UNITED STATES
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, Commission File Number: 1-12358
1997
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 7, 1997, Colonial Properties Trust had 19,187,947 Common Shares
of Beneficial Interest outstanding.
<PAGE>
COLONIAL PROPERTIES TRUST
INDEX TO FORM 10-Q
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
March 31, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income for the
Three Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6
Report of Independent Accountants 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT 13
Page 2
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COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
--------------------
March 31, 1997
(Unaudited) December 31, 1996
---------------- ---------------
ASSETS
Land, buildings, & equipment, net $ 866,068 $ 801,800
Undeveloped land and construction in progress 125,263 113,689
Cash and equivalents 2,284 3,342
Restricted cash 2,568 2,450
Accounts receivable, net 4,839 4,792
Prepaid expenses 2,860 4,582
Deferred debt and lease costs, net 6,576 6,028
Investments 5,584 5,692
Other assets 5,590 5,730
---------------- ---------------
$ 1,021,632 $ 948,105
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable $ 534,927 $ 506,435
Accounts payable 6,414 7,699
Accounts payable to affiliates 9,730 9,973
Accrued interest 4,946 5,465
Accrued expenses 4,708 1,705
Tenant deposits 3,156 2,926
Unearned rent 929 924
---------------- ---------------
Total liabilities 564,810 535,127
---------------- ---------------
Minority interest 144,415 133,474
---------------- ---------------
Common shares of beneficial interest,
$.01 par value, 50,000,000 shares
authorized; 19,182,743 and 17,659,696
shares issued and outstanding at March
31, 1997 and December 31, 1996, respectively 192 177
Additional paid-in capital 338,531 302,304
Cumulative earnings 57,580 50,768
Cumulative distributions (83,354) (73,387)
Deferred compensation on restricted shares (542) (358)
--------------- ---------------
Total shareholders' equity 312,407 279,504
--------------- ---------------
$ 1,021,632 $ 948,105
=============== ===============
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
---------------------
Three Months Ended
March 31,
--------------------------
1997 1996
--------------------------
Revenue:
Minimum rent $ 33,660 $ 25,742
Percentage rent 322 264
Tenant recoveries 3,420 2,221
Other 1,768 1,380
---------------- ------------
Total revenue 39,170 29,607
---------------- ------------
Property operating expenses:
General operating expenses 2,668 2,351
Salaries and benefits 2,274 1,853
Repairs and maintenance 3,580 2,827
Taxes, licenses, and insurance 3,618 2,671
General and administrative 1,213 838
Depreciation 6,669 4,748
Amortization 354 547
---------------- ------------
Total operating expenses 20,376 15,835
---------------- ------------
Income from operations 18,794 13,772
---------------- ------------
Other income (expense):
Interest expense (8,488) (5,090)
Income from subsidiaries 40 (2)
Losses from sales of property (1) -0-
Minority interest in consolidated
operating property (56) -0-
---------------- ------------
Total other expense (8,505) (5,092)
---------------- ------------
Income before extraordinary item
and minority interest in CRLP 10,289 8,680
Extraordinary loss from early
extinguishment of debt (384) (319)
---------------- ------------
Income before minority
interest in CRLP 9,905 8,361
Minority interest in income of CRLP 3,092 2,773
---------------- ------------
Net income $ 6,813 $ 5,588
================ ============
Net income per share $ 0.37 $ 0.34
================ ============
Weighted average common shares outstanding 18,657 16,536
================ ============
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
-------------------
Three Months Ended
March 31,
----------------------------------
1997 1996
---------------- ---------------
Cash flows from operating activities:
Net income $ 6,813 $ 5,588
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 7,023 5,295
(Income) loss from subsidiaries (40) 2
Minority interest 3,148 2,773
Other 543 36
Decrease (increase) in:
Restricted cash (118) (12)
Accounts receivable (279) 675
Prepaid expenses 618 312
Other assets 198 (528)
Increase (decrease) in:
Accounts payable (1,284) 1,907
Accrued interest (519) (262)
Accrued expenses and other (473) 1,768
------------ ------------
Net cash provided by operating
activities 15,630 17,554
------------ ------------
Cash flows from investing activities:
Acquisition of properties (19,393) -0-
Development expenditures (31,991) (24,710)
Tenant improvements (471) (95)
Capital expenditures (1,147) (619)
Distributions from subsidiaries 269 222
Capital contributions to subsidiaries (120) (3)
------------- ------------
Net cash used in investing
activities (52,853) (25,205)
------------- ------------
Cash flows from financing activities:
Proceeds from stock issuance, net of
expenses paid 43,355 106,919
Principal reductions of debt (24,789) (8,982)
Proceeds from additional borrowings 50,000 -0-
Net change in revolving credit balances (17,306) (70,692)
Dividends paid to common shareholders (9,968) (8,823)
Distributions to minority partners in CRLP (4,359) (4,070)
Payment of mortgage financing cost (803) (34)
Other, net 35 -0-
----------- ------------
Net cash provided by
financing activities 36,165 14,318
----------- ------------
Increase (decrease) in cash
and equivalents (1,058) 6,667
Cash and equivalents, beginning of period 3,342 1,588
----------- ------------
Cash and equivalents, end of period $ 2,284 $ 8,255
============= ================
The accompanying notes are an integral part of these financial statements.
