UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-14593
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 33-0104267
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1100
San Mateo, California 94402-1708
(Address of principal executive offices) (Zip Code)
(415) 343-9300
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No__
Total number of units outstanding as of June 30, 1997: 34,992
Page 1 of 21
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Balance Sheets
(in thousands, except units outstanding)
(Unaudited)
<CAPTION>
June 30,
1997 December 31,
(in Liquidation) 1996
<S> <C> <C>
Assets
Investments in real estate:
Rental property, net of accumulated
depreciation of $2,808 at December 31, 1996 $ --- $ 6,301
Rental property held pending foreclosure 6,173 ---
Rental property held for sale --- 9,490
---------- -----------
Total real estate investments 6,173 15,791
Cash and cash equivalents 851 773
Accounts receivable, net 68 79
Investment in and advances to unconsolidated joint venture 498 ---
Deferred financing costs and other fees, net of accumulated
amortization of $122 and $470 at June 30, 1997 and
December 31, 1996, respectively 26 122
Other assets 7 63
---------- -----------
Total assets $ 7,623 $ 16,828
========== ===========
Liabilities and Partners' Equity (Deficit)
Liabilities:
Notes payable $ 6,446 $ 14,773
Accounts payable and accrued expenses 69 127
Interest payable 50 8
Other liabilities 25 58
---------- -----------
Total liabilities 6,590 14,966
---------- ------------
Partners' equity (deficit):
General Partner (179) (162)
Limited Partners, 34,992 limited partnership
units outstanding 1,212 2,024
---------- ------------
Total partners' equity 1,033 1,862
---------- ------------
Total liabilities and partners' equity $ 7,623 $ 16,828
========== ============
</TABLE>
See accompanying notes to financial statements.
Page 2 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Operations
(in thousands, except units outstanding and per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
(in Liquidation) (in Liquidation)
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 558 $ 611 $ 1,128 $ 1,216
Interest and other income 5 19 13 40
---------- ---------- --------- ----------
Total revenues 563 630 1,141 1,256
---------- ---------- --------- ----------
Expenses:
Operating, including $69 and $70 paid
to affiliates in the six months ended
June 30, 1997 and 1996, respectively 207 184 385 347
Loss on sale of property 599 --- 599 ---
Interest 299 363 710 722
Depreciation and amortization 71 100 143 253
General and administrative, including
$214 and $235 paid to affiliates in the
six months ended June 30, 1997 and
1996, respectively 126 146 248 306
---------- ---------- -------- --------
Total expenses 1,302 793 2,085 1,628
---------- ---------- ---------- ----------
Loss from operations and disposition
of investment in real estate (739) (163) (944) (372)
---------- ---------- ---------- -----------
Income (loss) in unconsolidated
joint venture 115 (86) 115 (164)
----------- ---------- ----------- -----------
Net loss $ (624) $ (249) $ (829) $ (536)
=========== ========== =========== ===========
Net loss per limited partnership
current unit $ (49.68) $ (19.84) $ (66.03) $ (42.72)
========== ========== =========== ===========
Number of limited partnership
current units outstanding during
the period used to compute net loss
per limited partnership current unit 12,297 12,297 12,297 12,297
=========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 3 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Partners' Equity(Deficit)
For the six months ended June 30, 1997 (in Liquidation) and 1996
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Total Total
General Limited Partners Limited Partners'
Partner Current Deferred Growth Partners Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ (162) $ 2,024 $ --- $ --- $ 2,024 $ 1,862
Net loss (17) (812) --- --- (812) (829)
----------- ---------- ----------- ---------- ---------- --------
Balance at June 30, 1997
(in Liquidation) $ (179) $ 1,212 $ --- $ --- $ 1,212 $ 1,033
========== ========== =========== ========== ========== ========
Balance at December 31, 1995 $ (128) $ 3,714 $ --- $ --- $ 3,714 $ 3,586
Net loss (11) (525) --- --- (525) (536)
---------- ---------- ----------- ---------- ---------- ---------
Balance at June 30, 1996 $ (139) $ 3,189 $ --- $ --- $ 3,189 $ 3,050
========== ========== =========== ========== ========== =========
</TABLE>
See accompanying notes to financial statements.
