1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - --- SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........... to ...........
Commission file number 1-10093
RPS REALTY TRUST
----------------
(Exact name of registrant as specified in its charter.)
MASSACHUSETTS 13-6908486
- - ------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
733 Third Avenue, New York, New York 10017
- - ------------------------------------ -----
(Address of principal executive offices) (Zip Code)
212-370-8585
------------
(Registrant's telephone number, including area code)
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.
Yes X No
-------- --------
Number of shares of beneficial interest ($.10 par value) of the Registrant
outstanding as of May 5, 1994: 28,492,421.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
I N D E X
Part I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1994 (unaudited) and
December 31, 1993 (audited) ........................................................3
Consolidated Statements of Operations (unaudited) - Three Months Ended
March 31, 1994 and 1993 ............................................................4
Consolidated Statement of Shareholders' Equity (unaudited) - Three Months Ended
March 31, 1994......................................................................5
Consolidated Statements of Cash Flows (unaudited) - Three Months Ended
March 31, 1994 and 1993.............................................................6
Notes to Consolidated Financial Statements...........................................7
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................................11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..............................................12
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1994 1993
----------- ------------
(Unaudited) (Audited)
ASSETS:
Mortgage Loans Receivable
(Net of allowance for possible loan losses of $9,157,236
in 1994 and $23,724,537 in 1993) $ 74,541,677 $100,692,130
Short-term Investments 60,759,068 37,747,388
Investment In Real Estate-Net 33,893,399 33,740,202
Interest and Accounts Receivable 11,576,457 9,977,893
Deferred Acquisition Expenses
(Net of accumulated amortization of $1,171,308 in 1994
and $1,121,842 in 1993) 2,500,505 2,549,971
Cash 789,328 1,053,375
Other Assets 791,866 659,037
------------ ------------
TOTAL ASSETS $184,852,300 $186,419,996
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgages Payable $ 4,968,325 $ 5,027,023
Distributions Payable 2,279,394 2,285,058
Accounts Payable and Accrued Expenses 1,510,554 1,430,273
Deposits on Sale of Loans - 1,365,042
------------ ------------
TOTAL LIABILITIES 8,758,273 10,107,396
SHAREHOLDERS' EQUITY 176,094,027 176,312,600
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $184,852,300 $186,419,996
============ ============
See notes to consolidated financial statements
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE MONTHS ENDED
March 31,
-------------------------------------
1994 1993
---- ----
Revenues:
Interest Income:
Mortgage Loans $ 2,469,455 $ 3,086,783
Short-Term Investments 431,266 262,836
Rental Income 1,140,500 816,189
Other - 126,900
----------- -----------
4,041,221 4,292,708
----------- -----------
Expenses:
Interest on Note Payable - 499,107
General and Administrative 536,389 508,158
Payroll and Related Expenses 448,497 481,105
Amortization of Deferred
Acquisition Expenses 49,466 49,466
Interest on Mortgages 110,814 132,712
Property Operating 273,000 163,576
Real Estate Taxes 172,000 134,937
Depreciation 152,500 110,437
----------- -----------
$ 1,742,666 2,079,498
----------- -----------
Net Income $ 2,298,555 $ 2,213,210
=========== ===========
Net Income Per Share $.08 $.08
=========== ===========
Cash Dividend Declared $.08 $.08
=========== ===========
See Notes to Consolidated Financial Statements
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
Additional Cumulative Total
Shares of Paid-In Earnings/ Shareholders'
Beneficial Interest Capital (Distributions) Equity
------------------------- ----------- --------------- ------------
Number Amount
----------- ----------
Balance at
January 1, 1994 28,552,921 $2,855,292 $195,155,914 ($21,698,606) $176,312,600
Net income for the
three months ended
March 31, 1994 -- -- -- 2,298,555 2,298,555
Shares repurchased
and retired (60,500) (6,050) (231,684) (237,734)
Cash distributions
declared -- -- -- (2,279,394) (2,279,394)
Balance at
---------- ---------- ------------ ------------ ------------
March 31, 1994 28,492,421 $2,849,242 $194,924,230 $(21,679,445) $176,094,027
========== ========== ============ ============ ============
See notes to consolidated financial statements
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months
Ended
March 31,
--------------------------------------
1994 1993
-------------- ---------------
Cash Flows From Operating Activities:
Net Income $ 2,298,555 $ 2,213,210
