-----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, IyN4oy1O1nK03M9NSNAK854BenXJZ38Rx3JL8b77THqd9+eVXWgJNICbDNMH/+fY ibaVq0rxas+SyQV11pe3yw== 0000944209-96-000511.txt : 19961115 0000944209-96-000511.hdr.sgml : 19961115 ACCESSION NUMBER: 0000944209-96-000511 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96660934 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 QUARTERLY REPORT--XII 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 September 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)
September 30, December 31, 1996 1995 ------------- ------------ ASSETS CASH AND CASH EQUIVALENTS - including restricted deposits of $159,096 and $188,097 at September 30, 1996 and December 31, 1995, respectively - Note 1 $ 757,720 $ 671,430 ACCOUNTS RECEIVABLE 8,099 8,346 PREPAID EXPENSES 54,375 43,115 ----------- ----------- 820,194 722,891 ----------- ----------- NOTES RECEIVABLE - Note 5 342,057 476,985 ----------- ----------- PROPERTY AND EQUIPMENT - Notes 2, 5 and 6 Land 1,184,605 1,184,605 Land improvements 3,430,357 3,234,282 Buildings and improvements 9,933,168 9,933,168 Furniture and equipment 454,735 440,317 ----------- ----------- 15,002,865 14,792,372 Less accumulated depreciation 6,996,051 6,540,758 ----------- ----------- 8,006,814 8,251,614 ----------- ----------- OTHER ASSETS Loan costs - less accumulated amortization of $18,386 and $13,519 at September 30, 1996 and December 31, 1995, respectively 78,948 83,815 Other 4,420 5,136 ----------- ----------- 83,368 88,951 ----------- ----------- $ 9,252,433 $ 9,540,441 =========== ===========
See accompanying notes to financial statements. 3 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Balance Sheets (Continued) (Unaudited)
September 30, December 31, 1996 1995 ------------- ------------ LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) ACCOUNTS PAYABLE AND ACCRUED EXPENSES - including $12,891 and $8,644 due to related parties at September 30, 1996 and December 31, 1995, respectively $ 229,027 $ 170,016 DEPOSITS AND ADVANCE RENTALS 49,296 53,641 DEFERRED GAIN ON SALE - Note 6 159,096 188,097 MANAGEMENT AND CONDOMINIUM CONVERSION FEES PAYABLE TO AFFILIATE OR RELATED PARTY - Note 3 881,945 796,331 SECURED NOTE PAYABLE - Note 2 4,233,885 4,261,943 ----------- ----------- 5,553,249 5,470,028 ----------- ----------- PARTNERS' CAPITAL (DEFICIT) General partners (1,650,824) (1,652,362) Limited partners, 22,719 units issued and outstanding 5,350,008 5,722,775 ----------- ----------- 3,699,184 4,070,413 ----------- ----------- $ 9,252,433 $ 9,540,441 =========== ===========
See accompanying notes to financial statements. 4 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Income (Unaudited)
Nine Months Nine Months Ended Ended September 30, September 30, 1996 1995 ------------- ------------- INCOME Rent $1,685,231 $1,671,845 Interest and dividends 44,506 47,423 Other 36,412 24,730 Gain on sale of property and equipment - Note 6 29,001 42,000 ---------- ---------- 1,795,150 1,785,998 ---------- ---------- EXPENSES Depreciation and amortization 460,160 443,073 Interest 237,442 236,497 Maintenance, repairs and supplies 187,954 190,323 Salaries - including $13,759 and $15,820 paid to related parties in 1996 and 1995, respectively - Note 3 146,917 149,398 Utilities 134,275 137,390 Professional fees and services - including $47,766 and $54,698 paid to related parties in 1996 and 1995, respectively - Note 3 125,372 109,870 Real estate taxes 114,940 96,622 Management fees accrued to related parties - Note 3 85,614 84,775 Other 69,356 68,916 Insurance 48,363 51,066 Payroll taxes and employee benefits 30,986 26,690 ---------- ---------- 1,641,379 1,594,620 ---------- ---------- NET INCOME $ 153,771 $ 191,378 ========== ========== NET INCOME GENERAL PARTNERS $ 1,538 $ 1,914 ========== ========== LIMITED PARTNERS $ 152,233 $ 189,464 ========== ========== INCOME PER 1% GENERAL PARTNER INTEREST - Note 4 $ 15.38 $ 19.14 ========== ========== INCOME PER LIMITED PARTNERSHIP UNIT - Note 4 $ 6.70 $ 8.34 ========== ==========
See accompanying notes to financial statements. 5 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Income (Unaudited)
