<PAGE> 1
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, 1995
[ ] 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 48 pages contained herein. Exhibit Index located on page 18 herein.
<PAGE> 2
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.
ITEM 2. PROPERTIES.
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(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.
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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 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
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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. The complaint, which requests
damages of not less than $178,000, has not been served but the Partnership
anticipates doing so shortly.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
No matter was submitted during the quarter ended December 31,
1995.
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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, 1995, the approximate number of Unit
holders is 1,876.
(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 1995,
$725,000 ($31.91 per interest held) was distributed to the Limited Partners from
operations while in 1994, no distributions from operations were made.
During 1994, 1992 and 1991, $370,540, $180,000 and $3,450,000
($0, $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 1995
and 1994, $42,000 and $1,116,460 ($1.85 and $49.14 per interest held) was
distributed to the Limited Partners from sale proceeds of The Mark.
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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:
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994 1993 1992 1991
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenues: $ 2,344,863 $ 2,925,056 $ 3,028,062 $ 3,244,548 $ 3,821,491
Gain (loss) on sale of
property and equipment: 42,000 (67,041) 153,751 74,951 4,822,182
Net income (loss) from
continuing operations: 196,633 (491,194) (827,239) (349,948) 4,588,125
Net income (loss) from
continuing operations per
limited partnership interest 8.57 (18.38) (30.95) (13.09) 199.93
(1):
Total assets: 9,540,441 10,341,663 15,724,774 15,953,844 16,410,578
Long-term obligations: 4,261,943 4,278,706 8,319,038 7,818,477 7,779,254
Cash distributions per partnership
interest:
1. Limited Partner (2): 33.76 65.45 -- 15.84 151.86
2. General Partner: -- -- -- -- --
</TABLE>
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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.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(1) Liquidity.
The Partnership's quick ratios were 2.1:1 and 1.7:1 including
unrestricted cash balances of $483,333 and $682,817, at December 31, 1995 and
December 31, 1994, 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 1995 was approximately
$882,000. 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.
Generally, at the end of three years from the sale date (August 18, 1994),
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 is $58,003. The funds held in the Independent Committee Reserve will
be 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
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regardless of which specific partnership or partnerships, if less than all, a
claim relates to. Assuming no claims against the Independent Committee Reserve
have been made or threatened, $29,001 of the reserve, plus interest, less costs,
will be released to the Partnership from the Independent Committee Reserve two
years after the sale date and the remaining $29,002, plus interest, less costs,
will be released at the end of the third year after the sale. 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 and for the years ending December 31, 1993, 1992 and
1991. 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 $725,000 in 1995, 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 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, 1995, the interest rate in
effect was 7.62% and the principal balance was $4,261,943.
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
$1,960,000. 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, 1995 (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, 1995, the amount of
the notes receivable outstanding was approximately $477,000. Liquidity also
improves when the notes receivable are prepaid
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and when additional spaces are sold. During 1995, no such prepayments and sales
proceeds were received.
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 $234,000 in
1996 for physical improvements at its Properties compared with approximately
$347,000 in 1995. Funds for these improvements will be provided by cash
generated from operations.
Other than as described above, there are no known material
trends, favorable or unfavorable, in the Partnership's capital resources. The
Partnership does not contemplate any 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 1995 as in 1994 (including
insurance reimbursement in 1994 for lost rents due to the earthquake damage) and
increased 5.2% in 1994 over 1993, primarily resulting from lower occupancy at
Warner Oaks in the first half of 1993 as a result of units which could not be
occupied until their roofs were repaired. Excluding insurance reimbursement for
lost rents at Warner Oaks, average occupancy for the last three years is as
follows:
<TABLE>
<CAPTION>
Average Occupancy
-----------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Warner Oaks 93% 79% 92%
</TABLE>
The damage resulting from the January 1994 earthquake has been
almost completely repaired and occupancy has increased substantially. 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.
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Interest income decreased in 1995 over 1994 and in 1994 over
1993 due to declining cash balances. Additionally, gains on the sale of two
spaces at San Luis Bay in 1994 and three spaces in 1993 were not repeated in
1995.
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.
Expenses during 1994 decreased 13.4% over 1993. Interest
expense decreased 54% due to refinancing Warner Oaks at a lower interest rate
and the lender both charging an unusually lower interest rate March - July and
capitalizing February - March interest because of the January 1994 earthquake. A
loss on refinancing the discounted rate loan in 1993 was a one time event.
Maintenance and advertising costs at Warner Oaks also decreased. Much of these
costs were made temporarily unnecessary due to the earthquake. Also, management
fees temporarily fell in 1994 due to not being charged such fees on the
insurance reimbursement of lost rent. Partly offsetting these decreases were
increases in salaries to manage the earthquake repairs and related tenant
relations at Warner Oaks and increased depreciation from the capitalized
repairs.
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.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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.
<TABLE>
<CAPTION>
Name of General Partners Age
------------------------ ---
<S> <C>
De Anza Corporation
(Operating General Partner) N/A
Herbert M. Gelfand 64
Aubrey Meyerson (Deceased October 1995) N/A
David G. Licht 71
DZA Equities - XII, Ltd. N/A
</TABLE>
<TABLE>
<CAPTION>
Name of Directors/Key Executive Officers
of De Anza Corporation, Operating
General Partner Age
---------------------------------------- ---
<S> <C>
Glen Davis (Departed May 15, 1995) 46
Michael D. Gelfand 41
Sheila M. Schrank 40
Michael G. Silverman (Resigned February 17, 1995) 35
</TABLE>
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.
