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 September 30, 1996
___ 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 33-29987
Corporate Realty Income Trust I
(Exact name of registrant as specified in its charter)
Massachusetts 13-6931017
(State of organization) (I.R.S. Employer
identification No.)
388 Greenwich Street, 34th Floor, New York, New York 10013
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 816-8237
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
<PAGE>
CORPORATE REALTY INCOME TRUST I
Index
Page No.
Part I Financial information 3
Balance Sheets --
September 30, 1996 and December 31, 1995 4
Statements of Income --
For the three months ended September 30, 1996 and 1995 5
Statements of Income --
For the nine months ended September 30, 1996 and 1995 6
Statements of Cash Flows --
For the nine months ended September 30, 1996 and 1995 7
Notes to the Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II Other information 11
Signatures 12
<PAGE>
Part I. Financial Information
Item I. Financial Statements
The summarized financial information contained herein is unaudited; however, in
the opinion of management, all adjustments necessary for a fair presentation of
such financial information have been included.
<PAGE>
CORPORATE REALTY INCOME TRUST I
BALANCE SHEETS
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---------- ---------
<S> <C> <C>
ASSETS: (Unaudited)
Real estate, at cost:
Land $ 715,400 $ 715,400
Buildings 31,884,600 31,884,600
---------- ---------
32,600,000 32,600,000
Less: accumulated depreciation 4,855,264 4,257,428
---------- ---------
27,744,736 28,342,572
Cash and cash equivalents 983,508 531,435
Rent receivable - 206,510
Prepaid expenses 8,189 101,877
Deferred rent receivable 1,982,469 1,867,274
Deferred financing costs, net of
accumulated amortization of $137,876 in
1996 and $120,731 in 1995 88,282 105,427
---------- ---------
Total assets $30,807,184 $31,155,095
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Mortgage loans payable $15,421,294 $15,470,369
Accrued expenses 72,018 80,652
Due to affiliates 99,586 9,590
Dividends payable 353,772 353,772
---------- ---------
Total liabilities 15,946,670 15,914,383
========== =========
Shareholders' equity:
Shares of beneficial interest $.10 par value;
20,000,000 shares authorized; 1,010,776
shares issued and outstanding 101,078 101,078
Additional paid-in-capital 14,759,436 15,139,634
Retained earnings - -
---------- ---------
Total shareholder's equity 14,860,514 15,240,712
---------- ---------
Total liabilities and shareholders' equity $30,807,184 $31,155,095
========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the three months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------- --------
<S> <C> <C>
Income:
Rental $ 855,818 $ 805,035
Dividend and interest 12,811 5,556
-------- --------
868,629 810,591
-------- --------
Expenses:
Interest 352,032 353,170
Depreciation 199,279 199,279
General and administrative 47,696 44,029
Annual advisor fee 44,312 43,071
-------- --------
643,319 639,549
-------- --------
Net income $ 225,310 $ 171,042
======== ========
Net income per share $ .22 $ .17
======== ========
Dividend per share $ .35 $ .35
======== ========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF INCOME
For the nine months ended September 30, 1996 and 1995
(Unaudited)
<S> <C> <C>
1996 1995
--------- ----------
Income:
Rental $ 2,567,451 $ 2,567,450
Dividend and interest 26,435 17,184
--------- ----------
2,593,886 2,584,634
--------- ----------
Expenses:
Interest 1,056,501 1,068,397
Depreciation 597,836 597,836
General and administrative 127,220 119,493
Annual advisor fee 131,211 128,688
--------- ----------
1,912,768 1,914,414
--------- ----------
Net income $ 681,118 $ 670,220
========= ==========
Net income per share $ .67 $ .66
========= ==========
Dividend per share $ .35 $ .35
========= ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
CORPORATE REALTY INCOME TRUST I
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 681,118 $ 670,220
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
deferred financing costs 614,981 614,900
Interest accrued into the balance
of the mortgage payable - 24,486
Changes in assets and liabilities:
Decrease (increase) in rent receivable 206,510 (674,590)
Decrease in prepaid expenses 93,688 72,999
Decrease in accrued expenses (8,634) (3,266)
Increase in deferred rent receivable (115,195) (151,418)
Increase (decrease) in amount due to affiliate 89,996 (6,678)
Increase in financing costs - (2,463)
--------- ---------
Total adjustments 881,346 (126,030)
--------- ---------
Net cash provided by operating activities 1,562,464 544,190
--------- ---------
Cash flows from financing activities:
Principal payments on mortgage (49,075) (44,645)
Dividends paid to shareholders (1,061,316) (1,061,315)
--------- ---------
Net cash used in financing activities (1,110,391) (1,105,960)
--------- ---------
Net increase (decrease) in cash and cash equivalents 452,073 (561,770)
Cash and cash equivalents at beginning of period 531,435 766,945
--------- ---------
Cash and cash equivalents at end of period $ 983,508 $ 205,175
========= =========
</TABLE>
Supplemental disclosure of cash flow information:
Cash paid for interest during the nine months ended September 30, 1996 and
1995 amounted to $934,605 and $963,145, respectively.
Non-cash transactions:
Dividends declared and unpaid as of September 30, 1996 and 1995 amounted to
$353,772.
