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, 2001 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 (ZipCode)
Indianapolis, Indiana 46204
(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 1,742,634 shares
Part I. Financial Information
Century Realty Trust and Subsidiaries
Consolidated Balance Sheets
June December
30, 2001 31, 2000
___________ ___________
Unaudited See Note 1
Assets
Real estate investments:
Land $3,776,383 $3,776,383
Buildings 52,351,274 52,231,244
Equipment 1,364,058 1,301,796
Allowances for depreciation (13,882,583) (13,011,130)
___________ ___________
43,609,132 44,298,293
Net investment in direct financing leases 210,822 229,698
___________ ___________
43,819,954 44,527,991
Cash and cash equivalents 901,307 781,215
Restricted cash 1,284,128 1,295,266
Accounts and accrued income receivable 235,323 130,998
Unamortized management contracts 417,308 449,826
Unamortized mortgage costs 433,931 441,906
Undeveloped land 99,675 99,675
Other assets 75,358 94,259
___________ ___________
$47,266,984 $47,821,136
___________ ___________
___________ ___________
Liabilities and shareholders' equity
Liabilities:
Short-term debt $3,000,000 $3,000,000
Mortgage notes payable 30,755,080 31,013,235
Accounts payable and accrued liabilities 405,114 426,647
Interest 222,493 251,817
State income and property taxes 1,394,972 1,391,927
Tenants' security deposits and unearned income 619,067 503,952
___________ ___________
36,396,726 36,587,578
Minority interest in operating partnerships 926,079 1,149,187
Shareholders' equity:
Shares of Beneficial Interest, no par
value - authorized 5,000,000 shares,
issued 1,757,239 shares (1,743,243 shares
at December 31, 2000), including 19,207
shares (16,806 shares at December 31, 2000)
in treasury 9,210,344 9,043,334
Overdistributed income other
than from gain on the sale of real estate (383,851) (104,950)
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (198,392) (170,091)
___________ ___________
9,944,179 10,084,371
___________ ___________
$47,266,984 $47,821,136
___________ ___________
___________ ___________
See accompanying notes.
Century Realty Trust and Subsidiaries
Consolidated Statements of Income
Three Months Six Months
Ended June 30 Ended June 30
_______________________ _______________________
2001 2000 2001 2000
___________ ___________ ___________ ___________
Income:
Real estate operations:
Rental Income $3,177,590 $3,277,125 $6,359,134 $6,466,489
Income from direct
financing leases 7,086 8,285 14,172 16,571
Other income 67,732 56,077 139,623 129,532
__________ ___________ ___________ ___________
3,252,408 3,341,487 6,512,929 6,612,592
Less:
Operating expenses 1,437,430 1,359,950 2,837,800 2,631,068
Depreciation 476,201 452,248 908,728 904,347
Real estate taxes 316,684 314,479 675,076 671,763
__________ ___________ ___________ ___________
2,230,315 2,126,677 4,421,604 4,207,178
__________ __________ __________ __________
1,022,093 1,214,810 2,091,325 2,405,414
Interest 11,449 21,312 26,102 40,707
__________ ___________ ___________ ___________
1,033,542 1,236,122 2,117,427 2,446,121
Expenses:
Interest 669,951 729,583 1,384,308 1,478,520
State income taxes 30,453 32,092 61,106 63,768
General and administrative 146,831 138,649 297,202 289,728
__________ ___________ ___________ ___________
847,235 900,324 1,742,616 1,832,016
___________ ___________ ___________ ___________
Income before minority
interest in operating
partnerships 186,307 335,798 374,811 614,105
Minority interest in
operating partnerships 24,139 (33,018) 39,673 (18,591)
__________ ___________ ___________ ___________
Net income $210,446 $302,780 $414,484 $595,514
__________ __________ __________ __________
__________ __________ __________ __________
Per share data:
Basic earnings $0.12 $0.18 $0.24 $0.35
Diluted earnings $0.12 $0.18 $0.24 $0.35
See accompanying notes.
Century Realty Trust and Subsidiaries
Consolidated Statements of Cash Flows
Six Months
Ended June 30
2001 2000
__________ __________
Operating Activities
Net income $414,484 $595,514
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation and amortization 931,702 929,005
Minority interest (39,673) 18,591
Changes in operating assets
and liabilities:
Restricted cash 11,138 16,190
Accounts and accrued income receivable (104,325) 147,612
Other assets (857) 58,851
Accounts payable and accrued liabilities (52,775) (60,602)
Tenants' security deposits and
unearned income 115,115 77,484
__________ __________
Net cash provided by operating activities 1,274,809 1,782,645
Investing Activities:
Purchase of property and improvements (182,294) (181,339)
Lease principal payments received 18,876 16,477
__________ __________
Net cash used in investing activities (163,418) (164,862)
Financing Activities:
Principal payments on mortgage notes payable (258,155) (312,117)
Sale of treasury shares 5,125 -
Purchase of shares for treasury (33,361) (129,625)
Dividends paid to shareholders (688,421) (677,852)
Distributions to holders of minority interest (16,487) (39,910)
__________ __________
Net cash used in financing activities (991,299) (1,159,504)
__________ __________
Net increase in cash and cash equivalents 120,092 458,279
Balance at beginning of period 781,215 883,730
__________ __________
Balance at end of period $901,307 $1,342,009
__________ __________
__________ __________
Supplemental Data:
Selected noncash activities related to
investing and financing activities were
as follows:
Issued 13,896 shares in 2001 and 181,609
shares in 2000 in exchange for like
numbers of operating partnership units
of controlled partnerships $166,947 $2,154,223
__________ __________
__________ __________
See accompanying notes.
Notes to Consolidated Financial Statements
Century Realty Trust and Subsidiaries
June 30, 2001
Unaudited
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with accounting principles
generally accepted in the United States 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 accounting principles
generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the three months and six months ended June 30, 2001 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 2001.
The balance sheet at December 31, 2000 has been derived from
the audited financial statements at that date but does not
include all of the information and footnotes required 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, 2000.
Note 2 - Interest in Operating Partnerships
The Trust, through its wholly-owned subsidiary, CR Management,
Inc., is the general partner in five limited partnerships each
of which owns, as its principal asset, a single apartment
property. CR Management, Inc. owns 2,972 partnership units.
Effective January 1, 2000, the Trust granted to each of the
beneficial owners of the remaining 286,908 partnership units the
right to exchange their units for an equal number of shares of
the Trust. Exchanges are exercised effective on the first day
of each calendar quarter. At December 31, 2000 the Trust owned,
in the aggregate 192,687, or 66.5%, of the 289,880 outstanding
partnership units.
During the six months ended June 30, 2001, the Trust issued
13,896 shares of beneficial interest in exchange for partnership
units. As of July 1, 2001, holders of 4,602 units elected to
exchange units for shares. Including the exchanges exercised
July 1, 2001, the Trust owns 211,285, or 72.9%, of the 289,880
outstanding operating partnership units. The equity interest
that the Trust does not own is described in the consolidated
financial statements as the minority interest in operating
partnerships.
Note 3 - Mortgage Notes Payable
Nine of the fifteen properties owned by the Trust are
encumbered by mortgage loans that are payable in monthly
installments totaling approximately $175,000, including interest
at rates ranging from 6.97% to 8.88% per annum, and which mature
from December 1, 2002 to August 1, 2008. Scheduled payments
during the three and six month periods ended June 30, 2001
decreased mortgage loan balances, in the aggregate, by $97,794
and $197,008, 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, 2001 decreased mortgage loan balances, in
the aggregate, by $29,755 and $61,147, respectively.
Note 4 - Short-Term Debt
As of June 30, 2001 and December 31, 2000, the Trust had
borrowed $3,000,000, the maximum borrowing limit, under its bank
line of credit. The Trust expects to repay the current balance
late in the third quarter of 2001 with proceeds from a long-term
mortgage loan on one of its apartment properties. The line of
credit rate of interest was 6.3% and 9.5% at June 30, 2001 and
December 31, 2000, respectively.
Note 5 - 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.
Item 2. 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, 2001 and 2000, 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
2000 annual report. At June 30, 2001 and 2000 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 2001,
and that operating income and expenses in the third quarter of
2001 will approximate the comparable amounts reported for the
second quarter of 2001.
Results of Operation
For the quarter and six months ended June 30, 2001, the Trust
reported decreases of 2.7% and 1.6%, respectively, in gross
income from real estate operations from the comparable 2000
periods. Gross income from apartment operations accounted for
91% and 76% of the decreases for the quarter and six month
periods. Income from apartment operations decreased by 2.6% and
1.3% over the prior year quarter and six month periods due to
lower occupancy rates that more than offset 1.1% higher average
rental rates. Economic occupancy for the second quarter of 2001
was 91.6%, down from 94.8% in the prior year quarter; and, for
the six months ended June 30, 2001, was 91.3%, down from 93.8%
during the comparable period of 2000.
Gross revenue from rental properties other than apartments
accounted for 5.4% of total income from rental operations in the
first half of 2001. Non-apartment revenue decreased by $25,200,
or 6.7% compared to the prior year half due entirely to the absence
of $22,900 of rental income from the Florida restaurant property
that was closed during the first five months of 2001. The
restaurant property was leased to a new operator in May, 2001.
