<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
------------------
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 0-24594
WEST COAST REALTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4246740
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5933 W. CENTURY BLVD. 9TH, FLOOR
LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Zip Code)
(310) 670-0800
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. 2,927,967 SHARES
OUTSTANDING AS OF NOVEMBER 15, 1999.
1
<PAGE> 2
WEST COAST REALTY INVESTORS, INC.
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
Item 1. Consolidated Financial Statements
Balance Sheets -
September 30, 1999 and December 31, 1998 3
Statements of Stockholders' Equity -
Nine Months Ended September 30, 1998 and 1999 4
Statements of Income -
Three Months and Nine Months Ended
September 30, 1998 and 1999 5
Statements of Cash Flows -
Nine Months Ended September 30, 1998 and 1999 6
Summary of Accounting Policies 7
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 27
Item 2. Changes in Securities 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibit and Reports on Form 8-K 27
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
WEST COAST REALTY INVESTORS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 December 31, 1998
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Rental real estate, less accumulated
depreciation (Note 1) $ 45,965,888 $ 35,870,984
Cash and cash equivalents 2,297,136 4,594,587
Deferred rent 547,666 426,878
Loan origination fees, net of accumulated
amortization of $94,151 and $71,084 237,246 217,316
Other assets (Note 2) 279,382 145,907
------------ ------------
TOTAL ASSETS $ 49,327,318 $ 41,255,672
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 37,958 $ 34,542
Due to related party(Note 4(e)) 74,144 56,349
Dividends payable (Notes 7 and 9) 468,474 --
Security deposits and prepaid rent 418,165 324,041
Other liabilities 192,954 119,792
Notes payable (Note 5) 24,742,509 16,686,668
------------ ------------
TOTAL LIABILITIES 25,934,204 17,221,392
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $.01 par-shares authorized,
5,000,000 shares issued, 2,927,967 and 2,932,762
shares outstanding in 1999 and 1998, respectively 29,280 29,328
Additional paid-in capital 26,665,739 26,495,731
Dividends in excess of retained earnings (Note 7) (3,301,905) (2,490,779)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 23,393,114 24,034,280
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 49,327,318 $ 41,255,672
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
DIVIDENDS IN
ADDITIONAL EXCESS OF
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 2,932,762 $ 29,328 $ 26,495,731 $(2,490,779)
Treasury stock (4,795) (48) (47,764) --
Equity contribution by Affiliates through expense
reimbursements (Note 4(f)) -- -- 217,772 --
Net income -- -- -- 595,065
Dividends declared (Note 7) -- -- -- (1,406,191)
---------- -------- ------------ -----------
BALANCE AT SEPTEMBER 30, 1999 2,297,967 $ 29,280 $ 26,665,739 $(3,301,905)
========== ======== ============ ===========
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
DIVIDENDS IN
ADDITIONAL EXCESS OF
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 2,163,561 $ 21,635 $ 19,313,678 $(1,482,350)
Treasury stock (15,678) (157) (156,619) --
Issuance of stock, net 784,879 7,850 7,313,242 --
Equity contribution by Affiliates through
expense reimbursements (Note 4(f)) -- -- 181,675 --
Net income -- -- -- 521,038
Dividends declared (Note 7) -- -- -- (1,332,122)
---------- -------- ------------ -----------
BALANCE AT SEPTEMBER 30, 1998 2,932,762 $ 29,328 $ 26,651,976 $(2,293,434)
========== ======== ============ ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS Three Months NINE MONTHS Nine Months
ENDED Ended ENDED Ended
SEPTEMBER 30, September 30, SEPTEMBER 30, September 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Rental $1,336,411 $ 920,421 $3,769,539 $2,583,683
Interest 24,392 67,371 71,003 129,445
---------- ---------- ---------- ----------
1,360,803 987,792 3,840,542 2,713,128
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Operating 65,567 45,968 130,815 113,728
Property taxes 50,093 28,201 119,991 79,827
Property management
fees-related party (Note 4 (d)) 52,994 32,627 142,259 91,911
Interest 487,540 312,311 1,313,080 783,082
General and administrative 91,266 146,575 985,251 583,395
Depreciation and amortization 195,260 188,414 554,081 540,147
---------- ---------- ---------- ----------
942,720 754,096 3,245,477 2,192,090
---------- ---------- ---------- ----------
NET INCOME $ 418,083 $ 233,696 $ 595,065 $ 521,038
========== ========== ========== ==========
NET INCOME PER SHARE (NOTE 7) $ .14 $ .08 $ .20 $ .20
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS Nine Months
ENDED Ended
SEPTEMBER 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 595,065 $ 521,038
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 531,014 527,322
Interest expense due to amortization of loan origination fees 23,067 12,825
Increase (decrease) from changes in:
Deferred rent receivable (120,788) (100,446)
Other assets (133,475) (163,992)
Accounts payable 3,416 (105,545)
Due to related party 17,795 79,368
Security deposits and prepaid rent 94,124 (36,411)
Other liabilities 73,162 15,305
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,083,380 749,464
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of rental real estate (10,625,919) (6,743,346)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (10,625,919) (6,743,346)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net -- 7,164,296
Repurchase of treasury stock (47,812) --
Equity contribution by Affiliates through expense reimbursements 217,772 181,675
Dividends paid (937,716) (892,208)
Proceeds from notes payable 8,375,870 4,375,000
Payments on notes payable (320,030) (199,470)
Increase in loan origination fees (42,996) (115,631)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,245,088 10,513,662
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,297,451) 4,519,780
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,594,587 2,099,857
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,297,136 $ 6,619,637
============ ============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
WEST COAST REALTY INVESTORS, INC.
