Maxus Realty Trust (MRTI) 10QSB 2007 Q2 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter period ended:  June 30, 2007

¨   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:  000-13754

MAXUS REALTY TRUST, INC.

(Exact name of small business issuer as specified in its charter)

Missouri	43-1339136
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

104 Armour, North Kansas City, Missouri 64116

(Address of principal executive offices)

(816) 303-4500

(Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

State the number of shares outstanding of the Trust’s sole class of common equity, $1.00 par value common stock, as of June 30, 2007: 1,406,065.

Transitional Small Business Disclosure Format (check one):                                                                                                                                          Yes ¨  No x

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INDEX
		Page
PART I –	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	10
ITEM 3.	CONTROLS AND PROCEDURES	18
PART II –	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	18
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	19
ITEM 5.	OTHER INFORMATION	20
ITEM 6.	EXHIBITS	20
SIGNATURES		21
EXHIBIT INDEX		22

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PART I – FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

MAXUS REALTY TRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2007			2006
Assets	(Unaudited)
Investment property:
Land	$	3,101,000			2,403,000
Buildings and improvements		59,457,000			44,663,000
Personal property		4,492,000			3,525,000
		67,050,000			50,591,000
Less accumulated depreciation		(8,863,000	)		(7,491,000	)
Total investment property, net		58,187,000			43,100,000
Cash		4,572,000			8,470,000
Escrows and reserves		1,217,000			1,261,000
Accounts receivable		16,000			119,000
Prepaid expenses and other assets		390,000			281,000
Intangible assets, net		306,000			346,000
Deferred expenses, less accumulated amortization		623,000			529,000
Assets of discontinued operations		133,000			128,000
Total assets	$	65,444,000			54,234,000
Liabilities and Shareholders’ Equity
Liabilities:
Mortgage notes payable	$	51,876,000			39,132,000
Accounts payable, prepaid rent and accrued expenses		961,000			1,190,000
Real estate taxes payable		517,000			265,000
Refundable tenant deposits		286,000			244,000
Other accrued liabilities		46,000			46,000
Liabilities of discontinued operations		191,000			204,000
Total liabilities		53,877,000			41,081,000
Minority interest		676,000			702,000
Shareholders’ equity:
Common stock, $1 par value; Authorized 5,000,000 shares,
issued and outstanding 1,406,000 and 1,401,000 shares
in 2007 and 2006, respectively		1,406,000			1,401,000
Preferred Stock, $0.01 par value; Authorized 5,000,000 shares,
no shares issued and outstanding		---			---
Additional paid-in capital		19,191,000			19,130,000
Distributions in excess of accumulated earnings		(9,706,000	)		(8,080,000	)
Total shareholders’ equity		10,891,000			12,451,000
	$	65,444,000			54,234,000

See accompanying notes to unaudited condensed consolidated financial statements.

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MAXUS REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
Income	2007			2006			2007			2006
Revenues:
Rental	$	2,519,000			1,768,000			5,001,000			3,569,000
Other		363,000			214,000			685,000			414,000
Total revenues		2,882,000			1,982,000			5,686,000			3,983,000
Expenses:
Depreciation and amortization		815,000			521,000			1,607,000			1,066,000
Repairs and maintenance		278,000			296,000			578,000			483,000
Turn costs and leasing		151,000			113,000			293,000			208,000
Utilities		266,000			122,000			527,000			261,000
Real estate taxes		233,000			135,000			444,000			278,000
Insurance		127,000			78,000			240,000			153,000
Related party management fee		139,000			97,000			265,000			196,000
Other operating expenses		413,000			310,000			714,000			531,000
General and administrative		30,000			114,000			210,000			180,000
Total operating expenses		2,452,000			1,786,000			4,878,000			3,356,000
Operating income		430,000			196,000			808,000			627,000
Interest income		(58,000	)		(160,000	)		(106,000	)		(297,000	)
Interest expense		818,000			581,000			1,628,000			1,159,000
Loss before minority interest and discontinued operations		(330,000	)		(225,000	)		(714,000	)		(235,000	)
Less minority interest in continuing operations		11,000			7,000			24,000			8,000
Loss from continuing operations		(319,000	)		(218,000	)		(690,000	)		(227,000	)
Income (loss)  from discontinued operations
before minority interest		(52,000	)		130,000			(68,000	)		176,000
Less minority interest in discontinued operations		1,000			(4,000	)		2,000			(6,000	)
Income (loss) from discontinued operations		(51,000	)		126,000			(66,000	)		170,000
Net income (loss)	$	(370,000	)		(92,000	)		(756,000	)		(57,000	)
Per share data (basic and diluted):
Loss from continuing operations	$	(.23	)		(0.16	)		(.49	)		(0.16	)
Income (loss) from discontinued operations		(.04	)		0.09			(.05	)		0.12
Net income (loss) per share	$	(.27	)		(0.07	)		(.54	)		(0.04	)
Distributions:
Paid year-to-date:
Taxable to Shareholders	$	---			---			---			---
Return of capital	$	.40			---			.60			---
Distributions paid in current year		.40			---			.60			---
Weighted average shares outstanding, basic and diluted		1,404,000			1,401,000			1,403,000			1,401,000

See accompanying notes to unaudited condensed consolidated financial statements.

