-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WuE0Q+8aIePGN4kBHUWsL49NU18GXaZn+QEPNVegvL8hWtQ7xBRZF+KLeuo7VR+g yVMiKVVuNWrcMJRDk7d3hg== 0000944209-96-000205.txt : 19960814 0000944209-96-000205.hdr.sgml : 19960814 ACCESSION NUMBER: 0000944209-96-000205 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DE ANZA PROPERTIES XII LTD CENTRAL INDEX KEY: 0000351509 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953601367 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10430 FILM NUMBER: 96609232 BUSINESS ADDRESS: STREET 1: 9171 WILSHIRE BLVD STE 627 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3105501111 MAIL ADDRESS: STREET 1: 9171 WILSHIRE BLVD STREET 2: SUITE 600 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q --------- [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 [ ] 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 0-10430 DE ANZA PROPERTIES - XII, LTD. (Exact name of registrant as specified in its charter) CALIFORNIA 95-3601367 (State or other jurisdiction of (IRS Employer Iden- incorporation or organization) tification Number) 9171 WILSHIRE BOULEVARD, SUITE 627 BEVERLY HILLS, CALIFORNIA 90210 (Address of principal executive offices, including zip code) (310) 550-1111 (The registrant's telephone number, including area code) NO CHANGE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule 240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered sequentially. The total number of pages contained herein is 17. 1 TABLE OF CONTENTS ----------------- PART I. FINANCIAL INFORMATION - ------- --------------------- ITEM 1. FINANCIAL STATEMENTS Balance Sheets 3 Statements of Operations 5 Statements of Changes in Partners' Capital (Deficit) 7 Statements of Cash Flows 8 Notes to Financial Statements 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14 PART II. OTHER INFORMATION 16 - -------- -----------------
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Balance Sheets (Unaudited)
June 30, December 31, 1996 1995 -------- ------------ ASSETS CASH - including restricted cash of $188,097 at June 30, 1996 and December 31, 1995 - Note 1 $ 719,381 $ 671,43 ACCOUNTS RECEIVABLE 2,800 8,346 PREPAID EXPENSES 10,779 43,115 ----------- ----------- 732,960 722,891 ----------- ----------- NOTES RECEIVABLE - Note 5 343,283 476,985 ----------- ----------- PROPERTY AND EQUIPMENT - Notes 2, 5 and 6 Land 1,184,605 1,184,605 Land improvements 3,376,899 3,234,282 Buildings and improvements 9,933,168 9,933,168 Furniture and equipment 450,936 440,317 ----------- ----------- 14,945,608 14,792,372 Less accumulated depreciation 6,844,286 6,540,758 ----------- ----------- 8,101,322 8,251,614 ----------- ----------- OTHER ASSETS Loan costs - less accumulated amortization of $16,764 and $13,519 at June 30, 1996 and December 31, 1995, respectively 80,570 83,815 Other 8,164 5,136 ----------- ----------- 88,734 88,951 ----------- ----------- $ 9,266,299 $ 9,540,441 =========== ===========
See accompanying notes to financial statements. 3 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Balance Sheets (Continued) (Unaudited)
June 30, December 31, 1996 1995 ----------- ------------ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) ACCOUNTS PAYABLE AND ACCRUED EXPENSES - including $6,399 and $8,644 due to related parties at June 30, 1996 and December 31, 1995, respectively $ 157,417 $ 170,016 DEPOSITS AND ADVANCE RENTALS 48,591 53,641 DEFERRED GAIN ON SALE - Note 6 188,097 188,097 MANAGEMENT AND CONDOMINIUM CONVERSION FEES PAYABLE TO AFFILIATE OR RELATED PARTY - Note 3 852,491 796,331 SECURED NOTE PAYABLE - Note 2 4,244,865 4,261,943 ----------- ----------- 5,491,461 5,470,028 ----------- ----------- PARTNERS' CAPITAL (DEFICIT) General partners (1,651,818) (1,652,362) Limited partners, 22,719 units issued and outstanding 5,426,656 5,722,775 ----------- ----------- 3,774,838 4,070,413 ----------- ----------- $ 9,266,299 $ 9,540,441 =========== ===========
See accompanying notes to financial statements. 4 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Operations (Unaudited)
