<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q/A
AMENDMENT NO. 1 TO:
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995.
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 1-9639
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-2565432
(State or other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
12011 SAN VICENTE BLVD., SUITE 707
LOS ANGELES, CALIFORNIA 90049
(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 476-7793
NOT APPLICABLE
Former Name, former address and former fiscal year, if changed since last report
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. Yes X No ___.
Shares of Beneficial Interest outstanding
as of June 30, 1995 - 9,340,697
<PAGE>
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
PART I - FINANCIAL INFORMATION
Item 1: Consolidated Balance Sheets (Unaudited) (Note 1)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
--------- ---------
($ in thousands)
<S> <C> <C>
ASSETS
Investments in Rental Properties.................
Land........................................... $ 44,220 $ 44,213
Buildings and improvements..................... 164,812 162,015
--------- ---------
209,032 206,228
Less accumulated depreciation................ ( 21,332) ( 18,889)
--------- ---------
187,700 187,339
Investment in Unconsolidated Partnership......... 1,308 1,524
Notes Receivable Secured by Real Properties...... 5,381 7,437
Cash............................................. 486 867
Other Assets..................................... 1,862 1,798
--------- ---------
196,737 198,965
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable Secured by Real Properties......... 87,047 88,675
Accounts Payable and Accrued Expenses............ 2,064 1,901
Distributions Payable to Shareholders............ 3,315 3,299
--------- ---------
92,426 93,875
--------- ---------
SHAREHOLDERS' EQUITY
Shares of Beneficial Interest - no par value -
unlimited shares authorized; 9,340,697 shares
in 1995 and 9,294,251 shares in 1994 issued
and outstanding................................ 104,311 105,090
--------- ---------
$196,737 $198,965
========= =========
</TABLE>
See accompanying Notes to Financial Information
2
<PAGE>
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
PART I - FINANCIAL INFORMATION
Item 1: Consolidated Statements of Income (Unaudited) (Note 1)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------------------------- ------------------------
(in thousands, except per-share data)
<S> <C> <C> <C> <C>
REVENUES
Rental......................................... $ 8,058 $ 6,584 $16,124 $12,303
Interest / Other............................... 403 328 754 618
------- ------- ------- -------
8,461 6,912 16,878 12,921
------- ------- ------- -------
REAL ESTATE EXPENSES
Depreciation................................... 1,338 1,060 2,660 1,911
Interest....................................... 1,744 1,027 3,477 1,632
Property Taxes................................. 470 306 939 558
Repairs and Maintenance........................ 416 371 851 656
Insurance...................................... 47 44 106 75
Leasing Commissions and Payroll................ 571 442 1,090 762
Utilities...................................... 626 411 1,146 761
Other.......................................... 447 313 875 573
------- ------- ------- -------
5,659 3,974 11,144 6,928
------- ------- ------- -------
ADMINISTRATIVE EXPENSES
Trustees Fees.................................. 29 21 59 42
Professional Services.......................... 134 132 171 168
Salaries and Overhead.......................... 86 175 338 406
------- ------- ------- -------
249 328 568 616
------- ------- ------- -------
NET INCOME....................................... $ 2,553 $ 2,610 $ 5,166 $ 5,377
======= ======= ======= =======
Weighted Average Shares Outstanding (in thousands) 9,333 9,256 9,320 9,251
======= ======= ======= =======
Per Share Data
Net Income..................................... $ .27 $ .28 $ .55 $ .58
======= ======= ======= =======
Cash Distributions............................. $ .355 $ .345 $ .710 $.675
======= ======= ======= =======
</TABLE>
See accompanying Notes to Financial Information
3
<PAGE>
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
PART I - FINANCIAL INFORMATION
Item 1: Consolidated Statements of Cash Flows (Unaudited) (Note 1)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------------------------- ------------------------
($ in thousands)
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income..................................... $ 2,553 $ 2,610 $ 5,166 $ 5,377
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................. 1,362 1,083 2,707 1,952
(Increase) decrease in other assets............ ( 839) ( 677) 45 (936)
Increase (decrease) in accounts payable........ 11 357 164 611
-------- ------- ------- -------
Net cash provided by operating activities........ 3,087 3,373 8,082 7,004
-------- ------- ------- -------
Cash flows from investing activities:
Additions to buildings and improvements........ ( 698) ( 1,704) ( 2,804) ( 2,020)
Purchases of rental properties................. -0- (21,108) -0- (41,238)
Collections on notes receivable................ 3 1,292 2,057 1,298
-------- ------- ------- -------
Net cash used in investing activities............ ( 695) (21,520) ( 747) (41,960)
-------- ------- ------- -------
Cash flow from financing activities:
Principal payments on notes payable............ ( 214) ( -0-) ( 1,628) (32,750)
Distributions to shareholders.................. ( 3,123) ( 2,971) ( 6,224) ( 5,880)
Proceeds from short-term unsecured borrowings.. -0- 19,500 -0- 19,500
Proceeds from long-term unsecured borrowings... -0- -0- -0- 55,000
Cash proceeds from sale of Shares of Beneficial
Interest..................................... 69 104 136 136
-------- ------- ------- -------
Net cash (used in) provided by financing
activities..................................... ( 3,268) 16,633 ( 7,716) 36,006
-------- ------- ------- -------
Net (decrease) increase in cash.................. ( 876) ( 1,514) ( 381) 1,050
-------- ------- ------- -------
Cash at beginning of period...................... 1,362 2,782 867 218
-------- ------- ------- -------
Cash at end of period............................ $ 486 $ 1,268 $ 486 $ 1,268
======== ======= ======= =======
</TABLE>
See accompanying Notes to Financial Information
4
<PAGE>
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
PART I - FINANCIAL INFORMATION (Unaudited)
Item 1: Notes to Financial Information
Note 1: Reference is made to Notes to Audited Consolidated Financial
Statements appearing in the Trust's Annual Report on Form 10-K, as amended,
for the year ended December 31, 1994.