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Amortization of Deferred Acquisition Expense 49,466 49,466
Depreciation 152,500 110,437
Changes in Operating Assets and Liabilities:
Interest and Accounts Receivable (287,934) 1,497,492
Other Assets (298,029) (349,743)
Accounts Payable and Accrued Expenses (168,362) (173,309)
------------ ------------
Net Cash Provided by Operating Activities 1,746,196 3,347,553
------------ ------------
Cash Flows From Investing Activities:
Satisfaction of Mortgage Loans Receivable $23,888,624 $ 12,500
Investment in Mortgage Loans Receivable - (3,000,000)
Investments in Real Estate (305,697) (199,544)
------------ ------------
Net Cash Provided by Investing Activities 23,582,927 (3,187,044)
------------ ------------
Cash Flows From Financing Activities:
Dividends Declared and Paid (2,285,058) (4,289,448)
Shares Repurchased (237,734)
Repayment of Mortgages Payable (58,698) (1,037,493)
------------ ------------
Net Cash Used in Financing Activities (2,581,490) (5,326,941)
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents $22,747,633 (5,166,432)
Cash and Cash Equivalents, Beginning of Year 38,800,763 37,648,591
------------ ------------
Cash and Cash Equivalents, End of Period $61,548,396 $32,482,159
============ ============
Cash and Cash Equivalents, End of Period:
Cash $ 789,328 $ 1,284,458
Short-Term Investments 60,759,068 31,197,701
------------ ------------
$61,548,396 $32,482,159
============ ============
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 110,814 $ 132,712
============ ============
Supplemental Schedule of Noncash Investing and
Financing Activities:
Investment in Real Estate $ - $ 5,190,000
Accounts Payable 248,643
Mortgages Payable Assumed - 3,465,694
Interest and Accounts Receivable 1,310,630 (976,612)
Use of Allowance for Possible Loan Losses 14,567,301 1,352,306
Mortgages Receivable (2,261,828) (747,694)
Deposit on Sale of Loans (1,365,042) -
Other Assets (165,200) -
See notes to consolidated financial statements
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
l. GENERAL
In the opinion of management of RPS Realty Trust (the "Trust"), the
accompanying unaudited interim consolidated financial statements
contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the consolidated financial
position as of March 31, 1994 and the results of operations for the
three months ended March 31, 1994 and March 31, 1993. The financial
statements, related footnotes and discussions should be read in
conjunction with the consolidated financial statements, related
footnotes and discussions contained in the Trust's annual report on
Form 10-K for the year ended December 31, 1993. Certain
reclassifications have been made to prior year financial statements
to conform with current classifications.
2. NET EARNINGS PER SHARE
The weighted average number of shares outstanding for the quarters
ended March 31, 1994 and 1993 was 28,500,362 and 28,596,321,
respectively.
3. INVESTMENTS
The following tables summarizes the investments of the Trust as of
March 31, 1994:
MORTGAGE INVESTMENTS
TYPE OF NUMBER OF FUNDS RANGE OF
PROPERTY MORTGAGE LOANS ADVANCED(d)(e)(f) INTEREST RATES (a)(b)
- - -------------------------- -------------- --------------------- ---------------------
Industrial Properties
- - ---------------------
Wraparound Mortgage Loan 1 $15,350,000 17.4%
First Mortgage Loan 1 $ 1,500,000 12.0%
Office Buildings
- - ----------------
Wraparound Mortgage Loans 1 $ 468,493 10%
First Mortgage Loans 2 $ 5,850,000 5.0 - 8.3%
Shopping Center/Retail
- - ----------------------
Wraparound Mortgage Loans 7 $24,630,420 6.5 - 15.2%
First Mortgage Loan (g) 4 32,900,000 7.5 - 13.3%
Loan Secured by First
Lien (c) 1 $ 3,000,000 6%
= -------------
Total 17 $ 83,698,913
== ============
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
Northeast Southeast Midwest West
--------- --------- ------- ----
Outstanding Principal
Amount of Loans (d) $69,130,420 $4,500,000 $ 9,600,000 $468,493
Percentage of
Funds Outstanding 82.6% 5.4% 11.5% 0.5%
Number of Loans 10 2 4 1
Investments in Real Estate
The following table summarizes the Trust's equity investments in real
properties, and the carrying amount, net of accumulated depreciation and
allowance for impairment of such properties, as of March 31, 1994:
Property Location Carrying Value
- - -------- -------- --------------
Sunshine Plaza Tamarac, FL $ 9,207,566
Shopping Center
Crofton Shopping Center (h) Crofton, MD 9,943,772
Trinity Corners Pound Ridge, NY 2,932,450
Shopping Center
Toys R Us Commack, NY 2,831,012
Retail Center
222 East Saratoga Baltimore, MD 1,826,708
Office Building
Lantana Plaza Lantana, FL 5,449,659
Shopping Center
9 North Wabash Chicago,IL 3,282,232
-----------
Retail Building 35,473,399
Allowance for Impairment 1,580,000
-----------
Total $33,893,399
===========
(a) Interest rates presented are the weighted averages of the sum of current
plus accrued interest rates.
