<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, 1996
------------------------------------------
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 0-16888
-------------------------------------------
FIRST CAPITAL INCOME AND GROWTH FUND - SERIES XII
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3498223
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza,
Suite 1100, Chicago, Illinois 60606-2607
- ------------------------------- ----------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, (312) 207-0020
including area code ----------------------------------
Securities registered pursuant to Section NONE
12(b) of the Act: ----------------------------------
Securities registered pursuant to
Section 12(g) of the Act: Limited Partnership Assignee 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. [X]
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the definitive Prospectus dated May 8, 1987, included in
the Registrant's Registration Statement on Form S-11 (Registration No. 33-
12269), is incorporated herein by reference in Part IV of this report.
Real Estate Sale Agreement for the sale of Equitable of Iowa Building, located
in Des Moines, Iowa, is incorporated herein by reference in Part IV of this
report.
Real Estate Sale Agreement for the sale of Sentry Park West Office Campus,
located in Blue Bell, Pennsylvania, is incorporated herein by reference in Part
IV of this report.
EXHIBIT INDEX - PAGE A-1
- ------------------------
1
<PAGE>
PART I
ITEM 1. BUSINESS
The registrant, First Capital Income and Growth Fund-Series XII (the
"Partnership") is a limited partnership organized in 1987 under the Revised
Uniform Limited Partnership Act of the State of Illinois. The Partnership sold
1,000,000 Limited Partnership Assignee Units (the "Units") to the public from
May 1987 to November 1988, pursuant to a Registration Statement on Form S-11
filed with the Securities and Exchange Commission (Registration No. 33-12269).
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement.
The business of the Partnership is to invest primarily in existing, income-
producing real estate, such as shopping centers, office buildings, apartments,
warehouses, or any one or more of these categories. From November 1987 to March
1991, the Partnership: 1) made three real property investments; 2) purchased 50%
interests in three joint ventures, a 75% interest in one joint venture and a 25%
interest in a separate joint venture which were each formed with Affiliated
partnerships for the purpose of acquiring a 100% interest in certain real
property and 3) purchased 50% interests in four separate joint ventures which
were each formed with Affiliated partnerships for the purpose of acquiring a
preferred majority interest in certain real property. All of these joint
ventures, prior to dissolution, are operated under the common control of First
Capital Financial Corporation (the "General Partner"). Through December 31, 1996
the Partnership, with its respective joint venture partners, has dissolved as a
result of the sale and/or disposition of: 1) one 50% and one 75% interest in
joint ventures that had 100% interests in real property; 2) all four 50% joint
ventures that had preferred majority interests in real property and 3) one real
property investment.
Property management services for the Partnership's real estate investments are
provided by Affiliates of the General Partner for fees calculated as a
percentage of gross rents received from each of the Partnership's properties.
The real estate business is highly competitive. The results of operations of
the Partnership will depend upon the availability of suitable tenants, real
estate market conditions and general economic conditions which may impact the
success of these tenants. Properties owned by the Partnership frequently
compete for tenants with similar properties owned by others.
As of March 1, 1997, there were 16 employees at the Partnership's properties for
on-site property maintenance and administration.
ITEM 2. PROPERTIES (a)(b)
As of December 31, 1996, the Partnership owned directly or through joint
ventures, the following five properties, which were owned in fee simple and,
except for 1800 Sherman Office Building ("1800 Sherman"), were encumbered by
mortgages. For complete details of the material terms of the encumbrances,
refer to Note 5 of the Notes to Financial Statements.
<TABLE>
<CAPTION>
Net Leasable Number of
Property Name Location Sq. Footage Tenants (c)
- ----------------------- -------------------------- ------------ -----------
<S> <C> <C> <C>
SHOPPING CENTERS:
- -----------------
Deerfield Mall Deerfield Beach, Florida 379,170 54 (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>
Shopping Centers: continued
- ---------------------------
Regency Park (25%) Jacksonville, Florida 327,710 23 (3)
Office Buildings:
- -----------------
Meidinger Tower Louisville, Kentucky 331,054 33 (1)
Prentice Plaza (50%) Englewood, Colorado 157,311 33 (1)
1800 Sherman (50%) Evanston, Illinois 134,541 29 (2)
</TABLE>
(a) For a discussion of significant operating results and major capital
expenditures planned for the Partnership's properties refer to Item 7.
