<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
------------ ------------
Commission File Number 0-10430
DE ANZA PROPERTIES - XII, LTD.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3601367
(State or other jurisdiction of (IRS Employer Iden-
incorporation or organization) tification Number)
9171 WILSHIRE BOULEVARD, SUITE 627
BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices, including zip code)
(310) 550-1111
(The registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially. The total number of pages contained herein is 17.
1
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TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Operations 5
Statements of Changes in Partners'
Capital (Deficit) 7
Statements of Cash Flows 8
Notes to Financial Statements 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 14
PART II. OTHER INFORMATION 16
- -------- -----------------
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
CASH - including restricted cash of
$188,097 at June 30, 1996 and December
31, 1995 - Note 1 $ 719,381 $ 671,43
ACCOUNTS RECEIVABLE 2,800 8,346
PREPAID EXPENSES 10,779 43,115
----------- -----------
732,960 722,891
----------- -----------
NOTES RECEIVABLE - Note 5 343,283 476,985
----------- -----------
PROPERTY AND EQUIPMENT - Notes 2, 5 and 6
Land 1,184,605 1,184,605
Land improvements 3,376,899 3,234,282
Buildings and improvements 9,933,168 9,933,168
Furniture and equipment 450,936 440,317
----------- -----------
14,945,608 14,792,372
Less accumulated depreciation 6,844,286 6,540,758
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8,101,322 8,251,614
----------- -----------
OTHER ASSETS
Loan costs - less accumulated
amortization of $16,764 and
$13,519 at June 30, 1996
and December 31, 1995,
respectively 80,570 83,815
Other 8,164 5,136
----------- -----------
88,734 88,951
----------- -----------
$ 9,266,299 $ 9,540,441
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets (Continued)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $6,399 and $8,644 due to
related parties at June 30, 1996
and December 31, 1995, respectively $ 157,417 $ 170,016
DEPOSITS AND ADVANCE RENTALS 48,591 53,641
DEFERRED GAIN ON SALE - Note 6 188,097 188,097
MANAGEMENT AND CONDOMINIUM CONVERSION
FEES PAYABLE TO AFFILIATE OR RELATED
PARTY - Note 3 852,491 796,331
SECURED NOTE PAYABLE - Note 2 4,244,865 4,261,943
----------- -----------
5,491,461 5,470,028
----------- -----------
PARTNERS' CAPITAL (DEFICIT)
General partners (1,651,818) (1,652,362)
Limited partners, 22,719 units issued
and outstanding 5,426,656 5,722,775
----------- -----------
3,774,838 4,070,413
----------- -----------
$ 9,266,299 $ 9,540,441
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
INCOME
Rent $1,104,657 $1,110,001
Interest and dividends 29,374 30,614
Other 27,677 9,092
Gain on sale of property and
equipment - Note 6 - 42,000
---------- ----------
1,161,708 1,191,707
---------- ----------
EXPENSES
Depreciation and amortization 306,773 295,382
Interest 159,219 153,700
Maintenance, repairs and supplies 131,282 121,756
Salaries - including $9,506 and
$10,436 paid to related parties
in 1996 and 1995, respectively - Note 3 97,507 97,110
Professional fees and services -
including $31,360 and $38,277 paid
to related parties in 1996 and 1995,
respectively - Note 3 92,292 84,703
Utilities 90,478 89,995
Real estate taxes 75,885 57,748
Management fees accrued to related
parties - Note 3 56,160 56,386
Other 44,348 35,995
Insurance 32,545 34,113
Payroll taxes and employee benefits 20,794 17,857
---------- ----------
1,107,283 1,044,745
---------- ----------
NET INCOME $ 54,425 $ 146,962
========== ==========
NET INCOME
GENERAL PARTNERS $ 544 $ 1,470
========== ==========
LIMITED PARTNERS $ 53,881 $ 145,492
========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 5.44 $ 14.70
========== ==========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 2.37 $ 6.40
========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
------------ ------------
<S> <C> <C>
INCOME
Rent $538,163 $550,518
Interest and dividends 14,628 16,124
Other 15,155 3,401
Gain on sale of property and
equipment - Note 6 - 42,000
-------- --------
567,946 612,043
-------- --------
EXPENSES
Depreciation and amortization 153,372 147,691
Interest 78,499 79,090
Maintenance, repairs and supplies 80,755 65,580
Salaries - including $5,106 and $6,127
