SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended: March 31, 1996
Commission File Number: 1-12358
COLONIAL PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Alabama 59-7007599
(State of organization) (IRS Employer Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(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 ___
As of May 13, 1996 Colonial Properties Trust had 17,654,823 Common Shares
of Beneficial Interest outstanding.
<PAGE>
COLONIAL PROPERTIES TRUST
INDEX TO FORM 10-Q
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
March 31, 1996 and December 31, 1995
Consolidated Condensed Statements of Income for the
Three Months Ended March 31, 1996 and 1995
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended March 31, 1996 and 1995
Notes to Consolidated Condensed Financial Statements
Report of Independent Accountants
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
<PAGE>
<TABLE>
COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED BALANCE SHEETS
--------------------
<CAPTION>
March 31,1996 December 31,
(Unaudited) 1995
------------ ------------
ASSETS
<S> <C> <C>
Land, buildings,
& equipment, net ............................... $ 622,769,854 $ 624,517,030
Undeveloped land and
construction in progress ....................... 55,063,722 32,640,381
Cash and equivalents ........................... 8,255,258 1,588,197
Restricted cash ................................ 2,092,089 2,079,796
Accounts receivable, net ....................... 1,571,226 2,282,428
Prepaid expenses ............................... 3,572,059 3,700,278
Deferred debt and
lease costs, net ............................... 3,313,014 3,452,044
Inv in partnerships and
partially-owned corporations ................... 5,669,759 5,890,233
Other assets ................................... 5,136,819 4,971,667
------------- -------------
$ 707,443,800 $ 681,122,054
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages
payable ........................................ $ 274,609,531 $ 354,099,770
Accounts payable ............................... 13,509,256 11,601,811
Accrued interest ............................... 695,032 957,518
Accrued expenses ............................... 3,293,758 1,125,514
Tenant deposits ................................ 2,427,771 2,401,604
Unearned rent .................................. 417,864 843,642
------------- -------------
Total liabilities ........................... 294,953,212 371,029,859
------------- -------------
Minority Interest .............................. 130,223,279 119,199,440
------------- -------------
Common Shares of Beneficial
Interest,$.01 par value,
50,000,000 shares authorized;
17,646,948 and 13,044,935 shares
issued and outstanding at March 31,1996
and December 31, 1995, respectively ............. 176,469 130,449
Additional paid in Capital ....................... 300,436,216 205,884,198
Cumulative Earnings .............................. 28,849,468 23,261,761
Cumulative Distributions ......................... (46,902,966) (38,080,357)
Deferred Compensation on
Restricted Shares ................................ (291,878) (303,296)
------------ ------------
Total Shareholders' Equity ......................$ 282,267,309 190,892,755
------------ ------------
707,443,800 681,122,054
============= ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
---------------------
<CAPTION>
Three Months Ended
March 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenue:
Rent ......................................... $ 28,577,480 $ 24,661,718
Other ........................................ 1,029,474 846,323
------------ ------------
Total revenue ............................. 29,606,954 25,508,041
------------ ------------
Property operating expenses before depreciation:
General operating expenses ................... 2,350,757 1,880,086
Salaries and benefits ........................ 1,853,035 1,700,243
Repairs and maintenance ...................... 2,826,857 2,291,889
Taxes, licenses, and insurance ............... 2,671,432 2,283,429
------------ ------------
Total property operating expenses
before depreciation .............................. 9,702,081 8,155,647
General and administrative ...................... 838,129 1,206,171
Depreciation .................................... 4,747,929 4,312,068
Amortization .................................... 547,085 526,668
------------ ------------
Total operating expenses .................. 15,835,224 14,200,554
------------ ------------
Income from operations .................... 13,771,730 11,307,487
------------ ------------
Other income (expense):
Interest expense ............................. (5,090,473) (6,306,237)
Income from partnerships and partially
owned corporations ........................... (1,551) 62,647
------------ ------------
Total other expense ....................... (5,092,024) (6,243,590)
------------ ------------
Income before gains from sales of property
