<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - -------- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
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 1-10093
-------
RPS REALTY TRUST
----------------
(Exact name of registrant as specified in its charter.)
MASSACHUSETTS 13-6908486
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
747 Third Avenue, New York, New York 10017
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
212-355-1255
------------
(Registrant's telephone number, including area code)
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
--------- ---------
Number of shares of beneficial interest ($.10 par value) of the Registrant
outstanding as of May 5, 1995: 28,492,421.
<PAGE> 2
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
I N D E X
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1995 (unaudited) and
December 31, 1994 (audited) ........................................................ 3
Consolidated Statements of Operations (unaudited) - Three Months Ended
March 31, 1995 and 1994 ............................................................ 4
Consolidated Statement of Shareholders' Equity (unaudited) - Three Months Ended
March 31, 1995...................................................................... 5
Consolidated Statements of Cash Flows (unaudited) - Three Months Ended
March 31, 1995 and 1994............................................................. 6
Notes to Consolidated Financial Statements........................................... 7
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................. 12
</TABLE>
-2-
<PAGE> 3
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Mortgage Loans Receivable
(Net of allowance for possible loan losses of $12,781,336
in 1995 and $11,657,236 in 1994) $ 36,217,669 $ 41,891,769
Investment In Real Estate-Net 56,284,876 56,109,381
Short-term Investments 75,036,983 73,781,582
Interest and Accounts Receivable 8,256,412 8,607,992
Deferred Acquisition Expenses
(Net of accumulated amortization of $1,369,172 in 1995
and $1,319,706 in 1994) 2,302,641 2,352,107
Cash 858,204 802,384
Other Assets 3,980,579 2,625,607
----------- -----------
TOTAL ASSETS $182,937,364 $186,170,822
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Distributions Payable $ 2,279,394 $ 2,279,394
Accounts Payable and Accrued Expenses 1,042,845 1,292,260
----------- -----------
TOTAL LIABILITIES 3,322,239 3,571,654
SHAREHOLDERS' EQUITY 179,615,125 182,599,168
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $182,937,364 $186,170,822
=========== ===========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 4
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For The Three Months
Ended
March 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Revenues:
Interest Income:
Mortgage Loans $ 930,623 $2,469,455
Short-Term Investments 975,514 431,266
Rental Income 2,291,029 1,140,500
Other 49,173 -
--------- ---------
4,246,339 4,041,221
--------- ---------
Expenses:
Allowance for possible loan losses 3,000,000 -
General and Administrative 539,854 536,389
Payroll and Related Expenses 430,477 448,497
Amortization of Deferred
Acquisition Expenses 49,466 49,466
Interest on Mortgages - 110,814
Property Operating 350,844 273,000
Real Estate Taxes 330,429 172,000
Depreciation 249,918 152,500
--------- ---------
4,950,988 1,742,666
--------- ---------
Net Income (Loss) $ (704,649) $2,298,555
========= =========
Net Income (Loss) Per Share $(.02) $.08
========= =========
Cash Dividend Declared $.08 $.08
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE> 5
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
<TABLE>
<CAPTION>
Additional Cumulative Total
Shares of Paid-In Earnings/ Shareholders'
Beneficial Interest Capital (Distributions) Equity
------------------------- ------------ --------------- -------------
Number Amount
----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1995 28,492,421 $2,849,242 $194,924,231 ($15,174,305) $182,599,168
Net (loss) for the
nine months ended
March 31, 1995 -- -- -- (704,649) (704,649)
Cash distributions
declared -- -- -- (2,279,394) (2,279,394)
Balance at ---------- ---------- ------------ ------------ ------------
March 31, 1995 28,492,421 $2,849,242 $194,924,231 $(18,158,348) $179,615,125
========== ========== ============ ============ ============
</TABLE>
See notes to consolidated financial statements
-5-
<PAGE> 6
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------
1995 1994
------------ -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ (704,649) $ 2,298,555
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for possible loan losses 3,000,000 -
Amortization of Deferred Acquisition Expense 49,466 49,466
Depreciation 249,918 152,500
Changes in Operating Assets and Liabilities:
Interest and Accounts Receivable 25,680 (287,934)
Other Assets (1,354,972) (298,029)
Accounts Payable and Accrued Expenses (249,415) (168,362)
------------ ------------
Net Cash Provided by Operating Activities 1,016,028 1,746,196
------------ ------------
Cash Flows From Investing Activities:
Satisfaction of Mortgage Loans Receivable $ 3,000,000 $ 23,888,624
Investment in Mortgage Loans Receivable - -
Investments in Real Estate (425,413) (305,697)
------------ ------------
Net Cash Provided by Investing Activities 2,574,587 23,582,927
------------ ------------
Cash Flows From Financing Activities:
Dividends Declared and Paid $ (2,279,394) $ (2,285,058)
Shares Repurchased - (237,734)
Repayment of Mortgages Payable - (58,698)
------------ ------------
Net Cash Used in Financing Activities (2,279,394) (2,581,490)
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents $ 1,311,221 $ 22,747,633
Cash and Cash Equivalents, Beginning of Year 74,583,966 38,800,763
------------ ------------
Cash and Cash Equivalents, End of Period $ 75,895,187 $ 61,548,396
============ ============
Cash and Cash Equivalents, End of Period:
Cash $ 858,204 $ 789,328
Short-Term Investments 75,036,983 60,759,068
------------ ------------
$ 75,895,187 $ 61,548,396
============ ============
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ - $ 110,814
============ ============
Supplemental Schedule of Noncash Investing and
Financing Activities:
Accounts Payable - 248,643
Interest and Accounts Receivable (325,900) 1,310,630
Use of Allowance for Possible Loan Losses 1,875,900 14,567,301
Mortgages Receivable (1,550,000) (2,261,828)
Deposit on Sale of Loans - (1,365,042)
Other Assets - (165,200)
</TABLE>
See notes to consolidated financial statements
-6-
<PAGE> 7
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
l. GENERAL
In the opinion of management of RPS Realty Trust (the "Trust"), the
accompanying unaudited interim consolidated financial statements contain
all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the consolidated financial position as of March 31,
1995 and the results of operations for the three months ended March 31,
1995 and March 31, 1994. The financial statements, related footnotes
and discussions should be read in conjunction with the consolidated
financial statements, related footnotes and discussions contained in the
Trust's annual report on Form 10-K for the year ended December 31, 1994.
Certain reclassifications have been made to prior year financial
statements to conform with current classifications.
2. NET EARNINGS PER SHARE
The weighted average number of shares outstanding for the three months
ended March 31, 1995 and 1994 was 28,492,421 and 28,500,362,
respectively.
3. INVESTMENTS
The following tables summarizes the investments of the Trust as of March
31, 1995:
MORTGAGE INVESTMENTS
<TABLE>
<CAPTION>
TYPE OF NUMBER OF FUNDS RANGE OF
PROPERTY MORTGAGE LOANS ADVANCED(d)(e)(f) INTEREST RATES (a)(b)
- - ---------------------- -------------- ----------------- ---------------------
<S> <C> <C> <C>
Industrial Properties
- - ---------------------
First Mortgage Loan 1 $ 1,500,000 12.0%
Office Buildings
- - ----------------
Wraparound Mortgage Loans 1 $ 468,493 10%
First Mortgage Loans 2 $ 5,850,000 5.0 - 8.3%
Shopping Center/Retail
- - ----------------------
Wraparound Mortgage Loans 3 $ 8,280,512 6.5 - 12.7%
First Mortgage Loans (g) 3 $29,900,000 7.5 - 10.5%
Loan Secured by First
Lien (c) 1 $ 3,000,000 6%
-- -------------
Total 11 $ 48,999,005
== =============
</TABLE>
-7-
<PAGE> 8
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
<TABLE>
<CAPTION>
Northeast Southeast Midwest West
--------- --------- ------- ----
<S> <C> <C> <C> <C>
Outstanding Principal
Amount of Loans (d) $41,480,512 $1,500,000 $ 5,550,000 $468,493
Percentage of
Funds Outstanding 84.7% 3.1% 11.3% 0.9%
Number of Loans 7 1 2 1
</TABLE>
Investments in Real Estate
The following table summarizes the Trust's equity investments in real
properties, and the carrying amount, net of accumulated depreciation of such
properties, as of March 31, 1995:
<TABLE>
<CAPTION>
Property Location Carrying Value
- - -------- -------- --------------
<S> <C> <C>
Sunshine Plaza Tamarac, FL $ 9,128,816
Shopping Center
Crofton Shopping Center Crofton, MD 9,993,144
Trinity Corners Pound Ridge, NY 2,905,549
Shopping Center
Commack Property Commack, NY 2,800,312
Retail Center
Chester Shopping Center Chester, NJ 18,270,180
Lantana Plaza Lantana, FL 5,483,208
Shopping Center
9 North Wabash Chicago,IL 3,257,069
Retail Building
Norgate Shopping Center Indianapolis, IN 4,446,598
-----------
Total $56,284,876
===========
</TABLE>
(a) Interest rates presented are the weighted averages of the sum of current
plus accrued interest rates.