Six Months Six Months Ended Ended June 30, June 30, 1996 1995 ---------- ---------- INCOME Rent $1,104,657 $1,110,001 Interest and dividends 29,374 30,614 Other 27,677 9,092 Gain on sale of property and equipment - Note 6 - 42,000 ---------- ---------- 1,161,708 1,191,707 ---------- ---------- EXPENSES Depreciation and amortization 306,773 295,382 Interest 159,219 153,700 Maintenance, repairs and supplies 131,282 121,756 Salaries - including $9,506 and $10,436 paid to related parties in 1996 and 1995, respectively - Note 3 97,507 97,110 Professional fees and services - including $31,360 and $38,277 paid to related parties in 1996 and 1995, respectively - Note 3 92,292 84,703 Utilities 90,478 89,995 Real estate taxes 75,885 57,748 Management fees accrued to related parties - Note 3 56,160 56,386 Other 44,348 35,995 Insurance 32,545 34,113 Payroll taxes and employee benefits 20,794 17,857 ---------- ---------- 1,107,283 1,044,745 ---------- ---------- NET INCOME $ 54,425 $ 146,962 ========== ========== NET INCOME GENERAL PARTNERS $ 544 $ 1,470 ========== ========== LIMITED PARTNERS $ 53,881 $ 145,492 ========== ========== INCOME PER 1% GENERAL PARTNER INTEREST - Note 4 $ 5.44 $ 14.70 ========== ========== INCOME PER LIMITED PARTNERSHIP UNIT - Note 4 $ 2.37 $ 6.40 ========== ==========
See accompanying notes to financial statements. 5 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Operations (Unaudited)
Three Months Three Months Ended Ended June 30, June 30, 1996 1995 ------------ ------------ INCOME Rent $538,163 $550,518 Interest and dividends 14,628 16,124 Other 15,155 3,401 Gain on sale of property and equipment - Note 6 - 42,000 -------- -------- 567,946 612,043 -------- -------- EXPENSES Depreciation and amortization 153,372 147,691 Interest 78,499 79,090 Maintenance, repairs and supplies 80,755 65,580 Salaries - including $5,106 and $6,127 paid to related parties in 1996 and 1995, respectively - Note 3 49,356 56,424 Professional fees and services - including $13,781 and $16,810 paid to related parties in 1996 and 1995, respectively - Note 3 42,422 48,462 Utilities 45,032 41,516 Real estate taxes 37,943 16,389 Management fees accrued to related parties - Note 3 27,383 27,707 Other 22,449 22,363 Insurance 16,265 16,867 Payroll taxes and employee benefits 9,835 9,137 -------- -------- 563,311 531,226 -------- -------- NET INCOME $ 4,635 $ 80,817 ======== ======== NET INCOME GENERAL PARTNERS $ 46 $ 808 ======== ======== LIMITED PARTNERS $ 4,589 $ 80,009 ======== ======== INCOME PER 1% GENERAL PARTNER INTEREST - Note 4 $ 0.46 $ 8.08 ======== ======== INCOME PER LIMITED PARTNERSHIP UNIT - Note 4 $ 0.20 $ 3.52 ======== ========
See accompanying notes to financial statements. 6 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Changes in Partners' Capital (Deficit) (Unaudited) For the Six Months Ended June 30, 1996 and For the Year Ended December 31, 1995
General Limited Total Partners Partners ---------- ----------- ----------- BALANCE - January 1, 1995 $4,640,780 $(1,654,328) $6,295,108 DISTRIBUTIONS TO PARTNERS (767,000) - (767,000) NET INCOME - for the year ended December 31, 1995 196,633 1,966 194,667 ---------- ----------- ---------- BALANCE - December 31, 1995 4,070,413 (1,652,362) 5,722,775 DISTRIBUTIONS TO PARTNERS (350,000) - (350,000) NET INCOME - for the six months ended June 30, 1996 54,425 544 53,881 ---------- ----------- ---------- BALANCE - June 30, 1996 $3,774,838 $(1,651,818) $5,426,656 ========== =========== ==========
See accompanying notes to financial statements. 7 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Cash Flows (Unaudited)
Six Months Six Months Ended Ended June 30, June 30, 1996 1995 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Gross rents received from real estate operations $1,103,075 $1,360,469 Cash paid to suppliers and employees - including $43,515 and $50,852 paid to related parties in 1996 and 1995, respectively (566,309) (763,543) Interest paid (160,202) (152,433) Interest and other income received 57,999 30,592 ---------- ---------- Net cash provided by operating activities 434,563 475,085 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (153,236) (281,557) Payments received on notes receivable 133,702 1,369 Sales and closing costs - (3,575) ---------- ---------- Net cash used in investing activities (19,534) (283,763) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Distributions to partners (350,000) (375,000) Principal payments on secured notes payable (17,078) (12,480) ---------- ---------- Net cash used in financing activities (367,078) (387,480) ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47,951 (196,158) CASH AND CASH EQUIVALENTS: BALANCE AT BEGINNING OF PERIOD 671,430 912,914 ---------- ---------- BALANCE AT END OF PERIOD $ 719,381 $ 716,756 ========== ==========
