-----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, NeUyQx/5wdYYYieqNCYvAPQ5Ya2Vx3qnBe1kXmQgnDatMEOWU3lrQsI9pU7gu4Yq 2cwVz1n4p2d3GI7purJN/Q== 0000944209-97-000382.txt : 19970327 0000944209-97-000382.hdr.sgml : 19970327 ACCESSION NUMBER: 0000944209-97-000382 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970326 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-10430 FILM NUMBER: 97564101 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-K405 1 FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the Year Ended December 31, 1996 [_] Transition Report Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 (No Fee Required) 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 (I.R.S. Employer Incorporation or Organization) Identification Number) 9171 Wilshire Boulevard, Suite 627 90210 Beverly Hills, California (Zip Code) (Address of Principal Executive Offices) (310) 550-1111 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12 (b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interests (Title of Class) 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 [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by non-affiliates of the Partnership. $22,719,000 (See Item 5 Herein) DOCUMENTS INCORPORATED BY REFERENCE. Portions of the Prospectus of the registrant, dated August 21, 1981 and three supplements thereto dated December 29, 1981, January 25, 1982, and May 1, 1982, respectively, filed pursuant to Rule 424(b) and Rule 424(c) under the Securities Act of 1933, as amended, and the report on Form 8-K filed with the Securities and Exchange Commission on September 6, 1983 each of which were subsequently filed on July 11, 1989 with Form 8, are incorporated by reference in Parts I, II, III and IV hereof. Page 1 of 47 pages contained herein. Exhibit Index located on page 17 herein. PART I. ITEM 1. BUSINESS. -------- The registrant, De Anza Properties-XII, Ltd. (the "Partnership")/1/ is a limited partnership formed on December 2, 1980 under the California Uniform Limited Partnership Act to acquire, develop, maintain and operate income- producing residential real estate properties, including apartment complexes and mobile home parks, and to engage in general business activities related thereto. The Partnership considers its business to represent one industry segment, investment in real property, specifically mobile home parks and apartment complexes. The Partnership currently owns an apartment complex, and two spaces in a mobile home park previously owned by the Partnership (the "Properties"). A description of the Properties is set forth in Item 2 hereof and is incorporated herein by reference. The Partnership's apartment project is located in an upscale urban area. The project attracts primarily young professionals and business people due in part to the Property's convenient location near major office centers. The Property contains recreational facilities and services that offer its residents a quality lifestyle. The apartment project competes with approximately five other apartment properties consisting of approximately 2,500 rental units. Some of these properties are newer. Competition is a significant factor affecting the occupancy and results of operations of the Partnership's apartment project. The Property sustained damage as a result of the January 17, 1994 earthquake, discussed further in Item 7(1), Liquidity and Item 7(3), Results of Operations, which are incorporated herein by reference. A description of the general development of the business of the Partnership since the beginning of the year for which this report is being filed is set forth in Item 7(3), Results of Operations, and is incorporated herein by reference. Information regarding the Partnership's revenues, profitability and identifiable assets attributable to each of the Partnership's geographic areas is set forth in Item 8, Note 9 to the Financial Statements, in the Schedules of Projects' Operations attached thereto, and in the description of the Properties set forth in Item 2 hereof, which are incorporated herein by reference. The Partnership has no real estate investments which are located outside of the United States. As of the date of this report, the Partnership employed a total of 7 persons. - ------------------------- /1/ A Registration Statement (File No. 2-71144) was filed on behalf of the Partnership by its general partners (the "General Partners"), and the securities offered and sold thereunder were units of limited partnership interests. -2- ITEM 2. PROPERTIES. ---------- The Partnership purchased three Properties using the capital raised. Following is a description of each Property; for each Property which has been sold the description is as of the time of sale. SAN LUIS BAY MOBILE ESTATES. "San Luis Bay" is an 88-acre retirement community in Avila Beach, California, midway between Los Angeles and San Francisco. The 162 homesites are built into hillsides on winding private roads, providing valley or ocean views to many residents, most of whom are young retirees from Southern California. San Luis Bay is part of a larger planned community of single-family detached homes, townhomes, condominiums, a time-share resort with an 18-hole golf course, a tennis club and acres of beautiful landscaping. The golf course and tennis courts are available for use by the residents. Large homes with cedar-shake roofs, decks and wood or wood-like siding, and planted flowering shrubs on the slopes below characterize this community. San Luis Bay also features a clubhouse used principally for parties, banquets and special events. High on a hillside overlooking the valley is an outdoor pool, an indoor whirlpool spa, and a pool house with shower and locker facilities and saunas. An area reserved for parking recreational vehicles and boats is located on the property. Pursuant to an agreement dated April 21, 1989, to sell the community to an association representing the residents, the community was subdivided into condominium units, and the residents elected to purchase the individual homesites for an aggregate purchase price of $8,850,000, which could be paid, if an individual buyer so elected, partly in cash, with the remainder represented by purchase money financing provided by the Partnership. The residents who purchased their homesites for all cash received a 10% discount off their purchase price. During 1994, 1993, 1992 and 1991, two, three, three and 152 homesites (1.2%, 1.9%, 1.9% and 93.8% of the Property) closed escrow, respectively. The two homesites which were not purchased remain owned by the Partnership. Both of these residents have signed a seven-year non-transferable lease. The Partnership will continue to collect monthly space rental income from those homesites. See Item 8, Note 3 to the Financial Statements, which is incorporated herein by reference. WARNER OAKS APARTMENTS. "Warner Oaks" is a 227-unit, 7-acre mixed- aged apartment complex located in the Warner Center area of Woodland Hills, a Los Angeles, California suburban community. Warner Center is a planned development of owner-occupied residences, apartment properties, high-rise office buildings, first-class hotels and two major shopping malls. The community offers private tennis courts, an outdoor swimming pool and spa, and a complete fitness center with a full circuit of Nautilus equipment, a video aerobics studio and a tanning bed. Warner Oaks is a fully enclosed, gated community, most of the residents of which are professionals and white-collar workers who work in the immediate area. The Property offers six-month and twelve-month leases. Rental rates include water and sewer service; residents are billed separately for electricity and gas. The Partnership is currently in the -3- process of listing Warner Oaks with a national real estate brokers for sale in 1997; although, there can be no assurance that Warner Oaks will be sold in 1997. THE MARK. "The Mark" was sold on August 18, 1994. The Mark is a 58- acre mixed-aged community in Mesa, Arizona, principally serving young families with children who occupy the 411 homesites as primary residences. The community's central recreational facility contains a large clubhouse and swimming pool. A separate smaller building with a fitness center and second swimming pool serves adults only. A grassy park with play equipment is located at one end of the community, and at the other end is a seven acre area containing a softball diamond, a volleyball court and a basketball court. Football, soccer and other sports can be played there as well. Also available for resident use is a car wash facility and a do-it-yourself auto repair area with two covered repair bays. The entire community is surrounded by a 6-foot masonry wall and has a computerized access gated entrance. The Mark offered one- to-four-year leases. Rental rates included sewer service; residents were billed separately for water, electricity and gas. For a description of the terms of encumbrances relating to the Properties, see the information set forth in Item 8, Note 5 to the Financial Statements, which is incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS. ----------------- In March 1994, the Lees, residents of The Mark, filed a complaint with the Arizona Attorney General - Civil Rights Division alleging housing discrimination. On December 21, 1994, the Partnership entered into a Conciliation Agreement with the Arizona Attorney General and a Settlement Agreement with the Lees. Pursuant to the terms of those Agreements, the Partnership paid the Lees $100,000 and the Arizona Attorney General $3,657. All claims against the Partnership were dismissed. The Partnership has engaged counsel to pursue its claim against counsel that represented the Partnership in this matter. On March 13, 1996 the Partnership filed a complaint against the Partnership's former counsel alleging negligence which complaint is still pending. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. --------------------------------------------------- No matter was submitted during the quarter ended December 31, 1996. -4- PART II. ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER ------------------------------------------------------------------ MATTERS. ------- (a) Market Information. ------------------ There is no public market for the Units of Limited Partnership Interests and it is not anticipated that a public market for them will develop. Accordingly, accurate information as to the market value of a Unit at any given date is not available. The estimated aggregate market price shown on the cover page of this report is simply the original capital contributed by the Limited Partners and should not be relied upon as indicative of any bid or ask quotations or transactions in the Limited Partnership Interests. Units are transferable only on the books and records of the Partnership and are subject to certain limitations. (b) Holders. ------- As of December 31, 1996, the approximate number of Unit holders is 1,603. (c) Dividends. --------- The Partnership is a limited partnership and, accordingly, does not pay dividends. It does, however, make distributions from operations determined by the Operating General Partner on a quarterly basis. During 1996 and 1995, $700,000 and $725,000 ($30.87 and $31.91 per interest held), respectively, was distributed to the Limited Partners from operations. During 1996, 1994, 1992 and 1991, $135,000, $370,540, $180,000 and $3,450,000 ($5.94, $16.31, $7.92 and $151.86 per interest held), respectively, was distributed to the Limited Partners from the sale proceeds of San Luis Bay. No distributions from sale proceeds of San Luis Bay were made in 1995. In addition, during 1996, 1995 and 1994, $29,000, $42,000 and $1,116,460 ($1.28, $1.85 and $49.14 per interest held), respectively, was distributed to the Limited Partners from sale proceeds of The Mark. -5- ITEM 6. SELECTED FINANCIAL DATA. ----------------------- The following table sets forth in comparative tabular form a summary of selected financial data for each of the Partnership's last five years:
Years ended December 31, 1996 1995 1994 1993 1992 ---------- ----------- ------------ ------------ ------------ Operating revenues: $2,363,283 $2,344,863 $ 2,925,056 $ 3,028,062 $ 3,244,548 Gain (loss) on sale of property and equipment: 29,001 42,000 (67,041) 153,751 74,951 Net income (loss) from continuing operations: 379,819 196,633 (491,194) (827,239) (349,948) Net income (loss) from continuing operations per limited partnership interest /1/: 16.55 8.57 (18.38) (30.95) (13.09) Total assets: 8,905,871 9,540,441 10,341,663 15,724,774 15,953,844 Long-term obligations: 4,222,320 4,261,943 4,278,706 8,319,038 7,818,477 Cash distributions per partnership interest: 1. Limited Partner/2/: 38.03 33.76 65.45 - 15.84 2. General Partner: - - - - -
- ------------------------- Assets have been disposed of during the periods presented above which materially affect the comparability reflected in the selected financial data. The above selected financial data should be read in conjunction with the financial statements and the related notes appearing elsewhere in this annual report. /1/ Net income (loss) from continuing operations per limited partnership interest is based on the number of such interests outstanding (22,719 units) during each year. /2/ Cash distributions per limited partnership interest are based on the number of such interests outstanding (22,719 units) during each year. -6- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS. --------------------- (1) Liquidity. --------- The Partnership's quick ratios were 2.4:1 and 2.1:1 including unrestricted cash balances of $472,502 and $483,333 at December 31, 1996 and December 31, 1995, respectively. Cash balances declined with the reduction of accounts payable which also increased the quick ratio. 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 1996 was approximately $920,000. Cash flow from operations has improved substantially following the sale of The Mark, as described in Item 8, Note 3 to the financial statements. The Partnership has reinstated regular operating distributions to its Limited Partners though payment of management fees continues to be deferred in accordance with the Partnership Agreement. As a consequence of the sale of The Mark, three reserve accounts were established as follows: 1) The MHC Reserve in the amount of $42,000 was established as a requirement of the Amended Acquisition Agreement by and between MHC and the Partnership. The funds were released in 1995 in full and distributed to the Limited Partners. 2) The General Reserve is maintained in a separate interest bearing trust account, pursuant to the terms of a trust agreement between the Partnership, as the beneficiary, and Mr. Gelfand as trustee, with an all cash fund in the amount of $130,094. Pursuant to the terms of a contribution agreement entered into among all of the partnerships and/or liquidating trusts, whose properties were acquired in the MHC transaction described above, funds in the General Reserve may be used to discharge or satisfy the Partnership's pro rata portion of any contingent liabilities of any of the liquidating trusts or partnerships, and to discharge or satisfy any liabilities of Mr. Gelfand and his affiliates. Such liabilities may include any legal expenses incurred by the liquidating trusts, the partnerships, Mr. Gelfand and his affiliates personally, in the defense or resolution of any claim or action arising out of the MHC transaction, including claims arising out of indemnification obligations. In August 1997, assuming no claims are threatened or pending, all funds remaining in the General Reserve will be released to the Partnership. 3) The amount of the Independent Committee Reserve for the Partnership was initially $58,003. The funds held in the Independent Committee Reserve are invested in an interest bearing account (but not in derivative securities) pursuant to the terms of the Independent Committee Trust Agreement, between the Partnership as beneficiary, and Citicorp Trust N.A. as trustee, for the benefit of the Partnership's Independent Committee. Pursuant to the terms of a contribution agreement among all of the partnerships/liquidating trusts, each partnership/liquidating trust (including the Partnership) will contribute a pro rata portion of any claim for indemnification made by the Independent Committee regardless of which specific partnership or partnerships, if less than all, a claim relates to. In August 1996, -7- $29,001 of the reserve was released to the Partnership from the Independent Committee Reserve and assuming no claims against the Independent Committee Reserve have been made or threatened, the remaining $29,002, will be released in August 1997. The Independent Committee in its sole discretion may extend the term of the Independent Committee Trust for an additional year. In the future, liquidity may improve to the extent that funds are released from the General Reserve and/or the Independent Committee Reserve. The Partnership continues to operate Warner Oaks along with two spaces at San Luis Bay which are managed by Terra Vista Management, Inc., which is wholly owned by Mr. Michael D. Gelfand, the president of the Operating General Partner. As a result of the sale of The Mark, the Partnership's liquidity has improved. The Mark's income fell short of its expenses during the period of ownership in 1994. Thus, with the Property sold, the Partnership's income has improved which has improved liquidity and allowed recommencement of regular operating distributions to the Limited Partners. However, should it become necessary to improve liquidity further, the Partnership can reduce operating distributions, which totaled $700,000 in 1996, arrange a short-term line of credit or refinance Warner Oaks. The Partnership is currently listing Warner Oaks with a national real estate broker for sale in 1997. A sale and distribution of the proceeds would leave the Partnership with only its 2 spaces at San Luis Bay, notes receivable and reserves as assets. This would reduce the Partnership's liquidity. In November 1993, the Partnership refinanced Warner Oaks with a variable interest rate loan. The interest rate varies monthly at 250 basis points over the Eleventh District Cost of Funds with a limit on the maximum annual payment change of 7.5% of the current payment, and an interest rate maximum of 12.9% over the term of the loan. This loan is subject to negative amortization. Future liquidity will be affected, unfavorably or favorably, to the extent the pay rate fluctuates. At December 31, 1996, the interest rate in effect was 7.34% and the principal balance was $4,222,320. Warner Oaks incurred moderate damage from the January 17, 1994 earthquake, which epicenter was approximately ten miles from the property. The repairs to the property have been completed at a cost of approximately $1,887,000. The Property was covered by earthquake insurance, including business interruption insurance with a deductible of 5% of the building value on a per- building basis. The Partnership funded the insurance deductible and non- reimbursable expenses of approximately $600,000, out of reserves. Lost revenue of approximately $308,000 as a result of the damaged units, was recovered from the insurance company, $133,000 in 1994 and $175,000 in 1995. The Partnership has sold 160 of 162 spaces at San Luis Bay as of December 31, 1996 (see Item 8, Note 3 to the Financial Statements, which is incorporated herein by reference). Liquidity will improve as the notes receivable from the buyers of San Luis Bay spaces mature, as discussed in Item 8, Note 3 to the Financial Statements. As of December 31, 1996, the amount of the notes receivable -8- outstanding was approximately $302,000. Liquidity also improves when the notes receivable are prepaid and when additional spaces are sold. During 1996, four notes were prepaid. 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. (2) Capital Resources. ----------------- The Partnership anticipates spending approximately $139,000 in 1997 for physical improvements at its Properties compared with approximately $232,000 in 1996. Funds for these improvements will be provided by cash generated from operations. As described above, the Partnership is seeking to sell Warner Oaks in 1997. No assurance can be given that such a sale will occur; however, if it does then the Partnership will own only its 2 spaces at San Luis Bay, notes receivable and reserves as significant assets. The Partnership would endeavor to dispose of or collect these assets and liquidate as soon as practical. 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 material changes in the mix of its capital resources other than as described above. (3) Results of Operations. --------------------- Since The Mark was sold on August 18, 1994, a comparison of operations for 1995 and 1994 would not be meaningful. However, excluding the operations of The Mark, a comparison can be made. Rental income was the same in 1996 as in 1995 and 1994 (including insurance reimbursement in 1994 for lost rents due to the earthquake damage). Excluding insurance reimbursement for lost rents at Warner Oaks, average occupancy for the last three years is as follows:
Average Occupancy -------------------- 1996 1995 1994 ---- ---- ---- Warner Oaks 93% 93% 79%
Management anticipates stable occupancy for the foreseeable future. The recent recession in Southern California is expected to hold down rents at Warner Oaks, but is not expected to affect occupancy rates which are high and which are expected to remain high. -9- Interest income decreased in 1996 over 1995 and in 1995 over 1994 due to declining cash balances. Additionally, gains on the sale of two spaces at San Luis Bay in 1994 were not repeated in 1995 or 1995. Expenses during 1996 decreased 8.1% over 1995. The Partnership ceased accruing management fees in 1996 due to the unlikelihood that they will be paid (prior years' fees were accrued but not paid) according to their subordination to limited partner Priority Return distributions. Also in 1996, an adjustment was made to reduce previous earthquake losses to actual costs. Real estate taxes increased due to earthquake related reductions in 1995 not repeated in 1996. Payroll taxes and employee benefits increased because of higher workers compensation insurance rates and adjustments of prior years' costs. Lastly, insurance premiums decreased with a more competitive market for earthquake and other coverage. Expenses during 1995 increased 1.4% over 1994. Interest increased with rising interest rates on the Warner Oaks variable rate loan, as discussed more fully in Item 7(1) Liquidating, and due to unusually low interest rates temporarily charged by the lender in 1994 subsequent to the January 1994 earthquake. Advertising, repairs and maintenance increased because some ongoing costs were unnecessary in 1994 while earthquake repairs were underway and due to greater marketing efforts emphasizing the upgrades and repairs done since the 1994 earthquake. Management fees increased because vacancies were high in 1994 due to the earthquake and the Partnership did not accrue management fees on the insurance reimbursement for lost rent. Insurance premiums also increased because of the earthquake. Mostly offsetting these increases were decreases in salaries and payroll related expenses to manage the earthquake repairs in 1994 and the 1994 loss on earthquake damage was a one time event. Lastly, real estate taxes decreased due to a refund and reassessment of Warner Oaks due to earthquake damage. 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ------------------------------------------- See Index to Financial Statements set forth in Item 14 of this Annual Report on Form 10-K. The material contained in such Financial Statements, Notes and Supplementary Schedules is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE. -------------------- None. -10- PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP. --------------------------------------------------- (a) General Partners ---------------- The Partnership is a limited partnership and has no executive officers or directors. De Anza Corporation has served as the Operating General Partner of the Partnership since June 14, 1990 and its directors and policy making executive officers are described below together with the names and ages of the other General Partners, each of whom has served in that capacity since the creation of the Partnership.