Page 5
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COLONIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
Note 1 -- Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of
Colonial Properties Trust (the "Company") 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, 1996. The December 31, 1996 balance
sheet data presented herein was derived from audited financial statements but
does not include all disclosures required by generally accepted accounting
principles.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
128). SFAS 128 supersedes existing generally accepted accounting principles
relative to the calculation of earnings per share, is effective for years ending
after December 15, 1997, and requires restatement of all prior period earnings
per share information upon adoption. Generally, SFAS 128 requires a calculation
of basic earnings per share, which takes into consideration income (loss)
available to common shareholders and the weighted average of common shares
outstanding. SFAS 128 also requires the calculation of a diluted earnings per
share, which takes into effect the impact of all additional common shares that
would have been outstanding if all dilutive potential common shares relating to
options, warrants, and convertible securities had been issued, as long as their
effect is dilutive, with a related adjustment of income available for common
shareholders, as appropriate. SFAS 128 requires dual presentation of basic and
diluted earnings per share on the face of the statement of operations and
requires a reconciliation of the numerator and denominator of the basic earnings
per share computation. The Company does not expect the effect of its adoption of
SFAS 128 to be material.
Note 2 -- Acquisitions
In two transactions on January 1 and January 8, 1997, the Company acquired
a 73.05% interest in an office park comprised of eight one-level buildings in
Birmingham, Alabama. The purchase price of $20.8 million was funded by the
assumption of $8.7 million in mortgage debt, the issuance of 25,163 limited
partnership units valued at $0.7 million, and an advance on the Company's
unsecured line of credit. The assets and liabilities, and the results of
operations, and cash flows of this property are consolidated in the Company's
financial statements. The remaining 26.95% ownership in this property is
reflected as "minority interest in consolidated operating property" in the
Company's balance sheet and statement of income, and is included in "minority
interest" on the Company's statement of cash flows.
On March 24, 1997, the Company acquired a community shopping center in
Athens, Georgia. The purchase price of $22.2 million was financed through the
assumption of debt totaling $11.9 million and an advance on the Company's
unsecured line of credit.
Page 6
<PAGE>
Also on March 24, 1997, the Company acquired a community shopping center
in Birmingham, Alabama. The $3.0 million purchase price of the center was
financed through the issuance of 16,303 limited partnership units in Colonial
Realty Limited Partnership, valued at $0.5 million, and an advance on the
Company's unsecured line of credit.
On April 1, 1997, the Company acquired a multifamily community in
Birmingham, Alabama. The $20.5 million purchase price was financed through the
issuance of 57,072 limited partnership units of Colonial Realty Limited
Partnership, valued at $1.6 million, and an advance on the Company's unsecured
line of credit.
Note 3 -- Distribution
On April 24, 1997, a cash distribution was declared to shareholders of the
Company and partners of Colonial Realty Limited Partnership in the amount of
$0.52 per share and per unit, totaling $14.4 million. The distribution was made
to shareholders and partners of record as of May 5, 1997, and will be paid on
May 12, 1997.
Page 7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Colonial Properties Trust:
We have reviewed the accompanying consolidated condensed balance sheet of
Colonial Properties Trust (the "Company") as of March 31, 1997, and the related
consolidated condensed statements of income and cash flows for the three-month
periods ended March 31, 1997 and 1996. 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 consolidated 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, 1996, 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 24, 1997, 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, 1996, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 18, 1997
Page 8
<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 1996 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, 1997 and 1996 Revenue --
Total revenue increased by $9,563,000, or 32.3%, for the
first quarter of 1997 when compared to the first quarter of 1996. Of this
increase, $8,148,000 represents revenues generated by properties acquired or
developed during 1996 and 1997. The $1,415,000 remainder of the increase in
revenues when comparing the first quarter of 1997 to the first quarter of 1996
represents an increase in rents charged to tenants.
