<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
---------------------------------------
OR
[_] 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 0-12537
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First Capital Income Properties, Ltd. - Series VIII
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2192277
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
------------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 207-0020
-------------------------
Securities registered pursuant to Section 12(b) of
the Act NONE
-------------------------
Securities registered pursuant to Section 12(g) of
the Act Limited Partnership Units
-------------------------
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. [_]
Documents incorporated by reference:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated July 28, 1982, included
in the Partnership's Registration Statement on Form S-11, is incorporated herein
by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated April 6, 1994, reporting the sale of
the El Paso Natural Gas Building, located in El Paso, Texas, is incorporated
herein by reference in Part IV of this report.
The Partnership's Report on Form 8-K dated January 15, 1993, reporting the
refinancing of the El Paso Natural Gas Building, located in El Paso, Texas, is
incorporated herein by reference in Part IV of this report.
Exhibit Index - Page A-1
------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
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The registrant, First Capital Income Properties, Ltd. - Series VIII (the
"Partnership") is a limited partnership organized in June, 1982 under the
Florida Uniform Limited Partnership Act. The Partnership sold $70,000,000 in
Limited Partnership Units (the "Units") to the public from August, 1982 through
December, 1982, pursuant to a Registration Statement on Form S-11 filed with the
Securities and Exchange Commission (Registration Statement No. 2-78064).
Capitalized terms used in this report have the same meaning as those terms in
this Registration Statement.
The business of the Partnership is to invest primarily in existing, improved,
income-producing commercial real estate such as shopping centers, warehouses and
office buildings and, to a lesser extent, in other types of income-producing
real property and investment vehicles such as mortgage loans. From January 1983
through April 1986 the Partnership made six real property investments, purchased
a 50% interest in a joint venture with an Affiliated partnership which made one
real property investment and purchased four mortgage loan investments. As of
December 31, 1994, three of these mortgage loans have matured and have been
repaid and the fourth mortgage loan was repaid in February 1995 (See Note 3 in
Notes to Financial Statements for more information). In 1992, the Partnership
sold five of the seven warehouses at Atlanta Gateway Park Industrial Center
("Atlanta Gateway"). During 1993, the Partnership disposed of the remaining two
warehouses at Atlanta Gateway and its interest in Hairston Memorial Crossing
Shopping Center. On April 6, 1994, the joint venture sold its interest in the El
Paso Natural Gas Building (See Note 7 in Notes to Financial Statements for more
information).
Property management services for all of the Partnership's real estate
investments are provided by an Affiliate of the Managing General Partner, for
fees calculated as a percentage of gross rents received from the properties.
The real estate business is highly competitive. The results of operations of the
Partnership depend upon the availability of suitable tenants and market
conditions. Properties owned by the Partnership frequently compete for tenants
with similar properties owned by others.
The Partnership directly employs six people for on-site property maintenance and
administration.
ITEM 2. PROPERTIES (a) (b)
------ ------------------
As of December 31, 1994, the Partnership owned the following four property
interests, all of which were owned in fee simple.
<TABLE>
<CAPTION>
Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
------------- -------- ------------ ----------
<S> <C> <C> <C>
Shopping Centers:
-----------------
Old Mill Place San Antonio, Texas 153,018 27 (1)
Walker Springs Plaza Knoxville, Tennessee 161,405 10 (5)
Warehouses:
-----------
Tuckerstone Commons/
Rooker Royal I & II Atlanta, Georgia 215,345 19 (2)
</TABLE>
2
<PAGE>
ITEM 2. PROPERTIES (a)(b) - Continued
-------------------------------------
<TABLE>
<CAPTION>
Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
------------- -------- ------------ -----------
<S> <C> <C> <C>
Office Buildings:
-----------------
Brookwood Metroplex
Office Buildings I & II Birmingham, Alabama 207,664 21 (1)
</TABLE>
Notes:
------
(a) For a discussion of significant operating results and major capital
expenditures planned for the Partnership's properties refer to Item 7 on
pages 8 through 9.
(b) For Federal income tax purposes, the Partnership depreciates the portion of
the acquisition costs of its properties allocable to real property, and all
improvements thereafter, over useful lives ranging from 18 years to 31.5
years, utilizing either the Accelerated Cost Recovery System ("ACRS") or
straight-line method. The Partnership's portion of real estate taxes for Old
Mill Place, Walker Springs Plaza, Tuckerstone Commons / Rooker Royal I & II
and Brookwood Metroplex Office Buildings I & II were approximately $212,600,
$142,200, $67,900 and $143,900, respectively, for the year ended December
31, 1994. In the opinion of the Managing General Partner, the Partnership's
properties are adequately insured and serviced by all necessary utilities.
(c) Represents the total number of tenants as well as the number of tenants, in
parenthesis, that individually occupy more than 10% of the net leasable
square footage of the property.
The following table sets forth occupancy rates for the Partnership's properties
as of December 31 for each of the last five years:
<TABLE>
<CAPTION>
Property Name 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Old Mill Place 92% 96% 97% 95% 93%
Walker Springs
Plaza 100% 99% 99% 97% 95%
Tuckerstone
Commons/Rooker
Royal I & II 100% 86% 85% 91% 81%
Brookwood
Metroplex Office
Buildings I & II 100% 93% 94% 94% 98%
</TABLE>
3
<PAGE>
ITEM 2. PROPERTIES - Continued
The following table sets forth the properties' average annual rentals per square
foot for each of the last five years ended December 31 and are computed by
dividing each property's base rental revenues by its average occupied square
footage:
<TABLE>
<CAPTION>
Property Name 1994 1993 1992 1991 1990
------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Old Mill Place $8.00 $8.12 $7.59 $8.02 $8.00
Walker Springs
Plaza $5.14 $4.91 $4.68 $4.17 $4.09
Tuckerstone
Commons/Rooker
Royal I & II $3.16 $3.17 $3.40 $3.20 $3.26
Brookwood
Metroplex Office
Buildings I & II $10.29 $9.95 $9.63 $9.59 $9.61
</TABLE>
The following table summarizes the principal provisions of the leases for the
major tenants which occupy more than ten percent of the rentable square footage
at each of the Partnership's properties:
<TABLE>
<CAPTION>
Percentage
of Net Renewal
Leasable Options
Partnership's Expiration Square (Renewal
Share of Date of Footage Options/
Rent for 1995 Lease Occupied Years)
------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Old Mill Place
--------------
Kroger $ 280,600 8/31/00 28% 6 / 5
(grocery store)
Walker Springs Plaza
--------------------
Stein Mart $ 195,000 2/28/99 24% 1 / 5
(department store)
Kroger $ 114,700 3/31/98 22% 1 / 5
(grocery store)
Big Lots $ 120,000 4/30/98 16% None
(discount department store)
Steinberg's $ 108,900 3/31/97 11% 1 / 5
(appliance store)
Revco D. S., Inc. $ 41,000 3/31/98 10% 2 / 5
(drugstore)
Tuckerstone Commons /
Rooker Royal I & II
---------------------
Tucker Technology $ 93,000 8/31/97 12% None
(Tool and dye manufacturer)
Glen Harp & Sons, Inc. $ 56,500 12/31/97 11% None
(Semi-trailer coverings)
</TABLE>
4
<PAGE>
ITEM 2. PROPERTIES - Continued
Major tenants' principal lease provisions: (continued)
<TABLE>
<CAPTION>
Percentage
of Net Renewal
Leasable Options
Partnership's Expiration Square (Renewal
Share of Date of Footage Options/
Rent for 1995 Lease Occupied Years)
------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Brookwood Metroplex
Office Building I & II
----------------------
Vulcan Materials Co.
(construction material and
chemical manufacturer) $ 1,244,100 12/31/98 62% None
</TABLE>
The following table sets forth lease expirations (assuming no lease renewals)
for the Partnership's properties through the year ended December 31, 2004:
<TABLE>
Base Rents % of Total
Number of in Year of Base Rents
Year Tenants Square Feet Expiration (a) Collected (b)
---------- --------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
1995 17 62,004 $ 208,800 4.58%
1996 17 78,755 $ 329,400 7.89%
1997 13 118,586 $ 317,300 9.02%
1998 14 255,168 $ 1,523,100 53.66%
1999 7 97,409 $ 125,000 13.99%
2000 2 44,242 $ 217,200 32.36%
2001 2 16,620 $ 10,100 2.52%
2002 1 2,500 $ 23,300 6.33%
2003 1 3,465 $ 27,700 8.75%
2004 1 8,352 $ 33,600 15.13%
</TABLE>
(a) Represents Partnership's portion of rents to be received, through the
date of expiration, on expiring leases each year.
(b) Represents the rents to be received on expiring leases as a percentage
of the total base rents expected to be collected for each year.
ITEM 3. LEGAL PROCEEDINGS
(a & b) The Partnership and its properties are not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1994. Ordinary routine
litigation incidental to the business which is not deemed material was
maintained during the quarter ended December 31, 1994.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a,b,c & d) None.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
------- ----------------------------------------------------------------------
There has not been, nor is there expected to be, a public market for Units.
