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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 September 30, 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		(IRS Employer
incorporation or organization		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 November 11, 2002, 2,927,967 shares of the Registrant’s Common Stock were outstanding, prior to the 1:3 reverse stock split of November 15, 2002.

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WEST COAST REALTY INVESTORS, INC.

REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

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Part I -  Financial Information

Item 1.

Consolidated Financial Statements

3

Consolidated Balance Sheets-      As of September 30, 2002 (unaudited)      and December 31, 2001 (audited)

4

Consolidated Income Statements (unaudited)-      Three and nine months ended September 30, 2002 and 2001

4

Consolidated Statements of Cash Flows (unaudited)-      Nine months ended September 30, 2002 and 2001

5

Consolidated Statements of Stockholders’ Equity (unaudited)-      Nine months ended September 30, 2002 and 2001

6

Summary of significant accounting policies

7

Notes to consolidated financial statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

40

Item 4.

Controls and Procedures

40

Part II -  Other Information

Item 1.

Legal Proceedings

41

Item 2.

Changes In Securities and Use of Proceeds

41

Item 3.

Defaults Upon Senior Securities

41

Item 4.

Submission of Matters to a Vote of Security Holders

42

Item 5.

Other Information

42

Item 6.

Exhibits and Reports on Form 8-K

43

Signatures

44

Certifications

45

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

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PART I- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEST COAST REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS

			September 30,				December 31,
			2002				2001
			(Unaudited)				(Audited)
Assets
	Rental real estate, less accumulated depreciation (Note 1)		$	24,316,161			$	29,458,317
	Cash and cash equivalents			4,442,183				1,123,827
	Deferred rent			534,361				545,030
	Accounts receivable			80,534				14,184
	Loan origination fees, net of accumulated amortization of $99,516 and $144,483 at September 30, 2002 and December 31, 2001, respectively			461,586				167,389
	Rental real estate held for sale, net (Note 1)			7,444,818				5,402,842
	Deposits and acquisition costs (Note 4)			4,553,452				—
	Other assets			150,779				51,022
Total assets			$	41,983,874			$	36,762,611
Liabilities and Stockholders’ Equity
Liabilities
	Accounts payable and other liabilities		$	335,314			$	284,622
	Due to related party (Note 5)			24,577				37,477
	Security deposits and prepaid rent			226,139				303,852
	Notes payable (Note 6)			24,578,774				19,796,510
Total liabilities				25,164,804				20,422,461
Commitments and contingencies (Note 11)				—				—
Stockholders’ equity
	Common stock $.01 par value; 5,000,000 shares authorized; 975,989 shares issued and outstanding as of September 30, 2002 and December 31, 2001 (Note 7, adjusted for 1:3 split)			29,280				29,280
	Additional paid-in capital			27,147,772				27,147,772
	Dividends in excess of retained earnings			(10,357,982	)			(10,836,902	)
Total stockholders’ equity				16,819,070				16,340,150
Total liabilities and stockholders’ equity			$	41,983,874			$	36,762,611

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

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WEST COAST REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF INCOME

					Three				Three				Nine				Nine
					months ended				months ended				months ended				months ended
					September 30,				September 30,				September 30,				September 30,
					2002				2001				2002				2001
					(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenues
			Rental (Notes 1 and 3)		$	769,850			$	761,703			$	2,331,243			$	2,254,789
			Interest			14,913				12,054				23,505				44,827
						784,763				773,757				2,354,748				2,299,616
Cost and expenses
			Interest			387,512				235,340				817,473				756,509
			General and administrative			371,740				184,383				829,800				367,903
			Impairment loss (Note 1)			—				371,772				—				371,772
			Operating			127,732				101,702				262,661				304,370
			Depreciation			111,799				121,341				335,396				365,746
						998,783				1,014,538				2,245,330				2,166,300
Net (loss) income before discontinued operations and gain on sale of rental real estate and rental real estate held for sale						(214,020	)			(240,781	)			109,418				133,316
	Discontinued operations and gain on sale of rental real estate and rental real estate held for sale (Note 2)					557,484				(3,214,194	)			955,096				(2,797,847	)
Net income (loss)					$	343,464				($3,454,975	)		$	1,064,514				($2,664,531	)
Net income per share — basic and assuming dilution (Note 7, adjusted for 1:3 split):
		Net (loss) income before discontinued operations and gain on sale of rental real estate and rental real estate held for sale				($0.22	)			($0.25	)		$	0.11			$	0.14
		Discontinued operations and gain on sale of rental real estate and rental real estate held for sale			$	0.57				($3.29	)		$	0.98				($2.87	)
Net income per share					$	0.35				($3.54	)		$	1.09				($2.73	)