(b) In addition to fixed interest, the Trust is entitled to contingent
interest on certain loans in an amount equal to a percentage of the
gross rent received by the borrower from the property securing the
mortgage above a base amount, payable annually, and additional
contingent interest (equity participation) based on a predetermined
multiple of the contingent interest or a percentage of the net value of
the property at such date payable at maturity. Contingent interest in
the amount of $398,852 was received in the three months ended March 31,
1994. During the three months ended March 31, 1995 the Trust did not
receive contingent interest.
-8-
<PAGE> 9
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
(c) The loan is secured by a first lien on a separate collateral assignment
of a first mortgage loan which, in turn, is secured by a fee position
subject to a master lease on an office building in New York, New York.
(d) Before taking into account allowance for possible loan losses of
$12,781,336.
(e) As of March 31, 1995, the Trust had 4 loans that were in arrears (three
monthly payments or more) or otherwise considered to be "problem loans"
by the Trust. The aggregate gross principal amounts of these loans,
together with receivables relating to such loans comprised of accrued
interest and payments made on behalf of the borrowers for mortgage
payments relating to such properties, totaled approximately $40,435,207,
representing 22.3% of the Trust's invested assets, at March 31, 1995.
At March 31, 1995 and 1994, the Trust was not accruing current and
accrued interest on three and five of the above-mentioned loans, in the
aggregate approximate principal amount of $5,700,000 and $12,750,000,
respectively. In addition, as of March 31, 1995 and 1994 respectively,
the Trust was not accruing deferred interest on one additional loan, in
the aggregate approximate principal amount of $25,000,000.
(f) On February 14, 1995, the holder of the first mortgage loan secured by
the Madison Heights Shopping Center, whose loan was superior to the
Trust's wraparound mortgage loan with respect to such property,
foreclosed upon such property. The shopping center has been sold at
auction and the interest of the Trust has thereby been eliminated.
(g) On March 1, 1995, the Trust received proceeds of $3,021,000 from the
prepayment of the Coral Way Shopping Center mortgage loan. The proceeds
consisted of the repayment of the principal loan balance of $3,000,000
and current interest of $21,000.
4. DIVIDENDS TO SHAREHOLDERS
Under the Internal Revenue Code, a REIT must meet certain qualifications
including a requirement that it distribute annually to its shareholders
at least 95% of its taxable income. The Trust's policy is to distribute
to shareholders all taxable income. Dividends declared for the three
months ended March 31, 1995 are summarized below:
<TABLE>
<CAPTION>
RECORD DATE DIVIDEND PAYMENT DATE
----------- -------- -----------------
<S> <C> <C>
April 27, 1995 $ .08 May 17, 1995
</TABLE>
The difference, if any, between dividends and net income result from
timing differences related to the recognition of income and expense
between financial reporting and income tax purposes.
During 1995, the Trust will have tax write-offs on certain of the
mortgages which write-offs were previously recognized for financial
reporting purposes in prior years.