Page 4 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
1997
(in Liquidation) 1996
-------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (829) $ (536)
Adjustments to reconcile net loss to net
cash used for operating activities:
Loss on sale of property 599 ---
(Income) loss in unconsolidated joint venture (115) 164
Depreciation and amortization 143 253
Amortization of loan fees, included in interest expense 41 9
Changes in certain assets and liabilities:
Accounts receivable 11 (47)
Deferred financing costs and other fees (112) (22)
Other assets 56 (7)
Accounts payable and accrued expenses (58) (66)
Interest payable 114 59
Other liabilities (33) (3)
--------- ---------
Net cash used for operating activities (183) (196)
--------- ---------
Cash flows from investing activities:
Payments received on notes receivable from unconsolidated
joint venture --- 180
Increase in notes receivable from unconsolidated
joint venture (383) (375)
-------- --------
Net cash used for investing activities (383) (195)
-------- --------
Cash flows from financing activities:
Net proceeds from sale of property 9,054 ---
Net loan proceeds 140 ---
Notes payable principal payments (8,550) (81)
-------- --------
Net cash provided by (used for) financing activities 644 (81)
-------- --------
Net increase (decrease) in cash and cash equivalents 78 (472)
Cash and cash equivalents at beginning of period 773 1,816
-------- --------
Cash and cash equivalents at end of period $ 851 $ 1,344
======== ========
- continued -
</TABLE>
Page 5 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Statements of Cash Flows - continued -
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
1997
(in Liquidation) 1996
--------------- -------------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for interest $ 627 $ 655
========== ==========
Supplemental disclosure of refinancing activity:
New financing $ 8,500 $ ---
Original financing paid off in escrow (8,277) ---
Increase in other assets and loan fees (11) ---
Accrued interest expense paid through escrow (72) ---
---------- ----------
Net loan proceeds $ 140 $ ---
========== ==========
Supplemental disclosure of property sale:
Sales price $ 9,625 $ ---
Sales commissions and fees (550) ---
Holdback funds for tenant improvements (21) ---
---------- ----------
Net proceeds from sale of property $ 9,054 $ ---
========== ==========
Loss on sale of property:
Sales price, net of costs of sale $ 9,075 $ ---
Less: Basis in investment in real estate (9,511) ---
Less: Unamortized deferred financing costs and
other fees (163) ---
---------- ----------
Loss on sale of property $ (599) $ ---
========== ==========
</TABLE>
See accompanying notes to financialstatements.
Page 6 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Note 1. THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING POLICIES
In the opinion of Glenborough Corporation, the managing general partner, the
accompanying unaudited financial statements contain all adjustments (consisting
of only normal accruals) necessary to present fairly the financial position of
Outlook Income/Growth Fund VIII, A California Limited Partnership (the
"Partnership"), as of June 30, 1997 and December 31, 1996, and the related
statements of operations, for the three and six months ended June 30, 1997 and
1996, and the changes in partners' equity (deficit) and cash flows for the six
months ended June 30, 1997 and 1996.
As of June 30, 1997, the Partnership owned the following two real estate assets:
(i) San Mar Plaza, a shopping center located in San Marcos, Texas; and (ii) a
50% general partner interest in Huntington Breakers Apartments, Limited. On May
15, 1997, the loan secured by San Mar Plaza matured. Due to unsuccessful
negotiations with the lender to restructure the terms of the debt and
insufficient equity in the property, the Partnership did not pay off the loan
upon maturity and, as a result, defaulted on the terms of the loan. On July 1,
1997, title to the San Mar Plaza property was transferred to the lender pursuant
to an agreement between the Partnership and the lender. On July 14, 1997,
Huntington Breakers Apartments, Limited entered into a purchase and sale
agreement with an unaffiliated third party for the sale of its sole real estate
asset, the Huntington Breakers Apartment complex. Upon completion of the
above-noted transactions and the satisfaction of any remaining liabilities, the
Partnership plans to disburse any remaining cash to the partners and liquidate
the Partnership.