Three Months Three Months Ended Ended September 30, September 30, 1996 1995 ------------- ------------- INCOME Rent $580,574 $561,844 Interest and dividends 15,132 16,809 Other 8,735 15,638 Gain on sale of property and equipment - Note 6 29,001 - -------- -------- 633,442 594,291 -------- -------- EXPENSES Depreciation and amortization 153,387 147,691 Interest 78,223 82,797 Maintenance, repairs and supplies 56,672 68,567 Salaries - including $4,253 and $5,384 paid to related parties in 1996 and 1995, respectively - Note 3 49,410 52,288 Utilities 43,797 47,395 Professional fees and services - including $16,406 and $16,421 paid to related parties in 1996 and 1995, respectively - Note 3 33,080 25,167 Real estate taxes 39,055 38,874 Management fees accrued to related parties - Note 3 29,453 28,389 Other 25,009 32,921 Insurance 15,818 16,953 Payroll taxes and employee benefits 10,192 8,833 -------- -------- 534,096 549,875 -------- -------- NET INCOME $ 99,346 $ 44,416 ======== ======== NET INCOME GENERAL PARTNERS $ 993 $ 444 ======== ======== LIMITED PARTNERS $ 98,353 $ 43,972 ======== ======== INCOME PER 1% GENERAL PARTNER INTEREST - Note 4 $ 9.93 $ 4.44 ======== ======== INCOME PER LIMITED PARTNERSHIP UNIT - Note 4 $ 4.33 $ 1.94 ======== ========
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 Nine Months Ended September 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 (525,000) - (525,000) NET INCOME - for the nine months ended September 30, 1996 153,771 1,538 152,233 ---------- ----------- ---------- BALANCE - September 30, 1996 $3,699,184 $(1,650,824) $5,350,008 ========== =========== ==========
See accompanying notes to financial statements. 7 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Cash Flows (Unaudited)
Nine Months Nine Months Ended Ended September 30, September 30, 1996 1995 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Gross rents received from real estate operations $1,679,250 $ 1,930,645 Cash paid to suppliers and employees - including $65,194 and $75,665 paid to related parties in 1996 and 1995, respectively (807,505) (1,048,306) Interest paid (238,503) (235,082) Interest and other income received 81,671 45,865 ---------- ----------- Net cash provided by operating activities 714,913 693,122 ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (210,493) (320,223) Payments received on notes receivable 134,928 6,940 Sales and closing costs - (3,575) ---------- ----------- Net cash used in investing activities (75,565) (316,858) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Distributions to partners (525,000) (550,000) Principal payments on secured notes payable (28,058) (13,589) ---------- ----------- Net cash used in financing activities (553,058) (563,589) ---------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 86,290 (187,325) CASH AND CASH EQUIVALENTS: BALANCE AT BEGINNING OF PERIOD 671,430 912,914 ---------- ----------- BALANCE AT END OF PERIOD $ 757,720 $ 725,589 ========== ===========
See accompanying notes to financial statements. 8 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Statements of Cash Flows (Continued) (Unaudited)
Nine Months Nine Months Ended Ended September 30, September 30, 1996 1995 -------------- -------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income $153,771 $ 191,378 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 460,160 443,073 Gain on sale of property and equipment (29,001) (42,000) Changes in operating assets and liabilities Decrease in accounts receivable 247 244,737 Increase in prepaid expenses (11,260) (13,679) Decrease in other assets 716 - Increase (decrease) in accounts payable and accrued expenses 59,011 (202,937) Decrease in deposits and advance rentals (4,345) (12,225) Increase in management and condominium conversion fees payable to affiliate 85,614 84,775 -------- --------- Net cash provided by operating activities $714,913 $ 693,122 ======== =========
SUPPLEMENTAL DISCLOSURE - ----------------------- During the nine months ended September 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. During the nine months ended September 30, 1996, $29,001 of the Independent Committee cash reserve 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) September 30, 1996 and December 31, 1995 and For the Nine and Three Months Ended September 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 nine and three months ended September 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 September 30, 1996 and December 31, 1995 consisted of:
September 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 September 30, 1996 and December 31, 1995 was 7.32% and 7.62%, respectively. $4,233,885 $4,261,943 ---------- ----------
10 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Continued) (Unaudited) September 30, 1996 and December 31, 1995 and For the Nine and Three Months Ended September 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 September 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 $85,614 and $84,775 were accrued but not paid to Terra Vista for the nine months ended September 30, 1996 and 1995, respectively. Of the $85,614, $29,453 is attributable to the three months ended September 30, 1996 (compared to $28,389 accrued for the three months ended September 30, 1995). At September 30, 1996 and December 31, 1995, cumulative accrued fees to Terra Vista of $239,114 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) September 30, 1996 and December 31, 1995 and For the Nine and Three Months Ended September 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 September 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 $65,194 and $75,665 during the nine months ended September 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 $65,194, $21,679 is attributable to the three months ended September 30, 1996 (compared to $24,813 paid for the three months ended September 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 Income 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 September 30, 1996 and December 31, 1995, respectively, the outstanding amounts due under such notes totaled $342,057 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) September 30, 1996 and December 31, 1995 and For the Nine and Three Months Ended September 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 nine months ended September 30, 1995. The General Reserve and Independent Committee Reserve were established to fund contingent liabilities that may arise out of the MHC transaction. In August 1996, $29,001 of the Independent Committee Reserve was released. Thus, the gain on sale has been recognized and included in net income for the nine months ended September 30, 1996. 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 September 30, 1996, and December 31, 1995, $159,096 and $188,097, respectively, 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 1.9:1 and 2.1:1, including unrestricted cash balances of $598,624 and $483,333 at September 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 nine months ended September 30, 1996 were approximately $715,000. 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 $525,000 during the nine months ended September 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 September 30, 1996, the interest rate in effect was 7.32%. The Partnership has sold 160 of 162 spaces at San Luis Bay as of September 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 September 30, 1996, the amount of the notes receivable outstanding was approximately $342,000. 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 $34,000 of which will be spent during the remainder of 1996. Funds for these improvements will be provided by cash generated from operations. 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 increased 0.8% and 3.3% during the nine and three months ended September 30, 1996, over the same periods in 1995, primarily due to improved third quarter occupancy but also due to higher rental rates and reduced uncollectible rent. These income increases were offset in part by lower occupancy in the first half of 1996 and increased rent incentives to improve occupancy. 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 2.9% during the nine months ended September 30, 1996 and decreased 2.9% during the three months ended September 30, 1996 over the same periods in 1995. Because of the April 1996 tender offer by Moraga Gold, LLC, professional fees and services increased, comprised of higher legal fees. 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 1995. The increases were offset in part by lower costs for maintenance, repairs and supplies in the third quarter of 1996 largely as a result of air conditioning repairs prompted by an extended heat-wave in 1995 not repeated in 1996. 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 September 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 None. 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: November 13, 1996 By /s/ Michael D. Gelfand ---------------------- Michael D. Gelfand President and Chief Financial Officer 17 EX-27 2 FINANCIAL DATA SCHEDULE--V
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 757,720 0 8,099 0 0 820,194 15,002,865 6,996,051 9,252,433 315,323 4,233,885 0 0 0 3,699,184 9,252,433 1,685,231 1,795,150 0 943,777 460,160 0 237,442 153,771 0 153,771 0 0 0 153,771 6.70 6.70 EPS is per Limited Partner Unit
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