5. Ramco Transaction
On April 10, 1995, the Trust and Ramco-Gershenson, Inc. ("Ramco") and
its affiliates (the "Ramco Group") entered into an agreement relating to
the acquisition through an operating partnership (the "Operating
Partnership") controlled by the Trust of substantially all of the real
estate assets as well as the business operations of Ramco (the
"Transaction"). As part of the Transaction, the Trust will succeed to
the ownership of interests in 22 shopping center and retail properties
(the "Ramco Properties"), as well as 100% of the non-voting stock and 5%
of the voting
-9-
<PAGE> 10
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
stock of Ramco (representing in excess of 99% of the economic interests
of Ramco). The Trust will contribute to the Operating Partnership six
retail properties (the "RPS Properties") and $75,000,000 in cash (less
expenses paid by the Trust in connection with the Transaction).
Following the closing of the Transaction, Ramco will manage the Ramco
Properties, the RPS Properties and properties of certain third parties
and other Ramco affiliates.
Upon consummation of the Transaction, the Trust will be the sole general
partner of and a limited partner in the Operating Partnership and
initially will hold approximately 74.1% of the interests therein. The
members of the Ramco Group will be limited partners in the Operating
Partnership and will initially hold, in the aggregate, approximately
25.9% of the interests therein. The exact number of units of limited
partnership ("OP Units") to be received by the Trust and members of the
Ramco Group will be determined based upon the relative agreed upon
values of the assets to be contributed by the parties. The Ramco Group
can also increase its interest in the Operating Partnership based on the
future performance of certain of the Ramco Properties; such performance
incentives could increase the Ramco Group's interest in the Operating
Partnership to approximately 32.1% in the aggregate. The Ramco Group's
OP Units will be exchangeable for shares of the Trust commencing one
year after consummation of the Transaction, subject to purchase of such
OP Units for cash by the Trust, at the Trust's option.
As part of the Transaction, it is anticipated that (i) the Trust's state
of organization will be changed from Massachusetts to Maryland and the
Trust will change its name to Ramco-Gershenson Properties Trust and (ii)
the Trust will implement a four-for-one reverse stock split.
Upon consummation of the Transaction, it is contemplated that four of
the nine current members of the Board of Trustees will resign and will
be replaced by four individuals designated by the Ramco Group, two of
whom will be independent of the Trust, Ramco and their respective
affiliates. In addition, the five current principal executive officers
of Ramco will become executive officers of the Trust and will be
responsible for the management of the Trust's real estate operation.
In connection with the Transaction, and as a condition thereto, the
Trust will transfer its remaining mortgage loan portfolio, as well as
certain other assets, to a newly-formed Maryland real estate investment
trust, and thereafter will distribute the shares after taking into
account the reverse stock split referred to above, of the new REIT to
the Trust's shareholders.
6. Subsequent Events
In connection with the transaction with Ramco, on April 13, 1995, the
Trust advanced the sum of $2,340,000 to the members of the Ramco Group
(the "Ramco Advance") to be used for the sole purpose of paying
application fees, commitment fees and other fees and charges in
connection with a refinancing loan to be obtained in connection with the
Transaction. The Ramco Advance is evidenced by a promissory note (the
"Ramco Note") which accrues interest at a per annum rate equal to the
prime rate of the Bank of Boston, and matures on April 13, 1996; the
Ramco Note is secured by the pledge of certain partnership and stock
interests owned by the members of the Ramco Group who are the obligors
under the Ramco Note. Upon the occurrence of certain events, the Ramco
Advance will be converted into a Transaction expense of the Trust, and
the Ramco Note will be canceled. In such event, the $75,000,000 to be
contributed by the Trust to the Operating Partnership will be reduced by
the amount of the Ramco Advance.
-10-
<PAGE> 11
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
As of December 31, 1994 the Trust had $41,891,769 invested in mortgage loans
(after deducting allowance for possible loan losses of $11,657,236),
$56,109,381 invested in real properties and $73,781,582 in short-term
investments. During the first quarter of 1995 the Trust received proceeds of
$3,021,000 from the prepayment of the Coral Way Shopping Center loan.
