1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-13754
NOONEY REALTY TRUST, INC.
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(Exact name of Registrant as specified in its charter)
Missouri 43-1339136
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7701 Forsyth Boulevard, St. Louis, Missouri 63105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 863-7700
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Former name, former address and former fiscal year,
if changed since last report.
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 [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12,13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date. As of March 31, 1991 there were 866,624 shares of the
Registrant's common stock, par value $1 per share, issued and outstanding.
Page 1 of 13 Pages
2
PART I
Item 1 - Financial Statements:
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NOONEY REALTY TRUST, INC.
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(A REAL ESTATE INVESTMENT TRUST)
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BALANCE SHEETS
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September 30, December 31,
1995 1994
(Unaudited)
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ASSETS:
Cash and short-term investments $ 680,538 $ 601,604
Accounts receivable 229,073 277,065
Prepaid and deferred expenses 68,498 36,609
Investment property, at cost:
Land and improvements 2,568,955 2,568,955
Buildings 17,541,314 17,381,201
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20,110,269 19,950,156
Less accumulated depreciation 5,190,767 4,730,872
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14,919,502 15,219,284
Deferred expenses-at amortized cost 356,206 369,506
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$16,253,817 $16,504,068
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued expenses $ 463,015 $ 372,132
Mortgage notes payable 4,931,914 4,988,006
Refundable tenant deposits 47,647 45,004
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Total liabilities 5,442,576 5,405,142
Shareholders' Equity:
Common Stock, $1 par value; Authorized,
5,000,000 shares; Issued and outstanding,
866,624 in 1995 and 1994 866,624 866,624
Additional paid-in capital 14,252,532 14,252,532
Distributions in excess of net income (4,307,915) (4,020,230)
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10,811,241 11,098,926
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$16,253,817 $16,504,068
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NOONEY REAL REALTY TRUST, INC.
------------------------------
(A REAL ESTATE INVESTMENT TRUST)
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STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
-----------
Three Months Ended Nine Months Ended
Sept.30, Sept.30, Sept.30, Sept.30,
1995 1994 1995 1994
----------- ----------- ------------ ------------
REVENUES:
Rental and other income $ 732,365 $ 668,034 $2,140,910 $2,035,984
Interest 713 1,321 2,915 6,603
----------- ----------- ------------ ------------
733,078 669,355 2,143,825 2,042,587
EXPENSES:
Interest 103,838 114,002 312,692 343,376
Depreciation and amortization 180,549 181,211 540,400 531,347
Real estate taxes 132,924 133,973 388,311 365,808
Advisory Fee 28,936 29,322 86,960 87,069
Property management fees paid to
Nooney Krombach Company 27,285 24,750 79,587 75,591
Operating expenses 211,535 200,179 616,246 612,055
----------- ----------- ------------ ------------
685,067 683,437 2,024,196 2,015,246
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EARNINGS (LOSS) FROM OPERATIONS $ 48,011 $ (14,082) $ 119,629 $ 27,341
=========== =========== =========== ===========
EARNINGS PER SHARE $ 0.06 $ (0.02) $ 0.14 $ 0.03
=========== =========== =========== ===========
4
NOONEY REALTY TRUST, INC.
-------------------------
(A REAL ESTATE INVESTMENT TRUST)
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STATEMENT OF SHAREHOLDERS' EQUITY
---------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1995
------------------------------------
(UNAUDITED)
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COMMON STOCK
------------------------
ADDITIONAL DISTRIBUTION
NUMBER OF PAID-IN IN EXCESS OF
SHARES AMOUNT CAPITAL NET INCOME
----------- ----------- ------------ ------------
Balance, January 1, 1995 866,624 $ 866,624 $14,252,532 $(4,020,230)
Earnings from Operations 119,629
Distributions to Shareholders (407,314)
----------- ----------- ------------ ------------
Balance, September 30, 1995 866,624 $ 866,624 $14,252,532 $(4,307,915)
=========== =========== ============ ============
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NOONEY REALTY TRUST, INC.