See accompanying notes to financial statements. 8 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Cash Flows (Continued) (Unaudited)
Six Months Six Months Ended Ended June 30, June 30, 1996 1995 ---------- ---------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $ 54,425 $ 146,962 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 306,773 295,382 Gain on sale of property and equipment - (42,000) Changes in operating assets and liabilities Decrease in accounts receivable 5,546 248,754 Decrease in prepaid expenses 32,336 34,204 Increase in other assets (3,028) - Decrease in accounts payable and accrued expenses (12,599) (257,203) Decrease in deposits and advance rentals (5,050) (7,400) Increase in management and condominium conversion fees payable to affiliate 56,160 56,386 -------- --------- Net cash provided by operating activities $434,563 $ 475,085 ======== =========
SUPPLEMENTAL DISCLOSURE - ----------------------- During the six months ended June 30, 1995, the MHC cash reserve of $42,000 was released from restricted cash and the Partnership recognized a gain on that portion of the 1994 sale proceeds. See accompanying notes to financial statements. 9 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Unaudited) June 30, 1996 and December 31, 1995 and For the Six and Three Months Ended June 30, 1996 and 1995 NOTE 1 - BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been included. Operating results during the six and three months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1995. Cash and Cash Equivalents ------------------------- The Partnership invests its cash not needed for working capital in highly liquid short-term investments consisting primarily of money market funds and certificates of deposit, with original maturities ranging generally from one to three months. The Partnership considers all such items to be cash equivalents. NOTE 2 - SECURED NOTE PAYABLE Secured note payable at June 30, 1996 and December 31, 1995 consisted of:
June 30, December 31, 1996 1995 ---------- ------------ Note collateralized by a first trust deed, payable in monthly installments of $26,476, including interest until December 15, 1994. Thereafter, the monthly payment changes annually on each December 15th. Interest accrued at 6.25% until February 15, 1994, and thereafter floats at 2.5% over the FHLB's 11th District Cost of Funds Index, not to exceed 12.9%, adjusted monthly. Unpaid principal and accrued interest are due November 15, 2008. The interest rate in effect at June 30, 1996 and December 31, 1995 was 7.34% and 7.62%, respectively. $4,244,865 $4,261,943 ========== ==========
10 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) June 30, 1996 and December 31, 1995 and For the Six and Three Months Ended June 30, 1996 and 1995 NOTE 3 - TRANSACTIONS WITH RELATED PARTIES Pursuant to a former management agreement dated October 1, 1985, as amended, De Anza Assets, Inc., a former affiliate of the operating general partner (OGP), was paid a management fee in the amount of 5% of the annual gross receipts from the operations of the Partnership's properties. The payment of this fee is subordinated to the priority distribution to the limited partners of 7% of their adjusted capital contributions each year and is noncumulative, except in the case of a sale, refinancing or other disposition of the Partnership's properties. In that case, the difference between the management fee actually paid and the management fee that would have been paid if it were not subordinated is payable out of proceeds of the sale, refinancing or other disposition after payment of the limited partners' priority return and capital contribution and the general partners' incentive interest. However, management fees payable subsequent to a consummated refinancing are not subordinated to the limited partners' priority return to the extent the subordination would have been caused by increased debt service charges. At June 30, 1996 and December 31, 1995, cumulative accrued fees of $565,022 to De Anza Assets, Inc. have been subordinated and are included in management and condominium conversion fees payable to affiliate or related party, as reflected in the balance sheets. Shortly before its sale to an affiliate of Manufactured Home Communities, Inc. (MHC), as discussed in Note 6, De Anza Assets, Inc. assigned its rights to receipt of these fees to the Gelfand Family Trust. On August 18, 