See accompanying notes to financial statements.
<PAGE>
CORPORATE REALTY INCOME TRUST I
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
1. General
The accompanying financial statements and related notes of Corporate
Realty Income Trust I (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally included
in financial statements prepared under generally accepted accounting principles
have been condensed or omitted pursuant to such regulations. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the Company's financial
position, results of operations and cash flows have been included. These
financial statements should be read in conjunction with the Company's Form 10-K
for the year ended December 31, 1995.
The amount of net income per share was calculated using the number of
shares outstanding of 1,010,776 for the periods ended September 30, 1996 and
1995. Dividends declared as of September 30, 1996 and 1995 amounted to $.35
per share.
2. Rental Income
In accordance with the Financial Accounting Standards Board Statement
No.13, "Accounting for Leases," the Company recognizes rental income on a
straight-line basis over the fixed term of the lease period. Rental income is
net of the rent due to Circuit City under the terms of the ground lease.
Deferred rent receivable represents unbilled future rentals. The following
reconciles rental income received to rental income recognized for the three and
nine months ended September 30, 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Rental income received $818,999 $816,629 $2,452,256 $2,416,032
Deferred rent 36,819 (11,594) 115,195 151,418
-------- -------- ---------- ----------
Rental income recognized $855,818 $805,035 $2,567,451 $2,567,450
======== ======== ========== ==========
</TABLE>
<PAGE>
CORPORATE REALTY INCOME TRUST I
NOTES TO FINANCIAL STATEMENTS (Cont'd)
September 30, 1996
(Unaudited)
3. Transactions with Affiliates
The Company maintains an interest-bearing customer account with Smith
Barney Inc. For the three and nine months ended September 30, 1996 and 1995,
the Company earned interest on this account of $12,810 and $26,434,
respectively and $5,556 and $17,184, respectively. For purposes of these
financial statements, the Company considers this account to be cash.
The Company incurred expenses of $10,000 and $30,000 for the three and
nine months ended September 30, 1996 for administrative services performed by
the Advisor of which $10,000 was unpaid at September 30, 1996. The Advisor
earned $131,211 of the annual advisor fee for the nine months ended September
30, 1996, of which $87,693 was unpaid as of such date.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the nine months ended September 30, 1996
Liquidity and Capital Resources
At September 30, 1996, the Company had cash of approximately $983,000 which
was invested in an interest bearing account. Of this amount, approximately
$458,000 represented a working capital reserve, $353,772 was reserved to pay
the quarterly dividend in November 1996 and the balance was reserved for
operations.
The Company expects sufficient cash flow to be generated from operations to
meet its current operating and debt service requirements on a short-term and
long-term basis. The Company's only significant liabilities are mortgages
aggregating approximately $15,421,294, maturing at various dates in
approximately four to six years. The Company anticipates satisfying these
mortgages with the proceeds of refinancings or sales of the underlying
properties.
Results of Operations
Net income for the nine months ended September 30, 1996 approximated that
of the corresponding period in 1995. Interest income increased in 1996 as a
result of the increase in cash available for investment. The working capital
reserve has been increasing due to the increase in rental income from the
Circuit City building which increase became effective March 1, 1995. The
Company completed the property acquisition stage of its life cycle in 1992 and
has been in the portfolio management stage since the beginning of 1993.
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1996 Annual Meeting of Shareholders was convened on
August 15, 1996. At the Meeting, the following Trustees were elected to hold
office until the next annual meeting of shareholders, with the number of "For"
and "Withheld" votes cast in respect of each Trustee set forth opposite his
name:
<TABLE>
<CAPTION>
Name For Withheld
<S> <C> <C>
James C. Cowles 516,023 4,250
Richard S. Ellwood 517,023 3,250
Edward Lowenthal 517,023 3,250
Mark Sandler 517,023 3,250
Stephen J. Treadway 516,523 3,750
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Commission dated October 7,
1996 to report under Item 5, Other Events, that the Company had entered into
preliminary discussions regarding the potential sale of the Company's portfolio
of real estate investment properties.
<PAGE>
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.
CORPORATE REALTY INCOME TRUST I
(Registrant)
Dated: November 13, 1996 By: James C. Cowles
Chairman, President, and Treasurer
Dated: November 13, 1996 By: Valerie A. St. John
Controller
<PAGE>
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.
CORPORATE REALTY INCOME TRUST I
(Registrant)
Dated: November 13, 1996 By:
Chairman, President, and Treasurer
Dated: November 13, 1996 By:
Controller
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
CORPORATE REALTY INCOME TRUST I
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED
SEPTMEBER 30, 1996 AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE^
M
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 983,508
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 991,697
<PP&E> 32,600,000
<DEPRECIATION> 4,855,264
<TOTAL-ASSETS> 30,807,184
<CURRENT-LIABILITIES> 525,376
<BONDS> 0
0
0
<COMMON> 101,078
<OTHER-SE> 14,860,514
<TOTAL-LIABILITY-AND-EQUITY> 30,807,184
<SALES> 855,818
<TOTAL-REVENUES> 868,629
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 291,287
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 352,032
<INCOME-PRETAX> 225,310
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 225,310
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
<PAGE>
</TABLE>