As of March 1, 1995, there were 7,466 Holders of Units.
6
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $ 6,948,200 $ 9,462,300 $ 9,729,500 $ 9,781,700 $ 9,902,900
Net income (loss) $19,957,100 $ (517,900) $ (751,800) $ 883,400 $ 1,024,100
Net income (loss)
allocated to Limited
Partners $19,423,400 $ (778,900) $ (907,000) $ 688,900 $ 701,000
Net income (loss)
allocated to Limited
Partners per Unit
(70,000 Units issued
and outstanding) $ 277.48 $ (11.13) $ (12.96) $ 9.84 $ 10.01
Investment in commercial
rental properties (net
of accumulated
depreciation and
amortization) $31,547,600 $56,374,800 $63,912,500 $71,486,900 $73,579,800
Investment in mortgage
loan receivable (net of
unearned discount) $ 1,064,000 $ 1,064,000 $ 1,064,000 $ 1,063,300 $ 1,061,800
Number of real property
interests owned at
December 31 4 5 7 7 7
Total assets $41,343,100 $68,570,400 $73,171,600 $78,041,900 $78,287,800
Mortgage loans payable None $28,611,600 $29,803,400 $32,319,700 $31,503,700
Cash Flow (as defined in
the Partnership
Agreement) (a) $ 3,380,200 $ 3,248,600 $ 3,520,600 $ 3,132,400 $ 3,231,200
Distributions to Limited
Partners per Unit
(70,000 Units issued
and outstanding) (b) $ 255.00 $ 36.78 $ 22.50 $ 25.00 $ 45.00
Return of Capital to
Limited Partners per
Unit (70,000 Units
issued and outstanding)
(c) None $ 36.78 $ 22.50 $ 15.16 $ 34.99
---------------------------------------------------------------------------------------
</TABLE>
Reconciliation of Cash Flow (as defined in the Partnership Agreement) to net
cash provided by operating activities:
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in
the Partnership
Agreement) (a) $3,380,200 $3,248,600 $3,520,600 $3,132,400 $3,231,200
Items of reconciliation:
Principal payments on
mortgage loans payable 233,100 903,500 123,100 233,700 254,200
Amortization of
discount on mortgage
loans receivable (700) (1,500) (2,200)
Changes in assets and
liabilities:
Decrease (increase) in
current assets 39,700 234,100 (24,500) (7,300) 64,100
(Decrease) increase in
current liabilities (205,200) (380,200) 179,200 361,600 99,100
-------------------------------------------------------------------------------------
Net cash provided by
operating activities $3,447,800 $4,006,000 $3,797,700 $3,718,900 $3,646,400
-------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as all revenues from
operations (excluding tenant deposits, proceeds from the sale of any
Partnership properties and proceeds from the refinancing of any Partnership
indebtedness), minus all expenses (including Operating Expenses, payments
of principal and interest on any Partnership indebtedness, and any reserves
of revenues from operations deemed reasonably necessary by the Managing
General Partner), except depreciation and amortization expenses, capital
expenditures and the General Partners' Partnership Management Fee.
(b) Distributions to Limited Partners per Unit included Sale Proceeds of
approximately $215.00 for the $70.00 and $186.50, for the years ended
December 31, 1992 and 1990, respectively.year ended December 31, 1994.
(c) To the extent cash distributions exceed net income, such excess
distributions are treated as a return of capital.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 to A-6 and
the supplemental schedule on pages A-7 and A-8 in this report.
7
<PAGE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ordinary business of the Partnership is expected to pass through three
phases: (i) Offering of Units and investment in properties, (ii) operation of
properties and (iii) sale or other disposition of properties.
The Partnership commenced the Offering of Units on August 9, 1982, and began
operations on September 2, 1982, after reaching the required minimum
subscription level. In December 1982, the Offering was terminated upon the sale
of 70,000 Units. The Partnership made seven real property investments between
March 1983 and October 1984 (including one 50% joint venture interest) and
invested in four mortgage loans in April 1986. As of December 31, 1994, three
of these mortgage loans have matured and have been repaid and the fourth
mortgage loan was repaid in February 1995 (see Note 3 in Notes to Financial
Statements for more information). In 1992, the Partnership, in addition to
being in the operation of properties phase, entered the disposition phase of
its life cycle with the sale of five of the seven warehouses at Atlanta Gateway
Park Industrial Center ("Atlanta Gateway"). During 1993, the Partnership
disposed of the remaining two warehouses at Atlanta Gateway and its interest in
Hairston Memorial Crossing Shopping Center ("Hairston"). On April 6, 1994, the
joint venture sold its interest in the El Paso Natural Gas Building ("El Paso")
(see Note 7 in Notes to Financial Statements for more information).
OPERATIONS
One of the Partnership's objectives is to dispose of its properties when market
conditions allow for the achievement of the maximum possible sales price. In
the interim, the Partnership continues to manage and maintain its remaining
properties. Notwithstanding the Partnership's intention relative to property
sales, another primary objective of the Partnership is to provide cash
distributions to Limited Partners from Cash Flow generated by Partnership
operations. The statements of cash flows presented in the financial statements
represent a reconciliation of the changes in cash balances. To the extent cash
distributions exceed net income, such excess distributions are treated as a
return of capital. Cash Flow, as defined by the Partnership Agreement, is
generally not equal to Partnership net income or cash flows as determined under
generally accepted accounting principles, since certain items are treated
differently under the Partnership Agreement than under generally accepted
accounting principles. Management believes that in order to facilitate a clear
understanding of the Partnership's operations, an analysis of Cash Flow (as
defined by the Partnership Agreement) should be examined in conjunction with an
analysis of net income or cash flows, as defined by generally accepted
accounting principles. The amount of Cash Flow and the return on Capital
Investment are not indicative of actual distributions and actual returns on
capital investment.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Years Ended December 31,
-----------------------------------
1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of Cash Flow (as defined in the
Partnership Agreement) $ 3,380,200 $ 3,248,600 $ 3,520,600
Average Capital Investment $61,220,800 $70,000,000 $70,000,000
Return on average Capital Investment (Cash
Flow/ average Capital Investment) 5.52% 4.64% 5.03%
-------------------------------------------------------------------------------
</TABLE>
During the disposition phase of the Partnership's life cycle, comparisons of
Cash Flow results between periods are complicated. Partnership Cash Flow is
generally expected to decline as real property interests are sold or disposed
since the Partnership no longer receives Cash Flow generated from such real
property interests. Accordingly, rental income, interest expense, property
operating expenses, real estate tax, insurance and repairs and maintenance
expenses are expected to decline as well, but will continue to comprise the
significant components of Cash Flow and operating results until the final
property is sold. Also, during the disposition phase, cash and cash equivalents
increase as Sale Proceeds are received and decrease as the Partnership utilizes
these proceeds for the purposes of distributions to Limited Partners, mortgage
debt repayments or making capital improvements to the Partnership's remaining
properties. Prior to being utilized for such purposes, these proceeds are
invested in short-term money market instruments. Sale and Refinancing Proceeds
are excluded from the determination of Cash Flow.
Cash Flow results for the year ended December 31, 1994 increased approximately
$131,600 when compared to the year ended December 31, 1993. This increase was
due to: 1) increased Cash Flow results at Brookwood Metroplex Office Building I
& II ("Brookwood"), Walker Springs Plaza Shopping Center ("Walker Springs") and
Tuckerstone Commons / Rooker Royal I & II Warehouses ("Rooker") of
approximately $394,200, $73,200 and $40,700, respectively; 2) increased
interest income earned on short-term investments of approximately $257,300 due
to an increase in funds available for such investments as a result of the sale
of El Paso as well as an increase in the interest rate earned on these types of
investments; 3) decreased general and administrative expenses of approximately
$58,400 primarily due to lower professional service costs and printing and
mailing expenses and 4) the absence of the 1993 Cash Flow deficit of
approximately $45,000 generated at Hairston. Partially offsetting the increase
in Cash Flow results was: 1) decreased Cash Flow results at El Paso and Old
Mill Place Shopping Center ("Old Mill") of approximately $714,800 and $12,300,
respectively; 2) a decrease in income earned on the mortgage loan investment of
approximately $21,800 and 3) the absence of 1993 Cash Flow results of
approximately $21,100 generated at Atlanta Gateway.
Cash Flow results for the year ended December 31, 1993 decreased approximately
$272,000 when compared to the year ended December 31, 1992. This decrease was
due to: 1) decreased Cash Flow results at El Paso and Atlanta Gateway of
approximately $755,300 and $11,200, respectively; 2) increased general and
administrative expenses of approximately $45,700 primarily due to higher
printing and mailing costs in 1993 and 3) a decrease in income earned on the
mortgage loan investment of approximately $14,000. Partially offsetting the
decrease in Cash Flow results was: 1) increased Cash Flow results at Old Mill,
Brookwood, Walker Springs, Hairston and Rooker of approximately $240,300,
$74,400, $61,000, $55,200 and $5,800, respectively and 2) increased interest
income earned on short-term investments of approximately $138,700 due to an
increase in funds available for such investments.
