-----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, EjLN2weX33TZkukdbiLIrJ2nXJmkg5Gno7BVGmyFeJVxmBEJO/FicsLck6ojD1/2 3DFHr2bEHkBvJVspRYuUoA== 0000929454-97-000041.txt : 19970815 0000929454-97-000041.hdr.sgml : 19970815 ACCESSION NUMBER: 0000929454-97-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OUTLOOK INCOME GROWTH FUND VIII CENTRAL INDEX KEY: 0000771998 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330104267 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14593 FILM NUMBER: 97661813 BUSINESS ADDRESS: STREET 1: 400 S EL CAMINO REAL STREET 2: STE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402-1708 BUSINESS PHONE: 4153439300 MAIL ADDRESS: STREET 1: 400 SOUTH EL CAMINO REAL STREET 2: SUITE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402-1708 FORMER COMPANY: FORMER CONFORMED NAME: AUGUST INCOME GROWTH FUND VIII DATE OF NAME CHANGE: 19890814 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-14593 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) California 33-0104267 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 South El Camino Real, Suite 1100 San Mateo, California 94402-1708 (Address of principal executive offices) (Zip Code) (415) 343-9300 (Registrant's telephone number) 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__ Total number of units outstanding as of June 30, 1997: 34,992 Page 1 of 21 PART I. FINANCIAL INFORMATION Item 1. Financial Statements OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Balance Sheets (in thousands, except units outstanding) (Unaudited)
June 30, 1997 December 31, (in Liquidation) 1996 Assets Investments in real estate: Rental property, net of accumulated depreciation of $2,808 at December 31, 1996 $ --- $ 6,301 Rental property held pending foreclosure 6,173 --- Rental property held for sale --- 9,490 ---------- ----------- Total real estate investments 6,173 15,791 Cash and cash equivalents 851 773 Accounts receivable, net 68 79 Investment in and advances to unconsolidated joint venture 498 --- Deferred financing costs and other fees, net of accumulated amortization of $122 and $470 at June 30, 1997 and December 31, 1996, respectively 26 122 Other assets 7 63 ---------- ----------- Total assets $ 7,623 $ 16,828 ========== =========== Liabilities and Partners' Equity (Deficit) Liabilities: Notes payable $ 6,446 $ 14,773 Accounts payable and accrued expenses 69 127 Interest payable 50 8 Other liabilities 25 58 ---------- ----------- Total liabilities 6,590 14,966 ---------- ------------ Partners' equity (deficit): General Partner (179) (162) Limited Partners, 34,992 limited partnership units outstanding 1,212 2,024 ---------- ------------ Total partners' equity 1,033 1,862 ---------- ------------ Total liabilities and partners' equity $ 7,623 $ 16,828 ========== ============
See accompanying notes to financial statements. Page 2 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Statements of Operations (in thousands, except units outstanding and per unit amounts) (Unaudited)
Three months ended Six months ended June 30, June 30, (in Liquidation) (in Liquidation) 1997 1996 1997 1996 Revenues: Rental income $ 558 $ 611 $ 1,128 $ 1,216 Interest and other income 5 19 13 40 ---------- ---------- --------- ---------- Total revenues 563 630 1,141 1,256 ---------- ---------- --------- ---------- Expenses: Operating, including $69 and $70 paid to affiliates in the six months ended June 30, 1997 and 1996, respectively 207 184 385 347 Loss on sale of property 599 --- 599 --- Interest 299 363 710 722 Depreciation and amortization 71 100 143 253 General and administrative, including $214 and $235 paid to affiliates in the six months ended June 30, 1997 and 1996, respectively 126 146 248 306 ---------- ---------- -------- -------- Total expenses 1,302 793 2,085 1,628 ---------- ---------- ---------- ---------- Loss from operations and disposition of investment in real estate (739) (163) (944) (372) ---------- ---------- ---------- ----------- Income (loss) in unconsolidated joint venture 115 (86) 115 (164) ----------- ---------- ----------- ----------- Net loss $ (624) $ (249) $ (829) $ (536) =========== ========== =========== =========== Net loss per limited partnership current unit $ (49.68) $ (19.84) $ (66.03) $ (42.72) ========== ========== =========== =========== Number of limited partnership current units outstanding during the period used to compute net loss per limited partnership current unit 12,297 12,297 12,297 12,297 =========== ========== =========== ===========