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

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WEST COAST REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

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

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

			Nine months ended September 30, 2002
			(Unaudited)
															Dividends
			Common Stock								Additional				in Excess of
											Paid-In				Retained
			Shares				Amount				Capital				Earnings				Total
Balance, December 31, 2001 (Note 7, adjusted for split)				975,989			$	29,280			$	27,147,772				($10,836,902	)		$	16,340,150
	Net income															1,064,514				1,064,514
	Dividends declared (Note 7)															(585,594	)			(585,594	)
Balance, September 30, 2002				975,989			$	29,280			$	27,147,772				($10,357,982	)		$	16,819,070

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

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF 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. Our management and advisory relationships with the Advisor were terminated effective March 31, 2002, and since that date we have been self-managed and self-administered.

We were organized for the purpose of investing in, holding and managing income-producing residential, industrial, retail and commercial properties. Although all of our properties were located in California as of September 30, 2002, we purchased a large shopping center in the Atlanta, Georgia area in October 2002 (see Note 12). We do not own any residential properties. Most of our leases are “triple-net” leases that make the tenant responsible for maintenance, taxes and insurance.

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 September 30, 2002 and the results of operations and cash flows for the three and nine-month periods ended September 30, 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. Please review these unaudited financial statements in conjunction with the audited financial statements and the notes to them included in our annual report on Form 10-K for the year ended December 31, 2001.

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 were 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.

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 September 30, 2002, we classified six 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 three and nine-month periods ended September 30, 2002 and 2001 were immaterial, and recognized when received. Improvements and betterments that increase the value of the property or extend its useful life are capitalized.

Acquisition Costs

We expense internal acquisition costs, including acquisition costs paid to the Advisor, in accordance with Emerging Issues Task Force 97-11, “Accounting for Internal Costs Relating to Real Estate Property Acquisitions.”

Loan Origination Fees

Loan origination fees are capitalized and amortized over the life of the loan and included in interest expense.

Cash and Cash Equivalents

We 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.

Consolidation

The accompanying consolidated financial statements include the financial position, results of operations, and cash flows of West Coast Realty Investors, Inc. and two wholly owned limited liability companies. All significant intercompany amounts have been eliminated.

Use of Estimates

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Net Income Per Share

We calculate net income per share by dividing the net income by the weighted average number of shares outstanding for the period, adjusted for the 1:3 split. See Note 7. We are obligated to grant options to purchase 66,667 split adjusted shares of our stock to Allen Meredith, our President and Chief Operating Officer. As of September 30, 2002, no options have been issued to Mr. Meredith and there is therefore no dilutive impact for these options. See Note 11. We did not have any other potentially dilutive securities in the three and nine-month periods ended September 30, 2002 or 2001.

Comprehensive Income

Statement 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 distributions to owners. We do not have any components of comprehensive income other than net income in the three and nine-month periods ended September 30, 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.

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, real estate (including rental real estate held for sale), which comprised 76% of our total assets at September 30, 2002 and 95% of our total assets at December 31, 2001 and approximately 99% our total revenues (including revenue from discontinued operations) for both quarterly periods ended September 30, 2002 and 2001. All the rental real estate we presently own is located in California and Georgia. We acquired an Atlanta, Georgia shopping center in October 2002 as described in Note 12. Because most of our leases are to single tenants under long-term leases, the economic prospects of the region generally do not affect our rental income or operating expense. Accordingly, we do not use reporting by geographic region.

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our business focus has been the ownership and operation of suburban office properties and light industrial buildings, although we acquired a shopping center in the Atlanta, Georgia area in October 2002 (see Note 12) and may pursue other real estate opportunities. We evaluate performance and allocate resources primarily based on the opportunity for growth of net operating income (“NOI”). Like the real estate industry generally, we 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 including discontinued operations totaled $820,278 and $1,070,403 in the three-month periods ended September 30, 2002 and 2001, respectively, and $2,660,912 and $3,057,373 in the nine month periods ended September 30, 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 8.