and Minority Interest in CRLP ................ 8,679,706 5,063,897
Gains from sales of property .................... -0- 175,578
Extraordinary loss from early
extinguishment of debt .......................... (318,630) -0-
------------ ------------
Income before minority interest in CRLP ......... 8,361,076 5,239,475
Minority interest in income of CRLP ............. 2,773,369 2,394,440
------------ ------------
Net income ................................ $ 5,587,707 $ 2,845,035
============ ============
Net income per share ............................ $ 0.34 0.30
============ ============
Weighted average common shares outstanding ...... 16,535,763 9,590,808
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
-------------------
<CAPTION>
Three Months Ended
March 31,
-------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income ................................. $ 5,587,707 $ 2,845,035
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization ............ 5,295,015 4,838,736
Provision for doubtful accounts ........... 36,333 59,303
Gains from sales of property ............. -0- (175,578)
Income (loss) from partnerships and
partially-owned corporation .............. 1,551 (62,647)
Minority interest in income of CRLP ...... 2,773,369 2,394,440
Decrease (increase) in:
Restricted cash .......................... (12,293) (847,107)
Accounts receivable ...................... 674,869 773,047
Due from Affiliates ...................... -0- 4,467
Prepaid expenses ......................... 311,555 (285,469)
Other assets ............................. (528,041) (560,963)
Increase (decrease) in:
Accounts Payable ......................... 1,907,445 (352,619)
Accrued Interest ......................... (262,486) 282,664
Accrued Expenses ......................... 2,168,244 1,687,357
Tenant Deposits .......................... 26,167 64,617
Unearned Rent ............................ (425,778) 84,374
------------ ------------
Net Cash provided by operating activities ....... 17,553,657 10,749,657
------------ ------------
Cash Flows from Investing Activities:
Property Acquisition Costs paid ........... 0 (563,038)
Development Expenditures ................. (24,710,252) (2,220,512)
Tenant Improvements ....................... (95,043) (335,643)
Capital Expenditures ...................... (618,800) (142,587)
Proceeds from Sales of property ........... 0 328,861
Distributions from partnerships and
partially-owned corporations .............. 221,923 219,923
Capital Contributions to partnerships
and partially-owned corporations .......... (3,000) (76,100)
------------ ------------
Net Cash used in investing activities ........ (25,205,172) (2,789,096)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from stock issuance, net of
expenses paid ............................. 106,919,019 0
Principal Reductions of debt ............ (8,981,605) (18,793,411
Proceeds from Additional Borrowings ...... 0 61,520,000
Change in revolving credit balances .... (70,691,970) (61,905,652)
Capital distributions ..................... (8,822,609) (4,555,872)
Distributions to Minority partners in CRLP . (4,070,511) (2,233,158)
Payment of mortgage financing costs ........ (33,748) (629,702)
------------ ------------
Net cash provided by financing activies ...... 14,318,576 (26,597,795)
------------ ------------
Increase (decrease) in cash and equivalents .. 6,667,061 (18,637,234)
Cash and equivalents, beginning of period .... 1,588,197 20,733,110
------------ ------------
Cash and equivalents, end of period .......... $ 8,255,258 $ 2,095,876
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
COLONIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
Note 1 -- Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by management in accordance with generally accepted
accounting principles for interim financial reporting and in conjunction with
the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. These financial statements should be read in
conjunction with the information included in the Company's Annual Report as
filed with the Securities and Exchange Commission on Form 10-K for the year
ended December 31, 1995. The December 31, 1995 balance sheet data presented
herein was derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles.
Note 2 -- Acquisitions
On March 28, 1996, the Company acquired two land parcels totaling 36
acres in Orlando, Florida. The purchase price for this land was $4 million. The
property will be used to build 496 apartment units. The land acquisition was
financed through proceeds from the Company's public offering of common shares in
January 1996 and advances on the Company's line of credit. Development
expenditures related to this project are expected to be financed through
advances on the Company's line of credit as well.
On April 1, 1996, the Company acquired a multifamily community located
in Macon, Georgia. The purchase price of $14.4 million was funded through
advances on the Company's line of credit.