(b) For federal income tax purposes, the Partnership depreciates the portion
of the acquisition costs of its properties allocable to real property
(exclusive of land), and all improvements thereafter, over useful lives of
40 years utilizing the straight-line method. The Partnership's portion of
real estate taxes for Deerfield Mall, 1800 Sherman, Meidinger Tower and
Prentice Plaza the Partnership's most significant properties, was
$664,100, $464,800, $400,800 and $143,000, respectively, for the year
ended December 31, 1996. In the opinion of the General Partner, all of
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 presents each of the Partnership's most significant
properties' occupancy rates as of December 31 for each of the last five years:
(excludes properties that were sold during 1996)
<TABLE>
<CAPTION>
Property Name 1996 1995 1994 1993 1992
----------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Meidinger Tower 98% 96% 93% 85% 88%
Deerfield Mall 92% 93% 92% 89% 80%
1800 Sherman 94% 97% 97% 94% 88%
Prentice Plaza 98% 99% 97% 92% 93%
</TABLE>
3
<PAGE>
ITEM 2. PROPERTIES (Continued)
- ------ ----------
The amounts in the following table represent each of the Partnership's most
significant properties' average annual rental rate per square foot for each of
the last five years ended December 31 and were computed by dividing each
property's base rental revenues by its average occupied square footage:
(excludes properties that were sold during 1996)
<TABLE>
<CAPTION>
Property Name 1996 1995 1994 1993 1992
--------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Meidinger Tower $ 7.98 $ 8.33 $ 8.21 $ 8.46 $10.11
Deerfield Mall $ 9.57 $ 9.58 $ 9.25 $ 9.40 $ 9.70
1800 Sherman $21.27 $21.14 $20.58 $20.20 $19.67
Prentice Plaza $14.91 $14.31 $13.65 $12.63 $13.09
</TABLE>
The following table summarizes the principal provisions of the leases for each
of the tenants which occupy ten percent or more of the rentable square footage
at each of the Partnership's most significant properties:
<TABLE>
<CAPTION>
Partnership's Share of per
annum Base Rents (a) for Percentage Renewal
------------------------------------- of Net Options
Final Twelve Expiration Leasable (Renewal
Months of Date of Footage Options/
1997 Lease Lease Occupied Years)
---------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Meidinger Tower
- ---------------
William M. Mercer
(management and
insurance consulting) $887,200 $887,200 7/31/2002 34% 1/10 & 2/5
Deerfield Mall
- --------------
T. J. Maxx
(department store) $390,800 $433,500 11/30/2012 21% 5/5
Publix
(grocery store) $252,700 $252,700 5/4/2008 11% 4/5
1800 Sherman (50%)
- ------------------
ZS Associates
(sales-force $276,100 $317,200 12/31/2004 22% 1/5
life insurance)
Sachs Group
(health care information) $172,200 $206,600 6/30/2004 11% 1/5
Prentice Plaza (50%)
- --------------------
ANTEC Corporation
(design, $213,500 $224,400 9/30/1999 17% None
engineering,
manufacturing and
distribution of cable
</TABLE>
4
<PAGE>
ITEM 2. PROPERTIES (Continued)
television products)
(a) The Partnership's share of per annum base rents for each of the tenants
listed above for each of the years between 1997 and the final twelve
months for each of the above leases is no lesser or greater than the
amounts listed in the above table.
The amounts in the following table represent the Partnership's portion of base
rental income from leases in the year of expiration (assuming no lease renewals)
through the year ended December 31, 2006 for the Partnership's most significant
properties:
<TABLE>
<CAPTION>
Base Rents in
Number Year of % of Total Base
Year of Tenants Square Feet Expiration (a) Rents (b)
------ ------------ ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
1997 19 49,886 $278,900 3.34%
1998 40 144,154 $801,600 10.38%
1999 30 142,471 $820,500 12.83%
2000 15 57,312 $467,200 8.56%
2001 16 62,370 $452,600 9.37%
2002 4 134,042 $671,500 17.20%
2003 9 48,254 $322,100 10.57%
2004 6 83,005 $673,300 27.07%
2005 2 4,280 $ 21,100 1.20%
2006 1 6,681 $ 52,300 3.06%
</TABLE>
(a) Represents the Partnership's portion of base rents to be collected each
calendar year on expiring leases.
(b) Represents the Partnership's portion of base rents to be collected each
year on expiring leases as a percentage of the Partnership's portion of
the total base rents to be collected on leases in effect as of December
31, 1996.
ITEM 3. LEGAL PROCEEDINGS
(a & b) The Partnership and its properties were 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, 1996. Ordinary routine
litigation incidental to the business which is not deemed material was pursued
during the quarter ended December 31, 1996.
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, 1997, there were 7,391 Holders of Units.
