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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)



|[ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|----- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2002

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 000-24594

WEST COAST REALTY INVESTORS, INC.

(Exact name of registrant as specified in its charter)


|                                                             |  |                                  
|------------------------------------------------------------ |  | ---------------------------------
|Delaware                                                     |  | 95-4246740                       
|State or other jurisdiction of
incorporation or organization |  | (IRS Employer
Identification No.)

3000 SAND HILL ROAD BUILDING 3, SUITE 140
MENLO PARK, CALIFORNIA 94025
(Address of principal executive offices) (Zip Code)
 (650) 233-7140
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 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 ü  No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of May 10, 2002, 2,927,967 shares of the Registrants Common Stock were
outstanding.



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TABLE OF CONTENTS



|                               |                                                                                               |                                    |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------- |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                               |                                                                                               | BALANCE SHEETS                    
|                               |                                                                                               | STATEMENTS OF INCOME              
|                               |                                                                                               | STATEMENTS OF CASH FLOWS          
|                               |                                                                                               | STATEMENTS OF STOCKHOLDERS EQUITY
|                               |                                                                                               | SIGNIFICANT ACCOUNTING POLICIES   
|                               |                                                                                               | NOTES TO FINANCIAL STATEMENTS     
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION   
|                               | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                               | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                               | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                               | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                               | ITEM 5. OTHER INFORMATION                                                                    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|S I G N A T U R E S           
|EXHIBIT 3.1                   



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##### Table of Contents



WEST COAST REALTY INVESTORS, INC.
 REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
 TABLE OF CONTENTS

|                               |                                                                                               |                                                                 |  |    |    | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------- |  | -- | -- | 
|                              
|Part I  Financial Information |                                                                                               |                                                                 |  |   
|                              
|                               | Item 1. Financial Statements                                                                  |                                                                 |  |    |   
|                               |                                                                                               | Balance Sheets-                                                 |  |    |    | 
|                               |                                                                                               | As of March 31, 2002 (unaudited) and December 31,
2001(audited) |  |    | 3  | 
|                               |                                                                                               | Income Statements-                                              |  |    |    | 
|                               |                                                                                               | Three months ended March 31, 2002 and 2001                      |  |    | 4  | 
|                               |                                                                                               | Statements of Cash Flows-                                       |  |    |    | 
|                               |                                                                                               | Three months ended March 31, 2002 and 2001                      |  |    | 5  | 
|                               |                                                                                               | Statements of Stockholders Equity-                             |  |    |    | 
|                               |                                                                                               | Three months ended March 31, 2002 and 2001                      |  |    | 6  | 
|                               |                                                                                               | Summary of significant accounting policies                      |  |    | 7  | 
|                               |                                                                                               | Notes to financial statements                                   |  |    | 11 | 
|                              
|                               | Item 2. Managements Discussion and
Analysis of Financial Condition
and Results of Operations |                                                                 |  | 17 |   
|                               | Item 3. Quantitative and Qualitative
Disclosures about Market Risk                            |                                                                 |  | 21 |   
|                              
|Part II  Other Information    |                                                                                               |                                                                 |  |   
|                              
|                               | Item 1. Legal Proceedings                                                                     |                                                                 |  | 23 |   
|                               | Item 2. Changes In Securities and Use
of Proceeds                                             |                                                                 |  | 23 |   
|                               | Item 3. Defaults Upon Senior Securities                                                       |                                                                 |  | 23 |   
|                               | Item 4. Submission of Matters to a Vote
of Security Holders                                   |                                                                 |  | 24 |   
|                               | Item 5. Other Information                                                                     |                                                                 |  | 24 |   
|                               | Item 6. Exhibits and Reports on
Form 8-K                                                      |                                                                 |  | 24 |   
|                               | Signatures                                                                                    |                                                                 |  | 25 |   

As used in this Report on Form 10-Q, unless the context otherwise requires, the
terms we, us, or the Company and our refer to West Coast Realty
Investors, Inc., a Delaware corporation.



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##### Table of Contents






PART I - FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




WEST COAST REALTY INVESTORS, INC.
BALANCE SHEETS

|                                           |                                                                                                                                              |   |             |             |              |   |            |             |  
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | ----------- | ------------ | - | ---------- | ----------- | -
|                                           |                                                                                                                                              |   | March 31,   |             | December 31,
|                                           |                                                                                                                                              |   | 2002        |             | 2001        
|                                           |                                                                                                                                              |   | (Unaudited) |             | (Audited)   
|                                           |                                                                                                                                              |   |             |             |             
|Assets                                     |                                                                                                                                              |   |             |             |              |   |            |            
|                                           | Rental real estate, less accumulated depreciation (Notes 1 and 2)                                                                            |   | $           | 26,145,978  |              |   | $          | 29,458,317  |  
|                                           | Cash and cash equivalents                                                                                                                    |   |             | 1,362,529   |              |   |            | 1,123,827   |  
|                                           | Deferred rent                                                                                                                                |   |             | 538,872     |              |   |            | 545,030     |  
|                                           | Accounts receivable                                                                                                                          |   |             | 23,158      |              |   |            | 14,184      |  
|                                           | Loan origination fees, net of accumulated amortization of
$156,947 and $144,483                                                              |   |             | 179,858     |              |   |            | 167,389     |  
|                                           | Rental real estate held for sale, net (Note 1)                                                                                               |   |             | 8,594,819   |              |   |            | 5,402,842   |  
|                                           | Other assets                                                                                                                                 |   |             | 30,267      |              |   |            | 51,022      |  
|                                           |                                                                                                                                              |   |             |             |              |   |            |            
|Total assets                               |                                                                                                                                              | $ | 36,875,481  |             |              | $ | 36,762,611 |            
|                                           |                                                                                                                                              |   |             |             |              |   |            |             |  
|Liabilities and Stockholders Equity       |                                                                                                                                              |   |             |             |              |   |            |            
|Liabilities                                |                                                                                                                                              |   |             |             |              |   |            |            
|                                           | Accounts payable and other liabilities                                                                                                       |   | $           | 258,422     |              |   | $          | 284,622     |  
|                                           | Dividends payable                                                                                                                            |   |             | 292,797     |              |   |            |            |  
|                                           | Due to related party (Note 3)                                                                                                                |   |             | 31,500      |              |   |            | 37,477      |  
|                                           | Security deposits and prepaid rent                                                                                                           |   |             | 296,031     |              |   |            | 303,852     |  
|                                           | Notes payable (Note 4)                                                                                                                       |   |             | 19,667,807  |              |   |            | 19,796,510  |  
|                                           |                                                                                                                                              |   |             |             |              |   |            |            
|Total liabilities                          |                                                                                                                                              |   | 20,546,557  |             |              |   | 20,422,461 |            
|Commitments and contingencies(Note 9)      |                                                                                                                                              |   |             |             |              |   |            |            
|Stockholders equity                       |                                                                                                                                              |   |             |             |              |   |            |            
|                                           | Common stock $.01 par value; 5,000,000 shares authorized;
2,927,967 shares issued and outstanding as of March 31, 2002
and December 31, 2001 |   |             | 29,280      |              |   |            | 29,280      |  
|                                           | Additional paid-in capital                                                                                                                   |   |             | 27,147,772  |              |   |            | 27,147,772  |  
|                                           | Dividends in excess of retained earnings                                                                                                     |   |             | (10,848,128 | )            |   |            | (10,836,902 | )
|                                           |                                                                                                                                              |   |             |             |              |   |            |            
|Total stockholders equity                 |                                                                                                                                              |   | 16,328,924  |             |              |   | 16,340,150 |            
|                                           |                                                                                                                                              |   |             |             |              |   |            |            
|Total liabilities and stockholders equity |                                                                                                                                              | $ | 36,875,481  |             |              | $ | 36,762,611 |            
|                                           |                                                                                                                                              |   |             |             |              |   |            |             |  

See accompanying summary of accounting policies and notes to financial statements.



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WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF INCOME

|                                                            |                            |   |             |           |             |   |           |           | 
|----------------------------------------------------------- | -------------------------- | - | ----------- | --------- | ----------- | - | --------- | --------- | 
|                                                            |                            |   | Quarter     |           | Quarter    
|                                                            |                            |   | ended       |           | ended      
|                                                            |                            |   | March 31,   |           | March 31,  
|                                                            |                            |   | 2002        |           | 2001       
|                                                            |                            |   | (Unaudited) |           | (Unaudited)
|                                                            |                            |   |             |           |            
|Revenues                                                    |                            |   |             |           |             |   |           |          
|                                                            | Rental (Notes 1 and 2)     |   | $           | 1,101,217 |             |   | $         | 1,171,652 | 
|                                                            | Interest                   |   |             | 4,314     |             |   |           | 17,403    | 
|                                                            |                            |   |             |           |             |   |           |          
|                                                            |                            |   | 1,105,531   |           |             |   | 1,189,055 |          
|                                                            |                            |   |             |           |             |   |           |          
|Cost and expenses                                           |                            |   |             |           |             |   |           |          
|                                                            | Interest expense           |   |             | 341,598   |             |   |           | 414,357   | 
|                                                            | General and administrative |   |             | 207,204   |             |   |           | 132,725   | 
|                                                            | Depreciation               |   |             | 120,362   |             |   |           | 180,141   | 
|                                                            | Operating                  |   |             | 154,796   |             |   |           | 148,414   | 
|                                                            |                            |   |             |           |             |   |           |          
|                                                            |                            |   | 823,960     |           |             |   | 875,637   |          
|                                                            |                            |   |             |           |             |   |           |          
|Net income from operations                                  |                            |   | 281,571     |           |             |   | 313,418   |          
|Insurance recovery from lawsuit (Note 8)                    |                            |   |            |           |             |   | 165,053   |          
|                                                            |                            |   |             |           |             |   |           |          
|Net income                                                  |                            | $ | 281,571     |           |             | $ | 478,471   |          
|                                                            |                            |   |             |           |             |   |           |           | 
|Net income per share  basic and assuming dilution
(Note 5) |                            | $ | 0.10        |           |             | $ | 0.16      |          
|                                                            |                            |   |             |           |             |   |           |           | 

See accompanying summary of accounting policies and notes to financial statements.



4



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WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF CASH FLOWS

|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |         |          |         |  
|--------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------- | ------- | ----------- | ------- | ----------- | ------- | -------- | ------- | -
|                                                    |                                                                                   |                                                                                     |                                        |         | Quarter     |         | Quarter    
|                                                    |                                                                                   |                                                                                     |                                        |         | ended       |         | ended      
|                                                    |                                                                                   |                                                                                     |                                        |         | March 31,   |         | March 31,  
|                                                    |                                                                                   |                                                                                     |                                        |         | 2002        |         | 2001       
|                                                    |                                                                                   |                                                                                     |                                        |         | (Unaudited) |         | (Unaudited)
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |            
|Cash flows from operating activities                |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|                                                    | Net income                                                                        |                                                                                     | $                                      | 281,571 |             |         | $           | 478,471 |         
|                                                    | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                     |                                        |         |             |         |             |         |         
|                                                    |                                                                                   | Depreciation expense                                                                |                                        |         | 120,362     |         |             |         | 180,141  |        
|                                                    |                                                                                   | Interest expense due to amortization of loan origination fees                       |                                        |         | 12,474      |         |             |         | 12,538   |        
|                                                    |                                                                                   | Equity contribution by Affiliates through expense
reimbursements                    |                                        |         |            |         |             |         | 56,518   |        
|                                                    |                                                                                   | Increase (decrease) in cash flows from changes in
operating assets and liabilities: |                                        |         |             |         |             |         |          |        
|                                                    |                                                                                   |                                                                                     | Deferred rent                          |         |             | 6,158   |             |         |          | (10,968 | )
|                                                    |                                                                                   |                                                                                     | Accounts receivable                    |         |             | (8,974  | )           |         |          | (43,442 | )
|                                                    |                                                                                   |                                                                                     | Other assets                           |         |             | 20,755  |             |         |          | 8,090   |  
|                                                    |                                                                                   |                                                                                     | Accounts payable and other liabilities |         |             | (26,200 | )           |         |          | 38,697  |  
|                                                    |                                                                                   |                                                                                     | Due to related party                   |         |             | (5,977  | )           |         |          | 11,147  |  
|                                                    |                                                                                   |                                                                                     | Security deposits and prepaid rent     |         |             | (7,821  | )           |         |          | 99,634  |  
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Net cash provided by operating activities           |                                                                                   |                                                                                     | 392,348                                |         |             |         | 830,826     |        
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Cash flows from investing activities                |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Net cash (used in) provided by investing activities |                                                                                   |                                                                                     |                                       |         |             |         |            |        
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Cash flows from financing activities                |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|                                                    |                                                                                   | Dividends declared and paid                                                         |                                        |         |            |         |             |         |         |        
|                                                    |                                                                                   | Payments on notes payable                                                           |                                        |         | (128,703    | )       |             |         | (111,847 | )      
|                                                    |                                                                                   | (Increase) in loan origination fees                                                 |                                        |         | (24,943     | )       |             |         |         |        
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Net cash (used in) provided by financing activities |                                                                                   |                                                                                     | (153,646                               | )       |             |         | (111,847    | )      
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Net increase in cash and cash equivalents           |                                                                                   |                                                                                     | 238,702                                |         |             |         | 718,979     |        
|Cash and cash equivalents,beginning of period       |                                                                                   |                                                                                     | 1,123,827                              |         |             |         | 1,248,335   |        
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |        
|Cash and cash equivalents,end of period             |                                                                                   | $                                                                                   | 1,362,529                              |         |             | $       | 1,967,314   |        
|                                                    |                                                                                   |                                                                                     |                                        |         |             |         |             |         |         

See accompanying summary of accounting policies and notes to financial statements.



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WEST COAST REALTY INVESTORS, INC.
STATEMENTS OF STOCKHOLDERS EQUITY

Quarter ended March 31, 2002
(Unaudited)

|                          |                                               |  |              |  |            |   |              |  |          |   |            |  |  |   |             |          |   |   |            |          |  
|------------------------- | --------------------------------------------- |  | ------------ |  | ---------- | - | ------------ |  | -------- | - | ---------- |  |  | - | ----------- | -------- | - | - | ---------- | -------- | -
|                          |                                               |  |              |  |            |   |              |  |          |   |            |  |  |   | Dividends   |          |   |   |           
|                          |                                               |  | Common Stock |  | Additional |   | in Excess of |  |          |   |           
|                          |                                               |  |              |  | Paid-In    |   | Retained     |  |          |   |           
|                          |                                               |  | Shares       |  | Amount     |   | Capital      |  | Earnings |   | Total     
|                          |                                               |  |              |  |            |   |              |  |          |   |           
|Balance,December 31, 2001 |                                               |  | 2,927,967    |  |            | $ | 29,280       |  |          | $ | 27,147,772 |  |  | $ | (10,836,902 | )        |   | $ | 16,340,150 |         
|                          | Net income                                    |  |              |  |            |   |              |  |          |   |            |  |  |   |             | 281,571  |   |   |            | 281,571  |  
|                          | Dividends declared ($0.10 per
share) (Note 5) |  |              |  |            |   |              |  |          |   |            |  |  |   |             | (292,797 | ) |   |            | (292,797 | )
|                          |                                               |  |              |  |            |   |              |  |          |   |            |  |  |   |             |          |   |   |            |         
|Balance, March 31, 2002   |                                               |  | 2,927,967    |  |            | $ | 29,280       |  |          | $ | 27,147,772 |  |  | $ | (10,848,128 | )        |   |   | 16,238,924 |         
|                          |                                               |  |              |  |            |   |              |  |          |   |            |  |  |   |             |          |   |   |            |         

Quarter ended March 31, 2001
(Unaudited)

|                          |                                                                           |  |              |  |            |   |              |  |          |   |            |        |  |   |            |          |   |   |            |          |  
|------------------------- | ------------------------------------------------------------------------- |  | ------------ |  | ---------- | - | ------------ |  | -------- | - | ---------- | ------ |  | - | ---------- | -------- | - | - | ---------- | -------- | -
|                          |                                                                           |  |              |  |            |   |              |  |          |   |            |        |  |   | Dividends  |          |   |   |           
|                          |                                                                           |  | Common Stock |  | Additional |   | in Excess of |  |          |   |           
|                          |                                                                           |  |              |  | Paid-In    |   | Retained     |  |          |   |           
|                          |                                                                           |  | Shares       |  | Amount     |   | Capital      |  | Earnings |   | Total     
|                          |                                                                           |  |              |  |            |   |              |  |          |   |           
|Balance,December 31, 2000 |                                                                           |  | 2,927,967    |  |            | $ | 29,280       |  |          | $ | 26,977,370 |        |  | $ | (6,704,362 | )        |   | $ | 20,302,288 |         
|                          | Net income                                                                |  |              |  |            |   |              |  |          |   |            |        |  |   |            | 478,471  |   |   |            | 478,471  |  
|                          | Equity contribution by affiliates
through expense reimbursements
(Note 3) |  |              |  |            |   |              |  |          |   |            | 56,518 |  |   |            |          |   |   |            | 56,518   |  
|                          | Dividends declared ($0.15 per
share) (Note 5)                             |  |              |  |            |   |              |  |          |   |            |        |  |   |            | (439,195 | ) |   |            | (439,195 | )
|                          |                                                                           |  |              |  |            |   |              |  |          |   |            |        |  |   |            |          |   |   |            |         
|Balance, March 31, 2001   |                                                                           |  | 2,927,967    |  |            | $ | 29,280       |  |          | $ | 27,033,888 |        |  | $ | (6,665,086 | )        |   |   | 20,398,082 |         
|                          |                                                                           |  |              |  |            |   |              |  |          |   |            |        |  |   |            |          |   |   |            |         

See accompanying summary of accounting policies and notes to financial statements.



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WEST COAST REALTY INVESTORS, INC.
SIGNIFICANT ACCOUNTING POLICIES

Business

West Coast Realty Investors, Inc. was organized in October 1989 under the laws
of the State of Delaware. We have elected tax status as a Real Estate
Investment Trust (REIT) for federal and state income tax purposes since 1991.
Through March 31, 2002, we were advised by West Coast Realty Advisors, Inc.
(WCRA) and our properties were managed by West Coast Realty Management, Inc.
(WCRM) (collectively, the Advisor), each of which is a wholly-owned
subsidiary of Associated Financial Group, Inc. The Advisor managed and oversaw
our investments, subject to the direction of the board of directors. The
Advisor has terminated its management and advisory relationships with us
effective March 31, 2002, and since that date we have been self-managed and
self-administered.

We are organized for the purpose of investing in, holding and managing
income-producing residential, industrial, retail and commercial properties. As
of March 31, 2002, all of our properties were located in California, and we did
not own any residential properties. Most of our leases are triple-net leases
where the tenant is responsible for maintenance, taxes and insurance.

Rental Real Estate and Depreciation

Assets are stated at lower of cost or net realizable value. Depreciation is
computed using the straight-line method over their estimated useful lives of
31.5 to 39 years for financial reporting purposes.

In the event that facts and circumstances indicate that the cost of an asset
may be impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset would be compared to the carrying amount to determine if a
write-down to market value is required.

Real estate classified as held for sale is stated at the lower of its
carrying amount or estimated fair value less disposal costs. Depreciation is
not recorded on assets classified as held for sale.

In the normal course of business, we may receive offers to purchase our
properties, either solicited or unsolicited. For the offers we accept, the
prospective buyer will usually require a due diligence period before closing
the transaction. It is not unusual for matters to arise that result in the
withdrawal or rejection of the offer during this process. As a result, real
estate is not classified as held for sale until it is likely, in the opinion
of management, that a property will be disposed of in the near term, even if
sales negotiations for the property are currently under way. Properties
classified as held for sale are segregated from rental real estate in our
financial statement presentation. As of March 31, 2002, we classified seven
properties as held for sale, as they were listed for sale with real estate
brokers and we believed there was a high likelihood of sale in the near term.
There can be no assurance that the properties held for sale will be sold in the
near term, at prices we consider acceptable, or at all. Four properties were
classified as held for sale as of December 31, 2001.

Rental Income, Operating Expense and Capitalized Costs

Rental revenue is recognized on a straight-line basis to the extent that rental
revenue is deemed collectible. Percentage rents in the quarterly periods ended
March 31, 2002 and 2001 were immaterial,


7Table of ContentsWEST COAST REALTY INVESTORS, INC.
SIGNIFICANT ACCOUNTING POLICIESand recognized when received. Improvements and betterments that increase the
value of the property or extend its useful life are capitalized.Acquisition CostsWe expense internal acquisition costs, including acquisition costs paid the to
the Advisor, in accordance with Emerging Issues Task Force 97-11, Accounting
for Internal Costs Relating to Real Estate Property Acquisitions.Loan Origination FeesLoan origination fees are capitalized and amortized over the life of the loan
and included in interest expense.Cash and Cash EquivalentsWe consider cash in the bank, liquid money market funds and all highly liquid
certificates of deposit with original maturities of three months of less, to be
cash and cash equivalents. We place funds in financial institutions we believe
to be creditworthy and of high quality. Cash and cash equivalent balances are
held with various financial institutions and at times may exceed the Federal
Deposit Insurance Corporation limit of $100,000.ConsolidationWe own all of our assets directly and have no subsidiaries.Use of EstimatesThe preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ materially from those estimates.Net Income Per ShareWe calculate net income per share by dividing the net income by the weighted
average number of shares outstanding for the period. We did not have any
potentially dilutive securities in the quarterly periods ended
March 31, 2002
or 2001.Comprehensive IncomeStatement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income, (SFAS 130) establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is comprised of net income and all
changes to stockholders equity except those due to investments by owners and
8Table of Contents

WEST COAST REALTY INVESTORS, INC.
SIGNIFICANT ACCOUNTING POLICIES

distributions to owners. We do not have any components of comprehensive income
other than net income in the quarterly periods ended March 31, 2002 or 2001.

Reclassifications

We have made reclassifications to the prior years financial statements to
conform to the presentation of the current years financial statements.

Presentation of Interim Information

The accompanying unaudited financial statements include all normal adjustments
considered necessary, in the opinion of management, to present fairly the
financial position as of March 31, 2002 and the results of operations and cash
flows for the three months ended March 31, 2002 and 2001. Interim results are
not necessarily indicative of results for a full year.

The financial statements and notes are presented as permitted by Form 10-Q, and
do not contain certain information included in our audited financial statements
and notes for the fiscal year ended December 31, 2001.

Descriptive Information About Reportable Segments

Financial Accounting Standards Board Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information (Statement 131), requires
certain descriptive information to be provided about an enterprises reportable
segments. We have determined that we have one operating and reportable
segment, rental real estate, which comprised 96% of our total assets at both
March 31, 2002 and December 31, 2001 and approximately 99% our total revenues
for both quarterly periods ended March 31, 2002 and 2001. All the rental real
estate we own is located in California. As most of our leases are to single
tenants under long-term leases, we do not use reporting by geographic region.

Our business focus is the ownership and operation of suburban office properties
and light industrial buildings (although we may pursue other real estate
investment opportunities). We evaluate performance and allocate resources
primarily based on the opportunity for growth of net operating income (NOI).
We (like the real estate industry generally) define NOI as the excess of all
revenue generated by the property (primarily rental revenue) less direct
operating expenses (primarily, but not limited to, property taxes, insurance,
property management and maintenance expense, to the extent not paid by the
tenant). NOI excludes depreciation, capitalized expenditures and interest
expense. In addition to NOI growth prospects, we evaluate properties for
planned capital expenditures and various risks such as non-payment of rent by
tenant, term of the lease and other factors. NOI from our properties totaled
$946,421 and $1,023,238 for the quarterly periods ended March 31, 2002 and
2001, respectively.

All revenues are from external customers and there are no revenues from
transactions with other segments. Interest income is not separately reported,
as it is immaterial. Interest expense on debt is not allocated to individual
properties, even if that debt is secured. Because we are organized as a REIT,
we have not provided for federal or state income taxes. See Note 6.



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WEST COAST REALTY INVESTORS, INC.
SIGNIFICANT ACCOUNTING POLICIES

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board finalized Statements No.
141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method
of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that we recognize acquired intangible assets apart from goodwill
if the acquired intangible assets meet certain criteria. SFAS 141 applies to
all business combinations initiated after June 30, 2001 and for purchase
business combinations completed on or after July 1, 2001. It also requires,
upon adoption of SFAS 142 that we reclassify the carrying amounts of intangible
assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that we identify reporting units for the purposes
of assessing potential future impairments of goodwill, reassess the useful
lives of other existing recognized intangible assets, and cease amortization of
intangible assets with an indefinite useful life. An intangible asset with an
indefinite useful life should be tested for impairment in accordance with the
guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years
beginning after December 15, 2001 to all goodwill and other intangible assets
recognized at that date, regardless of when those assets were initially
recognized. SFAS 142 requires us to complete a transitional goodwill impairment
test six months from the date of adoption. We are also required to reassess the
useful lives of other intangible assets within the first interim quarter after
adoption of SFAS 142.

We had no previous transactions that resulted in the recognition of goodwill.
We have adopted SFAS 141 and SFAS 142 and there was no material affect on our
financial statements.

Statement of Financial Accounting Standard 143 (SFAS 143), Accounting for Asset
Retirement Obligations, was issued in June 2001 and is effective for fiscal
years beginning after June 15, 2002. SFAS 143 requires that any legal
obligation related to the retirement of long-lived assets be quantified and
recorded as a liability with the associated asset retirement cost capitalized
on the balance sheet in the period it is incurred when a reasonable estimate of
the fair value of the liability can be made. We have adopted SFAS 143 and
there was no material affect on our financial statements.

Statement of Financial Accounting Standard 144 (SFAS 144), Accounting for the
Impairment or Disposal of Long-Lived Assets, was issued in August 2001 and is
effective for fiscal years beginning after December 15, 2001. SFAS 144 provides
a single, comprehensive accounting model for impairment and disposal of
long-lived assets and discontinued operations. We have adopted SFAS 144 and
there was no material affect on our financial statements.



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##### Table of Contents






WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1 RENTAL REAL ESTATE

Our major categories of rental real estate are:

|                              |  |             |            |              |  |   |            |  
|----------------------------- |  | ----------- | ---------- | ------------ |  | - | ---------- | -
|                              |  | March 31,   |            | December 31,
|                              |  | 2002        |            | 2001        
|                              |  | (Unaudited) |            | (Audited)   
|                              |  |             |            |             
|Land                          |  | $           | 9,651,478  |              |  | $ | 10,672,326 |  
|Buildings and improvements    |  |             | 18,621,188 |              |  |   | 21,141,666 |  
|                              |  |             |            |              |  |   |            |  
|                              |  |             | 28,272,666 |              |  |   | 31,813,992 |  
|Less accumulated depreciation |  |             | (2,126,688 | )            |  |   | (2,355,675 | )
|                              |  |             |            |              |  |   |            |  
|Net rental real estate        |  | $           | 26,145,978 |              |  | $ | 29,458,317 |  
|                              |  |             |            |              |  |   |            |  

Our major categories of rental real estate held for sale are:

|                                     |  |             |            |              |  |   |            |  
|------------------------------------ |  | ----------- | ---------- | ------------ |  | - | ---------- | -
|                                     |  | March 31,   |            | December 31,
|                                     |  | 2002        |            | 2001        
|                                     |  | (Unaudited) |            | (Audited)   
|                                     |  |             |            |             
|Land                                 |  | $           | 3,497,168  |              |  | $ | 2,476,319  |  
|Buildings and improvements           |  |             | 6,497,478  |              |  |   | 3,977,000  |  
|                                     |  |             |            |              |  |   |            |  
|                                     |  |             | 9,994,646  |              |  |   | 6,453,319  |  
|Less accumulated depreciation        |  |             | (1,399,827 | )            |  |   | (1,050,477 | )
|                                     |  |             |            |              |  |   |            |  
|Net rental real estate held for sale |  | $           | 8,594,819  |              |  | $ | 5,402,842  |  
|                                     |  |             |            |              |  |   |            |  

Once a property is classified as held for sale, we stop charging depreciation
expense.

We earned a portion of our rental revenue from tenants whose individual rents
represented more than 10% of our total rental revenue for the quarters ending
March 31, 2002 and 2001. Specifically: three tenants accounted for 19%, 14%
and 12%, respectively, of our total revenue during the 2002 period. Further,
one tenant accounted for over 9% during that period. Three tenants accounted
for 14%, 13% and 11%, respectively, of our total revenue during the 2001
period. Further, one tenant accounted for 9% during that period.

NOTE 2 FUTURE MINIMUM RENTAL INCOME

As of March 31, 2002, future minimum rental income under the existing leases
that have remaining noncancelable terms in excess of one year are as follows:

|                       |      |        |           |           |            | 
|---------------------- | ---- | ------ | --------- | --------- | ---------- | 
|Years ending March 31, |      | Amount
|                       |      |       
|                       | 2003 |        | $         | 3,964,671 |           
|                       | 2004 |        |           | 3,334,760 |           
|                       | 2005 |        |           | 2,734,387 |           
|                       | 2006 |        |           | 1,937,400 |           
|                       | 2007 |        |           | 1,435,219 |           
|Thereafter             |      |        | 5,207,761 |          
|                       |      |        |           |           |           
|                       |      | Total  |           | $         | 18,614,198 | 
|                       |      |        |           |           |           



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##### Table of Contents



WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS

Future minimum rental income does not include lease renewals or new leases that
may result after a noncancelable lease expires.

NOTE 3 RELATED PARTY TRANSACTIONS

Until March 31, 2002, we had two agreements with the Advisor to provide advice
on investments and to administer our day-to-day operations, including property
management. The Advisor has terminated those agreements, pursuant to their
terms, effective March 31, 2002. Since that date, we have been fully
self-administered and self-managed.

During the quarter ended March 31, 2002, no advisory fees were due to the
Advisor. The Advisor did not charge us property management fees or for a
reimbursement of overhead costs.

At March 31, 2002, the Advisor owned 22,556 of our shares, less than 1% of our
outstanding shares. Two of our directors are also directors of the Advisor and
its affiliates.

The following related party transactions are included in the statements of
income:

|                                                                                                                              |  |      |   |      |  |   |        | 
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- |  | - | ------ | 
|Quarterly periods ending March 31,                                                                                            |  | 2002 |   | 2001
|                                                                                                                              |  |      |   |     
|Overhead expenses reimbursed to the Advisor                                                                                   |  |      |  |      |  | $ | 6,000  | 
|                                                                                                                              |  |      |   |      |  |   |        | 
|Property management fees earned by WCRM                                                                                       |  |      |  |      |  | $ | 49,289 | 
|                                                                                                                              |  |      |   |      |  |   |        | 
|Advisory fees earned by WCRA, which waived collection of these
fees, which are included in additional paid-in capital in 2001 |  |      |  |      |  | $ | 56,518 | 
|                                                                                                                              |  |      |   |      |  |   |        | 

In addition, we had related party accounts payable as follows:

|                                   |  |             |        |              |  |   |        | 
|---------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                   |  | March 31,   |        | December 31,
|                                   |  | 2002        |        | 2001        
|                                   |  | (Unaudited) |        | (Audited)   
|                                   |  |             |        |             
|Associated Securities Corporation  |  | $           | 27,500 |              |  | $ | 22,000 | 
|West Coast Realty Management, Inc. |  |             |       |              |  |   | 13,477 | 
|West Coast Realty Advisors, Inc.   |  |             | 4,000  |              |  |   | 2,000  | 
|                                   |  |             |        |              |  |   |        | 
|                                   |  | $           | 31,500 |              |  | $ | 37,477 | 
|                                   |  |             |        |              |  |   |        | 



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WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 4 NOTES PAYABLE

Notes payable consist of the following:

|                                                                                                                                                                                                                                                                                                                                                                                   |  |                                  |           |              |  |   |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | ------------ |  | - | --------- | 
|                                                                                                                                                                                                                                                                                                                                                                                   |  | Outstanding Principal Balance on
|                                                                                                                                                                                                                                                                                                                                                                                   |  |                                 
|                                                                                                                                                                                                                                                                                                                                                                                   |  | March 31,                        |           | December 31,
|                                                                                                                                                                                                                                                                                                                                                                                   |  | 2002                             |           | 2001        
|                                                                                                                                                                                                                                                                                                                                                                                   |  | (Unaudited)                      |           | (Audited)   
|                                                                                                                                                                                                                                                                                                                                                                                   |  |                                  |           |             
|8.250% promissory note secured by our
Huntington Beach, CA property, monthly
principal and interest payments are
$4,934, due February 1, 2004                                                                                                                                                                                                                                      |  | $                                | 488,952   |              |  | $ | 493,605   | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|8.250% promissory note secured by our
Fresno, CA property, monthly principal
and interest payments are $5,244 due
August 1, 2003                                                                                                                                                                                                                                                   |  |                                  | 560,617   |              |  |   | 565,136   | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|8.250% promissory note secured by our
Riverside, CA property, monthly principal
and interest payments are $9,116, due
November 8, 2004                                                                                                                                                                                                                                             |  |                                  | 1,109,460 |              |  |   | 1,113,865 | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|9.625% promissory note secured by our
Tustin, CA property, monthly principal
and interest payments are $24,190, due
February 1, 2005                                                                                                                                                                                                                                               |  |                                  | 1,592,704 |              |  |   | 1,626,410 | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|8.000% promissory note secured by our
Sacramento, CA property (Java City 721
West Del Paso Road), monthly principal
and interest payments are $3,126, due
June 1, 2018                                                                                                                                                                                                             |  |                                  | 337,504   |              |  |   | 340,187   | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|Variable rate promissory note secured by
our Irvine, CA property, interest rate
margin is 1.90% over the 3 month LIBOR
with right of conversion after the first
year (3.810% at March 31, 2002), monthly
payments of principal and interest are
$16,693, due August 1, 2007                                                                                                        |  |                                  | 2,123,856 |              |  |   | 2,140,535 | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|8.330% promissory note secured by our
Roseville, CA property, monthly principal
and interest payments are $11,510 due
July 1, 2008                                                                                                                                                                                                                                                 |  |                                  | 1,377,898 |              |  |   | 1,383,654 | 
|                                                                                                                                                                                                                                                                                                                                                                                  
|7.375% promissory note secured by our
Corona, CA property, monthly principal
and interest payments are $7,309 due June
1, 2011 (rate is adjustable on the fourth
and eighth anniversary years of the loan,
to the weekly average of the five-year
Treasury Note yield for the seventh week
prior to the Adjustment Date plus 195
basis points, but no less than the
existing rate) |  |                                  | 939,915   |              |  |   | 944,456   | 



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WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS

|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             |                                  |            |              |  |           |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----- | ----------- | -------------------------------- | ---------- | ------------ |  | --------- | ---------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             | Outstanding Principal Balance on
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             |                                 
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             | March 31,                        |            | December 31,
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             | 2002                             |            | 2001        
|NOTE 4 NOTES PAYABLE (continued)                                                                                                                                                                                                                                                                                                                                                                |       | (Unaudited) |                                  | (Audited) 
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             |                                  |           
|7.375% promissory note secured by our
Sacramento, property (Horn Road), monthly
principal and interest payments are
$7,309, due June 1, 2011 (rate is
adjustable on the fourth and eighth
anniversary years of the loan, to the
weekly average of the five-year Treasury
Note yield for the seventh week prior to
the Adjustment Date plus 195 basis
points, but no less than the existing
rate) |       |             | 939,915                          |            |              |  | 944,456   |           
|                                                                                                                                                                                                                                                                                                                                                                                                
|7.500% promissory note secured by our
Chino, CA property, monthly principal and
interest payments are $6,836, due October
1, 2010 (rate is adjustable on the fourth
and eighth anniversary years of the loan,
to the weekly average of the five-year
Treasury Note yield for the seventh week
prior to the Adjustment Date plus 200
basis points, but no less than the
existing rate)            |       |             | 875,883                          |            |              |  | 879,918   |           
|                                                                                                                                                                                                                                                                                                                                                                                                
|7.500% promissory note secured by our
Vacaville, CA property, monthly principal
and interest payments are $10,346, due
October 1, 2010 (rate is adjustable on
the fourth and eighth anniversary years
of the loan, to the weekly average of the
five-year Treasury Note yield for the
seventh week prior to the Adjustment Date
plus 200 basis points, but no less than
the existing rate)       |       |             | 1,325,679                        |            |              |  | 1,331,784 |           
|                                                                                                                                                                                                                                                                                                                                                                                                
|7.500% promissory note secured by our
Cerritos, CA property, monthly principal
and interest payments are $9,238, due
April 1, 2011 (rate is adjustable on the
fourth and eighth anniversary years of
the loan, to the weekly average of the
five year Treasury Note yield for the
seventh week prior to the Adjustment Date
plus 275 basis points, but no less than
the existing rate)           |       |             | 1,194,423                        |            |              |  | 1,199,676 |           
|                                                                                                                                                                                                                                                                                                                                                                                                
|7.500% promissory
note secured by our
Ontario, CA property,
monthly principal and
interest payments are
$22,390, due March 1,
2004                                                                                                                                                                                                                                                               |       |             | 2,867,099                        |            |              |  | 2,880,329 |           
|                                                                                                                                                                                                                                                                                                                                                                                                
|Variable rate
promissory note
secured by our
Folsom, CA property,
interest rate margin
is 1.75% over the 3
month LIBOR (3.870%
at March 31, 2002),
monthly payments of
principal of $6,199
and interest
calculated on the
outstanding balance,
due September 1, 2002                                                                                                                             |       |             | 3,933,902                        |            |              |  | 3,952,499 |           
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             |                                  |            |              |  |           |           
|                                                                                                                                                                                                                                                                                                                                                                                                 | Total |             | $                                | 19,667,807 |              |  | $         | 19,796,510 | 
|                                                                                                                                                                                                                                                                                                                                                                                                 |       |             |                                  |            |              |  |           |           



14



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##### Table of Contents



WEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS

The aggregate annual future maturities of our notes payable at March 31, 2002
are as follows:

|                       |       |        |           |            | 
|---------------------- | ----- | ------ | --------- | ---------- | 
|Years ending March 31, |       | Amount
|                       |       |       
|2003                   |       | $      | 4,391,501 |           
|2004                   |       |        | 4,224,877 |           
|2005                   |       |        | 2,601,772 |           
|2006                   |       |        | 251,760   |           
|2007                   |       |        | 268,538   |           
|Thereafter             |       |        | 7,929,359 |           
|                       |       |        |           |           
|                       | Total |        | $         | 19,667,807 | 
|                       |       |        |           |           

NOTE 5 NET INCOME AND DIVIDENDS PER SHARE

Dividends are declared by our board of directors and are based on a variety of
factors, including the previous quarters net income from operations before
depreciation and amortization, cash requirements to meet REIT distribution
tests, other cash requirements and other factors as the board deems
appropriate.

Net Income Per Share was computed using the weighted average number of
outstanding shares of 2,927,967 and 2,927,967 for the quarterly periods ended
March 31, 2002 and 2001.

NOTE 6 TAXES ON INCOME

We have elected to be taxed as a REIT under Sections 856-860 of the Internal
Revenue Code of 1986, as amended (the Code). As a result, we will not be
subject to federal taxation at the corporate level to the extent we distribute,
annually, at least 90% of our REIT taxable income, as defined by the Code, to
our stockholders and satisfy certain other requirements. In addition,
California, the state in which in which we own and operate real estate
properties, has provisions equivalent to the federal REIT provisions.
Accordingly, we have not provided for federal or state income taxes in the
accompanying financial statements.

NOTE 7 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

A supplemental disclosure of cash flow information follows:

|                                                          |                                                                  |      |         |         |  |   |         |         | 
|--------------------------------------------------------- | ---------------------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|Quarterly periods ended March 31,                         |                                                                  | 2002 |         | 2001   
|                                                          |                                                                  |      |         |        
|Cash paid during the period for interest                  |                                                                  | $    | 331,857 |         |  | $ | 406,894 |        
|                                                          |                                                                  |      |         |         |  |   |         |        
|Supplemental disclosure of non-cash financing
Activities: |                                                                  |      |         |         |  |   |         |        
|                                                          | Dividends declared                                               |      | $       | 292,797 |  |   | $       | 439,195 | 
|                                                          |                                                                  |      |         |         |  |   |         |        
|                                                          | Equity contributed by an affiliate through
expense reimbursement |      |         |        |  |   | $       | 56,518  | 
|                                                          |                                                                  |      |         |         |  |   |         |        

NOTE 8 INSURANCE RECOVERY

In March 2001, we received $165,053 from Bankers Standard Insurance Company
(Bankers Standard) in partial settlement of a lawsuit regarding Bankers
Standards responsibility to defend us


15Table of ContentsWEST COAST REALTY INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTSin a lawsuit related to the Riverside,
CA property. See Note 9, below. Bankers Standard is also
required to pay the subsequent costs of this action. We had previously
expensed these legal costs, and as a result, the proceeds of the settlement
were taken into income in March 2001.NOTE 9 COMMITMENTS AND CONTINGENCIESDuring the quarter ended September 30, 2001, we entered into an employment
agreement with Mr. Allen K. Meredith, the President and Chief Executive
Officer, under which he is entitled to options to purchase 200,000 shares of
our common stock at an exercise price equal to the fair market value at the
date of grant. These options would vest over a period of two years. As of
March 31, 2002, no options have been issued to Mr. Meredith and there is
therefore no dilutive impact for these options. Further, we would be obligated
to make severance payments to Mr. Meredith, upon the termination of his
employment or his resignation for certain reasons, of one years salary plus
bonus, if any.We are a defendant in a lawsuit entitled John Lonberg & Ruthee Goldkorn v.
Sanborn Theaters, Inc., a California Corporation doing business as Marketplace
Cinema and So-Cal Cinema, Inc., a California Corporation; and
Salts-Troutman-Kaneshiro, Inc., West Coast Realty Investors, Inc., USDC Central
District of California, Eastern Division Case No. CV-97-6598AHM (JGx). This is
an Americans with Disabilities Act claim brought against the Market Place
Cinema, our property located in Riverside, CA. We own the theater and have
leased it to Sanborn Theaters, Inc., who operates it. The plaintiffs allege
certain features of the theater discriminated against them and violated state
and federal disabled access laws. The plaintiffs demand statutory damages,
damages for emotional distress, a lodestar multiplier, attorneys fees and
punitive damages. Although the plaintiffs have not quantified their damages,
we expect that the plaintiffs claims will exceed $300,000. The United States
Department of Justice has intervened in this suit against Sanborn Theaters.
This case has now been stayed pending the outcome of a similar case filed
against AMC Theaters. We cannot determine the likelihood of an unfavorable
outcome or range of potential loss, if any. We believe we have complied with
all applicable provisions of law and intend to vigorously defend the
allegations contained in the lawsuit. We believe that the lawsuit will not
have a material impact on our continuing operations or overall financial
condition.NOTE 10 SUBSEQUENT EVENTSOn March 21, 2002, our board of directors declared a dividend of $0.10 per
common share to holders of record on March 28, 2002, payable on April 12, 2002.On April 26, 2002, we sold our Huntington Beach CA Property for $1,500,000 and
recognized a gain of approximately $230,000.
16Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
        MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSFORWARD-LOOKING STATEMENTSThis Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking statements are
identified by words such as believes, expects, may, will, should,
seeks, approximately, intends, plans, pro forma, estimates, or
anticipates or in their negative form or other variations, or by discussions
of strategy, plans or intentions. Forward-looking statements are based on
assumptions, data or methods that may be incorrect, imprecise or incapable of
being realized. These statements include our statements of this nature
concerning the following:
   
   the commercial real estate market;
   
   our future revenues;
   
   our future revenue mix, net operating income and operating results;
   
   our future cash requirements;
   
   competition, our competitors and our ability to compete;
   
   our financial and managerial controls, reporting systems and procedures, and other systems
and processes;
   
   property values;
   
   any particular tenants intentions or financial condition, such as its plans to renew or
terminate a property lease, or the likelihood that it will default upon a property lease;
   
   vacancies;
   
   interest rates;
   
   our operating costs;
   
   our future depreciation expenses;
   
   litigation matters and legal proceedings, our defenses to
such matters and our contesting of
such matters;
   
   our ability to meet our debt obligations;
   
   the proposed sales of certain properties;
   
   our ability to obtain outside financing;
   
   identifying, acquiring and successfully integrating new properties;
   
   the type and locations of real estate investments we may make;
   
   our ability to qualify as a real estate investment trust under the Internal Revenue Code of
1986, as amended;
   
   environmental risks;
   
   natural disasters and other threats to our properties;
   
   the economies of the geographic areas where our properties are located; and
   
   our ability to provide liquidity for our common stock by
listing it on the Nasdaq SmallCap
Market or other market.These statements are subject to risks and uncertainties that could cause actual
results and events to differ materially. For a detailed discussion of these
risks and uncertainties, see Risk Factors that May Affect Future Operating
Results in our Annual Report on Form 10-K for the year ended December 31,
2001. We undertake no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this Report on Form
10-Q.
17Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSRESULTS OF OPERATIONSQuarter ended March 31, 2002 compared the quarter ended March 31, 2001Operations for the quarterly periods ended March 31, 2002 and 2001 represented
full periods of rental operations for all of our properties.Rental revenue decreased by $70,435 (6%) for the quarter ended March 31, 2002
compared to the quarter ended March 31, 2001, primarily due to the loss of
rents in 2002 from the vacancy in our Vacaville, CA property in 2002.Interest income decreased by $13,089 (75%) for the quarter ended March 31, 2002
compared to the quarter ended March 31, 2001 due to lower average balances
maintained in interest-earning assets and lower interest rates.Interest expense decreased by $72,759 (18%) for the quarter ended March 31,
2002 compared to the quarter ended March 31, 2001, due to significantly lower
interest rates on our variable rate debt at our Folsom, CA and Irvine, CA
properties.General and administrative costs increased by $74,479 (56%) principally due to
our preparations to convert to a self-advised and self-managed REIT, including
expenses related to the hiring of three employees, travel expenses and
insurance. This increase was offset in part by our having to pay no advisory
fee charged in 2002 because the criteria to charge the fee was not met.Depreciation expense decreased by $59,779 (33%) for the quarter ended March 31,
2002 compared to the quarter ended March 31, 2001, primarily due to the
classification of seven properties as held for sale in the first quarter of
2002. Depreciation expense was not charged to those seven properties in the
first quarter of 2002, as it had been during the same quarter in 2001Operating expenses increased by $6,382 (4%), primarily due to painting our
Vacaville, CA, property, and was largely offset by the Advisor waiving the
management fee.In March 2001, we received $165,053 from Bankers Standard Insurance Company
(Bankers Standard) in partial settlement of a lawsuit regarding Bankers
Standards responsibility to defend the Company in the Market Place Cinema
lawsuit. See Part II, Item 1. Bankers Standard is also required to pay the
subsequent legal costs of defending this action. We had previously expensed
these legal costs, and as a result the proceeds of the settlement were taken
into income in March 2001. There was no such item in 2002.Net income for the quarter ended March 31, 2002 was $281,571, compared to net
income of $478,471 for the quarter ended March 31, 2001. This decrease was
primarily due to amounts recognized from the Bankers Standard settlement in
2001 and the loss of rents in 2002 from the vacancy at our Vacaville, CA
property.The weighted average number of shares outstanding for the quarter ended March
31, 2002 was 2,927,967, the same as the comparable period in prior year. Net
income per share decreased from $0.16 in 2001 to $0.10 in 2002 primarily due to
amounts recognized from the Bankers Standard settlement in 2001 and the loss
of rents from the Vacaville, CA property.
18Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSInflation and changing prices have not had a material effect on our operations.CRITICAL ACCOUNTING POLICIESThe preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. We evaluate our estimates and assumptions on an ongoing
basis based on a combination of historical information and various other
assumptions that we believe are to be reasonable under the particular
circumstances. Actual results may differ from these estimates based on
different assumptions or conditions. We believe the critical accounting
policies that most affect our consolidated financial statements are described
below.Revenue Recognition  We recognize minimum rents on the straight-line method
over the terms of the leases, as required under Statement of Financial
Accounting Standard No. 13. Some of the leases also provide for additional
revenue based on contingent percentage income which is recorded on an accrual
basis once the specified target that triggers this type of income is achieved.
The leases also typically require our tenants to pay us for common area
maintenance, real estate taxes and other operating expenses. We recognize
these payments as revenue in the period the applicable costs are incurred.Real Estate  We record real estate assets at the lower of cost or fair value
if impaired. Costs incurred to unaffiliated third parties for the acquisition
of properties are capitalized.We evaluate the recoverability of our investment in real estate whenever events
or changes in circumstances indicate that the carrying amount of an asset may
be impaired. Our assessment of recoverability of our real estate assets
includes, but is not limited to, recent operating results, expected cash flows
and our plans for future operations.Properties classified as held for sale are segregated from rental real estate
in our financial statement presentation. We stop recording depreciation on a
property once we classify it as held for sale.Use of Estimates  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ materially from those estimates.LIQUIDITY AND CAPITAL RESOURCESOur primary source of liquidity to fund distributions, principal payments on
notes payable and minor capital expenditures is our cash flows from operating
activities. To qualify as a REIT for federal income tax purposes, we must
distribute annually at least 90% of our REIT taxable income (excluding capital
gains). Accordingly, we currently intend to continue to make, but have not
contractually bound ourselves to make, regular quarterly distributions to
holders of our common stock. As a policy, we keep cash balances on hand for
reserves for unexpected cash requirements. Our primary sources for liquidity
to fund asset acquisitions, major capital expenditures and balloon payments on
notes payable include (a) net proceeds of refinancing selected existing notes
payable, and (b) selling assets. Further,


19Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSwe may attempt to obtain funding by
issuing additional equity either in the form of common stock or through joint
ventures.The following table presents our contractual cash obligations as of March 31,
2002:Payments Due by PeriodOne toLess Than
        
        Three
        
        Three to
        
        Over FiveContractual Obligations
        
        Total
        
        One year
        
        Years
        
        Five Years
        
        YearsLong-Term Debt
        
        $
        19,667,807
        
        
        $
        4,391,501
        
        
        $
        6,826,649
        
        
        $
        520,298
        
        
        $
        7,929,359Total Contractual Cash
Obligations
        
        $
        19,667,807
        
        
        $
        4,391,501
        
        
        $
        6,826,649
        
        
        $
        520,298
        
        
        $
        7,929,359At March 31, 2002, our net real estate investments totaled approximately
$34,750,000 for the 15 properties we own. Depending upon the availability and
cost of external capital, we anticipate making additional investments in light
industrial and suburban office properties, and in other types of real property.
In particular, we have entered into an agreement to acquire an Atlanta,
Georgia retail shopping center for a gross purchase price of approximately
$20,500,000, plus additional expenses associated with the inspection and
closing. We have deposited $200,000 in earnest money and, unless we terminate
the agreement before the end of our 45-day inspection period, we will deposit
an additional $200,000 at the end of the inspection period. If during our
inspection period we uncover any problems of significance, we have the right to
terminate the acquisition agreement and receive a refund of the $200,000
earnest money paid to that date. This potential acquisition represents a
change in our business focus, which had previously been to acquire, own and
manage light industrial and suburban office properties in California.We intend to fund new investments from (a) existing cash balances (subject to
maintaining reasonable cash reserves) and from the net proceeds of (b)
refinancing selected existing mortgage loans to higher balances and (c) asset
sales. With respect to our refinancing plans, we are seeking to refinance
several of our properties to increase the loan balances and provide net
proceeds for us to use for other corporate purposes, including the funding of
the cash portion of the purchase price of the retail center described above.With respect to our acquisition of the retail center in particular, we intend
to seek to obtain the approval of the institutional lender to assume the
existing first mortgage debt that encumbers the property, which has a principal
balance of approximately $16,800,000. If we proceed with the acquisition and
obtain the lenders consent to assume the mortgage, we will be required to pay
any assumption fees the lender charges. The transaction is currently scheduled
to close on or before July 17, 2002, unless an extension is required to
complete the debt assumption process. If the lender fails to approve the
assumption and we have not obtained alternative financing by June 9, we may
terminate the contract and receive a refund of all of our earnest money. Since
the amount of the loan is greater than 80% of the purchase price of the
property it secures, we will either need to amend our bylaws to increase that
limit or use part of our cash to pay down the loan to an amount that complies
with the limit.We may consider other sources of possible funding, including joint ventures.
To increase our financial flexibility, we may obtain a revolving line of
credit, although there can be no assurance we will be successful.
20Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSThe statements above regarding our possible acquisition and financing of the
retail center and our refinancing commitments are forward-looking statements
within the meaning of the securities laws. Although we believe the
expectations reflected in the forward-looking statements are based on
reasonable assumptions, actual results could differ materially from those
anticipated in the forward-looking statements. Some of the factors that might cause such a difference
include the following: we may decide to terminate the contract during its
inspection period; the lender may not consent to our assumption of the mortgage
on the property or may impose conditions on its consent that may be
unacceptable to us; we may be unable to obtain alternative financing on
acceptable terms, or at all, if we cannot assume the loan; we may be unable to
refinance our other properties due to various issues that may arise in the
underwriting and closing process and other risks discussed in more detail in
our SEC reports, including the section entitled Risk Factors Affecting Future
Operating Results in our annual report on Form 10-K for the year ended
December 31, 2001.We believe our liquidity and various sources of capital are sufficient to fund
operations including capital expenditures and leasing commissions, meet debt
service and dividend requirements under the Code for REIT status and finance
future investments. We believe our properties are in good condition without
significant deferred maintenance obligations. Our properties are leased under
triple-net leases, which we believe reduces our risk pertaining to excessive
maintenance and operating costs. However, we anticipate we will continue to
require outside sources of financing to meet our long-term liquidity needs
beyond 2002, such as scheduled debt repayments (including balloon payments on
our debt) and property acquisitions.Cash flows in 2002Our cash resources increased $238,702 during the quarter ended March 31, 2002.
During the quarter ended March 31, 2002, cash provided by operating activities
was $392,348, primarily from net income adjusted for non-cash items as
depreciation and amortization. Further, financing activities used $153,646,
due largely to principal payments on notes payable.Cash flows in 2001Our cash resources increased $718,918 during the quarter ended March 31, 2001.
During the quarter ended March 31, 2001, cash provided by operating activities
was $830,826 primarily from net income adjusted for non-cash items as
depreciation and amortization and changes in balance sheet accounts. Further,
financing activities used $111,847, due to principal payments on notes payable.NEW ACCOUNTING PRONOUNCEMENTSInformation on new accounting pronouncements is contained in the notes to our
financial statements under Item 1 in this Quarterly Report on Form 10-Q.
ITEM 3.
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKMarket risks from our operations result primarily from changes in short-term
LIBOR interest rates. We do not have any direct foreign exchange or other
significant market risk.Our exposure to market risk for changes in interest rates relates primarily to
two mortgage loans totaling $6,057,758 at March 31, 2002. We generally enter
into fixed and variable rate debt obligations to support general corporate
purposes, including acquisitions, capital expenditures and


21Table of ContentsWEST COAST REALTY INVESTORS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSworking capital
needs. We periodically evaluate the level of variable rate debt with respect to
total debt and other factors, including our assessment of the current and
future economic environment. We did not have any derivative financial
instruments at March 31, 2002 or December 31, 2001.The fair values of our financial instruments (including such items in the
financial statement captions as cash, other assets and liabilities other than
notes payable) approximate their carrying or contract values based on their
nature, terms and interest rates that approximate current market rates. The
fair value of notes discounted cash flow analyses with an interest rate similar
to that of current market borrowing arrangements. The fair value of our notes
payable exceeded their carrying value by approximately $1,800,000 at December
31, 2001.We had $6,057,758 and $6,185,237 in variable rate debt outstanding at March 31,
2002 and 2001, respectively. A hypothetical 10% adverse change in interest
rates would have had an unfavorable impact of approximately $7,000 and $12,000,
respectively, on the quarters ended March 31, 2002 and 2001 on our earnings and
cash flows based on these debt levels. We cannot predict the effect of adverse
changes in interest rates on its variable rate debt and, therefore, our
exposure to market risk, nor can there be any assurance that fixed rate,
long-term debt will be available to us at advantageous pricing. Consequently,
our future results may differ materially from the estimated adverse changes
discussed above.
22Table of ContentsWEST COAST REALTY INVESTORS, INC.
PART II  OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGSWe are a defendant in a lawsuit entitled John Lonberg; Ruthee Goldkorn v.
Sanborn Theaters, Inc. and So-Cal Cinema, Inc.; Salts, Troutman and Kaneshiro,
Inc.; West Coast Realty Investors, Inc., in the U.S. District Court for the
Central District of California (Case #CV-97-6598AHM(JGx)). We were added as a
defendant in the plaintiffs First Amended Complaint filed May 7, 1998.The plaintiffs alleged violations of the federal Americans with Disabilities
Act and the California Unruh Civil Rights Act with respect to their movie-going
experiences, including inadequate physical accommodations for individuals with
disabilities and insensitive theater personnel. Sanborn Theaters, Inc
(Sanborn) is the tenant and theater operator. Salts, Troutman and Kaneshiro,
Inc. is the architect who designed the theater and its interiors.The plaintiffs seek actual damages of $1,000 for each violation of law; three
times actual damages; and attorneys fees, expenses and costs. The plaintiffs
also seek mandatory injunctive relief requiring the defendants to reconfigure
the theater.The plaintiffs have agreed to dismiss their claims under the Unruh Civil Rights
Act.The U.S. Department of Justice, Civil Rights Division (DOJ) filed a Motion to
Intervene in the case on March 1, 1999. DOJ has sued Sanborn only and
preliminary discussions have been held between the DOJ and Sanborn. Sanborn
intends to vigorously defend against the DOJ.We cannot determine the likelihood of an unfavorable outcome or range of
potential loss, if any. We believe we have complied with all applicable
provisions of law and intend to vigorously defend the allegations contained in
the lawsuit. We believe that the lawsuit will not have a material impact on
our continuing operations or overall financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDSNone
ITEM 3. DEFAULTS UPON SENIOR SECURITIESNone
23Table of ContentsWEST COAST REALTY INVESTORS, INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSAt the special meeting of stockholders held on January 15, 2002, the
stockholders approved two corporate actions by the following votes:BrokerFor
        
        Against
        
        Abstain
        
        non-voteNo. of
        
        No. of
        
        No. of
        
        No. ofShares
        
        Shares
        
        Shares
        
        SharesProposal No. 1 
Bylaw amendment to
allow us to be
self-administered
and self-managed
        
        
        1,287,447
        
        
        
        118,675
        
        
        
        157,671
        
        
        
        Proposal No. 2 
Bylaw amendment to
increase the limit
on the our
borrowings from 50%
to 65% of aggregate
property value
        
        
        1,216,061
        
        
        
        186,071
        
        
        
        161,662
        
        
        
        
ITEM 5. OTHER INFORMATIONNone
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K(a)  Exhibits

|    |  |                                                                              
|--- |  | -----------------------------------------------------------------------------
|No. |  | Description                                                                  
|    |  |                                                                              
|3.1 |  | Amended and Restated Bylaws including the amendments adopted January 15,
2002

(b)  Reports on Form 8-K

None



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##### Table of Contents






S I G N A T U R E S

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.



|Dated: May 14, 2002 | WEST COAST REALTY INVESTORS, INC.
     (Registrant)
 
 
/s/ Charles P. WingardCHARLES P. WINGARD
(Acting Vice President/Treasurer,
Principal Financial Officer, and
Principal Accounting Officer)
|------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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