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 September 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 September 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 nine 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.

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Statement of Financial Accounting Standard 143 (SFAS 143), Accounting for Asset Retirement Obligations, was issued in September 2001 and is effective for fiscal years beginning after September 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 effect 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 effect on net income, only changes in the classification of the income and expense of discontinued operations.

Accounting Pronouncements Issued But Not Yet Adopted

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This statement eliminates the current requirement that gains and losses on debt extinguishment must be classified as extraordinary items in the income statement. Instead, such gains and losses will be classified as extraordinary items only if they are deemed to be unusual and infrequent, in accordance with the current GAAP criteria for extraordinary classification. In addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring that modifications of capital leases that result in reclassification as operating leases be accounted for consistent with sale-leaseback accounting rules. The statement also contains other nonsubstantive corrections to authoritative accounting literature. The changes related to debt extinguishment will be effective for fiscal years beginning after May 15, 2002, and the changes related to lease accounting will be effective for transactions occurring after May 15, 2002. Adoption of this standard will not have any immediate effect on our financial statements.

In July, 2002, the FASB issued FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which nullifies EITF Issues No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” and No. 88-10, “Costs Associated with Lease Modification or Termination.” Statement 146 fundamentally changes how a company should account for future “restructurings.” The primary change from EITF Issue No. 94-3 is in when to recognize and how to measure a liability for costs associated with an exit or disposal activity. The guidance in EITF Issue No. 94-3 specified that a company should recognize a liability for an exit cost at the date it commits to a plan to exit or dispose of an activity. However, it was concluded in Statement 146 that a company’s commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability as defined in FASB Concepts Statement No. 6, Elements of Financial Statements. As a result, Statement 146 requires that a company recognize a liability for a cost associated with an exit or disposal activity only when it meets the

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WEST COAST REALTY INVESTORS, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

definition of liability (i.e., when the liability is incurred). For example, a company will now have to wait until leased property (under an operating lease) is no longer used before it records a liability for future rentals and such liability would be measured at fair value. One-time termination benefits to employees are still accruable (but at fair value) at the date of an exit plan if certain criteria similar to those in EITF Issue No. 94-3 are met. Statement 146 also requires that a company initially measure the liability at its fair value. The EITF Issue No. 94-3 only required the liability be reported when the costs can be reasonably estimated, but provided no guidance on how to measure it.

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — RENTAL REAL ESTATE

Our major categories of rental real estate are:

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

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

In conjunction with the implementation of our business plan, we have determined that some properties, primarily properties with small retail operations or limited prospects for appreciation, are inconsistent with our new investment objectives. Based on appraisals, estimated disposal costs and holding periods, we determined, with the Advisor, that the total expected future cash flows and the ultimate disposition of certain properties were less than their carrying values at September 30, 2001. As a result, an impairment loss of $3,800,000, primarily related to the Riverside, CA and Vacaville, CA properties, was recorded in that quarter, measured as the amount by which the carrying amount of the asset exceeded its fair value.

We earned a portion of our rental revenue from tenants whose individual rents represented more than 10% of our total rental revenue (including revenue from tenants in properties included in discontinued operations) for the three and nine month periods ending September 30, 2002 and 2001. Specifically:

     -Four tenants accounted for 20%, 16%, 13% and 10%, respectively, in the three- month period ended September 30, 2002.

     -Five tenants accounted for 22%, 19%, 15%, 12% and 10%, respectively, in the three- month period ended September 30, 2001.

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     -Four tenants accounted for 21%, 16%, 13% and 11%, respectively, in the nine-month period ended September 30, 2002.

     -Five tenants accounted for 20%, 15%, 13%, 13% and 10%, respectively, in the nine-month period ended September 30, 2001.

The tenant in our Ontario, CA property is a subsidiary of Adelphia Communications, Inc, which has filed for protection under the federal bankruptcy laws. The tenant has paid its rent through November 30, 2002. We do not yet know whether we will be adversely affected this bankruptcy filing.