6
<PAGE>
ITEM 6.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $17,900,200 $ 17,678,700 $ 16,698,200 $ 18,534,400 $ 22,687,900
Net income (loss) $ 2,155,600 $(13,386,400) $(14,742,000) $(22,424,800) $(11,581,300)
Net income (loss)
allocated to Limited
Partners (a) $2,134,000 $(13,252,500) $(14,594,600) $(22,200,600) $(11,465,500)
Weighted average number
of Units outstanding 949,843 953,845 963,785 973,695 984,436
Net income (loss)
allocated to Limited
Partners per weighted
average Unit (a) $ 2.25 $ (13.89) $ (15.14) $ (22.80) $ (11.65)
Total assets $74,772,700 $ 85,015,000 $100,121,600 $120,664,800 $167,132,400
Mortgage loans payable $48,858,400 $ 60,405,300 $ 61,195,100 $ 65,853,800 $ 87,530,600
Front-End Fees Loan
payable to Affiliate $13,434,400 $ 13,434,400 $ 13,434,400 $ 13,434,400 $ 13,434,400
Distributions to Limited
Partners per weighted
average Unit None None None None $ 0.25
Return of capital to
Limited Partners per
weighted average Unit
(b) None None None None $ 0.25
OTHER DATA:
Investment in commercial
rental properties (net
of accumulated
depreciation and
amortization) $65,500,600 $ 78,329,900 $ 94,027,300 $113,844,700 $148,740,900
Number of real property
interests owned at
December 31 5 7 7 10 11
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Net (loss) allocated to Limited Partners for 1993 included an extraordinary
gain on extinguishment of debt.
(b) For the purposes of this table, return of capital represents either: the
amount by which distributions, if any, exceed net income each respective
year or; total distributions, if any, in years when the Partnership incurs
a net loss. Pursuant to the Partnership Agreement, Capital Investment is
only reduced by distributions of Sale or Refinancing Proceeds. Accordingly,
return of capital as used in the above table does not impact Capital
Investment.
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in
the Partnership
Agreement) (a) $ 2,710,800 $ 2,141,300 $ 2,259,300 $ 2,673,200 $ 3,387,400
Items of reconciliation:
Principal payments on
mortgage loans payable $ 1,085,200 $ 1,240,500 $ 449,200 $ 185,200 $ 187,700
General Partner's
Portfolio Management
Fee 27,500
Changes in current
assets and
liabilities:
Decrease (Increase) in
current assets 374,200 (271,600) 495,000 540,200 (84,400)
(Decrease) Increase in
current liabilities (751,300) 50,600 (156,100) 758,200 (33,800)
- -------------------------------------------------------------------------------------------
Net cash provided by
operating activities $ 3,418,900 $ 3,160,800 $ 3,047,400 $ 4,156,800 $ 3,484,400
- -------------------------------------------------------------------------------------------
Net cash provided by
(used for) investing
activities $ 10,173,400 $ (683,000) $ 2,141,100 $(5,627,100) $(3,683,300)
- -------------------------------------------------------------------------------------------
Net cash (used for)
financing activities $(11,675,100) $(1,833,400) $(5,762,800) $(4,329,500) $(6,628,800)
- -------------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership cash
revenues earned from operations (excluding tenant deposits and proceeds
from the sale, disposition or financing of any Partnership properties or
the refinancing of any Partnership indebtedness), minus all cash expenses
incurred (including Operating Expenses, payments of principal and interest
on any Partnership indebtedness, and any reserves of revenues from
operations deemed reasonably necessary by the General Partner), except
depreciation and amortization expenses and capital expenditures and lease
acquisition expenditures.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-9
in this report and the supplemental schedule on pages A-10 and A-11.
7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues $17,899,200 $ 17,678,700 $ 16,698,200 $ 18,534,400 $ 22,687,900
Net income (loss) $ 2,155,600 $(13,386,400) $(14,742,000) $(22,424,800) $(11,581,300)
Net income (loss)
allocated to Limited
Partners (a) $ 2,134,000 $(13,252,500) $(14,594,600) $(22,200,600) $(11,465,500)
Weighted average number
of Units outstanding 949,843 953,845 963,785 973,695 984,436
Net income (loss)
allocated to Limited
Partners per weighted
average Unit (a) $ 2.25 $ (13.89) $ (15.14) $ (22.80) $ (11.65)
Total assets $74,772,700 $ 85,015,000 $100,121,600 $120,664,800 $167,132,400
Mortgage loans payable $48,858,400 $ 60,405,300 $ 61,195,100 $ 65,853,800 $ 87,530,600
Front-End Fees Loan
payable to Affiliate $13,434,400 $ 13,434,400 $ 13,434,400 $ 13,434,400 $ 13,434,400
Distributions to Limited
Partners per weighted
average Unit None None None None $ 0.25
Return of capital to
Limited Partners per
weighted average Unit
(b) None None None None $ 0.25
OTHER DATA:
Investment in commercial
rental properties (net
of accumulated
depreciation and
amortization) $65,500,600 $ 78,329,900 $ 94,027,300 $113,844,700 $148,740,900
Number of real property
interests owned at
December 31 5 7 7 10 11
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Net (loss) allocated to Limited Partners for 1993 included an extraordinary
gain on extinguishment of debt.