1994, subsequent to the sale of the Mark and the property management business of De Anza Group, Inc. (DAG), as discussed in Note 6, the property management of Warner Oaks and the two remaining spaces at San Luis Bay was assumed by Terra Vista Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael D. Gelfand, president of the OGP and the son of Herbert M. Gelfand. Herbert M. Gelfand, together with Beverly Gelfand, is the sole shareholder of the OGP and an individual general partner. Management fees of $56,160 and $56,386 were accrued but not paid to Terra Vista for the six months ended June 30, 1996 and 1995, respectively. Of the $56,160, $27,383 is attributable to the three months ended June 30, 1996 (compared to $27,707 accrued for the three months ended June 30, 1995). At June 30, 1996 and December 31, 1995, cumulative accrued fees of $209,610 and $153,500, respectively, have been subordinated and are included in management and condominium conversion fees payable to affiliate or related parties, as reflected in the balance sheets. The Gelfand Family Trust has agreed to share any payment to be made to the Gelfand Family Trust for deferred management fees equally with Terra Vista until Terra Vista has been paid all outstanding deferred management fees. 11 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) June 30, 1996 and December 31, 1995 and For the Six and Three Months Ended June 30, 1996 and 1995 NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued) Pursuant to the partnership agreement, a condominium conversion fee equal to 1% of the sales price of the San Luis Bay homesites sold is due to an affiliate of the OGP (see Note 5). Payment of this fee has been deferred pursuant to the partnership agreement's requirement regarding subordination to payment of the limited partners' priority return and capital contribution, the general partners' incentive interest and deferred management fees. Subordinated cumulative accrued fees of $77,809 have been included in management and condominium conversion fees payable to affiliate or related party at June 30, 1996 and December 31, 1995, as reflected in the balance sheets. Shortly before the sale to MHC, De Anza Assets, Inc. assigned its rights to receive these fees to the Gelfand Family Trust. In addition, Terra Vista or an affiliate of the OGP was paid $43,515 and $50,852 during the six months ended June 30, 1996 and 1995, respectively, for performing bookkeeping, legal, regional management, computer and investor relations services necessary for the operation of the Partnership and its properties. Of the $43,515, $19,845 is attributable to the three months ended June 30, 1996 (compared to $23,943 paid for the three months ended June 30, 1995). NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED PARTNERSHIP UNIT Income per limited partnership unit is computed based on the limited partners' share of net income as shown on the Statements of Operations and Changes in Partners' Capital (Deficit) and the number of limited partnership units outstanding (22,719 units). The general partners' share of net income has not been included in this computation. Income per 1% general partner interest is computed based on the general partners' share of net income as shown on the Statements of Operations and Changes in Partners' Capital (Deficit). NOTE 5 - SALE OF SAN LUIS BAY MOBILE ESTATES On May 2, 1989, the Partnership entered into an agreement to sell San Luis Bay Mobile Estates (the 162-space mobile home community in Avila Beach, California) to the residents for an aggregate sales price of $8,850,000 and, pursuant to that agreement, subdivided the property into condominium units in 1991. The Partnership provided purchase money financing for up to 80% of the individual homesite price, payable in monthly payments, including interest at 10%, based on a loan amortization schedule of 30 years, with a balloon payment of unpaid principal and interest due at the end of seven years. At June 30, 1996 and December 31, 1995, respectively, the outstanding amounts due under such notes totaled $343,283 and $476,985. Those residents who purchased their homesites for cash received a 10% discount off their purchase price. The Partnership sold 160 homesites prior to 1995. The remaining two homesites are leased to tenants. 