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, 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
June December
30, 1996 31, 1995
____________ ____________
Unaudited
Assets
Real estate investments:
Land $2,068,658 $2,068,658
Buildings 32,885,194 32,778,431
Equipment 829,720 765,401
Allowances for depreciation (7,064,874) (6,511,045)
____________ ____________
28,718,698 29,101,445
Net investment in direct financing leases 463,783 483,977
____________ ____________
29,182,481 29,585,422
Cash and cash equivalents 162,183 189,929
Certificates of deposit and U.S. government
agency securities 491,073 293,946
Accounts and accrued income receivable 408,085 309,873
Undeveloped land 99,675 99,675
Other assets 284,973 283,238
____________ ____________
$30,628,470 $30,762,083
____________ ____________
____________ ____________
Liabilities and shareholders' equity
Liabilities:
Short-term debt $0 $700,762
Mortgage notes payable 20,349,410 19,748,063
Accounts payable and accrued compensation 299,879 298,553
Accrued interest 129,775 132,056
State income and property taxes 1,047,130 972,368
Tenants' security deposits and unearned rent 417,575 424,830
____________ ____________
22,243,769 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 1,335,538 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)
____________ ____________
8,384,701 8,485,451
____________ ____________
$30,628,470 $30,762,083
____________ ____________
____________ ____________
See accompanying notes.
STATEMENTS OF INCOME
Century Realty Trust
Unaudited
Three Months Six Months
Ended June 30, Ended June 30,
____________________ ______________________
1996 1995 1996 1995
__________ __________ __________ __________
Income
Real estate operations:
Rental Income $2,006,016 $1,956,820 $4,024,335 $3,535,817
Income from direct financing
leases 15,213 16,427 30,425 32,854
__________ __________ __________ __________
2,021,229 1,973,247 4,054,760 3,568,671
Less:
Real estate operating expenses 754,629 736,479 1,505,566 1,308,297
Provision for depreciation 277,590 276,480 555,180 507,240
Real estate taxes 196,640 195,813 440,090 396,273
__________ __________ __________ __________
1,228,859 1,208,772 2,500,836 2,211,810
__________ __________ __________ __________
792,370 764,475 1,553,924 1,356,861
Interest 11,962 8,577 18,748 15,447
Sundry 39,435 39,100 81,777 64,727
__________ __________ __________ __________
843,767 812,152 1,654,449 1,437,035
Expenses
Interest 462,437 482,871 929,160 808,456
State income taxes 35,647 36,200 70,508 65,995
General and administrative 94,730 91,908 191,455 186,136
__________ __________ __________ __________
592,814 610,979 1,191,123 1,060,587
__________ __________ __________ __________
Net income $250,953 $201,173 $463,326 $376,448
__________ __________ __________ __________
__________ __________ __________ __________
Net income per share of
Beneficial Interest $0.17 $0.15 $0.32 $0.27
__________ __________ __________ __________
__________ __________ __________ __________
Weighted average number
of shares outstanding 1,453,716 1,381,351 1,453,494 1,381,351
See accompanying notes.
STATEMENTS OF CASH FLOW
Century Realty Trust
Unaudited
Six Months
Ended June 30,
1996 1995
___________ ___________
Operating Activities
Net income $463,326 $376,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 569,841 520,087
Changes in operating assets and liabilities:
Increase in accounts and income
receivable (98,212) (93,694)
Increase in prepaid expenses and other assets (17,746) (82,307)
Increase in accounts payable and accrued expenses 69,113 6,187
Increase (decrease) in tenants' security deposits
and unearned rents (7,255) 90,994
___________ ___________
Net cash provided by operations 979,067 817,715
Investing Activities
Investment in certificates of deposit (1,183,394) (988,789)
Proceeds from matured certificates of deposit 986,267 990,197
Acquisition of real estate, net of debt assumed 0 (5,936,913)
Purchase of property improvements and replacements (171,082) (130,927)
Principal payments received under leases 20,194 17,764
___________ ___________
Net cash used in investing activities (348,015) (6,048,668)
Financing Activities
Proceeds from sale of treasury shares 17,500 0
Short-term bank borrowing (700,762) 545,762
Proceeds from long-term mortgage loans 730,492 5,368,000
Principal payments on mortgage notes payable (129,145) (125,438)
Dividends paid to shareholders (576,883) (528,276)
___________ ___________
Net cash provided by (used in) financing activities (658,798) 5,260,048
___________ ___________
Net increase (decrease) in cash and cash equivalents (27,746) 29,095
Balance at beginning of period 189,929 58,491
___________ ___________
Balance at end of period $162,183 $87,586
___________ ___________
___________ ___________
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, under a $1 million line of credit, borrowed approximately $700,000
from a bank which it repaid in May, 1996 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 October 4, 1996 to March 31, 2005. The approximate aggregate amount of
scheduled mortgage loan repayments for each of the remaining quarters of 1996
are: third quarter, $78,600; and, fourth quarter, $81,000.