The Partnership has three types of units: (i) Current Units (12,297 units
currently outstanding); (ii) Deferred Units (8,424 units currently outstanding);
and (iii) Growth Units (14,271 units currently outstanding). Each type of unit
was designed to provide a different type of return to the investor.
Basis of Accounting - The accompanying financial statements as of and for the
six months ended June 30, 1997 are presented on a liquidation basis of
accounting, as the Partnership intends to liquidate upon completion of the sale
of the Huntington Breakers Apartment complex. The accounting during the period
of liquidation includes adjustments, where appropriate, of individual assets and
liabilities to their estimated net-realizable value. No write down was necessary
as of June 30, 1997, as assets are stated at or below their expected
net-realizable values.
Reclassifications - Certain 1996 balances have been reclassified to conform to
the current year presentation.
Page 7 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Note 2. REFERENCE TO 1996 AUDITED FINANCIAL STATEMENTS
These unaudited financial statements should be read in conjunction with the
Notes to Consolidated Financial Statements included in the 1996 audited
financial statements.
Note 3. TRANSACTIONS WITH AFFILIATES
In accordance with the Limited Partnership Agreement, the Partnership pays the
General Partner, Glenborough Corporation ("Glenborough"), compensation for
services provided to the Partnership. Glenborough provides property management
services and was compensated for such services as follows:
Six months ended June 30,
1997 1996
Management fees $ 58,000 $ 58,000
Property management salaries 11,000 12,000
------------- -------------
$ 69,000 $ 70,000
The Partnership also reimbursed Glenborough for expenses incurred for services
provided to the Partnership such as accounting, investor services, data
processing, duplicating and office supplies, legal and administrative services,
and the actual costs of goods and materials used on behalf of the Partnership.
Glenborough was reimbursed $214,000 and $235,000 for such expenses during the
six months ended June 30, 1997 and 1996, respectively. These amounts are
included in general and administrative expenses.
As of June 30, 1997, GPA Ltd., a partnership with the same General Partner as
the Partnership, has purchased 2,766 limited partnership units (a 7.9% interest)
from two unaffiliated limited partners.
Note 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE
The Partnership holds an undivided 50% general partner interest in Huntington
Breakers Apartments, Limited (the Breakers Partnership). The Breakers
Partnership owns a 342-unit apartment complex located in Huntington Beach,
California which was completed in March 1986.
Page 8 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Net losses from operations are generally allocated ninety-nine percent (99%) to
the Partnership and one percent (1%) to the other partners in proportion to the
number of units held by each of the other partners. Net income from operations
will be allocated in the same amounts and in the same ratios as any
distributions made to the partners, and then in the same amounts and in the same
ratios that previous allocations of net losses from operations were made to the
partners. Thereafter, allocations will be made to the partners in proportion to
the number of units held by each partner.
At December 31, 1996, the Partnership's share of losses from the Breakers
Partnership exceeded its investments in and advances to the Breakers Partnership
by approximately $46,000. These excess losses were not recognized by the
Partnership as it had no obligations to fund such losses. The Partnership's
share of net income from the Breakers Partnership for the six months ended June
30, 1997 exceeded the unrecognized losses as of December 31, 1996. Therefore,
the 1997 income from the Breakers Partnership has been netted with the deferred
losses as of December 31, 1996, and the remaining income of $115,000 is
reflected in the accompanying statement of operations for the three and six
months ended June 30, 1997. During the quarter ended June 30, 1997, the
Partnership advanced Breakers Partnership $383,000 which is included in the
accompanying balance sheet at June 30, 1997.