Note 2: The accompanying unaudited consolidated financial statements
are prepared in accordance with instructions to Form 10-Q and in the opinion
of management, include all material adjustments (consisting only of normal
recurring accruals) which are necessary for a fair presentation of the
results for the interim periods shown. The results for the six month period
ended June 30, 1995 are not necessarily indicative of the results to be
expected for the full year.
Note 3: The consolidated financial statements include the accounts of
REIT-Santa Maria Properties, Ltd., a limited partnership in which the Trust
is general partner and has significantly all the partnership capital. The
accounts of the limited partnership have been consolidated with those of the
Trust as of April 15, 1981, the date when the partnership interest was
acquired.
Note 4: No provision has been made for income taxes as the Trust
believes that it qualified as a real estate investment trust under Sections
856-860 of the Internal Revenue Code and under similar state statutes.
5
<PAGE>
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
PART I - FINANCIAL INFORMATION (Unaudited)
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
Real Estate Investment Trust of California is a regionally focused,
self-administered equity real estate investment trust which owns a
diversified portfolio of real estate investments. The Trust currently
invests primarily in apartment communities which offer attractive current
returns, solid potential for long-term appreciation and earnings growth. The
continuing policy of the Trust is to emphasize current returns, rather than
the realization of capital gains through property dispositions, although in
furtherance of the strategy emphasizing apartment investments. Revenues of
the Trust consist primarily of rental income derived from its portfolio of
income-producing properties and to a much lesser extent interest income from
secured notes receivable.
The Trust continues to focus on equity investments in apartment
communities in various diversified markets, including Northern and Southern
California, Arizona and Nevada. Market conditions have adjusted investment
yields of apartment communities more in line with the general real estate
market for investment grade real estate. In furtherance of this strategic
focus, during 1994 the Trust acquired nine apartment communities totaling
1,381 units. These and prior multi-family community acquisitions are the
basis of a major impact on the financial operations of the Trust. No
apartment communities were acquired in the first and second quarters of 1995,
as the Trust focused its activities on the management of its core portfolio
of assets and securing long-term financing.
The following table is a summary of apartment acquisitions of the Trust
since March of 1991:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
TOTAL AVERAGE % INVESTMENT
STATE # OF UNITS INVESTMENT UNIT COST BY STATE
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA 1,640 $82,395,000 $50,200 62%
- -----------------------------------------------------------------------
ARIZONA 1,271 34,775,000 $27,400 26%
- -----------------------------------------------------------------------
NEVADA 280 15,200,000 $54,300 12%
- -----------------------------------------------------------------------
TOTAL: 3,191 $132,370,000 $41,000 100%
- -----------------------------------------------------------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1995, the Trust had lines of credit with Sanwa Bank
($29,000,000) and Union Bank ($7,500,000) for use in the acquisition of
income producing properties and general operating purposes, including the
payment of distributions to shareholders. Reference is made to the Notes to
the Trust's 1994 Annual Report on Form 10-K, as amended, for full details of
the terms of these lines of credit. As of June 30, 1995, the Trust had
outstanding balances on the lines of credit of $28,000,000. As of July, the
Trust reduced its line of credit with Sanwa Bank to $18,500,000 and has
retired the Union line. Outstanding balance as of July 31, 1995 on the Sanwa
line is $11,800,000.
In order to reduce exposure to variable rate debt on the Trust's
short-term bank lines of credit, the Trust obtained, in July 1995, an
$18-million, 10-year collaterized loan with The Prudential Insurance Company
of America. The fixed interest rate is 7.88%, with interest-only payments
and the opportunity to convert in the future to an unsecured loan. Proceeds
of this loan were used to reduce outstanding borrowings at Sanwa Bank and
Union Bank.
