<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, 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)
P.O. Box 255427-314, Sacramento, California 95825
(Address of registrant's principal executive offices) (Zip Code)
(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 March 31, 1999
par value one dollar per share 129,549
<PAGE> 2
USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - March 31, 1999 and
December 31, 1998 ................................. 3
Statements of Income - For the Three Months
Ended March 31, 1999 and 1998 ..................... 4
Statements of Cash Flows - For the Three
Months Ended March 31, 1999 and 1998 .............. 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,
1999 1998
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $3,063,279 at March 31,
1999 and $3,421,976 at December 31, 1998 $ 21,320,495 $ 24,606,111
Notes receivable 1,076,000 726,000
---------- -----------
22,396,495 25,332,111
Cash and cash equivalents 14,675 24,097
Other assets 177,040 302,272
----------- -----------
Total assets $ 22,588,210 $ 25,658,480
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 4,042,981 $ 5,999,580
Line of credit 0 730,000
Accounts payable 56,460 5,460
Lease deposits 62,282 52,282
----------- -----------
Total liabilities 4,161,723 6,797,322
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 250,000 shares;
126,549 shares outstanding at March 31,
1999 and 128,056 shares outstanding at
December 31, 1998 $ 126,549 $ 128,056
Additional paid-in capital 33,180,394 33,363,866
Distributions in excess of cumulative
net income (14,880,456) (14,630,764)
----------- -----------
Total shareholders' equity 18,426,487 18,861,158
----------- -----------
Total liabilities and shareholders' equity $ 22,588,210 $ 25,658,480
=========== ===========
See notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
March 31,
1999 1998
---------- ----------
Revenues:
Rent $ 803,388 $ 826,767
Interest 15,126 17,915
---------- ----------
818,514 844,682
---------- ----------
Expenses:
Operating expenses 73,710 71,679
Property taxes 51,000 47,913
Property management fees 13,200 12,000
Interest 126,925 130,104
Depreciation and amortization 162,000 162,000
General and administative 89,590 93,632
---------- ----------
Net income before loss on sale of rental properties 516,425 517,328
Loss on sale of rental properties (92,558) 0
---------- ----------
Net Income $ 209,531 $ 327,354
========== ==========
Net income per share of beneficial interest $ 1.65 $ 2.40
========== ==========
See notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1999 1998
---------- ----------
OPERATING ACTIVITIES:
Net income $ 209,531 $ 327,354
---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 162,000 162,000
Loss on sale of rental properties 92,558 0
Changes in other assets and liabilities:
Decrease (increase) in other assets 125,232 (35,416)
Increase in accounts payable 51,000 38,105
---------- ----------
Total adjustments to income 430,790 164,689
---------- ----------
Net cash provided by
operating activities 640,321 492,043
INVESTING ACTIVITIES:
Improvements to properties (5,519) (23,975)
Increase in notes receivable (350,000) 0
Proceeds from the sale of properties 3,036,577 0
---------- ----------
Net cash used by investing activities 2,681,058 (23,975)
FINANCING ACTIVITIES:
Redemption of shares (184,979) (50,815)
Payments on long-term notes payable (1,956,599) (34,920)
Payments on line of credit (730,000) 0
Distributions paid (459,223) (435,059)
---------- ----------
Net cash used by financing activities (3,330,801) (520,794)
---------- ----------
Net decrease in cash (9,422) (52,726)
Cash and cash equivalents at beginning of period 24,097 168,236
---------- ----------
Cash and cash equivalents at end of period $ 14,675 $ 115,510
========== ==========
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, 1999, and the
results of its operations and cash flows for the three months
ended March 31, 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.
3. Effective July 1, 1998, the Trust executed a one-for-thirty reverse
share split of its shares of beneficial interest. All references to
the number of shares and per share amounts have been restated to
reflect the impact of said reverse share split.
<PAGE> 7
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 $209,531 or $1.65 per share for the three months
ended March 31, 1999 compared to $327,354 or $2.40 per share for
the same period in 1998.
The Trust paid distributions of $3.60 per share for the three
months ended March 31, 1999 and $3.30 per share for the same
period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Trust expects that operating income, cash in the bank, 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 14, 1999 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman,
Chairman
May 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 March 31, 1999 (Unaudited) and the
Statement of Income for the Three Months Ended March 31, 1999 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 14,675
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 191,715
<PP&E> 24,383,774
<DEPRECIATION> 3,063,279
<TOTAL-ASSETS> 22,588,210
<CURRENT-LIABILITIES> 56,460
<BONDS> 0
<COMMON> 126,549
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 22,588,210
<SALES> 818,514
<TOTAL-REVENUES> 818,514
<CGS> 0
<TOTAL-COSTS> 516,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126,925
<INCOME-PRETAX> 209,531
<INCOME-TAX> 0
<INCOME-CONTINUING> 209,531
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209,531
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.65
</TABLE>