SUMMARY OF ACCOUNTING POLICIES
BUSINESS
West Coast Realty Investors, Inc. (the "Company"), is a corporation formed on
October 26, 1989 under the laws of the State of Delaware. The Company exists as
a Real Estate Investment Trust ("REIT") under Sections 856 to 860 of the
Internal Revenue Code. The Company has complied with all requirements imposed on
REIT's for 1998, 1997, and 1996 tax years; however, qualification as a REIT for
future years is dependent upon future operations of the Company. The Company was
organized to acquire interests in income-producing residential, industrial,
retail and commercial properties located primarily in California and the west
coast of the United States. The Company intends to acquire property for cash or
on a moderately leveraged basis with aggregate mortgage indebtedness not to
exceed fifty percent of the purchase price of all properties on a combined
basis, or eighty percent individually and intends on owning and operating such
properties for investment purposes, over an anticipated holding period of five
to ten years.
RENTAL REAL ESTATE AND DEPRECIATION
Assets are stated at lower of cost or net realizable value. Depreciation is
computed using the straight-line method over their estimated useful lives of
31.5 to 39 years for financial and income tax reporting purposes.
In the event that facts and circumstances indicate that the cost of an asset may
be impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset would be compared to the carrying amount to determine if a
write-down to market value is required.
PRESENTATION OF INTERIM INFORMATION
In the opinion of the Advisor of West Coast Realty Investors, Inc. (the
"Company"), the accompanying unaudited financial statements include all normal
adjustments considered necessary to present fairly the financial position as of
September 30, 1999, and the results of operations and cash flows for the three
and nine months ended September 30, 1999 and 1998. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10Q, and
do not contain certain information included in the Company's audited financial
statements and notes for the fiscal year ended December 31, 1998.
7
<PAGE> 8
WEST COAST REALTY INVESTORS, INC.
SUMMARY OF ACCOUNTING POLICIES
RENTAL INCOME
Rental revenue is recognized on a straight-line basis to the extent that rental
income is deemed collectible. Where there is uncertainty of collecting higher
scheduled rental amounts, due to the tendency of tenants to renegotiate their
leases for lower amounts, rental income is recognized as amounts are collected.
ACQUISITION COSTS
The Company began expensing internal acquisition costs in accordance with
Emerging Issues Task Force 97-11, "Accounting for Internal Costs Relating to
Real Estate Property Acquisitions" which was issued in March 1998. Acquisition
costs are paid to an affiliate, West Coast Realty Advisors, "WCRA" who incurs
such internal acquisition costs. Prior to this, the Company capitalized internal
acquisition costs and included it as part of the cost of the property.
LOAN ORIGINATION FEES
Loan origination fees are capitalized and amortized over the life of the loan.
CASH AND CASH EQUIVALENTS
The Company considers cash in the bank, liquid money market funds, and all
highly liquid certificates of deposit, with original maturities of three months
or less, to be cash and cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NET INCOME PER SHARE
Net income per share is calculated by dividing the net income by the weighted
average number of shares outstanding for the period.
8
<PAGE> 9
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 1 - RENTAL PROPERTIES
The Company owns the following income-producing properties:
<TABLE>
<CAPTION>
Original
Acquisition
Location (Property Name) Date Purchased Cost
- ------------------------ ----------------- -----------
<S> <C> <C>
Huntington Beach, California (Blockbuster) February 26, 1991 $ 1,676,210
Fresno, California May 14, 1993 1,414,893
Huntington Beach, California (OPTO-22) September 15,1993 2,628,985
Riverside, California November 29, 1994 3,655,500
Tustin, California (Safeguard) May 22, 1995 4,862,094
Fremont, California (Technology Drive) October 31, 1995 3,747,610
Sacramento, California (Java City) August 2, 1996 1,828,500
Irvine, California (Tycom) January 17, 1997 4,907,440
Roseville, California (Applebee's) October 31, 1997 1,976,484
Corona, California December 31, 1997 1,904,452
Sacramento, California (Horn Road) January 15, 1998 2,141,200
Chino, California April 19, 1998 1,859,338
Vacaville, California May 20, 1998 2,735,308
Cerritos, California December 23, 1998 2,314,569
Ontario, California January 12, 1999 4,614,964
Folsom, California May 1, 1999 6,010,955
</TABLE>
The major categories of property are:
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Land $ 16,318,836 $ 12,576,130
Buildings and improvements 31,959,666 25,076,453
------------ ------------
48,278,502 37,652,583
Less accumulated depreciation (2,312,614) (1,781,599)
------------ ------------
Net rental properties $ 45,965,888 $ 35,870,984
============ ============
</TABLE>
9
<PAGE> 10
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 1 - RENTAL PROPERTIES (CONTINUED)
A significant portion of the Company's rental revenue was earned from tenants
whose individual rents represented more than 10% of total rental revenue.