The impact of decreased debt service payments on the Partnership's mortgage
loans was a primary factor contributing to Cash Flow results for the years
under comparison. Debt service payments in 1994 decreased approximately
$2,390,900 when compared to 1993 due to: 1) decreased debt service payments of
approximately $1,928,800 on the mortgage loan collateralized by El Paso as a
result of the sale of the property in 1994; 2) decreased debt service payments
of approximately $195,500 on the mortgage loan collateralized by Hairston as a
result of the disposition of the property in 1993; 3) a decrease in interest
expense of approximately $166,900 as a result of the repayment of the mortgage
loan collateralized by Brookwood in October 1994 and 4) a decrease in interest
expense of approximately $77,700 and $22,000 at Old Mill and Rooker,
respectively, as a result of the repayment in April 1993 of the mortgage loan
collateralized by these two properties. Debt service payments increased in 1993
when compared to 1992 due primarily to an increase of approximately $927,700 in
debt service payments resulting from obtaining the new loan collateralized by
El Paso in January 1993. Partially offsetting the overall increase in 1993 debt
service payments was: 1) decreased interest expense at Old Mill and Rooker of
approximately $222,800 and $63,100, respectively, as a result of the 1993
principal repayment previously discussed; 2) decreased debt service payments of
approximately $209,500 at Hairston as a result of its disposition as previously
discussed and 3) a decrease in interest expense of approximately $206,300 as a
result of the disposition in February 1993 of the two remaining warehouses at
Atlanta Gateway.
Rental revenues at Brookwood for the years ended December 31, 1994, 1993 and
1992 were approximately $2,195,300, $1,875,900 and $1,883,500, respectively.
The changes in rental revenues for the years under comparison were due to
changes in the average annual occupancy rates from 93% in 1992 to 89% in 1993
to 98% in 1994. Partially offsetting the increase in Cash Flow results in 1994
when compared to 1993 was an increase in property operating expenses of
approximately $41,500, primarily due to an increase in management fees as a
result of the increase in rental revenues, which are calculated based on a
percentage of gross rents received by the property, and an increase in real
estate taxes of approximately $39,700, due to the fact that 1993 included
refunds resulting from the favorable outcome of the Partnership's protest of
real estate tax increases relating to the tax years 1991 and 1992. Partially
offsetting the decrease in Cash Flow results in 1993 when compared to 1992 was
a decrease in property operating expenses of approximately $34,900 due to a
decrease in management fees and a decrease in real estate taxes of
approximately $52,500 due to the favorable outcome of the Partnership's protest
as previously discussed.
Rental revenues at Walker Springs for the years ended December 31, 1994, 1993
and 1992 were approximately $1,083,000, $1,026,500 and $905,600, respectively.
The increases in rental revenues during the years under comparison were
primarily due to the steady increase in average base rental rates charged to
new and renewing tenants as well as increased tenant reimbursements for real
estate taxes. A contributing factor to the changes in Cash Flow results for
1993 and 1994 was real estate taxes at Walker Springs. In 1993, real estate
taxes increased approximately $57,400 when compared to 1992 due to the
annexation of the property by the city of Knoxville during 1991, which now
subjects the property to city taxes as well as county taxes, and an increase in
the assessed valuation of the property in 1993. The Managing General Partner
paid the 1993 taxes under protest as taxes were appealed. As a result of this
appeal, the assessed valuation of the property was reduced. The 1994 real
estate tax expense for this property decreased approximately $45,900 when
compared to 1993, which reflects the decrease in the assessed value
8
<PAGE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
and includes the receipt of a refund of approximately $17,500 for 1993 taxes.
The Partnership also received approximately $18,600 in early 1995 as an
additional refund of 1993 taxes. In addition, partially offsetting the increase
in Cash Flow results in 1994 was an increase in property operating expenses of
approximately $25,500 primarily due to increases in professional service costs.
Rental revenues at Rooker for the years ended December 31, 1994, 1993 and 1992
were approximately $645,900, $657,100 and $681,400, respectively. The decrease
in rental revenues in 1994 when compared to 1993 was primarily due to the
recovery in 1993 of a tenant receivable previously written off in 1992. The
decrease in rental revenues in 1993 when compared to 1992 was due to the loss
of two major tenants at the property during the third quarter of 1993.
Contributing to the increase in Cash Flow results in 1994 when compared to 1993
was a decrease in property operating expenses of approximately $14,200
primarily due to a decrease in professional service costs. Contributing to the
decrease in Cash Flow results in 1993 when compared to 1992 was an increase in
property operating expenses of approximately $14,200 primarily due to an
increase in professional service costs.
Rental revenues at Old Mill for the years ended December 31, 1994, 1993 and
1992 were approximately $1,303,200, $1,392,100 and $1,389,800, respectively.
The decrease in rental revenues in 1994 when compared to 1993 was primarily due
to a decrease in the average annual occupancy rate from 97% in 1993 to 92% in
1994 and an adjustment in 1993 of previously billed 1991 and 1992 tenant real
estate tax reimbursements which were underestimated. Partially offsetting the
decrease in 1994 rental revenues was a decrease of approximately $49,000 in
write-offs of tenant receivables deemed uncollectible. The increase in rental
revenues for 1993 when compared to 1992 was due to an increase in the average
occupancy rate from 96% in 1992 to 97% in 1993 as well as an increase in the
average base rental rate charged to new and renewing tenants.
Rental revenues at El Paso for the years ended December 31, 1994, 1993 and 1992
were approximately $1,003,400, $3,688,100 and $3,512,500, respectively. The
decrease in rental revenue in 1994 when compared to 1993 was due to the sale of
the property, as previously discussed. The increase in rental revenue for 1993
when compared to 1992 was due to the annual 5% rent increase charged to the
sole tenant as allowed under the net lease agreement.
Rental revenues at Hairston for the years ended December 31, 1993 and 1992 were
approximately $315,700 and $599,500, respectively. The decrease in rental
revenues from 1992 to 1993 was due to the disposition of the property in August
1993, as previously discussed.
Rental revenues at Atlanta Gateway for the years ended December 31, 1993 and
1992 were approximately $27,000 and $392,900, respectively. The decrease in
rental revenues for the years under comparison was due to the sale in 1992 of
five of the seven warehouses comprising Atlanta Gateway and the disposition of
the final two warehouses in February 1993, as previously discussed.
To increase occupancy levels at the Partnership's properties, the Managing
General Partner, through its Affiliated asset and property management groups,
continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
building brochures; 2) early lease renewal of existing tenants and addressing
any expansion needs these tenants may have; 3) promotion of local broker events
and networking with local brokers; 4) networking with national level retailers;
5) cold-calling other businesses and tenants in the market area; and 6)
providing rental concessions or competitively pricing rental rates depending on
market conditions.
The rate of inflation has remained relatively stable and has had a minimal
impact on the operating results of the Partnership. The nature of various
tenant lease clauses protects the Partnership, to some extent, from increases
in the rate of inflation. Certain of the lease clauses provide for: (1) annual
rent increases and (2) total or partial tenant reimbursement of property
operating expenses (e.g., common area maintenance, real estate taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
The decrease in the Partnership's cash position as of December 31, 1994 when
compared to December 31, 1993 resulted primarily from the distributions paid to
Partners, the repayment of the mortgage loan collateralized by Brookwood and
the payments for capital and tenant improvements exceeding the receipt of net
proceeds from the sale of El Paso and net cash provided by operating
activities. The liquid assets of the Partnership as of December 31, 1994 were
comprised of amounts held for working capital purposes and undistributed Cash
Flow.
Net cash provided by operating activities decreased from $4,006,000 for the
year ended December 31, 1993 to $3,447,800 for the year ended December 31,
1994. This decrease was primarily due to the effects of the sale and
dispositions of El Paso, Hairston and Atlanta Gateway and, to a lesser extent,
the timing of the collection of rental revenues. The decrease was partially
offset by the increase in Cash Flow results, as previously discussed, as well
as the timing of the payment of certain Partnership expenses.
Net cash (used for) provided by investing activities changed from ($301,500)
for the year ended December 31, 1993 to $42,840,500 for the year ended December
31, 1994. This change was primarily due to the receipt of proceeds from the
sale of El Paso along with the maturity of the restricted certificate of
deposit established in connection with the El Paso refinancing completed in
1993.
On April 6, 1994 First Capital Kayser Center, a joint venture in which the
Partnership and an Affiliated partnership each had a 50% interest, sold its
interest in El Paso, located in El Paso, Texas, for a sale price of
$88,450,000. The Partnership's share of Sale Proceeds was approximately
$20,974,800 net of selling expenses, including a mortgage prepayment penalty,
and the payoff of the mortgage loan collateralized by the property. The
Partnership distributed $15,050,000 of these proceeds to the Limited Partners
in May 1994. The remaining proceeds were retained by the Partnership and added
to working capital. A portion of these proceeds were utilized in October 1994
to repay the Partnership's last remaining mortgage loan which was
collateralized by Brookwood.
