SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 22, 1998
USP REAL ESTATE INVESTMENT TRUST
(Exact name of registrant as specified in its charter)
Iowa 0-7589 42-6149662
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 398-8975
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
Consideration Conveyed Use of
Date Transaction Description Received To Property
12/22/98 Sale of 100% Geneva Square, $4,500,000 Kensington Shopping
interest Lake Geneva, WI Development Center
Corporation
On December 22, 1998, USP Real Estate Investment Trust ("the Trust") sold
Geneva Square in Lake Geneva, Wisconsin for $4,500,000, receiving cash
of $1,618,678 after closing costs of $20,165, mortgage repayment of
$2,803,790 and other closing adjustments. The gain on the transaction of
approximately $528,282 will be recognized in the fourth quarter and was
determined as follows:
Sale Price $ 4,500,000
Net Book Value $ 3,951,553
Closing Costs 20,165
Adjusted basis 3,971,718
Gain $ 528,282
The consideration in this transaction was determined on the basis of
arms-length negotiations, as well as property appraisals, geographic,
economic and investment analyses, and review of historical operating
data and cash flow projections. There was no known material relationship
between the buyer and the Trust, its officers, trustees,affiliates, or
any associates of the Trust's officers or trustees.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
The following pro forma condensed consolidated balance sheet as of
September 30, 1998, and the pro forma condensed consolidated statements
of operations for the nine months ended September 30, 1998 and the year
ended December 31, 1997, give effect to the sale of the Trust's real estate
property, Geneva Square. The adjustments related to the pro forma condensed
consolidated balance sheet assume the transaction was consummated at
September 30, 1998, while the adjustments to the pro forma condensed
consolidated income statements assume the transaction was consummated at the
beginning of each period presented. The sale occurred on December 22, 1998.
These pro forma statements are not necessarily indicative of the results that
actually would have occurred if the sale had been in effect as of and for
the periods presented or the results that may be achieved in the future.
USP REAL ESTATE INVESTMENT TRUST
Pro Forma Consolidated Balance Sheet (unaudited)
September 30, 1998
Historical Pro Forma
Financial Pro Forma Financial
Statements Adjustments Statements
ASSETS
Real estate $ 40,722,496 (6,213,974) 34,508,522
Less accumulated depreciation (12,747,098) 2,218,484 (10,528,614)
27,975,398 (3,995,490) 23,979,908
Cash and cash equivalents 1,809,854 1,618,678 3,428,532
Rents and other receivables 354,272 (14,112) 340,160
Prepaid and deferred expenses 278,337 (25,069) 253,268
Taxes held in escrow 159,467 (138,849) 20,618
$ 30,577,328 (2,554,842) 28,022,486
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans payable $ 13,813,825 (2,808,340) 11,005,485
Accounts payable and accrued expenses 619,498 (108,315) 511,183
Due to affiliates 48,442 (3,910) 44,532
Distribution declared 310,400 - 310,400
Tenant deposits 80,095 (2,133) 77,962
Other 32,924 (6,418) 26,506
14,905,184 (2,929,116) 11,976,068
Shareholders' Equity
Shares of beneficial interest,
$1 par value, 20,000,000
shares authorized, 3,880,000
shares issued and outstanding 3,880,000 - 3,880,000
Additional paid-in capital 11,792,144 374,274 12,166,418
15,672,144 374,274 16,046,418
$ 30,577,328 (2,554,842) 28,022,486
NOTE: The pro forma adjustments represent the amounts attributed to Geneva
Square and thus were subtracted from the Historical Financial Statements to
arrive at the Pro Forma Financial Statements.
USP REAL ESTATE INVESTMENT TRUST
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Nine Months Ended September 30, 1998
Historical Pro Forma
Financial Pro Forma Financial
Statements Adjustments Statements
REVENUE
Rents $ 4,034,705 (700,718) 3,333,987
Interest 85,400 - 85,400
4,120,105 (700,718) 3,419,387
EXPENSES
Property expenses:
Real estate taxes 458,865 (102,015) 356,850
Repairs and maintenance 317,128 (36,477) 280,651
Utilities 82,611 (9,930) 72,681
Management fee 187,316 (35,036) 152,280
Insurance 33,554 (5,805) 27,749
Other 151,102 (22,768) 128,334
Property expenses, excluding depreciation 1,230,576 (212,031) 1,018,545
Depreciation 624,346 (132,065) 492,281
Total property expenses 1,854,922 (344,096) 1,510,826
Interest 1,039,252 (175,507) 863,745
Administrative fee 191,727 (29,128) 162,599
Other administrative 300,808 - 300,808
3,386,709 (548,731) 2,837,978
Net earnings $ 733,396 (151,987) 581,409
Basic and diluted net earnings per share $ .19 (.04) .15
Average number of shares outstanding 3,880,000 3,880,000
NOTE: The pro forma adjustments represent activity for the first nine
months of 1998 for Geneva Square. The adjustments resulted in net
earnings of $151,987 and, when subtracted from the Historical Financial
Statements the Pro Forma Financial Statements reflect net earnings of $581,409.
USP REAL ESTATE INVESTMENT TRUST
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the Year Ended December 31, 1997
Historical Pro Forma
Financial Pro Forma Financial
Statements Adjustments Statements
REVENUE
Rents $ 4,802,974 (510,666) 4,292,308
Interest 209,113 - 209,113
5,012,087 (510,666) 4,501,421
EXPENSES
Property expenses:
Real estate taxes 610,322 (134,995) 475,327
Repairs and maintenance 549,765 (104,326) 445,439
Utilities 122,754 (24,933) 97,821
Management fee 221,935 (25,533) 196,402
Insurance 47,137 (8,027) 39,110
Other 153,385 (35,474) 117,911
Property expenses, excluding depreciation 1,705,298 (333,288) 1,372,010
Depreciation 806,333 (177,005) 629,328
Total property expenses 2,511,631 (510,293) 2,001,338
Interest 1,443,337 (235,842) 1,207,495
Administrative fee 205,714 (38,837) 166,877
Other administrative 214,276 - 214,276
4,374,958 (784,972) 3,589,986
Earnings from operations $ 637,129 274,306 911,435
Net gain on sale of property $ 259,157 - 259,157
Net earnings $ 896,286 274,306 1,170,592
Basic and diluted net earnings per share $ .23 .07 .30
Average number of shares outstanding 3,880,000 3,880,000
NOTE: The pro forma adjustments represent activity for the year 1997 for Geneva
Square. The adjustments resulted in a net loss of $274,306 and, when added to
the Historical Financial Statements, the Pro Forma Financial Statements reflect
net earnings of $1,170,592.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
USP REAL ESTATE INVESTMENT TRUST
/s/ Alan F. Fletcher
Alan F. Fletcher
Vice President and Treasurer
(principal financial officer)
/s/ Roger L. Schulz
Roger L. Schulz
Controller
(principal accounting officer)
Dated: January 6, 1999