Specifically:
Two tenants accounted for 11.7% and 11.2% of total rental revenue for the nine
months ended September 30, 1999.
Four tenants accounted for 19%, 16%, 13%, and 13% of total rental revenue for
the nine months ended September 30, 1998.
Four tenants accounted for 20%, 16%, 16%, and 15% of total rental revenue for
the nine months ended September 30, 1997;
NOTE 2 - OTHER ASSETS
Other assets consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
Rent receivable $203,977 $ --
Leasing commissions 35,282 --
Deposits and prepaid expenses 40,123 145,907
-------- --------
Total Other Assets $279,382 $145,907
======== ========
</TABLE>
NOTE 3 - FUTURE MINIMUM RENTAL INCOME
As of September 30, 1999 and December 31, 1998, future minimum rental income
under the existing leases that have remaining noncancelable terms in excess of
one year are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31,1998
------------------ ----------------
<S> <C> <C>
1999 ................................ $ 1,433,101 $ 4,331,729
2000 ................................ 5,020,425 4,359,497
2001 ................................ 4,755,052 4,080,478
2002 ................................ 4,209,103 3,625,884
2003 ................................ 3,591,498 3,007,277
Thereafter .......................... 16,287,487 14,537,356
----------- -----------
Total ............................... $35,296,666 $33,942,221
=========== ===========
</TABLE>
Future minimum rental income does not include lease renewals or new leases that
may result after a noncancelable-lease expires.
10
<PAGE> 11
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998(UNAUDITED)
AND DECEMBER 31, 1998
NOTE 4 - RELATED PARTY TRANSACTIONS
Sales commissions and wholesaling fees, representing 7% of the gross proceeds
from the sale of common shares, were paid to Associated Securities Corp.
("ASC"), a member of the National Association of Securities Dealers, Inc.
("NASD") and an affiliate of the Advisor.
The Advisor has an agreement with the Company to provide advice on investments
and to administer the day-to-day operations of the Company. At September 30,
1999 the Advisor owned 22,556 shares of the Company. Property management
services for the Company's properties are provided by West Coast Realty
Management, Inc. ("WCRM"), an affiliate of the Advisor.
Certain officers and directors of the Company are also officers and directors of
the Advisor and its affiliates.
During the periods presented, the Company had the following related party
transactions:
(a) In accordance with the advisory agreement, compensation earned by,
or services reimbursed or reimbursable to the advisor, consisted of the
following:
<TABLE>
<CAPTION>
NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ ------------------
<S> <C> <C>
Syndication fees $ -- $225,176
Acquisition fees and financing fees 682,414 639,398
Overhead expenses 18,000 24,000
-------- --------
$700,414 $888,574
======== ========
</TABLE>
(b) At September 30, 1999 and December 31, 1998, the Advisor owned
22,556 shares of the issued and outstanding shares of the Company.
(c) Sales commissions paid in accordance with the selling agreement to
ASC totaled $0 for the nine months ended September 30, 1999 and $422,510 for the
nine months ended September 30, 1998.
11
<PAGE> 12
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 4 - RELATED PARTY TRANSACTIONS (CONTINUED)
(d) Property management fees earned by WCRM totaled $52,994 and $32,627
for the three months ended September 30, 1999 and 1998, respectively. For the
nine months ended September 30, 1999 and 1998, WCRM earned $142,259 and $91,911,
respectively, in property management fees.
(e) The Corporation had related party accounts payable as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
Associated Securities Corp. $15,150 $16,697
West Coast Realty Management 52,994 33,652
West Coast Realty Advisors 6,000 6,000
------- -------
$74,144 $56,349
======= =======
</TABLE>
(f) Advisory fees earned by WCRA totaled $217,772 and $196,675 for the
nine months ended September 30, 1999 and 1998, respectively. WCRA waived
collection of $217,772, (or 100%) and $181,675, (or 92%) respectively, of these
fees which are included in additional paid-in capital.
