SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000 Commission File Number 0-7716
CENTURY REALTY TRUST
(Exact name of Registrant as specified in its charter)
INDIANA 35-1284316
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
823 Chamber of Commerce Building 46204
Indianapolis, Indiana (ZipCode)
(Address of principal executive offices)
Registrant's telephone number, including area code (317)632-5467
Indicate by check mark whether this 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 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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Shares of Beneficial Interest, no par value 1,723,377 shares
Century Realty Trust and Subsidiaries
Consolidated Balance Sheets
June December
30, 2000 31, 1999
___________ ___________
Assets
Real estate investments:
Land $3,776,383 $3,776,383
Buildings 52,184,319 52,085,208
Equipment 1,387,062 1,304,834
Allowances for depreciation (12,558,339) (11,690,079)
___________ ___________
44,789,425 45,476,346
Net investment in direct financing leases 246,174 262,651
___________ ___________
45,035,599 45,738,997
Cash and cash equivalents 1,342,009 883,730
Restricted cash 1,241,515 1,257,705
Accounts and accrued income receivable 286,971 434,583
Unamortized management contracts 482,343 514,861
Unamortized mortgage costs 466,002 490,661
Undeveloped land 99,675 99,675
Other assets 50,052 112,473
___________ ___________
$49,004,166 $49,532,685
___________ ___________
___________ ___________
Liabilities and shareholders' equity
Liabilities:
Short-term debt $100,000 $100,000
Mortgage notes payable 34,759,297 35,071,414
Accounts payable and accrued liabilities 462,471 516,089
Interest 249,534 263,795
State income and property taxes 1,405,197 1,392,522
Tenants' security deposits and unearned rent 563,037 485,553
___________ ___________
37,539,536 37,829,373
Minority interest in operating partnerships 1,300,155 3,475,699
Shareholders' equity:
Shares of Beneficial Interest, no par
value - authorized 5,000,000 shares,
issued 1,735,137 shares (1,553,528 shares
at December 31, 1999), including 16,806
shares (5,914 shares at December 31, 1999)
in treasury 8,913,640 6,759,417
Undistributed income other than from
gain on the sale of real estate 104,848 192,584
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (170,091) (40,466)
___________ ___________
10,164,475 8,227,613
___________ ___________
$49,004,166 $49,532,685
___________ ___________
___________ ___________
See accompanying notes.
Century Realty Trust and Subsidiaries
Consolidated Statements of Income
Three Months Six Months
Ended June 30 Ended June 30
_______________________ _______________________
2000 1999 2000 1999
___________ ___________ ___________ ___________
Income:
Real estate operations:
Rental Income $3,277,125 $3,176,985 $6,466,489 $6,389,301
Income from direct
financing leases 8,285 9,333 16,571 18,666
Other income 56,077 52,035 129,532 118,248
__________ ___________ ___________ ___________
3,341,487 3,238,353 6,612,592 6,526,215
Less:
Operating expenses 1,359,950 1,318,458 2,631,068 2,579,847
Depreciation 452,248 433,520 904,347 890,952
Real estate taxes 314,479 322,130 671,763 689,664
__________ ___________ ___________ ___________
2,126,677 2,074,108 4,207,178 4,160,463
__________ __________ __________ __________
1,214,810 1,164,245 2,405,414 2,365,752
Interest 21,312 25,104 40,707 39,786
__________ ___________ ___________ ___________
1,236,122 1,189,349 2,446,121 2,405,538
Expenses:
Interest 729,583 767,938 1,478,520 1,537,115
State income taxes 32,092 40,331 63,768 80,843
General and administrative 138,649 132,779 289,728 267,270
__________ ___________ ___________ ___________
900,324 941,048 1,832,016 1,885,228
___________ ___________ ___________ ___________
Income before minority
interest in operating
partnerships 335,798 248,301 614,105 520,310
Minority interest in
operating partnerships (33,018) (57,371) (18,591) (107,952)
__________ ___________ ___________ ___________
Net income $302,780 $190,930 $595,514 $412,358
__________ __________ __________ __________
__________ __________ __________ __________
Per share data:
Basic earnings $0.18 $0.12 $0.35 $0.27
Diluted earnings $0.18 $0.12 $0.35 $0.27
See accompanying notes.