(b) For the purposes of this table, return of capital represents either: the
amount by which distributions, if any, exceed net income each respective
year or; total distributions, if any, in years when the Partnership incurs
a net loss. Pursuant to the Partnership Agreement, Capital Investment is
only reduced by distributions of Sale or Refinancing Proceeds. Accordingly,
return of capital as used in the above table does not impact Capital
Investment.
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in
the Partnership
Agreement) (a) $ 2,710,800 $ 2,141,300 $ 2,259,300 $ 2,673,200 $ 3,387,400
Items of reconciliation:
Principal payments on
mortgage loans payable 1,085,200 1,240,500 449,200 185,200 187,700
General Partner's
Portfolio Management
Fee 27,500
Changes in current
assets and
liabilities:
Decrease (Increase) in
current assets 374,200 (271,600) 495,000 540,200 (84,400)
(Decrease) Increase in
current liabilities (751,300) 50,600 (156,100) 758,200 (33,800)
- -------------------------------------------------------------------------------------------
Net cash provided by
operating activities $ 3,418,900 $ 3,160,800 $ 3,047,400 $ 4,156,800 $ 3,484,400
- -------------------------------------------------------------------------------------------
Net cash provided by
(used for) investing
activities $ 10,173,400 $ (683,000) $ 2,141,100 $(5,627,100) $(3,683,300)
- -------------------------------------------------------------------------------------------
Net cash (used for)
financing activities $(11,675,100) $(1,833,400) $(5,762,800) $(4,329,500) $(6,628,800)
- -------------------------------------------------------------------------------------------
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership cash
revenues earned from operations (excluding tenant deposits and proceeds
from the sale, disposition or financing of any Partnership properties or
the refinancing of any Partnership indebtedness), minus all cash expenses
incurred (including Operating Expenses, payments of principal and interest
on any Partnership indebtedness, and any reserves of revenues from
operations deemed reasonably necessary by the General Partner), except
depreciation and amortization expenses and capital expenditures and lease
acquisition expenditures.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-16
in this report and the supplemental schedule on pages A-17 and A-18.
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 its life
cycle in three phases: (i) the Offering of Units and Investment in Properties;
(ii) the operation of properties and (iii) the sale or other disposition of
properties.
The Partnership commenced the Offering of Units on May 8, 1987 and began
operations on June 9, 1987 after reaching the required minimum subscription
level. On November 22, 1988, the Offering was Terminated upon the sale of
1,000,000 Units. From November 1987 to March 1991, the Partnership: 1) made
three real property investments; 2) purchased 50% interests in three joint
ventures, a 75% interest in one joint venture and a 25% interest in a separate
joint venture which were each formed with Affiliated partnerships for the
purpose of acquiring a 100% interest in certain real property and 3) purchased
50% interests in four separate joint ventures which were each formed with
Affiliated partnerships for the purpose of acquiring a preferred majority
interest in certain real property.
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
1993 the Partnership, in addition to being in the operation of properties
phase, entered the disposition phase of its life cycle. During the disposition
phase of the Partnership's life cycle, comparisons of operating results are
complicated due to the timing and effect of property sales and dispositions.
Partnership operating results are generally expected to decline as real
property interests are sold or disposed of since the Partnership no longer
receives income generated from such real property interests. Through December
31, 1996 the Partnership, with its respective joint venture partners, has
dissolved as a result of the sale and/or disposition of: 1) one 50% and one 75%
interest in joint ventures that had 100% interests in real property; 2) all
four 50% interests in joint ventures with preferred majority interests in real
property and 3) one real property interest.
As disclosed in the Partnership's Annual Report for the year ended December 31,
1995, the Partnership was faced with significant financial obligations during
1996. In addition, operating results were affected by industry issues of its
tenants, as well as unique matters related to its individual properties. During
1996, the General Partner was successful in selling two of the three properties
whose mortgage debt was maturing during 1996 and was able to extend until
December 31, 1997 the maturity date of the other maturing mortgage loan. The
Partnership was also able to resolve some of the unique issues facing its
properties through successful tenanting of those properties and the sale of two
of the properties. During 1996 each of the Partnership's remaining properties
experienced improved operating results as compared to the previous year.