During the year ended December 31, 1994, the Partnership spent approximately
$567,500 for capital and tenant improvements and has budgeted to spend
approximately $550,000 during 1995. Of this budgeted amount approximately
$175,000, $175,000, $150,000 and $50,000 relates to anticipated capital and
tenant improvements and leasing costs expected to be incurred at Old Mill,
Brookwood, Walker Springs and Rooker, respectively. The Managing General
Partner believes these improvements will be necessary to secure new tenants and
to maintain occupancy levels as existing tenant leases expire.
Net cash used for financing activities increased from $363,000 for the year
ended December 31, 1993 to $48,103,500 for the year ended December 31, 1994.
This increase was primarily due to the payoff of the mortgage loan
collateralized by El Paso, including a prepayment penalty, increased
distributions to Partners in 1994, including Sale Proceeds, and the repayment
in October 1994 of the mortgage loan collateralized by Brookwood. The 1993
results included the net proceeds and a deposit refund received on the
refinancing of El Paso reduced by loan acquisition costs and a prepayment
penalty relating to the previous loan and the repayment of the mortgage loan
collateralized by Old Mill and Rooker.
On October 3, 1994 the Partnership repaid the $7,000,000 mortgage loan
collateralized by Brookwood, along with a prepayment penalty of $210,000. This
payment was funded from a portion of the Partnership's share of the proceeds
received from the sale of El Paso, as discussed above.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain a significant level of cash
reserves for the Partnership. The cash reserves are needed due to the
anticipated capital and tenant improvements necessary to be made to the
Partnership's remaining properties during the next several years. As a result
of these concerns, the Partnership continues to reserve amounts from Cash Flow
to supplement working capital reserves and has also retained a portion of the
Sale and Refinancing Proceeds discussed in previous paragraphs. For the year
ended December 31, 1994, Cash Flow retained to supplement working capital
reserves approximated $269,100. The Managing General Partner believes that the
Partnership's current cash position along with any additional amounts retained
from future Cash Flow or Sale Proceeds will be sufficient to cover budgeted
expenditures and any other requirements which may reasonably be foreseen.
Distributions to Limited Partners for the quarter ended December 31, 1994 were
made at an annualized rate of 4.57% of average Capital Investment. Cash
distributions are made 60 days after the quarter-end. The amount of Cash Flow
available for distributions to Partners is ultimately dependent upon the
performance of the Partnership's investments as well as the amount of Cash Flow
retained for future cash requirements. Therefore, there can be no assurance of
the amount of future Cash Flow available for distribution to Partners.
On February 24, 1995, the Partnership received approximately $1,060,300,
including approximately $16,300 in accrued interest from January 1, 1995 and a
$20,000 forgiveness of principal, in full satisfaction of the mortgage loan
receivable. The maturity date of this mortgage loan investment, which was June
1, 1993, had been extended until January 31, 1995.
On March 22, 1995, the Partnership entered into an agreement to sell Rooker,
located in Atlanta, Georgia, for a sale price of $5,300,000. The closing of
this transaction, expected to take place in the second quarter of 1995, is
subject to the satisfaction of certain conditions and contingencies and may or
may not be consummated.
9
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
------- -------------------------------------------
The response to this item is submitted as a separate section of this report. See
page A-1, "Index of Financial Statements, Schedule and Exhibits".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
10
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------
(a) DIRECTORS
---------
The Partnership has no directors. First Capital Financial Corporation
("FCFC") is the Managing General Partner. The directors of FCFC, as of March
30, 1995, are shown in the table below. Directors serve for one year or
until their successors are elected. The next annual meeting of FCFC will be
held in May, 1995.
Name Office
---- ------
Samuel Zell....................................... Chairman of the Board
Douglas Crocker II................................ Director
Sheli Z. Rosenberg................................ Director
Sanford Shkolnik.................................. Director
Samuel Zell, 53, has been a Director of the Managing General Partner since
1983 (Chairman of the Board since December 1985); and is Chairman of the
Board of Great American Management and Investment, Inc. ("Great American").
Mr. Zell is also Chairman of the Board of Equity Financial and Management
Company ("EFMC") and Equity Group Investments, Inc., and is a trustee and
beneficiary of a general partner of Equity Holding Limited, an Illinois
Limited Partnership, a privately owned investment partnership. He is also
Chairman of the Board of Directors of Itel Corporation, Broadway Stores,
Inc., Falcon Building Products, Inc. and American Classic Voyages Co. He is
Chairman of the Board of Trustees of Equity Residential Properties Trust. He
is a director of Jacor Communications, Inc., Sealy Corporation and The
Vigoro Corporation, Chairman of the Board of Directors and Chief Executive
Officer of Capsure Holdings Corp. and Manufactured Home Communities, Inc.
and Co-Chairman of the Board of Revco D.S., Inc. Mr. Zell was President of
Madison Management Group, Inc. ("Madison") prior to October 4, 1991. Madison
filed for a petition under the Federal bankruptcy laws on November 8, 1991.
Douglas Crocker II, 54, has been President and Chief Executive Officer since
December, 1992 and a Director since January, 1993 of the Managing General
Partner. Mr. Crocker has been an Executive Vice President of EFMC since
November, 1992. Mr. Crocker has been President and Chief Executive Officer
of Equity Residential Properties Trust since March 31, 1993. He was
President of Republic Savings Bank, F.S.B. ("Republic") from 1989 to June,
1992 at which time the Resolution Trust Company took control of Republic.
Sheli Z. Rosenberg, 53, was President and Chief Executive Officer of the
Managing General Partner from December, 1990 to December, 1992 and has been
a Director of the Managing General Partner since September, 1983; was
Executive Vice President and General Counsel for EFMC from October, 1980 to
November, 1994; has been President and Chief Executive Officer of EFMC and
Equity Group Investments, Inc. since November, 1994; has been a Director of
Great American since June, 1984 and is a director of various subsidiaries of
Great American. She is also a director of Itel Corporation, Capsure Holdings
Corp., American Classic Voyages Co., Falcon Building Products, Inc., Jacor
Communications, Inc., Revco D.S., Inc. and The Vigoro Corporation. She was
Chairman of the Board from January, 1994 to September, 1994; and has been
Co-Chairman of the Board since September, 1994 of CFI Industries, Inc., She
is also a trustee of Equity Residential Properties Trust. Ms. Rosenberg is
Chairman of the Board of Rosenberg & Liebentritt, P.C., counsel to the
Partnership, the Managing General Partner and certain of their Affiliates.
Ms. Rosenberg was Vice President of Madison prior to October 4, 1991.
Madison filed for a petition under the Federal
11
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------
(a) DIRECTORS
---------
bankruptcy laws on November 8, 1991. She has been Vice President of First
Capital Benefit Administrators, Inc. ("Benefit Administrators") since July
22, 1987. Benefit Administrators filed for a petition under the Federal
Bankruptcy laws on January 3, 1995.
Sanford Shkolnik, 56, has been a Director of the Managing General Partner
since December, 1985. Mr. Shkolnik has been Executive Vice President of EFMC
since 1976. He is Chairman of the Board and Chief Executive Officer of SC
Management, Inc., which is General Partner of Equity Properties and
Development Limited Partnership, a nationally ranked shopping center
company. He is also a director of Broadway Stores, Inc.
(b, c & e) EXECUTIVE OFFICERS
------------------
The Partnership does not have any executive officers. The executive officers
of the Managing General Partner as of March 30, 1995 are shown in the table.
All officers are elected to serve for one year or until their successors are
elected and qualified.
Name Office
---- ------
Douglas Crocker II.......................President and Chief Executive
Officer
Arthur A. Greenberg......................Senior Vice President
Norman M. Field..........................Vice President - Finance and
Treasurer
PRESIDENT AND CEO - See Table of Directors above.
Arthur A. Greenberg, 53, has been Senior Vice President of the Managing
General Partner since August, 1986. Mr. Greenberg was Executive Vice
President and Chief Financial Officer of Great American from December, 1986
to March, 1995. Mr. Greenberg also is a Director and Executive Vice
President/Treasurer of EFMC since 1971, and President of Greenberg &
Pociask, Ltd. He is Senior Vice President since 1989 and Treasurer since
1990 of Capsure Holdings Corp. Mr. Greenberg is a director of American
Classic Voyages Co., The Vigoro Corporation, and Chairman of the Board of
Firstate Financial A Savings Bank. Mr. Greenberg was Vice President of
Madison prior to October 4, 1991. Madison filed for a petition under the
Federal bankruptcy laws on November 8, 1991.
Norman M. Field, 46, has been Vice President and Treasurer of the Managing
General Partner since February, 1984, and also served as Vice President and
Treasurer of Great American from July, 1983 until March, 1995. Mr. Field has
been treasurer of Benefit Administrators since July 22, 1987. Benefit
Administrators filed for a petition under the Federal Bankruptcy laws on
January 3, 1995. He has also been Chief Financial Officer of Equality
Specialties, Inc., a subsidiary of Great American, since August, 1994.
(d) FAMILY RELATIONSHIPS
--------------------
There are no family relationships among any of the foregoing officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------
There are no involvements in certain legal proceedings among any of the
foregoing officers.