Century Realty Trust and Subsidiaries
Consolidated Statements of Cash Flows
Six Months
Ended June 30
2000 1999
__________ __________
Operating Activities
Net income $595,514 $412,358
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation and amortization 929,005 915,480
Minority interest 18,591 107,952
Changes in operating assets
and liabilities:
Restricted cash 16,190 (135,294)
Accounts and accrued income receivable 147,612 (107,621)
Other assets 58,851 (9,496)
Accounts payable and accrued liabilities (60,602) 112,320
Tenants' security deposits and
unearned rent 77,484 (25,182)
__________ __________
Net cash provided by operations 1,782,645 1,270,517
Investing Activities:
Purchase of property and improvements (181,339) (262,467)
Lease principal payments received 16,477 16,929
__________ __________
Net cash used in investing activities (164,862) (245,538)
Financing Activities:
Net short-term borrowings - -
Principal payments on mortgage notes payable (312,117) (281,391)
Sale of treasury shares - 2,850
Purchase of shares for treasury (129,625) -
Dividends paid to shareholders (677,852) (613,861)
Distributions to minority interest (39,910) (88,930)
__________ __________
Net cash used in financing activities (1,159,504) (981,332)
__________ __________
Net increase in cash and cash equivalents 458,279 43,647
Balance at beginning of period 883,730 744,901
__________ __________
Balance at end of period $1,342,009 $788,548
__________ __________
__________ __________
Supplemental Data:
Selected noncash activities related to
investing and financing activities were
as follows:
Issued 181,609 shares of beneficial
interest in exchange for 181,609
operating partnership units of
controlled partnerships $2,154,223 $0
__________ __________
__________ __________
See accompanying notes.
NOTES TO FINANCIAL STATEMENTS
CENTURY REALTY TRUST
June 30, 2000
NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Trust's annual report on Form 10-K for the year ended December 31, 1999.
NOTE 2 - MORTGAGE NOTES PAYABLE
Ten of the fifteen properties owned by the Trust are encumbered by
mortgage loans that are payable in monthly installments totaling approximately
$210,000, including interest at fixed rates ranging from 6.97% to 9% per
annum, and which mature from December 1, 2000 to August 1, 2008. Scheduled
payments during the three months and six months ended June 30, 2000 decreased
mortgage loan balances, in the aggregate, by $127,977 and $256,942,
respectively.
The five apartment properties owned by the operating partnerships
controlled by the Trust have long-term mortgage loans that are payable in
monthly installments totaling approximately $76,000. The loans have interest
rates ranging from 8 1/8% to 8 7/8%, and mature from June 1, 2006 to May 1,
2030. Scheduled payments during the three months and six months ended June
30, 2000 decreased mortgage loan balances, in the aggregate, by $27,199 and
$55,175, respectively.
NOTE 3 - REAL ESTATE INVESTMENT TRANSACTIONS
In November, 1997, the Trust, through its wholly-owned subsidiary, CR
Management, Inc., acquired for 286,908 operating partnership units and other
consideration, the general partner interest in five limited partnerships each
of which owned as its principal asset a single apartment property. In
accordance with a provision in the agreement the Trust granted, effective
January 1, 2000, to all beneficial owners of partnership units the right to
exchange their units for an equal number of shares of the Trust. The
exchange offer provides that exchanges will be exercised effective on the
first day of each calendar quarter. As of January 1, 2000 and April 1, 2000,
holders of 160,110 and 21,499 units, respectively, elected to exchange units
for shares. The Trust immediately repurchased for treasury 10,892 of those
shares. On July 1, 2000, holders of 5,046 units elected to exchange units
for shares, none of which were repurchased. Following the exchanges as of
July 1, 2000, 100,253, or 34.9%, of the 286,908 outstanding operating
partnership units were held by minority interest partners.
NOTE 4 - FEDERAL INCOME TAXES
The Trust intends to continue as a real estate investment trust as
defined in the Internal Revenue Code and to distribute its taxable income.
Assuming compliance with other requirements of the Code, income distributed
will not be taxable to the Trust. Accordingly, no provision for federal
income taxes is made in the financial statements. Distributions, however, to
the extent that such payments are from earnings and profits of the Trust,
are taxable to the shareholder recipients as dividend income.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Contained in this discussion are forward-looking statements which
management believe to be reasonable and informative. Such statements are
based on assumptions which may not prove to be correct for reasons management
cannot predict. Consequently, the inclusion of forward-looking statements
should not be considered as representations by the Trust or its management
that expected results will be achieved or that stated objectives will be
attained.
At June 30, 2000 and 1999, and throughout the quarters and six month
periods then ended, the Trust owned or controlled fifteen apartment
communities containing 2,136 apartment units, three multi-tenant commercial
properties containing 89,000 rentable square feet, and two restaurant
properties leased to operators under net leases. Five of the fifteen
apartment communities containing a total of 586 units are owned by
partnerships over which the Trust has exclusive control. A detailed listing
of the investment real estate is contained on Page 2 of the Trust's 1999
annual report. At June 30, 2000 and 1999 the Trust's net investment in real
estate consisted of apartment properties (94%), commercial properties (5%)
and net-leased restaurant properties (1%). Except for one restaurant
property in Orlando, Florida, the Trust's real estate investments are located
in Indiana.
The apartment communities, which comprise 94% of the Trust's investment
property, also account for most of the rental income and expenses reported.
Management expects the real estate portfolio will be unchanged during the
third quarter of 2000, and that operating income and expenses in the third
quarter of 2000 will approximate the comparable amounts reported for the
second quarter of 2000.
RESULTS OF OPERATIONS
For the quarter and six months ended June 30, 2000, the Trust reported
increases of 3.2% and 1.4%, respectively, in gross income from real estate
operations over the comparable 1999 periods. Gross income from apartment
operations accounted for 102% and 119% of the increases for the quarter and
six month periods. Income from apartment operations increased by 3.4% and
1.7% over the prior year quarter and six month periods on the strength of
1.1% higher average rental rates and improved occupancy. Economic occupancy
for the second quarter of 2000 was 94.8%, up from 92.7% in the prior year
quarter; and, for the six months ended June 30, 2000, was 93.8%, up from
93.2% during the comparable period of 1999.
Gross revenue from rental properties other than apartments accounted for
5.6% percent of total income from rental operations in the first half of 2000.
Non-apartment revenue decreased by $16,500, or 4.3% compared to the prior
year half due to lower occupancy rates. Occupancy rates averaged 94% during
the first half of 2000, down from 98% during the comparable six months of
1999.
Operating expenses, excluding interest and depreciation, for the
apartment properties consumed 49.8% of gross possible income for the second
quarter of 2000, up from 49.6% for the prior year period, and amounted to an
increase of $25,070, or 1.5%. For the six months ended June 30, 2000 and
1999, apartment operating expenses were 48.9% and 49%, respectively, of
gross possible income, up $31,830, or 1%, from the comparable period of 1999.
A comparatively moderate winter season following an unusually severe winter
a year ago resulted in significantly lower winter-related repair expenses
during the first half of 2000. Snow and ice removal costs in early 2000
amounted to approximately $18,000, one half the cost incurred in the early
months of 1999.
Real estate taxes on Indiana property are assessed on March 1 each year
and are payable in two installments in the following calendar year. Real
estate tax expense for the current year periods represents one-fourth
(quarter) and one-half (six months) of the estimated real estate taxes
payable during the next calendar year. Estimates are based on actual tax
payments during the current year with allowances for anticipated rate
increases comparable with past experience.
Increases in legal, accounting and other professional fees accounted for
the increases of 4.4% and 8.4% in general and administrative expenses between
the quarters and six-month periods ended June 30, 2000 and 1999, respectively.
Annual listing fees for NASDAQ of $6,900 and an increase of $12,100 in legal
fees related to general business matters accounted for 85% of the increase in
general and administrative expenses between the six month periods ended June
30, 2000 and 1999. Administrative salaries and related payroll taxes and
benefits changed by less than 1% for the quarter and six months ended June
30, 2000 from the prior year periods. In the first half of 2000, general and
administrative expenses consumed 4.4% of income from real estate operations,
up from 4.1% in the first half of 1999.
Interest expense related to loans outstanding throughout the second
quarter and six month periods of 2000 and 1999 declined by $38,400 and
$58,600, respectively. A contract-provided interest rate re-set to market
on a mortgage loan with an unpaid balance of $5.07 million reduced the
annual percentage rate from 9.5% to 8.15% effective April 1, 2000. That
rate reduction resulted in a decrease in interest expense of approximately
$17,000 for the quarter and six month periods. The next interest rate re-set
to market on that loan is scheduled for October 1, 2000. The balance of the
decrease in interest expense from the quarter and six months a year ago
resulted from the scheduled reduction of loan balances. Scheduled reduction
of mortgage loan balances on partnership-owned properties accounted for
$1,900 and $4,000 of the reduction in interest expense for the quarter and
six month periods, respectively.
FINANCIAL CONDITION AND LIQUIDITY
On July 6, 2000, the Trust declared a $.21 per share cash distribution
payable August 14, 2000 to shareholders of record July 28, 2000. That
distribution will require total disbursements of $361,909. Four of the five
controlled partnerships declared surplus cash distributions that, in the
aggregate, will result in the payment of $17,400 to minority interest
partners of record on July 28, 2000.
Other than the requirement for declared, but unpaid distributions,
management is not aware of any significant transactions or events that would
require material expenditures in the second half of 2000.
Except for $100,000 of short-term debt, the Trust has no obligations,
nor has it made any commitments, which will require expenditures in excess
of funds anticipated to be provided by operations during the remainder of
2000. No transactions or events have occurred to indicate that funds
provided by operations during the balance of 2000 will differ
disproportionately from the first half of the year. At June 30, 2000, the
Trust held approximately $1,342,000 in unrestricted cash which management
believes is sufficient to meet anticipated working capital requirements.
INFLATION
Management believes that the direct effects of inflation on the Trust's
quarterly operations have been insignificant during 2000 and 1999.
PART II
Item 6(b). No events occurred during the three months ended June 30,
2000, which would have necessitated the filing of a report on Form 8K.
MANAGEMENT REPRESENTATIONS
The information furnished in this report, while not audited, includes
all adjustments, in the opinion of management, necessary for a fair
representation of the financial position of Century Realty Trust at June 30,
2000, and December 31, 1999, and the results of its operations and its cash
flow for the three months and six months ended June 30, 2000, and June 30,
1999, in accordance with generally accepted accounting principles consistently
applied. The interim results reported are not necessarily indicative of
expected results for the full year, and should be considered in conjunction
with the audited financial statements contained in the Trust's 1999 annual
report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY REALTY TRUST
Date_____________ By___________________________
John I. Bradshaw, Jr.
President and Treasurer
Date_____________ By___________________________
David F. White
Controller