Operating Expenses -- Total operating expenses increased by $4,541,000, or
28.7%, for the first quarter of 1997 when compared to the first quarter of 1996.
Of this increase, $3,922,000 represents operating expenses of the properties
acquired or developed during 1996 and 1997. Operating expenses also increased by
$170,000 due to the resolution of prior reserves for certain state tax
contingencies in the amount of $300,000 in the first quarter of 1996 and only
$130,000 in the first quarter of 1997.
Other Income and Expenses -- Interest expense increased by $3,398,000, or
66.7%, for the first quarter of 1997 when compared to the first quarter of 1996.
Interest expense increased $4,873,000 due to the increase in indebtedness which
was incurred to finance acquisition and development activity, net of
indebtedness which was repaid through a portion of the Company's equity offering
proceeds in January 1997. Interest expense also decreased by $693,000 due to the
capitalization of $1,254,000 in interest on construction expenditures during the
first quarter of 1997 compared to $561,000 capitalized during the first quarter
of 1996.
Liquidity and Capital Resources
As of March 31, 1997, the Company had one bank line of credit providing
for total borrowings of $125 million. The line, which is used by the Company
primarily to finance property acquisitions and development, bears interest at a
rate ranging between LIBOR plus 100 to LIBOR plus 150 basis points and expires
in December 1998. The balance outstanding on this line at March 31, 1997, was
$31,509,000.
Management intends to replace significant borrowings that may accumulate
under the bank line of credit 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.
Page 9
<PAGE>
Funds from Operations
The Company generally considers Funds From Operations ("FFO") a widely
used and appropriate measure of performance for an equity REIT that provides a
relevant basis for comparison among REITs. FFO, as defined by the National
Association of Real Estate Investment Trusts (NAREIT), means income (loss)
before minority interest (determined in accordance with GAAP), excluding gains
(losses) from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. FFO is presented to assist investors in
analyzing the performance of the Company. The Company's method of calculating
FFO may be different from methods used by other REITs and, accordingly, may not
be comparable to such other REITs. FFO (i) does not represent cash flows from
operations as defined by GAAP, (ii) is not indicative of cash available to fund
all cash flow needs and liquidity, including its ability to make distributions,
and (iii) should not be considered as an alternative to net income (as
determined in accordance with GAAP) for purposes of evaluating the Company's
operating performance. The Company's FFO for the first quarter of 1997 and 1996
was computed as follows:
(in thousands) 1997 1996
- -------------------------------------------------------------
Net Income $ 6,813 $ 5,588
Adjustments:
Minority interest in CRLP 3,092 2,773
Real estate depreciation 6,791 4,890
(1)
Losses from sales of 3 -0-
property (1)
Debt prepayment penalties 384 319
- -------------------------------------------------------------
Funds From Operations $ 17,083 $ 13,570
- -------------------------------------------------------------
(1) Includes pro-rata share of adjustments for subsidiaries.
Page 10
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COLONIAL PROPERTIES TRUST
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
15. Letter re: Unaudited Interim Financial Information
Page 11
<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 8, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
Date: May 8, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: May 8, 1997 /s/ Kenneth E. Howell
--------------------
Kenneth E. Howell
Vice President, Controller,
and Secretary
(Principal Accounting Officer)
Page 12
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Properties Trust
(File No. 1-12358)
Registrations on Form S-8
Registrations on Form S-3
We are aware that our report dated April 18, 1997 on our review of interim
financial information of Colonial Properties Trust for the quarters ended March
31, 1997 and 1996 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
January 8, 1997, Form S-8 related to the registration of common stock issuable
under the Colonial Properties Trust 401(k)/Profit-Sharing Plan filed on October
15, 1996, 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.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
May 8, 1997
Page 13
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,284
<SECURITIES> 0
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<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 866,068
<DEPRECIATION> 0
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<BONDS> 534,927
0
0
<COMMON> 192
<OTHER-SE> 312,215
<TOTAL-LIABILITY-AND-EQUITY> 1,021,632
<SALES> 37,402
<TOTAL-REVENUES> 39,170
<CGS> 20,376
<TOTAL-COSTS> 20,376
<OTHER-EXPENSES> 8,505
<LOSS-PROVISION> 0
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<EXTRAORDINARY> (384)
<CHANGES> 0
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<EPS-PRIMARY> .37
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