-------------------------
(A REAL ESTATE INVESTMENT TRUST)
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Earnings (loss) from operations $ 48,011 $ (14,082) $ 119,629 $ 27,341
Adjustments to reconcile earnings from operations
to net cash provided by operating activities:
Depreciation and amortization 180,549 181,211 540,400 531,347
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable 34,847 (59,413) 47,992 (100,425)
Increase in prepaid expenses (61,129) (128,637) (31,889) (108,580)
Decrease (Increase) in deferred assets 2,328 (37,288) (67,205) (298,446)
Increase (Decrease) in accounts payable
and accrued expenses 121,380 103,514 90,883 (17,521)
(Decrease) Increase in refundable tenant
deposits (482) 11,233 2,643 15,314
----------- ----------- ------------ ------------
Total Adjustments 277,493 70,620 582,824 21,689
----------- ----------- ------------ ------------
Net cash provided by operating activities 325,504 56,538 702,453 49,030
CASH FLOWS USED IN INVESTING ACTIVITIES
Adjustments to investment property (37,272) (83,658) (160,113) (133,983)
----------- ----------- ------------ ------------
Net cash used in investing activities (37,272) (83,658) (160,113) (133,983)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Cash distributions to shareholders (147,326) (103,995) (407,314) (294,982)
Payments on mortgage notes payable (19,090) (19,518) (56,092) (51,041)
----------- ----------- ------------ ------------
Net cash used in financing activities (166,416) (123,513) (463,406) (346,023)
----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 121,816 (150,633) 78,934 (430,976)
----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS
Beginning of period 558,722 392,220 601,604 672,563
----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS
End of period $ 680,538 $ 241,587 $ 680,538 $ 241,587
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NOONEY REALTY TRUST, INC.
(A REAL ESTATE INVESTMENT TRUST)
NOTES TO FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NOTE A:
Refer to the Registrant's financial statements for the year ended December 31,
1994, which are contained in the Registrant's Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without
change. Also, refer to the footnotes to those statements for additional
details of the Registrant's financial condition. The details in those notes
have not changed except as a result of normal transactions in the interim
periods or as noted below.
NOTE B:
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 1995 and for all periods
presented have been made.
NOTE C:
The Registrant has employed Nooney Advisors, Ltd., a Missouri limited
partnership, to serve as the Registrant's investment and financial counselor
and to supervise the day-to-day operations of the Registrant. Certain General
Partners of Nooney Advisors, Ltd. are also officers and directors of the
Registrant. Advisory fees of $28,936 and $86,960 were paid to Nooney Advisors,
Ltd. for the three and nine months ended September 30, 1995. Advisory fees of
$29,322 and $87,069 were paid to Nooney Advisors, Ltd. for the three and nine
months ended September 30, 1994.
The Registrant's properties are managed by Nooney Krombach Company, a wholly
owned subsidiary of Nooney Company. Certain officers and directors of the
Registrant are also officers and directors of Nooney Company or one of its
subsidiaries.
NOTE D:
The earnings per share for the three and nine months ended September 30, 1995
and 1994 has been computed based on 866,624 shares, the number outstanding
during the periods.
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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Cash on hand as of September 30, 1995 is $680,538, an increase of $78,934
from year end December 31, 1994. The increase in cash was provided by the
operations of the Trust's properties along with lower than expected capital
expenditures. Based on the current cash position and the properties' ability
to provide operating cash flow, the Trust expects the properties to fund
anticipated capital expenditures for the remainder of 1995. The anticipated
capital expenditures by property are as follows:
Other Leasing
Capital Capital Total
---------- ---------- ----------
Atrium at Alpha $ 0 $ 9,650 $ 9,650
Franklin Park Dist. Center 40,250 0 40,250
Applied Communications Bldg. 0 0 0
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$ 40,250 $ 9,650 $ 49,900
During the remainder of 1995, approximately $49,900 of capital expenditures
are expected. Atrium at Alpha leasing capital includes funds for tenant
alterations to their respective suites along with lease commissions for new
tenant leases. With the renewal of the first mortgage loan in the last
quarter of 1994, Franklin Park Distribution Center is scheduled for brickwork
repair to the outside of the building. Capital expenditures at Applied
Communications Building are expected to be minimal.
In November 1994 the Trust successfully negotiated the renewal of the first
mortgage debt for a term of seven years. The mortgage lender committed to a $5
million loan at a fixed rate of 8.4% and an amortized period of 23 years.
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Results of Operations
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The results of operations for the Trust's properties for the quarters ended
September 30, 1995 and 1994 are detailed in the schedule below. Expenses of
the Trust are excluded.
Atrium at Franklin Park Applied
Alpha Distr. Center Comm. Bldg.
---------------- ---------------- ----------------
1995
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Revenues 276,421 190,113 263,125
Expenses 236,085 145,930 236,073
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Net Income 40,336 44,183 27,052
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1994
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Revenues 221,556 185,439 258,121
Expenses 225,952 146,184 244,900
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Net Income (Loss) (4,396) 39,255 13,221
================ ================ ================
The operations of Franklin Park Distribution Center for the third quarter of
1995 are similar to the operating results for the quarter ended September 30,
1994. Atrium at Alpha operating results improved through increased revenues
offset by a minimal increase in expenses. The increase in revenues relates to
an increase in occupancy and slightly increasing rental rates. Expense
increases relate to increases in utilities and management expenses. At Applied
Communications Building revenues increased due to an increase in the rental
rate received from the single tenant as of January 1, 1995. The decrease in
expenses are attributable to decreases in utilities and interest costs.
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The occupancy levels at the Trust's properties during the third quarter
remain at a high level. These high levels can be attributable to the Trust's
ability to renew the properties major tenants as their leases mature. The
occupancy levels at September 30 are as follows:
PROPERTY 1995 1994 1993
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Atrium at Alpha 99% 85% 88%
Franklin Park Dist. Center 100% 100% 100%
Applied Communications Bldg. 100% 100% 100%
Franklin Park Distribution Center currently is fully leased by two tenants.
The larger of the two tenants occupies 57% of the building while the other
occupies 43% of the building. The leases expire in December 1999 and June
1998, respectively.
The Applied Communications Building has a single tenant who occupies the
entire building. The tenant's lease expires in August 1999.
During the third quarter the occupancy level at Atrium at Alpha increased
from the previous quarter through the net leasing of 3,606 square feet. Three
new leases were signed during the third quarter accounting for 3,606 square
feet while no tenants moved out. The Trust renewed four existing tenant leases
totaling approximately 5,286 square feet. The rental rates for the new leases
and the renewals increased approximately 15.50%. The property has two major
tenants which leases 23% and 17% of the available space with leases expiring in
May 1999 and July 1996, respectively.
1995 Comparisons
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As of September 30, 1995, the Trust's consolidated revenues are $733,078
for the quarter ended and $2,143,825 for the nine month period ended. The
revenues have increased approximately 9.50% and 4.96% for the quarter ended and
nine month period ended September 30, 1995, respectively, when compared to the
same periods ended September 30, 1994.
The increase in consolidated revenues as previously stated are attributable
to the operating results of all three properties. Franklin Park Distribution
Center, Applied Communications Building and Atrium at Alpha had increases of
approximately 2.50%, 1.94% and 24.76%, respectively, for the quarter ended
September 30, 1995 and increases of approximately 4.90%, 2.29% and 8.50%,
respectively for the nine month period ended September 30, 1995, when compared
to the same periods ended September 30, 1994.
At Franklin Park Distribution Center revenues for the quarter ended and
nine month period ended September 30, 1995 was $190,113 and $560,709,
respectively compared to $185,439 and $534,396 for the three month and nine
month period ended September 30, 1994. With the renewal of a major tenant
effective January 1, 1995, the property was able to increase the rental
10
revenues through an increase in the major tenant's base rent. The remainder of
the revenue increase relates to the recovery of real estate taxes. As real
estate taxes increase, the Trust has the ability to directly pass through any
increases to the tenancy of the property.
Revenues at the Applied Communications Building increased $5,004 for the
quarter ended and $17,016 for the nine month period ended September 30, 1995
when compared to the same periods ended September 30, 1994. The property's
revenues for the three month period ended September 30, 1995 and 1994 were
$263,125 and $258,121, respectively. For the nine month period ended September
30, 1995 and 1994 revenues were $762,401 and $745,385, respectively. The
increase in revenues relates to an increase in the tenant's base rent of $.35
per square foot effective January 1, 1995. In addition, escalation income
increased due to the payment of operating expense pass-throughs by the existing
tenant. The payments commenced January 1, 1995. Offsetting an increase in
rental and escalation income are decreases in utility reimbursement income.
The decrease in utility reimbursement is in direct correlation with a similar
decrease in utility expense.
At Atrium at Alpha revenues for the quarter ended and nine month period
ended September 30, 1995 was $276,421 and $806,752, respectively compared to
$221,556 and $743,584 for the three month and nine month period ended
September 30, 1994. For the quarter ended and nine month period ended the
property had increases in rental income of $53,743 and $130,486, respectively,
when compared to the same periods ended September 30, 1994. The increase in
quarterly income is attributable to increased occupancy and increasing rental
rates. The increases in revenues for the nine month period are also
attributable to increased occupancy and increasing rental rates along with
increases in electric reimbursement income. The increase in electric
reimbursement is in direct correlation with a similar increase in electrical
expense. To offset increases in rental and electric reimbursement income,
there was a significant decrease in escalation income. The decrease in
escalation is a result of an operating expense decrease from 1993 to 1994 of
approximately 4%. The decrease caused the actual expenses to be lower than the
tenant's base years for 1994. Therefore, in 1995 the Trust estimated that the
expense levels will remain below the tenant's base years resulting in minimal
escalation income for 1995.
11
As of September 30, 1995, the Trust's consolidated expenses for the quarter
and nine month period ended are $685,067 and $2,024,196, respectively.
Expenses for the quarter ended increased $1,630 or .24% when compared to the
quarter ended September 30, 1994. For the nine month period ended September
30, 1995 expenses increased $8,950 or .44% when compared to the same period
ended September 30, 1994. Although consolidated expenses for the quarter and
nine month period ended September 30, 1995 have had minimal increases when
compared to the same periods ended September 30, 1994, certain expense
categories have had noteworthy fluctuations. For the quarter ended September
30, 1995 when compared to the quarter ended September 30, 1994 interest expense
decreased $10,164 or 8.92%, management fees increased $2,535 or 10.24% and
other operating expenses increased $11,356 or 5.67%. The decrease in interest
expense is caused by the November 1994 refinancing of the first mortgage debt
at a lower interest rate. Management fees, as expected, increased due to the
increases in revenues. The increase in other operating expenses are
attributable to several expense categories as outlined in the following
schedule. Decreases are bracketed.
Franklin Applied
Park Dist. Comm. Atrium at
Center Building Alpha Trust Totals
---------- ---------- ---------- ---------- ----------
Electric --- (4,783) 4,638 --- (145)
Insurance 291 15 (164) (2,406) (2,264)
Management Fees 140 200 2,195 --- 2,535
Office-General (104) 109 (1,203) 274 (924)
Parking Lot (169) 444 1,104 --- 1,379
Administrative 613 844 2,086 --- 3,543
Repairs & Maintenance (310) 683 2,304 --- 2,677
Professional Fees (1,012) --- (652) 9,371 7,707
Property Totals (551) (2,488) 10,308 7,239 14,508
Expense categories not noted above (3,152)
Consolidated increase in other operating expenses 11,356
For the nine months ended September 30, 1995 when compared to the nine
month period ended September 30, 1994 interest expense decreased $30,684 or
8.94%, depreciation and amortization increased $9,053 or 1.70%, real estate
taxes increased $22,503 or 6.15% and management fees increased $3,996 or 5.29%.