Notwithstanding this, the future operations of the Partnership's properties
still face uncertainty based on regional market issues, individual property
matters and industry issues and loan maturities.
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1996, 1995 and 1994.
The discussion following the table should be read in conjunction with the
Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results
(a)
For the Years Ended December 31,
----------------------------------
1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
MEIDINGER TOWER
Rental revenues $4,893,300 $4,680,200 $4,134,300
- ----------------------------------------------------------------------
Property net (loss) (b) $ (203,200) (311,200) (563,000)
- ----------------------------------------------------------------------
Average occupancy 97% 93% 90%
- ----------------------------------------------------------------------
DEERFIELD MALL
Rental revenues $4,275,400 $4,212,300 $3,941,300
- ----------------------------------------------------------------------
Property net income (b) $ 794,000 $ 550,500 $ 247,600
- ----------------------------------------------------------------------
Average occupancy 94% 94% 89%
- ----------------------------------------------------------------------
1800 SHERMAN OFFICE BUILDING (50%)
Rental revenues $1,533,100 $1,538,200 $1,496,900
- ----------------------------------------------------------------------
Property net income (b) $ 380,600 $ 316,000 $ 388,900
- ----------------------------------------------------------------------
Average occupancy 95% 97% 95%
- ----------------------------------------------------------------------
PRENTICE PLAZA (50%)
Rental revenues $1,270,700 $1,169,400 $1,072,900
- ----------------------------------------------------------------------
Property net (loss) $ (19,000) (229,800) (250,400)
- ----------------------------------------------------------------------
Average occupancy 99% 97% 93%
- ----------------------------------------------------------------------
REGENCY PARK SHOPPING CENTER (25%)
Rental revenues $ 599,300 $ 587,500 $ 523,200
- ----------------------------------------------------------------------
Property net income (loss) (b) $ 10,500 $ (70,200) $ (163,100)
- ----------------------------------------------------------------------
Average occupancy 90% 88% 79%
- ----------------------------------------------------------------------
EQUITABLE OF IOWA BUILDING
Rental revenues $3,020,700 $3,845,500 $3,503,300
- ----------------------------------------------------------------------
Property net income (b)(c) $ 910,100 $ 528,900 $ 147,900
- ----------------------------------------------------------------------
Average occupancy (c) 99% 97%
- ----------------------------------------------------------------------
SENTRY PART WEST OFFICE CAMPUS (50%)
Rental revenues $1,009,500 $1,399,200 $1,149,500
- ----------------------------------------------------------------------
Property net income (loss) (b)(c) $ 244,700 $ (351,400) (396,100)
- ----------------------------------------------------------------------
Average occupancy (c) 86% 76%
- ----------------------------------------------------------------------
PARK CENTRAL OFFICE PARK I, II & III (50%)
Rental revenues $ 371,500
- ----------------------------------------------------------------------
Property net income (d) $ 5,100
- ----------------------------------------------------------------------
Average occupancy (d)
- ----------------------------------------------------------------------
SENTRY PARK EAST OFFICE CAMPUS (50%)
Rental revenues $137,000
- ----------------------------------------------------------------------
Property net (loss) (b)(d) $ (32,800)
- ----------------------------------------------------------------------
Average occupancy (d)
- ----------------------------------------------------------------------
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income,
interest expense on the Partnership's Front-End Fees loan and general and
administrative expenses or are related to properties disposed of by the
Partnership prior to the periods under comparison.
(b) Property net (loss) income excludes provisions for value impairment which
were included in the Statements of Income and Expenses for the years ended
December 31, 1995 and 1994 (see Note 12 of Notes to Financial Statements
for additional information).
(c) These properties were sold during 1996. The gains realized on the sales of
these properties are excluded from the property net income reported above
(see Note 11 of Notes to Financial Statements for additional information).
(d) These properties were sold during 1994. The gains/losses realized on the
sales of these properties are excluded from property net income / loss
reported above (see Note 11 of Notes to Financial Statements for additional
information).
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995
Net results for the Partnership changed from a (loss) of $(13,386,400) for the
year ended December 31, 1995 to income of $2,155,600 for the year ended
December 31, 1996. The change in results was primarily due to the provisions
for value impairment which contributed $12,700,000 to the net (loss) in 1995.
In addition, the change was due to the gain of $816,100 and $160,200 from the
sales of Sentry West and Equitable, respectively, during 1996.