Page 9 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Summary condensed balance sheet information as of June 30, 1997 and December 31,
1996, and condensed statements of operations for the six months ended June 30,
1997 and 1996, are as follows (in thousands):
<TABLE>
<CAPTION>
Huntington Breakers Apartments, Limited,
A California Limited Partnership
Balance Sheets
June 30, December 31,
1997 1996
<S> <C> <C>
Net real estate investment, held for sale $ 15,918 $ 15,763
Other assets 1,371 1,279
------------ ------------
Total assets $ 17,289 $ 17,042
============ ============
Notes payable $ 19,292 $ 19,761
Notes payable to Outlook Income/Growth Fund VIII 1,445 1,014
Other liabilities 1,201 1,078
------------ ------------
Total liabilities 21,938 21,853
------------ ------------
Partners' deficit:
Outlook Income/Growth Fund VIII (3,025) (3,185)
Other Partners, net (1,624) (1,626)
------------ -------------
Total partners' deficit (4,649) (4,811)
------------ -------------
Total liabilities and partners' deficit $ 17,289 $ 17,042
============ =============
</TABLE>
Huntington Breakers Apartments, Limited,
A California Limited Partnership
Condensed Statements of Operations
For the six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revenues $ 1,823 $ 1,812
Expenses 1,661 1,978
------------ -------------
Net income (loss) $ 162 $ (166)
============ =============
</TABLE>
Page 10 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
As of June 30, 1997, the Breakers Partnership has a $16,000,000, 7-day variable
rate (4.00% at June 30, 1997) note payable secured by a first deed of trust and
letter of credit in the amount of $16,184,000. The note requires monthly
interest only installments and matures on July 1, 2014, at which time all
remaining principal and interest will be due and payable.
The Breakers Partnership also has a $3,292,000 note payable secured by a second
trust deed. The note accrues interest at LIBOR plus 1.5% (7.21% at June 30,
1997) and is payable in monthly interest only installments until June 1, 2001,
at which time all remaining principal and interest will be due and payable.
Huntington Breakers must comply with certain covenants relating to the
aforementioned notes which include maintenance of a Cash Collateral Account, as
defined, quarterly excess property income payments (total property income less
carrying costs, operating expenses, management fees, debt service payments,
capital expenditures and bond interest fees and expenses equals excess property
income), and the holding open for lease of at least 20% of the property's units
to tenants qualifying as "low income". For the six months ended June 30, 1997,
the Partnership paid $469,000 in excess property income. It is management's
opinion that the Partnership is in compliance with all required terms of the
loan agreement.
On July 14, 1997, the Breakers Partnership entered into a purchase and sale
agreement with an unaffiliated third party for the sale of the Huntington
Breakers Apartment complex. The sale is expected to close escrow in October
1997; however, the sale is subject to a number of contingencies and accordingly,
there can be no assurance that the sale will be consummated. The Breakers
Partnership would use the proceeds from the sale to pay off the related debt on
the property, advances and amounts due to Partners, guaranty payments and
preference accounts.
Note 5. DISPOSITION OF PROPERTY
On May 28, 1997, the Partnership sold Silver Creek Plaza, a retail shopping
center located at 1759 East Capitol Expressway in San Jose, California to Summit
Commercial Properties, Incorporated an unrelated party ("the buyer"), for
$9,625,000. The sale proceeds were used to pay off the loan secured by the
property in the amount of $8,500,000 and settlement and other closing costs,
including transaction fees payable to the general partner.
Page 11 of 21
<PAGE>
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Note 6. NOTES PAYABLE
On January 22, 1997, the Partnership obtained an $8,500,000 loan from Wells
Fargo Bank and paid off the matured first and second deeds of trust on Silver
Creek Plaza which had a total outstanding balance of $8,277,000. On May 28,
1997, the $8,500,000 loan was paid off upon the sale of the Silver Creek Plaza
shopping center.
Note 7. SUBSEQUENT EVENT
On May 15, 1997, the note payable secured by San Mar Plaza, a shopping center
located at 900 Highway 80 in San Marcos, Texas, matured. Due to unsuccessful
negotiations with the lender to restructure the terms of the debt and
insufficient equity in the Property, the Partnership did not pay off the loan.