12
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
-------- ----------------------
(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the Managing General Partner, nor any director or officer of the
Managing General Partner, received any direct remuneration from the Partnership
during the year ended December 31, 1994. However, Affiliates of the Managing
General Partner do compensate its directors and officers.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------- --------------------------------------------------------------
(a) As of March 1, 1995 no person owned of record or was known by the
Partnership to own beneficially more than five percent of the Partnership's
70,000 Units then outstanding.
(b) The Partnership has no directors or executive officers. As of March 1,
1995 the executive officers and directors of First Capital Financial
Corporation, the Managing General Partner, did not own any Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- ----------------------------------------------
(a) Affiliates of the Managing General Partner, provide leasing, property
management and supervisory services to the Partnership. Compensation for these
property management services may not exceed 6% of the gross receipts from the
property being managed plus normal out-of-pocket expenses where the General
Partners or Affiliates provide leasing, re-leasing, and leasing related
services, or 3% of gross receipts where the General Partners or Affiliates do
not perform leasing, re-leasing, and leasing related services for a particular
property. In the event the Partnership leases properties on a long-term net
basis (10 years or more), the maximum property management fee from such leases
shall be 1% of the gross revenues from such properties, except that the
Partnership may also pay the General Partners or their Affiliates a one-time
initial leasing fee of 3% of the gross revenues on each lease payable over the
first five full years of the original term of lease. For the year ended
December 31, 1994, these Affiliates were entitled to leasing, property
management and supervisory fees of approximately $303,600. In addition, other
Affiliates of the Managing General Partner were entitled to fees, compensation
and reimbursements of approximately $111,800 for insurance, personnel, and
mortgage servicing fees. Compensation for these services are on terms which are
fair, reasonable and no less favorable to the Partnership than reasonably could
have been obtained from unaffiliated persons. Of these amounts, a total of
approximately $77,500 was due to Affiliates as of December 31, 1994.
In addition, as of December 31, 1994, $37,700 was due to the Managing General
Partner for real estate commissions earned in connection with the sale of five
of the buildings comprising a portion of Atlanta Gateway. These commissions
have been accrued but not paid. Under the terms of the Partnership Agreement,
these commissions will not be paid until such time as Limited Partners have
received cumulative distributions of Sale or Refinancing Proceeds equal to 100%
of their Original Capital Contribution plus a cumulative return (including all
Cash Flow which has been distributed to the Limited Partners from the initial
date of investment) of 6% simple interest per annum on their Capital Investment
from the initial date of investment.
Subsequent to December 23, 1982, the Termination of the Offering, the General
Partners are entitled to 10% of distributable Cash Flow, as a Partnership
Management Fee. In accordance with the Partnership Agreement, Net Profits
(exclusive of Net Profits from the sale or disposition of Partnership
properties) shall be allocated first to the General Partners in an amount equal
to the greater of the General
13
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -- Continued
-------- -----------------------------------------------------------
Partners' Partnership Management Fee, or 1% of such Net Profits and the balance,
if any, to the Unit Holders. Net Profits from the sale or disposition of a
Partnership property shall be allocated first, to the General Partners and the
Unit Holders with negative balances in their capital accounts, pro rata in
proportion to such negative balances, to the extent of the total of such
negative balances; second, to the General Partners, in an amount necessary to
make the aggregate amount of their capital accounts equal to the greater of the
Sale or Refinancing Proceeds to be distributed to the General Partners or 1% of
such Net Profits; and third, the balance, if any, to the Unit Holders. Net
Losses from the sale or disposition of Partnership property (including
provisions for value impairment) shall be allocated: first, to the extent that
the balances in the General Partners' and the Unit Holders' capital accounts
exceed their Capital Investment (the "Excess Balances") pro rata in proportion
to such Excess Balances until such Excess Balances are reduced to zero; second,
to the General Partners and Unit Holders pro rata in proportion to the balances
in their respective capital accounts until the balances in their capital
accounts shall be reduced to zero; and third, the balance, if any, 99% to the
Unit Holders 1% to the General Partners. In all events, there shall be
allocated to the General Partners not less than 1% of Net Profits and Net Losses
from the sale or disposition of a Partnership property. For the year ended
December 31, 1994 the General Partners were allocated distributable Cash Flow
and, accordingly, Net Profits from operations of approximately $311,100, Net
Profits from the sale of a Partnership property of approximately $236,100 and an
extraordinary loss on early extinguishment of debt of approximately $13,500.
Revco D. S., Inc. ("Revco"), a drug store company, which is 20% owned by Zell
Chilmark Fund L.P., an Affiliate of the Managing General Partner, is obligated
to the Partnership under a lease of office space at Walker Springs Plaza.
During the year ended December 31, 1994 Revco paid approximately $60,800 in rent
to the Partnership.
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to
the Partnership, the Managing General Partner and certain of their Affiliates.
Sheli Z. Rosenberg, President and Chief Executive Officer of the Managing
General Partner from December, 1990 to December, 1992 and a Director of the
Managing General Partner since September, 1983, is the Chairman of the Board of
this firm. Compensation for these services are on terms which are fair,
reasonable and no less favorable to the Partnership than reasonably could have
been obtained from unaffiliated persons.
(c) No management person is indebted to the Partnership.
(d) None.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
(a, c & d) (1, 2 & 3) See Index of Financial Statements, Schedule and Exhibits
on page A-1 of Form 10-K.
(b) Reports on Form 8-K:
None.
15
<PAGE>
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.
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES VIII
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Dated: March 30, 1995 By: /s/ DOUGLAS CROCKER II
---------------- ----------------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
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.
/s/ SAMUEL ZELL March 30, 1995 Chairman of the Board and Director
-------------------------- -------------- of the Managing General Partner
SAMUEL ZELL
/s/ DOUGLAS CROCKER II March 30, 1995 President, Chief Executive Officer
-------------------------- -------------- and Director of the Managing
DOUGLAS CROCKER II General Partner
/s/ SHELI Z. ROSENBERG March 30, 1995 Director of the Managing General
-------------------------- -------------- Partner
SHELI Z. ROSENBERG
/s/ SANFORD SHKOLNIK March 30, 1995 Director of the Managing General
-------------------------- -------------- Partner
SANFORD SHKOLNIK
/s/ NORMAN M. FIELD March 30, 1995 Vice President - Finance and
-------------------------- -------------- Treasurer
NORMAN M. FIELD
16
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Pages
Report of Independent Certified Public Accountants A-2
Balance Sheets at December 31, 1994 and 1993 A-3
Statements of Partners' Capital for the Years
Ended December 31, 1994, 1993, and 1992 A-3
Statements of Income and Expenses for the Years
Ended December 31, 1994, 1993, and 1992 A-4
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993, and 1992 A-4
Notes to Financial Statements A-5 to A-6
SCHEDULE FILED AS PART OF THIS REPORT
III - Real Estate and Accumulated Depreciation
as of December 31, 1994 A-7 and A-8
All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto,
or in other schedules.
EXHIBITS FILED AS PART OF THIS REPORT
EXHIBITS (3 & 4) First Amended and Restated Certificate and Agreement of
Limited Partnership as set forth on pages A-1 through A-30 of the Partnership's
definitive Prospectus dated July 28, 1982; Registration Statement No. 2-78064,
filed pursuant to Rule 424 (b), incorporated herein by reference.
EXHIBIT (10) Material Contracts
(a) Real Estate Sale Agreements for the sale of the Partnership's investment in
the El Paso Natural Gas Building filed as an exhibit to the Partnership's Report
on Form 8-K dated April 6, 1994 is incorporated herein by reference.
(b) Loan Agreement for the refinancing of the Partnership's investment in the
El Paso Natural Gas Building filed as an exhibit to the Partnership's Report on
Form 8-K dated January 15, 1993 is incorporated herein by reference.
(c) Lease agreements for tenants that individually occupy more than 10% of the
net leasable square footage of the Partnership's most significant properties,
filed as an exhibit to the Partnership's Report on Form 10-K dated December 31,
1992 are incorporated herein by reference.
EXHIBIT (13) Annual Report to Security Holders
The 1993 Annual Report to Holders of Units is being sent under separate cover,
not via EDGAR, for the information of the Commission.