Net results, exclusive of provisions for value impairment, gain on sale of
properties and the operating results of the sold properties, changed from a
(loss) of $(863,900) for the year ended December 31, 1995 to income of $24,500
for the year ended December 31, 1996. The change in results was primarily due
to: 1) improved operating results at all of the Partnership remaining
properties, 2) decreased interest expense on the Partnership's Front-End Fees
loan, due to a decrease in the variable interest rate, 3) increased interest
income, primarily due to an increase in the funds available for short-term
investments which was primarily the result of the receipt of sales proceeds
during the second half of 1996 and 4) decreased general and administrative
expenses, primarily due to lower data processing and printing and mailing
costs.
The following comparative discussion includes the results from the
Partnership's five remaining property investments.
Rental revenues increased by $384,200 or 3.2% for the year ended December 31,
1996 when compared to the year ended December 31, 1995. The primary factors
which contributed to the increase were higher rental revenues at Meidinger
Tower, which was primarily due an increase in tenant expense reimbursements and
the receipt in 1996 of a one-time lease settlement fee and Prentice Plaza,
primarily due to an increase in tenant expense reimbursements and base rents,
which was due to the increase in average occupancy and average base rental rate
charged to new and renewing tenants.
Interest expense on the Partnership's mortgage loans decreased by $280,300 for
the year ended December 31, 1996 when compared to the year ended December 31,
1995. The decrease was primarily due to: 1) a lower average interest rate on
Meidinger's variable rate mortgage loan; 2) a decrease in the interest rate on
the fixed-rate mortgage loan collateralized by Regency, as further discussed
below and 3) lower average outstanding balances resulting from principal
payments on Deerfield Mall and Regency.
Depreciation and amortization expense decreased by $146,500 for the years under
comparison. The decrease was primarily the result of the effects of provisions
for value impairment recorded during the year ended December 31, 1995 which
reduced the depreciable bases of Deerfield Mall, Meidinger Tower, 1800 Sherman
and Regency.
Real estate tax expense decreased by $142,200 for the years under comparison.
The decrease was primarily due to the successful appeal in 1996 for the
reduction of the assessed value of 1800 Sherman for the 1995 tax year and the
1996 receipt of a refund following a successful appeal of the assessed value of
Prentice Plaza for the 1989 to 1994 tax years.
Repairs and maintenance expense increased by $116,900 for the year ended
December 31, 1996 when compared to the year ended December 31, 1995. The
property contributing most significantly to the increase was Meidinger Tower,
primarily due to a 7% increase in the janitorial service contract which was the
result of an increase in the contractor's wages and the costs of supplies.
Property operating expenses increased by $107,700 for the years under
comparison as a result of an increase at Meidinger Tower which was primarily
due to higher utility, security and personnel costs as well as an increase in
property management and leasing fees resulting from the increase in rental
revenues. Also contributing to the increase was an increase in security costs
at Prentice Plaza.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net (loss) for the Partnership decreased by $1,355,600 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994. The
effects of the sales of certain Partnership properties during 1994 and
provisions for value impairment recognized in 1995 and 1994 had a significant
impact on the comparison of net (loss) for the years ended December 31, 1995
and 1994. The Partnership recorded provisions for value impairment of
$12,700,000 during 1995. During 1994, the Partnership recorded provisions for
value impairment of $13,250,000 and sold the three remaining office buildings
at Sentry East as well as Park Central. Properties sold during 1994 accounted
for net income (including operating results and the net gain on sale of
properties) of $160,800. For further information on the sales see Note 11 of
Notes to Financial Statements.
Excluding the effects on net income of the properties sold and provisions for
value impairment, net (loss) for the year ended December 31, 1995 decreased by
$968,700 when compared to the net (loss) for the year ended December 31, 1994.
The primary factor contributing to the decrease in net (loss) was improved
operating results at all of the Partnership's remaining property interests
except 1800 Sherman. In addition, interest income increased due to an increase
in the rates and funds available for short-term investments. Partially
offsetting the decrease in net (loss) was an increase in interest expense on
the Partnership's Front-End Fees Loan due to an increase in the variable
interest rate.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
For purposes of the following comparative discussion, the operating results of
Park Central and Sentry East have been excluded.
Rental revenues increased by $1,610,900 or 10% for the year ended December 31,
1995 when compared to the year ended December 31, 1994. This increase was
primarily the result of an increase in the average occupancy rates at all of
the Partnership's properties. This factor, along with an increase in the
average base rental rate charged to new and renewing tenants, contributed to a
total increase for the Partnership of $974,300 in base rents. Another
significant factor was a net increase in tenant expense reimbursements at the
Partnership's properties, particularly at Meidinger Tower.
Depreciation and amortization expense decreased by $223,100 for the years under
comparison. The decrease was primarily the result of the effects of provisions
for value impairment recorded for several Partnership properties, which reduced
depreciable bases.
