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, 1997 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 (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 1,499,139 shares
BALANCE SHEETS
Century Realty Trust
March December
31, 1997 31, 1996
__________ __________
Unaudited
Assets
Real estate investments:
Land $2,068,658 $2,068,658
Buildings 32,925,677 32,912,673
Equipment 858,278 838,254
Allowances for depreciation (7,759,547) (7,476,182)
__________ __________
28,093,066 28,343,403
Net investment in direct financing leases 429,183 443,590
__________ __________
28,522,249 28,786,993
Cash and cash equivalents 448,314 315,337
Short-term investments 787,618 590,993
Accounts and accrued income receivable 511,971 335,303
Undeveloped land 99,675 99,675
Other assets 550,616 410,166
___________ ___________
$30,920,443 $30,538,467
___________ ___________
___________ ___________
Liabilities and shareholders' equity
Liabilities:
Mortgage notes payable 20,349,371 20,437,686
Accounts payable and accrued compensation 313,888 288,474
Accrued interest 130,307 132,578
State income and property taxes 1,228,714 952,031
Tenants' security deposits and unearned rent 451,740 394,507
___________ ___________
22,474,020 22,205,276
Shareholders' equity:
Shares of Beneficial Interest, no par value-authorized
5,000,000 shares, issued 1,529,353 shares, including
54,214 shares in treasury (75,414 shares at
December 31, 1996 6,290,068 6,249,104
Undistributed income other than from
gain on the sale of real estate 1,211,235 1,284,028
Undistributed net realized gain from the
sale of real estate 1,316,078 1,316,078
Cost of treasury shares (370,958) (516,019)
8,446,423 8,333,191
___________ ___________
$30,920,443 $30,538,467
___________ ___________
___________ ___________
See accompanying notes.
STATEMENTS OF INCOME
Century Realty Trust
Unaudited
Three Months
Ended March 31,
_______________________
1997 1996
___________ ___________
Income
Real estate operations:
Rental Income $2,045,997 $2,018,319
Income from direct financing leases 13,831 15,212
Other income 42,217 42,342
__________ __________
2,102,045 2,075,873
Less:
Real estate operating expenses 754,103 750,937
Depreciation 284,490 277,590
Real estate taxes 238,500 243,450
__________ __________
1,277,093 1,271,977
__________ __________
824,952 803,896
Interest income 11,812 6,786
__________ __________
836,764 810,682
Expenses
Interest 461,358 466,723
State income taxes 41,437 34,861
General and administrative expenses 101,435 96,725
__________ __________
604,230 598,309
__________ __________
Net income $232,534 $212,373
__________ __________
__________ __________
Net income per share of
Beneficial Interest $0.16 $0.15
__________ __________
Weighted average number
of shares outstanding 1,465,086 1,453,272
See accompanying notes.
STATEMENTS OF CASH FLOW
Century Realty Trust
Unaudited
Three Months
Ended March 31,
_______________________
1997 1996
__________ __________
Operating Activities
Net income $232,534 $212,373
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 292,160 284,685
Changes in operating assets and liabilities:
Decrease (Increase) in accounts and income
receivable (176,668) (79,538)
Decrease (Increase) in prepaid expenses and
other assets (149,245) (67,920)
Increase in accounts payable and accrued expenses 299,826 290,466
Increase (decrease) in tenants' security deposits
and unearned rents 57,233 (13,176)
__________ __________
Net cash provided by operations 555,840 626,890
Investing Activities
Investment in certificates of deposit (691,493) (592,735)
Proceeds from matured certificates of deposit 494,868 98,711
Purchase of property improvements and replacements (33,028) (74,436)
Principal payments received under leases 14,407 10,097
__________ __________
Net cash used in investing activities (215,246) (558,363)
Financing Activities
Proceeds from sale of treasury shares 186,025 17,500
Principal payments on mortgage notes payable (88,315) (74,698)
Dividends paid to shareholders (305,327) (1,225)
__________ __________
Net cash provided by (used in) financing activities (207,617) (58,423)
__________ __________
Net increase (decrease) in cash and cash equivalents 132,977 10,104
Balance at beginning of period 315,337 189,929
__________ __________
Balance at end of period $448,314 $200,033
__________ __________
__________ __________
See accompanying notes.
NOTES TO FINANCIAL STATEMENTS
CENTURY REALTY TRUST
Unaudited
NOTE 1 - PENDING REAL ESTATE INVESTMENT TRANSACTIONS
Late in 1996, the Trust agreed to purchase a 192 unit apartment
property in Evansville, Indiana for $5.25 million, subject to $3.7
million of indebtedness under an existing first-mortgage loan.
Early in 1997, the Trust agreed to purchase a 34,000 square foot office
property in Indianapolis, Indiana for $1.55 million. The Trust expects
to acquire both of these properties during the second quarter of 1997.
To facilitate the purchases, the Trust obtained a $2.5 million stand-by
line of credit from a bank.
NOTE 2 - MORTGAGE NOTES PAYABLE
Eight of the Trust's properties are encumbered by mortgage loans that
are payable in monthly installments totaling approximately $178,000,
including interest at rates ranging from 8.125% to 9.75% per annum, and
which mature from April 15, 1998 to October 1, 2006. The approximate
aggregate amount of scheduled mortgage loan repayments for each of the
remaining quarters of 1997 are: second quarter, $72,600; third quarter,
$74,200; and, fourth quarter, $75,900.
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. 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
RESULTS OF OPERATIONS
For the first quarter of 1997, the Trust reported increases over the
comparable 1996 period in both rental income and income from real estate
operations. In spite of a $6,900 increase in the provision for depreciation,
substantially all of which related to property improvements and replacements
purchased in 1996, reported net income increased by $20,161 or $.01 per
share. The 9.5% increase in net income was due to improved results of
operations from the investment properties owned throughout the first quarter
of 1996 and 1995. The Trust has acquired no investment properties since the
purchase of the Fox Run apartments March 31, 1995.
The nine apartment properties (1,358 units) that the Trust owned
throughout the first quarters of 1997 and 1996 reported average three-month
economic occupancy rates of 94% and 96.9% for the two periods, respectively.
Average rental rates increased 4.8% for those properties over the prior year
period. The combined effect of lower occupancy rates and higher rental
rates resulted in a 1.6% 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
quarter of 1997, down from 47.1% for the prior year period, and amounted to
a decrease of .4% in total operating expenses.
Rental properties other than apartments, which accounted for 4% percent
of total rental income in the first quarter of 1997, reported a 7.9% ($5,200)
decrease in net operating income compared with the prior year. Rental income,
due to lower occupancy rates, was down $4,800, or 5.7%, while operating
expenses increased by 2.1%. During the 1996 quarter, the commercial
properties were 100% occupied.
Interest expense related to loans outstanding throughout the first
quarters of 1997 and 1996 declined by $10,689 due the scheduled reduction
of loan balances. That decrease was partly offset by $4,700 of additional
interest expense related to approximately $240,000 of additional borrowings
in connection with the refinance of two mortgage loans during 1996. One
loan was refinanced in May, 1996 and the other in September, 1996.
FINANCIAL CONDITION AND LIQUIDITY
At March 31,1997, the Trust held approximately $1,236,000 in cash and
short term investments. It invests funds in excess of immediate cash needs
in securities of the U.S. government, agencies of the U.S government, and
FDIC-insured certificates of deposit. Except for the two pending property
acquisitions, 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 1997. No transactions or
events have occurred to indicate that funds provided by operations, except
as to the impact resulting from properties not yet acquired, during the
balance of 1997 will differ disproportionately from the first quarter of
the year.
The Trust expects to complete the purchase of a 34,000 square foot
office building in Indianapolis, in late May of early June, 1997. In
connection with that purchase, the Trust expects to issue approximately
$250,000 of restricted (unregistered) shares of beneficial interest and
make a permanent cash investment of a like amount. The balance of the
purchase price, approximately $1 million, will be funded by a long-term
mortgage loan on the property.
The purchase of a 192-unit apartment property in Evansville, Indiana,
will be completed when the holder of an existing first mortgage loan
approves the assumption by the Trust. A closing in mid to late June now
appears likely. In addition to the mortgage loan assumption, an equity
investment of approximately $1.5 million will be required to complete the
purchase.
To facilitate both of the pending purchases the Trust, after March 31,
sold 36,000 shares of beneficial interest previously held as treasury shares
for a total of $391,500. In addition, the Trust has been granted a $2.5
million unsecured standby line of credit by a bank. The line of credit, to
the extent necessary, will be used to complete the purchases.
The two pending acquisitions, combined, are expected to initially
provide approximately $1.4 million in annual rental income and produce a
net cash flow of approximately 10% on the equity invested.
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, until the third quarter of 1996,
followed a practice of making cash distributions to its shareholders in
June and December each year. In May, 1996, the Board of Trustees declared
a cash distribution of $.40 per share which was paid June 17, 1996. After
that payment, the Board of Trustees changed the frequency of distributions
to quarterly, and subsequently paid distributions of $.21 per share in both
September and December, 1996. To facilitate the provision of timely quarterly
financial reports to shareholders, the timing of quarterly distributions was
changed for subsequent distributions. Commencing in 1997, distributions
were scheduled for payment in February, May, August and November. A
distribution of $.21 per share was paid in February, and on April 1, 1997,
a distribution of $.22 per share was declared for payment May, 19, 1997 to
shareholders of record April 25, 1997.
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,
1997, 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,
1997, and December 31, 1996, and the results of its operations and its cash
flow for the three months ended March 31, 1997, and March 31, 1996, 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 1996 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