<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 September 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)
PMB 314, P.O. Box 255427, Sacramento, California 95825-5427
(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 September 30, 1999
par value one dollar per share 122,854
<PAGE> 2
USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - September 30, 1999 and
December 31, 1998 ................................. 3
Statements of Income - For the Nine Months
Ended September 30, 1999 and 1998 ................. 4
Statements of Income - For the Nine Months
Ended September 30, 1999 and 1998 ................. 5
Statements of Cash Flows - For the Nine
Months Ended September 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
September 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $3,387,279 at September 30,
1999 and $3,421,976 at December 31, 1998 $ 24,600,254 $ 24,606,111
Notes receivable 1,076,000 726,000
---------- -----------
25,676,254 25,332,111
Cash 28,189 24,097
Other assets 244,361 302,272
----------- -----------
Total assets $ 25,948,804 $ 25,658,480
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 6,577,485 $ 5,999,580
Line of credit 1,581,000 730,000
Accounts payable and accrued expenses 51,000 5,460
Lease deposits 62,282 62,282
----------- -----------
Total liabilities 8,271,767 6,797,322
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 250,000 shares;
122,854 shares outstanding at September 30,
1999 and 128,056 at December 31, 1998 $ 122,854 $ 128,056
Additional paid-in capital 32,729,852 33,363,866
Distributions in excess of cumulative
net income (15,175,669) (14,630,764)
----------- -----------
Total shareholders' equity 17,677,037 18,861,158
----------- -----------
Total liabilities and shareholders' equity $ 25,948,804 $ 25,658,480
=========== ===========
See accompanying notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
September 30,
1999 1998
---------- ----------
Revenues:
Rent $ 809,627 $ 801,852
Interest 21,559 14,773
---------- ----------
831,186 816,625
---------- ----------
Expenses:
Operating expenses 76,096 76,369
Property taxes 51,000 47,913
Property management fees 13,200 13,200
Interest 161,873 131,088
Depreciation and amortization 162,000 162,000
General and administative 50,865 51,908
---------- ----------
515,034 482,478
---------- ----------
Net income before loss on sale of properties 316,152 334,147
Loss on sale of properties 0 0
---------- ----------
Net income $ 316,152 $ 334,147
========== ==========
Net income per share of beneficial interest $ 2.56 $ 2.59
========== ==========
See accompanying notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Nine Months Ended
September 30,
1999 19987
---------- ----------
Revenues:
Rent $ 2,410,958 $ 2,422,192
Interest 60,672 48,451
---------- ----------
2,471,630 2,470,643
---------- ----------
Expenses:
Operating expenses 223,279 221,414
Property taxes 150,957 143,739
Property management fees 39,600 38,000
Interest 407,493 391,317
Depreciation and amortization 486,000 486,000
General and administrative 216,290 214,705
---------- ----------
1,523,619 1,495,175
---------- ----------
Net income before loss on sale of properties 948,011 975,468
Loss on sale of properties (92,558) 0
---------- ----------
Net income $ 855,453 $ 975,468
========== ==========
Net income per share of beneficial interest $ 6.82 $ 7.56
========== ==========
See accompanying notes to financial statements.
<PAGE> 6
Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 855,453 975,468
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 486,000 486,000
Loss on sale of rental properties 92,558 0
Changes in other assets and liabilities:
Increase (decrease) in other assets 57,911 (135,660)
Increase in accounts payable
and accrued expenses 45,540 70,625
Decrease) in lease deposits 0 (4,875)
---------- ----------
Total adjustments to income 682,009 416,090
---------- ----------
Net cash provided by
operating activities 1,537,462 1,391,558
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and improvements to
rental properties (3,609,278) (154,695)
Increase in notes receivable (350,000) 0
Proceeds from the sale of properties 3,036,577 0
---------- ----------
Net cash provided by
investing activities (922,701) (154,695)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term notes payable 2,600,000 0
Line of credit 851,000 440,000
Redemption of shares (639,216) (354,069)
Principal payments on long-term notes payable (2,022,095) (106,982)
Distributions paid (1,400,358) (1,372,929)
---------- ----------
Net cash used by
financing activities (610,669) (1,393,980)
---------- ----------
Net increase (decrease) in cash 4,092 (157,117)
Cash and cash equivalents, beginning of period 24,097 168,236
---------- ----------
Cash and cash equivalents, end of period $ 28,189 $ 11,119
========== ==========
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 September 30, 1999, and the results of its
operations for the nine months ended September 30, 1999 and 1998 and cash
flows for the nine months ended September 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 $2.56 and $6.82 per share for the three months and nine months
ended September 30, 1999, repsectively, compared to $2.59 and $7.56 for the
three months and nine months ended September 30, 1998, respectively.
The Trust paid distributions of $3.96 and $11.16 per share for the three
months and nine months ended September 30, 1999, respectively, compared to
$3.60 and $10.50 per share for the three months and nine months ended
September 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:
None.
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
----------------------------------------
November 6, 1999 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman
Chairman
November 6, 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 September 30, 1999 (Unaudited) and the
Statement of Income for the Nine Months Ended September 30, 1999
(Unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 28,189
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,189
<PP&E> 27,987,533
<DEPRECIATION> 3,387,279
<TOTAL-ASSETS> 25,948,804
<CURRENT-LIABILITIES> 51,000
<BONDS> 0
<COMMON> 122,854
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,948,804
<SALES> 2,471,630
<TOTAL-REVENUES> 2,471,630
<CGS> 0
<TOTAL-COSTS> 1,523,619
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 407,493
<INCOME-PRETAX> 948,011
<INCOME-TAX> 0
<INCOME-CONTINUING> 948,011
<DISCONTINUED> 92,558
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 855,453
<EPS-BASIC> 6.82
<EPS-DILUTED> 6.82
</TABLE>