EXHIBIT (27) Financial Data Schedule
A-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Partners
First Capital Income Properties, Ltd. - Series VIII
Chicago, Illinois
We have audited the balance sheets of First Capital Income Properties, Ltd. -
Series VIII as of December 31, 1994 and 1993, and the related statements of
income and expenses, Partners' Capital and cash flows for the years ended
December 31, 1994, 1993 and 1992. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Income
Properties, Ltd. - Series VIII as of December 31, 1994 and 1993, and the results
of its operations and its cash flows for the years ended December 31, 1994, 1993
and 1992 in conformity with generally accepted accounting principles. We have
also audited Schedule III of First Capital Income Properties, Ltd. - Series VIII
as of December 31, 1994. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
Grant Thornton LLP
Chicago, Illinois
February 20, 1995
except for Note 8,
as to which the
date is March 22, 1995
A-2
<PAGE>
BALANCE SHEETS
December 31, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 7,260,400 $ 8,209,700
Buildings and improvements 36,197,000 66,301,200
------------------------------------------------------------------------------
43,457,400 74,510,900
Accumulated depreciation and amortization (11,909,800) (18,136,100)
------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 31,547,600 56,374,800
Investment in mortgage loan receivable 1,064,000 1,064,000
------------------------------------------------------------------------------
32,611,600 57,438,800
Cash and cash equivalents 8,356,100 10,171,300
Restricted certificate of deposit 75,000
Rents receivable 259,700 291,100
Escrow deposits 65,300
Other assets (net of accumulated amortization on
loan acquisition costs of $104,500 and $97,500,
respectively) 115,700 528,900
------------------------------------------------------------------------------
$41,343,100 $ 68,570,400
------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $ 28,611,600
Accounts payable and accrued expenses $ 237,900 312,500
Due to Affiliates 115,200 86,500
Security deposits 110,800 99,600
Distributions payable 777,800 995,500
Other liabilities 4,900 164,200
------------------------------------------------------------------------------
1,246,600 30,269,900
------------------------------------------------------------------------------
Partners' capital (deficit):
General Partners 178,000 (44,600)
Limited Partners (70,000 Units authorized, issued
and outstanding) 39,918,500 38,345,100
------------------------------------------------------------------------------
40,096,500 38,300,500
------------------------------------------------------------------------------
$ 41,343,100 $ 68,570,400
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital, January 1, 1992 $ 300 $ 44,180,600 $ 44,180,900
Net income (loss) for the year ended
December 31, 1992 155,200 (907,000) (751,800)
Distributions for the year ended
December 31, 1992 (175,000) (1,575,000) (1,750,000)
------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1992 (19,500) 41,698,600 41,679,100
Net income (loss) for the year ended
December 31, 1993 261,000 (778,900) (517,900)
Distributions for the year ended
December 31, 1993 (286,100) (2,574,600) (2,860,700)
------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1993 (44,600) 38,345,100 38,300,500
Net income for the year ended December
31, 1994 533,700 19,423,400 19,957,100
Distributions for the year ended
December 31, 1994 (311,100) (17,850,000) (18,161,100)
------------------------------------------------------------------------------
Partners' capital, December 31, 1994 $ 178,000 $ 39,918,500 $ 40,096,500
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $ 6,232,700 $ 8,982,300 $9,374,200
Interest on short-term investments 599,000 341,700 203,000
Interest on mortgage loan receivable 116,500 138,300 152,300
--------------------------------------------------------------------------------
6,948,200 9,462,300 9,729,500
--------------------------------------------------------------------------------
Expenses:
Interest 969,000 2,689,600 3,243,900
Depreciation and amortization 1,461,500 2,160,700 2,415,000
Real estate taxes and insurance 645,400 702,200 849,400
Repairs and maintenance 535,500 560,000 561,600
Property operating 987,000 1,102,000 1,220,200
General and administrative 198,000 256,400 210,700
--------------------------------------------------------------------------------
4,796,400 7,470,900 8,500,800
--------------------------------------------------------------------------------
Income before gain (loss) on sale or
disposition of property, provisions for
value impairment and extraordinary
(loss) on early extinguishments of debt 2,151,800 1,991,400 1,228,700
Gain (loss) on sale or disposition of
property 18,929,600 (1,969,200) (1,049,300)
Provisions for value impairment (931,200)
--------------------------------------------------------------------------------
Net income (loss) before extraordinary
(loss) on early extinguishments of debt 21,081,400 22,200 (751,800)
Extraordinary (loss) on early
extinguishments of debt (1,124,300) (540,100)
--------------------------------------------------------------------------------
Net income (loss) $19,957,100 $ (517,900) $ (751,800)
--------------------------------------------------------------------------------
Net income allocated to General Partners $ 533,700 $ 261,000 $ 155,200
--------------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners $19,423,400 $ (778,900) $ (907,000)
--------------------------------------------------------------------------------
Net income (loss) before extraordinary
(loss) on early extinguishments of debt
allocated to Limited Partners per Unit
(70,000 Units authorized, issued and
outstanding) $ 293.35 $ (3.49) $ (12.96)
--------------------------------------------------------------------------------
Net income (loss) allocated to Limited
Partners per Unit (70,000 Units
authorized, issued and outstanding) $ 277.48 $ (11.13) $ (12.96)
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993 and 1992
(All dollars rounded to nearest 00s)
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $19,957,100 $ (517,900) $ (751,800)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 1,461,500 2,160,700 2,415,000
Amortization of discount on mortgage
loan receivable (700)
(Gain) loss on sale or disposition of
property (18,929,600) 1,969,200 1,049,300
Provisions for value impairment 931,200
Extraordinary loss on early
extinguishments of debt 1,124,300 540,100
Changes in assets and liabilities:
Decrease in rents receivable 31,400 111,300 43,800
Decrease (increase) in other assets 8,300 122,800 (68,300)
(Decrease) increase in accounts payable
and accrued expenses (74,600) (509,900) 184,100
Increase in due to Affiliates 28,700 4,700 1,700
(Decrease) increase in other
liabilities (159,300) 125,000 (6,600)
--------------------------------------------------------------------------------
Net cash provided by operating
activities 3,447,800 4,006,000 3,797,700
--------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant
improvements (567,500) (500,600) (220,300)
Decrease (increase) in escrow deposits 65,300 287,700 (175,200)
Proceeds from the sale of property 43,267,700 3,511,800
Costs incurred on sale and disposition
of properties (13,600)
Maturity of (investment in) restricted
certificate of deposit 75,000 (75,000)
--------------------------------------------------------------------------------
Net cash provided by (used for)
investing activities 42,840,500 (301,500) 3,116,300
--------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from the issuance of mortgage
loan payable 22,500,000
Principal payments on mortgage loans
payable (28,611,600) (19,821,600) (2,516,300)
Distributions paid to Partners (18,378,800) (2,303,200) (1,798,100)
Payment of loan acquisition costs (397,900) (81,300)
Increase (decrease) in security deposits 11,200 (25,200) (21,000)
Refund of (deposit on) loan commitment 225,000 (225,000)
Prepayment cost on mortgage loans
payable (1,124,300) (540,100)
--------------------------------------------------------------------------------
Net cash (used for) financing
activities (48,103,500) (363,000) (4,641,700)
--------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (1,815,200) 3,341,500 2,272,300
Cash and cash equivalents at the
beginning of the year 10,171,300 6,829,800 4,557,500
--------------------------------------------------------------------------------
Cash and cash equivalents at the end of
the year $ 8,356,100 $10,171,300 $6,829,800
--------------------------------------------------------------------------------
Supplemental information:
Interest paid during the year $ 1,025,900 $ 2,766,900 $3,272,300
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ORGANIZATION:
The Partnership was formed on June 3, 1982, by the filing of a Certificate and
Agreement of Limited Partnership with the Department of State of the State of
Florida, and commenced the Offering of Units on August 9, 1982. The Certificate
and Agreement, as amended and restated, authorized the sale to the public of
60,000 Units (with the Managing General Partner's option to increase the
Offering to 70,000 Units) and not less than 1,250 Units. On September 2, 1982,
the required minimum subscription level was reached and the Partnership's
operations commenced. The Managing General Partner exercised its option to
increase the Offering to 70,000 Units, which amount was sold prior to the
Termination of the Offering on December 23, 1982. The Partnership was formed to
invest primarily in existing, improved, income-producing commercial real estate
and, to a lesser extent, in other types of investment vehicles such as mortgage
loans.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2013. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements include the Partnership's 50% interest in a joint
venture which owned the El Paso Natural Gas Building ("El Paso"), prior to its
sale on April 6, 1994. The joint venture was operated under the control of the
Managing General Partner. Accordingly, the Partnership's pro rata share of the
venture's revenues, expenses, assets, liabilities and capital is included in
the financial statements.
The Partnership is not liable for Federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. In addition, it is not practicable for
the Partnership to determine the aggregate tax bases of the Limited Partners;
therefore, the disclosure of the differences between the tax bases and the
reported assets and liabilities of the Partnership would not be meaningful.
Commercial rental properties are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. Lease acquisition
fees are recorded at cost and amortized over the life of the lease. Rental
guarantees from the sellers of properties are treated as a reduction of the
purchase price of the property for accounting purposes and are not treated as
Cash Flow for Partnership distribution purposes. Maintenance and repair costs
are expensed against operations as incurred; expenditures for improvements are
capitalized to the appropriate property accounts and depreciated using the
straight-line method over the estimated useful lives of the improvements.
Loan acquisition costs are amortized over the period of the note issued under
first mortgage loans made in connection with the acquisitions of Partnership's
properties. When a property is sold or refinanced, the related loan acquisition
costs and accumulated amortization are removed from the respective accounts and
any unamortized balance is expensed.
Property sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Partnership. Upon disposition, the
related costs and accumulated depreciation and amortization are removed from
the respective accounts. Any gain or loss on sale or disposition is recognized
in accordance with generally accepted accounting principles.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
The discount on the mortgage loan receivable was amortized over the original
life of the loan. The mortgage loan is recorded at face value net of the
unearned discount.