On April 15, 1996, the Company acquired a multifamily community located
in Birmingham, Alabama. The purchase price of $13.7 million was financed through
the assumption of a mortgage with an outstanding balance of $7.5 million, which
bears interest at 6.875% and through advances on the Company's line of credit.
On April 30, 1996, the Company acquired two multifamily communities
located in Mobile, Alabama. The combined purchase price of $10.9 million was
paid through the issuance of 182,804 limited partnership units of Colonial
Realty Limited Partnership at $24.00 per share, the assumption of $6.4 million
of indebtedness at an interest rate of 7.125%, and through advances on the
Company's line of credit.
On May 10, 1996, the Company acquired two multifamily communities
located in Birmingham, Alabama. The combined purchase price of $30.3 million was
paid through the assumption of $16.2 million of indebtedness at an interest rate
of 8.0% and through advances on the Company's line of credit.
Note 3 -- Subsequent Events
On April 25, 1996, a cash distribution was declared to shareholders of
the Company and partners of Colonial Realty Limited Partnership (CRLP) in the
amount of $.50 per share and per unit, totaling $12,898,000. The distribution
will be made to shareholders and partners of record as of May 6, 1996 and will
be paid on May 13, 1996.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees
Colonial Properties Trust
We have reviewed the accompanying consolidated balance sheet of Colonial
Properties Trust as of March 31, 1996, and 1995, and the related consolidated
condensed statements of income and cash flows for the three month periods then
ended. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidate financial statements
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
January 25, 1996, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated condensed balance sheet as of December 31, 1995, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 20, 1996
<PAGE>
COLONIAL PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The following discussion should be read in conjunction with
management's discussion and analysis of financial condition and results of
operations and all of the other information appearing in the Company's 1995
Annual Report as filed with the Securities and Exchange Commission on Form 10-K
and with the financial statements included therein and the notes thereto.
Results of Operations -- Three Months Ended March 31, 1996 and 1995
Revenue -- Total revenue increased by $4,099,000, or 16.1%, for the
first quarter of 1996 when compared to the first quarter of 1995. Of this
increase, $3,433,000 represents revenues generated by 10 properties acquired and
developed during 1995. The remainder of the increase was primarily attributable
to increases in rent revenues.
Operating Expenses -- Property operating expense before depreciation
and amortization increased by $1,546,000, or 19.0%, and depreciation expense
increased by $436,000, or 10.1% for the first quarter of 1996 when compared to
the first quarter of 1995. Of this increase, $1,088,000 and $400,000 represent
operating expenses and depreciation expense, respectively, of 10 properties
acquired during 1995.
General and administrative expenses decreased by $368,000, or 30.5%
during the first quarter of 1996 when compared to the first quarter of 1995.
This decrease is primarily attributable to the decrease in a reserve for certain
state tax contingencies.
Other Income (Expense) -- Interest expense decreased by $1,216,000, or
19.3%, for the first quarter of 1996 when compared to the first quarter of 1995.
This decrease is primarily attributed to the decrease in indebtedness which was
repaid through a portion of the Company's equity offering proceeds in May 1995
and January 1996.
Liquidity and Capital Resources
As of March 31, 1996, the Company had four bank lines of credit and one
construction loan providing for total borrowings of $100,800,000. These credit
facilities are used by the Company primarily to finance property acquisitions
and development. The significant terms of these credit facilities are shown
below: <TABLE>
<CAPTION>
Balance
Maximum Interest Expiration Outstanding At
Borrowings Rate Date March 31, 1996
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Line of Credit $ 75,000,000 LIBOR + 125 to December 1998 $ -0-
175 Basis Points
Line of Credit 7,500,000 LIBOR + 150 March 1997 -0-
Basis Points
Line of Credit 6,400,000 LIBOR + 175 October 1996 -0-
Basis Points
Line of Credit 5,000,000 LIBOR + 175 May 1998 -0-
Basis Points
Construction Loan 6,900,000 LIBOR + 175 April 1997 -0-
Basis Points
============= =============
$ 100,800,000 $ -0-
============= =============
</TABLE>
Management intends to replace significant borrowings that may accumalate
under the bank lines of credit and the construction loan with funds generated
from the sale of additional equity securities and/or permanent financing, as
market conditions permit. Management believes that these potential sources of
funds, along with the possibility of issuing limited partnership units of
Colonial Realty Limited Partnership in exchange for properties, will provide the
Company with the means to finance additional acquisitions. Management
anticipates that its net cash provided by operations and its existing cash
balances will provide the necessary funds on a short- and long-term basis to
cover its operating expenses, interest expense on outstanding indebtedness,
recurring capital expenditures, and dividends to shareholders in accordance with
Internal Revenue Code requirements applicable to real estate investment trusts.