The Trust is actively marketing a number of its investments, that if
sold, would generate additional funds to be used to reduce short-term debt or
be reinvested in additional apartment communities. There can be no guarantee
that these properties can be sold on terms acceptable to the Trust. On
November 1, 1994, the Trust sold the La Verne Towne Center, La Verne,
California, for a net sales price of $13,300,000. The funds were used for
property acquisitions.
The following table quantifies cash flows from operating, investing and
financing activities using information from the Consolidated Statements of
Cash Flows:
6
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
- ---------------------------------------------------------------------------------------------
June 30, June 30, June 30, June 30,
For the Three and Six Months Ended 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net cash provided by operating activities............ $3,087 $ 3,373 $8,082 $ 7,004
- ---------------------------------------------------------------------------------------------
Net cash used in investing activities................ ( 695) (21,520) ( 747) (41,960)
- ---------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities.. (3,268) 16,633 (7,716) 36,006
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in cash...................... ($ 876) ($1,514) ($ 381) $ 1,050
- ---------------------------------------------------------------------------------------------
Cash at end of period................................ $ 486 $ 1,268 $ 486 $ 1,268
- ---------------------------------------------------------------------------------------------
</TABLE>
As the owner of real estate, the Trust is subject to risks arising in
connection with the underlying real estate such as defaults or nonrenewal of
the leases, increased operating costs, environmental problems, financing
availability, changes in real estate and zoning laws and increases in real
property tax rates. The success of the Trust also depends upon trends of the
economy, including interest rates, income tax laws, governmental regulation
and legislation, and population changes.
CHANGES IN RESULTS OF OPERATIONS - FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
1995 AND JUNE 30, 1994
The following table summarizes the financial comparison of the six
months ended June 30, 1995 and June 30, 1994 ($ in thousands, except per
share data).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
FOR THE THREE AND SIX ENDED JUNE ENDED JUNE % ENDED JUNE ENDED JUNE %
MONTHS ENDED 30, 1995 30, 1994 CHANGE 30, 1995 30, 1994 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $ 8,461 $ 6,912 22.4 $16,878 $12,921 30.6%
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Depreciation 1,338 1,060 26.2 2,660 1,911 39.2
- ----------------------------------------------------------------------------------------------------
Interest 1,744 1,027 69.8 3,477 1,632 113.1
- ----------------------------------------------------------------------------------------------------
Property operating costs 2,577 1,887 36.6 5,007 3,385 47.9
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Administrative expenses 249 328 (24.1%) 568 616 (7.8)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Net Income $ 2,553 $ 2,610 (2.2%) $ 5,166 $ 5,377 (3.9%)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Weighted Average Shares
Outstanding (000's) 9,333 9,256 9,320 9,251
- ----------------------------------------------------------------------------------------------------
</TABLE>
Revenues and real estate expenses increased from June 30, 1994 to June
30, 1995 primarily due to 1994 acquisitions and improvements in occupancies
and operating performances of existing apartment investments. Approximately
66% of this increase was attributed to 1994 property acquisitions and 34% to
prior acquisition and improved occupancies and rental increases. As new
investments were acquired, depreciation expense has increased. In March
1994, the Trust funded the Prudential Insurance Company of America
$55,000,000 unsecured note payable. The interest on this borrowing is the
major portion of the increase in interest expense between the periods. These
funds were used to fund 1994 property acquisitions. The operating costs
increased due to the 1994 property acquisitions totaling 1,381 apartment
units.
Expenses related to apartment operations, which include payroll of
on-site personnel (such as resident managers, leasing staff, maintenance and
janitorial staff), utilities, advertising, direct office expenses and
management fees, have increased in direct relation to acquisitions of those
properties. All operating expenses for apartment complexes, including real
property taxes and insurance, but excluding depreciation, range from
approximately 35% to 40% of gross scheduled income. This compares to retail
and commercial properties, which are generally leased on a "net" basis with
the tenant paying operating expenses.
The retail portfolio continues to experience weakness in rental rates
and occupancy due to the effects of the Southern California economy.
Although retail and commercial properties continue to present leasing
problems, the Trust increased revenues by approximately 5% when the first six
months of 1995 is compared with the same period in 1994. New leases account
for the improved performance.
7
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to report to be signed on its
behalf by the undersigned duly authorized.
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
Date:__________________ By:_______________________________________
LEROY E. CARLSON
Vice President, Secretary and Treasurer
(for the Registrant and as Chief
Accounting Officer)
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US $
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 486
<SECURITIES> 0
<RECEIVABLES> 5381
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 209032
<DEPRECIATION> 21332
<TOTAL-ASSETS> 196737
<CURRENT-LIABILITIES> 0
<BONDS> 87047
<COMMON> 104311
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 196737
<SALES> 0
<TOTAL-REVENUES> 16878
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3477
<INCOME-PRETAX> 5166
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5166
<EPS-PRIMARY> .555
<EPS-DILUTED> .555
</TABLE>