Interest expense on the Partnership's mortgage loans increased by $568,000 for
the year ended December 31, 1995 when compared to the year ended December 31,
1994. The increase was primarily due to increases in the variable interest
rates on the mortgage loans collateralized by Meidinger Tower, Equitable and
Sentry West together with a fixed interest rate on the new mortgage loan
collateralized by Deerfield Mall which was higher than the 1994 variable
interest rate on its prior mortgage loan.
Property operating expense increased by $191,600 for the years under
comparison. Contributing factors were increases in property management and
leasing fees at all of the Partnership's properties, except for Deerfield Mall
as a result of the increase in rental revenues, and in fees for professional
services at Sentry West, Equitable and Prentice Plaza. Partially offsetting the
increase in property operating expense was decreased professional service fees
at Deerfield Mall and 1800 Sherman.
To increase and/or maintain occupancy levels at the Partnership's properties,
the 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 renewal of existing tenant leases 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 during the years under
comparison 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 the following: (1) annual rent increases based
on the Consumer Price Index or graduated rental increases; (2) percentage
rentals at shopping centers, for which the Partnership receives as additional
rent a percentage of a tenant's sales over predetermined amounts and (3) total
or partial tenant reimbursement of property operating expenses (e.g., common
area maintenance, real estate taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
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 it properties.
Cash Flow (as defined in the Partnership Agreement) is generally not equal to
net income or cash flows as defined by GAAP, since certain items are treated
differently under the Partnership Agreement than under GAAP. Management
believes that to facilitate a clear understanding of the Partnerships
operations, an analysis of Cash Flow (as defined in the Partnership Agreement)
should be examined in conjunction with an analysis of net income or cash flows
as defined by GAAP. The second table in Select Financial Data includes a
reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash
flow provided by operating activities as determined by GAAP. Such amounts are
not indicative of actual distributions to Partners and should not be considered
as an alternative to the results disclosed in the Statements of Income and
Expenses and Statements of Cash Flows.
The increase in Cash Flow (as defined in the Partnership Agreement) of $569,500
for the year ended December 31, 1996 when compared to the year ended December
31, 1995, was primarily due to the change in net income (loss) previously
discussed (exclusive of depreciation, amortization, provisions for value
impairment and the gains on the sales of Sentry West and Equitable) and the
absence of principal payments in 1996 on the mortgage loan collateralized by
Meidinger Tower.
The net increase in the Partnership's cash position of $1,917,200 for the year
December 31, 1996 was primarily the result of the net cash provided by
operating activities and the net proceeds received from the sales of Sentry
West and Equitable exceeding the increases in escrow deposits, investments in
debt securities, regularly scheduled principal payments made on Partnership's
mortgage loans payable and expenditures made for capital and tenant
improvements and leasing costs. Liquid assets (including cash, cash equivalents
and investments in debt securities) of the Partnership as of December 31, 1996
were comprised of amounts held for working capital purposes.
Net cash provided by operating activities continues to be a primary source of
funds for the Partnership. Net cash provided by operating activities increased
by $258,100 for the year ended December 31, 1996 when compared to the year
ended December 31, 1995. This increase was primarily due to increases in the
net cash provided by operating activities at Meidinger Tower, Prentice Plaza,
Deerfield Mall and Regency as well as the increase in interest income and
decrease in interest expense and general and administrative expenses,
previously discussed. The increase was partially offset by decrease in the net
cash provided by operating activities at Equitable and Sentry West which was
the result of their sale during 1996.
Net cash (used for) provided by investing activities changed from $(683,000)
for the year ended December 31, 1995 to $10,173,400 for the year ended December
31, 1996. The change was primarily due to the cash generated from the sales of
Sentry West and Equitable, partially offset by an increase in cash paid into
real estate tax escrows and an increase in investments in debt securities. The
increase in investments in debt securities is a result of the extension of the
maturities of certain of the Partnerships short-term
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
investments in an effort to maximize the return on these amounts while they are
held for working capital purposes. These investments are of investment-grade
and substantially all of them mature less than one year from their date of
purchase. The Partnership maintains working capital reserves to pay for capital
expenditures such as building and tenant improvements and leasing costs. During
the year ended December 31, 1996, the Partnership spent $899,500 for these
items and has budgeted to spend approximately $1,000,000 during 1997. Included
in this budgeted amount are capital and tenant improvements and leasing costs
of approximately $500,000 for Meidinger Tower. Actual amounts expended may vary
depending on a number of factors including actual leasing activity, results of
property operations, liquidity considerations and other market conditions
throughout the year. The General Partner believes these improvements and
leasing costs are necessary in order to increase and/or maintain occupancy
levels in very competitive markets, maximize rental rates charged to new and
renewing tenants and to prepare the remaining properties for eventual
disposition.