12
<PAGE> 13
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 5 - NOTES PAYABLE
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
8.25% promissory note secured by a Deed of Trust on the Blockbuster property,
interest rate adjusted to the 5-year Treasury rate plus 350 basis points on
February 1, 1999, monthly principal and interest payments are $4,934, due
February 1, 2004 ................................................................ $ 531,447 $ 542,584
8.25% promissory note secured by a Deed of Trust on the Fresno Property, monthly
principal and interest payments are $5,244 due August 1, 2003 ................... 593,576 603,662
Variable rate promissory note secured by a Deed of Trust on the OPTO-22
property, interest rate adjustments are monthly and are based on the 11th
District cost of funds rate plus 3% (7.963% at June 30, 1999), and may never
go below 6.5% or above 11.0%, monthly principal and interest payments are
$12,794 due October 1, 2003 ..................................................... 1,647,733 1,668,449
8.25% promissory note secured by a Deed of Trust on the Riverside property,
monthly principal and interest payments are $9,988, due November 8, 2004 ........ 1,146,910 1,156,264
9.625% promissory note secured by a Deed of Trust on the Safeguard property,
monthly principal and interest payments are $24,191, due February 1, 2005 ....... 1,896,024 1,973,724
</TABLE>
13
<PAGE> 14
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 5 - NOTES PAYABLE (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
8.24% promissory note secured by a Deed of Trust on the Fremont property,
interest rate equaled the 20-year Treasury rate plus 1.65% at loan closing,
monthly principal and interest payments are currently $18,898, due
August 1, 2015 .................................................................. 1,992,680 2,036,273
10% promissory note secured by a Deed of Trust on the Java City property,
monthly principal and interest payments are $3,413, due November 1, 2001 ........ 314,625 321,124
8% promissory note secured by a Deed of Trust on the Java City property, monthly
principal and interest payments are $3,126, due June 1, 2018 .................... 361,200 367,440
Variable rate promissory note secured by a Deed of Trust on the Tycom property,
interest rate margin is 1.9% over the 3 month LIBOR with right of conversion
after the first year (7.23% at June 30, 1999), monthly payments of principal
and interest are $16,693, due June 30, 2007 ..................................... 2,239,530 2,267,479
8.33% promissory note secured by a Deed of Trust on the Roseville property,
monthly principal and interest payments are $11,510 due July 1, 2008 ............ 1,430,416 1,444,161
7.375% promissory note secured by a Deed of Trust on the Corona property,
monthly principal and interest payments are $7,309 due June 1, 2011
(rate is adjustable on the fourth and eighth anniversary years of the loan,
to the weekly average of the five-year Treasury Note yield for the seventh
week prior to the Adjustment Date plus 195 basis points, but no less
than the existing rate) ......................................................... 981,782 992,913
</TABLE>
14
<PAGE> 15
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 5 - NOTES PAYABLE (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
7.375% promissory note secured by a Deed of Trust on the Horn Road property,
monthly principal and interest are $7,309, due June 1, 2011 (rate is
adjustable on the fourth and eighth anniversary years of the loan, to the
weekly average of the five-year Treasury Note yield for the seventh week prior
to the Adjustment Date plus 195 basis points, but no less than the
existing rate) .................................................................. 981,782 992,913
7.5% promissory note secured by a Deed of Trust on the Chino property, monthly
principal and interest payments are $6,836, due October 1, 2010 (rate is
adjustable on the fourth and eighth anniversary years of the loan, to the
weekly average of the five-year Treasury Note yield for the seventh week prior
to the Adjustment Date plus 200 basis points, but no less
than the existing rate) ......................................................... 913,028 922,884
7.5% promissory note secured by a Deed of Trust on the Vacaville property,
monthly principal and interest payments are $10,346 due October 1, 2010 (rate
is adjustable on the fourth and eighth anniversary years of the loan, to the
weekly average of the five-year Treasury Note yield for the seventh week prior
to the Adjustment Date plus 200 basis points, but no less
than the existing rate) ......................................................... 1,381,885 1,396,798
7.50% promissory note secured by a Deed of Trust on the Cerritos property,
monthly principal and interest payments are $9,238 due April 1, 2011 ............ 1,242,783 --
</TABLE>
15
<PAGE> 16
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 5 - NOTES PAYABLE (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
7.50% promissory note secured by a Deed of Trust on the Ontario property,
monthly principal and interest payments are $22,390 due March 1, 2004 ........... 2,982,278 --
Variable rate promissory note secured by a Deed of Trust on the Folsom property,
interest rate margin is 1.75% over a selected LIBOR (6.75% at June 30, 1999),
monthly payments of principal and interest are approximately 28,500, due
September 1, 2001 ............................................................... 4,104,830 --
----------- -----------
$24,742,509 $16,686,668
=========== ===========
</TABLE>
The aggregate annual future maturities at September 30, 1999 and December 31,
1998 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30, 1999 DECEMBER 31, 1998
----------- ------------------ -----------------
<S> <C> <C>
1999 ............................... $ 115,876 $ 357,041
2000 ............................... 521,766 393,630
2001 ............................... 4,526,317 435,147
2002 ............................... 837,769 764,545
2003 ............................... 2,605,291 2,526,325
Thereafter ......................... 16,135,490 12,209,980
----------- -----------
Total ........................... $24,742,509 $16,686,668
=========== ===========
</TABLE>
NOTE 6 - DIVIDEND REINVESTMENT PLAN
The Company had a Dividend Reinvestment Plan (the "Plan") whereby cash dividends
were at the election of the shareholders, used to purchase additional shares of
the Company. The dividend reinvestment plan was terminated in April 1998.
16
<PAGE> 17
WEST COAST REALTY INVESTORS, INC
.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 7 - NET INCOME AND DIVIDENDS PER SHARE
Dividends are declared and accrued based approximately upon the previous
quarter's income from operations before depreciation and amortization.
Net Income Per Share for the nine months ended September 30, 1999 and 1998 was
computed using the weighted average number of outstanding shares of 2,929,885
and 2,561,114, respectively.