Restricted certificate of deposit represented funds reserved from the loan
proceeds received in connection with the refinancing of El Paso, which funds
were placed in an interest-bearing investment. Under the terms of the loan
agreement this amount could have been used for future loan servicing costs.
Certain reclassifications have been made to the previously reported 1992
statements in order to provide comparability with the 1993 and 1994 statements.
These reclassifications have no effect on income or Partners' capital.
2. RELATED PARTY TRANSACTIONS:
Subsequent to December 23, 1982, the Termination of the Offering, the General
Partners are entitled to 10% of distributable Cash Flow, as a Partnership
Management Fee. In accordance with the Partnership Agreement, Net Profits
(exclusive of Net Profits from the sale or disposition of Partnership
properties) shall be allocated first to the General Partners in an amount equal
to the greater of the General Partners' Partnership Management Fee, or 1% of
such Net Profits and the balance, if any, to the Unit Holders. Net Profits from
the sale or disposition of a Partnership property shall be allocated first, to
the General Partners and the Unit Holders with negative balances in their
capital accounts, pro rata in proportion to such negative balances, to the
extent of the total of such negative balances; second, to the General Partners,
in an amount necessary to make the aggregate amount of their capital accounts
equal to the greater of the Sale or Refinancing Proceeds to be distributed to
the General Partners or 1% of such Net Profits; and third, the balance, if any
to the Unit Holders. Net Losses from the sale or disposition of Partnership
property (including provisions for value impairment) shall be allocated: first,
to the extent that the balances in the General Partners' and the Unit Holders'
capital accounts exceed their Capital Investment (the "Excess Balances") pro
rata in proportion to such Excess Balances until such Excess Balances are
reduced to zero; second, to the General Partners and Unit Holders pro rata in
proportion to the balances in their respective capital accounts until the
balances in their capital accounts shall be reduced to zero; and third, the
balance, if any, 99% to the Unit Holders 1% to the General Partners. In all
events, there shall be allocated to the General Partners not less than 1% of
Net Profits and Net Losses from the sale or disposition of a Partnership
property. For the year ended December 31, 1994 the General Partners were
allocated distributable Cash Flow and, accordingly, Net Profits from operations
of approximately $311,100, Net Profits from the sale of a Partnership property
of approximately $236,100 and an extraordinary loss on early extinguishment of
debt of approximately $13,500. For the year ended December 31, 1993, the
General Partners were allocated distributable Cash Flow and, accordingly, Net
Profits from operations of approximately $286,100, a Net Loss on the sale and
disposition of Partnership properties of approximately $19,700 and an
extraordinary loss of approximately $5,400 on an early extinguishment of debt.
For the year ended December 31, 1992, the General Partners were allocated Cash
Flow and, accordingly, Net Profits from operations of approximately $175,000, a
Net Loss on the sale of a Partnership property of approximately $10,500 and a
Net Loss from a provision for value impairment of $9,300.
Fees and reimbursements paid and payable by the Partnership to Affiliates are
as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------------------
1994 1993 1992(a)
------------------ ---------------- ----------------
Paid Payable Paid Payable Paid Payable
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $ 273,100 $ 72,500 $339,100 $42,000 $386,600 $38,500
Real estate commission
(b) None 37,700 None 37,700 None 37,700
Reimbursements of
property insurance
premiums, at cost 75,900 None 80,200 None 141,800 100
Reimbursements of
expenses at cost:
(1) Accounting 23,700 2,800 20,800 2,800 23,500 3,800
(2) Investor
communication 10,100 1,100 10,000 2,100 9,900 1,500
(3) Legal 112,500 None 110,000 1,200 99,200 None
(4) Mortgage servicing 2,700 1,100 2,000 700 1,700 200
-----------------------------------------------------------------------------
$ 498,000 $115,200 $562,100 $86,500 $662,700 $81,800
-----------------------------------------------------------------------------
</TABLE>
(a) Certain property management reimbursements and other expense reimbursements
previously reported in 1992 have been excluded from the above table and
amounts previously included in 1992 in due to Affiliates have been
reclassified to accounts payable and accrued expenses in order to provide
comparability to the fees presented for 1994 and 1993.
(b) As of December 31, 1994, $37,700 was due to the Managing General Partner
for real estate commissions earned in connection with the sale of five of
the buildings comprising the Atlanta Gateway Park Industrial Center
("Atlanta Gateway"). These commissions have been accrued but not paid.
Under the terms of the Partnership Agreement, these commissions will not be
paid until such time as the Limited Partners have received cumulative
distributions of Sale or Refinancing Proceeds equal to 100% of their
Original Capital Contribution plus a cumulative return (including all Cash
Flow which has been distributed to the Limited Partners from the initial
date of investment) of 6% simple interest per annum on their Capital
Investment from the initial date of investment.
On-site property management for the Partnership's properties is provided by an
Affiliate of the Managing General Partner for fees ranging from 1% to 6% of
gross rents received from the properties.
A-5
<PAGE>
Revco D. S., Inc. ("Revco"), a drug store company, of which a 20% ownership
interest was acquired by Zell Chilmark Fund L.P., an Affiliate of the Managing
General Partner, on June 1, 1992, is obligated to the Partnership under a lease
of office space at Walker Springs Plaza. During the years ended December 31,
1994 and 1993 Revco paid approximately $60,800 and $52,700, respectively, in
rent to the Partnership. For the period June 1, 1992 to December 31, 1992,
Revco paid approximately $31,600 in rent to the Partnership.
3. INVESTMENT IN MORTGAGE LOAN RECEIVABLE:
On April 30, 1986, the Partnership acquired a first mortgage loan with an
aggregate outstanding principal balance of $1,064,000. The loan was purchased
at a discount of $50,700, which amount was amortized over the life of the note.
The real property mortgaged by this note is held as collateral under the loan
agreement. In addition, payment of the mortgage loan is guaranteed by the
original holder of the loan if the borrower were to be declared in default by
the Partnership. As of December 31, 1993 and 1994, the loan balance remained at
$1,064,000, earning interest income at a rate of 10%. Periodic payments of
approximately $26,600 are received quarterly. The maturity date of this
mortgage loan investment, which was June 1, 1993, was extended until December
31, 1994 and then again to January 31, 1995. All unpaid interest and an
extension fee of approximately 1.5% of the principal balance were received from
the obligor of the loan for the extension from June 1, 1993 to December 31,
1994. On February 24, 1995, the Partnership received approximately $1,060,300,
including approximately $16,300 in accrued interest from January 1, 1995, in
full satisfaction of this mortgage loan receivable.
4. MORTGAGE LOANS PAYABLE:
Mortgage loans payable at December 31, 1993 consisted of the following non-
recourse loans:
<TABLE>
<CAPTION>
Loan Interest Maturity Periodic
Property Pledged as Collateral Balance Rate Date Payment
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brookwood Metroplex Office Buildings I
& II (a) $ 7,000,000 9.75% 10/1/96 $ 56,900
El Paso Natural Gas Building (b) 21,611,600 7.8% 5/15/07 $217,700
------------------------------------------------------------------------------
$28,611,600
------------------------------------------------------------------------------
</TABLE>
(a) On October 3, 1994 the Partnership repaid the principal balance of the
mortgage loan collateralized by Brookwood Metroplex Office Buildings I & II
in the amount of $7,000,000, along with a prepayment penalty of $210,000.
The prepayment penalty was recorded as an extraordinary loss on early
extinguishment of debt and was not included in the Partnership's
calculation of Cash Flow (as defined by the Partnership Agreement) for the
year ended December 31, 1994.
(b) On April 6, 1994 First Capital Kayser Center, a joint venture in which the
Partnership and an Affiliated partnership each had a 50% interest, sold its
interest in El Paso, located in El Paso, Texas. The outstanding
indebtedness collateralized by El Paso of approximately $42,757,000 was
satisfied at closing (see Note 7 for additional information).
5. FUTURE MINIMUM RENTALS:
Future minimum rentals due on noncancelable operating leases as of December 31,
1994 were as follows:
<TABLE>
<S> <C>
1995 $ 4,556,600
1996 4,177,000
1997 3,516,200
1998 2,838,500
1999 893,700
Thereafter 2,922,000
--------------
$18,904,000
--------------
</TABLE>
The Partnership is subject to the usual business risks associated with the
collection of the above scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from (i) operating
expense reimbursements and (ii) percentage rents.
6. INCOME TAX:
The Partnership utilizes an accrual basis method of accounting for both tax
reporting and financial statement purposes. Financial statement results will
differ from tax results due to differing depreciation lives and methods, the
recognition of rents received in advance as taxable income and the use of
differing methods in computing the gain on sale of property for financial
statement purposes. The net effect of these differences for the year ended
December 31, 1994, was that the net gain for financial statement purposes was
less than the net gain for tax reporting purposes by approximately $8,778,600.
The aggregate cost in commercial rental properties for Federal income tax
purposes at December 31, 1994 was $43,457,400.
7. PROPERTY SALES AND DISPOSITIONS:
On April 6, 1994 First Capital Kayser Center sold its interest in El Paso for a
sale price of $88,450,000. The outstanding indebtedness on this property of
approximately $42,757,000 was satisfied at closing. First Capital Kayser Center
incurred selling expenses of approximately $3,743,300, of which approximately
$1,828,600 related to a prepayment penalty on the early extinguishment of debt.
First Capital Kayser Center received net sale proceeds of approximately
$84,706,700, of which the Partnership's share was approximately $42,353,400.
The net gain, after recognition of the prepayment penalty, reported by the
Partnership for financial statement purposes was approximately $18,015,300. For
tax reporting purposes the Partnership will report a gain of approximately
$28,646,700.
On February 16, 1993 the Partnership disposed of the two remaining warehouses
comprising Atlanta Gateway as a result of a conveyance of the titles to the
mortgage holder in lieu of foreclosure. The disposition of these properties
relieved the Partnership of its obligations under the mortgage loans of
approximately $1,024,100 and any interest in the assets therein. The gain for
tax reporting purposes on this disposition was approximately $457,700 and the
loss for financial statement purposes was approximately $84,000. Due to the
anticipated loss in connection with this disposition, the Partnership recorded
$81,200 of the total loss as of December 31, 1992 as a provision for value
impairment and the remaining portion of the loss was recorded in 1993. An
additional loss of approximately $9,800 relating to the warehouses at Atlanta
Gateway sold in 1992 was also recorded in 1993.
On August 3, 1993, as a result of a sheriff's sale, the Partnership disposed of
the Hairston Memorial Crossing Shopping Center. The disposition relieved the
Partnership of its obligation under the mortgage loan of approximately
$2,846,100 and any interest in the assets therein. The loss for tax reporting
purposes on this disposition was approximately $708,400 and the loss for
financial statement purposes was approximately $2,806,500. Due to the
anticipated loss in connection with this disposition, the Partnership recorded
$850,000 of the total loss as of December 31, 1992 as a provision for value
impairment. The remaining portion of the loss was recorded in 1993.
On January 31, 1992, the Partnership sold one of the seven warehouses
comprising Atlanta Gateway for approximately $616,000. The outstanding
indebtedness on this parcel of $490,000 was satisfied at closing. The
Partnership incurred selling expenses of approximately $49,800. The Partnership
received proceeds from this sale of approximately $76,200. For tax reporting
purposes the Partnership recorded a gain on this sale of approximately
$161,900. For financial statement purposes a loss of approximately $107,600 was
recorded.
On April 10, 1992, the Partnership sold an additional warehouse at Atlanta
Gateway for approximately $892,600. The outstanding indebtedness on this parcel
of $275,000 was satisfied at closing. The Partnership incurred selling expenses
of approximately $67,300. The Partnership received proceeds from this sale of
approximately $550,300. For tax reporting purposes the Partnership recorded a
gain on this sale of approximately $260,200. For financial statement purposes a
loss of approximately $179,400 was recorded.
On August 31, 1992, the Partnership sold, in a single transaction, two
additional warehouses at Atlanta Gateway for approximately $1,650,000. The
total outstanding indebtedness on these parcels of $1,053,200 was satisfied at
closing. The Partnership incurred selling expenses of approximately $134,700.
The Partnership received proceeds from this sale of approximately $462,100. For
tax reporting purposes the Partnership recorded a gain on this sale of
approximately $193,300. For financial statement purposes a loss of
approximately $680,200 was recorded.
On December 21, 1992, the Partnership sold the fifth of seven warehouses at
Atlanta Gateway for approximately $615,000. The total outstanding indebtedness
on this parcel of $575,000 was satisfied at closing. The Partnership incurred
selling expenses of approximately $47,700. This transaction resulted in a net
cash outlay by the Partnership of approximately $7,700. For tax reporting
purposes the Partnership recorded a gain on this sale of approximately
$233,200. For financial statement purposes a loss of approximately $82,100 was
recorded.
All of the above sales were all-cash sales, with no further involvement on the
part of the Partnership.
8. SUBSEQUENT EVENT:
On March 22, 1995, the Partnership entered into an agreement to sell
Tuckerstone Commons/Rooker Royal I & II Warehouses, located in Atlanta,
Georgia, for a sale price of $5,300,000. The closing of this transaction,
expected to take place in the second quarter of 1995, is subject to the
satisfaction of certain conditions and contingencies and may or may not be
consummated.
A-6
<PAGE>
FIRST CAPITAL INCOME PROPERTIES, LTD. -- SERIES VIII
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Column A Column C Column D Column E
------------------------- -------------------------- ------------------------- ----------------------------------------
Initial cost Costs capitalized Gross amount at which
to Partnership (1) subsequent to acquisition carried at close of period
-------------------------- ------------------------- ----------------------------------------
Buildings and Carrying Buildings and
Description Land improvements Improvements Costs(2) Land improvements Total(3)(4)
------------------------- ---------- ------------- ------------ -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers:
-----------------
Old Mill Place
Shopping Center
(San Antonio, TX) $2,475,900 10,385,400 564,200 130,800 2,500,800 11,055,500 13,556,300
Walker Springs Plaza
Shopping Center
(Knoxville, TN) 1,756,800 4,440,200 842,300 98,400 1,784,700 5,353,000 7,137,700
Warehouses:
-----------
Tuckerstone Commons/
Rooker Royal I & II
(Atlanta, GA) 767,300 4,448,700 854,100 43,600 773,700 5,340,000 6,113,700
Office Buildings:
-----------------
Brookwood Metroplex
Office Buildings I & II
(Birmingham, AL) 2,188,100 11,595,100 2,785,300 81,200 2,201,200 14,448,500 16,649,700
---------- ----------- ---------- -------- ---------- ----------- -----------
$7,188,100 $30,869,400 $5,045,900 $354,000 $7,260,400 $36,197,000 $43,457,400
========== =========== ========== ======== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Column A Column F Column G Column H Column I
------------------------- --------------- ------------ ------------- ---------------
Life on which
depreciation in
latest income
Accumulated Date of statements is
Description Depreciation(3) Construction Date Acquired computed
------------------------- --------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Shopping Centers:
-----------------
Old Mill Place
Shopping Center 30(5)
(San Antonio, TX) 3,471,400 1980 - 81 Sept. 1983 2 - 11(6)
Walker Springs Plaza
Shopping Center 35(5)
(Knoxville, TN) 1,685,100 1972 Dec. 1983 3 - 7 (6)
Warehouses:
-----------
Tuckerstone Commons/
Rooker Royal I & II 35(5)
(Atlanta, GA) 1,735,500 1979 - 81 Oct. 1984 3 - 10(6)
Office Buildings:
-----------------
Brookwood Metroplex
Office Buildings I & II 35(5)
(Birmingham, AL) 5,017,800 1975 Aug. 1983 2 - 13(6)
-----------
$11,909,800
===========
</TABLE>
Column B -- Not Applicable.
See accompanying notes on the following page.
A-7
<PAGE>
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES VIII
NOTES TO SCHEDULE III
Note 1. Amounts presented are net of rent guarantees.
Note 2. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 3. The following is a reconciliation of activity in Columns E and F.
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993 December 31, 1992
-------------------------- ------------------------- -------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
------------ ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at the
beginning of the year $ 74,510,900 $18,136,100 $82,216,500 $18,304,000 $88,971,700 $17,484,800
Additions during
the year:
Improvements 567,500 500,600 220,300
Provision for
depreciation 1,454,500 2,085,900 2,340,100
Deductions during
the year:
Basis of disposed
real property (31,621,000) (8,206,200) (6,044,300)
Accumulated depreciation
on real estate
disposed (7,680,800) (2,253,800) (1,520,900)
Provision for value
impairment (931,200)
------------ ----------- ----------- ----------- ----------- -----------
Balance at the end of
the year $ 43,457,400 $11,909,800 $74,510,900 $18,136,100 $82,216,500 $18,304,000
============ =========== =========== =========== =========== ===========
</TABLE>
Note 4. The aggregate cost for Federal income tax purposes at December 31, 1994
was $43,457,400.
Note 5. Estimated useful life for building.
Note 6. Estimated useful life for improvements.
A-8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000703482
<NAME> FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES VIII
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 8,356,100
<SECURITIES> 0
<RECEIVABLES> 259,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,615,800
<PP&E> 43,457,400
<DEPRECIATION> 11,909,800
<TOTAL-ASSETS> 41,343,100
<CURRENT-LIABILITIES> 1,015,700
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 40,096,500
<TOTAL-LIABILITY-AND-EQUITY> 41,343,100
<SALES> 0
<TOTAL-REVENUES> 6,948,200
<CGS> 0
<TOTAL-COSTS> 2,167,900
<OTHER-EXPENSES> 198,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 969,000
<INCOME-PRETAX> 21,081,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,081,400
<DISCONTINUED> 0
<EXTRAORDINARY> (1,124,300)
<CHANGES> 0
<NET-INCOME> 19,957,100
<EPS-PRIMARY> 277.48
<EPS-DILUTED> 277.48
</TABLE>