Occupancy rates for the office and warehouse properties were 94%
during the first half of 2001 and 2000.
Operating expenses, excluding interest and depreciation, for
the apartment properties consumed 51.7% of gross possible income
for the second quarter of 2001, up from 49.8% for the prior year
period, and amounted to an increase of $75,800, or 4.6%. For
the six months ended June 30, 2001 and 2000, apartment operating
expenses were 51.1% and 48.9%, respectively, of gross possible
income, up $190,600, or 5.9%, from the comparable period of
2000. A comparatively severe winter season following a moderate
winter a year ago resulted in significantly higher maintenance
payroll costs and winter-related repair expenses during the
first half of 2001. Substantially higher costs for natural gas
during the winter contributed to a 6.2% increase in utilities
expenses in the 2001 period. Due to a decrease in occupancy
rates, advertising and marketing costs increased approximately
$20,000 and $45,000 for the second quarter and first half of
2001 over the comparable periods of 2000.
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. Real estate tax
expense increased by less than one percent in the 2001 periods
from the prior year periods.
Increases in trustee fees resulting from the addition of three
board members in 2000 and increases in legal, accounting and
other professional fees accounted for the increases of 5.9% and
2.6% in general and administrative expenses between the quarters
and six-month periods ended June 30, 2001 and 2000,
respectively. Administrative salaries and related payroll taxes
and benefits increased by 3.5% and 2.9% for the quarter and six
months ended June 30, 2000 from the prior year periods. In the
first half of 2001, general and administrative expenses consumed
4.6% of income from real estate operations, up from 4.4% in the
first half of 2000.
Interest expense related to loans outstanding throughout the
second quarter and six month periods of 2001 and 2000 declined
by $39,000 and $62,300, respectively. Approximately 70% of the
reductions resulted from lower interest rates on two variable
rate loans with unpaid balances totaling $6.05 million at June
30, 2001. Interest rates on the variable rate loans averaged
6.15% and 7.97% during the second quarters, and 7.30% and 8.56%
during the first six months of 2001 and 2000, respectively. In
December, 2000, the Trust borrowed $2.9 million on its bank line
of credit and used the proceeds, together with cash on hand, to
repay the $3.4 million balance on a mortgage loan that matured.
The net impact on interest expense amounted to reductions of
$19,700 and $30,100 for the quarter and six months of 2001
compared with the same periods of 2000.
Financial Condition and Liquidity
On July 5, 2001, the Trust declared a $.19 per share cash
distribution payable August 20, 2001 to shareholders of record
July 27, 2001. That distribution will require total disbursements
of $331,100. Two of the five controlled partnerships declared
surplus cash distributions that, in the aggregate, will result
in the payment of $4,700 to minority interest partners of record
on July 27, 2001.
Subsequent to June 30, 2001, the Trust embarked on a
restructuring program which, when completed, will convert the
Trust to an "UPREIT" format, under which properties owned by the
Trust will be transferred to Century Realty Properties, L.P., a
partnership in which the Trust is the sole general partner, with
a wholly-owned subsidiary, CRT Investments, Inc., as the sole
limited partner. On August 1, 2001, the Trust transferred title
to four unencumbered rental properties, including three
apartment properties and one office building to Century Realty
Properties, L.P. Properties encumbered by mortgage loans will
be transferred upon approval by the various mortgage lenders.
In connection with that restructuring, legal and other fees,
including those expected to be assessed by mortgage lenders, may
amount to $100,000, the majority of which will be incurred
before the end of 2001.
Other than the requirement for declared, but unpaid
distributions, and the cost to complete the restructuring,
management is not aware of any significant transactions or
events that would require material expenditures in the second
half of 2001.
Except for $3,000,000 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 2001. The Trust expects to
repay the short-term debt in August with proceeds of a
long-term mortgage loan on one of its presently unencumbered
apartment properties.
No transactions or events have occurred to indicate that funds
provided by operations during the second half of 2001 will
differ disproportionately from the first half of the year. At
June 30, 2001, the Trust, its subsidiaries and controlled
partnerships held, in the aggregate, approximately $901,000 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 2001
and 2000.
PART II. Other Information
Item 6(b). No events occurred during the three months
ended June 30, 2001, 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, 2001, and December 31, 2000,
and the results of its operations and its cash flow for the
three months and six months ended June 30, 2001, and June 30,
2000, in accordance with accounting principles generally accepted
in the United States 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 2000 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__8/10/2001__ By___S/______________________
John I. Bradshaw, Jr.
President and Treasurer
Date__8/10/2001__ By___S/______________________
David F. White
Controller