Name of General Partners Age - ------------------------ --- De Anza Corporation (Operating General Partner) N/A Herbert M. Gelfand 65 David G. Licht 72 DZA Equities - XII, Ltd. N/A Name of Directors/Key Executive Officers of De Anza Corporation, Operating General Partner Age - ------------------------ --- Michael D. Gelfand 42 Sheila M. Schrank 41
Pursuant to the Partnership's Second Amended and Restated Certificate and Agreement of Limited Partnership (the "Partnership Agreement"), the General Partners will retain their respective positions until their death, insanity, bankruptcy, disability, removal, or withdrawal. De Anza Corporation, the Operating General Partner of the Partnership, is wholly owned by Herbert M. Gelfand. De Anza Corporation was formed as a California corporation in 1984 and since October 1985, has been available to serve as a general partner of real estate partnerships previously sponsored by De Anza Group, Inc. or Mr. Gelfand. De Anza Corporation currently serves as the operating general partner of one other real estate partnership and is the liquidating agent for three other partnerships which are dissolving. Herbert M. Gelfand served as the Operating General Partner of the Partnership from its inception until June 14, 1990, and currently serves as a general partner of five affiliated partnerships. Mr. Gelfand is currently the Operating General Partner of four of the five affiliated partnerships, the first of which was formed in 1969. Mr. Gelfand was also the founder, and together with his wife, Beverly J. Gelfand, were the principal shareholders of De Anza Group, Inc. which was sold August 18, 1994. Mr. Gelfand served as its Chairman of the Board of Directors until its sale. From 1986 to 1990, Mr. Gelfand -11- was also its Chief Executive Officer. Mr. Gelfand served as the Chairman of the Board of Directors of De Anza Corporation since its inception. He is a member of the Bar of the State of California and was engaged in the private practice of law from 1956 through 1977 and from 1970 until 1975, Mr. Gelfand was a partner in the predecessor to the firm of Benjamin and Susman, a Law Corporation (and thereafter was counsel to that firm until 1977), which predecessor law firm performed legal services for all but one of the affiliated partnerships. Mr. Gelfand is married to Beverly J. Gelfand, who served as a director of De Anza Group, Inc. until its sale, and is the father of Michael D. Gelfand, Director, President, Chief Financial Officer and Treasurer of De Anza Corporation. David G. Licht has been an attorney practicing in California since 1950, and is the senior member of Licht & Licht, a Professional Corporation, specializing in business law. He became a director of De Anza Group, Inc. in April 1980 and served until its sale. He has served as a Director of De Anza Corporation since its inception. He also served as the Secretary of De Anza Group, Inc. from April 1980 until February 1981. DZA Equities - XII, Ltd. ("Equities") is a California limited partnership which was formed in 1980 and whose general partner is Herbert M. Gelfand and whose limited partners are certain current and former officers and employees of De Anza Group, Inc. or De Anza Corporation or its affiliates. As a General Partner of the Partnership, Equities shares in the Partnership's cash distributions to General Partners and the allocation of profits and losses of the Partnership. Michael D. Gelfand is a director, President, Chief Financial Officer and Treasurer of De Anza Corporation and is President and sole shareholder of Terra Vista Management, Inc., a real estate management company that currently manages Warner Oaks and properties owned by other affiliated partnerships. Mr. Gelfand joined De Anza Group, Inc. in 1978 and is the son of Herbert M. Gelfand and Beverly J. Gelfand. He received a B.S. degree from Claremont Men's College in 1977. Mr. Gelfand is a previous member of the Board of Directors of the National Campground Owner's Association, and is a licensed NASD General Securities Principal. Sheila M. Schrank became Vice President - Controller of De Anza Corporation in October 1990. Prior to that, Ms. Schrank served as Assistant Vice President from 1983-1990, after having served as Assistant Controller since 1982. From 1976 to June 1982, she served in various accounting and data processing functions at De Anza Accounting Corporation, a former affiliate of the Operating General Partner. (b) Independent Committee. --------------------- The Partnership created an independent committee (the "Independent Committee") to review and evaluate certain "Interested Partner" and "Fundamental" transactions. These transactions are defined in the Partnership Agreement, which is incorporated herein by reference, and are to be reviewed prior to the expenditure of significant sums in connection with the pursuit of any such transactions. The -12- Independent Committee was created pursuant to an amendment to the Partnership Agreement which was adopted at the May 31, 1990 Special Meeting of the Limited Partners. The members of the Independent Committee are Frederick M. Nicholas, Arthur W. Schmutz and Ira Yellin. The appointment of these individuals to the Independent Committee was approved and ratified by vote of the Limited Partners at the May 31, 1990 Special Meeting of the Limited Partners. None of the members of the Independent Committee has had any prior dealings or affiliation with the Partnership or the General Partners. Frederick M. Nicholas, age 75, is President and the principal shareholder of The Hapsmith Company since it was formed. The Hapsmith Company specialized in commercial real estate development. Mr. Nicholas attended the University of Southern California, where he received an AB degree in 1947 and a JD degree in 1952. Mr. Nicholas was the Chairman of the Board of Trustees for the Museum of Contemporary Art, Los Angeles, California. Arthur W. Schmutz, age 74, has been a partner at Gibson, Dunn & Crutcher, a law firm, from 1960 to 1986 and an advisory partner at the same law firm from 1987 to the present. Mr. Schmutz has been practicing law in California since 1953 and his areas of specialty include securities, real estate, corporate and general commercial law. He received his AB degree from Johns Hopkins University in 1949 and an LLB degree from Harvard Law School in 1952. Ira Yellin, age 56, served as Executive Vice President of The Hapsmith Company from 1975 to 1985. From 1985 to 1997, he was the President and principal shareholder of The Yellin Company, which is engaged in general real estate investment, development and management. Currently, Mr. Yellin is Senior Vice President of Catellus Development Corp. Mr. Yellin received an AB degree from Princeton University in 1962. He also received an LLB degree from Harvard Law School in 1965 and an LLM degree from the University of California, Berkeley, in 1966. Based upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the Partnership, no person failed to timely file a report required by Section 16(a) of the Securities Exchange Act of 1934. ITEM 11. EXECUTIVE COMPENSATION. ----------------------- The Partnership does not have directors, a chief executive officer or any other executive officers. None of the General Partners of the Partnership received compensation (including distributions) exceeding $100,000 each from the Partnership during the years ended December 31, 1996, 1995 and 1994. There was no compensation (including distributions) paid by the Partnership to the Operating General Partner's President. None of the four most highly compensated officers of the Operating General Partner received reimbursement from the Partnership exceeding $100,000 each during the years ended December 31, 1996, 1995 and 1994. -13- Information contained in Item 13 of this Annual Report on Form 10-K is incorporated herein by reference. COMPENSATION OF DIRECTORS. The Partnership does not have directors. De Anza Corporation, the Operating General Partner, has directors, none of whom received compensation for the year ended December 31, 1995, from the Partnership. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. There is no compensation committee for the Partnership or the Operating General Partner. The President of the Operating General Partner participates in deliberations regarding executive officer compensation. Payments of compensation by the Partnership are governed by the Partnership Agreement and described in the Prospectus under the heading "Compensation and Fees of General Partners", page 12, which is incorporated herein by reference. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS. In the event a General Partner (other than the Operating General Partner) withdraws as a General Partner of the Partnership, such individual may either (i) upon payment of $1,000 to the Partnership, continue as a Limited Partner (but without the right to vote as a Limited Partner), and thereafter receive all profits, losses and cash distributions to which he would have been entitled as a General Partner, or (ii) sell his interest to the Partnership or the remaining General Partners at a price and on such terms agreed upon by the withdrawing General Partner and De Anza Corporation, the Partnership's Operating General Partner. In the event the withdrawing General Partner elects to sell his interest in the Partnership, he must first offer to sell such interest to the Partnership. If such offer is not accepted by a majority in interest of the Partnership's Limited Partners within 30 days after the Partnership's receipt of the notice of withdrawal, then the withdrawing General Partner shall offer his interest for sale to the remaining General Partners, who shall have the right to accept such offer for a period of 30 days. In the event a General Partner is removed as a General Partner by vote of a majority in interest of the Limited Partners, such General Partner shall automatically become a Limited Partner and if the vote of a majority in interest of the Limited Partners so requires, sell his interest to the Limited Partners who shall purchase such interest on behalf of the Partnership. If a removed General Partner is required by the Limited Partners to sell his interest in the Partnership, the amount to be paid for such interest shall be computed as of the date of the consummation of the purchase and in accordance with Section 15 of the Partnership's Partnership Agreement, which is incorporated herein by reference. -14- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. -------------------------------------------------------------- (a) Security Ownership of Certain Beneficial Owners. -----------------------------------------------