See accompanying notes to financial statements. Page 3 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Statements of Partners' Equity(Deficit) For the six months ended June 30, 1997 (in Liquidation) and 1996 (in thousands) (Unaudited)
Total Total General Limited Partners Limited Partners' Partner Current Deferred Growth Partners Equity Balance at December 31, 1996 $ (162) $ 2,024 $ --- $ --- $ 2,024 $ 1,862 Net loss (17) (812) --- --- (812) (829) ----------- ---------- ----------- ---------- ---------- -------- Balance at June 30, 1997 (in Liquidation) $ (179) $ 1,212 $ --- $ --- $ 1,212 $ 1,033 ========== ========== =========== ========== ========== ======== Balance at December 31, 1995 $ (128) $ 3,714 $ --- $ --- $ 3,714 $ 3,586 Net loss (11) (525) --- --- (525) (536) ---------- ---------- ----------- ---------- ---------- --------- Balance at June 30, 1996 $ (139) $ 3,189 $ --- $ --- $ 3,189 $ 3,050 ========== ========== =========== ========== ========== =========
See accompanying notes to financial statements. Page 4 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Statements of Cash Flows (in thousands) (Unaudited)
Six months ended June 30, 1997 (in Liquidation) 1996 -------------- ----------- Cash flows from operating activities: Net loss $ (829) $ (536) Adjustments to reconcile net loss to net cash used for operating activities: Loss on sale of property 599 --- (Income) loss in unconsolidated joint venture (115) 164 Depreciation and amortization 143 253 Amortization of loan fees, included in interest expense 41 9 Changes in certain assets and liabilities: Accounts receivable 11 (47) Deferred financing costs and other fees (112) (22) Other assets 56 (7) Accounts payable and accrued expenses (58) (66) Interest payable 114 59 Other liabilities (33) (3) --------- --------- Net cash used for operating activities (183) (196) --------- --------- Cash flows from investing activities: Payments received on notes receivable from unconsolidated joint venture --- 180 Increase in notes receivable from unconsolidated joint venture (383) (375) -------- -------- Net cash used for investing activities (383) (195) -------- -------- Cash flows from financing activities: Net proceeds from sale of property 9,054 --- Net loan proceeds 140 --- Notes payable principal payments (8,550) (81) -------- -------- Net cash provided by (used for) financing activities 644 (81) -------- -------- Net increase (decrease) in cash and cash equivalents 78 (472) Cash and cash equivalents at beginning of period 773 1,816 -------- -------- Cash and cash equivalents at end of period $ 851 $ 1,344 ======== ======== - continued -
Page 5 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Statements of Cash Flows - continued - (in thousands) (Unaudited)
Six months ended June 30, 1997 (in Liquidation) 1996 --------------- ------------- Supplemental disclosure of cash flow information: Cash paid for interest $ 627 $ 655 ========== ========== Supplemental disclosure of refinancing activity: New financing $ 8,500 $ --- Original financing paid off in escrow (8,277) --- Increase in other assets and loan fees (11) --- Accrued interest expense paid through escrow (72) --- ---------- ---------- Net loan proceeds $ 140 $ --- ========== ========== Supplemental disclosure of property sale: Sales price $ 9,625 $ --- Sales commissions and fees (550) --- Holdback funds for tenant improvements (21) --- ---------- ---------- Net proceeds from sale of property $ 9,054 $ --- ========== ========== Loss on sale of property: Sales price, net of costs of sale $ 9,075 $ --- Less: Basis in investment in real estate (9,511) --- Less: Unamortized deferred financing costs and other fees (163) --- ---------- ---------- Loss on sale of property $ (599) $ --- ========== ==========
See accompanying notes to financialstatements. Page 6 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Note 1. THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING POLICIES In the opinion of Glenborough Corporation, the managing general partner, the accompanying unaudited financial statements contain all adjustments (consisting of only normal accruals) necessary to present fairly the financial position of Outlook Income/Growth Fund VIII, A California Limited Partnership (the "Partnership"), as of June 30, 1997 and December 31, 1996, and the related statements of operations, for the three and six months ended June 30, 1997 and 1996, and the changes in partners' equity (deficit) and cash flows for the six months ended June 30, 1997 and 1996. As of June 30, 1997, the Partnership owned the following two real estate assets: (i) San Mar Plaza, a shopping center located in San Marcos, Texas; and (ii) a 50% general partner interest in Huntington Breakers Apartments, Limited. On May 15, 1997, the loan secured by San Mar Plaza matured. Due to unsuccessful negotiations with the lender to restructure the terms of the debt and insufficient equity in the property, the Partnership did not pay off the loan upon maturity and, as a result, defaulted on the terms of the loan. On July 1, 1997, title to the San Mar Plaza property was transferred to the lender pursuant to an agreement between the Partnership and the lender. On July 14, 1997, Huntington Breakers Apartments, Limited entered into a purchase and sale agreement with an unaffiliated third party for the sale of its sole real estate asset, the Huntington Breakers Apartment complex. Upon completion of the above-noted transactions and the satisfaction of any remaining liabilities, the Partnership plans to disburse any remaining cash to the partners and liquidate the Partnership. The Partnership has three types of units: (i) Current Units (12,297 units currently outstanding); (ii) Deferred Units (8,424 units currently outstanding); and (iii) Growth Units (14,271 units currently outstanding). Each type of unit was designed to provide a different type of return to the investor. Basis of Accounting - The accompanying financial statements as of and for the six months ended June 30, 1997 are presented on a liquidation basis of accounting, as the Partnership intends to liquidate upon completion of the sale of the Huntington Breakers Apartment complex. The accounting during the period of liquidation includes adjustments, where appropriate, of individual assets and liabilities to their estimated net-realizable value. No write down was necessary as of June 30, 1997, as assets are stated at or below their expected net-realizable values. Reclassifications - Certain 1996 balances have been reclassified to conform to the current year presentation. Page 7 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Note 2. REFERENCE TO 1996 AUDITED FINANCIAL STATEMENTS These unaudited financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 1996 audited financial statements. Note 3. TRANSACTIONS WITH AFFILIATES In accordance with the Limited Partnership Agreement, the Partnership pays the General Partner, Glenborough Corporation ("Glenborough"), compensation for services provided to the Partnership. Glenborough provides property management services and was compensated for such services as follows: Six months ended June 30, 1997 1996 Management fees $ 58,000 $ 58,000 Property management salaries 11,000 12,000 ------------- ------------- $ 69,000 $ 70,000 The Partnership also reimbursed Glenborough for expenses incurred for services provided to the Partnership such as accounting, investor services, data processing, duplicating and office supplies, legal and administrative services, and the actual costs of goods and materials used on behalf of the Partnership. Glenborough was reimbursed $214,000 and $235,000 for such expenses during the six months ended June 30, 1997 and 1996, respectively. These amounts are included in general and administrative expenses. As of June 30, 1997, GPA Ltd., a partnership with the same General Partner as the Partnership, has purchased 2,766 limited partnership units (a 7.9% interest) from two unaffiliated limited partners. Note 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE The Partnership holds an undivided 50% general partner interest in Huntington Breakers Apartments, Limited (the Breakers Partnership). The Breakers Partnership owns a 342-unit apartment complex located in Huntington Beach, California which was completed in March 1986. Page 8 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Net losses from operations are generally allocated ninety-nine percent (99%) to the Partnership and one percent (1%) to the other partners in proportion to the number of units held by each of the other partners. Net income from operations will be allocated in the same amounts and in the same ratios as any distributions made to the partners, and then in the same amounts and in the same ratios that previous allocations of net losses from operations were made to the partners. Thereafter, allocations will be made to the partners in proportion to the number of units held by each partner. At December 31, 1996, the Partnership's share of losses from the Breakers Partnership exceeded its investments in and advances to the Breakers Partnership by approximately $46,000. These excess losses were not recognized by the Partnership as it had no obligations to fund such losses. The Partnership's share of net income from the Breakers Partnership for the six months ended June 30, 1997 exceeded the unrecognized losses as of December 31, 1996. Therefore, the 1997 income from the Breakers Partnership has been netted with the deferred losses as of December 31, 1996, and the remaining income of $115,000 is reflected in the accompanying statement of operations for the three and six months ended June 30, 1997. During the quarter ended June 30, 1997, the Partnership advanced Breakers Partnership $383,000 which is included in the accompanying balance sheet at June 30, 1997. Page 9 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Summary condensed balance sheet information as of June 30, 1997 and December 31, 1996, and condensed statements of operations for the six months ended June 30, 1997 and 1996, are as follows (in thousands):
Huntington Breakers Apartments, Limited, A California Limited Partnership Balance Sheets June 30, December 31, 1997 1996 Net real estate investment, held for sale $ 15,918 $ 15,763 Other assets 1,371 1,279 ------------ ------------ Total assets $ 17,289 $ 17,042 ============ ============ Notes payable $ 19,292 $ 19,761 Notes payable to Outlook Income/Growth Fund VIII 1,445 1,014 Other liabilities 1,201 1,078 ------------ ------------ Total liabilities 21,938 21,853 ------------ ------------ Partners' deficit: Outlook Income/Growth Fund VIII (3,025) (3,185) Other Partners, net (1,624) (1,626) ------------ ------------- Total partners' deficit (4,649) (4,811) ------------ ------------- Total liabilities and partners' deficit $ 17,289 $ 17,042 ============ =============
Huntington Breakers Apartments, Limited, A California Limited Partnership Condensed Statements of Operations For the six months ended June 30, 1997 and 1996
1997 1996 Revenues $ 1,823 $ 1,812 Expenses 1,661 1,978 ------------ ------------- Net income (loss) $ 162 $ (166) ============ =============
Page 10 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) As of June 30, 1997, the Breakers Partnership has a $16,000,000, 7-day variable rate (4.00% at June 30, 1997) note payable secured by a first deed of trust and letter of credit in the amount of $16,184,000. The note requires monthly interest only installments and matures on July 1, 2014, at which time all remaining principal and interest will be due and payable. The Breakers Partnership also has a $3,292,000 note payable secured by a second trust deed. The note accrues interest at LIBOR plus 1.5% (7.21% at June 30, 1997) and is payable in monthly interest only installments until June 1, 2001, at which time all remaining principal and interest will be due and payable. Huntington Breakers must comply with certain covenants relating to the aforementioned notes which include maintenance of a Cash Collateral Account, as defined, quarterly excess property income payments (total property income less carrying costs, operating expenses, management fees, debt service payments, capital expenditures and bond interest fees and expenses equals excess property income), and the holding open for lease of at least 20% of the property's units to tenants qualifying as "low income". For the six months ended June 30, 1997, the Partnership paid $469,000 in excess property income. It is management's opinion that the Partnership is in compliance with all required terms of the loan agreement. On July 14, 1997, the Breakers Partnership entered into a purchase and sale agreement with an unaffiliated third party for the sale of the Huntington Breakers Apartment complex. The sale is expected to close escrow in October 1997; however, the sale is subject to a number of contingencies and accordingly, there can be no assurance that the sale will be consummated. The Breakers Partnership would use the proceeds from the sale to pay off the related debt on the property, advances and amounts due to Partners, guaranty payments and preference accounts. Note 5. DISPOSITION OF PROPERTY On May 28, 1997, the Partnership sold Silver Creek Plaza, a retail shopping center located at 1759 East Capitol Expressway in San Jose, California to Summit Commercial Properties, Incorporated an unrelated party ("the buyer"), for $9,625,000. The sale proceeds were used to pay off the loan secured by the property in the amount of $8,500,000 and settlement and other closing costs, including transaction fees payable to the general partner. Page 11 of 21 OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Note 6. NOTES PAYABLE On January 22, 1997, the Partnership obtained an $8,500,000 loan from Wells Fargo Bank and paid off the matured first and second deeds of trust on Silver Creek Plaza which had a total outstanding balance of $8,277,000. On May 28, 1997, the $8,500,000 loan was paid off upon the sale of the Silver Creek Plaza shopping center. Note 7. SUBSEQUENT EVENT On May 15, 1997, the note payable secured by San Mar Plaza, a shopping center located at 900 Highway 80 in San Marcos, Texas, matured. Due to unsuccessful negotiations with the lender to restructure the terms of the debt and insufficient equity in the Property, the Partnership did not pay off the loan. On July 1, 1997, title to the San Mar Plaza property was transferred to the lender pursuant to an agreement between the Partnership and the lender. As of July 1, 1997, the outstanding loan balance secured by the Property was $6,436,000 and the net assets approximated $6,199,000. The following pro forma financial statements represent the Partnership's balance sheet and statement of operations as of and for the six months ended June 30, 1997 and for the year ended December 31, 1996, as if the foreclosure of San Mar Plaza had occurred on January 1, 1996. The pro forma adjustments reflect the sale of Silver Creek Plaza shopping center and the disposition of San Mar Plaza. Page 12 of 21 OUTLOOK INCOME /GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Pro forma Balance Sheet As of June 30, 1997 (in thousands, except units outstanding) (Unaudited)
Silver Creek San Mar Historical(1) Disposition(2) Disposition(3) Pro Forma Assets Investment in real estate: Rental property held pending foreclosure $ 6,173 $ --- $ (6,173) $ --- -------------- --------------- -------------- ------------- Total real estate investment 6,173 --- (6,173) --- Cash and cash equivalents 851 --- --- 851 Accounts receivable, net 68 (37) (24) 7 Investment in and advances to unconsolidated joint venture 498 --- --- 498 Deferred financing costs and other fees, net 26 --- (26) --- Other assets 7 (5) (2) --- --------------- --------------- -------------- ------------- Total assets $ 7,623 $ (42) $ (6,225) $ 1,356 ============== =============== ============== =============
- continued - Page 13 of 21 OUTLOOK INCOME /GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited) Pro forma Balance Sheet - continued As of June 30, 1997 (in thousands, except units outstanding) (Unaudited)
Silver Creek San Mar Historical(1) Disposition(2) Disposition(3) Pro Forma Liabilities and Partners' Equity (Deficit) Liabilities: Note payable $ 6,446 $ --- $ (6,446) $ --- Accounts payable and accrued expenses 69 --- (52) 17 Interest payable 50 --- (50) --- Other liabilities 25 (5) (20) --- -------------- -------------- -------------- -------------- Total liabilities 6,590 (5) (6,568) 17 -------------- -------------- -------------- -------------- Partners' equity (deficit): General Partner (179) (1) 7 (173) Limited Partners, 34,992 limited partnership units outstanding 1,212 (36) 336 1,512 -------------- -------------- ------------- --------------- Total partners' equity 1,033 (37) 343 1,339 -------------- -------------- ------------- --------------- Total liabilities and partners' equity $ 7,623 $ (42) $ (6,225) $ 1,356 ============== ============== ============= ===============
- continued - Page 14 of 21 OUTLOOK INCOME /GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited)
Pro forma Statement of Operations For the six months ended June 30, 1997 (in thousands, except per unit amounts and units outstanding) (Unaudited) Silver Creek San Mar Historical(1) Disposition(2) Disposition(3) Pro Forma Revenues: Rental income $ 1,128 $ (596) $ (532) $ --- Interest income 13 --- --- 13 -------------- -------------- -------------- -------------- Total revenues 1,141 (596) (532) 13 -------------- -------------- -------------- -------------- Expenses: Operating 385 (260) (125) --- Loss on sale of property 599 (599) --- --- Interest 710 (402) (308) --- Depreciation and amortization 143 (10) (133) --- General and administrative 248 (63) (48) 137 ------------- -------------- -------------- -------------- Total expenses 2,085 (1,334) (614) 137 ------------- ------------- -------------- -------------- Loss from operations and dispositions of investments in real estate (944) 738 82 (124) -------------- ------------- -------------- --------------- Income in unconsolidated joint venture 115 --- --- 115 -------------- ------------- -------------- ---------------- Net loss $ (829) $ 738 $ 82 $ (9) ============== ============= ============== ================ Net loss per limited partnership current unit $ (66.03) $ --- $ --- $ (0.72) =============== ============= ============== ================= Number of limited partnership current units outstanding during the period used to compute net loss per limited partnership current unit 12,297 12,297 12,297 12,297 =============== ============== ============== =================
- continued - Page 15 of 21 OUTLOOK INCOME /GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP Notes to Financial Statements June 30, 1997 (in Liquidation) (Unaudited)
Pro forma Statement of Operations For the year ended December 31, 1996 (in thousands, except per unit amounts and units outstanding) (Unaudited) Silver Creek San Mar Historical(1) Disposition(2) Disposition(3) Pro Forma Revenues: Rental income $ 2,333 $ (1,300) $ (1,033) $ --- Interest and other income 57 --- --- 57 -------------- -------------- -------------- ------------- Total revenues 2,390 (1,300) (1,033) 57 -------------- -------------- -------------- ------------- Expenses: Operating 706 (464) (242) --- Interest 1,451 (826) (625) --- Depreciation and amortization 530 (262) (268) --- General and administrative 574 (139) (105) 330 -------------- -------------- -------------- ------------- Total expenses 3,261 (1,691) (1,240) 330 -------------- -------------- -------------- ------------- Net loss from operations (871) 391 207 (273) Loss in unconsolidated joint venture (853) --- --- (853) --------------- -------------- -------------- ------------- Net loss $ (1,724) $ 391 $ 207 $ (1,126) =============== ============== ============== ============= Net loss per limited partnership current unit: $ (137.43) --- $ --- $ (89.74) ============== ============== ============== ============= Number of limited partnership current units outstanding during the period used to compute net loss per limited partnership current unit 12,297 12,297 12,297 12,297 ============== ============== ============== ============
Page 16 of 21 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources On May 28, 1997, the Partnership sold Silver Creek Plaza to Summit Commercial Properties, Incorporated , an unrelated party, for $9,625,000. The sale proceeds were used to pay off the loan, secured by the property in the amount of $8,500,000 and settlement and other closing costs, including transaction fees payable to the general partner. The loss on sale totaled $599,000. As of June 30, 1997, the Partnership owns a 96,206 square foot shopping center (San Mar Plaza) and a 50% joint venture interest in a 342-unit apartment complex (Huntington Breakers Apartments). The loan secured by the San Mar Plaza property matured on May 15, 1997. Due to unsuccessful negotiations with the lender to restructure the terms of the debt and insufficient equity in the Property, title to the property was transferred to the lender pursuant to an agreement between the Partnership and the lender on July 1, 1997. On July 14, 1997, the Breakers Partnership entered into a purchase and sale agreement with an unaffiliated third party for the sale of the Huntington Breakers Apartment complex. The sale is expected to close escrow in October 1997; however, the sale is subject to a number of contingencies and accordingly, there can be no assurance that the sale will be consummated. With the proceeds from the sale, the Breakers Partnership would pay off the related debt on the property, advances and amounts due to Partners, guaranty payments and preference accounts. Upon completion of the above-noted transactions and satisfaction of any remaining liabilities, the Partnership intends to disburse any remaining cash to the partners and liquidate the Partnership. Management believes that the Partnership's cash on hand as of June 30, 1997, together with the expected proceeds from the potential sale of Huntington Breakers, will be sufficient to fund the Partnership operations through the dissolution of the Partnership. Results of Operations The $53,000 and $88,000 decreases in rental income during the three and six months ended June 30, 1997 compared to the same periods in 1996 were due to the May 28, 1997 sale of Silver Creek Plaza and a reduction in occupancy at the San Mar Plaza property. The occupancy rates at San Mar Plaza were 87% and 97% at June 30, 1997 and June 30, 1996, respectively. Interest and other income decreased by $14,000 and $27,000, respectively, during the three and six months ended June 30, 1997 compared to the same periods in 1996, as a result of a lower average invested cash balance of $1,295,000 and $635,000 for the three and six months ended June 30, 1997 compared to $1,769,000 and $1,300,000 for the three and six months ended June 30, 1996. Page 17 of 21 During the three and six months ended June 30, 1997 compared to the three and six months ended June 30, 1996, operating expenses increased by $23,000 and $38,000, respectively. The Silver Creek Plaza property realized a $22,000 and $32,000 increase in operating expenses during the three and six months ended June 30, 1997, due to the 1997 payment of supplemental property taxes which was partially offset by the overall decrease in operating expenses associated with the sale of the property on May 28, 1997. The $599,000 loss on sale of property included in the Partnership's June 30, 1997 statement of operations resulted from the sale of Silver Creek Plaza. The decrease in interest expense of $64,000 and $12,000 during the three and six months ended June 30, 1997 compared to the same periods in 1996, is primarily due to the pay off of the secured debt upon the sale of Silver Creek Plaza. Due to the cessation of depreciation on Silver Creek Plaza, depreciation and amortization decreased by $29,000 and $110,000, respectively, during the three and six months ended June 30, 1997 compared to the same periods in 1996. During the three and six months ended June 30, 1997 compared to the same periods in 1996, general and administrative expenses decreased by $20,000 and $58,000, respectively, as a result of lower legal fees due to a 1996 settlement, lower professional fees attributable to non-recurring property appraisal fees incurred in 1996. The income (loss) in unconsolidated joint venture represents the Partnership's share of income (loss) in the Huntington Breakers Apartments joint venture. Huntington Breakers Apartments The Huntington Breakers Apartments joint venture agreement included an income guaranty from the developer to the Partnership. The developer defaulted on the income guaranty and no amounts were ever paid. Following lengthy negotiations, the developer agreed to pay the guaranteed amounts, but the Partnership allowed the payments to be deferred and collected as a priority claim against future cash flow. Under the Huntington Breakers joint venture agreement, the Partnership has an annual cash flow priority of $700,000. The property has never reached this cash flow and no guaranty amounts have ever been received. The property was 96% occupied at June 30, 1997, which is two percentage points higher than the June 30, 1996, occupancy. Occupancies in the competing complexes have improved and the competition has reduced rental concessions offered to draw in new tenants. Management believes the market has improved and continues an aggressive marketing campaign to attract new tenants and maintain occupancy. Page 18 of 21 Huntington Breakers total expenses have decreased during the six months ended June 30, 1997 compared to the same period in 1996, primarily as a result of reduction in interest expense of $253,000, due to the financing arrangements obtained in July 1996, combined with the cessation of depreciation on June 1, 1997 when Huntington Breakers became classified as property held for sale. Page 19 of 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Partnership is not a party to, nor any of its assets the subject of, any material pending legal proceedings. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits #27 - Financial Data Schedule (b) Reports on Form 8-K On June 9, 1997, the Partnership filed a Current Report on Form 8-K with respect to the sale of Silver Creek Plaza, a retail shopping center located at 1759 East Capitol Expressway in San Jose, California. On July 15, 1997, the Partnership filed a Current Report on Form 8-K with respect to the July 1, 1997 foreclosure of San Mar Plaza, a shopping center located at 900 Highway 80 in San Marcos, Texas. Page 20 of 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OUTLOOK INCOME/GROWTH FUND VIII, A CALIFORNIA LIMITED PARTNERSHIP By: Glenborough Corporation, a California corporation Its Managing General Partner Date: August 14, 1997 By: /s/ Terri Garnick Terri Garnick Chief Financial Officer Page 21 of 21 EX-27 2 FDS --
5 (Replace this text with the legend) 0000771998 OUTLOOK INCOME/GROWTH FUND VIII 1,000 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-31-1997 JUN-30-1997 1.000 851 0 68 23 0 926 9,108 2,935 7,623 119 0 0 0 0 1,033 7,623 0 1,256 0 0 1,375 0 710 (624) 0 (624) 0 0 0 (624) 0 0
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