On July 1, 1997, title to the San Mar Plaza property was transferred to the
lender pursuant to an agreement between the Partnership and the lender. As of
July 1, 1997, the outstanding loan balance secured by the Property was
$6,436,000 and the net assets approximated $6,199,000.
The following pro forma financial statements represent the Partnership's balance
sheet and statement of operations as of and for the six months ended June 30,
1997 and for the year ended December 31, 1996, as if the foreclosure of San Mar
Plaza had occurred on January 1, 1996.
The pro forma adjustments reflect the sale of Silver Creek Plaza shopping center
and the disposition of San Mar Plaza.
Page 12 of 21
<PAGE>
OUTLOOK INCOME /GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Pro forma Balance Sheet
As of June 30, 1997
(in thousands, except units outstanding)
(Unaudited)
<TABLE>
<CAPTION>
Silver Creek San Mar
Historical(1) Disposition(2) Disposition(3) Pro Forma
<S> <C> <C> <C> <C>
Assets Investment in real estate:
Rental property held pending
foreclosure $ 6,173 $ --- $ (6,173) $ ---
-------------- --------------- -------------- -------------
Total real estate investment 6,173 --- (6,173) ---
Cash and cash equivalents 851 --- --- 851
Accounts receivable, net 68 (37) (24) 7
Investment in and advances to
unconsolidated joint venture 498 --- --- 498
Deferred financing costs and
other fees, net 26 --- (26) ---
Other assets 7 (5) (2) ---
--------------- --------------- -------------- -------------
Total assets $ 7,623 $ (42) $ (6,225) $ 1,356
============== =============== ============== =============
</TABLE>
- continued -
Page 13 of 21
<PAGE>
OUTLOOK INCOME /GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
Pro forma Balance Sheet - continued
As of June 30, 1997
(in thousands, except units outstanding)
(Unaudited)
<TABLE>
<CAPTION>
Silver Creek San Mar
Historical(1) Disposition(2) Disposition(3) Pro Forma
<S> <C> <C> <C> <C>
Liabilities and Partners' Equity (Deficit)
Liabilities:
Note payable $ 6,446 $ --- $ (6,446) $ ---
Accounts payable and accrued
expenses 69 --- (52) 17
Interest payable 50 --- (50) ---
Other liabilities 25 (5) (20) ---
-------------- -------------- -------------- --------------
Total liabilities 6,590 (5) (6,568) 17
-------------- -------------- -------------- --------------
Partners' equity (deficit):
General Partner (179) (1) 7 (173)
Limited Partners, 34,992 limited
partnership units outstanding 1,212 (36) 336 1,512
-------------- -------------- ------------- ---------------
Total partners' equity 1,033 (37) 343 1,339
-------------- -------------- ------------- ---------------
Total liabilities and
partners' equity $ 7,623 $ (42) $ (6,225) $ 1,356
============== ============== ============= ===============
</TABLE>
- continued -
Page 14 of 21
<PAGE>
OUTLOOK INCOME /GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
<TABLE>
<CAPTION>
Pro forma Statement of Operations
For the six months ended June 30, 1997
(in thousands, except per unit amounts and units outstanding)
(Unaudited)
Silver Creek San Mar
Historical(1) Disposition(2) Disposition(3) Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,128 $ (596) $ (532) $ ---
Interest income 13 --- --- 13
-------------- -------------- -------------- --------------
Total revenues 1,141 (596) (532) 13
-------------- -------------- -------------- --------------
Expenses:
Operating 385 (260) (125) ---
Loss on sale of property 599 (599) --- ---
Interest 710 (402) (308) ---
Depreciation and amortization 143 (10) (133) ---
General and administrative 248 (63) (48) 137
------------- -------------- -------------- --------------
Total expenses 2,085 (1,334) (614) 137
------------- ------------- -------------- --------------
Loss from operations and dispositions
of investments in real estate (944) 738 82 (124)
-------------- ------------- -------------- ---------------
Income in unconsolidated joint
venture 115 --- --- 115
-------------- ------------- -------------- ----------------
Net loss $ (829) $ 738 $ 82 $ (9)
============== ============= ============== ================
Net loss per limited partnership
current unit $ (66.03) $ --- $ --- $ (0.72)
=============== ============= ============== =================