Amount & Nature of Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class - -------------- ------------------------ -------------------- ---------------- Limited Partnership Interests: Moraga Gold, LLC MacKenzie Patterson 4,559 UNITS/1/ 20.1%/1/ 1640 School Street, #100 DIRECT Moraga, CA 94556
(b) Security Ownership of Management. --------------------------------
Amount & Nature of Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class - -------------- ------------------------ -------------------- ---------------- General Partner Interests: Herbert M. Gelfand 37.60% 37.60% TTEE DZA Equities - XII, Ltd. 10.00% 10.00% DIRECT David G. Licht 2.00% 2.00% DIRECT De Anza Corporation .40% .40% DIRECT Economic Assignment of General Partner Interest: DME, Ltd. 39.6% 39.6% DIRECT Gelfand Family Trust 0.4% 0.4% TTEE ------ ------ All General Partners and directors/key executive officers of De Anza Corporation as a group (7): 90.00%/2/ 90.00%/2/ ====== ======
- ------------------------- /1/ Moraga Gold, LLC, and its affiliates, reported in Schedule 14D-1, dated February 7, 1997, that it is the beneficial owner of 4,559 Units. /2/ Beneficial Ownership excludes the assignment by a Beneficial Owner of any economic interests to others; however, it does include the economic interest if the Beneficial Owner is the assignee. -15-
Amount & Nature of Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class - -------------- ------------------------ -------------------- ---------------- Limited Partnership Interests: Herbert M. Gelfand 2.5 UNITS * BY SPOUSE --------- All General Partners and directors/key executive officers of De Anza Corporation as a group (7): 2.5 UNITS * ========= * Less than 1%
(c) Changes in Control. ------------------ None. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- For the year ended December 31, 1996, Terra Vista Management, Inc., or an affiliate of the Operating General Partner was not paid management fees but was reimbursed $85,138 for the cost of goods and services provided that were necessary for the operation of the Partnership and its Properties. A portion of the foregoing fees were for compensation to executives as set forth in Item 11 above. Were the management fees not subordinated to the distribution of the limited partners' Priority Return, approximately $115,418 would have been paid. See Item 8, Note 6 to the Financial Statements for discussion of Terra Vista Management, Inc.'s affiliation with the Partnership and actual transaction amounts which is incorporated herein by reference. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. --------------------------------------------------------------- (a) 1. Index to Financial Statements for the years ended December 31, 1996, 1995, and 1994 that are filed as part of this report: -16-
PAGE ---- Independent Auditor's Report............................................ 23 Balance Sheets, December 31, 1996 and 1995.............................. 24 Statements of Operations for the years ended December 31, 1996, 1995 and 1994......................................................... 26 Statements of Changes in Partners' Capital (Deficit) for the period January 1, 1994 to December 31, 1996........................... 27 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994......................................................... 28 Notes to Financial Statements........................................... 30 Schedules of Projects' Operations for the years ended December 31, 1996, 1995 and 1994...................................... 43 Schedule of Distributable Income, Partners' Distributions and Reserves for the years ended December 31, 1996, 1995 and 1994......... 46
2. All Schedules have been omitted since they are not required, not applicable or the information is included in the Financial Statements or Notes thereto. 3. The following index sets forth the exhibits required to be filed by Item 601 of Regulation S-K: EXHIBIT NO. PAGE - ----------- ---- 3.1 Second Amended and Restated Certificate and Agreement of Limited Partnership effective as of June 14, 1990. (See Exhibit 3.1 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990, incorporated herein by reference.) 10.1 Management Agreement between De Anza Assets, Inc. and the Partnership respecting San Luis Bay dated June 25, 1991. (See Exhibit 10.6 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1992, incorporated herein by reference.) -17- EXHIBIT NO. PAGE - ----------- ---- 10.2 Balloon Promissory Note in the amount of $4,300,000; Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing; and Security Agreement dated November 8, 1993. (See Exhibit 10.8 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993, incorporated herein by reference.) 10.3 Amended Acquisition Agreement and Joint Escrow Instructions dated May 9, 1994 by and between De Anza Properties-XII, Ltd. and MHC Operating Limited Partnership respecting The Mark Mobile Home Park, as executed. (See Exhibit 10.8 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) 10.4 Consent Agreement dated August 18, 1994, between the Partnership and De Anza Assets, Inc. ("Assets ") whereby Assets withdrew as the property manager of San Luis Bay Mobile Estates and was replaced by Terra Vista Management, Inc. (See Exhibit 10.10 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) 10.5 General Reserve Trust Agreement dated August 1, 1994 between the Partnership, the Herbert M. and Beverly J. Gelfand Family Trust and Herbert M. Gelfand as trustee. (See Exhibit 10.11 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) 10.6 Independent Committee Trust Agreement dated August 1, 1994 between the Partnership and Citicorp Trust N.A. as trustee. (See Exhibit 10.12 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) 10.7 General Reserve Contribution Agreement dated August 1, 1994 between the Partnership, affiliated partnerships, the Herbert M. and Beverly J. Gelfand Family Trust, and Herbert M. Gelfand as trustee. (See Exhibit 10.13 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) 10.8 Independent Committee Reserve Contribution Agreement dated August 1, 1994 between the Partnership, affiliated partnerships, and Citicorp Trust N.A. as trustee. (See Exhibit 10.14 in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 incorporated herein by reference.) -18- EXHIBIT NO. PAGE - ----------- ---- 10.9 Warner Oaks/Terra Vista Management Agreement dated August 18, 1994. (See Exhibit 10.1 in the Partnership's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 incorporated herein by reference.) (b) Reports on Form 8-K. None. (c) The information set forth in Item 14(a) (3) of this Annual Report on Form 10-K is incorporated herein by reference. (d) All information required by Regulation S-X will be furnished by the Partnership to its partners in its annual report. Therefore, this Item is not applicable. -19- SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) 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. (a California limited partnership) By DE ANZA CORPORATION (a California corporation) Operating General Partner By /s/ Michael D. Gelfand ---------------------- Michael D. Gelfand President and Chief Financial Officer Date: March 26, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Herbert M. Gelfand ---------------------- Herbert M. Gelfand, Chairman of the Board Of Directors of De Anza Corporation, the Operating General Partner Date: March 26, 1997 By /s/ Michael D. Gelfand ---------------------- Michael D. Gelfand Director of De Anza Corporation, the Operating General Partner Date: March 26, 1997 By /s/ David Licht --------------- David Licht Director of De Anza Corporation, the Operating General Partner Date: March 26, 1997 -20- DE ANZA PROPERTIES - XII, LTD. (A LIMITED PARTNERSHIP) AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES December 31, 1996 and 1995 De Anza Properties - XII, Ltd. (A Limited Partnership) December 31, 1996 and 1995 CONTENTS Report of Independent Auditors........................................... 1 Audited Financial Statements Balance Sheets........................................................... 2 Statements of Operations................................................. 4 Statement of Changes in Partners' Capital (Deficit)...................... 5 Statements of Cash Flows................................................. 6 Notes to Financial Statements............................................ 8 Other Financial Information Schedule of Projects' Operations......................................... 21 Schedule of Distributable Income, Partners' Distributions and Reserves... 24
Report of Independent Auditors To the Partners De Anza Properties - XII, Ltd. Beverly Hills, California We have audited the accompanying balance sheets of De Anza Properties - XII, Ltd., a Limited Partnership (the Partnership), as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' capital (deficit) and cash flows for the years ended December 31, 1996, 1995 and 1994. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As explained in Note 3 to the financial statements, the Partnership sold one of its properties on August 18, 1994. The assets and operations of the property sold represented a significant portion of the Partnership's total assets and results of operations. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years ended December 31, 1996, 1995 and 1994, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary Schedules I and II are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ERNST & YOUNG, LLP January 29, 1997 Los Angeles, California De Anza Properties - XII, Ltd. (A Limited Partnership) Balance Sheets
DECEMBER 31, 1996 1995 ----------- ----------- ASSETS CASH AND CASH EQUIVALENTS, including restricted cash of $159,096 and $188,097 at December 31, 1996 and 1995, respectively (Notes 1 and 3) $ 631,598 $ 671,430 ACCOUNTS RECEIVABLE 7,923 8,346 PREPAID EXPENSES 39,545 43,115 ----------- ----------- 679,066 722,891 ----------- ----------- NOTES RECEIVABLE (Note 3) 301,958 476,985 ----------- ----------- PROPERTY AND EQUIPMENT (Notes 1, 3, 5, 8, 9 and 10) Land 1,184,605 1,184,605 Land improvements 3,437,005 3,234,282 Buildings and improvements 9,933,168 9,933,168 Furniture and equipment 469,216 440,317 ----------- ----------- 15,023,994 14,792,372 Less accumulated depreciation 7,180,893 6,540,758 ----------- ----------- 7,843,101 8,251,614 ----------- ----------- OTHER ASSETS Loan costs, less accumulated amortization of $20,008 and $13,519 at December 31, 1996 and 1995, respectively (Notes 1 and 5) 77,326 83,815 Other 4,420 5,136 ----------- ----------- 81,746 88,951 ----------- ----------- $ 8,905,871 $ 9,540,441 =========== ===========
See accompanying report of independent auditors and notes to financial statements. 2 De Anza Properties - XII, Ltd. (A Limited Partnership) Balance Sheets (Continued)
DECEMBER 31, 1996 1995 ----------- ----------- LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) ACCOUNTS PAYABLE AND ACCRUED EXPENSES, including $8,864 and $8,644 due to related parties at December 31, 1996 and 1995, respectively (Note 6) $ 92,710 $ 170,016 DEPOSITS AND ADVANCE RENTALS 49,182 53,641 UNRECOGNIZED GAIN (Note 3) 159,096 188,097 MANAGEMENT AND CONDOMINIUM CONVERSION FEES PAYABLE TO AFFILIATE OR RELATED PARTY (Note 6) 796,331 796,331 SECURED NOTE PAYABLE (Note 5) 4,222,320 4,261,943 ----------- ----------- 5,319,639 5,470,028 ----------- ----------- PARTNERS' CAPITAL (DEFICIT) General partners (1,648,564) (1,652,362) Limited partners, 22,719 units issued and outstanding 5,234,796 5,722,775 ----------- ----------- 3,586,232 4,070,413 ----------- ----------- $ 8,905,871 $ 9,540,441 =========== ===========
See accompanying report of independent auditors and notes to financial statements. 3 De Anza Properties - XII, Ltd. (A Limited Partnership) Statements of Operations
YEAR ENDED DECEMBER 31, 1996 1995 1994 ---------- ---------- ---------- INCOME Rent (Notes 4 and 8) $2,257,960 $2,241,482 $2,737,987 Interest and dividends 59,000 63,411 76,706 Other 46,323 39,970 64,546 Utilities - - 45,817 Gain (loss) on sale of property and equipment (Note 3) 29,001 42,000 (67,041) ---------- ---------- ---------- 2,392,284 2,386,863 2,858,015 ---------- ---------- ---------- EXPENSES Depreciation and amortization (Note 1) 646,624 647,027 806,028 Interest 315,356 318,184 412,823 Maintenance, repairs and supplies 242,248 244,538 261,280 Salaries, including $18,874, $21,018, and $33,081 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) 207,394 210,316 398,501 Utilities 178,828 179,183 275,941 Real estate taxes 155,422 135,357 199,515 Professional fees and services, including $60,850, $78,061, and $101,304 paid to related parties in 1996, 1995 and 1994, respectively (Note 6) 149,150 140,777 271,424 Other 85,305 90,000 313,015 Insurance 63,288 75,213 56,790 Payroll taxes and employee benefits 42,109 35,887 74,367 Loss on earthquake damage (Note 8) (73,259) - 156,496 Management fees accrued to related parties (Note 6) - 113,748 123,029 ---------- ---------- ---------- 2,012,465 2,190,230 3,349,209 ---------- ---------- ---------- NET INCOME (LOSS) $ 379,819 $ 196,633 $ (491,194) ========== ========== ========== NET INCOME (LOSS) GENERAL PARTNERS $ 3,798 $ 1,966 $ (73,679) ========== ========== ========== LIMITED PARTNERS $ 376,021 $ 194,667 $ (417,515) ========== ========== ========== INCOME (LOSS) PER 1% GENERAL PARTNER INTEREST (Note 7) $ 37.98 $ 19.66 $ (736.79) ========== ========== ========== INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT (Note 7) $ 16.55 $ 8.57 $ (18.38) ========== ========== ==========
See accompanying report of independent auditors and notes to financial statements. 4 De Anza Properties - XII, Ltd. (A Limited Partnership) Statements of Changes in Partners' Capital (Deficit) Years Ended December 31, 1996, 1995 and 1994
GENERAL LIMITED PARTNERS PARTNERS TOTAL (NOTE 2) (NOTE 2) ----------- ----------- ----------- BALANCE - January 1, 1994 $ 6,618,974 $(1,580,649) $ 8,199,623 DISTRIBUTIONS TO PARTNERS (Note 3) (1,487,000) - (1,487,000) NET LOSS - for the year ended December 31, 1994 (491,194) (73,679) (417,515) ----------- ----------- ----------- BALANCE - December 31, 1994 4,640,780 (1,654,328) 6,295,108 DISTRIBUTIONS TO PARTNERS (Note 3) (767,000) - (767,000) NET LOSS - 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 (Note 3) (864,000) - (864,000) NET INCOME - for the year ended December 31, 1996 379,819 3,798 376,021 ----------- ----------- ----------- BALANCE - December 31, 1996 $ 3,586,232 $(1,648,564) $ 5,234,796 =========== =========== ===========
See accompanying report of independent auditors and notes to financial statements. 5 De Anza Properties - XII, Ltd. (A Limited Partnership) Statements of Cash Flows
YEAR ENDED DECEMBER 31, 1996 1995 1994 ----------- ----------- ----------- OPERATING ACTIVITIES Gross rents received from real estate operations $ 2,297,147 $ 2,513,880 $ 2,844,909 Cash paid to suppliers and employees, including $85,138, $104,365, and $137,816 paid to related parties during 1996, 1995 and 1994, respectively (Note 6) (1,121,414) (1,377,593) (1,836,126) Interest paid (316,028) (316,426) (392,072) Interest and other income received 60,681 61,688 79,393 ----------- ----------- ----------- Net cash provided by operating activities 920,386 881,549 696,104 ----------- ----------- ----------- INVESTING ACTIVITIES Additions to property and equipment (231,622) (346,736) (835,059) Principal payments on notes receivable 175,027 11,041 101,144 Sales costs - (3,575) (187,142) Proceeds from sale of property and equipment - - 5,660,720 ----------- ----------- ----------- Net cash (used in) provided by investing activities (56,595) (339,270) 4,739,663 ----------- ----------- ----------- FINANCING ACTIVITIES Principal payments on secured note payable (39,623) (16,763) (4,080,568) Partner distributions (864,000) (767,000) (1,487,000) ----------- ----------- ----------- Net cash used in financing activities (903,623) (783,763) (5,567,568) ----------- ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (39,832) (241,484) (131,801) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 671,430 912,914 1,044,715 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 631,598 $ 671,430 $ 912,914 =========== =========== ===========
See accompanying report of independent auditors and notes to financial statements. 6 De Anza Properties - XII, Ltd. (A Limited Partnership) Statements of Cash Flows (Continued)
YEAR ENDED DECEMBER 31, 1996 1995 1994 --------- --------- --------- RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net income (loss) $ 379,819 $ 196,633 $(491,194) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 646,624 647,027 806,028 (Gain) loss on sale of property and equipment (29,001) (42,000) 67,041 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 423 245,711 (210,027) Decrease (increase) in prepaid expenses 3,570 2,490 (11,700) Decrease in mobile homes held for resale - - 80,271 Decrease in other assets 716 205 7,238 (Decrease) increase in accounts payable and accrued expenses (77,306) (265,840) 321,471 (Decrease) increase in deposits and advance rentals (4,459) (16,425) 3,955 Increase in management and condominium conversion fees payable to affiliate or related party - 113,748 123,021 --------- --------- --------- Net cash provided by operating activities $ 920,386 $ 881,549 $ 696,104 ========= ========= =========
NONCASH FINANCING ACTIVITY During the year ended December 31, 1994, the lender deferred two months of note payments on the Warner Oaks loan. The accrued and unpaid interest of $40,236 has been added to the principal balance (Note 5). See accompanying report of independent auditors and notes to financial statements. 7 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 generally ranging from one to three months. The Partnership considers all such items to be cash equivalents. Restricted cash at December 31, 1996 and 1995 is comprised of the cash reserves established in connection with the sale of certain property described in Note 3. The Partnership maintains some of its cash in bank deposit accounts which, at times, may exceed the federally insured limits. No losses have been experienced to date related to such accounts. The Partnership places its cash and cash equivalents with quality financial institutions and believes it is not exposed to any significant concentrations of credit risk on cash and cash equivalents. PROPERTY AND EQUIPMENT In 1996, the Partnership adopted Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The adoption of Statement No. 121 had no effect on the Partnership's financial position or results of operations. Property and equipment are stated at cost at December 31, 1995. Depreciation is computed using both the straight-line and declining-balance methods, based on estimated useful lives as follows:
Land improvements 10 - 15 Buildings and improvements 25 - 30 Furniture 3 - 5 Mobile homes 5
Maintenance and repairs are expensed as incurred. See accompanying report of independent auditors. 8 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LOAN COSTS The costs incurred in obtaining financing are capitalized and amortized over the terms of the respective loans. The loan costs pertaining to the loan secured by the Mark were written off upon the sale of the property (see Note 3). FINANCIAL INSTRUMENTS The carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable and accounts payable at December 31, 1996, approximates fair value due to the short maturity of these instruments. The carrying value of the note payable approximates fair value at December 31, 1996, based on the current borrowing rates for similar obligations. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at December 31, 1996 and 1995 and revenues and expenses for the years ended December 31, 1996, 1995 and 1994. Actual results could differ from those estimates. See accompanying report of independent auditors. 9 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES Since the Partnership's income or loss is allocated to the partners and not the Partnership, there is no provision or benefit for income taxes reflected in the accompanying financial statements. The amount of income (loss) for federal tax purposes for the years ended December 31, 1996, 1995 and 1994 was $231,500, $3,588, and $(432,179), respectively. The income (loss) for federal tax purposes was calculated as follows:
1996 1995 1994 --------- --------- --------- Net income (loss) per financial statements $ 379,819 $ 196,633 $(491,194) Tax basis depreciation in excess of financial statement depreciation (119,268) (151,272) (304,452) Financial statement basis in excess of tax basis of property sold - 876,990 Capitalized costs for book purposes - (445,000) Deferred income (29,001) (42,000) (768) Other - 227 (67,755) --------- --------- --------- Income (loss) for federal tax purposes $ 231,550 $ 3,588 $(432,179) ========= ========= =========
See accompanying report of independent auditors. 10 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES (CONTINUED) Partners' capital, as reflected in the financial statements, differs from the amount reflected in the Partnership's federal tax return for the years ended December 31, 1996, 1995 and 1994. Partners' capital is reconciled as follows:
1996 1995 1994 ----------- ----------- ----------- Partners' capital per financial statements $ 3,586,232 $ 4,070,413 $ 4,640,780 Syndication costs 3,378,563 3,378,563 3,378,563 Accumulated depreciation difference (7,163,079) (7,043,811) (6,892,539) Purchase price adjustment 2,273,774 2,273,774 2,273,774 Aggregate of differences described in the preceding reconciliation (148,269) (193,045) 59,015 Accumulated amortization - - (1,081) Other 205,297 279,074 70,095 ----------- ----------- ----------- Partners' capital per federal tax return $ 2,132,518 $ 2,764,968 $ 3,528,607 =========== =========== ===========
2. PARTNERSHIP AGREEMENT The Partnership was formed on December 2, 1980 to acquire, develop and operate income-producing residential real properties. The Partnership owns and operates Warner Oaks Apartments, a 227-unit apartment complex in Woodland Hills, California. The Partnership owned and operated two mobile home communities: San Luis Bay Mobile Estates, a 162-space community in Avila Beach, California, and Mark Mobile Home Park (the Mark), a 411-space community in Mesa, Arizona. Prior to 1994, management converted the San Luis Bay Mobile Estates to a common- interest subdivision of the type referred to as a condominium and sold most of the homesites by the end of 1994 (see Note 3). The Mark was sold in 1994 (see Note 3). See accompanying report of independent auditors. 11 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 2. PARTNERSHIP AGREEMENT (CONTINUED) The partnership agreement provides that distributable cash, as defined, will be distributed to the limited partners, up to a sum equivalent to 6% per annum of their adjusted capital contributions, as defined therein, through November 20, 1983, and 7% per annum thereafter. Cash is then distributed to the general partners, up to a sum equivalent to 2% per annum of the adjusted capital contributions of the limited partners, through November 20, 1983, and 2-1/3% per annum thereafter. Any additional cash is distributed 75% to the limited partners and 25% to the general partners. Net income is allocated in the same proportion as cash distributions; however, the general partners receive a minimum 1% allocation. If no distributions are made, net income is allocated 85% to the limited partners and 15% to the general partners. Losses are allocated 85% to the limited partners and 15% to the general partners. 3. SALE OF PROPERTY AND EQUIPMENT SAN LUIS BAY 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 installments, including interest at 10%, based on a loan amortization schedule of 30 years, with a balloon payment of unpaid principal and interest due in 1998. Those residents who purchased their homesites for cash received a 10% discount off their purchase price. At December 31, 1996 and 1995, respectively, the outstanding amounts due totaled $301,958 and $476,985. The Partnership sold 158 homesites prior to 1994. In 1994, it sold two sites for $104,990. The remaining two unsold units are leased to tenants. The Partnership released reserves from San Luis Bay sales and distributed $135,000 and $370,540 to the limited partners in 1996 and 1994, respectively. These distributions represent a return of original capital. See accompanying report of independent auditors. 12 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 3. SALE OF PROPERTY AND EQUIPMENT (CONTINUED) THE MARK In 1994, the Partnership entered into negotiations through De Anza Group, Inc. (DAG), the former parent company of its operating general partner, for the sale of the Mark. On January 19, 1994, the Partnership entered into an Acquisition Agreement to sell the Mark to MHC Operating Limited Partnership (MHC). The sale was part of an overall transaction for the sale of the related management business of DAG and other mobile home communities affiliated with DAG. The sale closed escrow on August 18, 1994. 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. Excess proceeds of $1,116,460 were distributed to the partners as a return of capital on September 16, 1994, after repayment of debt of $3,977,437, sales and closing costs of $210,519 and establishment of 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 Partnership has been charged with certain costs for the transaction, some of which were based upon an allocation of costs from the overall transaction with MHC. Such transaction costs have been capitalized to the properties and deducted in the determination of net gain on the sale of the Partnership's property and equipment. Transaction and closing costs charged to the Partnership in 1994 totaled $210,519. The MHC Reserve was required by the Amended Acquisition Agreement. The General Reserve and Independent Committee Reserve were established to fund contingent liabilities that may arise out of the MHC transaction. During 1996 and 1995, $29,001 of the Independent Committee Reserve and the $42,000 MHC Reserve, respectively, were released and distributed to the limited partners as a return of original capital. See accompanying report of independent auditors. 13 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 3. SALE OF PROPERTY AND EQUIPMENT (CONTINUED) THE MARK (CONTINUED) 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. During the years ended December 31, 1996 and 1995, the Partnership recognized as income $29,001 attributable to the Independent Committee Reserve released and $42,000 attributable to the MHC Reserve released, respectively. 4. TENANT LEASES Apartment units are leased for a period of one year or on a month-to-month basis, while the two remaining mobile home spaces are leased for less than two years. The Partnership accounts for all leases as operating leases. Rental revenue is reported ratably over the lease terms. The annual rents from noncancelable operating leases from tenants, as of December 31, 1996, are as follows:
Years Ending December 31, ------------ 1997 $ 224,442 1998 6,071 ------------ $ 230,513 ============
See accompanying report of independent auditors. 14 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 5. SECURED NOTE PAYABLE Secured note payable at December 31, 1996 and 1995 consisted of:
DECEMBER 31, 1996 1995 ---------- ---------- Note collateralized by a first trust deed, payable in monthly installments of $27,485, including interest until December 15, 1995 and $29,547 through December 15, 1996. Thereafter, the monthly payment changes annually on each December 15th. Interest floats at 2.5% over the Federal Home Loan Bank'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 December 31, 1996 and 1995 was 7.34% and 7.62%, respectively $4,222,320 $4,261,943 ========== ==========
Due to the Northridge earthquake on January 17, 1994, the lender agreed to a deferment of two months of note payments. The accrued and unpaid interest of $40,236 was added to the principal balance during 1994 (see Note 8). The annual maturities on the secured note payable for the years subsequent to December 31, 1996 are as follows:
Years Ending December 31, ------------ 1997 $ 51,805 1998 55,737 1999 59,969 2000 64,521 2001 69,418 Thereafter 3,920,870 ------------ $ 4,222,320 ============
See accompanying report of independent auditors. 15 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 6. 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, 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. Management fees of $83,277, were accrued but not paid to De Anza Assets, Inc. for the year ended December 31, 1994. At December 31, 1996 and 1995, cumulative accrued fees of $565,022 have been subordinated and are included in management and condominium conversion fees payable to affiliate or related party. Shortly before the sale to MHC, 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 DAG, as discussed in Note 3, the property management of Warner Oaks and remaining spaces at San Luis Bay was assumed by Terra Vista Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael D. Gelfand, the son of Herbert M. Gelfand. Herbert M. Gelfand is the sole shareholder of the Operating General Partner and an individual general partner. Management fees of $113,748 were accrued but not paid to Terra Vista for the year ended December 31, 1995. Management fees in the amount of $114,386 were not accrued for the year ended December 31, 1996 because the Partnership has determined that it is not probable based on the anticipated cash flows to be generated from the disposition or the refinancing of the property and under the terms of the Partnership Agreement that the fees would be paid. At December 31, 1996 and 1995, cumulative accrued fees of $153,500, have been subordinated and are included in management and condominium conversion fees payable to affiliate or related party. The See accompanying report of independent auditors. 16 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 6. TRANSACTIONS WITH RELATED PARTIES (CONTINUED) Gelfand Family Trust has agreed to share equally any payment to be made to the Gelfand Family Trust for deferred management fees with Terra Vista until Terra Vista has been paid all outstanding deferred management fees. Pursuant to the partnership agreement, a condominium conversion fee equal to 1% of the sales price of the San Luis Bay homesites is due to DAG (see Notes 2 and 3). Payment of this fee has been deferred pursuant to the partnership agreement 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 at December 31, 1996 and 1995. Shortly before the sale to MHC, DAG assigned its right to receipt of this fee to the Gelfand Family Trust. In addition, DAG or a wholly owned subsidiary was paid $90,094 for the year ended December 31, 1994 and Terra Vista or an affiliate of the operating general partner was paid in the aggregate $85,138, $104,365 and $47,721 for the years ended December 31, 1996 and 1995, and for the period August 18, 1994 through December 31, 1994, respectively, for performing bookkeeping, legal, regional management, computer and investor relations services necessary for the operation of the Partnership and its properties. 7. INCOME (LOSS) PER 1% GENERAL PARTNER INTEREST AND LIMITED PARTNERSHIP UNIT Income (loss) per 1% general partner interest was computed based on the general partners' share of net income (loss) as reflected in the statement of changes in partners' capital (deficit). Income (loss) per limited partnership unit was computed based on the limited partners' share of income (loss) as reflected in the statement of changes in partners' capital (deficit) and the number of limited partnership units outstanding (22,719 units in each year). See accompanying report of independent auditors. 17 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 8. LOSS ON EARTHQUAKE DAMAGE On January 17, 1994, the Warner Oaks Apartment complex suffered property damage from an earthquake. The Partnership estimates total costs of $1,989,000 and received insurance proceeds of $1,414,000. A portion of the costs has been capitalized and the balance of $156,496, representing estimated noncapitalized costs, net of insurance proceeds, has been expensed at December 31, 1994. Additional insurance proceeds of $308,000 received for loss of income were included in rental income for the year ended December 31, 1995. The excess of the estimated accrued costs over the actual costs incurred by the Partnership totaling $73,259 is recorded as a reduction to operating expenses in 1996. As of December 31, 1996, all of the repairs have been completed. See accompanying report of independent auditors. 18 DE ANZA PROPERTIES - XII, LTD. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 9. SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
INITIAL COST TO PARTNERSHIP ----------------------------- BUILDINGS, IMPROVEMENTS, COSTS FURNITURE CAPITALIZED SALE OF AND SUBSEQUENT TO PROPERTY AND DESCRIPTION ENCUMBRANCES LAND EQUIPMENT ACQUISITION EQUIPMENT - --------------------------------------------------------------------------------------------------------- San Luis Bay Mobile Estates, mobile home community, Avila Beach, California - $ 722,945 $ 3,218,956 $ 272,310 $(4,160,988) Warner Oaks Apartments, apartment complex, Woodland Hills, California $4,222,320 1,168,747 9,962,170 3,839,854 - ------------------------------------------------------------------------ $4,222,320 $1,891,692 $13,181,126 $4,112,164 $(4,160,988) ========================================================================
GROSS AMOUNT CARRIED AT CLOSE OF PERIOD ENDED DECEMBER 31, 1996 ------------------------------------------ LIFE ON WHICH DEPRECIATION IN BUILDINGS, LATEST IMPROVEMENTS, STATEMENT OF FURNITURE OPERATIONS IS AND ACCUMULATED YEAR OF DATE OF COMPUTED DESCRIPTION LAND EQUIPMENT TOTAL DEPRECIATION CONSTRUCTION ACQUISITION (YEARS) - ----------------------------------------------------------------------------------------------------------------------------- San Luis Bay Mobile Estates, mobile home community, Avila Beach, California $ 9,442 $ 43,781 $ 53,223/1/ $ 24,614 1972 8/11/81 3 to 25 Warner Oaks Apartments, apartment complex, Woodland Hills, California 1,175,608 13,795,608 14,970,771/2/ 7,156,279 1979 2/09/82 5 to 30 ---------------------------------------------------- $1,184,605 $13,839,389 $15,023,994 $7,180,893 ====================================================
(1) Aggregate cost for federal income tax purposes is $53,223 (2) Aggregate cost for federal income tax purposes is $15,964,887 See accompanying report of independent auditors. 19 De Anza Properties - XII, Ltd. (A Limited Partnership) Notes to Financial Statements (Continued) For the Years Ended December 31, 1996, 1995 and 1994 10. RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
BUILDINGS, IMPROVEMENTS, FURNITURE LAND AND EQUIPMENT TOTAL ----------- ------------- ----------- REAL ESTATE Balance at January 1, 1994 $ 2,922,400 $17,878,479 $20,800,879 Additions during 1994 -- 839,516 839,516 Reductions due to sale of property and equipment during 1994 (1,737,795) (5,456,964) (7,194,759) ----------- ----------- ----------- Balance at December 31, 1994 1,184,605 13,261,031 14,445,636 Additions during 1995 -- 346,736 346,736 ----------- ----------- ----------- Balance at December 31, 1995 1,184,605 13,607,767 14,792,372 Additions during 1996 -- 231,622 231,622 ----------- ----------- ----------- Balance at December 31, 1996 $ 1,184,605 $13,839,389 $15,023,994 =========== =========== ===========
ACCUMULATED DEPRECIATION Balance at January 1, 1994 $ 7,210,949 Depreciation charged to expense during 1994 745,511 Reduction due to sale of property and equipment during 1994 (2,056,240) ----------- Balance at December 31, 1994 5,900,220 Depreciation charged to expense during 1995 640,538 ----------- Balance at December 31, 1995 6,540,758 Depreciation charged to expense during 1996 640,135 ----------- Balance at December 31, 1996 $ 7,180,893 ===========
See accompanying report of independent auditors. 20 SCHEDULE I Page 1 of 3 De Anza Properties - XII, Ltd. (A Limited Partnership) Schedule of Projects' Operations
YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------------------------------------------------ WARNER OAKS APARTMENTS DE ANZA PROPERTIES - XII, LTD. TOTAL ----------------------------------------------------------------------------------------------------- AMOUNT % OF INCOME AMOUNT % OF INCOME AMOUNT % OF INCOME ------------------------------------------------------------------------------------------------------ INCOME Rent (Notes 4 and 8) $ 2,245,805 98.34% $ 12,155 11.19% $ 2,257,960 94.38% Interest and dividends - - 59,000 54.31 59,000 2.47 Other 37,839 1.66 8,484 7.81 46,323 1.94 Gain on sale of property and equipment (Note 3) - - 29,001 26.69 29,001 1.21 ------------------------------------------------------------------------------------------------------ 2,283,644 100.00 108,640 100.00 2,392,284 100.00 ------------------------------------------------------------------------------------------------------ EXPENSES Depreciation and amortization (Note 1) 645,606 28.27 1,018 0.94 646,624 27.03 Interest 315,340 13.81 16 0.01 315,356 13.18 Maintenance, repairs and supplies 242,248 10.61 - - 242,248 10.13 Salaries, including $18,874 paid to related parties (Note 6) 190,194 8.33 17,200 15.83 207,394 8.67 Utilities 178,795 7.83 33 0.03 178,828 7.47 Real estate taxes 154,501 6.77 921 0.85 155,422 6.50 Professional fees and services, including $60,850 paid to related parties (Note 6) 70,993 3.11 78,157 71.94 149,150 6.23 Other 32,786 1.44 52,519 48.34 85,305 3.57 Insurance 62,648 2.74 640 0.59 63,288 2.65 Payroll taxes and employee benefits 42,109 1.84 - - 42,109 1.76 Loss on earthquake damage (Note 8) (73,259) (3.21) - - (73,259) (3.06) ------------------------------------------------------------------------------------------------------ 1,861,961 81.54 150,504 138.53 2,012,465 84.13 ------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) $ 421,683 18.46% $(41,864) (38.53)% $ 379,819 15.87% ======================================================================================================
See accompanying report of independent auditors and notes to financial statements. 21 SCHEDULE I Page 2 of 3 De Anza Properties - XII, Ltd. (A Limited Partnership) Schedule of Projects' Operations
YEAR ENDED DECEMBER 31, 1995 ------------------------------------------------------------------------------------------------------ SAN LUIS BAY WARNER OAKS DE ANZA MOBILE ESTATES APARTMENTS PROPERTIES - XII, LTD. TOTAL ------------------------------------------------------------------------------------------------------ % OF % OF % OF % OF AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME -------------------------------------------------------------------------------------------------- INCOME Rent (Notes 4 and 8) $12,050 100.00% $2,229,432 98.50% - - $2,241,482 93.91% Interest and dividends - - - - $ 63,411 56.94% 63,411 2.66 Gain on sale of property and - - - - 42,000 37.72 42,000 1.76 equipment (Note 3) Other - - 34,024 1.50 5,946 5.34 39,970 1.67 -------------------------------------------------------------------------------------------------- 12,050 100.00 2,263,456 100.00 111,357 100.00 2,386,863 100.00 -------------------------------------------------------------------------------------------------- EXPENSES Depreciation and amortization (Note 1) 1,071 8.89 645,956 28.54 - - 647,027 27.11 Interest 29 0.24 318,155 14.06 - - 318,184 13.33 Maintenance, repairs and supplies - - 244,538 10.80 - - 244,538 10.25 Salaries, including $21,018 paid to related parties (Note 6) - - 190,819 8.43 19,487 17.51 210,316 8.81 Utilities 18 0.15 179,096 7.91 69 0.06 179,183 7.51 Real estate taxes 1,274 10.57 134,083 5.92 - - 135,357 5.67 Professional fees and services, including $78,061 paid to related parties (Note 6) - - 74,823 3.31 65,954 59.23 140,777 5.90 Other 3,932 32.63 52,072 2.30 33,996 30.53 90,000 3.77 Insurance 493 4.09 74,720 3.30 - - 75,213 3.15 Payroll taxes and employee benefits - - 35,956 1.59 (69) (0.06) 35,887 1.50 Management fees accrued to related parties (Note 6) 315 2.61 113,433 5.01 - - 113,748 4.77 -------------------------------------------------------------------------------------------------- 7,132 59.18 2,063,651 91.17 119,447 107.27 2,190,230 91.77 -------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 4,918 40.82% $ 199,805 8.83% $ (8,090) (7.27%) $ 196,633 8.23% ==================================================================================================
See accompanying report of independent auditors and notes to financial statements. 22 SCHEDULE I Page 3 of 3 De Anza Properties - XII, Ltd. (A Limited Partnership) Schedule of Projects' Operations
FOR THE YEAR ENDED DECEMBER 31, 1994 ----------------------------------------------------------------------------------------------------- SAN LUIS BAY WARNER OAKS MARK MOBILE DE ANZA MOBILE ESTATES APARTMENTS HOME PARK PROPERTIES - XII, LTD. TOTAL ----------------------------------------------------------------------------------------------------- % OF % OF % OF % OF % OF AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME ------------------------------------------------------------------------------------------------------ INCOME Rent (Notes 4 and 8) $14,735 17.10% $2,227,352 97.60% $ 495,900 119.84% - - $2,737,987 95.80% Interest - - 3,021 0.13 167 0.04 $ 73,518 96.78% 76,706 2.68 Other - - 51,715 2.27 10,387 2.51 2,444 3.22 64,546 2.27 Utilities - - - - 45,817 11.07 - - 45,817 1.60 Gain (loss) on sale of property and equipment (Note 3) 71,426 82.90 - - (138,467) (33.46) - - (67,041) (2.35) ------------------------------------------------------------------------------- ----------- -------- 86,161 100.00 2,282,088 100.00 413,804 100.00 75,962 100.00 2,858,015 100.00 ------------------------------------------------------------------------------- ----------- -------- EXPENSES Depreciation and amortization (Note 1) 1,721 2.00 634,484 27.80 169,823 41.04 - - 806,028 28.20 Interest 5 0.01 253,261 11.10 159,557 38.56 - - 412,823 14.44 Maintenance, repairs and supplies - - 166,239 7.29 95,041 22.97 - - 261,280 9.14 Salaries, including $33,081 paid to related parties (Note 6) - - 211,020 9.25 155,007 37.46 32,474 42.75 398,501 13.94 Utilities 212 0.25 176,629 7.74 98,880 23.90 220 0.29 275,941 9.66 Real estate taxes 1,299 1.51 161,655 7.08 36,561 8.84 - - 199,515 6.98 Professional fees and services, including $101,304 paid to related parties (Note 6) 1,361 1.58 79,011 3.46 148,628 35.92 42,424 55.85 271,424 9.50 Other 5,618 6.52 29,505 1.29 252,863 61.11 25,029 32.95 313,015 10.95 Insurance 398 0.46 39,454 1.73 16,938 4.09 - - 56,790 1.99 Payroll taxes and employee benefits - - 43,768 1.92 30,599 7.40 - - 74,367 2.60 Loss on earthquake damage (Note 8) - - 156,496 6.85 - - - - 156,496 5.48 Management fees accrued to related parties (Note 6) 415 0.48 97,578 4.28 25,036 6.05 - - 123,029 4.31 ------------------------------------------------------------------------------- ----------- -------- 11,029 12.81 2,049,100 89.79 1,188,933 287.34 100,147 131.84 3,349,209 117.19 ------------------------------------------------------------------------------- ----------- -------- NET INCOME (LOSS) $75,132 87.19% $ 232,988 10.21% $ (775,129) (187.34)% $(24,185) (31.84)% $ (491,194) (17.19)% ============================================================================================ ========
See accompanying report of independent auditors and notes to financial statements. 23 Schedule II Page 1 of 2 De Anza Properties - XII, Ltd. (A Limited Partnership) Schedule of Distributable Income, Partners' Distributions and Reserves
YEAR ENDED DECEMBER 31, 1996 1995 1994 ----------- ----------- ------------ Net income (loss) $ 379,819 $ 196,633 $ (491,194) Add (deduct) adjustments per partnership agreement: Depreciation and amortization 646,624 647,027 806,028 (Gain) loss on sale of property and (29,001) (42,000) 67,041 equipment Debt amortization (39,623) (16,763) (91,790) Net change in accruals (75,874) 95,624 169,331 Release of prior years' reserves 3,611,149 3,455,628 2,996,212 ----------- ----------- ------------ Cash available for distribution(1) 4,493,094 4,336,149 3,455,628 Cash distributions to limited partners, up to 7% per annum of average adjusted capital contributions of $17,559,104, $17,601,655, and $18,739,386, in 1996, 1995 and 1994, respectively (700,000) (725,000) - ----------- ----------- ------------ Reserves from operations(2) $3,793,044 $3,611,149 $ 3,455,628 =========== =========== ============ Proceeds from sales of properties available for distribution or reserves.(3) $ 175,027 $ 11,041 $ 1,549,159 Use of reserves for earthquake repairs - - (664,000) Release of prior years' reserves 299,371 330,330 935,171 ----------- ----------- ------------ 474,398 341,371 1,820,330 Distributions to limited partners from sales proceeds (164,000) (42,000) (1,487,000) ----------- ----------- ------------ Reserves from sales of properties (2)(3)(4) $ 310,398 $ 299,371 $ 333,330 =========== =========== ============ Distributions to limited partners per original $1,000 investment: From operations: Amount $ 30.81 $ 31.91 - ----------- ----------- ------------ Percent (of adjusted capital) 3.99% 4.12% - =========== =========== ============ From sales: Amount $ 7.22 $ 1.85 $65.45 =========== =========== ============ Percent (of original investment) 0.72% 0.18% 6.55% =========== =========== ============
See accompanying report of independent auditors and notes to financial statements. 24 Schedule II Page 2 of 2 De Anza Properties - XII, Ltd. (A Limited Partnership) Schedule of Distributable Income, Partners' Distributions and Reserves (Continued) (1) Cash available for distribution represents amounts as defined by the partnership agreement. (2) The operating general partner has exercised its discretion in reserving these amounts for operations, additions to property and equipment, and future distribution. (3) Proceeds from sales of properties available for distribution or reserves represent actual cash payments less cash disbursements for expenses incurred in connection with the sale. In 1994, the Partnership sold two of the then remaining four spaces of San Luis Bay for $104,990 in cash. After paying closing costs of $3,532, the Partnership netted proceeds of $101,458. Additionally, the Partnership collected $101,144 in principal payments on the purchase money notes. Also in 1994, the Partnership sold the Mark for $5,404,419, plus an amount of $130,094 to fund certain reserves. After a repayment of debt of $3,977,437 and closing and sales costs of $210,519, the Partnership netted proceeds of $1,346,557. During 1994, the Partnership distributed proceeds of $1,116,460 and $370,540 from the sales of the Mark and San Luis Bay, respectively, to the limited partners. These distributions represent a return of original capital contributed and reduces the adjusted capital contributions as defined in the partnership agreement. In 1995, the Partnership collected $11,041 in principal payments on the purchase money notes. Additionally, the Partnership distributed $42,000 to the limited partners from the sale proceeds of the Mark upon release of the MHC Reserve. This amount represents a return of original capital contributed and reduces the adjusted capital contributions as defined in the Partnership agreement. In 1996, the Partnership collected $175,027 in principal payments on the purchase money notes. The Partnership distributed $135,000 of these San Luis Bay sale proceeds to the limited partners along with $29,000 from the sale proceeds of the Mark upon partial release of the Independent Committee Reserve. These distributions represent a return of original capital contributions as defined in the partnership agreement. (4) Included in the reserves from sales of properties are $159,096, $188,097 and $230,097 at December 31, 1996, 1995 and 1994, respectively, in specific reserves established to fund contingent liabilities that may arise from the MHC transaction. See accompanying report of independent auditors and notes to financial statements. 25 EX-27 2 FINANCIAL DATA SCHEDULE - ARTICLE V
5 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 631,598 0 309,881 0 0 679,066 15,023,994 7,180,893 8,905,871 193,697 4,222,320 0 0 0 3,586,232 8,905,871 2,257,960 2,392,284 0 1,050,485 646,624 0 315,356 379,819 0 379,819 0 0 0 379,819 16.55 16.55 EPS is per limited partnership unit.
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