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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 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 and is
the father-in-law of Michael G. Silverman, a former officer of De Anza
Corporation.
Aubrey Meyerson served as Chief Executive Officer as well as
Vice Chairman of De Anza Group, Inc. from 1982 to 1986. He remained a General
Partner of the Partnership and one other affiliated limited partnership until
his death in October 1995. Mr. Meyerson had been engaged in the real estate
business for approximately thirty years, primarily in the development and
management of residential property. Recently, Mr. Meyerson was President and
owner of Aubrey Meyerson Company, which acquires and manages manufactured
housing communities. Mr. Meyerson was not actively engaged in the management of
the Partnership.
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.
Glen Davis served as Vice President Finance/Risk Management of
De Anza Corporation until his departure from De Anza Corporation on May 15,
1995. Mr. Davis joined De Anza Group Inc. in January 1992 as Vice President
Finance/Risk Management after serving over eight years for two national
residential real estate developers. Mr. Davis was the Chief Financial Officer of
D & S Development
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Corporation between 1986 and 1992 and the Treasurer at The Anden Group between
1983 and 1986. Prior to that, he was a Certified Public Accountant with the
accounting firm of Kenneth Leventhal and Company for a period of five years. Mr.
Davis graduated from UCLA with a degree in mathematics and pursued his graduate
business curriculum at California State University, Northridge.
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, and brother-in-law of Michael G.
Silverman. 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.
Michael G. Silverman served as Secretary, Vice President and
General Counsel of De Anza Corporation from October 1990 until his resignation
on February 17, 1995. Prior to that, he served as Corporate Counsel from October
1989 to October 1990, and as Associate Counsel from May 1989 to October 1989,
after having served as a financial analyst for De Anza Group, Inc. beginning
September, 1988. Mr. Silverman attended the University of California, Berkeley
from which he received a BA degree in Political Science in 1983 and Hastings
College of Law from which he received a JD degree, magna cum laude, in 1987. He
has been a member of the California State Bar since 1987. Mr. Silverman is the
son-in-law of Herbert M. Gelfand and of Beverly J. Gelfand and is the
brother-in-law of Michael D. Gelfand.
(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 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
-13-
<PAGE> 14
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 74, 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 73, 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 55, served as Executive Vice President of The
Hapsmith Company from 1975 to 1985. Since 1985, he has been the President and
principal shareholder of The Yellin Company, which is engaged in general real
estate investment, development and management. 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, 1995, 1994 and
1993. 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, 1995, 1994 and 1993.
Information contained in Item 13 of this Annual Report on Form
10-K is incorporated herein by reference.
-14-
<PAGE> 15
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.
-15-
<PAGE> 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security Ownership of Certain Beneficial Owners.
<TABLE>
<CAPTION>
Amount & Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------------ -------------------- ----------------
<S> <C> <C> <C>
Limited Partnership
Interests:
MacKenzie Partnerships 1,691 UNITS(1) 7.4%(1)
1640 School Street, #100 DIRECT
Moraga, CA 94556
</TABLE>
(b) Security Ownership of Management.
<TABLE>
<CAPTION>
Amount & Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------------ -------------------- ----------------
<S> <C> <C> <C>
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)
===== =====
</TABLE>
- ---------------
(1) MacKenzie Patterson, Inc., an affiliate of MacKenzie Partnerships, reported
in Amendment No. 2 to Schedule 13D, dated February 8, 1996, that it is the
beneficial owner of 1,691 Units.
(2) Aubrey Meyerson ceased being a General Partner upon his death in October
1995. Accordingly, his former General Partner Interests are being held by
his successor with the economic benefits thereof.
-16-
<PAGE> 17
<TABLE>
<CAPTION>
Amount & Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------------ -------------------- ----------------
<S> <C> <C> <C>
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 *
=========
</TABLE>
* Less than 1%
(c) Changes in Control.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For the year ended December 31, 1995, Terra Vista Management,
Inc., or an affiliate of the Operating General Partner accrued but was not paid
management fees of $113,748 and was reimbursed $104,365 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. 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,
1995, 1994, and 1993 that are filed as part of this report:
-17-
<PAGE> 18
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report.......................................................... 24
Balance Sheets, December 31, 1995 and 1994............................................ 25
Statements of Operations for the years ended
December 31, 1995, 1994 and 1993...................................................... 27
Statements of Changes in Partners' Capital (Deficit)
for the period January 1, 1993 to December 31, 1995................................... 28
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993...................................................... 29
Notes to Financial Statements......................................................... 31
Schedules of Projects' Operations for the years ended
December 31, 1995, 1994 and 1993...................................................... 44
Schedule of Distributable Income, Partners'
Distributions and Reserves for the years
ended December 31, 1995, 1994 and 1993................................................ 47
</TABLE>
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:
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<S> <C> <C>
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.)
</TABLE>
-18-
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<S> <C> <C>
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.)
</TABLE>
-19-
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<S> <C> <C>
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.)
</TABLE>
(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.
-20-
<PAGE> 21
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 29, 1996
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 29, 1996
By /s/Michael D. Gelfand
---------------------
Michael D. Gelfand
Director of De Anza Corporation, the Operating General Partner
Date: March 29, 1996
By /s/David Licht
--------------
David Licht
Director of De Anza Corporation, the Operating General Partner
Date: March 29, 1996
-21-
<PAGE> 22
DE ANZA PROPERTIES - XII, LTD.