Additionally during the first quarter the Trust added $3,000,000 to its
allowance for possible loan losses bringing the allowance to $12,781,336.
During future periods additional provisions for loan losses may be required, as
loans are either sold or prepaid or otherwise re-valued. As of March 31, 1995
the Trust had $36,217,669 invested in mortgage loans (after deducting allowance
for possible loan losses of $12,781,336), $56,284,876 invested in real
properties and $75,036,983 in short-term investments.
RESULTS OF OPERATIONS
Three months ended March 31, 1995 compared to three months ended March 31,
1994.
Total revenues for the three months ended March 31, 1995 (before rental income)
decreased $945,411 or 32.6%. Interest from mortgage loans received by the
Trust during the first quarter of 1995 decreased $1,538,832 or 62.3%. The
reduction in interest from mortgage loans is attributable to the reduction in
the size of the Trust's mortgage loan portfolio, from 17 as of March 31, 1994
to 11 as of March 31, 1995. Short-term interest income increased $544,248 or
126% as a result of higher cash balances.
During the quarter ended March 31, 1995 expenses (excluding property operating,
real estate taxes, interest on mortgages and depreciation expenses) increased
$2,985,445 as compared to the first quarter ended March 31, 1994. This
increase was primarily due to additional provision for possible loan losses in
the first quarter of $3,000,000.
During the first quarter of 1995, the Trust received rental income of
$2,291,029 as compared to $1,140,500 for the first quarter of 1994. This
increase of $1,150,529 or 101% is primarily as a result of the Trust owning 8
retail properties during the 1995 period compared to 6 during the 1994 period.
Interest expense on mortgages payable in 1995 decreased $110,814 or 100% due to
the Trust exercising its right to prepay the first mortgage loan relating to
the Crofton Plaza Shopping Center property on September 30, 1994. Property
operating expenses, real estate taxes and depreciation expense increased during
the 1995 period by $77,844, 158,429 and 97,418 respectively over the 1994
period due to the aforementioned increase in the number of properties. For the
quarter ended March 31, 1995, the Trust recognized net income from the
investment of real estate of $1,359,838 as compared to $432,186 in the 1994
quarter.
As a result of the foregoing factors (primarily the increase in provision for
loan losses), the Trust incurred a net loss for the first quarter of 1995 of
$704,649 or $.02 per share as compared to net income of $2,298,555 or $.08 per
share inthe 1994 period.
-11-
<PAGE> 12
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. No exhibits are filed with this report.
B. No Reports on Form 8-K were filed during the quarter.
-12-
<PAGE> 13
RPS REALTY TRUST FORM 10-Q MARCH 31, 1995
SIGNATURES
Pursuant to the requirements 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.
RPS REALTY TRUST
By: /s/ Joel M. Pashcow
------------------------------
Joel M. Pashcow
Chairman and Trustee
(Principal Executive Officer)
By: /s/ Herbert Liechtung
------------------------------
Herbert Liechtung
President and Trustee
(Principal Executive Officer)
By: /s/ Edwin R. Frankel
------------------------------
Edwin R. Frankel
Senior Vice President and Treasurer
(Chief Financial Officer)
Date: May 9, 1995
<PAGE> 14
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 75,895,187
<SECURITIES> 0
<RECEIVABLES> 8,256,412
<ALLOWANCES> 12,781,336
<INVENTORY> 0
<CURRENT-ASSETS> 113,548,172
<PP&E> 0
<DEPRECIATION> 1,981,071
<TOTAL-ASSETS> 182,932,364
<CURRENT-LIABILITIES> 3,322,239
<BONDS> 0
<COMMON> 2,849,242
0
0
<OTHER-SE> 176,765,883
<TOTAL-LIABILITY-AND-EQUITY> 182,937,364
<SALES> 0
<TOTAL-REVENUES> 4,246,339
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,950,988
<LOSS-PROVISION> 3,000,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (704,649)
<INCOME-TAX> 0
<INCOME-CONTINUING> (704,649)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (704,649)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
