1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended September 30, 2000 Commission file number 0-16508
USA REAL ESTATE INVESTMENT TRUST
(Exact Name of Registrant as specified in its Charter)
California 68-0109347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
PMB 314, P.O. Box 255427, Sacramento, California 95825-5427
(Address of registrant's principal executive offices) (Zip Code)
(800)308-4532
(Registrant's telephone number, including area code)
COMMONWEALTH EQUITY TRUST USA
(Former name)
Indicate by check mark whether the 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 for 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.
/ X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the latest practical date.
Certificates of Beneficial Interest Outstanding at September 30, 2000
par value one dollar per share 115,078
2
USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - September 30, 2000 and
December 31, 1999 ................................. 3
Statements of Income - For the Nine Months
Ended September 30, 2000 and 1999 ................. 4
Statements of Income - For the Nine Months
Ended September 30, 2000 and 1999 ................. 5
Statements of Cash Flows - For the Nine
Months Ended September 30, 2000 and 1999 .......... 6
Notes to Financial Statements ....................... 7
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 8
Part II. Other Information ................................... 8
3
PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
September 30, December 31,
2000 1999
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $3,958,316 at September 30,
2000 and $3,472,316 at December 31, 1999 $ 23,883,411 $ 24,680,481
Notes receivable 275,000 1,076,000
---------- -----------
24,158,411 25,756,481
Cash 28,121 71,679
Other assets 381,731 393,710
----------- -----------
Total assets $ 24,568,263 $ 26,221,870
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 6,400,500 $ 6,534,539
Line of credit 2,070,000 2,341,000
Accounts payable and accrued expenses 0 0
Lease deposits 58,501 62,282
----------- -----------
Total liabilities 8,529,001 8,937,821
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 250,000 shares;
115,078 shares outstanding at September 30,
2000 and 120,984 at December 31, 1999 $ 115,078 $ 120,984
Additional paid-in capital 31,765,772 32,498,365
Distributions in excess of cumulative
net income (15,841,588) (15,335,300)
----------- -----------
Total shareholders' equity 16,039,262 17,284,049
----------- -----------
Total liabilities and shareholders' equity $ 24,568,263 $ 26,221,870
=========== ===========
See accompanying notes to financial statements.
4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
September 30,
2000 1999
---------- ----------
Revenues:
Rent $ 809,250 $ 809,627
Interest 10,805 21,559
---------- ----------
811,055 831,186
---------- ----------
Expenses:
Operating expenses 79,081 76,096
Property taxes 54,000 51,000
Property management fees 13,200 13,200
Interest 178,148 161,873
Depreciation and amortization 162,000 162,000
General and administrative 49,071 50,865
---------- ----------
535,500 515,034
---------- ----------
Net income before loss on sale of properties 275,555 316,152
Loss on sale of properties 49,955 0
---------- ----------
Net income $ 321,510 $ 316,152
========== ==========
Net income per share of beneficial interest $ 2.79 $ 2.56
========== ==========
See accompanying notes to financial statements.
5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Nine Months Ended
September 30,
2000 1999
---------- ----------
Revenues:
Rent $ 2,447,196 $ 2,410,958
Interest 50,461 60,672
---------- ----------
2,497,657 2,471,630
---------- ----------
Expenses:
Operating expenses 228,444 223,279
Property taxes 162,000 150,957
Property management fees 39,600 39,600
Interest 554,284 407,493
Depreciation and amortization 486,000 486,000
General and administrative 187,457 216,290
---------- ----------
1,657,785 1,523,619
---------- ----------
Net income before gain or loss on sale of properties 839,872 948,011
Gain or loss on sale of properties 45,955 (92,558)
---------- ----------
Net income $ 885,827 $ 855,453
========== ==========
Net income per share of beneficial interest $ 7.54 $ 6.82
========== ==========
See accompanying notes to financial statements.
6 Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2000 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 885,827 855,453
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 486,000 486,000
(Gain) or loss on sale of rental properties (45,955) 92,558
Changes in other assets and liabilities:
Increase (decrease) in other assets 11,979 57,911
Increase in accounts payable
and accrued expenses 0 45,540
(Decrease) in lease deposits (3,781) 0
---------- ----------
Total adjustments to income 448,243 682,009
---------- ----------
Net cash provided by
operating activities 1,334,070 1,537,462
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of and improvements to
rental properties (138,930) (3,609,278)
(Decrease) increase in notes receivable 801,000 (350,000)
Proceeds from the sale of properties 495,955 3,036,577
---------- ----------
Net cash provided by
investing activities 1,158,025 (922,701)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term notes payable 0 2,600,000
Increase (decrease) in line of credit (271,000) 851,000
Redemption of shares (738,499) (639,216)
Principal payments on long-term notes payable (134,039) (2,022,095)
Distributions paid (1,392,115) (1,400,358)
---------- ----------
Net cash used by
financing activities 2,535,653 (610,669)
---------- ----------
Net increase (decrease) in cash (43,558) 4,092
Cash and cash equivalents, beginning of period 71,679 24,097
---------- ----------
Cash and cash equivalents, end of period $ 28,121 $ 28,189
========== ==========
See accompanying notes to financial statements.
7
USA REAL ESTATE INVESTMENT TRUST
Notes to Financial Statements
1. In the opinion of the Trust, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Trust's
financial position as of September 30, 2000, and the results of its
operations for the nine months ended September 30, 2000 and 1999 and cash
flows for the nine months ended September 30, 2000 and 1999.
The accounting policies followed by the Trust are set forth in Note 1 to
the Trust's financial statements in the 1999 Form 10-K, which are
incorporated herein by reference.
2. In 1987, the Trust elected to be taxed as a real estate investment trust
and, as such, will not be taxed on that portion of its taxable income
which is distributed to shareholders provided that at least 95% of its
real estate investment trust taxable income is distributed.
The Trust intends to continue to qualify as a real estate investment trust
and, accordingly, no provision for income taxes has been made in the
financial statements.
8
USA REAL ESTATE INVESTMENT TRUST
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The $45,955 or $0.40 per share gain on sale of rental properties was attributed
to the sale of 3090 Sunrise Boulevard in Rancho Cordova, California in July,
2000.
The $92,558 or $0.73 per share loss on sale of rental properties was
attributed to the sale of 170-174 West Shaw Avenue in Clovis, California in
March, 2000.
Net income was $2.79 and $7.54 per share for the three months and nine months
ended September 30, 2000, respectively, compared to $2.56 and $6.82 for the
three months and nine months ended September 30, 1999, respectively.
The Trust paid distributions of $3.96 and $11.88 per share for the three
months and nine months ended September 30, 2000, respectively, compared to
$3.96 and $11.16 per share for the three months and nine months ended
September 30, 1999, respectively.
CAPITAL RESOURCES AND LIQUIDITY
The Trust expects that operating income, proceeds from the sale of properties,
collections on notes receivable, and borrowings collateralized by specific
properties will provide for its future liquidity and capital resource needs.
PART II. OTHER INFORMATION
USA REAL ESTATE INVESTMENT TRUST
ITEM 5: OTHER INFORMATION:
None.
ITEM 6: REPORTS ON FORM 8-K
None.
9
USA REAL ESTATE INVESTMENT TRUST
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
USA Real Estate Investment Trust
----------------------------------------
November 14, 2000 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman
Chairman
November 14, 2000 Benjamin Diaz
-------------------- ----------------------------------------
Date Benjamin Diaz
Trustee
10
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule