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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 From the transition period from  to
 Commission File Number: 333-139042
 SHOPOFF PROPERTIES TRUST, INC.
 (Exact name of registrant as specified in its charter)
 Maryland(State or Other Jurisdiction of 
Incorporation of Organization)
    
    20-5882165(I.R.S. Employer
Identification No.)8951 Research Drive 
Irvine, California(Address of Principal Executive Offices)
    
    92618(Zip Code)
 (877) TSG-REIT  (Registrants Telephone Number, Including Area Code)
 N/A  (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008
    
    
    2Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2009
and 2008 (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009
and 2008 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4T. Controls and Procedures
    
    
    29PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    31SIGNATURES
    
    
    32EX-31.1EX-31.2EX-32.1EX-32.2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  1




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SHOPOFF PROPERTIES TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2009 (Unaudited) and December 31, 2008
 March 31, 2009(Unaudited)
    
    
    December 31, 2008ASSETSCash and cash equivalents
    
    $
    11,459,464
    
    
    $
    7,486,696Restricted cash
    
    
    58,937
    
    
    
    Notes receivable, net
    
    
    3,021,915
    
    
    
    558,000Real estate deposits
    
    
    1,000,000
    
    
    
    3,300,000Real estate investments
    
    
    
    
    
    
    2,614,134Prepaid expenses and other assets
    
    
    25,984
    
    
    
    55,807Property and equipment, net
    
    
    40,952
    
    
    
    45,047Total Assets
    
    $
    15,607,252
    
    
    $
    14,059,684LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Accounts payable and accrued liabilities
    
    $
    137,011
    
    
    $
    64,596Income taxes payable
    
    
    116,481
    
    
    
    Due to related parties
    
    
    13,631
    
    
    
    132,135Total Liabilities
    
    
    267,123
    
    
    
    196,731EquityShopoff Properties Trust, Inc. stockholders equity:Common stock, $0.01 par value; 200,000,000 shares
authorized; 1,857,300 shares issued and outstanding at
March 31, 2009 and December 31, 2008
    
    
    18,573
    
    
    
    18,573Additional paid-in capital, net of offering costs
    
    
    15,294,381
    
    
    
    15,472,346Subscribed stock, $0.01 par value, 6,200 shares subscribed
    
    
    58,900
    
    
    
    Accumulated deficit
    
    
    (31,825
    )
    
    
    (1,628,066
    )Total
Shopoff Properties Trust, Inc. stockholders equity
    
    
    15,340,029
    
    
    
    13,862,853Noncontrolling interest
    
    
    100
    
    
    
    100Total Equity
    
    
    15,340,129
    
    
    
    13,862,953Total Liabilities and Equity
    
    $
    15,607,252
    
    
    $
    14,059,684
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SHOPOFF PROPERTIES TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three months Ended March 31, 2009 and 2008
(Unaudited)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,2009
    
    
    2008Revenues:Sale of real estate
    
    $
    5,000,000
    
    
    $
    Interest income, notes receivable
    
    
    163,915
    
    
    
    Interest income, other
    
    
    14,904
    
    
    
    8,2255,178,819
    
    
    
    8,225Expenses:Cost of sales of real estate
    
    
    2,977,742
    
    
    
    Professional fees
    
    
    163,366
    
    
    
    30,068Due diligence costs related to
properties not acquired
    
    
    106,669
    
    
    
    Acquisition fees paid to advisor
    
    
    69,000
    
    
    
    Insurance
    
    
    55,802
    
    
    
    69,009General and administrative
    
    
    54,639
    
    
    
    Director compensation
    
    
    38,879
    
    
    
    3,466,097
    
    
    
    99,077Net income before income taxes
    
    
    1,712,722
    
    
    
    (90,852
    )Provision for income taxes
    
    
    116,481
    
    
    
    Net income available to common shareholders per common share:
    
    $
    1,596,241
    
    
    $
    (90,852
    )Basic
    
    $
    .86
    
    
    $
    (4.31
    )Diluted
    
    $
    .79
    
    
    $
    (4.31
    )Weighted-average number of common shares outstanding used in per share computations:Basic
    
    
    1,857,300
    
    
    
    21,100Diluted
    
    
    2,026,050
    
    
    
    21,100
  3




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SHOPOFF PROPERTIES TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three months Ended March 31, 2009 and 2008
(Unaudited)
 Three months
    
    
    Three monthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,2009
    
    
    2008Cash Flows
used in Operating ActivitiesNet income (loss)
    
    $
    1,596,241
    
    
    $
    (90,852
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Gain on sale
of real estate investment
    
    
    (2,022,258
    )
    
    
    Depreciation
expense:
    
    
    4,095
    
    
    
    Changes in assets and liabilities:Due to
related parties
    
    
    (118,504
    )
    
    
    Accounts payable and accrued liabilities
    
    
    72,415
    
    
    
    91,149Income taxes payable
    
    
    116,481
    
    
    
    Prepaid expenses and other assets
    
    
    29,823
    
    
    
    7,928Net cash
used in operating activities
    
    
    (321,707
    )
    
    
    8,225Cash Flows provided by Investing ActivitiesNotes receivable, net
    
    
    (2,463,915
    )
    
    
    Proceeds from sale of real
estate investment, net
    
    
    4,636,392
    
    
    
    Real estate deposits
    
    
    2,300,000
    
    
    
    Net cash provided by investing activities
    
    
    4,472,477
    
    
    
    Cash Flows used in Financing ActivitiesOffering
costs paid to advisor
    
    
    (177,965
    )
    
    
    Stock subscriptions
    
    
    58,900
    
    
    
    Common stock issuable upon breaking escrow
    
    
    
    
    
    
    1,424,687Restricted cash
    
    
    (58,937
    )
    
    
    (1,432,912
    )Net cash used in financing activities
    
    
    (178,002
    )
    
    
    (8,225
    )Net change in cash
    
    
    3,972,768
    
    
    
    Cash, beginning of period
    
    
    7,486,696
    
    
    
    200,550Cash, end of period
    
    $
    11,459,464
    
    
    $
    200,550
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SHOPOFF PROPERTIES TRUST, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. ORGANIZATION AND NATURE OF BUSINESS
         5




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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Use of Estimates
  Principles of Consolidation
   Cash and Cash Equivalents
  Concentrations of Credit Risk
  6




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Revenue and Profit Recognition
    Notes Receivable
  Earnings
Per Share
  7




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Earnings Per Share
   Three months endedMarch 31, 2009
    
    March 31, 2008Basic EPS  weighted-average number of common shares outstanding
    
    
    1,857,300
    
    
    
    21,000Effect of contingently issuable shares of restricted stock
    
    
    168,750
    
    
    
    Diluted EPS  weighted-average number
of common shares and potential common
shares outstanding
    
    
    2,026,050
    
    
    
    21,000
 Accounting Change
  Significant Recent Accounting Pronouncements
  3. NOTES RECEIVABLE
 Mesquite Venture I, LLC
   Aware Development Inc.
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
    
    Aware agreed that, in the absence of additional defaults other than
payment defaults, Aware would forbear from exercising its rights and
remedies under the Vineyard Loans, including without limitation
foreclosure, from the date January 9, 2009 through July 9, 2009
(Forbearance Period), in order to allow Springbrook time to attempt
to refinance the Vineyard Loans. During the Forbearance Period,
interest and other required payments required of Springbrook under the
Vineyard Loans will continue to accrue at the stated rate, and will be
added to principal.
    
    At any time during the Forbearance Period, Aware shall accept, as
payment in full under the Vineyard Loans, with respect to one note,
the sum of $1,896,000 plus all accrued interest then due under the
Notes, of which amount Springbrook shall cause to be paid $1,886,000
directly to SPT Real Estate Finance, LLC, and $10,000 to Aware and all
other amounts directly to SPT Real Estate Finance, LLC and, with respect to the second note,
the sum of $424,000 plus all accrued interest then due under the Aware
Notes, of which amount Springbrook shall cause to be paid $414,000
directly to SPT Real Estate Finance, LLC, and $10,000 to Aware and all other amounts
directly to SPT Real Estate Finance, LLC.
    