Dividends declared during the first nine months 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
OUTSTANDING AMOUNT TOTAL
RECORD DATE SHARES PER SHARE DIVIDEND
----------- ----------- --------- ----------
<S> <C> <C> <C>
March 31, 1999 2,932,762 $0.160 $ 469,243
June 30, 1999 2,927,967 $0.160 468,474
September 30, 1999 2,927,967 $0.160 468,474
----------
TOTAL $1,406,191
==========
</TABLE>
<TABLE>
<CAPTION>
OUTSTANDING AMOUNT TOTAL
RECORD DATE SHARES PER SHARE DIVIDEND
----------- ----------- --------- -----------
<S> <C> <C> <C>
January 1, 1998 2,149,404 $0.0666 $ 143,150
February 1, 1998 2,345,825 0.0666 156,232
March 1, 1998 2,345,825 0.0666 156,232
April 1, 1998 2,345,825 0.0558 130,897
May 1, 1998 2,590,131 0.0558 144,529
June 1, 1998 2,888,319 0.0558 161,168
September 30, 1998 2,932,762 0.1500 439,914
----------
TOTAL $1,332,122
==========
</TABLE>
NOTE 8 - LITIGATION
The Company is, from time to time, involved in legal proceedings, claims and
litigation arising in the ordinary course of business. While the amounts claimed
may be substantial, the ultimate liability cannot presently be determined
because of considerable uncertainties that exist. Therefore, it is possible the
outcome of such legal proceedings, claim and litigation could have a material
effect on quarterly or annual operating results or cash flows when resolved in a
future period. However, based on facts currently available, management believes
such matters will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.
17
<PAGE> 18
WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND DECEMBER 31, 1998
NOTE 9 - SUBSEQUENT EVENTS
(a) On October 22, 1999, the Company paid dividends totaling $468,474 ($0.160
per share), payable to shareholders of record as of September 30, 1999 (Note 7).
18
<PAGE> 19
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements in the Management Discussion and Analysis constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements,
expressed or implied by such forward-looking statements.
INTRODUCTION
West Coast Realty Investors, Inc. (the "Company"), was organized in October 1989
under the laws of the State of Delaware. The Company qualifies as a Real Estate
Investment Trust ("REIT") for federal and state income tax purposes. The Company
is advised by West Coast Realty Advisors, Inc. (the "Advisor"), a wholly-owned
subsidiary of Associated Financial Group, Inc. The Advisor will oversee the
investments of the Company, subject to the direction of the Company's Board of
Directors.
The Company is organized for the purpose of investing in, holding, and managing
income-producing retail or commercial properties located in California and on
the west coast of the United States. Properties have been and will be acquired
for cash or on a moderately leveraged basis with aggregate mortgage indebtedness
not to exceed fifty percent of the purchase price of all properties on a
combined basis or eighty percent individually. The Company intended on holding
each property for approximately seven to ten years.
The Company's principal goals are to:
1. Invest in properties which will preserve and protect capital;
2. Provide shareholders with cash dividends, a portion of which will not
constitute taxable income;
3. Provide capital gains through potential appreciation of properties.
The ownership and operation of any income-producing real estate is subject to
those risks inherent in all real estate investments, including national and
local economic conditions, the supply and demand for similar types of real
property, competitive marketing conditions, zoning changes, possible casualty
losses, and increases in real estate taxes, assessments, and operating expenses,
as well as others.
19
<PAGE> 20
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
INTRODUCTION (CONTINUED)
In addition, the Company is subject to the usual competitive factors that are
common in real estate including new construction, changes in the economy, and
vacancy factors at other rental real estate locations.
The Company is operated by the Advisor, subject to the terms of the Amended
Advisory Agreement dated January 1, 1992, which was renewed until June 30, 2000
by a majority vote of the shareholders, and will thereafter be renewable
annually with the approval of a majority of the shareholders. The Company has no
employees, and all administrative services are provided by the Advisor.
RESULTS OF OPERATIONS - 9 MONTHS ENDED SEPTEMBER 30, 1999 VS. 9 MONTHS ENDED
SEPTEMBER 30, 1998
Operations for the nine months ended September 30, 1999 represented a full nine
months of rental operations for all properties except Ontario property which was
acquired on January 12, 1999 and the Folsom property which was acquired on May
1, 1999.
Rental revenue increased $1,185,856 (45.9%) due to a full nine months ownership
of the Sacramento (Horn Road), Chino, Vacaville and Cerritos, properties and
partial ownership of the Ontario and Folsom properties (as compared to partial
or no ownership of these properties during the nine months ended September 30,
1998). Interest income decreased $58,442 (45.1%) due to lower cash balances
maintained in money market accounts during the nine months ended September 30,
1999 compared to the nine months ended September 30, 1998.
20
<PAGE> 21
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - 9 MONTHS ENDED SEPTEMBER 30, 1999 VS. 9 MONTHS ENDED
SEPTEMBER 30, 1998 (CONTINUED)
Operating expenses increased $17,087 (15.0%) primarily due to increases in
leasing commissions, common area maintenance and property insurance during the
nine months ended September 30, 1999 compared to the nine months ended September
30, 1998. Interest expense increased $529,998 (67.7%) due to the additional debt
incurred in connection with property acquisitions and refinancing activities.
Despite the debt amounts, the Company is still below the maximum 50% aggregate
debt to appraised property value ratio that is allowed by the Company's by-laws.
General and administrative costs increased $401,856 (68.9%) due primarily to
acquisition and refinancing fees of $682,414 expended in connection with
additional property refinancing and acquisitions. Acquisition costs were
previously capitalized as part of the cost of the property. The Company was
required to begin expensing acquisition fees in accordance with the Emerging
Issues Task Force 97-11 "Accounting for Internal Costs Relating to Real Estate
Property Acquisitions". Depreciation and amortization expense increased $13,934
(2.6%) as the result of the ownership of additional properties during 1999 as
compared to 1998. Net income of $595,065 for the nine months ended September 30,
1999 was $74,027 (14.2%) higher than the nine months ended September 30, 1998.
This increase in net income is primarily attributable to the increased revenue
in connection with the acquisition of additional properties, offset by $682,414
of acquisition and refinancing fees expensed in connection with the additional
property acquisitions, which were previously part of the cost of the property.
The average number of shares outstanding during 1999 was 2,929,885 vs. 2,561,114
in 1998. Primarily due to the expensing of $682,414 in acquisition and
refinancing fees and partly because of the greater number of shares outstanding,
net income per share remained unchanged at $.20 for the nine months ended
September 30, 1999 and 1998. If this figure is analyzed using flow of funds -
that is net income plus depreciation expense, plus adding acquisition and
refinancing fees which was incurred in 1999 and 1998 - then the amount in 1999
was $.63 per share vs. $.53 per share in 1998.
During the nine months ended September 30, 1999, the Company declared dividends
totaling $1,406,191, compared to dividends of $1,332,122 declared for the nine
months ended September 30, 1998. Cash basis income for the nine months ended
September 30, 1999 was $1,149,146. This was derived by adding depreciation and
amortization expense to net income. Thus, cash dividends declared during the
nine months ended September 30, 1999 were $257,045 greater than cash basis net
income. In comparison, cash dividends declared in the first nine months of 1998
were $270,937 greater than cash basis income of $1,061,185. In either event, the
Company continued to qualify as a REIT in 1999, and liquidity of the Company
continues to be strong.
21
<PAGE> 22
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - 3 MONTHS ENDED SEPTEMBER 30, 1999 VS. 3 MONTHS ENDED
SEPTEMBER 30, 1998
Operations for the three months ended September 30, 1999 represented a full
quarter of rental operations for all properties.
Rental revenue increased $415,990 (45.2%) due to a full quarter ownership of the
Cerritos, Ontario and Folsom properties during the quarter ended September 30,
1999 (as compared to no or partial ownership of these properties during the
quarter ended September 30, 1998). Interest income decreased $42,979 (63.8%) due
to lower cash balances maintained in money market accounts during the quarter
ended September 30, 1999 compared to the quarter ended September 30, 1998.
Operating expenses increased $19,599 (42.6%). This increase was primarily the
result of additional property insurance and property leasing commissions, offset
by lower common area maintenance charges during the quarter ended September 30,
1999, compared to the quarter ended September 30, 1998. Interest expense
increased $175,229 (56.1%) due to the additional debt incurred in connection
with property acquisitions and refinancing activities. Despite the debt amounts,
the Company is still below the maximum 50% aggregate debt to appraised property
value ratio that is allowed by the Company's by-laws. General and administrative
costs decreased $55,309 (37.7%) from the quarter ended September 30, 1998 to
September 30, 1999, due primarily to a $43,750 decrease in acquisition and
refinancing fees expended in connection with additional property acquisitions.
Acquisition fees were previously capitalized as part of the cost of the
property. The Company was required to begin expensing acquisition fees in
accordance with the Emerging Issues Task Force 97-11 "Accounting for Internal
Costs Relating to Real Estate Property Acquisitions".
Depreciation and amortization expense increased $6,846 (3.6%) from the quarter
ended September 30, 1998, compared to the quarter ended September 30, 1999 due
to the ownership of additional properties in 1999. Net income of $418,083 for
the quarter ended September 30, 1999 was $184,387 (78.9%) higher than the
quarter ended September 30, 1998. This increase in net income is primarily
attributable to a $415,990 increase in rental revenue in connection with the
acquisition of additional properties, offset by a $175,229 increase in interest
expense due to the additional debt incurred in connection with property
acquisitions and refinancing activities.
22
<PAGE> 23
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS - 3 MONTHS ENDED SEPTEMBER 30, 1999 VS. 3 MONTHS ENDED
SEPTEMBER 30, 1998 (CONTINUED)
The average number of shares outstanding during the quarter ending September 30,
1999 was 2,927,967 vs. 2,921,651 for the quarter ending September 30, 1998.
Despite the greater number of shares outstanding, the net income per share
increased from $.08 for the quarter ended September 30, 1998 to $.14 for the
quarter ended September 30, 1999. If this figure is analyzed using flow of funds
- - that is net income plus depreciation expense, plus adding acquisition fee
expense which was incurred in the third quarter 1998 - then the amount for the
quarter ended September 30, 1999 would be $.21 per share vs. $.16 per share for
the quarter ended September 30, 1998.