12 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) June 30, 1996 and December 31, 1995 and For the Six and Three Months Ended June 30, 1996 and 1995 NOTE 6 - SALE OF THE MARK On August 18, 1994 the Partnership sold The Mark to an affiliate of MHC, a real estate investment trust, as part of an overall transaction for the sale of the related management business of DAG and other mobile home communities affiliated with DAG. The sales price for The Mark was $5,404,419. Additional proceeds of $130,094, which were included in the sales price for calculating the gain on sale of property and equipment, were received from MHC to fund a General Reserve. In connection with the sale, the Partnership established various reserves totaling $230,097. The $230,097 was used to establish the following cash reserves: MHC Reserve $ 42,000 General Reserve 130,094 Independent Committee Reserve 58,003
The MHC Reserve was required by MHC and released in May 1995. Accordingly, the gain on sale has been recognized and included in net income for the six months ended June 30, 1995. The General Reserve and Independent Committee Reserve were established to fund contingent liabilities that may arise out of the MHC transaction. Pursuant to the guidelines of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate," the Partnership deferred in 1994 the recognition of gain on that portion of the sales proceeds, represented by the MHC Reserve, General Reserve and Independent Committee Reserve, totaling $230,097. As these reserves are released or expended, gain on sale will be recognized. At June 30, 1996, and December 31, 1995, $188,097 of sale proceeds have been deferred and are included in deferred gain on sale, as reflected in the balance sheets. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity - --------- The Partnership's quick ratios were 2.2:1 and 2.1:1, including unrestricted cash balances of $531,284 and $483,333 at June 30, 1996 and December 31, 1995, respectively. The increase in cash is due mainly to the receipt of notes receivable prepayments. The Partnership's cash balance is its immediate source of liquidity. On a long-term basis, the Partnership's liquidity is sustained primarily from cash flows from operations, which during the six months ended June 30, 1996 were approximately $435,000. Cash flow from operations has improved substantially following the August 1994 sale of The Mark (see Note 6 to the Financial Statements). The Partnership has reinstated regular operating distributions to its partners though payment of the management fees continues to be deferred in accordance with the Partnership Agreement. Subsequent to the sale of The Mark, the Partnership continues to operate Warner Oaks, the remaining property, which is managed by Terra Vista. The Partnership also owns two spaces at San Luis Bay Mobile Estates and various notes receivables related to that sale (see Note 5 to the Financial Statements). As a result of the sale of The Mark, the Partnership's liquidity has improved. The Mark's income fell short of its expenses, thus with the property sold, the Partnership's income has improved which has improved liquidity. However, should it become necessary to improve liquidity further, the Partnership can reduce partner distributions, which totaled $350,000 during the six months ended June 30, 1996, arrange a short-term line of credit or refinance Warner Oaks. In November 1993, the Partnership refinanced Warner Oaks with a variable interest rate loan. The interest rate for the initial three months was 6.25%, thereafter the loan bears interest at 250 basis points over the Eleventh District Cost of Funds with caps on the maximum annual payment change of 7.5% of the current payment, and an interest rate cap of 12.9% over the life of the loan. This loan is subject to negative amortization. Future liquidity will be affected, unfavorably or favorably, to the extent the payment rate fluctuates. At June 30, 1996, the interest rate in effect was 7.34%. The Partnership has sold 160 of 162 spaces at San Luis Bay as of June 30, 1996 (see Note 5 to the Financial Statements). Liquidity is expected to improve as the notes receivable from the buyers of San Luis Bay spaces mature, as discussed in Note 5 to the Financial Statements. As of June 30, 1996, the amount of the notes receivable outstanding was approximately $343,000. Liquidity also improves when the notes receivable are prepaid and when additional spaces are sold. Other than as described elsewhere, there are no known trends, demands, commitments, events or uncertainties which are reasonably likely to materially affect the Partnership's liquidity. 