    The commercial guaranties executed by William A. Shopoff, an
individual, and William A. Shopoff and Cindy I. Shopoff, as Trustees
of the Trust, in connection with the Vineyard Loans, have been
released, and Aware has waived any and all right to recover under the
same.
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4. REAL ESTATE INVESTMENTS
 Winchester Ranch (Pulte Home Project)
        5. STOCKHOLDERS EQUITY
 Common Stock
    10




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6. OTHER RELATED PARTY TRANSACTIONS
        
    
    Acquisition and Advisory Fees:3% of (i) with respect to any real estate asset acquired
by the Company directly or indirectly other than a real estate related investment, the
contract purchase price of the
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underlying property, and (ii) with respect to any real estate related investment acquired by
the Company directly or indirectly, the contract purchase price of the underlying property.
 
    
    Debt Financing Fee:1% of the amount available under any loan or line of credit made
available to the Company upon the receipt of the proceeds from such loan or line of credit.
    
    Asset Management Fee:a monthly payment equal to one-twelfth of 2% of (i) the aggregate
asset value for operating assets and (ii) the total contract price plus capitalized
entitlement and project related costs for real estate assets held for less than or equal to
one year by the Company, directly or indirectly, as of the last day of the preceding month
other than a real estate-related investment and (iii) the appraised value as determined
from time to time for real estate assets held for greater than one year by the Company,
directly or indirectly, as of the last day of the preceding month other than a real
estate-related investment and (iv) the appraised value of the underlying property, for any
real estate-related investment held by the Company directly or indirectly, as of the last
day of the preceding month, in the case of subsection (iv) not to exceed one-twelfth of 2%
of the funds advanced by the Company for the purchase of the real estate-related
investment.
    
    Disposition Fees:equal to (i) in the case of the sale of any real estate asset, other
than real estate-related investments, the lesser of (a) one-half of the competitive real
estate commission paid up to 3% of the contract price or, if none is paid, the amount that
customarily would be paid, or (b) 3% of the contract price of each real estate asset sold,
and (ii) in the case of the sale of any real estate-related investments, 3% of the sales
price. Any disposition fee may be paid in addition to real estate commissions paid to
non-affiliates, provided that the total real estate commissions (including such disposition
fee) paid to all persons by the Company for each real estate asset, upon disposition
thereof, shall not exceed an amount equal to the lesser of (i) 6% of the aggregate contract
price of each real estate asset or (ii) the competitive real estate commission for each
real estate asset. The Company will pay the disposition fees for a property at the time the
property is sold.
    
    Additional Fees:The Agreement includes certain other fees that will be payable to the
Advisor upon the occurrence of certain potential events such as listing on a national
securities exchange or termination of the Agreement.
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7. PROPOSED ACQUISITIONS
   8. COMMITMENTS AND CONTINGENCIES
 Legal
Matters
  Organizational and Offering Costs
  Specific Performance
   9. RESIGNATION OF INDEPENDENT DIRECTOR
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10. SUBSEQUENT EVENTS
 Real Estate Investment
       Registration Statement
  Other
   
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
 You should read the following discussion and analysis together with our condensed consolidated
financial statements and notes thereto included in this Quarterly Report on Form 10-Q . The
following information contains forward-looking statements, which are subject to risks and
uncertainties. Should one or more of these risks or uncertainties materialize, actual results may
differ materially from those expressed or implied by the forward-
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looking statements. Please see Special Note Regarding Forward-Looking Statements below for a
description of these risks and uncertainties.
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Company Overview
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Results of Operations
       Comparison of Three Months Ended March 31, 2009 to Three Months Ended March 31, 2008
  17




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Recent Market Developments
   18




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Organization and Offering Costs
   Liquidity and Capital Resources
       19




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Distributions
  Investment Strategy
  20




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
    
    the potential for an annual internal rate of return in excess of 30% on a compounded basis;
    
    the potential for a sharp increase in value due to such factors as a recent or potential
future zoning change or other opportunity where a property might lie in the path of
progress;
    
    characteristics of the property enable us to ascertain that we could purchase the property
at a discount from current market value;
    
    geographic location in California, Nevada, Arizona, Hawaii, or Texas;
    
    potential for capital appreciation;
    
    potential for economic growth in the community in which the property is located;
    
    prospects for liquidity through sale, financing or refinancing of the property;
    
    moderate competition from existing properties;
    
    location in a market in which we have familiarity based upon past experience or we have an
advantage based upon our experience in repositioning properties;
    
    potential for development of the property into income property.
    Other Property Acquisitions
 Making Loans and Investments in Mortgages
 Investment in Securities
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Joint Ventures
 Critical Accounting Policies
  Use of Estimates
  Principles of Consolidation
   Cash and Cash Equivalents
  22




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Revenue and Profit Recognition
 Accounting for Sales of Real Estate
    Cost of Real Estate Assets Not Held for Sale
    Property Held for Sale
  23




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
    
    Management, having the authority to approve the action, commits to a plan to sell the
asset;
    
    The asset is available for immediate sale in its present condition, subject only to
terms that are usual and customary for sales of such asset;
    
    An active program to locate a buyer and other actions required to complete the plan to
sell the asset has been initiated;
    
    The sale of the asset is probable, and the transfer of the asset is expected to qualify
for recognition as a completed transaction within one year;
    
    The asset is being actively marketed for sale at a price that is reasonable in relation
to its current estimated fair value; and
    
    Given the actions required to complete the plan to sell the asset, it is unlikely that
significant changes to the plan would be made or that the plan would be abandoned.
   Long-Lived Assets
   24




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Notes Receivable
  Organization and Offering Costs
   Potential Investments in Partnerships and Joint Ventures.
 Consolidation of
Variable Interest Entities
 
    
    The total equity investment at risk is not sufficient to permit the entity to finance
its activities without additional subordinated financial support from other parties (i.e.,
the equity investment at risk is not greater than the expected losses of the entity).
    
    As a group the holders of the equity investment at risk lack any one of the following
three characteristics of a controlling financial interest:
 
    
    The direct or indirect ability to make decisions about an entitys activities
through voting rights or similar rights.
    
    The obligation to absorb the expected losses of the entity if they occur.
    
    The right to receive the expected residual returns of the entity if they occur.
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Income Taxes
      26




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Stock-Based Compensation
 Share-Based Payment
 Concentrations of Credit Risk
     Significant Recent Accounting Pronouncements
  27




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
    
    Acquisition costs will be generally expensed as incurred;
    
    Noncontrolling interests (formerly known as minority interests 
see SFAS No. 160 discussion below) will be valued at fair value at the
acquisition date;
    
    Acquired contingent liabilities will be recorded at fair value at the
acquisition date and subsequently measured at either the higher of
such amount or the amount determined under existing guidance for
non-acquired contingencies;
    
    In-process research and development will be recorded at fair value as
an indefinite-lived intangible asset at the acquisition date;
    
    Restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
    
    Changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income
tax expense.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4T. Controls and Procedures
    29




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Limitations on the Effectiveness of Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity 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
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Item 6. Exhibits
 Exhibit 31.1:
    
    Certificate of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2:
    
    Certificate of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1:
    
    Certificate of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2:
    
    Certificate of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  SHOPOFF PROPERTIES TRUST, INC.(Registrant)Date May 15, 2009
    By:
    /s/ William A. ShopoffWilliam A. ShopoffChief Executive Officer
(Principal Executive Officer)Date May 15, 2009
    By:
    /s/ Kevin M. BridgesKevin M. BridgesChief Financial Officer,
(Principal Financial Officer) 32




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EXHIBIT INDEX
 Exhibit 31.1:
    
    Certificate of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2:
    
    Certificate of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1:
    
    Certificate of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2:
    
    Certificate of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 33