During the quarter ended September 30, 1999, the Company declared dividends
totaling $468,474, compared to dividends of $439,914 declared for the quarter
ended September 30, 1998. Cash basis income for the quarter ended September 30,
1999 was $613,343. This was derived by adding depreciation and amortization
expense to net income. Thus, dividends declared during the quarter ended
September 30, 1999 were $144,868 less than cash basis net income. In comparison,
dividends declared for the quarter ended September 30, 1998 were $17,804 greater
than cash basis income of $422,110. In either event, the Company continued to
qualify as a REIT in 1999, and liquidity of the Company continues to be strong.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1999, the Company declared dividends
totaling $1,406,191, compared to the nine months ended September 30, 1998, when
the Company declared dividends totaling $1,332,122. Dividends are determined by
management based on cash flows and the liquidity position of the Company. It is
the intention of management to declare dividends, subject to the maintenance of
reasonable reserves.
The Company has used the net proceeds from its offerings to purchase additional
income-producing properties and to add to the cash reserve balances of the
Company. Since the fourth and latest offering expired on April 22, 1998, the
Company did not raise additional net proceeds as the result of the sale of
shares for the nine months ended September 30, 1999. In contrast, during the
nine months ended September 30, 1998, the Company raised $7,164,296 in net
proceeds as the result of the sale of shares from its fourth offering.
23
<PAGE> 24
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Management uses cash as its primary measure of the Company's liquidity. The
amount of cash that represents adequate liquidity for a real estate investment
company, is dependent on several factors. Among them are:
1. Relative risk of the Company's operations;
2. Condition of the Company's properties;
3. Stage in the Company's operating cycle (e.g., money-raising, acquisition,
operating or disposition phase); and
4. Shareholders dividends.
The Company is adequately liquid and management believes it has the ability to
generate sufficient cash to meet both short-term and long-term liquidity needs,
based upon the above four factors.
The first factor refers to the risk of the Company's investments. At September
30, 1999, the Company's excess funds were invested in a short-term money market
fund. The Company acquires rental property either entirely for cash or with
moderate financing. During the nine months ended September 30, 1999, notes
payable pertaining to property acquisitions by the Company increased by
$8,375,870, while cash used in principal repayments of notes totaled $320,030.
Although the notes are set up on an amortization schedule allowing for the
repayment of principal over time, most of the principal on the notes is due in
balloon payments that come due in the years 2001 through 2011. The Company is
aware that the balloon payments must be avoided through refinancing of the loans
or the sale of the property(ies) in order to protect the interests of the
Company's shareholders. Furthermore, most of the properties' tenants are
nationally known retailers or well-established businesses under long-term
leases.
The second factor refers to the condition of the Company's properties. The
Company's properties are in good condition without significant deferred
maintenance obligations and are leased under "triple-net" leases, which reduces
the Company's risk pertaining to excessive maintenance and operating costs.
24
<PAGE> 25
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The third factor refers to operating cycle. The Company was liquid at September
30, 1999 since the Company is still in the "operating" stage. Virtually all
funds raised were invested in short-term money market funds. At September 30,
1999, the Company has allocated approximately $450,000 towards a "reserve" fund
(3% of gross funds raised, as disclosed in the Company's latest prospectus),
$468,000 of cash held pending dividend distribution to the investors, $178,000
of cash to be paid for current mortgage and accounts payable commitments,
$418,000 in tenant security deposits and prepaid rents, and the
balance-approximately $783,000-expected to be invested in future property
acquisitions. The Company's operations generated $1,149,146 in net operating
cash flow during the nine months ended September 30, 1999 (net income plus
depreciation and amortization expense). Thus, the Company is generating
significant amounts of cash flow and could withhold payment of all or a portion
of dividends, if necessary, in order to rebuild cash balances.
The fourth factor refers to distribution of dividends to shareholders. Dividends
to shareholders were made at a level consistent with the amount of net income
available after application of expenses. The Advisor is careful not to make
distributions in excess of the available income.
Inflation and changing prices have not had a material effect on the Company's
operations. Operations in the near future may be materially affected as and when
the Company acquires additional property.
The Company currently has no external sources of liquidity, other than funds
that potentially could be received from the sale of additional shares. The
Company currently has no material capital commitments.
CASH FLOWS - SEPTEMBER 30, 1999 VS. SEPTEMBER 30, 1998
Cash resources decreased $2,297,451 during the nine months ended September 30,
1999 compared to a $4,519,780 increase in cash resources for the nine months
ended September 30 1998. Cash provided by operating activities amounted to
$1,083,380 with the largest contributor being $1,149,146 in cash basis net
income for the nine months ended September 30, 1999. In contrast, the nine
months ended September 30, 1998 provided $749,464 in cash from operating
activities with the largest contributor being $1,061,185 in cash basis net
income.
25
<PAGE> 26
WEST COAST REALTY INVESTORS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
CASH FLOWS - SEPTEMBER 30, 1999 VS. SEPTEMBER 30, 1998 (CONTINUED)
The sole use of cash in investing activities for the nine months ended September
30, 1999 was $10,625,919 expended for the acquisition of two additional
properties located in Ontario and Folsom, California. In contrast, the nine
months ended September 30, 1998 used $6,743,346 in cash for investing in
connection with the acquisition of three additional properties located in
Sacramento (Horn Rd.), Chino and Vacaville, California. For the nine months
ended September 30, 1999, financing activities provided an additional $7,245,088
due to $8,375,870 in financing obtained in connection with the acquisition of
the Cerritos, Ontario and Folsom, California properties, offset by dividends
paid of $937,716, repayments on notes payable of $320,030, repurchase of
treasury stock of $47,812 and an increase in loan origination fees of $42,996.
In contrast, for the nine months ended September 30, 1998, financing activities
provided an additional $10,513,662 via the sale of additional shares in the
Company ($7,164,296 in net proceeds), plus $4,375,000 due to the refinancing of
purchased income-producing properties located in Corona, Sacramento, Roseville
and Chino, California, less dividends paid of $892,208, less repayments on notes
payable of $199,470 and less in increase in loan origination fees of $115,631.
IMPACT OF YEAR 2000
Many existing computer systems and applications, and other control devices, use
only two digits to identify a year in the date field, without considering the
impact of the upcoming change in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. The Company relies on its
systems, applications and devices in operating and monitoring all major aspects
of its business, including financial systems (such as general ledger, accounts
receivable, accounts payable and shareholder servicing), and embedded computer
chips, networks and telecommunications equipment and end products. The Company
also relies, directly and indirectly, on external systems of business
enterprises such as its advisor, lessees, suppliers, creditors, financial
organizations, and of governmental entities for accurate exchange of data. The
Company's current estimate is that the costs associated with the year 2000 issue
will not have a material adverse effect on the results of operations or
financial position of the Company. However, despite the Company's efforts to
address the year 2000 impact on its internal systems, the Company may not have
fully identified such impact or whether it can resolve it without disruption of
its business and without incurring significant expense. In addition, even if the
internal systems of the Company are not materially affected by the year 2000
issue, the Company could be affected through disruption in the operations of the
enterprises with which the Company interacts.
26
<PAGE> 27
WEST COAST REALTY INVESTORS, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit entitled JOHN LONBERG; RUTHEE GOLDKORN
V. SANBORN THEATERS, INC.; SALTS, TROUTMAN AND KANESHIRO, INC.; WEST COAST
REALTY INVESTORS, INC., in the U.S. District Court for the Central District of
California. (Case #CV-97-6598AHM(JGx)
The Company was added as a defendant in the plaintiff's First Amended Complaint
filed May 7, 1998, apparently due to the Company's status as landlord for a
movie theater known as the Riverside Market Place Cinema.
The plaintiffs alleged violations of the federal Americans with Disabilities Act
and the California Unruh Civil Rights Act with respect to their movie-going
experiences, including inadequate physical accommodations for wheelchair-bound
guests and insensitive theater personnel. Sanborn is the tenant and theater
operator. Troutman is the architect who designed the theater and its interiors.
The plaintiffs seek actual damages of $1,000 for each violation of law; three
times actual damages; and attorneys fees, expenses and costs. The plaintiffs
also seek mandatory injunctive relief requiring the defendants to make the
theater accessible to and useable by disabled individuals.
The plaintiffs have agreed to dismiss their claim under the Unruh Civil Rights
Act.
The U.S. Department of Justice, Civil Rights Division ("DOJ") filed a Motion to
Invervene in the case on March 1, 1999. DOJ has sued Sanborn Theaters only and
preliminary discussions have been held between the DOJ and Sanborn. Sanborn
intends to vigorously defend the allegations contained in the lawsuit. On June
9, 1999, all parties stipulated to a stay of the present case until resolution
of a similar case, entitled U.S.A v. AMC Entertainment, Inc. and American
Multi-Cinema, Inc. CV-99-01034-MMM(SHx), also filed in the U.S. District Court
for the Central District of California. The Company believes that the lawsuit
will not have a material impact on the Company's continuing operations or
overall financial condition.
ITEM 2. CHANGES IN SECURITIES
None
27
<PAGE> 28
WEST COAST REALTY INVESTORS, INC.
PART II - OTHER INFORMATION (CONTINUED)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Information required under this section has been included in the
financial statements.
- Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
28
<PAGE> 29
WEST COAST REALTY INVESTORS, INC.
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.
WEST COAST REALTY INVESTORS, INC.
(Registrant)
Date: November 15, 1999 /s/ W. THOMAS MAUDLIN JR.
----------------------------------
W. THOMAS MAUDLIN JR.
(Director, President and
Principal Executive Officer)
Date: November 15, 1999 /s/ JOHN R. LINDSEY
----------------------------------
JOHN R. LINDSEY
(Vice President/Treasurer,
Principal Financial Officer, and
Principal Accounting Officer)
29
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,297,136
<SECURITIES> 0
<RECEIVABLES> 203,977
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,541,236
<PP&E> 48,278,502
<DEPRECIATION> (2,312,614)
<TOTAL-ASSETS> 49,327,318
<CURRENT-LIABILITIES> 1,192,152
<BONDS> 24,742,509
0
0
<COMMON> 29,280
<OTHER-SE> 23,363,834
<TOTAL-LIABILITY-AND-EQUITY> 49,327,318
<SALES> 3,769,539
<TOTAL-REVENUES> 3,840,542
<CGS> 1,932,397
<TOTAL-COSTS> 1,932,397
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,313,080
<INCOME-PRETAX> 595,065
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 595,065
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
</TABLE>