A mortgage loan with a balance of $2 million will mature October 4, 1996
(extended from 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 six months ended June 30, 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 repaid on May 16, 1996
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 half of 1996, the Trust reported a 13.8% increase in
rental income over the comparable 1995 period. Rental income derived from
the Fox Run apartments during the first quarter of 1996, accounted for 77% of
the increase. In spite of a $47,940 increase in the provision for
depreciation, all of which related to the Fox Run apartments, reported net
income increased by $86,878, or $.05 per share. Of the total increase in net
income. $67,507 (78%) was due to improved operating results of the core
properties (properties owned throughout the first half of 1996 and 1995).
The Fox Run apartments acquired in 1995, and financing activities related
thereto, accounted for an increase in net income of $19,371, or $.01 per
share, after an increase in provision for depreciation of $48,000.
The eight apartment properties (1,102 units) that the Trust owned
throughout the first half of 1996 and 1995 experienced average six-month
economic occupancy rates of 96.7% and 96.2% for the two periods, respectively.
Average rental rates increased 2.7% for those properties over the prior year
period. The combined effect of higher occupancy rates and higher rental rates
resulted in a 3.2% increase in gross revenue from the core group of apartments.
Operating expenses, excluding interest and depreciation, for the same
properties amounted to 46.7% of gross possible income for the first half of
1996, up slightly from 46.6% for the prior year period, and amounted to an
increase of 2.6% in total operating expenses.
For the second quarter, net income of the Trust, as a whole, increased
by $49,780, or 24.7%, over the comparable quarter of 1995. The increase
resulted primarily from improved performance of the apartment properties.
While economic occupancy remained steady at 96% during the second quarters of
1996 and 1995, rental rates increased by an average of 2.7%. Apartment
operating expenses increased by 2% from the second quarter of 1995, to 46.9%
of gross possible income. An eleven percent increase in the cost of utilities
accounted for more than one-half of the total expense increase.
For the Fox Run apartments, economic occupancy during the first half of
1996 averaged 95.5% and operating expenses, as a percent of gross possible
income, amounted to 50.9%. For the second quarters of 1996 and 1995, economic
occupancy rates were 95.8% and 93.8%, resectively, while operating expenses,
as a percent of gross possible income, declined from 53.2% for the 1995
quarter to 50% for the 1996 quarter. During the nine months of 1995 that the
Trust owned Fox Run economic occupancy averaged 95.6% and operating expenses
amounted to 53.2% of gross possible income.
Rental properties other than apartments, which accounted for 4% percent
of total rental income in the first half of 1996, produced a 9.9% ($10,812)
increase in net operating income compared with the prior year. Rental income,
primarily on the strength of higher occupancy rates, was up $10,096, or 6.8%,
while operating expenses decreased by 1.8%. For the second quarter of 1996,
compared with the second quarter of 1995, a slight decrease in operating
expenses was offset by a decrease in rental income.
Due to investing and financing activities related to the purchase of Fox
Run in 1995, interest expense was approximately $135,700 higher for the first
half of 1996 than for the comparable half of the previous year. Interest
expense related to loans outstanding throughout the first half of 1996 and
1995 declined by $8,800 due the scheduled reduction of loan balances, and
$6,175 due to lower rates applicable to one variable-rate mortgage loan which
provides for interest at the prime rate. The decrease in interest expense
for the second quarter of 1996 compared with 1995, consisted of $4,400 due to
the scheduled reduction of loan balances other than the Fox Run mortgage loan,
$3,750 due to lower variable interest rates, and $12,250 resulting from the
scheduled reduction in the Fox Run mortgage loan.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 1996, the Trust held approximately $653,000 in cash,
certificates of deposit and U.S. government agency securities. It is the
policy of the Trust to invest funds in excess of immediate cash needs in
FDIC-insured certificates of deposit and in securities issued by the U.S.
government and agencies of the U.S. government. 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 second half of 1996 will differ disproportionately
from the first half of the year.
The $2,000,000 variable rate mortgage loan which matures October 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 semi-annually in June and
December each year. On July 26, 1996, the Board of Trustees announced a
change in the frequency of dividend payments from semi-annually to quarterly,
and declared a quarterly cash distribution of $.21 per share to be paid
September 16, 1996 to shareholders of record August 16, 1996. In June, 1996,
the Trust paid $.40 per share, and in December, 1995, $.40 per share. With
1,453,939 shares currently outstanding, the September, 1996, distribution
will require the disbursement of $305,327.
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 June 30,
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
presentation of the financial position of Century Realty Trust at June 30,
1996, and December 31, 1995, its cash flow for the six months ended June 30,
1996 and 1995, and the results of its operations for the three months and six
months ended June 30, 1996 and 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