NOTE 2 — DISCONTINUED OPERATIONS

As of September 30, 2002, we have six properties designated as “held for sale” and during the nine months ended September 30, 2002, we sold two properties. The operations of these properties during the three and nine-month periods ended September 30, 2002 and 2001 are as follows:

			Three				Three				Nine				Nine
			months ended				months ended				months ended				months ended
			September 30,				September 30,				September 30,				September 30,
			2002				2001				2002				2001
			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenues
	Rental		$	215,291			$	446,342			$	781,646			$	1,239,783
				215,291				446,342				781,646				1,239,783
Cost and expenses
	Interest			111,986				128,498				345,717				389,321
	General and administrative			—				44				1,749				49,088
	Impairment loss			—				3,428,228				—				3,428,228
	Operating			37,131				35,940				189,316				132,569
	Depreciation			6,851				67,826				23,979				203,477
				155,968				3,660,536				560,761				4,202,683
Subtotal				59,323				(3,214,194	)			220,885				(2,962,900	)
Insurance recovery from lawsuit				—				—				—				165,053
Gain on sale of rental real estate and real estate held for sale				498,161				—				734,211				—
Net income (loss) from discontinued operations				557,484				(3,214,194	)			955,096				(2,797,847	)

NOTE 3 — FUTURE MINIMUM RENTAL INCOME

As of September 30, 2002, future minimum rental income under the existing leases that have remaining noncancelable terms in excess of one year are as follows:

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Future minimum rental income does not include lease renewals or new leases that may result after a noncancelable lease expires and includes future minimum rental income from discontinued operations.

NOTE 4 — DEPOSITS AND ACQUISITION EXPENSES

As of September 30, 2002, we had made deposits totaling $4,400,000 toward the purchase of a shopping center in the Atlanta, Georgia area. In addition, we incurred approximately $148,000 in legal and other costs toward the purchase of that property. We purchased this property in October 2002. See Note 12.

NOTE 5 — RELATED PARTY TRANSACTIONS

Until March 31, 2002, we had two agreements with the Advisor: (a) to provide advice on investments, and (b) to administer our day-to-day operations, including property management. Our management and advisory relationships with the Advisor were terminated effective March 31, 2002. Since that date, we have been fully self-administered and self-managed, and no fees are due the Advisor.

During the quarter ended March 31, 2002, no advisory fees were due to the Advisor, and the Advisor did not charge us for property management fees or for a reimbursement of overhead costs due to the relatively low level of service provided in that period.

At September 30, 2002, the Advisor and a related entity owned at total of 22,556 of our shares, which is 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:

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6 — NOTES PAYABLE

Notes payable consist of the following:

			Outstanding Principal Balance on
			September 30,				December 31,
			2002				2001
			(Unaudited)				(Audited)
8.250% promissory note secured by our Huntington Beach property, monthly principal and interest payments are $4,934, due February 1, 2004. This property was sold in April 2002				—			$	493,605
8.250% promissory note secured by our Fresno property, monthly principal and interest payments are $5,244, due August 1, 2003 with a balloon payment of $537,256			$	552,577				565,136
8.250% promissory note secured by our Riverside property, monthly principal and interest payments are $9,116, due November 8, 2004 with a balloon payment of $1,062,369				1,101,388				1,113,865
6.970% promissory note secured by our Tustin property, monthly principal and interest payments of $30,677 due September 1, 2009 with a balloon payment of $4,219,765				4,625,000				1,626,410
8.000% promissory note secured by our Sacramento property (Java City 721 West Del Paso Road), with fully amortizing monthly principal and interest payments of $3,126 to June 1, 2018				332,196				340,187
6.970% promissory note secured by our Irvine property, monthly principal and interest payments of $25,105 due September 1, 2009 with a balloon payment of $3,453,364				3,785,000				2,140,535
8.330% promissory note secured by our Roseville property, monthly principal and interest payments are $11,510, due July 1, 2008 with a balloon payment of $1,187,329				1,366,022				1,383,654

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — NOTES PAYABLE (continued)

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — NOTES PAYABLE (continued)

The aggregate annual future maturities of our notes payable at September 30, 2002 are as follows:

NOTE 7 — NET INCOME AND DIVIDENDS PER SHARE

Dividends are declared by our board of directors and are based on a variety of factors, including the 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.

On October 18, 2002 our board of directors approved the filing on November 15, 2002 of our amended and restated certificate of incorporation with the Delaware Secretary of State in the form approved by our stockholders at our annual meeting on September 24, 2002. Among other things, the amended and restated certificate of incorporation will make effective a reverse 1:3 split of our common stock, to be effective November 15, 2002. Stockholders entitled to fractional shares resulting from the stock split will receive cash in lieu of such fractional share based on the last trade on an exchange of our common stock prior to the reverse split. Accordingly, all weighted average share and per share amounts in the accompanying financial statements and notes have been restated to reflect the stock split.