The decrease in interest expense is caused by the November 1994 refinancing of
the first mortgage debt at a lower interest rate. The increase in
depreciation and amortization related to tenant alteration and lease commission
expenditures at Atrium at Alpha and Franklin Park Distribution Center. Real
estate taxes increased due to increased assessments and tax rates at Franklin
Park Distribution Center and Atrium at Alpha. Management fees, as expected,
increased due to increased revenues.
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1994 Comparisons
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On a consolidated basis, revenue for the quarter ended September 30, 1994
was $669,355, a decrease of $31,767 or 4.53% when compared to quarter ended
September 30, 1993. For the nine months ended September 30, 1994 revenues were
2,042,587, a decrease of $50,274 or 2.40% when compared to the same period
ended September 30, 1993. The cause for the decrease in revenues relates to a
decrease in escalation income at Atrium at Alpha offset by increases in rental
income at Applied Communications Building and Franklin Park Distribution
Center. The decrease in escalation income at Atrium at Alpha is due to the
rollover of a large block of space in May 1994 whereby several tenants
negotiated new base years resulting in the payment of escalation charges to
cease. Along with tenant rollover, the property's operating expenses remainder
relatively flat from 1992 to 1993, resulting in actual expenses and tenant base
years for 1993 to be approximately equal. Therefore, in 1994, when the Trust
estimated that the actual expense levels would remain below the tenant's base
years, the result would be minimal escalation income for 1994. The rental
income increases at Applied Communications Building and Franklin Park
Distribution Center are attributable to step-up rents and renewal rent
increases, respectively.
Consolidated expenses for the quarter ended and nine month period ended
September 30, 1994 were $683,437 and $2,015,246, respectively. Consolidated
expenses increased approximately 7.62% when comparing quarter ended September
30, 1994 to the same period ended September 30, 1993, while for the nine month
period consolidated expenses increased approximately 1.55%. For the quarter
ended and nine month period ended September 30, 1994, the increase in expenses
can be attributable to real estate taxes and other operating expenses. The
increase in real estate taxes is attributable to Atrium at Alpha. At Atrium at
Alpha the Trust was able to get a reduction in the property's assessed value
resulting in a real estate tax refund which directly reduced the 1993 expense.
The increase in other operating expenses is attributable to increases at
Applied Communications Building and the Trust. Other operating expenses at
Franklin Park Distribution Center and Atrium at Alpha remained relatively flat
for the quarter ended and nine month period ended September 30, 1994 when
compared to the same periods ended September 30, 1993. At Applied
Communications Building for the quarter ended, parking lot expenditures and
utilities had increased along with insurance costs at the Trust. For the nine
month period ended Applied Communications Building had increases in parking lot
expenditures, repairs and maintenance, utilities and professional fees along
with insurance and professional fees at the Trust.
Inflation
- ---------
The effects of inflation did not have a material impact upon the Trust's
operation in fiscal 1994 and are not expected to have a material impact in
1995.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
Exhibit 27 -- Financial Data Schedule (provided for the
information of the Securities and Exchange
Commission only)
(b) Reports on Form 8-K
None
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.
NOONEY REALTY TRUST, INC.
Dated: November 14,1995 By: /s/ Gregory J. Nooney, Jr.
-----------------------------------------
Gregory J. Nooney, Jr.
Chief Executive Officer
/s/ Patricia A. Nooney
-----------------------------------------
Patricia A. Nooney
President and Treasurer