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Capital Resources - ----------------- The Partnership anticipates spending approximately $244,000 in 1996 for physical improvements at Warner Oaks, approximately $91,000 of which will be spent during the remainder of 1996. Funds for these improvements will be provided by cash generated from operations. If necessary, the Partnership can use funds from reserves from the sale proceeds of San Luis Bay, and from cash reserved for capital improvement projects. While no decision has been made regarding when a sale of Warner Oaks would occur, the OGP believes it may be in the best interest of the Partnership to consider pursuing a sale of the property as individual condominium units rather than as a single project, in order to realize greater value. Accordingly, the Partnership is investigating converting Warner Oaks from its current apartment use to condominiums, although preliminarily, it appears that the market does not favor a conversion at this time. The Partnership will continue to monitor the market and consider pursuing a conversion if and when the condominium market improves. Such a conversion may require significant investment in the property in addition to the physical improvements normally done by the Partnership. No assurance can be given that such conversion would occur. If there is no conversion then the property would remain a single project and, at the advisable time, be sold as one. Other than as described above, there are no known material trends, favorable or unfavorable, in the Partnership's capital resources. The Partnership does not contemplate any other material changes in the mix of its capital resources, other than as described above. Results of Operations - --------------------- Rental income decreased 0.5% and 2.2% during the six and three months ended June 30, 1996, over the same periods in 1995, primarily due to lower occupancy and increased rent incentives to improve occupancy. These income decreases were offset in part by rent increases to both new and continuing tenants. Other income increased due to a negative earthquake insurance proceeds adjustment in 1995 not repeated in 1996 and increased partner transfer fees in 1996. Expenses increased 6.0% during the six and three months ended June 30, 1996 over the same periods in 1995. Because of the recent tender offer by Moraga Capital, LLC, professional fees and services increased comprised of higher legal fees while other expenses increased due to additional investor mailings. Maintenance, repairs and supplies increased with increased apartment turnover in the second quarter of 1996. Real estate taxes were higher because 1995 included a refund of 1994 taxes in connection with the reassessment of Warner Oaks following the 1994 earthquake. Additionally, depreciation and amortization expense increased in 1996 as a result of depreciation of capitalized costs placed in service during the last twelve months. Other than as described above, there are no known trends or uncertainties which have had or can be reasonably expected to have a material effect on continuing operations. 15 PART II. OTHER INFORMATION ITEM NUMBER - ----------- 1. LEGAL PROCEEDINGS No new material legal proceedings were commenced during the three months ended June 30, 1996 and there are none pending. 2. CHANGES IN SECURITIES None. 3. DEFAULTS UPON SENIOR SECURITIES None. 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 5. OTHER INFORMATION On April 18, 1996 Moraga Gold, LLC filed a Schedule 14D-1 tender offer for Units of the Partnership. On May 2, 1996 the Partnership filed a Schedule 14D-9 in response. 6. EXHIBITS AND REPORTS ON FORM 8-K None. 16 PART II. OTHER INFORMATION (Continued) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DE ANZA PROPERTIES - XII, LTD. (Registrant) By DE ANZA CORPORATION A California Corporation Operating General Partner Date: August 13, 1996 By /s/ Michael D. Gelfand ---------------------- Michael D. Gelfand President and Chief Financial Officer 17 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 719,381 0 2,800 0 0 732,960 14,945,608 6,844,286 9,266,299 248,008 4,244,865 0 0 0 3,774,838 9,266,299 1,104,657 1,161,708 0 641,291 306,773 0 159,219 54,425 0 54,425 0 0 0 54,425 2.37 2.37 AMOUNT IS PER LIMITED PARTNER UNIT
-----END PRIVACY-ENHANCED MESSAGE-----