Number of limited partnership current
units outstanding during the period used
to compute net loss per limited
partnership current unit 12,297 12,297 12,297 12,297
=============== ============== ============== =================
</TABLE>
- continued -
Page 15 of 21
<PAGE>
OUTLOOK INCOME /GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements
June 30, 1997
(in Liquidation)
(Unaudited)
<TABLE>
<CAPTION>
Pro forma Statement of Operations
For the year ended December 31, 1996
(in thousands, except per unit amounts and units outstanding)
(Unaudited)
Silver Creek San Mar
Historical(1) Disposition(2) Disposition(3) Pro Forma
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,333 $ (1,300) $ (1,033) $ ---
Interest and other income 57 --- --- 57
-------------- -------------- -------------- -------------
Total revenues 2,390 (1,300) (1,033) 57
-------------- -------------- -------------- -------------
Expenses:
Operating 706 (464) (242) ---
Interest 1,451 (826) (625) ---
Depreciation and amortization 530 (262) (268) ---
General and administrative 574 (139) (105) 330
-------------- -------------- -------------- -------------
Total expenses 3,261 (1,691) (1,240) 330
-------------- -------------- -------------- -------------
Net loss from operations (871) 391 207 (273)
Loss in unconsolidated
joint venture (853) --- --- (853)
--------------- -------------- -------------- -------------
Net loss $ (1,724) $ 391 $ 207 $ (1,126)
=============== ============== ============== =============
Net loss per limited partnership
current unit: $ (137.43) --- $ --- $ (89.74)
============== ============== ============== =============
Number of limited partnership
current units outstanding during
the period used to compute net
loss per limited partnership
current unit 12,297 12,297 12,297 12,297
============== ============== ============== ============
</TABLE>
Page 16 of 21
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
On May 28, 1997, the Partnership sold Silver Creek Plaza to Summit Commercial
Properties, Incorporated , an unrelated party, for $9,625,000. The sale proceeds
were used to pay off the loan, secured by the property in the amount of
$8,500,000 and settlement and other closing costs, including transaction fees
payable to the general partner. The loss on sale totaled $599,000.
As of June 30, 1997, the Partnership owns a 96,206 square foot shopping center
(San Mar Plaza) and a 50% joint venture interest in a 342-unit apartment complex
(Huntington Breakers Apartments). The loan secured by the San Mar Plaza property
matured on May 15, 1997. Due to unsuccessful negotiations with the lender to
restructure the terms of the debt and insufficient equity in the Property, title
to the property was transferred to the lender pursuant to an agreement between
the Partnership and the lender on July 1, 1997.
On July 14, 1997, the Breakers Partnership entered into a purchase and sale
agreement with an unaffiliated third party for the sale of the Huntington
Breakers Apartment complex. The sale is expected to close escrow in October
1997; however, the sale is subject to a number of contingencies and accordingly,
there can be no assurance that the sale will be consummated. With the proceeds
from the sale, the Breakers Partnership would pay off the related debt on the
property, advances and amounts due to Partners, guaranty payments and preference
accounts.
Upon completion of the above-noted transactions and satisfaction of any
remaining liabilities, the Partnership intends to disburse any remaining cash to
the partners and liquidate the Partnership. Management believes that the
Partnership's cash on hand as of June 30, 1997, together with the expected
proceeds from the potential sale of Huntington Breakers, will be sufficient to
fund the Partnership operations through the dissolution of the Partnership.
Results of Operations
The $53,000 and $88,000 decreases in rental income during the three and six
months ended June 30, 1997 compared to the same periods in 1996 were due to the
May 28, 1997 sale of Silver Creek Plaza and a reduction in occupancy at the San
Mar Plaza property. The occupancy rates at San Mar Plaza were 87% and 97% at
June 30, 1997 and June 30, 1996, respectively.
Interest and other income decreased by $14,000 and $27,000, respectively, during
the three and six months ended June 30, 1997 compared to the same periods in
1996, as a result of a lower average invested cash balance of $1,295,000 and
$635,000 for the three and six months ended June 30, 1997 compared to $1,769,000
and $1,300,000 for the three and six months ended June 30, 1996.
Page 17 of 21
<PAGE>
During the three and six months ended June 30, 1997 compared to the three and
six months ended June 30, 1996, operating expenses increased by $23,000 and
$38,000, respectively. The Silver Creek Plaza property realized a $22,000 and
$32,000 increase in operating expenses during the three and six months ended
June 30, 1997, due to the 1997 payment of supplemental property taxes which was
partially offset by the overall decrease in operating expenses associated with
the sale of the property on May 28, 1997.
The $599,000 loss on sale of property included in the Partnership's June 30,
1997 statement of operations resulted from the sale of Silver Creek Plaza.
The decrease in interest expense of $64,000 and $12,000 during the three and six
months ended June 30, 1997 compared to the same periods in 1996, is primarily
due to the pay off of the secured debt upon the sale of Silver Creek Plaza.
Due to the cessation of depreciation on Silver Creek Plaza, depreciation and
amortization decreased by $29,000 and $110,000, respectively, during the three
and six months ended June 30, 1997 compared to the same periods in 1996.
During the three and six months ended June 30, 1997 compared to the same periods
in 1996, general and administrative expenses decreased by $20,000 and $58,000,
respectively, as a result of lower legal fees due to a 1996 settlement, lower
professional fees attributable to non-recurring property appraisal fees incurred
in 1996.
The income (loss) in unconsolidated joint venture represents the Partnership's
share of income (loss) in the Huntington Breakers Apartments joint venture.
Huntington Breakers Apartments
The Huntington Breakers Apartments joint venture agreement included an income
guaranty from the developer to the Partnership. The developer defaulted on the
income guaranty and no amounts were ever paid. Following lengthy negotiations,
the developer agreed to pay the guaranteed amounts, but the Partnership allowed
the payments to be deferred and collected as a priority claim against future
cash flow. Under the Huntington Breakers joint venture agreement, the
Partnership has an annual cash flow priority of $700,000. The property has never
reached this cash flow and no guaranty amounts have ever been received.
The property was 96% occupied at June 30, 1997, which is two percentage points
higher than the June 30, 1996, occupancy. Occupancies in the competing complexes
have improved and the competition has reduced rental concessions offered to draw
in new tenants. Management believes the market has improved and continues an
aggressive marketing campaign to attract new tenants and maintain occupancy.
Page 18 of 21
<PAGE>
Huntington Breakers total expenses have decreased during the six months ended
June 30, 1997 compared to the same period in 1996, primarily as a result of
reduction in interest expense of $253,000, due to the financing arrangements
obtained in July 1996, combined with the cessation of depreciation on June 1,
1997 when Huntington Breakers became classified as property held for sale.
Page 19 of 21
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not a party to, nor any of its assets the
subject of, any material pending legal proceedings.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
#27 - Financial Data Schedule
(b) Reports on Form 8-K
On June 9, 1997, the Partnership filed a Current Report on
Form 8-K with respect to the sale of Silver Creek Plaza, a
retail shopping center located at 1759 East Capitol Expressway
in San Jose, California.
On July 15, 1997, the Partnership filed a Current Report on
Form 8-K with respect to the July 1, 1997 foreclosure of San
Mar Plaza, a shopping center located at 900 Highway 80 in San
Marcos, Texas.
Page 20 of 21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OUTLOOK INCOME/GROWTH FUND VIII,
A CALIFORNIA LIMITED PARTNERSHIP
By: Glenborough Corporation,
a California corporation
Its Managing General Partner
Date: August 14, 1997 By: /s/ Terri Garnick
Terri Garnick
Chief Financial Officer
Page 21 of 21
<PAGE>
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