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MAXUS REALTY TRUST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30,			June 30,
Cash flows from operating activities:	2007			2006
Net income (loss)	$	(756,000	)		(57,000	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Minority interest		(26,000	)		(2,000	)
Depreciation and amortization		1,607,000			1,107,000
Amortization of loan premium		---			(63,000	)
Amortization of loan costs		42,000			---
Changes in accounts affecting operations:
Accounts receivable		103,000			187,000
Prepaid expenses and other assets		(117,000	)		(85,000	)
Escrows and reserves, net		155,000			312,000
Accounts payable and other liabilities		42,000			(93,000	)
Net cash provided by operating activities		1,050,000			1,306,000
Cash flows from investing activities:
Capital expenditures		(407,000	)		(190,000	)
Acquisition of Highland Pointe		(3,420,000	)		---
Net cash used in investing activities		(3,827,000	)		(190,000	)
Cash flows from financing activities:
Principal payments on mortgage notes payable		(256,000	)		(179,000	)
Cash paid in connection with refinance of investment property		(45,000	)		---
Payment of loan fees		(16,000	)		(7,000	)
Issuance of common stock		66,000			---
Distributions paid to shareholders		(870,000	)		---
Net cash used in financing activities		(1,121,000	)		(186,000	)
Net increase (decrease) in cash		(3,898,000	)		930,000
Cash, beginning of year		8,470,000			2,009,000
Cash, end of year	$	4,572,000			2,939,000
Supplemental disclosure of cash flow information -
Cash paid during the six month period for interest	$	1,634,000			1,278,000
Supplemental disclosure of non-cash investing and financing activities:
Highland Pointe assets acquired	$	16,250,000			---
Highland Pointe mortgage notes payable and other liabilities assumed	$	12,830,000			---
Highland Pointe mortgage debt extinguished with refinancing	$	12,700,000			---
Mortgage note resulting from refinancing	$	13,000,000			---
Arbor Gate renovations financed with accounts payable	$	---			1,302,000
Arbor Gate renovations paid from insurance escrow account	$	---			863,000
Waverly mortgage paid from insurance escrow account	$	---			4,187,000
Insurance proceeds deposited to escrows and reserves	$	---			186,000

See accompanying notes to unaudited condensed consolidated financial statements.

(Remainder of page left blank intentionally.)

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MAXUS REALTY TRUST, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Organization

Maxus Realty Trust, Inc. (the “Trust” or “Registrant”), is structured as what is commonly referred to as an umbrella partnership REIT, or UPREIT, structure. To effect the UPREIT restructuring, the Trust formed Maxus Operating Limited Partnership, a Delaware limited partnership (“MOLP"), to which the Trust contributed all of its assets, in exchange for a 99.999% partnership interest in MOLP and the assumption by MOLP of all of the Trust's liabilities.  The Trust now conducts and intends to continue to conduct all of its activities through MOLP. MOLP is the sole member of limited liability companies that own all of the Trust’s properties. Maxus Realty GP, Inc., a Delaware corporation that is wholly owned by the Trust, is the sole general partner of MOLP and has a 0.001% interest in MOLP. As the sole general partner of MOLP, Maxus Realty GP, Inc. generally has the exclusive power under the partnership agreement to manage and conduct the business of MOLP, subject to certain limited approval and voting rights of the limited partners.

Pursuant to MOLP's limited partnership agreement, MOLP may issue limited partnership operating units (and corresponding limited partnership interests) in return for cash or other property that is contributed to MOLP.  Holders of MOLP limited partnership operating units may redeem the units (and corresponding limited partnership interests) in return for the issuance of the Trust's common stock or cash, at the Trust's election, after a one (1) year holding period. At June 30, 2007, the Trust owned approximately 96.74% of the limited partnership interests in MOLP and minority holders of MOLP owned 47,339 limited partnership operating units, or approximately 3.26% of MOLP. The 47,339 limited partnership operating units were issued in connection with the acquisition of the Terrace Apartments in April 2004, and the acquisition of the Bicycle Club Apartments in July 2005.

(2) Summary of Significant Accounting Policies

Refer to the financial statements of the Trust for the year ended December 31, 2006, which are contained in the Trust's Annual Report on Form 10-KSB, for a description of the accounting policies, which have been continued.  Also, refer to the notes to the Trust’s Annual Report for additional details of the Trust’s financial condition.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2007 and for all periods presented have been made. The results for the six-month period ended June 30, 2007 are not necessarily indicative of the results which may be expected for the entire year.

Prior period amounts have been reclassified to conform to the current year presentation. Prior to the third quarter of 2006 the Trust had presented amortized debt issuance costs with depreciation and amortization. These debts have been reclassified and have been presented as interest expense for all periods presented. For the six months ended June 30, 2007 and 2006 these costs were $22,000 and $17,000 respectively.

(3) Segment Reporting

The Trust has adopted SFAS No. 131, Disclosure About Segments of an Enterprise and Related Information, which establishes standards for the way that public business enterprises report information about operating segments in financial statements, as well as related disclosures about products and services, geographic areas, and major customers.

The Trust has two reportable operating segments, apartments and a commercial building. The Trust’s management evaluates the performance of each segment based on their net operating income (NOI). NOI is defined as rental revenues less rental expenses and real estate taxes. We rely on NOI for purposes of assessing segment performance. We also believe NOI is a valuable means of comparing year-to-year operating performance. The accounting policies of the segments are the same as those of the Trust.

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Following is information for each segment for the six months ended June 30, 2007:

			Net Income
			(Loss)					Depreciation
	Total		Continuing			Investment		and		Interest		Discontinued
	Revenue		Operations			Property		Amortization		Expense		Operations			Assets (1)
Apartments	$	5,042,000		(764,000	)		16,447,000		1,505,000		1,520,000		(68,000	)		61,886,000
Commercial Bldg.		644,000		159,000			12,000		102,000		108,000		---			3,425,000
Parent		---		(109,000	)		---		---		---		---			---
Subtotal		5,686,000		(714,000	)		16,459,000		1,607,000		1,628,000		(68,000	)		65,311,000
Minority Interest		---		24,000			---		---		---		2,000			---
Total	$	5,686,000		(690,000	)		16,459,000		1,607,000		1,628,000		(66,000	)		65,311,000

⁽¹⁾The assets do not include assets from discontinued operations.

Note, that at June 30, 2006, there was one reportable segment.

The Trust applies SFAS No. 141, Business Combinations, for rental property acquisitions. The Trust considers the fair values of both tangible and intangible assets or liabilities when allocating the purchase price (plus any capitalized costs incurred during the acquisition). Tangible assets typically include land, land improvements, building, tenant improvements, furniture, fixtures and equipment. Intangible assets or liabilities may include values assigned to in-place leases (including the separate values of tenant relationships and any above or below market leases), and any assumed financing that is determined to be above or below market terms.