Net Income Per Share was computed using the split adjusted weighted average number of outstanding shares of 975,989 and 975,989 for the three and nine-month periods ended September 30, 2002 and 2001. We are obligated to issue options to purchase 66,667 split adjusted shares of common stock to our President and Chief Executive Officer. As of September 30, 2002, no options have been issued to Mr. Meredith and there is therefore no dilutive impact for these options. We did not issue any other potentially dilutive securities in the three and nine-month periods ended September 30, 2002 or 2001.

NOTE 8 — 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

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 owned and operated real estate properties through September 30, 2002, 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 9 — SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

A supplemental disclosure of cash flow information follows:

NOTE 10 — 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 in a lawsuit related to the Riverside property. See Note 11, 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, we took the proceeds of the settlement into income in March 2001 as part of discontinued operations.

NOTE 11 — COMMITMENTS AND CONTINGENCIES

In March 2002, we entered into an employment agreement with Mr. Allen K. Meredith, our President and Chief Executive Officer, under which he is entitled to options to purchase 66,667 split adjusted shares of our common stock at an exercise price per share equal to the fair market value of our common stock at the date of grant. These options would vest over a period of two years. As of September 30, 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. 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”

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WEST COAST REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

On July 31, 2002, James E. Prock filed an action against Allen Meredith, our Chief Executive Officer and us, in Los Angeles County Superior Court. Mr. Prock was an employee of the Advisor and not an employee of West Coast Realty Investors, Inc. He provided services as our Chief Operating Officer from 1992 to August 2001 and as Acting Chief Operating Officer from August 2001 to March 2002. The lawsuit alleges that during the fall of 2001 and winter of 2002, we made purported promises to Mr. Prock that we would hire him as a full time managerial employee after we became a self managed REIT. The lawsuit seeks damages for unspecified purported lost compensation and punitive damages, and the discovery process has commenced. We cannot determine the likelihood of an unfavorable outcome or range of potential loss, if any. We believe the suit is without merit 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 12 — SUBSEQUENT EVENTS

On October 3, 2002, our board of directors declared a dividend of $0.30 per split adjusted common share to holders of record on October 11, 2002, payable on October 25, 2002.

On October 15, 2002, we completed the purchase of the Northlake Tower Festival Shopping Center. Northlake Tower Festival is a 321,000 square foot shopping center on approximately 38 acres of land in Tucker, DeKalb County, in northeastern metropolitan Atlanta. It is currently approximately 97% leased to 47 tenants including Toys“R“Us, OfficeMax, PETsMART, Haverty’s, AMC Theaters and Bally Total Fitness. The land is owned by an unrelated third party and is subject to a separate ground lease that extends through 2057. We paid a total of approximately $3.8 million in cash and assumed the first mortgage debt payable to GECC that encumbers the property, which has a principal balance of approximately $16.7 million, has an interest rate of 7.64% and has a 30-year amortization.

On September 24, 2002, we held our annual meeting of stockholders. Stockholders were asked to vote (1) to approve the amendment and restatement of our certificate of incorporation, (2) to approve the amendment and restatement of our bylaws, (3) to elect the board of directors and (4) to approve the West Coast Realty Investors, Inc. 2002 Stock Incentive Plan. Our stockholders approved each of these proposals. The effectiveness of the amended and restated certificate of incorporation and the amended and restated bylaws was contingent on our shares being listed for trading on the American Stock Exchange (the “Amex”). In October, the Amex informed our management of its informal approval of our shares for listing, and on October 18, 2002, our board of directors approved the filing of our amended and restated certificate of incorporation with the Delaware Secretary of State on November 15, 2002. On October 31, 2002, our common stock was listed and became available for trading on the American Stock Exchange, thus satisfying the contingency for filing the amended and restated certificate of incorporation. Among other things, as described in our August 16, 2002 proxy materials for the annual meeting, this filing will effectuate a one-for-three reverse split of our outstanding common stock on November 15, 2002.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This 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, including the Atlanta shopping center we purchased in October 2002;
	•		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.