(A LIMITED PARTNERSHIP)
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTARY SCHEDULES
December 31, 1995 and 1994
-22-
<PAGE> 23
De Anza Properties - XII, Ltd.
(A Limited Partnership)
December 31, 1995 and 1994
CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
-23-
<PAGE> 24
Report of Independent Auditors
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, 1995 and 1994,
and the related statements of operations, changes in partners' capital (deficit)
and cash flows for the years ended December 31, 1995, 1994 and 1993. 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 substantial 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, 1995 and 1994, and the results of its operations and its cash flows for the
years ended December 31, 1995, 1994 and 1993, 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
Los Angeles, California
January 24, 1996
-24-
<PAGE> 25
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
-----------------------------------
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS, including restricted
cash of $188,097 and $230,097 at December 31,
1995 and 1994, respectively (Notes 1 and 3) $ 671,430 $ 912,914
ACCOUNTS RECEIVABLE 8,346 254,057
PREPAID EXPENSES 43,115 45,605
-----------------------------------
722,891 1,212,576
-----------------------------------
NOTES RECEIVABLE (Note 3) 476,985 488,026
-----------------------------------
PROPERTY AND EQUIPMENT (Notes 1, 3, 5, 8, 9 and 10)
Land 1,184,605 1,184,605
Land improvements 3,234,282 2,901,226
Buildings and improvements 9,933,168 9,933,168
Furniture and equipment 440,317 426,637
-----------------------------------
14,792,372 14,445,636
Less accumulated depreciation 6,540,758 5,900,220
-----------------------------------
8,251,614 8,545,416
-----------------------------------
OTHER ASSETS
Loan costs, less accumulated amortization of
$13,519 and $7,030 at December 31, 1995
and 1994, respectively (Notes 1 and 5) 83,815 90,304
Other 5,136 5,341
-----------------------------------
88,951 95,645
-----------------------------------
$ 9,540,441 $ 10,341,663
===================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-25-
<PAGE> 26
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Balance Sheets (Continued)
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
--------------------------------------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES,
including $8,644 and $27,938 due to related parties at
December 31, 1995 and 1994, respectively (Note 6) $ 170,016 $ 439,431
DEPOSITS AND ADVANCE RENTALS 53,641 70,066
UNRECOGNIZED GAIN (Note 3) 188,097 230,097
MANAGEMENT AND CONDOMINIUM CONVERSION
FEES PAYABLE TO AFFILIATE OR RELATED
PARTY(Note 6) 796,331 682,583
SECURED NOTE PAYABLE (Note 5) 4,261,943 4,278,706
--------------------------------------
(5,470,028) 5,700,883
--------------------------------------
PARTNERS' CAPITAL (DEFICIT)
General partners (1,652,362) (1,654,328)
Limited partners, 22,719 units issued and outstanding 5,722,775 6,295,108
--------------------------------------
4,070,413 4,640,780
--------------------------------------
$ 9,540,441 $ 10,341,663
=====================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-26-
<PAGE> 27
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
-------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Rent (Notes 4 and 8) $ 2,241,482 $ 2,737,987 $ 2,834,261
Interest and dividends 63,411 76,706 82,439
Gain (loss) on sale of property and equipment (Note 3) 42,000 (67,041) 153,751
Other 39,970 64,546 60,853
Utilities - 45,817 50,509
-------------------------------------------------------------
2,386,863 2,858,015 3,181,813
-------------------------------------------------------------
EXPENSES
Depreciation and amortization (Note 1) 647,027 806,028 791,059
Interest 318,184 412,823 833,035
Maintenance, repairs and supplies 244,538 261,280 371,722
Salaries, including $21,018, $33,081 and $28,996 paid
to related parties in 1995, 1994 and 1993,
respectively (Note 6) 210,316 398,501 432,266
Utilities 179,183 275,941 302,908
Professional fees and services, including $78,061,
$101,304 and $90,484 paid to related parties in
1995, 1994 and 1993, respectively (Note 6) 140,777 271,424 158,662
Real estate taxes 135,357 199,515 222,892
Management fees accrued to related parties (Note 6) 113,748 123,029 144,068
Other 90,000 313,015 367,330
Insurance 75,213 56,790 69,157
Payroll taxes and employee benefits 35,887 74,367 86,517
Loss on earthquake damage (Note 8) - 156,496 -
Loss on refinancing of discounted note - - 173,204
Provision for loss on mobile homes held for resale - - 56,232
-------------------------------------------------------------
2,190,230 3,349,209 4,009,052
-------------------------------------------------------------
NET INCOME (LOSS) $ 196,633 $ (491,194) $ (827,239)
=============================================================
NET INCOME (LOSS)
GENERAL PARTNERS $ 1,966 $ (73,679) $ (124,086)
=============================================================
LIMITED PARTNERS $ 194,667 $ (417,515) $ (703,153)
=============================================================
INCOME (LOSS) PER 1% GENERAL PARTNER INTEREST
(Note 7) $ 19.66 $ (736.79) $ (1,240.86)
=============================================================
INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
(Note 7) $ 8.57 $ (18.38) $ (30.95)
=============================================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-27-
<PAGE> 28
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS
TOTAL (Note 2) (Note 2)
-----------------------------------------------------
<S> <C> <C> <C>
BALANCE - January 1, 1993 $ 7,446,213 $ (1,456,563) $ 8,902,776
NET LOSS - for the year ended
December 31, 1993 (827,239) (124,086) (703,153)
-----------------------------------------------------
BALANCE - December 31, 1993 6,618,974 (1,580,649) 8,199,623
DISTRIBUTIONS TO PARTNERS
(Note 3) (1,487,000) - (1,487,000)
NET LOSS - for 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 INCOME - for year ended
December 31, 1995 196,633 1,966 194,667
-----------------------------------------------------
BALANCE - December 31, 1995 $ 4,070,413 $ (1,652,362) $ 5,722,775
=====================================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-28-
<PAGE> 29
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
---------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Gross rents received from real estate operations $ 2,513,880 $ 2,844,909 $ 3,376,301
Cash paid to suppliers and employees, including
$104,365, $137,816 and $122,156 paid to
related parties during 1995, 1994 and 1993,
respectively (Note 6) (1,377,593) (1,836,126) (2,790,662)
Interest paid (316,426) (392,072) (522,077)
Interest and other income received 61,688 79,393 84,828
---------------------------------------------------------------
Net cash provided by operating activities 881,549 696,104 148,390
---------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property and equipment (346,736) (835,059) (806,692)
Principal payments on notes receivable 11,041 101,144 148,087
Sales costs (3,575) (187,142) (19,802)
Proceeds from sale of property and equipment - 5,660,720 221,071
---------------------------------------------------------------
Net cash (used in) provided by investing
activities (339,270) 4,739,663 (457,336)
---------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from refinancing of secured note payable - - 330,109
Loan costs - - (97,334)
Principal payments on secured note payable (16,763) (4,080,568) (164,419)
Partner distributions (767,000) (1,487,000) -
---------------------------------------------------------------
Net cash (used in) provided by financing
activities (783,763) (5,567,568) 68,356
---------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (241,484) (131,801) (240,590)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 912,914 1,044,715 1,285,305
---------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 671,430 $ 912,914 $ 1,044,715
===============================================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-29-
<PAGE> 30
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Statement of Cash Flows (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
---------------------------------------------------------------
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income (loss) $ 196,633 $ (491,194) $ (827,239)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 647,027 806,028 791,059
Note payable discount - - 334,871
(Gain) loss on sale of property and
equipment (42,000) 67,041 (153,751)
Provision for loss on mobile
homes held for resale - - 56,232
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 245,711 (210,027) 10,434
Decrease (increase) in prepaid expenses 2,490 (11,700) 6,915
Decrease (increase) in mobile homes held
for resale - 80,271 (163,144)
Decrease in other assets 205 7,238 1,873
(Decrease) increase in accounts payable
and accrued expenses (265,840) 321,471 (50,709)
(Decrease) increase in deposits and
advance rentals (16,425) 3,955 (3,804)
Increase in management and condominium
conversion fees payable to affiliate
or related party 113,748 123,021 145,653
---------------------------------------------------------------
Net cash provided by operating activities $ 881,549 $ 696,104 $ 148,390
===============================================================
</TABLE>
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.
-30-
<PAGE> 31
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
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, 1995 and 1994 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
Property and equipment are stated at cost. 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.
In March 1995, the FASB issued Statement 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
Partnership will adopt Statement 121 in the first quarter of 1996 and, based on
current circumstances, does not believe the effect of adoption, if any, will be
material.
See accompanying report of independent auditors.
-31-
<PAGE> 32
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
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, 1995, approximates fair
value due to the short maturity of these instruments. The carrying value of the
note payable approximates fair value at December 31, 1995, 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, 1995 and
1994 and revenues and expenses for the years ended December 31, 1995, 1994 and
1993. Actual results could differ from those estimates.
See accompanying report of independent auditors.
-32-
<PAGE> 33
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
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, 1995, 1994 and 1993 was $3,588,
$(432,179), and $(802,428), respectively. The income (loss) for federal tax
purposes was calculated as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss) per financial statements $ 196,633 $ (491,194) $ (827,239)
Tax basis depreciation in excess of financial
statement depreciation (151,272) (304,452) (372,232)
Amortization of note discount - - 161,667
Financial statement basis in excess of tax basis
of property sold - 876,990 1,586
Loss on refinancing of discounted note - - 173,204
Capitalized costs for book purposes - (445,000) -
Deferred income (42,000) (768) -
Other 227 (67,755) 60,586
-------------------------------------------------------------
Income (loss) for federal tax purposes $ 3,588 $ (432,179) $ (802,428)
=============================================================
</TABLE>
See accompanying report of independent auditors.
-33-
<PAGE> 34
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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, 1995, 1994 and 1993. Partners' capital is reconciled as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C>
Partners' capital per financial
statements $ 4,070,413 $ 4,640,780 $ 6,618,974
Syndication costs 3,378,563 3,378,563 3,378,563
Accumulated depreciation
difference (7,043,811) (6,892,539) (6,521,893)
Unamortized note discount - - (334,871)
Purchase price adjustment 2,273,774 2,273,774 2,273,774
Aggregate of differences
described in the preceding
reconciliation (193,045) 59,015 24,811
Accumulated amortization - (1,081) -
Other 279,074 70,095 8,427
-------------------------------------------------------
Partners' capital per federal tax
return $ 2,764,968 $ 3,528,607 $ 5,447,785
=======================================================
</TABLE>
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 1993, 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 1993 (see Note 3). The Mark was sold in 1994
(see Note 3).
See accompanying report of independent auditors.
-34-
<PAGE> 35
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
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 1996. Those residents who purchased their
homesites for cash received a 10% discount off their purchase price. At December
31, 1995 and 1994, respectively, the outstanding amounts due totaled $476,985
and $488,026.
The Partnership sold 155 homesites prior to 1993. In 1993 and 1994, it
respectively sold 3 sites for $194,130, and 2 sites for $104,990. The remaining
2 unsold units are leased to tenants.
The Partnership released reserves from San Luis Bay sales and distributed
$70,540 and $300,000 to the limited partners on September 16, 1994, and December
30, 1994, respectively. These distributions represent a return of original
capital.
See accompanying report of independent auditors.
-35-
<PAGE> 36
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
3. SALE OF PROPERTY AND EQUIPMENT (CONTINUED)
THE MARK
In 1993, 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:
<TABLE>
<S> <C>
MHC Reserve $ 42,000
General Reserve 130,094
Independent Committee Reserve 58,003
</TABLE>
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 1995, the MHC
Reserve was released in full and distributed to the limited partners as a return
of original capital.
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
year ended December 31, 1995, the Partnership recognized as income $42,000
attributable to the MHC Reserve released.
See accompanying report of independent auditors.
-36-
<PAGE> 37
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
3. SALE OF PROPERTY AND EQUIPMENT (CONTINUED)
THE MARK (CONTINUED)
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.
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 three 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, 1995, are as follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
--------------------------
<S> <C>
1996 $ 148,602
1997 12,142
1998 6,071
--------------------------
$ 166,815
==========================
</TABLE>
See accompanying report of independent auditors.
-37-
<PAGE> 38
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
5. SECURED NOTE PAYABLE
Secured note payable at December 31, 1995 and 1994 consisted of:
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
---------------------------------------
<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 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,
1995 and 1994 was 7.62% and 6.25%, respectively $ 4,261,943 $ 4,278,706
=======================================
</TABLE>
Due to the Northridge earthquake on January 17, 1994, the lender for the Warner
Oaks loan agreed to a deferment of two months of note payments. The accrued and
unpaid interest of $40,236 has been added to the principal balance during 1994
(Note 8).
The annual maturities on the secured note payable for the years subsequent to
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Years Ending
December 31,
--------------------
<S> <C>
1996 $ 5,422
1997 5,850
1998 6,311
1999 6,809
2000 7,346
Thereafter 4,230,205
--------------------
$ 4,261,943
====================
</TABLE>
See accompanying report of independent auditors.
-38-
<PAGE> 39
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
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, and
$144,068 were accrued but not paid to De Anza Assets, Inc. for the years ended
December 31, 1994 and 1993, respectively. At December 31, 1995 and 1994,
cumulative accrued fees of $565,022, have been subordinated and are included in
management and condominium conversion fees payable to affiliate or related
party, as reflected in the balance sheet. 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 and $39,752 were accrued but not paid to Terra Vista
for the year ended December 31, 1995 and for the period from August 18, 1994
through December 31, 1994, respectively. At December 31, 1995 and 1994,
cumulative accrued fees of $153,500 and $39,752, respectively, have been
subordinated and are included in management and condominium conversion fees
payable to affiliate or related party, as reflected in the balance sheet. 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.
See accompanying report of independent auditors.
-39-
<PAGE> 40
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
6. 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 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, 1995 and 1994. 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 and $114,481 for
the years ended December 31, 1994 and 1993, respectively, and Terra Vista or an
affiliate of the operating general partner was paid $104,365 and $47,721 for the
year ended December 31, 1995 and for the period from 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.
-40-
<PAGE> 41
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
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 has
received insurance proceeds of $1,414,000. A portion of the costs has been
capitalized and the balance of $156,496, representing 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, 1994. As of December 31, 1995,
substantially all of the repairs have been completed.
See accompanying report of independent auditors.
-41-
<PAGE> 42
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
9. SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Initial Cost to Partnership
---------------------------
Buildings, Cost
Improvements Capitalized Sale of
and Subsequent to Property and
Description Encumbrances Land Equipment Acquisition Equipment
----------- ------------ ---- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
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 $4,261,943 1,168,747 9,962,170 3,608,232 --
---------- ---------- ----------- ---------- -----------
$4,261,943 $1,891,692 $13,181,126 $3,880,542 $(4,160,988)
========== ========== =========== ========== ===========
<CAPTION>
Gross Amount Carried at Close of
Period Ended Life on Which
December 31, 1995 Depreciation in
--------------------------------- Latest
Buildings, Statement of
Improvements Operations Is
and Accumulated Year of Date of Computed
Land Equipment Total Depreciation Construction Acquisition (Years)
---- ------------ ----- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
San Luis Bay Mobile Estates,
mobile home community,
Avila Beach, California $ 9,442 $ 43,781 $ 53,223(1) $ 23,596 1972 8/11/81 3 TO 25
Warner Oaks Apartments,
apartment complex,
Woodland Hills, California 1,175,163 13,563,986 14,739,149(2) 6,517,162 1979 2/09/82 5 TO 30
---------- ----------- ----------- ----------
$1,184,605 $13,607,767 $14,792,372 $6,540,758
========== =========== =========== ==========
</TABLE>
- ---------------
(1) Aggregate cost for federal income tax
purposes is $43,781
(2) Aggregate cost for federal income tax
purposes is $14,558,102
See accompanying report of independent auditors.
-42-
<PAGE> 43
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Notes to Financial Statements (Continued)
For the Years Ended December 31, 1995, 1994 and 1993
10. RECONCILIATION OF REAL ESTATE AND ACCUMULATED
DEPRECIATION
<TABLE>
<CAPTION>
BUILDINGS,
IMPROVEMENTS
LAND AND EQUIPMENT TOTAL
---------------------------------------------------------------
<S> <C> <C> <C>
REAL ESTATE
Balance at January 1, 1993 $ 2,935,909 $ 17,136,428 $ 20,072,337
Additions during 1993 - 839,889 839,889
Reductions due to sale of
property and equipment
during 1993 (13,509) (97,838) (111,347)
---------------------------------------------------------------
Balance at December 31, 1993 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
===============================================================
ACCUMULATED DEPRECIATION
Balance at January 1, 1993 $ 6,480,360
Depreciation charged to expense during 1993 779,597
Reduction due to sale of property and equipment
during 1993 (49,008)
---------------------
Balance at December 31, 1993 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
=====================
</TABLE>
See accompanying report of independent auditors.
-43-
<PAGE> 44
SCHEDULE I
Page 1 of 3
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Schedule of Projects' Operations
<TABLE>
<CAPTION>
Year Ended December 31, 1995
--------------------------------------------------------------------------------
San Luis Bay Warner Oaks De Anza Properties
Mobile Estates Apartments - XII, Ltd.
---------------------- ------------------------ ------------------------
Amount % of Income Amount % of Income Amount % of Income
------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Rent (Notes 4 and 8) $12,050 100.00% $2,229,432 98.50% -- --
Interest and dividends -- -- -- -- $ 63,411 56.94%
Gain on sale of property and
equipment (Note 3) -- -- -- -- 42,000 37.72
Other -- -- 34,024 1.50 5,946 5.34
------- ------ ---------- ------ ---------- ------
12,050 100.00 2,263,456 100.00 111,357 100.00
------- ------ ---------- ------ ---------- ------
EXPENSES
Depreciation and amortization (Note 1) 1,071 8.89 645,956 28.54 -- --
Interest 29 0.24 318,155 14.06 -- --
Maintenance, repairs and supplies -- -- 244,538 10.80 -- --
Salaries, including $21,018 paid to
related parties (Note 6) -- -- 190,819 8.43 19,497 17.51
Utilities 18 0.15 179,096 7.91 69 0.06
Professional fees and services, including
$78,061 paid to related parties (Note 6) -- -- 74,823 3.31 65,954 59.23
Real estate taxes 1,274 10.57 134,083 5.92 -- --
Management fees accrued to related
parties (Note 6) 315 2.61 113,433 5.01 -- --
Other 3,932 32.63 52,072 2.30 33,996 30.53
Insurance 493 4.09 74,720 3.30 -- --
Payroll taxes and employee benefits -- -- 35,956 1.59 (69) (0.06)
------ ----- ---------- ----- -------- ------
7,132 59.18 2,063,651 91.17 119,447 107.27
------ ----- ---------- ----- -------- ------
NET INCOME (LOSS) $4,918 40.82% $ 199,805 8.83% $ (8,090) (7.27%)
====== ===== ========== ===== ======== ======
<CAPTION>
Year Ended
December 31, 1995
-------------------------
Total
-------------------------
Amount % of Income
------- -----------
<S> <C> <C>
INCOME
Rent (Notes 4 and 8) $2,241,482 93.91%
Interest and dividends 63,411 2.66
Gain on sale of property and
equipment (Note 3) 42,000 1.76
Other 39,970 1.67
---------- ------
2,386,863 100.00
---------- ------
EXPENSES
Depreciation and amortization (Note 1) 647,027 27.11
Interest 318,184 13.33
Maintenance, repairs and supplies 244,538 10.25
Salaries, including $21,018 paid to
related parties (Note 6) 210,316 8.81
Utilities 179,183 7.51
Professional fees and services, including
$78,061 paid to related parties (Note 6) 140,777 5.90
Real estate taxes 135,357 5.67
Management fees accrued to related
parties (Note 6) 113,748 4.77
Other 90,000 3.77
Insurance 75,213 3.15
Payroll taxes and employee benefits 35,887 1.50
---------- ------
2,190,230 91.77
---------- ------
NET INCOME (LOSS) $ 196,633 8.23%
========== ======
</TABLE>
See accompanying report of independent auditors and notes to
financial statements.
-44-
<PAGE> 45
SCHEDULE I
Page 2 of 3
De Anza Properties-XII, Ltd.
(A Limited Partnership)
Schedule of Projects' Operations
<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
-----------------------------------------------------------------------
San Luis Bay Warner Oaks Mark Mobile
Mobile Estates Apartments Home Park
--------------------- ----------------------- ----------------------
Amount % of Income Amount % of Income Amount % of Income
------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Rent (Notes 4 and 8) $14,735 17.10% $2,227,352 97.60% $ 495,900 119.84%
Interest -- -- 3,021 0.13 167 0.04
Other -- -- 51,715 2.27 10,387 2.51
Utilities -- -- -- -- 45,817 11.07
Gain on sale of property and equipment
(Note 3) 71,426 82.90 -- -- (138,467) (33.46)
------- ------ --------- ------ --------- -------
86,161 100.00 2,282,088 100.00 413,804 100.00
------- ------ --------- ------ --------- -------
EXPENSES
Depreciation and amortization (Note 1) 1,721 2.00 634,484 27.80 169,823 41.04
Interest 5 0.01 253,261 11.10 159,557 38.56
Maintenance, repairs and supplies -- -- 166,239 7.29 95,041 22.97
Salaries, including $33,081 paid to related
parties (Note 6) -- -- 211,020 9.25 155,007 37.46
Utilities 212 0.25 176,629 7.74 98,880 23.90
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
Real estate taxes 1,299 1.51 161,655 7.08 36,561 8.84
Management fees accrued to related parties (Note 6) 415 0.48 97,578 4.28 25,036 6.05
Other 5,618 6.52 29,505 1.29 252,863 61.11
Insurance 398 0.46 39,454 1.73 16,938 4.09
Payroll taxes and employee benefits -- -- 43,768 1.92 30,599 7.40
Loss on earthquake damage (Note 8) -- -- 156,496 6.85 -- --
------- ------ --------- ------ --------- -------
11,029 12.81 2,049,100 89.79 1,188,933 287.34
------- ------ --------- ------ --------- -------
NET INCOME (LOSS) $75,132 87.19% $ 232,988 10.21% $(775,129) (187.34)%
======= ====== ========= ====== ========= =======
<CAPTION>
For the Year Ended December 31, 1994
----------------------------------------------------------
De Anza Properties-XII, Ltd. Total
---------------------------- ---------------------
Amount % of Income Amount % of Income
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME
Rent (Notes 4 and 8) -- -- $2,737,987 95.80%
Interest $ 73,518 96.78% 76,706 2.68
Other 2,444 3.22 64,546 2.27
Utilities -- -- 45,817 1.60
Gain on sale of property and equipment
(Note 3) -- -- (67,041) (2.35)
-------- ------ ---------- ------
75,962 100.00 2,858,015 100.00
-------- ------ ---------- ------
EXPENSES
Depreciation and amortization (Note 1) -- -- 806,028 28.20
Interest -- -- 412,823 14.44
Maintenance, repairs and supplies -- -- 261,280 9.14
Salaries, including $33,081 paid to related
parties (Note 6) 32,474 42.75 398,501 13.94
Utilities 220 0.29 275,941 9.66
Professional fees and services, including
$101,304 paid to related parties (Note 6) 42,424 55.85 271,424 9.50
Real estate taxes -- -- 199,515 6.98
Management fees accrued to related parties (Note 6) -- -- 123,029 4.31
Other 25,029 32.95 313,015 10.95
Insurance -- -- 56,790 1.99
Payroll taxes and employee benefits -- -- 74,367 2.60
Loss on earthquake damage (Note 8) -- -- 156,496 5.48
-------- ------ ---------- ------
100,147 131.84 3,349,209 117.19
-------- ------ ---------- ------
NET INCOME (LOSS) $(24,185) (31.84)% $(491,194) (17.19)%
======== ====== ========== ======
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-45-
<PAGE> 46
SCHEDULE I
Page 3 of 3
De Anza Properties-XII, Ltd.
(A Limited Partnership)
Schedule of Projects' Operations
<TABLE>
<CAPTION>
For the Year Ended December 31, 1993
-----------------------------------------------------------------------
San Luis Bay Warner Oaks Mark Mobile
Mobile Estates Apartments Home Park
--------------------- ----------------------- -----------------------
Amount % of Income Amount % of Income Amount % of Income
-------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Rent (Notes 4) $ 28,137 16.55% $2,103,906 98.08% $ 702,218 90.02
Interest -- -- 777 0.04 2,760 0.35
Other -- -- 40,480 1.88 12,746 1.63
Utilities -- -- -- -- 50,509 6.48
Gain on sale of property
and equipment (Note 3) 141,923 83.45 -- -- 11,828 1.52
-------- ------ --------- ------ --------- -------
170,060 100.00 2,145,163 100.00 780,061 100.00
-------- ------ --------- ------ --------- -------
EXPENSES
Depreciation and amortization (Note 1) 3.201 1.88 588,726 27.44 199,132 25.53
Interest 7 -- 554,070 25.83 278,958 35.76
Maintenance, repairs and supplies -- -- 253,417 11.81 118,305 15.16
Salaries, including $28,996 paid to related
parties (Note 6) -- -- 178,025 8.30 225,683 28.93
Utilities 340 0.20 166,462 7.76 136,050 17.44
Professional fees and services,
including $90,484 paid to
related parties (Note 6) 1,562 0.92 70,969 3.31 49,314 6.32
Real estate taxes 1,920 1.13 155,992 7.27 64,980 8.33
Management fees accrued to related
parties (Note 6) 864 0.51 107,420 5.01 35,784 4.59
Other 12,343 7.26 51,956 2.42 270,206 34.64
Insurance 519 0.31 33,669 1.57 34,969 4.48
Payroll taxes and employee benefits -- -- 41,530 1.94 44,987 5.77
Loss on refinancing of discounted
rate (Note 1) -- -- 173,204 8.07 -- --
Provision for loss on mobile homes
held for resale -- -- -- -- 56,232 7.21
-------- ------ --------- ------ --------- -------
20,756 12.21 2,375,440 100.73 1,514,600 194.16
-------- ------ --------- ------ --------- -------
NET INCOME (LOSS) $149,304 87.79% $(230,277) (10.73)% $(734,539) (94.16)%
======== ====== ========= ====== ========= =======
<CAPTION>
For the Year Ended December 31, 1993
----------------------------------------------------------
De Anza Properties-XII, Ltd. Total
---------------------------- ---------------------
Amount % of Income Amount % of Income
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME
Rent (Notes 4) -- -- $2,834,261 89.08%
Interest $ 78,902 91.19% 82,439 2.60
Other 7,627 8.81 60,853 1.91
Utilities -- -- 50,509 1.58
Gain on sale of property
and equipment (Note 3) -- -- 153,751 4.83
-------- ------ ---------- ------
86,529 100.00 3,181,813 100.00
-------- ------ ---------- ------
EXPENSES
Depreciation and amortization (Note 1) -- -- 791,059 24.86
Interest -- -- 833,035 26.18
Maintenance, repairs and supplies -- -- 371,722 11.68
Salaries, including $28,996 paid to related
parties (Note 6) 28,558 33.00 432,266 13.59
Utilities 56 0.06 302,908 9.52
Professional fees and services,
including $90,484 paid to
related parties (Note 6) 36,817 42.55 158,662 4.99
Real estate taxes -- -- 222,892 7.01
Management fees accrued to related
parties (Note 6) -- -- 144,068 4.53
Other 32,825 37.94 367,330 11.54
Insurance -- -- 69,157 2.17
Payroll taxes and employee benefits -- -- 86,517 2.72
Loss on refinancing of discounted
rate (Note 1) -- -- 173,204 5.44
Provision for loss on mobile homes
held for resale -- -- 56,232 1.77
-------- ------ ---------- ------
98,256 113.55 4,009,052 126.00
-------- ------ ---------- ------
NET INCOME (LOSS) $(11,727) (13.55)% $ (827,239) (26.00)%
======== ====== ========== ======
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-46-
<PAGE> 47
Schedule II
Page 1 of 2
De Anza Properties - XII, Ltd.
(A Limited Partnership)
Schedule of Distributable Income, Partners' Distributions and Reserves
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994 1993
-----------------------------------------
<S> <C> <C> <C>
Net income (loss) $ 196,633 $ (491,194) $ (827,239)
Add (deduct) adjustments per partnership
agreement:
Depreciation and amortization 647,027 806,028 791,059
(Gain) loss on sale of property and equipment (42,000) 67,041 (153,751)
Amortization of note payable discount - - 334,871
Debt amortization (16,763) (91,790) (164,419)
Net change in accruals 95,624 169,331 115,942
Release of prior years' reserves 3,455,628 2,996,212 2,899,749
-----------------------------------------
Cash available for distribution(1) 4,336,149 3,455,628 2,996,212
Cash distributions to limited partners, up to
7% per annum of average adjusted capital
contributions of $17,601,655, $18,739,386,
and $19,089,000 in 1995, 1994 and 1993,
respectively (725,000) - -
-----------------------------------------
Reserves from operations(2) $3,611,149 $ 3,455,628 $2,996,212
=========================================
Proceeds from sales of properties available
for distribution or reserves(3) - $ 1,549,159 $ 336,339
Use of reserves for earthquake repairs - (664,000) -
Release of prior years' reserves $ 330,330 935,171 598,832
-----------------------------------------
330,330 1,820,330 935,171
Distributions to limited partners from sales
proceeds (42,000) (1,487,000) -
-----------------------------------------
Reserves from sales of properties(2)(3)(4) $ 288,330 $ 333,330 $ 935,171
=========================================
Distributions to limited partners per original
$1,000 investment:
From operations:
Amount $ 31.91 - -
=========================================
Percent (of adjusted capital) 4.12% - -
=========================================
From sales:
Amount $ 1.85% $ 65.45 -
=========================================
Percent (of original investment) 0.18% 6.55% -
=========================================
</TABLE>
See accompanying report of independent auditors and notes to financial
statements.
-47-
<PAGE> 48
Schedule II
Page 2 of 2
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Schedule of Distributable Income, Partners' Distributors 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 1993, the Partnership sold three of the remaining seven spaces of San
Luis Bay for $194,310. After paying closing and sales costs of $6,058,
the Partnership netted proceeds of $188,252. Also, in 1993, the
Partnership collected $148,087 in principal payments on the purchase
money notes.
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 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.
(4) Included in the reserves from sales of properties are $188,097 and
$230,097 at December 31, 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.
-48-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 671,430
<SECURITIES> 0
<RECEIVABLES> 8,346
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 722,891
<PP&E> 14,792,372
<DEPRECIATION> 6,540,758
<TOTAL-ASSETS> 9,540,441
<CURRENT-LIABILITIES> 229,079
<BONDS> 4,261,943
0
0
<COMMON> 0
<OTHER-SE> 4,070,413
<TOTAL-LIABILITY-AND-EQUITY> 9,540,441
<SALES> 2,241,482
<TOTAL-REVENUES> 2,386,863
<CGS> 0
<TOTAL-COSTS> 1,225,019
<OTHER-EXPENSES> 647,027
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 318,184
<INCOME-PRETAX> 196,633
<INCOME-TAX> 0
<INCOME-CONTINUING> 196,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,633
<EPS-PRIMARY> 8.57<F1>
<EPS-DILUTED> 8.57<F1>
<FN>
<F1>EARNINGS PER SHARE IS PER LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