The Trust usually acquires tenant leases with property acquisitions. The fair value of the tangible assets is determined by valuing the property as if it were vacant based on management’s determination of the relative fair values of the assets. Management determines the as if vacant fair value of a property using recent independent appraisals or methods similar to those used by independent appraisers. The aggregate value of intangible assets or liabilities, including in-place leases, is measured based on the difference between the stated price plus capitalized costs of the property as if vacant.

The fair value of acquired in-place leases includes management’s estimate of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, advertising and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period (i.e. utilities); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period. Amounts allocated to in-place leases are amortized over the estimated remaining initial lease term of the respective leases and recorded as amortization expense.

In accordance with SFAS No. 141, Business Combinations, the Trust has determined the fair value of acquired in-place leases, which consist of the following:

	June 30, 2007		Dec. 31, 2006
In-place leases, net of accumulated amortization of $265,000 and $33,000 respectively	$	306,000		346,000
Total intangible assets, net	$	306,000		346,000

In place leases, net at June 30, 2007 relate to the Northtown Business Center, Valley Forge and Highland Pointe acquisitions and in-place leases net at December 31, 2006 relate to the Northtown Business Center and Valley Forge Apartments purchased in the fourth quarter of 2006.

Amortization expense for 2007 is expected to be $313,000, of which $232,000 was recognized in the period ended June 30, 2007.

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(5) Related Party Transactions

Maxus Properties, Inc., an affiliate of the Trust through affiliated ownership, manages the Trust’s properties. The Trust paid Maxus Properties, Inc. property management fees (including fees related to discontinued operations) of $265,000 and $196,000 for the six months ended June 30, 2007 and 2006, respectively. Management fees are determined pursuant to management agreements that provide for fees calculated as a percentage of monthly gross receipts (as defined) from the properties’ operations and reimbursement of payroll related costs. At June 30, 2007, and 2006, $57,000 and $78,000, respectively, was payable to Maxus Properties, Inc. for accrued payroll, direct expense reimbursement and accrued management fees.

Certain Maxus Properties, Inc. employees are located at the Trust’s properties and perform leasing, maintenance, office management, and other related services for these properties. The Trust recognized $813,000 and $534,000 of payroll costs in the six months ended June 30, 2007 and 2006 respectively, that have been reimbursed to Maxus Properties, Inc.

(6) Contingencies

Legal Proceedings

The Trust is a plaintiff in certain legal actions. It is our opinion, based on advice of legal counsel, that the outcome of these actions will not have a material adverse effect on our consolidated financial position or operations. Please refer to Part II, Item 1, of this report for a description of certain pending legal proceedings.

(7)  Discontinued Operations/Involuntary Conversions

The Trust has reclassified its Condensed Consolidated Balance Sheet for the six months ended June 30, 2007 and has presented its Condensed Consolidated Statement of Operations for the six months ended June 30, 2007 to reflect discontinued operations of the Arbor Gate Apartments (“Arbor Gate”) and the Waverly Apartments (“Waverly”).

As a result of Hurricane Katrina, the Waverly Apartments were completely destroyed and remain uninhabitable. On July 21, 2006, Arbor Gate Acquisition, L.L.C., a wholly-owned subsidiary of MOLP, completed the sale of its multi-family unit apartment complex, Arbor Gate Apartments.  The assets of Arbor Gate and Waverly were written down to their estimated fair values.

Condensed financial information for Arbor Gate and Waverly are as follows:

DISCONTINUED OPERATIONS

(ARBOR GATE AND WAVERLY)

BALANCE SHEET

Assets	June 30, 2007		Dec. 31, 2006
Investment property
Land	$	128,000		128,000
Prepaid expenses and other assets		5,000		---
Assets of discontinued operations - property held for sale	$	133,000		128,000
Liabilities:
Account payable, prepaid rent and accrued expenses	$	149,000		149,000
Real estate taxes payable		42,000		55,000
Liabilities of discontinued operations - property held for sale	$	191,000		204,000

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DISCONTINUED OPERATIONS

 (ARBOR GATE AND WAVERLY)

STATEMENTS OF OPERATIONS

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2007			2006			2007			2006
Total revenues	$	---			204,000			1,000			358,000
Operating Expenses		(52,000	)		(130,000	)		(69,000	)		285,000
Net operating income (loss)		(52,000	)		74,000			(68,000	)		73,000
Interest income		---			5,000			---			26,000
Interest expense		---			(48,000	)		---			(137,000	)
Loss from discontinued operations - before ACI	$	(52,000	)		31,000			(68,000	)		(38,000	)
Income from discontinued operations - ACI		---			99,000			---			214,000
Income (loss) from discontinued operations - ACI	$	(52,000	)		130,000			(68,000	)		176,000

On August 29, 2005, Arbor Gate and Waverly sustained extensive damages caused by Hurricane Katrina. The rehabilitation of Arbor Gate due to the damages was ongoing at December 31, 2005 and was completed during the year ended December 31, 2006. Waverly has not been rehabilitated. Both properties were insured for property damage resulting from Hurricane Katrina.

As of the date of the hurricane, the estimated total net book value of the assets destroyed at Arbor Gate and Waverly was $6,159,000. An insurance receivable for this amount was recorded during 2005 due to expected recovery from the insurance carriers. During the year ended December 31, 2005, the Trust received a total of $5,600,000 from the insurance carriers resulting in a receivable at December 31, 2005 of approximately $560,000. During the year end December 31, 2006, the Trust received additional sums totaling approximately $1,430,000. Amounts received in excess of the recorded receivable were recognized as a gain of approximately $871,000 after the Trust determined there were no remaining contingencies on recoveries received. Of the total amount of insurance recoveries received to date approximately $344,000 was paid by the excess property carrier. The recovery from the excess property carrier represents the undisputed portion of the Trust’s claim. The Trust is still seeking additional amounts from the excess property carrier and has filed a lawsuit in regard to this matter as described below.