paid to related parties in 1996 and
1995, respectively - Note 3 49,356 56,424
Professional fees and services -
including $13,781 and $16,810 paid
to related parties in 1996 and 1995,
respectively - Note 3 42,422 48,462
Utilities 45,032 41,516
Real estate taxes 37,943 16,389
Management fees accrued to related
parties - Note 3 27,383 27,707
Other 22,449 22,363
Insurance 16,265 16,867
Payroll taxes and employee benefits 9,835 9,137
-------- --------
563,311 531,226
-------- --------
NET INCOME $ 4,635 $ 80,817
======== ========
NET INCOME
GENERAL PARTNERS $ 46 $ 808
======== ========
LIMITED PARTNERS $ 4,589 $ 80,009
======== ========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 0.46 $ 8.08
======== ========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 0.20 $ 3.52
======== ========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
(Unaudited)
For the Six Months Ended June 30, 1996 and
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
General Limited
Total Partners Partners
---------- ----------- -----------
<S> <C> <C> <C>
BALANCE - January 1, 1995 $4,640,780 $(1,654,328) $6,295,108
DISTRIBUTIONS TO PARTNERS (767,000) - (767,000)
NET INCOME - for the year
ended December 31, 1995 196,633 1,966 194,667
---------- ----------- ----------
BALANCE - December 31,
1995 4,070,413 (1,652,362) 5,722,775
DISTRIBUTIONS TO PARTNERS (350,000) - (350,000)
NET INCOME - for the six
months ended June 30,
1996 54,425 544 53,881
---------- ----------- ----------
BALANCE - June 30, 1996 $3,774,838 $(1,651,818) $5,426,656
========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $1,103,075 $1,360,469
Cash paid to suppliers and employees -
including $43,515 and $50,852
paid to related parties in 1996
and 1995, respectively (566,309) (763,543)
Interest paid (160,202) (152,433)
Interest and other income received 57,999 30,592
---------- ----------
Net cash provided by
operating activities 434,563 475,085
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (153,236) (281,557)
Payments received on notes receivable 133,702 1,369
Sales and closing costs - (3,575)
---------- ----------
Net cash used in
investing activities (19,534) (283,763)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (350,000) (375,000)
Principal payments on secured
notes payable (17,078) (12,480)
---------- ----------
Net cash used in
financing activities (367,078) (387,480)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 47,951 (196,158)
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 671,430 912,914
---------- ----------
BALANCE AT END OF PERIOD $ 719,381 $ 716,756
========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 54,425 $ 146,962
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization 306,773 295,382
Gain on sale of property and
equipment - (42,000)
Changes in operating assets and
liabilities
Decrease in accounts receivable 5,546 248,754
Decrease in prepaid expenses 32,336 34,204
Increase in other assets (3,028) -
Decrease in accounts payable and
accrued expenses (12,599) (257,203)
Decrease in deposits and advance
rentals (5,050) (7,400)
Increase in management and
condominium conversion fees
payable to affiliate 56,160 56,386
-------- ---------
Net cash provided by
operating activities $434,563 $ 475,085
======== =========
</TABLE>
SUPPLEMENTAL DISCLOSURE
- -----------------------
During the six months ended June 30, 1995, the MHC cash reserve of $42,000 was
released from restricted cash and the Partnership recognized a gain on that
portion of the 1994 sale proceeds.
See accompanying notes to financial statements.
9
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 1996 and December 31, 1995 and
For the Six and Three Months Ended June 30, 1996 and 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) have been included.
Operating results during the six and three months ended June 30, 1996
are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. For further information, refer to
the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-K for the year ended December
31, 1995.
Cash and Cash Equivalents
-------------------------
The Partnership invests its cash not needed for working capital in
highly liquid short-term investments consisting primarily of money
market funds and certificates of deposit, with original maturities
ranging generally from one to three months. The Partnership considers
all such items to be cash equivalents.
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at June 30, 1996 and December 31, 1995 consisted
of:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Note collateralized by a first trust
deed, payable in monthly installments
of $26,476, including interest until
December 15, 1994. Thereafter, the monthly
payment changes annually on each December
15th. Interest accrued at 6.25% until
February 15, 1994, and thereafter
floats at 2.5% over the FHLB's 11th
District Cost of Funds Index, not to
exceed 12.9%, adjusted monthly. Unpaid
principal and accrued interest are due
November 15, 2008. The interest rate
in effect at June 30, 1996 and
December 31, 1995 was 7.34% and 7.62%,
respectively. $4,244,865 $4,261,943
========== ==========
</TABLE>
10
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
June 30, 1996 and December 31, 1995 and
For the Six and Three Months Ended June 30, 1996 and 1995
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES
Pursuant to a former management agreement dated October 1, 1985, as
amended, De Anza Assets, Inc., a former affiliate of the operating
general partner (OGP), was paid a management fee in the amount of 5%
of the annual gross receipts from the operations of the Partnership's
properties. The payment of this fee is subordinated to the priority
distribution to the limited partners of 7% of their adjusted capital
contributions each year and is noncumulative, except in the case of a
sale, refinancing or other disposition of the Partnership's
properties. In that case, the difference between the management fee
actually paid and the management fee that would have been paid if it
were not subordinated is payable out of proceeds of the sale,
refinancing or other disposition after payment of the limited
partners' priority return and capital contribution and the general
partners' incentive interest. However, management fees payable
subsequent to a consummated refinancing are not subordinated to the
limited partners' priority return to the extent the subordination
would have been caused by increased debt service charges. At June 30,
1996 and December 31, 1995, cumulative accrued fees of $565,022 to De
Anza Assets, Inc. have been subordinated and are included in
management and condominium conversion fees payable to affiliate or
related party, as reflected in the balance sheets. Shortly before its
sale to an affiliate of Manufactured Home Communities, Inc. (MHC), as
discussed in Note 6, De Anza Assets, Inc. assigned its rights to
receipt of these fees to the Gelfand Family Trust.
On August 18, 1994, subsequent to the sale of the Mark and the
property management business of De Anza Group, Inc. (DAG), as
discussed in Note 6, the property management of Warner Oaks and the
two remaining spaces at San Luis Bay was assumed by Terra Vista
Management, Inc. (Terra Vista). Terra Vista is wholly owned by Michael
D. Gelfand, president of the OGP and the son of Herbert M. Gelfand.
Herbert M. Gelfand, together with Beverly Gelfand, is the sole
shareholder of the OGP and an individual general partner. Management
fees of $56,160 and $56,386 were accrued but not paid to Terra Vista
for the six months ended June 30, 1996 and 1995, respectively. Of the
$56,160, $27,383 is attributable to the three months ended June 30,
1996 (compared to $27,707 accrued for the three months ended June 30,
1995). At June 30, 1996 and December 31, 1995, cumulative accrued fees
of $209,610 and $153,500, respectively, have been subordinated and are
included in management and condominium conversion fees payable to
affiliate or related parties, as reflected in the balance sheets. The
Gelfand Family Trust has agreed to share any payment to be made to the
Gelfand Family Trust for deferred management fees equally with Terra
Vista until Terra Vista has been paid all outstanding deferred
management fees.
11
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
June 30, 1996 and December 31, 1995 and
For the Six and Three Months Ended June 30, 1996 and 1995
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)
Pursuant to the partnership agreement, a condominium conversion fee
equal to 1% of the sales price of the San Luis Bay homesites sold is
due to an affiliate of the OGP (see Note 5). Payment of this fee has
been deferred pursuant to the partnership agreement's requirement
regarding subordination to payment of the limited partners' priority
return and capital contribution, the general partners' incentive
interest and deferred management fees. Subordinated cumulative accrued
fees of $77,809 have been included in management and condominium
conversion fees payable to affiliate or related party at June 30, 1996
and December 31, 1995, as reflected in the balance sheets. Shortly
before the sale to MHC, De Anza Assets, Inc. assigned its rights to
receive these fees to the Gelfand Family Trust.
In addition, Terra Vista or an affiliate of the OGP was paid $43,515
and $50,852 during the six months ended June 30, 1996 and 1995,
respectively, for performing bookkeeping, legal, regional management,
computer and investor relations services necessary for the operation of
the Partnership and its properties. Of the $43,515, $19,845 is
attributable to the three months ended June 30, 1996 (compared to
$23,943 paid for the three months ended June 30, 1995).
NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED
PARTNERSHIP UNIT
Income per limited partnership unit is computed based on the limited
partners' share of net income as shown on the Statements of Operations
and Changes in Partners' Capital (Deficit) and the number of limited
partnership units outstanding (22,719 units). The general partners'
share of net income has not been included in this computation. Income
per 1% general partner interest is computed based on the general
partners' share of net income as shown on the Statements of Operations
and Changes in Partners' Capital (Deficit).
NOTE 5 - SALE OF SAN LUIS BAY MOBILE ESTATES
On May 2, 1989, the Partnership entered into an agreement to sell San
Luis Bay Mobile Estates (the 162-space mobile home community in Avila
Beach, California) to the residents for an aggregate sales price of
$8,850,000 and, pursuant to that agreement, subdivided the property
into condominium units in 1991. The Partnership provided purchase money
financing for up to 80% of the individual homesite price, payable in
monthly payments, including interest at 10%, based on a loan
amortization schedule of 30 years, with a balloon payment of unpaid
principal and interest due at the end of seven years. At June 30, 1996
and December 31, 1995, respectively, the outstanding amounts due under
such notes totaled $343,283 and $476,985. Those residents who purchased
their homesites for cash received a 10% discount off their purchase
price.
The Partnership sold 160 homesites prior to 1995. The remaining two
homesites are leased to tenants.
12
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
June 30, 1996 and December 31, 1995 and
For the Six and Three Months Ended June 30, 1996 and 1995
NOTE 6 - SALE OF THE MARK
On August 18, 1994 the Partnership sold The Mark to an affiliate of
MHC, a real estate investment trust, as part of an overall transaction
for the sale of the related management business of DAG and other mobile
home communities affiliated with DAG.
The sales price for The Mark was $5,404,419. Additional proceeds of
$130,094, which were included in the sales price for calculating the
gain on sale of property and equipment, were received from MHC to fund
a General Reserve. In connection with the sale, the Partnership
established various reserves totaling $230,097.
The $230,097 was used to establish the following cash reserves:
<TABLE>
<S> <C>
MHC Reserve $ 42,000
General Reserve 130,094
Independent Committee Reserve 58,003
</TABLE>
The MHC Reserve was required by MHC and released in May 1995.
Accordingly, the gain on sale has been recognized and included in net
income for the six months ended June 30, 1995. The General Reserve and
Independent Committee Reserve were established to fund contingent
liabilities that may arise out of the MHC transaction.
Pursuant to the guidelines of Financial Accounting Standards No. 66,
"Accounting for Sales of Real Estate," the Partnership deferred in 1994
the recognition of gain on that portion of the sales proceeds,
represented by the MHC Reserve, General Reserve and Independent
Committee Reserve, totaling $230,097. As these reserves are released or
expended, gain on sale will be recognized. At June 30, 1996, and
December 31, 1995, $188,097 of sale proceeds have been deferred and are
included in deferred gain on sale, as reflected in the balance sheets.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity
- ---------
The Partnership's quick ratios were 2.2:1 and 2.1:1, including unrestricted
cash balances of $531,284 and $483,333 at June 30, 1996 and December 31, 1995,
respectively. The increase in cash is due mainly to the receipt of notes
receivable prepayments. The Partnership's cash balance is its immediate source
of liquidity.
On a long-term basis, the Partnership's liquidity is sustained primarily from
cash flows from operations, which during the six months ended June 30, 1996 were
approximately $435,000. Cash flow from operations has improved substantially
following the August 1994 sale of The Mark (see Note 6 to the Financial
Statements). The Partnership has reinstated regular operating distributions to
its partners though payment of the management fees continues to be deferred in
accordance with the Partnership Agreement.
Subsequent to the sale of The Mark, the Partnership continues to operate
Warner Oaks, the remaining property, which is managed by Terra Vista. The
Partnership also owns two spaces at San Luis Bay Mobile Estates and various
notes receivables related to that sale (see Note 5 to the Financial Statements).
As a result of the sale of The Mark, the Partnership's liquidity has improved.
The Mark's income fell short of its expenses, thus with the property sold, the
Partnership's income has improved which has improved liquidity. However, should
it become necessary to improve liquidity further, the Partnership can reduce
partner distributions, which totaled $350,000 during the six months ended June
30, 1996, arrange a short-term line of credit or refinance Warner Oaks.
In November 1993, the Partnership refinanced Warner Oaks with a variable
interest rate loan. The interest rate for the initial three months was 6.25%,
thereafter the loan bears interest at 250 basis points over the Eleventh
District Cost of Funds with caps on the maximum annual payment change of 7.5% of
the current payment, and an interest rate cap of 12.9% over the life of the
loan. This loan is subject to negative amortization. Future liquidity will be
affected, unfavorably or favorably, to the extent the payment rate fluctuates.
At June 30, 1996, the interest rate in effect was 7.34%.
The Partnership has sold 160 of 162 spaces at San Luis Bay as of June 30, 1996
(see Note 5 to the Financial Statements). Liquidity is expected to improve as
the notes receivable from the buyers of San Luis Bay spaces mature, as discussed
in Note 5 to the Financial Statements. As of June 30, 1996, the amount of the
notes receivable outstanding was approximately $343,000. Liquidity also
improves when the notes receivable are prepaid and when additional spaces are
sold.
Other than as described elsewhere, there are no known trends, demands,
commitments, events or uncertainties which are reasonably likely to materially
affect the Partnership's liquidity.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Capital Resources
- -----------------
The Partnership anticipates spending approximately $244,000 in 1996 for physical
improvements at Warner Oaks, approximately $91,000 of which will be spent during
the remainder of 1996. Funds for these improvements will be provided by cash
generated from operations. If necessary, the Partnership can use funds from
reserves from the sale proceeds of San Luis Bay, and from cash reserved for
capital improvement projects.
While no decision has been made regarding when a sale of Warner Oaks would
occur, the OGP believes it may be in the best interest of the Partnership to
consider pursuing a sale of the property as individual condominium units rather
than as a single project, in order to realize greater value. Accordingly, the
Partnership is investigating converting Warner Oaks from its current apartment
use to condominiums, although preliminarily, it appears that the market does not
favor a conversion at this time. The Partnership will continue to monitor the
market and consider pursuing a conversion if and when the condominium market
improves. Such a conversion may require significant investment in the property
in addition to the physical improvements normally done by the Partnership. No
assurance can be given that such conversion would occur. If there is no
conversion then the property would remain a single project and, at the advisable
time, be sold as one.
Other than as described above, there are no known material trends, favorable or
unfavorable, in the Partnership's capital resources. The Partnership does not
contemplate any other material changes in the mix of its capital resources,
other than as described above.
Results of Operations
- ---------------------
Rental income decreased 0.5% and 2.2% during the six and three months ended June
30, 1996, over the same periods in 1995, primarily due to lower occupancy and
increased rent incentives to improve occupancy. These income decreases were
offset in part by rent increases to both new and continuing tenants.
Other income increased due to a negative earthquake insurance proceeds
adjustment in 1995 not repeated in 1996 and increased partner transfer fees in
1996.
Expenses increased 6.0% during the six and three months ended June 30, 1996 over
the same periods in 1995. Because of the recent tender offer by Moraga Capital,
LLC, professional fees and services increased comprised of higher legal fees
while other expenses increased due to additional investor mailings. Maintenance,
repairs and supplies increased with increased apartment turnover in the second
quarter of 1996. Real estate taxes were higher because 1995 included a refund of
1994 taxes in connection with the reassessment of Warner Oaks following the 1994
earthquake. Additionally, depreciation and amortization expense increased in
1996 as a result of depreciation of capitalized costs placed in service during
the last twelve months.
Other than as described above, there are no known trends or uncertainties which
have had or can be reasonably expected to have a material effect on continuing
operations.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM NUMBER
- -----------
1. LEGAL PROCEEDINGS
No new material legal proceedings were commenced during the three months
ended June 30, 1996 and there are none pending.
2. CHANGES IN SECURITIES
None.
3. DEFAULTS UPON SENIOR SECURITIES
None.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
5. OTHER INFORMATION
On April 18, 1996 Moraga Gold, LLC filed a Schedule 14D-1 tender offer for
Units of the Partnership. On May 2, 1996 the Partnership filed a Schedule
14D-9 in response.
6. EXHIBITS AND REPORTS ON FORM 8-K
None.
16
<PAGE>
PART II. OTHER INFORMATION (Continued)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DE ANZA PROPERTIES - XII, LTD.
(Registrant)
By DE ANZA CORPORATION
A California Corporation
Operating General Partner
Date: August 13, 1996 By /s/ Michael D. Gelfand
----------------------
Michael D. Gelfand
President and
Chief Financial Officer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 719,381
<SECURITIES> 0
<RECEIVABLES> 2,800
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 732,960
<PP&E> 14,945,608
<DEPRECIATION> 6,844,286
<TOTAL-ASSETS> 9,266,299
<CURRENT-LIABILITIES> 248,008
<BONDS> 4,244,865
0
0
<COMMON> 0
<OTHER-SE> 3,774,838
<TOTAL-LIABILITY-AND-EQUITY> 9,266,299
<SALES> 1,104,657
<TOTAL-REVENUES> 1,161,708
<CGS> 0
<TOTAL-COSTS> 641,291
<OTHER-EXPENSES> 306,773
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,219
<INCOME-PRETAX> 54,425
<INCOME-TAX> 0
<INCOME-CONTINUING> 54,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,425
<EPS-PRIMARY> 2.37<F1>
<EPS-DILUTED> 2.37
<FN>
<F1>AMOUNT IS PER LIMITED PARTNER UNIT
</FN>
</TABLE>
