FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities |
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| For the quarterly period ended June 30, 2002 |
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| OR |
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| Transition Report Pursuant to Section 13 or 15(d) of the Securities |
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| For the transition period from ______________ to ______________ |
Commission File Number
333-77229
| T REIT, Inc. |
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| (Exact name of registrant as specified in its charter) |
| Virginia |
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52-2140299 |
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| (State or other jurisdiction of |
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(I.R.S. Employer Identification No.) |
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| 1551 N. Tustin Avenue, Suite 650 |
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| Santa Ana, California 92705 |
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(877) 888-7348 |
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| (Address of principal executive offices) |
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(Registrant’s telephone number, |
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| N/A |
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| (Former name) |
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by
Sections 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 o
As of July 31, 2002,
there were 4,707,826 shares of common stock of T REIT,
Inc. outstanding.
T REIT, Inc.
Form 10-Q
For the quarterly period ended June 30, 2002
INDEX
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Page | |||
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| Part I |
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Item 1. |
3 | |||
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Condensed Consolidated Balance Sheets as of June 30, 2002 (Unaudited) and December 31, 2001 |
4 | ||
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5 | |||
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6 | |||
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7 | |||
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8 | |||
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||
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Item 3. |
20 | |||
| Part II |
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Item 1. |
21 | |||
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Item 2. |
21 | |||
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Item 3. |
21 | |||
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Item 4. |
21 | |||
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Item 5. |
21 | |||
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Item 6. |
21 | |||
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25 | ||||
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates”, “believes”, “can”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “should”, or “will” or the negative of these terms or other comparable terminology. These statements are only predictions, and forward-looking statements, and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Business Risks” contained in Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. For all of these predictions and forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. The Company’s expectations are as of the date this Form 10-Q is filed, and the Company does not intend to update any of the forward-looking statements after the date this Quarterly Report on Form 10-Q is filed to conform these statements to actual results, unless required by law.
Part I - Financial Information
Item 1. Financial Statements.
The June 30, 2002 and 2001 Condensed Consolidated Financial Statements of the Company required to be filed with this Form 10-Q Quarterly Report were prepared by management without audit and commence on the following page, together with the related Notes. In the opinion of management, these Condensed Consolidated Financial Statements present fairly the financial condition of the Company, but should be read in conjunction with the Condensed Consolidated Financial Statements of the Company for the quarter ended March 31, 2002 and the Consolidated Financial Statements of the Company for the year ended December 31, 2001 previously filed with the Securities and Exchange Commission.
3
T REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, |
December 31, |
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| ASSETS |
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| Real estate operating properties |
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Land |
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$ |
9,001,043 |
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$ |
8,926,043 |
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Buildings and improvements |
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26,991,271 |
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26,951,837 |
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Investments in unconsolidated real estate |
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14,455,499 |
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1,878,037 |
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50,447,813 |
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37,755,917 |
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Less: accumulated depreciation and amortization |
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(943,399 |
) |
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(594,381 |
) | |
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| Total real estate operating properties |
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49,504,414 |
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37,161,536 |
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| Cash and cash equivalents |
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12,206,568 |
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3,647,159 |
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| Real estate deposits |
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— |
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631,500 |
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| Accounts receivable |
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568,465 |
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293,163 |
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| Accounts receivable from related parties |
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223,971 |
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627,000 |
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| Other assets, net |
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908,272 |
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698,420 |
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| Notes receivable |
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591,479 |
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595,000 |
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| Notes receivable from related parties |
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1,408,448 |
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1,787,579 |
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| Total assets |
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$ |
65,411,617 |
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$ |
45,441,357 |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Accounts payable and accrued expenses |
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$ |
1,216,373 |
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$ |
748,317 |
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| Security deposits and deferred revenue |
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124,550 |
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190,156 |
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| Notes payable |
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25,061,566 |
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24,737,461 |
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| Total liabilities |
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26,402,489 |
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25,675,934 |
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| Commitments and contingencies |
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| Shareholders’ equity: |
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Common stock, $.01 par value; 10,000,000 shares authorized; 4,720,176 and 2,470,487 shares issued and 4,707,826 and 2,470,487 shares outstanding at June 30, 2002 and December 31, 2001, respectively |
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47,078 |
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24,705 |
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Additional paid-in capital, net of offering costs of $5,575,464 and $2,976,946 at June 30, 2002 and December 31,2001, respectively |
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38,607,638 |
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20,305,132 |
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Retained earnings (accumulated deficit) |
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354,412 |
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(564,414 |
) | |
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| Total shareholders’ equity |
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39,009,128 |
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19,765,423 |
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| Total liabilities and shareholders’ equity |
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$ |
65,411,617 |
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$ |
45,441,357 |
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The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
T REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Six Months Ended |
Three Months Ended |
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| 2002 |
2001 |
2002 |
2001 |
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| Revenues |
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Rental Income |
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$ |
2,586,086 |
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$ |
1,678,617 |
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$ |
1,290,610 |
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$ |
1,056,277 |
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Interest Income |
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188,485 |
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91,926 |
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77,395 |
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51,782 |