(b) In addition to fixed interest, the Trust is entitled to contingent
interest on certain loans in an amount equal to a percentage of the
gross rent received by the borrower from the property securing the
mortgage above a base amount, payable annually, and additional
contingent interest (equity participation) based on a predetermined
multiple of the contingent interest or a percentage of the net value of
the property at such date payable at maturity. Contingent interest in
the amount of $398,852 and $53,627 was received in the three months
ended March 31, 1994 and 1993, respectively.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
(c) The loan is secured by a first lien on a separate collateral assignment
of a first mortgage loan which, in turn, is secured by a fee position
subject to a master lease on an office building in New York, New York.
(d) Before taking into account allowance for possible loan losses of
$9,157,236.
(e) As of March 31, 1994, the Trust had 6 loans that were in arrears (three
monthly payments or more) or otherwise considered to be "problem loans"
by the Trust. The aggregate gross principal amounts of these loans,
together with receivables relating to such loans comprised of accrued
interest and payments made on behalf of the borrowers for mortgage
payments relating to such properties, totaled approximately $22,911,539,
representing 12.8% of the Trust's invested assets, at March 31, 1994.
At March 31, 1994 and 1993, the Trust was not accruing current and
accrued interest on five and six of the above-mentioned loans, in the
aggregate approximate principal amount of $12,750,000 and $40,530,000,
respectively. In addition, as of March 31, 1994 and 1993 respectively,
the Trust was not accruing deferred interest on one and five additional
loans, in the aggregate approximate principal amount of $25,000,000 and
$45,100,000, respectively.
(f) On January 3, 1994, the Trust sold the following mortgage loans: (i)
its wrap-around mortgage loan secured by the Tampa Plaza shopping center
located in Northridge, California (the "Tampa Loan"); (ii) its
wrap-around mortgage loan secured by the Wellesley Plaza office building
located in Los Angeles, California (the "Wellesley Loan"); and (iii) its
first mortgage loan secured by the Tackett Center mixed-use retail
center located in Palm Springs, California (the "Tackett Loan"). On
January 7, 1994, the Trust sold its first mortgage loan secured by the
Janss Mall shopping center located in Thousand Oaks, California (the
"Janss Mall Loan", and collectively, the "California Mortgage Loans").
The California Mortgage Loans at closing had an approximate aggregate
outstanding balance of $39,698,000 before taking into consideration
allowance for possible losses of approximately $14,567,000. The Tampa,
Tackett and Janss Mall Loans were sold pursuant to a competitive
offering process, pursuant to which bids for each of the Loans were
solicited; the Wellesley Loan was offered in the competitive offering
process, but was sold in an arms-length negotiation outside of the
competitive offering process. Secured Capital Corp. of Los Angeles,
California acted as the Trust's representative with respect to the
offering and sale of the California Mortgage Loans. In the aggregate,
the Trust received cash proceeds of $25,500,000 from the sale of the
California Mortgage Loans, before deduction of costs, fees and expenses
relating to such transactions, including the payment of a fee to Secured
Capital Corp.
(g) On January 25, 1994, the Trust restructured its mortgage loan in the
original principal amount of $31,000,000 which was secured by a
collateral assignment of mortgages on two properties, an office building
located on Rector Street, New York City (the "Rector Property") and a
shopping center located on Hylan Boulevard, Staten Island, New York (the
"Hylan Center"). Pursuant to the restructuring, the Trust received a
direct assignment of the first mortgage with a principal amount of
$25,000,000 and accrued interest of $7,881,250 secured by the Hylan
Center and retained the collateral assignment of the Rector Property
mortgage, the principal amount of which was reduced to $3,000,000. The
holder of the first mortgage secured by the Rector Property has agreed
to grant the Trust a pledge of a senior participation interest in such
mortgage. In addition, upon a foreclosure, the Trust will obtain a
direct first mortgage secured by the Rector Property. The restructuring
is scheduled to be completed in the second quarter of 1994; however,
there can be no assurance that the restructuring will be completed.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
(h) This property is subject to a first mortgage in the approximate
principal amount of $4,968,325 at March 31, 1994.
