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 March 31, 1996 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.)
419 Chamber of Commerce Building 46204
Indianapolis, Indiana (Zip Code)
(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 1,453,939 shares
BALANCE SHEETS
Century Realty Trust
March December
31, 1996 31, 1995
__________ __________
Unaudited
Assets
Real estate investments:
Land $2,068,658 $2,068,658
Buildings 32,804,016 32,778,431
Equipment 814,252 765,401
Allowances for depreciation (6,787,960) (6,511,045)
----------- -----------
28,898,966 29,101,445
Net investment in direct financing leases 473,880 483,977
----------- -----------
29,372,846 29,585,422
Cash and cash equivalents 200,033 189,929
Certificates of deposit 787,971 293,946
Accounts and accrued income receivable 389,411 309,873
Undeveloped land 99,675 99,675
Other assets 343,388 283,238
----------- -----------
$31,193,324 $30,762,083
------------ ------------
------------ ------------
Liabilities and shareholders' equity
Liabilities:
Short-term debt $700,762 $700,762
Mortgage notes payable 19,673,365 19,748,063
Accounts payable and accrued compensation 310,475 298,553
Accrued interest 131,793 132,056
State income and property taxes 1,249,951 972,368
Tenants' security deposits and unearned rent 411,654 424,830
------------ ------------
22,478,000 22,276,632
Shareholders' equity:
Shares of Beneficial Interest, no par value-authorized
5,000,000 shares, issued 1,529,353 shares, including
75,414 shares in treasury (77,414 shares at
December 31, 1995 6,249,104 6,245,289
Undistributed income other than from
gain on the sale of real estate 1,666,161 1,453,788
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (516,019) (529,704)
------------ ------------
8,715,324 8,485,451
------------ ------------
$31,193,324 $30,762,083
------------ ------------
------------ ------------
See accompanying notes.
STATEMENTS OF INCOME
Century Realty Trust
Unaudited
Three Months
Ended March 31,
________________________
1996 1995
__________ ____________
Income
Real estate operations:
Rental Income $2,018,319 $1,578,997
Income from direct financing leases 15,212 16,427
----------- -----------
2,033,531 1,595,424
Less:
Real estate operating expenses 750,937 571,818
Provision for depreciation 277,590 230,760
Real estate taxes 243,450 200,460
----------- -----------
1,271,977 1,003,038
----------- -----------
761,554 592,386
Interest 6,786 6,870
Sundry 42,342 25,627
----------- -----------
810,682 624,883
Expenses
Interest 466,723 325,585
State income taxes 34,861 29,795
General and administrative 96,725 94,228
----------- -----------
598,309 449,608
----------- -----------
Net income $212,373 $175,275
----------- -----------
----------- -----------
Net income per share of
Beneficial Interest $0.15 $0.13
----------- -----------
----------- -----------
Weighted average number
of shares outstanding 1,453,272 1,381,351
See accompanying notes.
STATEMENTS OF CASH FLOW
Century Realty Trust
Unaudited
Three Months
Ended March 31,
_________________________
1996 1995
__________ ___________
Operating Activities
Net income $212,373 $175,275
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 284,685 236,781
Changes in operating assets and liabilities:
Increase in accounts and income
receivable (79,538) (46,438)
Increase in prepaid expenses and other assets (67,920) (59,333)
Increase in accounts payable and accrued expenses 290,466 278,669
Increase (decrease) in tenants' security deposits
and unearned rents (13,176) 78,053
--------- -----------
Net cash provided by operations 626,890 663,007
Investing Activities
Investment in certificates of deposit (592,735) (792,198)
Proceeds from matured certificates of deposit 98,711 296,736
Acquisition of real estate, net of debt assumed 0 (5,930,835)
Purchase of property improvements and replacements (74,436) (56,346)
Principal payments received under leases 10,097 8,882
--------- -----------
Net cash used in investing activities (558,363) (6,473,761)
Financing Activities
Proceeds from sale of treasury shares 17,500 0
Short-term bank borrowing 0 545,762
Proceeds from long-term mortgage loans 0 5,368,000
Principal payments on mortgage notes payable (74,698) (46,821)
Dividends paid to shareholders (1,225) (2,284)
--------- -----------
Net cash provided by (used in) financing activities (58,423) 5,864,657
--------- -----------
Net increase (decrease) in cash and cash equivalents 10,104 53,903
Balance at beginning of period 189,929 58,491
--------- -----------
Balance at end of period $200,033 $112,394
--------- -----------
--------- -----------
See accompanying notes.
NOTES TO FINANCIAL STATEMENTS
CENTURY REALTY TRUST
Unaudited
NOTE 1 - REAL ESTATE INVESTMENT TRANSACTIONS
On March 31, 1995, the Trust purchased the Fox Run Apartments, a
256-unit garden apartment property in Indianapolis, Indiana. The
purchase price was $6.9 million including prorations and assumed liabilities
of approximately $240,000. The balance of the purchase price consisted of
a new 9.5%, 10-year first mortgage loan for $5.4 million from a bank, and
70,588 unregistered shares of beneficial interest valued at $600,000. To
complete the purchase, the Trust borrowed approximately $700,000 from a
bank under a $1 million line of credit which it expects to repay with
proceeds from refinancing other real estate.
NOTE 2 - MORTGAGE NOTES PAYABLE
Eight of the Trust's properties are encumbered by mortgage loans that
are payable in monthly installments totaling approximately $170,000, including
interest at rates ranging from 8.125% to 9.75% per annum, and which mature
from June 4, 1996 to March 31, 2005. The approximate aggregate amount of
scheduled mortgage loan repayments for each of the remaining quarters of
1996 are: second quarter, $76,300; third quarter, $78,600; and, fourth
quarter, $81,000.