The Trust has had various discussions with its excess property insurance carrier, RSUI Indemnity Company (“RSUI”) concerning amounts the Trust believes it is owed pursuant to its insurance policy. The Trust has reached settlements with its flood and primary wind carrier for the amounts described in the preceding paragraph. However, because management and RSUI have failed to reach an agreement regarding the scope of damages and the associated costs specifically related to the insurance claims filed on behalf of Waverly, the Trust filed a lawsuit on September 7, 2006 against RSUI in the United States District Court for the Western District of Missouri. The lawsuit alleges breach of contract and vexatious refusal by RSUI for its failure to fulfill its indemnity obligations under the commercial property insurance policy issued to the Trust by RSUI covering Waverly Apartments. The Trust intends to vigorously pursue this matter.  At this date, the amount of any additional recovery and the ultimate resolution of this matter cannot be estimated.

 (8) Subsequent Events

Dividend

On July 17, 2007, the Board of Trustees of the Trust approved the payment of a quarterly cash dividend of $.20 per share to the holders of record on August 31, 2007 of the Trust’s $1.00 par value, common stock. The dividend will be paid on or about September 21, 2007.

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ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Section includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this section and located elsewhere in this Form 10-QSB regarding the prospects of our industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others: (i) the ability to retain tenants, (ii) general economic, business, market and social conditions, (iii) trends in the real estate investment market, (iv) projected leasing and sales, (v) competition, (vi) inflation and (vii) future prospects for the Trust.  Readers are urged to consider these factors carefully in evaluating the forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.  The forward-looking statements included herein are made only as of the date of this Form 10-QSB, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

Lease agreements are accounted for as operating leases, and rentals from such leases are reported as revenues ratably over the terms of the leases.

Investment Property Useful Lives

The Trust is required to make subjective assessments as to the useful lives of its properties for the purpose of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Trust’s net income.

Buildings and improvements are depreciated over their estimated useful lives of 27.5 to 40 years on a straight-line basis. Land improvements are depreciated over their useful lives of 15 to 20 years on a straight-line basis. Personal property is depreciated over its estimated useful life of 5 to 15 years using the straight-line method.

Capital Expenditures

For reporting purposes, the Trust capitalizes all carpet, flooring, blinds, appliance and HVAC replacements. The Trust expenses all other expenditures that total less than $10,000. Expenditures and costs related to contracts that are equal to or greater than $10,000 are evaluated individually for capitalization. Repairs and maintenance are charged to expense as incurred. Additions and betterments are capitalized.

Classification of Properties

The Trust is required to make subjective assessments as to whether a property should be classified as “Held for Sale” under the provisions of SFAS 144.  SFAS 144 contains certain criteria that must be met in order for a property to be classified as held for sale, including: management commits to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer has been initiated; the sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a sale within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to

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complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Impairment of Investment Property Values

The Trust is required to make subjective assessments as to whether there are impairments in the value of its investment properties. Management's estimates of impairment in the value of investment properties have a direct impact on the Trust’s net income.

The Trust follows the provisions of SFAS No. 144. The Trust assesses the carrying value of its long-lived asset whenever events or changes in circumstances indicate that the carrying amount of the underlying asset may not be recoverable. Certain factors that may occur and indicate that an impairment may exist include, but are not limited to: significant underperformance relative to projected future operating results; significant changes in the manner of the use of the asset; and significant adverse industry or market economic trends.  If an indicator of possible impairment exists, a property is evaluated for impairment by a comparison of the carrying amount of a property to the estimated undiscounted future cash flows expected to be generated by the property.  If the carrying amount of a property exceeds its estimated future cash flows on an undiscounted basis, an impairment charge is recognized by the amount by which the carrying amount of the property exceeds the fair value of the property. Management estimates fair value of its properties based on projected undiscounted cash flows using a discount rate determined by management to be commensurate with the risk inherent in the Trust.

Real Estate Acquisitions

Upon acquisitions of real estate properties, management makes subjective estimates of the fair value of acquired tangible assets (consisting of land, land improvements, building, improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities (consisting of above and below market leases, in-place leases, tenant relationships and assumed financing that is determined to be above or below market terms) in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations. Management utilizes methods similar to those used by independent appraisers in making these estimates. Based on these estimates, management allocates purchase price to the applicable assets and liabilities. These estimates have a direct impact on our net income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect amounts reported in the accompanying Condensed Consolidated Financial Statements. The most significant assumptions and estimates relate to revenue recognition, depreciable lives of investment property, capital expenditures, properties held for sale, and the valuation of investment property. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

Impact of Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. FAS 157 is effective for us on January 1, 2008 and will be applied prospectively. The provisions of FAS 157 are not expected to have a material impact on our condensed consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, Establishing the Fair Value Option for Financial Assets and Liabilities, to permit all entities to choose to elect to measure eligible financial instruments at fair value.  SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 159, unless it chooses early adoption.  Management is currently evaluating the impact of SFAS No. 159 on its condensed consolidated financial statements.

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DESCRIPTION OF BUSINESS

OVERVIEW

The Trust currently operates seven apartment communities and one industrial/commercial property. Cash is primarily generated by renting units to tenants, or securing loans with the Trust’s assets. Cash is used primarily to pay operating expenses (repairs and maintenance, payroll, utilities, taxes, and insurance), make capital expenditures for property improvements, repay principal and interest on outstanding loans or to pay cash distributions to shareholders. The key performance indicators for revenues are occupancy rates and rental rates. Revenues are also impacted by concessions (discounts) offered as rental incentives. The key performance indicator for operating expenses is total operating expense per apartment unit. A significant change in the turnover rate of rental units can also cause a significant change in operating expenses. Management also evaluates total taxes, utilities and insurance rates for each property.

General economic trends that management evaluates include construction of apartment units (supply), unemployment rates, job growth, and interest rates (demand). The apartment industry is sensitive to extremely low interest rates, which tend to increase home ownership and decrease apartment occupancy rates. The apartment industry is also sensitive to increased unemployment rates, which tend to cause possible renters to double up in a unit or share a non-rental dwelling with relatives or acquaintances. New construction in an area with low occupancy rates can cause a further decline in occupancy or rental rates.

Economic trends appear to indicate that interest rates are increasing. It also appears that unemployment rates are declining, with job growth rising. If these trends are correct and if the trends continue, the Trust believes it should be able to begin reducing concessions, raising rental rates and increasing occupancy, which should improve revenues. In such case, the Trust also believes variable operating expenses will also tend to increase, but fixed expense coverage would improve.

(Remainder of page left blank intentionally.)

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The Trust primarily invests in income-producing real properties (apartments). As of June 30, 2007 the Trust’s portfolio is comprised of:

PROPERTY	# UNITS	TYPE	LOCATION	PURCHASE DATE
Barrington Hills Apartments (“Barrington Hills”)	232	Apartments	Little Rock, AR	November, 2001
Bicycle Club Apartments (“Bicycle Club”)	312	Apartments	North Kansas City, MO	July, 2005
Chalet Apartments - I and II (“Chalet”)	234	Apartments	Topeka, KS	September, 2001
Forest Park Apartments (1) (“Forest Park”) (f.k.a. North Winn)	110	Apartments	Kansas City, MO	August, 2000
Valley Forge Apartments (1)  (“Valley Forge”)	88	Apartments	Kansas City, MO	November, 2006
King’s Court Apartments (2) (“King’s Court”)	82	Apartments	Olathe, KS	August, 2001
Terrace Apartments (2) (“Terrace”)	84	Apartments	Olathe, KS	April, 2004
Highland Pointe Apartments (“Highland Pointe”)	232	Apartments	Yukon, OK	January, 2007
Northtown Business Center	240,000 sq. ft. & 12.44 acres	Industrial and related office and mezzanine space	North Kansas City, MO	August, 2006
The Landings Apartments (the “Landings”)	154	Apartments	Little Rock, AR	September, 2001
Waverly Apartments (“Waverly”)	128	Apartments	Bay Saint Louis, MS	September, 2004

⁽¹⁾       Forest Park and Valley Forge Apartments are operated as one entity.

⁽²⁾King’s Court and Terrace Apartments (“Kings Court/Terrace”) are operated as one entity.

⁽³⁾Waverly Apartments is classified as a discontinued operation.

UPREIT Structure

The Trust is structured as what is commonly referred to as an umbrella partnership REIT, or UPREIT, structure. To effect the UPREIT restructuring, the Trust formed Maxus Operating Limited Partnership, a Delaware limited partnership (“MOLP"), to which the Trust contributed all of its assets, in exchange for a 99.999% partnership interest in MOLP and the assumption by MOLP of all of the Trust's liabilities. The Trust conducts and intends to continue to conduct all of its activities through MOLP. Maxus Realty GP, Inc., a Delaware corporation that is wholly owned by the Trust, is the sole general partner of MOLP and has a 0.001% interest in MOLP. As the sole general partner of MOLP, Maxus Realty GP, Inc. generally has the exclusive power under the partnership agreement to manage and conduct the business of MOLP, subject to certain limited approval and voting rights of the limited partners.

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Pursuant to MOLP's limited partnership agreement, MOLP may issue limited partnership operating units (and corresponding limited partnership interests) in return for cash or other property that is contributed to MOLP.  Holders of MOLP limited partnership operating units may redeem the units (and corresponding limited partnership interests) in return for the issuance of the Trust's common stock or cash, at the Trust's election, after a one (1) year holding period. The Trust anticipates that the UPREIT structure will enable it to make additional acquisitions of properties from tax-motivated sellers. As an UPREIT, the Trust believes that MOLP will be able to issue limited partnership operating units to tax-motivated sellers who contribute properties to MOLP, thereby enabling those sellers to realize certain tax benefits that would be unavailable to them if the Trust purchased those properties directly for cash or common stock. As of June 30, 2007, minority holders of MOLP own 47,339 limited partnership operating units, or approximately 3.26% of the partnership interest in MOLP. Maxus Realty Trust’s common shares trade on the NASDAQ Stock Exchange (NASDAQ: MRTI).

Each of the real estate properties are owned by single member limited liability companies that are directly owned by MOLP. Maxus Properties, Inc. provides property management services for each of the Trust’s real properties.

LIQUIDITY AND CAPITAL RESOURCES

Comparison of Consolidated Results

Cash as of June 30, 2007 was $4,572,000, a decrease of $3,898,000 from $8,470,000 at December 31, 2006. The majority of the decrease was due to the cash used to fund the acquisition of Highland Pointe. Escrows and reserves held by various lenders were $1,217,000 and $1,261,000 at June 30, 2007 and December 31, 2006, respectively. The decrease of $44,000 is due to the various lenders’ funding requirements.

Net cash provided by operating activities decreased $256,000 to $1,050,000 for the six month period ended June 30, 2007. This decrease was due to the increased loss from operations for the six months ended June 30, 2007.  The decrease was also due to the increased costs associated with the operations of the new properties, Northtown Business Center, Valley Forge and Highland Pointe.

Net cash used in investing activities was $3,827,000 which was comprised of $3,420,000 for the acquisition of Highland Pointe and the balance comprised of routine capital expenditures.

Net cash used in financing activities was $1,121,000 for the six month period ended June 30, 2007. A portion of the cash used was for the costs of refinancing the Highland Pointe mortgage note. Distributions in the amount of $870,000 were made to the shareholders of record for the six months ended June 30, 2007.

Management believes that the current cash position and the properties’ ability to generate adequate cash flows should enable the Trust to fund anticipated operating and capital expenditures for the remainder of 2007. No assurance can be given as to the actual timing or amount of any additional insurance proceeds or for sale proceeds from the Waverly property.

Projected capital expenditures of approximately $1,419,000 are currently planned for the remainder of 2007, primarily for re-roofing, parking/driveway repair, landscaping, concrete repairs, replacing damaged wood decks, repairing balconies, office/clubhouse renovations, and the replacement of HVAC units. The majority of these expenditures are expected to be reimbursed from escrow reserves held by lenders. Capital replacements of approximately $370,000 are currently expected to be reimbursed from reserves held by lenders. The Trust will also continue to evaluate opportunities for the acquisition of investment properties and may incur material capital expenditures in connection with these acquisition opportunities.