4. DIVIDENDS TO SHAREHOLDERS
Under the Internal Revenue Code, a REIT must meet certain
qualifications including a requirement that it distribute annually to
its shareholders at least 95% of its taxable income. The Trust's
policy is to distribute to shareholders all taxable income.
Dividends declared for the three months ended March 31, 1994 are
summarized below:
RECORD DATE DIVIDEND PAYMENT DATE
------------- ---------- --------------
April 28, 1994 $ .08 May 17, 1994
The difference, if any, between dividends declared and net income
result from timing differences related to the recognition of income
and expenses between financial reporting and income tax purposes.
During 1994, the Trust will have tax write-offs on certain of the
mortgages which write-offs were previously recognized for financial
reporting in prior years.
5. SHARE REPURCHASES
Pursuant to its share repurchase program, during January of 1994, the
Trust purchased 60,500 of its shares at an average price of $3.93 per
share.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
As of December 31, 1993 the Trust had $100,692,130 invested in mortgage loans
(after deducting allowance for possible loan losses of $23,724,537),
$33,740,202 invested in real properties and $37,747,388 in short-term
investments. During the first quarter of 1994, the Trust sold four mortgage
loans comprising the Trust's California mortgage loan portfolio and received
proceeds of $25,500,000 from the sale, before deduction of costs, fees and
expenses relating to such transaction. As of March 31, 1994 the Trust had
$74,541,677 invested in mortgage loans (after deducting allowance for possible
loan losses of $9,157,236), $33,893,399 invested in real properties and
$60,759,068 in short-term investments.
RESULTS OF OPERATIONS
Three months ended March 31, 1994 compared to three months ended March 31,
1993.
Total revenues for the three months ended March 31, 1994 (before rental income)
decreased $575,798 or 16.6% from that of the previous year. During the first
quarter of 1994 interest from mortgage loans decreased $617,328 or 20.0%
primarily as a result of the reduction in the Trust's mortgage portfolio.
Short-term interest income increased $168,430 or 64.1% as a result of higher
balances in short-term investments. Other income decreased $126,900 or 100% as
a result of the Trust selling its marketable securities in 1993.
During the quarter ended March 31, 1994 expenses (excluding interest on
mortgages, property operating, real estate taxes and depreciation) decreased
$503,484 or 32.7% compared to the same quarter a year ago. Interest expense on
the note payable decreased $499,107 or 100% as a result of the Trust redeeming
in full the note issued pursuant to the Note Issuance Agreement in 1993.
General and Administrative expenses increased $28,231 or 5.6% primarily as a
result of increased insurance costs.
During the first quarter of 1994 the Trust recognized rental income of
$1,140,500 as compared to $816,189 for the same period of 1993. This 40%
increase results from the Trust receiving rental income from 7 properties for
the first quarter of 1994 as compared to 5 during the 1993 period. During the
first quarter of 1994, the Trust's interest expense on mortgages payable
decreased 17% to $110,814 due to principal paydowns. Property operating
expenses, real estate taxes and depreciation expense increased 66%, 27% and
38%, respectively, over the first quarter of 1993 due to the aforementioned
increase in the number of properties. During the first quarter of 1994 the
Trust recognized net income from investment in real estate of $432,186 as
compared to $274,527 for the first quarter of 1993.
Net earnings for the first quarter of 1994 as compared to the first quarter of
1993 increased $85,345 or 3.9% as a result of the items discussed above.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. No exhibits are filed with this report.
B. Current Report on Form 8-K filed January 10, 1994.
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RPS REALTY TRUST FORM 10-Q MARCH 31, 1994
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 thereunto duly authorized.
RPS REALTY TRUST
By:/s/ Joel M. Pashcow
---------------------------
Joel M. Pashcow
Chairman and Trustee
(Principal Executive Officer)
By:/s/ Herbert Liechtung
---------------------------
Herbert Liechtung
President and Trustee
(Principal Executive Officer)
By:/s/ Edwin R. Frankel
----------------------------
Edwin R. Frankel
Senior Vice President and Treasurer
(Chief Financial Officer)
Date: