<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number 0-10430
DE ANZA PROPERTIES - XII, LTD.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3601367
(State or other jurisdiction of (IRS Employer Iden-
incorporation or organization) tification Number)
9171 WILSHIRE BOULEVARD, SUITE 627
BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices, including zip code)
(310) 550-1111
(The registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially. The total number of pages contained herein is 18.
1
<PAGE>
TABLE OF CONTENTS
-----------------
PART I. FINANCIAL INFORMATION
- ------ ---------------------
<TABLE>
<C> <S> <C>
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets 3
Statements of Income 5
Statements of Changes in Partners'
Capital (Deficit) 7
Statements of Cash Flows 8
Notes to Financial Statements 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 15
PART II. OTHER INFORMATION 17
- ------- -----------------
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ -----------
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS - including restricted
deposits of $159,096 at December 31, 1996 -
Note 1 $ 848,466 $ 631,598
ACCOUNTS RECEIVABLE 4,586 7,923
PREPAID EXPENSES 52,679 39,545
----------- -----------
905,731 679,066
----------- -----------
NOTES RECEIVABLE - Note 5 246,098 301,958
----------- -----------
PROPERTY AND EQUIPMENT - Notes 2 and 5
Land 1,179,884 1,184,605
Land improvements 3,535,702 3,437,005
Buildings and improvements 9,914,218 9,933,168
Furniture and equipment 482,159 469,216
----------- -----------
15,111,963 15,023,994
Less accumulated depreciation 7,270,584 7,180,893
----------- -----------
7,841,379 7,843,101
----------- -----------
OTHER ASSETS
Loan costs - less accumulated amortization
of $24,875 and $20,008 at September 30, 1997
and December 31, 1996, respectively - Note 2 72,459 77,326
Other 25,359 4,420
----------- -----------
97,818 81,746
----------- -----------
$ 9,091,026 $ 8,905,871
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Balance Sheets (Continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
<S> <C> <C>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
including $9,716 and $6,399 due to
related party at September 30, 1997
and December 31, 1996, respectively $ 143,159 $ 92,710
DEPOSITS AND ADVANCE RENTALS 43,560 49,182
DEFERRED GAIN ON SALE - Note 5 - 159,096
MANAGEMENT AND CONDOMINIUM CONVERSION
FEES PAYABLE TO AFFILIATE OR RELATED PARTY -
Note 3 796,331 796,331
SECURED NOTE PAYABLE - Note 2 4,183,333 4,222,320
----------- ----------
5,166,383 5,319,639
----------- ----------
PARTNERS' CAPITAL (DEFICIT)
General partners (1,639,555) (1,648,564)
Limited partners, 22,719 units issued
and outstanding 5,564,198 5,234,796
----------- ----------
3,924,643 3,586,232
----------- ----------
$ 9,091,026 $8,905,871
=========== ==========
</TABLE>
See acccompanying notes to financial statements.
4
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
INCOME
Rent $1,697,962 $1,685,231
Other 101,198 36,412
Interest and dividends 38,159 44,506
Gain on sale of property and equipment 236,094 29,001
---------- ----------
2,073,413 1,795,150
---------- ----------
EXPENSES
Interest 230,975 237,442
Maintenance, repairs and supplies 183,728 187,954
Salaries - including $11,736 and $13,759
paid to related party in 1997 and
1996, respectively - Note 3 149,211 146,917
Utilities 135,789 134,275
Professional fees and services -
including $43,980 and $47,766 paid
to related party in 1997 and 1996,
respectively - Note 3 119,559 125,372
Real estate taxes 116,638 114,940
Depreciation and amortization 106,989 460,160
Other 54,745 69,356
Insurance 44,599 48,363
Payroll taxes and employee benefits 30,269 30,986
---------- ----------
1,172,502 1,555,765
---------- ----------
NET INCOME $ 900,911 $ 239,385
========== ==========
NET INCOME
GENERAL PARTNERS $ 9,009 $ 2,394
========== ==========
LIMITED PARTNERS $ 891,902 $ 236,991
========== ==========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 90.09 $ 23.94
========== ==========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 39.26 $ 10.43
========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
INCOME
Rent $563,403 $580,574
Other 9,303 8,735
Interest and dividends 12,919 15,132
Gain on sale of property and equipment 159,096 29,001
-------- --------
744,721 633,442
-------- --------
EXPENSES
Interest 77,484 78,223
Maintenance, repairs and supplies 56,482 56,672
Salaries - including $4,124 and $4,253
paid to related party in 1997 and
1996, respectively - Note 3 52,426 49,410
Utilities 47,282 43,797
Professional fees and services -
including $14,923 and $16,406 paid
to related party in 1997 and 1996,
respectively - Note 3 20,943 33,080
Real estate taxes 38,832 39,055
Depreciation and amortization 1,672 153,387
Other 10,401 25,009
Insurance 14,761 15,818
Payroll taxes and employee benefits 8,920 10,192
-------- --------
329,203 504,643
-------- --------
NET INCOME $415,518 $128,799
======== ========
NET INCOME
GENERAL PARTNERS $ 4,155 $ 1,288
======== ========
LIMITED PARTNERS $411,363 $127,511
======== ========
INCOME PER 1% GENERAL
PARTNER INTEREST - Note 4 $ 41.55 $ 12.88
======== ========
INCOME PER LIMITED
PARTNERSHIP UNIT - Note 4 $ 18.11 $ 5.61
======== ========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
(A Limited Partnership)
Statements of Changes in Partners' Capital (Deficit)
(Unaudited)
For the Nine Months Ended September 30, 1997 and
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
General Limited
Total Partners Partners
----------- ------------ -----------
<S> <C> <C> <C>
BALANCE - January 1, 1996 $4,070,413 $(1,652,362) $5,722,775
DISTRIBUTIONS TO PARTNERS (864,000) - (864,000)
NET INCOME - for the year
ended December 31, 1996 379,819 3,798 376,021
---------- ----------- ----------
BALANCE - December 31, 1996 3,586,232 (1,648,564) 5,234,796
DISTRIBUTIONS TO PARTNERS (562,500) - (562,500)
NET INCOME - for the nine
months ended September 30,
1997 900,911 9,009 891,902
---------- ----------- ----------
BALANCE - September 30, 1997 $3,924,643 $(1,639,555) $5,564,198
========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Gross rents received from real estate
operations $1,694,912 $1,679,250
Cash paid to suppliers and employees -
including $76,804 and $65,194
paid to related party in 1997
and 1996, respectively (796,394) (807,505)
Interest paid (231,402) (238,503)
Interest and other income received 139,720 81,671
---------- -----------
Net cash provided by
operating activities 806,836 714,913
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (114,580) (210,493)
Payments received on notes receivable 55,860 134,928
Sale of property and equipment 100,000 -
Sales and closing costs (29,761) -
--------- -----------
Net cash provided by (used in)
investing activities 11,519 (75,565)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (562,500) (525,000)
Principal payments on secured
notes payable (38,987) (28,058)
--------- -----------
Net cash used in
financing activities (601,487) (553,058)
--------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 216,868 86,290
CASH AND CASH EQUIVALENTS:
BALANCE AT BEGINNING OF PERIOD 631,598 671,430
---------- -----------
BALANCE AT END OF PERIOD $ 848,466 $ 757,720
========== ===========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1997 1996
-------------- -------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 900,911 $ 239,385
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization 106,989 460,160
Gain on sale of property and equipment (236,094) (29,001)
Changes in operating assets and
liabilities
Decrease in accounts receivable 3,337 247
Increase in prepaid expenses (13,134) (11,260)
Decrease in other assets - 716
Increase in accounts payable and
accrued expenses 50,449 59,011
Decrease in deposits and advance
rentals (5,622) (4,345)
-------- ---------
Net cash provided by
operating activities $806,836 $714,913
======== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) have been included. Operating results during the nine and
three months ended September 30, 1997 are not necessarily indicative
of the results that may be expected for the year ending December 31,
1997. For further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1996.
Cash and Cash Equivalents
-------------------------
The Partnership invests its cash not needed for working capital in
highly liquid short-term investments consisting primarily of money
market funds and certificates of deposit, with original maturities
ranging generally from one to three months. The Partnership
considers all such items to be cash equivalents.
Depreciation
------------
Pursuant to generally accepted accounting principles the Partnership
ceased to depreciate Warner Oaks Apartments ("Warner Oaks") from the
time it determined to sell the property (see Note 5).
NOTE 2 - SECURED NOTE PAYABLE
Secured note payable at September 30, 1997 and December 31, 1996
consisted of:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Note collateralized by a first
trust deed, payable in monthly
installments of $29,997, including
interest until December 15, 1997.
Thereafter, the monthly payment
changes annually on each December
15th. Interest accrues at 2.5%
over the FHLB's 11th District Cost
of Funds Index, not to exceed 12.9%,
adjusted monthly. Unpaid principal
and accrued interest are due
November 15, 2008. The interest rate
in effect at September 30, 1997 and
December 31, 1996 was 7.39% and
7.34%, respectively. $4,183,333 $4,222,320
========== ==========
</TABLE>
10
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES
Pursuant to a former management agreement dated October 1, 1985, as
amended, De Anza Assets, Inc., a former affiliate of the operating
general partner (OGP), was paid a management fee in the amount of 5%
of the annual gross receipts from the operations of the
Partnership's properties. The payment of this fee is subordinated to
the priority distribution to the limited partners of 7% of their
adjusted capital contributions each year and is noncumulative,
except in the case of a sale, refinancing or other disposition of
the Partnership's properties. In that case, the difference between
the management fee actually paid and the management fee that would
have been paid if it were not subordinated is payable out of
proceeds of the sale, refinancing or other disposition after payment
of the limited partners' priority return and capital contribution
and the general partners' incentive interest. However, management
fees payable subsequent to a consummated refinancing are not
subordinated to the limited partners' priority return to the extent
the subordination would have been caused by increased debt service
charges. At September 30, 1997 and December 31, 1996, cumulative
accrued fees of $565,022 to De Anza Assets, Inc. have been
subordinated and are included in management and condominium
conversion fees payable to affiliate or related party, as reflected
in the balance sheets. Shortly before its sale to an affiliate of
Manufactured Home Communities, Inc. (MHC), as discussed in Note 5,
De Anza Assets, Inc. assigned its rights to receipt of these fees to
the Gelfand Family Trust.
On August 18, 1994, subsequent to the sale of the Mark and the
property management business of De Anza Group, Inc. (DAG), as
discussed in Note 5, the property management of Warner Oaks and the
two remaining spaces at San Luis Bay was assumed by Terra Vista
Management, Inc. (Terra Vista). Terra Vista is wholly owned by
Michael D. Gelfand, president of the OGP and the son of Herbert M.
Gelfand. Herbert M. Gelfand, together with Beverly Gelfand, is the
sole shareholder of the OGP and an individual general partner.
Management fees of $86,074 and $85,614 were deferred, but not
accrued for the nine months ended September 30, 1997 and 1996,
respectively. Of the $86,074, $28,578 is attributable to the three
months ended September 30, 1997 (compared to $29,453 deferred, but
not accrued for the three months ended September 30, 1996). The
Partnership has determined, that based on the anticipated net
proceeds from the disposition or refinancing of the property and
their allocation under the terms of the Partnership Agreement, that
it is not probable any deferred management fees would be paid.
However, in the event there were sufficient proceeds, the deferred
management fees would be paid at that time. At September 30, 1997
and December 31, 1996, cumulative accrued fees to Terra Vista of
$153,500, have been subordinated and are included in management and
condominium conversion fees payable to affiliate or related party.
The Gelfand Family Trust has agreed to share equally any payment
which is made to the Gelfand Family Trust for deferred management
fees with Terra Vista until Terra Vista has been paid all
outstanding deferred management fees due Terra Vista.
Pursuant to the partnership agreement, a condominium conversion fee
equal to 1% of the sales price of the San Luis Bay homesites sold is
due to an
11
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)
affiliate of the OGP (see Note 5). Payment of this fee has been
deferred pursuant to the partnership agreement's requirement
regarding subordination to payment of the limited partners' priority
return and capital contribution, the general partners' incentive
interest and deferred management fees. Subordinated cumulative
accrued fees of $77,809 have been included in management and
condominium conversion fees payable to an affiliate or related party
at September 30, 1997 and December 31, 1996. Shortly before the sale
to MHC, De Anza Assets, Inc. assigned its rights to receive these
fees to the Gelfand Family Trust.
In addition, Terra Vista was paid $76,804 and $65,194 during the
nine months ended September 30, 1997 and 1996, respectively, for
performing bookkeeping, legal, regional management, computer,
disposition and investor relations services necessary for the
operation of the Partnership and its properties. Of the $76,804,
$37,814 is attributable to the three months ended September 30, 1997
(compared to $21,679 paid for the three months ended September 30,
1996).
NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED PARTNERSHIP UNIT
Income per limited partnership unit is computed based on the limited
partners' share of net income as shown on the Statements of Income
and Changes in Partners' Capital (Deficit) and the number of limited
partnership units outstanding (22,719 units). The general partners'
share of net income has not been included in this computation.
Income per 1% general partner interest is computed based on the
general partners' share of net income as shown on the Statements of
Operations and Changes in Partners' Capital (Deficit).
NOTE 5 - SALE OF 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 payments, including interest at 10%, based
on a loan amortization schedule of 30 years, with a balloon payment
of unpaid principal and interest due at the end of seven years. At
September 30, 1997 and December 31, 1996, respectively, the
outstanding amounts due under such notes totaled $246,098 and
$301,958. Those residents who purchased their homesites for cash
received a 10% discount off their purchase price.
12
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 5 - SALE OF PROPERTY AND EQUIPMENT (Continued)
San Luis Bay (continued)
------------------------
The Partnership sold 160 homesites prior to 1995. On May 1, 1997,
the Partnership sold one of the two remaining spaces at San Luis Bay
for $100,000. Net proceeds, after commission and sale and closing
costs of $7,112, was $92,888. The sole remaining homesite is leased
to a resident.
The Mark
--------
On August 18, 1994 the Partnership sold The Mark to an affiliate of
MHC, a real estate investment trust, as part of an overall
transaction for the sale of the related management business of DAG
and other mobile home communities affiliated with DAG. In connection
with the sale, the Partnership established various reserves totaling
$230,097. The $230,097 was used to establish the following cash
reserves:
MHC Reserve $ 42,000
General Reserve 130,094
Independent Committee Reserve 58,003
The MHC Reserve was required by MHC. It was released in 1995, at
which time the gain on sale was recognized. The General Reserve and
Independent Committee Reserve were established to fund contingent
liabilities that may arise out of the MHC transaction. In August
1996, $29,001 of the Independent Committee Reserve was released and
the gain on sale recognized and included in net income. In August
1997, the remaining balance of the Independent Committee Reserve,
$29,002, and the General Reserve of $130,094, were released and the
gain on sale recognized and included in net income.
Pursuant to the guidelines of Financial Accounting Standards No. 66,
"Accounting for Sales of Real Estate," the Partnership deferred in
1994 the recognition of gain on that portion of the sales proceeds,
represented by the MHC Reserve, General Reserve and Independent
Committee Reserve, totaling $230,097. As these reserves are released
or expended, gain on sale is recognized. At December 31, 1996,
$159,096 of sale proceeds have been deferred and are included in
deferred gain on sale, as reflected in the balance sheets while at
September 30, 1997, all reserves were released with no deferred gain
on sale reflected in the balance sheets.
13
<PAGE>
DE ANZA PROPERTIES - XII, LTD.
(A Limited Partnership)
Notes to Financial Statements (Continued)
(Unaudited)
September 30, 1997 and December 31, 1996 and
For the Nine and Three Months Ended September 30, 1997 and 1996
NOTE 6 - SUBSEQUENT EVENT - POTENTIAL SALE OF WARNER OAKS APARTMENTS
In March 1997, the Partnership listed Warner Oaks Apartments,
located in Los Angeles, its remaining property, for sale. In October
1997, the Partnership entered into a contingent contract to sell the
property to Bay Apartment Communities, Inc., an unaffiliated entity,
for $20 million dollars, all cash. The currently scheduled closing
date is in January 1998, however there can be no assurance that a
sale will be consummated, or if consummated that it will occur at
that time or for that amount. Upon such a sale it is anticipated
that the Partnership would be dissolved and terminated.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity
- ---------
The Partnership's quick ratios were 3.6:1 and 2.4:1, including unrestricted
cash balances of $848,466 and $472,502 at September 30, 1997 and December 31,
1996, respectively. The increase in cash is mainly due to notes receivable
prepayments, the sale of a space at San Luis Bay and the release of restricted
cash reserves. The Partnership's cash balance is its immediate source of
liquidity.
On a long-term basis, the Partnership's liquidity is sustained primarily from
cash flows from operations, which during the nine months ended September 30,
1997 were approximately $807,000. Should it become necessary to improve
liquidity, the Partnership can reduce partner distributions, which totaled
$562,500 during the nine months ended September 30, 1997, arrange a short-term
line of credit or refinance Warner Oaks.
Subsequent to the sale of The Mark, the Partnership continues to operate
Warner Oaks, the remaining property. In October 1997, the Partnership entered
into a contingent contract to sell Warner Oaks and anticipates that a closing
would occur in January 1998; however, there can be no assurances that a sale
will occur. The Partnership also owns one space at San Luis Bay Mobile Estates
and various notes receivables related to the 1991 San Luis Bay sale (see Note
5 to the Financial Statements). Upon sale of Warner Oaks, the Partnership
expects to pursue the sale of its remaining space at San Luis Bay and
collection of its notes receivable in order to liquidate and dissolve the
Partnership in 1998.
In November 1993, the Partnership refinanced Warner Oaks with a variable
interest rate loan. The interest rate for the initial three months was 6.25%,
thereafter the loan bears interest at 250 basis points over the Eleventh
District Cost of Funds with caps on the maximum annual payment change of 7.5%
of the current payment, and an interest rate cap of 12.9% over the life of the
loan. This loan is subject to negative amortization. Future liquidity will be
affected, unfavorably or favorably, to the extent the payment rate fluctuates.
At September 30, 1997, the interest rate in effect was 7.39%.
The Partnership has sold 161 of 162 spaces at San Luis Bay as of September 30,
1997 (see Note 5 to the Financial Statements). Liquidity is expected to
improve as the notes receivable from the buyers of San Luis Bay spaces mature,
as discussed in Note 5 to the Financial Statements. As of September 30, 1997,
the amount of the notes receivable outstanding was approximately $246,000.
Liquidity also improves when the notes receivable are prepaid and if the
remaining space is sold.
Other than as described elsewhere, there are no known trends, demands,
commitments, events or uncertainties which are reasonably likely to materially
affect the Partnership's liquidity.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Capital Resources
- -----------------
The Partnership anticipates spending approximately $139,000 in 1997 for
physical improvements at Warner Oaks, approximately $24,000 of which will be
spent during the remainder of 1997. The Partnership is continuously reviewing
the necessity for such expenditures in light of the expected sale of Warner
Oaks. Funds for these improvements will be provided by cash generated from
operations.
As described above the Partnership may sell Warner Oaks in January 1998. No
assurances can be made that such a sale will occur. However, if it does the
Partnership would endeavor to dispose of its remaining space at San Luis Bay
and collect its notes receivable in order to liquidate as soon as practical.
Other than as described above, there are no known material trends, favorable
or unfavorable, in the Partnership's capital resources. The Partnership does
not contemplate any other material changes in the mix of its capital
resources, other than as described above.
Results of Operations
- ---------------------
Rental income increased 0.8% and decreased 3.0% during the nine and three
months ended September 30, 1997, respectively, over the same periods in 1996,
primarily due to fluctuating occupancy. Other income increased in 1997 due to
receipt of a legal settlement of litigation regarding a matter at The Mark
that occurred prior to the sale of that property in 1994. Gain on sale income
increased in 1997 due to sale of a space at San Luis Bay and recognition of
deferred income attributable to the 1994 sale of The Mark property.
Expenses decreased 24.6% and 34.8% during the nine and three months ended
September 30, 1997, respectively, over the same periods in 1996. The decrease
is almost entirely due to lower depreciation and amortization expense in 1997
because, according to generally accepted accounting principles, from the time
the Partnership determined to sell Warner Oaks it ceased to depreciate the
carrying value of the assets. Additionally, interest expense decreased in 1997
due to declining principal balances. Other expense decreased in 1997 due to
responses to 1996 offers for the Partnership's Units not being repeated in
1997.
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.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM NUMBER
- -----------
1. LEGAL PROCEEDINGS
No new material legal proceedings were commenced during the three
months ended September 30, 1997 and there are none pending.
2. CHANGES IN SECURITIES
None.
3. DEFAULTS UPON SENIOR SECURITIES
None.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
5. OTHER INFORMATION
The Partnership has entered into a contingent contract to sell its
last remaining property, Warner Oaks Apartments, for $20 million, all
cash, to Bay Apartment Communities, Inc., an unaffiliated entity. The
sale is scheduled to occur in January 1998. There is no assurance that
the property will be sold. If sold, the Partnership will be dissolved
and liquidated, including disposing of the remaining space at San Luis
Bay and collection of the notes receivable. It is expected that the
sale of Warner Oaks will result in a taxable gain.
6. EXHIBITS AND REPORTS ON FORM 8-K
None.
17
<PAGE>
PART II. OTHER INFORMATION (Continued)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DE ANZA PROPERTIES - XII, LTD.
(Registrant)
By DE ANZA CORPORATION
A California Corporation
Operating General Partner
Date: November 12, 1997 By /s/ Michael D. Gelfand
----------------------
Michael D. Gelfand
President and
Chief Financial Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 848,466
<SECURITIES> 0
<RECEIVABLES> 4,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 905,731
<PP&E> 15,111,963
<DEPRECIATION> 7,270,584
<TOTAL-ASSETS> 9,091,026
<CURRENT-LIABILITIES> 238,719
<BONDS> 4,131,333
0
0
<COMMON> 0
<OTHER-SE> 3,924,643
<TOTAL-LIABILITY-AND-EQUITY> 9,091,026
<SALES> 1,697,962
<TOTAL-REVENUES> 2,073,413
<CGS> 0
<TOTAL-COSTS> 834,538
<OTHER-EXPENSES> 106,989
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 230,975
<INCOME-PRETAX> 900,911
<INCOME-TAX> 0
<INCOME-CONTINUING> 900,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 900,911
<EPS-PRIMARY> 39.26<F1>
<EPS-DILUTED> 39.26
<FN>
<F1>ESP is per limited partnership unit
</FN>
</TABLE>