Funds from Operations
"Funds from Operations", as defined by the National Association of Real
Estate Investment Trusts (NAREIT) and as used herein, means net income (loss)
(computed in accordance with generally accepted accounting principles, excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and
joint ventures are calculated to reflect funds from operations on the same
basis. Industry analysts generally consider Funds from Operations (FFO) an
appropriate measure of performance of an equity REIT, and the Company considers
funds from operations in evaluating property acquisitions and its operating
performance. Funds from Operations does not represent cash generated from
operating activities in accordance with generally accepted accounting principles
(which unlike FFO, generally reflects all cash effects of transactions and other
events that enter into the determination of net income), is not necessarily
indicative of cash flow available to fund cash needs, and should not be
considered an alternative to net income as an indication of the Company's
operating performance or to cash flow as a measure of liquidity or the ability
to make distributions.
In February 1995 NAREIT established new guidelines "clarifying" its
definition of FFO. For the Company, the primary impact of this change was a
reduction in FFO for the amortization of capitalized debt costs. Under NAREIT's
new definition, the Company's FFO for the first quarter of 1996 and 1995 was
calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
------------- ------------
<S> <C> <C>
Net income $ 5,588,000 $ 2,845,000
Adjustments:
Minority interest in CRLP 2,773,000 2,395,000
Depreciation 4,890,000 4,478,000
Gains from sales of property -0- (176,000)
Extraordinary loss 319,000 -0-
============ ============
Funds from operations $ 13,570,000 $ 9,542,000
============ ============
</TABLE>
<PAGE>
COLONIAL PROPERTIES TRUST
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
15. Letter re: Unaudited Interim Financial Information
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL PROPERTIES TRUST
Date: May 14, 1996 Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President
and Chief Financial Officer
Date: May 14, 1996 Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President
and Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: May 14, 1996 Kenneth E. Howell
Kenneth E. Howell
Vice President, Controller,
and Secretary
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
15. Letter re: Unaudited Interim Financial Information
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Properties Trust
(File No. 1-12358)
Registration on Form S-8
We are aware that our report dated April 20, 1996 on our review of interim
financial information of Colonial Properties Trust for the quarters ended March
31, 1996 and 1995 and included in the Company's quarterly report on Form 10-Q
for the quarters then ended is incorporated by reference in the registration
statements on Form S-8 related to certain restricted shares and stock options
filed on September 29, 1994, Form S-3 related to the Shelf Registration filed on
February 17, 1995, and Form S-3 related to the Dividend Reinvestment Plan filed
on April 11, 1995. Pursuant to Rule 436(c) under the Securities Act of 1933,
this report should not be considered a part of the registration statement
prepared or certified by us within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000909111
<NAME> Colonial Properties Trust
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 8,255,258
<SECURITIES> 0
<RECEIVABLES> 1,607,559
<ALLOWANCES> 36,333
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 762,361,576
<DEPRECIATION> 84,528,000
<TOTAL-ASSETS> 707,443,800
<CURRENT-LIABILITIES> 0
<BONDS> 274,609,531
0
0
<COMMON> 176,469
<OTHER-SE> 282,090,840
<TOTAL-LIABILITY-AND-EQUITY> 707,443,800
<SALES> 0
<TOTAL-REVENUES> 29,606,954
<CGS> 0
<TOTAL-COSTS> 15,835,224
<OTHER-EXPENSES> 1,551
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,090,473
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,906,337
<DISCONTINUED> 0
<EXTRAORDINARY> 318,630
<CHANGES> 0
<NET-INCOME> 5,587,707
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