On April 17, 2007, the Board of Trustees of the Trust approved the payment of a quarterly cash dividend of $.20 per share to the holders of record on April 27, 2007 of the Trust’s $1.00 par value, common stock. The dividend was paid on or about April 30, 2007.

On May 8, 2007, the Board of Trustees of the Trust declared a cash dividend of $0.20 per share payable to the holders of record on May 31, 2007 of the Trust $1.00 par value, common stock. The dividend was paid on or about June 21, 2007.

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Contractual Obligations and Commercial Commitments

	Balance at		Interest		Fixed	Due
	June 30, 2007		Rate		or (variable)	Date
Barrington Hills		5,368,000	6.04	%	Fixed	July 1, 2029
Bicycle Club		11,156,000	6.19	%	Fixed	September 1, 2016
Chalet I		3,759,000	6.59	%	Fixed	October 1, 2008
Chalet II		1,417,000	6.54	%	Fixed	October 1, 2008
Forest Park		2,343,000	5.29	%	Fixed	September 1, 2015
Highland Pointe		13,000,000	5.67	%	Fixed	February 28, 2017
Kings Court		2,246,000	5.91	%	(variable)	May 1, 2009
Northtown Bus. Center		3,122,000	6.87	%	Fixed	September 1, 2016
Terrace		1,552,000	6.87	%	Fixed	February 1, 2009
The Landings		6,198,000	6.19	%	Fixed	September 1, 2016
Valley Forge		1,715,000	5.69	%	Fixed	December 1, 2015
Total	$	51,876,000

OFF-BALANCE SHEET ARRANGEMENTS

The Partnership does not have any “off-balance sheet arrangements” as defined in Item 303 (c) of Regulations S-B promulgated under the Securities Exchange Act of 1934, as amended.

RESULTS OF OPERATIONS

The results of operations for the Trust's properties for the six months ended June 30, 2007 are detailed below.

Funds from Operations

The white paper on Funds from Operations approved by the board of governors of NAREIT defines Funds from Operations as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus property related 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. In 1999, NAREIT clarified the definition of Funds from Operations to include non-recurring events, except for those that are defined as “extraordinary items” under GAAP and gains and losses from sales of depreciable operating property. In 2002, NAREIT clarified that Funds from Operations related to assets held for sale, sold or otherwise transferred and included in results of discontinued operations should continue to be included in consolidated Funds from Operations.

The Trust computes Funds from Operations in accordance with the guidelines established by the white paper, which may differ from the methodology for calculating Funds from Operations utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. Funds from Operations do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, distributions or other commitments and uncertainties. Funds from Operations should not be considered

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as an alternative to net income (determined in accordance with GAAP) as an indication of the Trust’s financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of the Trust’s liquidity, nor is it indicative of funds available to fund the Trust’s cash needs including its ability to make distributions. The Trust believes Funds from Operations is helpful to investors as a measure of the performance of the Trust because, along with cash flows from operating activities, financing activities and investing activities, it provides investors with an understanding of the ability of the Trust to incur and service debt and make capital expenditures. In the table below, revenue, expenses, net income and property related depreciation and amortization were determined in accordance with GAAP. The addition of property related depreciation and amortization to net income results in Funds from Operations, which is not determined in accordance with GAAP.

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2007			2006			2007			2006
Net income (loss)	$	(370,000	)		(92,000	)		(756,000	)		(57,000	)
Property related depreciation and amortization (1)		815,000			521,000			1,607,000			1,066,000
Funds from operations	$	445,000			429,000			851,000			1,009,000

⁽¹⁾For the six months ended June 30, 2007 and June 30, 2006, depreciation and amortization of discontinued operations of Arbor Gate and Waverly of $0 and $81,000, respectively, and is included in this amount. For the three months ended June 30, 2007 and June 30, 2006, depreciation and amortization of discontinued operations of Arbor Gate & Waverly of $0 and $10,000, respectively, is included in this amount.

The Trust has historically added amortization of deferred financing costs back to net income to determine funds from operations. Historically these costs have not been material. The Trust has re-examined this policy and believes amortization of deferred financing cost should not be included in the determination of funds from operations. All periods presented have been adjusted to conform to this change in policy.

Occupancy

The occupancy levels at June 30, 2007 were as follows:

	OCCUPANCY LEVELS
	AT JUNE 30,
	2007	2006
Arbor Gate (1)	n/a	97%
Barrington Hills	86%	86%
Bicycle Club	91%	91%
Chalet	93%	95%
Forest Park/Valley Forge (2)	87%	94%
Highland Pointe (3)	87%	n/a
King’s Court/Terrace	90%	93%
The Landings	92%	95%
Northtown Business Center (4)	95%	n/a
Waverly (5)	0%	0%

⁽¹⁾ Arbor Gate was sold in July 2006.

⁽²⁾ Valley Forge was acquired in November 2006.

⁽³⁾Highland Pointe was acquired in January 2007.

⁽⁴⁾ Northtown Business Center was acquired in August 2006.

⁽⁵⁾Waverly is uninhabitable due to the damages incurred by Hurricane Katrina in August 2005.

Forest Park/Valley Forge was 87% occupied at June 30, 2007. A majority of the percentage of decrease in occupancy was due to residents buying homes. Tenant concessions have been necessary to compete with the existing competition. Bicycle Club was 91% occupied at June 30, 2007. The property is experiencing few turnovers this year compared to last year, mostly due to a decrease in home buying. King’s Court/Terrace occupancy was 90% at June 30, 2007. King’s Court/Terrace is located in Olathe, Kansas. Overall occupancy in the Olathe, Kansas market has

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remained stable, with most competitors’ average occupancy in the high 80% to low 90% range. It appears that tenant concessions are declining. There continues to be fewer people purchasing homes in this market due to the increase in interest rates. Olathe is the fastest growing city in the Johnson County area. Chalet, which is located in Topeka, Kansas, ended the quarter at 93% occupancy. The average occupancy for competitors in this market is also 93%. Chalet offers few concessions due to consistently high occupancy rates. There is no new competition in the Topeka area. Competitors in the area continue to offer concessions. The Landings and Barrington Hills are both located in Little Rock, Arkansas. The average occupancy rate for Little Rock is 93% to 95%. The Landings and Barrington Hills had occupancy rates of 92% and 86%, respectively on June 30, 2007. Barrington’s decrease in occupancy is due in part to the rental market in the Little Rock area. Management is currently giving rent concessions to all prospective tenants of Barrington. Lately, concessions in the Little Rock area have been more aggressive. Because of the damages incurred by Hurricane Katrina in August 2005, Waverly is uninhabitable. Waverly is located in Bay Saint Louis, Mississippi. Due to the effects of Hurricane Katrina, competitive conditions in this area of Mississippi are difficult to ascertain at this time. The occupancy at Northtown Business Center is 95%. The commercial and industrial real estate market in North Kansas City continues at a steady growth pace. This is partly due to North Kansas City’s close proximity to downtown Kansas City, easy access and regional centrality. Lease rates at Northtown Business Center are consistent with market prices.

Comparison of Consolidated Results

For the six month periods ended June 30, 2007 and 2006, the Trust’s consolidated revenues from continuing operations were $5,686,000 and $3,983,000, respectively. Revenues increased $1,703,000 (43%) for the six month period ended June 30, 2007 as compared to the same period ended June 30, 2006. The increase is due primarily to the 2006 acquisitions of Northtown Business Center and Valley Forge, and the 2007 acquisition of Highland Pointe. Highland Pointe provided an additional $837,000 of revenues for the six month period ended June 30, 2007. Northtown Business Center provided an additional $644,000 for the six month period ended June 30, 2007.

For the six month periods ended June 30, 2007 and 2006, the Trust’s consolidated operating expenses were $4,878,000 and $3,356,000, respectively. Expenses increased $1,552,000 (45%) for the six month period ended June 30, 2007, as compared to the same period ended June 30, 2006. This increase is due primarily to the properties acquired in 2006 and the acquisition of Highland Pointe in 2007. The acquisitions of Northtown Business Center and Valley Forge increased operating expenses by $375,000 for the six month period ended June 30, 2007. The acquisition of Highland Pointe increased operating expenses by $823,000 for the six month period ended June 30, 2007. For the six months ended June 30, 2007, depreciation and amortization expense increased by $541,000, interest expense increased by $469,000, repairs and maintenance expense increased $95,000, utility expense increased $266,000 and other operating expenses increased by $183,000. These increases pertain to the additional investment assets associated with the acquisition of Northtown Business Center, Valley Forge and Highland Pointe.

The net loss from continuing operations before minority interest for the six month period ended June 30, 2007 was ($714,000) or ($.51) per share. The net loss from continuing operations before minority interest for the six-month period ended June 30, 2006 was ($235,000) or ($.17) per share.

MARKET RISK

The debt on the Landings is at a fixed rate of 6.19% and matures in 2016; the debt on Chalet is at fixed rates of 6.59% and 6.535% and matures in 2008; and the debt on Barrington Hills is at a fixed rate of 6.035%, is repriced in 2009 and matures in 2029. The debt on Terrace is at a fixed rate of 6.87% and matures in 2009. The debt on Forest Park is at a fixed rate of 5.29% and matures in 2015. The debt on Bicycle Club is at a fixed rate of 6.19% and matures in 2016. King’s Court/Terrace is at a variable rate and matures in 2009. The debt on Highland Pointe is at a fixed rate of 5.67% and matures on 2017. A 100 basis point increase in the variable rate debt on an annual basis would impact net income by approximately $22,000. The Bicycle Club, Landings and Valley Forge notes will allow prepayment in full, subject to compliance with the prepayment terms as set forth in the promissory note, including payment of the applicable prepayment premium. The prepayment penalty is the greater of 1% of the amount of principal being prepaid or the yield maintenance calculation as contained in the note. In regards to Northtown Business Center, at closing the Trust paid a $31,500 nonrefundable prepayment buy-out payment which allows the Trust to prepay all or part of the outstanding principal balance of the mortgage loan on any monthly payment date without payment of any further prepayment charge or fee.

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INFLATION

The effects of inflation did not have a material impact upon the Trust's operations during the current period.

ITEM 3:   CONTROLS AND PROCEDURES

(a)      Evaluation of disclosure controls and procedures.

The Trust’s Chief Executive Officer and Chief Financial Officer have evaluated the disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date, the Trust’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Registrant in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC for filing the Registrant’s periodic report. This determination is a result of the material weakness identified in the fourth quarter of 2006 in conjunction with the audit of the Trust’s financial statements for the fiscal year ended December 31, 2006. See Item 8A of our annual report on Form 10-KSB for information related to the finding of the material weakness.

(b)     Changes in internal controls

There has been no change in the Trust’s internal controls over financial reporting during its most recent fiscal quarter from that of December 31, 2006. The Trust is in the process of analyzing in conjunction with its new auditors a plan to ensure the Trust has adequate technical accounting resources related to financial statement preparation and disclosures. The Trust is currently evaluating their options to mitigate the control deficiency. The Trust anticipates the timing of their changes to be during the next quarter.

PART II    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

                    Maxus Realty Trust, Inc. v. FF Park Lane Associates, L.P., et al.

On June 14, 2005, the Trust entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the "Purchase Agreement") with FF Park Lane Associates, L.P., a Texas limited partnership ("Seller") pursuant to which the Trust agreed to purchase a 168 multi-family unit apartment complex that is located at 3007 Antelope Trail, Temple, Texas, known as Westgate Park Apartments II (the "Property"), subject to the terms and conditions provided in the Purchase Agreement, for a purchase price of approximately $4.75 million (the "Purchase Price"), subject to standard prorations (the "Transaction"). On July 1, 2005, the Trust's Board of Trustees approved the Transaction. In accordance with the terms of the Purchase Agreement, the Trust paid $100,000 of the Purchase Price to an escrow agent as a deposit (the "Deposit").