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2,774,571 |
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1,770,543 |
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1,368,005 |
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1,108,059 |
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| Expenses |
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Rental expenses |
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667,674 |
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564,622 |
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330,238 |
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375,497 |
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General and administrative |
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415,380 |
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144,981 |
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277,529 |
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125,488 |
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Depreciation and amortization |
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438,014 |
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248,152 |
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208,425 |
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151,503 |
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Interest |
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901,421 |
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845,155 |
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476,422 |
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470,899 |
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2,422,489 |
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1,802,910 |
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1,292,614 |
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1,123,387 |
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| Income (loss) before equity in earnings of unconsolidated real estate |
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352,082 |
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(32,367 |
) |
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75,391 |
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(15,328 |
) | ||
| Equity in net earnings of unconsolidated real estate |
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566,744 |
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— |
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512,611 |
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— |
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| Net income (loss) |
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$ |
918,826 |
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$ |
(32,367 |
) |
$ |
588,002 |
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$ |
(15,328 |
) | ||
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| Net income (loss) per common share: |
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Basic |
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$ |
0.27 |
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$ |
(0.03 |
) |
$ |
0.15 |
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$ |
(0.01 |
) | |
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Diluted |
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$ |
0.26 |
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$ |
(0.03 |
) |
$ |
0.14 |
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$ |
(0.01 |
) | |
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| Weighted average number of common shares outstanding: |
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Basic |
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3,366,673 |
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933,579 |
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3,937,623 |
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1,085,042 |
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Diluted |
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3,574,201 |
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933,579 |
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4,158,901 |
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1,085,042 |
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| Dividends declared per common share |
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$ |
0.30 |
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$ |
.40 |
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$ |
0.18 |
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$ |
0.21 |
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The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
T REIT, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
For the Six Months Ended June 30, 2002
(Unaudited)
| Number of |
Par Value |
Additional |
Retained |
Total |
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| BALANCE - December 31, 2001 |
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2,470,487 |
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$ |
24,705 |
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$ |
20,305,132 |
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$ |
(564,414 |
) |
$ |
19,765,423 |
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| Issuance of common stock, net |
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2,237,339 |
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22,373 |
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19,712,763 |
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— |
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19,735,136 |
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| Distributions |
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— |
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— |
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(1,410,257 |
) |
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— |
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(1,410,257 |
) |
| Net income |
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— |
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— |
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— |
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918,826 |
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918,826 |
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| BALANCE - June 30, 2002 |
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4,707,826 |
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$ |
47,078 |
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$ |
38,607,638 |
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$ |
354,412 |
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$ |
39,009,128 |
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The accompanying notes are an integral part of these
condensed consolidated
financial statements.
6
T REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months |
Six Months |
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| CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net income (loss) |
|
$ |
918,826 |
|
$ |
(32,367 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
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Equity in net earnings of unconsolidated real estate |
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(566,744 |
) |
|
— |
| |
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Depreciation and amortization |
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|
438,014 |
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|
248,152 |
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Change in operating assets and liabilities: |
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| |
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Accounts receivable |
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(275,302 |
) |
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(249,468 |
) | |
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Accounts receivable from related parties |
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|
403,029 |
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— |
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Other assets |
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(298,848 |
) |
|
(197,380 |
) | |
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Accounts payable and accrued expenses |
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|
468,056 |
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(216,031 |
) | |
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Security deposits and deferred revenue |
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(65,606 |
) |
|
40,999 |
| |
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| Net cash provided by (used in) operating activities |
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1,021,425 |
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(406,095 |
) | ||
| CASH FLOWS USED IN INVESTING ACTIVITIES |
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|
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Purchase of real estate properties |
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(75,000 |
) |
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(4,774,274 |
) | |
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Real estate property improvements |
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|
(39,434 |
) |
|
— |
| |
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|
Notes receivable |
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|
3,521 |
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|
— |
| |
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Notes receivable from related parties |
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|
379,131 |
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(430,000 |
) | |
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Real estate deposits |
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|
631,500 |
|
|
13,240 |
| |
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|
Investment in unconsolidated real estate |
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|
(12,010,718 |
) |
|
— |
| |
|
|
|
|
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|
|
| ||
| Net cash (used in) investing activities |
|
|
(11,111,000 |
) |
|
(5,191,034 |
) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
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|
|
| ||
|
|
Proceeds from issuance of common stock, net |
|
|
19,735,136 |
|
|
5,632,134 |
| |
|
|
Proceeds from refinancing notes payable |
|
|
456,237 |
|
|
1,500,000 |
| |
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|
Principal payments on notes payable |
|
|
(132,132 |
) |
|
(550,615 |
) | |
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Distributions to shareholders |
|
|
(1,410,257 |
) |
|
(377,500 |
) | |
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|
|
|
|
|
|
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| Net | |||||||||