A mortgage loan with a balance of $2 million will mature on June 4,
1996. That loan provides for the payment of interest only at the lender's
prime rate (currently 8.25%). The Trust intends to obtain a longer term
loan on the mortgaged property on or before the maturity date in an amount
sufficient to retire the present balance.
NOTE 3 - 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INVESTMENT ACTIVITY
The changes in the financial condition of the Trust, and the results of
its operations for the quarter ended March 31, 1996 and 1995 resulted
primarily from an investment property transaction in 1995. On March 31,
1995, the Trust purchased the Fox Run apartments, a 256-unit property in
Indianapolis, Indiana for $6.9 million. Including the cost of certain
improvements, the total acquisition cost was $7,036,000 ( $27,485 per unit).
With the addition of Fox Run, the Trust increased the number of apartments
it owns by 23% to 1,358 units and the number of apartment properties to nine,
all of which are located in Indiana.
FINANCING ACTIVITY
The purchase of the Fox Run apartments in 1995 was financed by a
combination of long-term and short-term loans. Approximately 75% of the
purchase price was paid with proceeds of a new 9.5%, 10-year first mortgage
loan. Short-term financing included approximately $700,000 borrowed from a
bank under an unsecured line of credit, which the Trust expects to repay with
proceeds from refinancing one of its other properties. Also, in connection
with the purchase of Fox Run, the Trust issued 70,588 unregistered shares of
beneficial interest worth $600,000.
RESULTS OF OPERATIONS
For the first quarter of 1996, the Trust reported significant increases
over the comparable 1995 period in both rental income and income from real
estate operations. In spite of a $46,830 increase in the provision for
depreciation, substantially all of which related to the Fox Run apartments,
reported net income increased by $37,098, or $.02 per share. The 21% increase
in net income was due primarily to improved results of operations from the
core properties (properties owned throughout the first quarter of 1996 and
1995). The Fox Run apartments acquired in 1995 and financing activities
related thereto, accounted for a decrease in net income of $19,832, after
provision for depreciation of $46,770.
The eight apartment properties (1,102 units) that the Trust owned
throughout the first quarters of 1996 and 1995 reported average three-month
occupancy rates of 96.9% and 96.6% for the two periods, respectively.
Average rental rates increased 3.3% for those properties over the prior year
period. The combined effect of higher occupancy rates and higher rental rates
resulted in a 3.7% increase in gross revenue from the core group of apartments.
Operating expenses, excluding interest and depreciation, for the same
properties amounted to 47.1% of gross possible income for the first quarter of
1996, down from 47.7% for the prior year period, and amounted to an increase
of less than 2% in total operating expenses.
For the Fox Run apartments, occupancy averaged 97.2% and operating
expenses, as a percent of gross possible income, amounted to 51.8% for the
first quarter of 1996. Both of these performance measures represent
improvements over the comparable percentages of 95.6% and 52.8%, respectively,
experienced during the nine months of 1995 that the Trust owned Fox Run.
Rental properties other than apartments, which accounted for 4.1%
percent of total rental income in the first quarter of 1996, produced a 22.7%
($12,177) increase in net operating income compared with the prior year. Rental
income, primarily on the strength of higher occupancy rates, was up $12,721,
or 17.6%, while operating expenses decreased by 2.9%.
Due to investing and financing activities related to the purchase of Fox
Run in 1995, interest expense was approximately $146,500 higher for the first
quarter of 1996 than for the comparable prior year quarter. Interest expense
related to loans outstanding throughout the first quarters of 1996 and 1995
declined by $4,500 due the scheduled reduction of loan balances, and $2,025
due to lower rates applicable to one variable-rate mortgage loan which provides
for interest at the prime rate.
FINANCIAL CONDITION AND LIQUIDITY
At March 31,1996, the Trust held approximately $988,000 in cash and
certificates of deposit. It invests funds in excess of immediate cash needs
in U.S. government securities and FDIC-insured certificates of deposit. 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 1996. No transactions or events have occurred to indicate
that funds provided by operations during the balance of 1996 will differ
disproportionately from the first quarter of the year.
Management expects to repay the $700,762 of short-term debt with proceeds
from new mortgage borrowing on other property owned by the Trust. The
$2,000,000 variable rate mortgage loan which matures June 4, 1996, will be
repaid with the proceeds of a new loan, with the same property presently
encumbered serving as collateral. Management believes that the balance of
the loan represents less than 60% of the market value of the property, and that
the full amount will be refinanced.
The Trust intends to continue as a real estate investment trust, and to
distribute all of its earnings. Accordingly, no provision has been made for
federal income taxes. The Trust has, since 1978, followed a practice of making
cash distributions to its shareholders in June and December each year. On
May 1, 1996, the Board of Trustees declared a cash distribution of $.40 per
share to be paid June 17, 1996 to shareholders of record May 17, 1996. In
December, 1995, the Trust paid $.40 per share, and in June, 1995, $.38 per
share. With 1,453,939 shares currently outstanding, the June, 1996,
distribution will require the disbursement of $581,576.
INFLATION
Management believes that the direct effects of inflation on the Trust's
operations have been insignificant.
PART II
Item 6(b). No events occurred during the three months ended March 31,
1996, 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 March
31, 1996, and December 31, 1995, and the results of its operations and its
cash flow for the three months ended March 31, 1996, and March 31, 1995, 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 1995 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.
Executive Vice President,
Secretary and Treasurer
Date_____________ By___________________________
David F. White
Controller