The Purchase Price is comprised of (i) the $100,000 Deposit, (ii) the Trust's assumption of a mortgage loan of Lehman Brothers Bank, FSB (the "Lender") in the amount of $3,800,000 (the "Existing Mortgage") and (iii) the balance of approximately $940,000 payable in cash on the closing date.

However, the Transaction did not close as a result of a dispute between the Trust and Seller. Shortly prior to the anticipated closing of the Transaction, the Trust discovered that the 2005 property taxes for the Property increased by more than $50,000 from the 2004 property taxes for the Property. In providing certain due diligence information to the Trust on May 26, 2005, Seller included 2003 and 2004 tax statements, but failed to include the 2005 tax assessment for the Property, which the Trust learned Seller apparently received on May 2, 2005.

As a result, the Trust requested a reduced purchase price. On November 2, 2005 Seller notified the Trust in writing that the Trust had defaulted under the Purchase Agreement claiming Seller had satisfied all of

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its closing conditions under the Purchase Agreement. Seller also requested the escrow agent deliver the Deposit to Seller if the Trust had not remedied the default prior to 5:00 pm, November 4, 2005. On November 2, 2005, the Trust notified Seller in writing that Seller had not satisfied certain conditions to closing. On November 4, 2005, the Trust sent Seller a letter requesting a $570,000 purchase price reduction to offset the economic impact of the increased property tax assessment on the Property.

On November 4, 2005, the Trust filed a lawsuit in the Circuit Court of Clay County, Missouri, Case No. CV105-010030 against Seller and its general partner GAF Park Lane, Inc. (the "Defendants") for breach of contract and fraud. The Trust requested that the court (i) order the Defendants to specifically perform the Purchase Agreement by conveying the Property to the Trust and (ii) award the Trust its damages, primarily $570,000 in actual damages, as well as punitive damages, attorneys' fees and expenses.

Seller filed a motion to dismiss based on a lack of personal jurisdiction, which was briefed and argued on April 26, 2006. On May 15, 2006, the court denied Seller's motion to dismiss. On June 9, 2006, Seller filed its answer and counterclaim, alleging that the Trust breached the Purchase Agreement by not closing the transaction. Seller has requested as damages the earnest money deposit made by the Trust and attorneys' fees and costs. Trial to the court was held on July 18, 2007.  The court took the matter under advisement and requested further briefing.  A determination is expected later this year.  At this date it is not possible to predict the outcome of this litigation, but management does not believe resolution of this matter will be material to the results of the Trust.

Maxus Realty Trust, Inc. v. RSUI Indemnity Company

On September 7, 2006, the Trust filed a lawsuit against RSUI Indemnity Company (“RSUI”) in the United States District Court for the Western District of Missouri (Case No. 06-0750-CV-W-ODS).  The lawsuit alleges breach of contract and vexatious refusal by RSUI for its failure to fulfill its indemnity obligations under the commercial property insurance policy issued to the Trust by RSUI covering Waverly Apartments, located in Bay St. Louis, Mississippi, which was damaged by Hurricane Katrina.

The Trust has requested relief from the court for (i) compensatory damages in an amount to be determined at trial, including interest and special damages, (ii) pre-judgment and post-judgment interest on such compensatory damages, and (iii) all of our costs in bringing the action including attorneys’ fees.

The Trust received a check in the amount of $344,557 from RSUI on October 25, 2006. It is believed that this amount represented partial payment of an undisputed portion of the property damage claim related to Hurricane Katrina. This check was offered to the Trust without prejudice to the Trust’s rights to claim additional sums in the ongoing litigation. Management intends to vigorously pursue this matter. At this date the amount of any additional recovery by the Trust cannot be estimated.  A trial date of January 28^th, 2008 is presently scheduled.

ITEM 2.      UNREGISTERED SALES OF EQUITY SECURTIES AND USE OF PROCEEDS

None

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

See Note 6 of the Notes to Unaudited Condensed consolidated Financial Statements incorporated herein   by this reference, with respect to the sale of the ACI Building.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  On May 8, 2007, the Trust held its Annual Meeting of Shareholders. At the meeting the following matterswere voted on by the shareholders:

1.   The following individuals were the nominees of management voted upon and elected as trustees by the shareholders of the Trust at the meeting to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualify: Monte McDowell, Danley K. Sheldon, Jose Evans, Kevan

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Acord, David L. Johnson, Chris Garlich and W. Robert Kohorst. There were 967,723 votes "for" Mr. McDowell and 114,812 votes "withheld." There were 971,748 votes "for" Mr. Sheldon and 110,787 votes "withheld." There were 971,273 votes "for" Mr. Evans and 111,262 votes “withheld." There were 971,073 votes "for" Mr. Acord and 111,462 votes "withheld." There were 972,733 votes "for" Mr. Johnson and 109,802 votes “withheld."  There were 971,043 votes "for" Mr. Garlich and 111,492 votes “withheld."  There were 971,273 votes "for" Mr. Kohorst and 111,262 votes "withheld."

ITEM 5.       OTHER INFORMATION

(a) On July 17, 2007, the Board of Trustees of the Trust declared a cash dividend of $0.20 per share payable to the holders of record on August 31, 2007 of the Trust's $1.00 par value, common stock. The dividend will be paid on or about September 21, 2007.

ITEM 6.      EXHIBITS

   See Exhibits Index on Page 22.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

			MAXUS REALTY TRUST, INC.
Date:	August 9, 2007	By:	/s/ David L. Johnson
			David L. Johnson
			Chairman of the Board,
			President and Chief Executive Officer
			Trustee
Date:	August 9, 2007	By:	/s/ John W. Alvey
			John W. Alvey
			Treasurer and
			Principal Financial Officer

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EXHIBIT INDEX

Exhibit
Number	Description
3.1	Articles of Incorporation of the Registrant, as amended, are incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005, as filed pursuant to Rule 13a-13 under the Securities Exchange Act of 1934 (File No. 000-13754).
3.2	Bylaws of the Registrant, as amended May 22, 2006, are incorporated by reference to Exhibit 3.2, to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006, as filed pursuant to Rule 13a-13 under the Securities Exchange Act of 1934 (File No. 0000-13754)
31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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