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 September 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.)
823 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
September December
30, 1996 31, 1995
___________ ___________
Unaudited
Assets
Real estate investments:
Land $2,068,658 $2,068,658
Buildings 32,963,284 32,778,431
Equipment 853,080 765,401
Allowances for depreciation (7,341,790) (6,511,045)
____________ ____________
28,543,232 29,101,445
Net investment in direct financing leases 453,687 483,977
____________ ____________
28,996,919 29,585,422
Cash and cash equivalents 311,531 189,929
Certificates of deposit 689,618 293,946
Accounts and accrued income receivable 271,682 309,873
Undeveloped land 99,675 99,675
Other assets 480,971 283,238
____________ ____________
$30,850,396 $30,762,083
____________ ____________
____________ ____________
Liabilities and shareholders' equity
Liabilities:
Mortgage notes payable $20,528,533 $19,748,063
Notes payable - other 0 $700,762
Accounts payable and accrued compensation 314,374 298,553
Accrued interest 130,360 132,056
State income and property taxes 1,176,308 972,368
Tenants' security deposits and unearned rent 419,312 424,830
____________ ____________
22,568,887 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 1,232,346 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)
____________ ____________
8,281,509 8,485,451
____________ ____________
$30,850,396 $30,762,083
____________ ____________
____________ ____________
See accompanying notes.
STATEMENTS OF INCOME
Century Realty Trust
Unaudited
Three Months Nine Months
Ended September 30, Ended September 30,
_____________________ _____________________
1996 1995 1996 1995
__________ __________ __________ __________
Income
Real estate operations:
Rental Income $2,031,952 $1,981,489 $6,056,287 $5,517,306
Income from direct financial Leases 15,212 16,427 45,637 49,281
__________ __________ __________ __________
2,047,164 1,997,916 6,101,924 5,566,587
Less:
Real estate operating expenses 802,369 739,337 2,307,935 2,047,634
Provision for depreciation 277,590 276,480 832,770 783,720
Real estate taxes 220,213 220,191 660,303 616,464
__________ __________ __________ __________
1,300,172 1,236,008 3,801,008 3,447,818
__________ __________ __________ __________
746,992 761,908 2,300,916 2,118,769
Interest 10,966 6,657 29,714 22,104
Sundry 38,671 42,370 120,448 107,097
__________ __________ __________ __________
796,629 810,935 2,451,078 2,247,970
Expenses
Interest 464,552 481,595 1,393,712 1,290,051
State income taxes 35,277 36,210 105,785 102,205
General and administrative 94,665 93,489 286,120 279,625
__________ __________ __________ __________
594,494 611,294 1,785,617 1,671,881
__________ __________ __________ __________
Net income $202,135 $199,641 $665,461 $576,089
__________ __________ __________ __________
__________ __________ __________ __________
Net income per share of
Beneficial Interest $0.14 $0.14 $0.46 $0.42
__________ __________ __________ __________
__________ __________ __________ __________
Weighted average number
of shares outstanding 1,453,642 1,381,351 1,453,593 1,381,351
See accompanying notes.
STATEMENTS OF CASH FLOW
Century Realty Trust
Unaudited
Nine Months
Ended September 30,
_______________________
1996 1995
___________ ___________
Operating Activities
Net income $665,461 $576,089
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 853,716 803,383
Changes in operating assets and liabilities:
Decrease (increase) in accounts and income
receivable 38,191 (101,402)
Increase in prepaid expenses and other (220,704) (148,198)
Increase in accounts payable and accrue 210,944 373,557
Increase (decrease) in tenants' security deposits
and unearned rents (5,518) 56,811
___________ ___________
Net cash provided by operations 1,542,090 1,560,240
Investing Activities
Investment in certificates of deposit (1,678,219) (1,381,639)
Proceeds from matured certificates of deposit 1,282,547 988,814
Acquisition of real estate, net of debt assumed 0 (5,964,916)
Purchase of property improvements and replacements (272,532) (356,892)
Principal payments received under leases 30,290 26,646
___________ ___________
Net cash used in investing activities (637,914) (6,687,987)
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 2,987,537 5,368,000
Principal payments on mortgage notes payable (2,207,067) (183,921)
Dividends paid to shareholders (879,782) (529,622)
___________ ___________
Net cash provided by (used in) financing activities (782,574) 5,200,219
___________ ___________
Net increase (decrease) in cash and cash equivalents 121,602 72,472
Balance at beginning of period 189,929 58,491
___________ ___________
Balance at end of period $311,531 $130,963
___________ ___________
___________ ___________
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 $177,600, including
interest at rates ranging from 8.125% to 9.75% per annum, and which mature
from April, 1998 to October, 2006. The approximate aggregate amount of
scheduled mortgage principal repayments for the fourth quarter of 1996 is
$88,000.
A variable rate interest-only mortgage loan with a balance of $2 million
that matured in 1996 was paid off in September with the proceeds of a new
$2.25 million fixed rate long-term amortizing mortgage loan on the same
property. The new loan provides for a repayment schedule that will reduce
the principal balance to approximately $1.65 million at its maturity date in
October, 2006.
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 substantially all of
its income, which would otherwise be taxable. 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 nine months ended September 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%, ten-year first mortgage
loan. Short-term financing included approximately $700,000 borrowed from a
bank under an unsecured line of credit, that 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 three quarters of 1996, the Trust reported a 9.7% increase in
rental income over the comparable 1995 period. Rental income derived from
the Fox Run apartments during the 1996 period, accounted for 75% of the
increase. In spite of a $49,000 increase in the provision for depreciation,
all of which related to the Fox Run apartments, reported net income
increased by $89,000, or $.04 per share. Of the total increase in net
income. $57,000 (64%) was due to improved operating results of the core
properties (properties owned throughout the nine months of 1996 and 1995).
The Fox Run apartments acquired in 1995, and financing activities related
thereto, accounted for an increase in net income of $32,000, or $.02 per
share, after an increase in provision for depreciation of $49,000.
The eight apartment properties (1,102 units) that the Trust owned
throughout the first three quarters of 1996 and 1995 experienced average
nine-month economic occupancy rates of 96.1% and 96.5% for the two periods,
respectively. Average rental rates increased 3.2% for those properties over
the prior year period. The combined effect of lower occupancy rates and
higher rental rates resulted in a 2.7% increase in gross revenue from the
core group of apartments. Operating expenses, excluding interest and
depreciation, for the same properties amounted to 46.6% of gross possible
income for the first half of 1996, up slightly from 46.5% for the prior year
period, and amounted to an increase of 3.4% in total operating expenses.
For the third quarter, income from real estate operations, decreased by
$15,000, or 2.0%, from the comparable quarter of 1995. The decrease resulted
primarily from a lower overall economic occupancy rate in the residential
properties, and increased operating expenses compared with the third quarter
a year ago. While rental rates increased by an average of 4.7%, economic
occupancy declined from 97.1% during the third quarter of 1995 to 94.8% for
the 1996 period . Apartment operating expenses increased by 6.3% from the
third quarter of 1995, to 48.2% of gross possible income. A 21% increase in
maintenance and repairs and a 27% increase in decorating expenses accounted
for nearly all of the total expense increase. Most of the increase in
decorating expenses occurred at Fox Run, while the increase in maintenance
and repairs occurred among the core group of properties.
For the Fox Run apartments, economic occupancy during the first nine
months of 1996 averaged 94.5%, down from 95.3% for the six months of
ownership in 1995. Operating expenses, as a percent of gross possible
income, amounted to 52.9% in 1996, up from 52.3% in 1995. For the third
quarters of 1996 and 1995, economic occupancy rates for Fox Run averaged
92.6% and 94.8%, respectively, while operating expenses, as a percent of
gross possible income, declined from 52.9% for the 1995 quarter to 52.3% for
the 1996 quarter.
Rental properties other than apartments, which accounted for 4% percent
of total rental income in the first nine months of 1996, produced a 7.5%
($12,123) increase in net operating income compared with the prior year.
Rental income, primarily on the strength of higher occupancy rates, was up
$14,364, or 6.4%, while operating expenses increased by 3.6%. For the third
quarter of 1996, compared with the third quarter of 1995, rental income
increased by 5.8%. while operating expenses increased 14.3%. Higher
maintenance and repair expenses accounted for the increase in total operating
expenses.
Interest expense related to investing and financing activities,
primarily the purchase of Fox Run in 1995, was approximately $120,000 higher
for the first three quarters of 1996 than for the comparable period of the
previous year. Interest expense related to loans outstanding throughout the
first nine months of 1996 and 1995 declined by $16,000 due the scheduled
reduction of loan balances, and lower rates applicable to one variable-rate
mortgage loan. The $17,000 decrease in interest expense for the third
quarter of 1996 compared with 1995, consisted of $5,400 due to lower variable
interest rates and the reduction of loan balances other than the Fox Run
mortgage loan, and $11,600 resulting from the scheduled reduction in the Fox
Run mortgage loan and related financing activities.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 1996, the Trust held approximately $1 million 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 that was scheduled to mature
October 4, 1996, was repaid in September with the proceeds of a new ten-year
fixed rate mortgage loan, with no change in the property serving as collateral.
The Trust intends to continue to operate as a real estate investment
trust, and to distribute all of its earnings. Accordingly, no provision has
been made for federal income taxes.
On October 29, 1996, the Board of Trustees declared a quarterly cash
distribution of $.21 per share payable December 16, 1996 to shareholders of
record November 22, 1996. With 1,453,939 shares currently outstanding, the
December distribution will require the disbursement of $305,327. The previous
quarterly distribution, also $.21 per share, was paid September 16, to
shareholders of record August 16, 1996.
In June, 1996, the Trust paid a semi-annual distribution of $.40 per
share. The Trust had, 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.
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 September
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 September
30, 1996, and December 31, 1995, its cash flow for the nine months ended
September 30, 1996 and 1995, and the results of its operations for the three
months and nine months ended September 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