On August 28, 1996, the joint venture which owned Sentry West, in which the
Partnership had a 50% interest, sold Sentry West for $11,650,000. The
Partnership's share of the proceeds from this transaction, net of closing
prorations, selling expenses and the repayment of the mortgage loan
collateralized by Sentry West was approximately $894,500 and was added to
working capital. For additional information, see Note 11 of Notes to Financial
Statements.
On October 16, 1996 the Partnership sold Equitable for $7,000,000. Proceeds
from this transaction, net of closing prorations, estimated selling expenses
and the repayment of the mortgage loan collateralized by Equitable, was
approximately $520,000 and were added to working capital. For additional
information, see Note 11 of Notes to Financial Statements.
The increase in net cash used for financing activities of $9,841,700 for year
ended December 31, 1996 when compared to the year ended December 31, 1995 was
primarily the result of the repayment of mortgage loans in conjunction with the
sales of Sentry West and Equitable, partially offset by the effects of the
expiration of the Repurchase Option Period in 1995 and the absence of principal
payments in 1996 on the mortgage loan collateralized by Meidinger Tower. Also
contributing to the increase were higher principal payments made in 1996
compared to 1995 on the mortgage loans collateralized by Regency and Deerfield
Mall.
Pursuant to a modification of the Partnership's Front-End Fees loan agreement,
the Partnership has the option to defer payment of interest on this loan for a
48-month period beginning April 1, 1993. In addition, any interest payments
made by the Partnership from April 1, 1993 through March 31, 1997 may be
borrowed from an Affiliate of the General Partner. All deferred and
subsequently borrowed amounts (including accrued interest thereon) shall be due
and payable on April 1, 1997, and shall not be subordinated to payment of
Original Capital Contributions to Limited Partners. As of December 31, 1996,
the Partnership had not exercised its option to defer the payment of interest
on this loan.
In August 1996, the joint venture which owns Regency, in which the Partnership
has a 25% interest with Affiliated partnerships, executed an agreement (the
"Extension") with the mortgage lender to modify the terms of the mortgage loan
collateralized by Regency. Significant terms of the Extension, which are
retroactive to January 1, 1996, include: 1) an extension of the maturity date
to December 31, 1997; 2) monthly principal and interest payments based on a 23-
year amortization schedule with a per annum interest rate of 7.5%; and 3) net
property cash flow (as defined in the Extension), if any, after deducting
scheduled principal and interest payments, approved capital and tenant
improvements and leasing commissions, is required to be deposited into a non-
interest bearing reserve account maintained by the lender to be used for
capital and tenant improvements, leasing commissions and operating deficits of
Regency.
As of December 31, 1996, 26 of the 33 tenants at Prentice Plaza and 35 of the
54 tenants at Deerfield Mall have leases, totaling 236,905 square feet, that
expire during the next three years. The Partnership's share of total base
rental revenues projected to be collected from these tenants for the year
ending December 31, 1997 is $2,180,600. Notwithstanding the market rental rates
that may be in effect at the time that these leases mature, the Partnership
faces a significant amount of uncertainty with respect to the occupancy at its
properties in 1998 and possibly beyond. The General Partner and its Affiliated
management companies intend to address the possible renewal of these leases
well in advance of their scheduled maturities in an attempt to maintain
occupancy and rental revenues at its properties.
The Partnership has significant financial obligations during 1997 and beyond.
In addition to required principal payments on certain of its mortgage loans,
two of the Partnership's mortgage loans mature within the next two years. In
addition, as a result of the potential tenant turnover discussed above, it is
anticipated that the Partnership will incur a substantial amount of capital and
tenant improvements and leasing costs during the next several years. In light
of this, the General Partner believes that it is in the Partnership's best
interest to retain all cash available. Accordingly, cash distributions to
Partners continue to be suspended The General Partner believes that Cash Flow
(as defined in the Partnership Agreement) is one of the best and least
expensive sources of cash. For the year ended December 31, 1996, Cash Flow (as
defined in the Partnership Agreement) of $2,710,800 was retained to supplement
working capital reserves. In addition, the General Partner continues to review
other sources of cash available to the Partnership, which includes the possible
financing, refinancing or sale of certain of the Partnership's properties.
While there can be no assurance as to the timing or successful completion of
any future transactions or as to the properties future operating results, the
General Partner currently believes that the amount of the Partnerships existing
cash reserves, future Cash Flow (as defined in the Partnership Agreement) to be
earned as well as additional proceeds to be received from any sale,
disposition, financing or refinancing of any properties or any mortgage loan
modifications or extensions are sufficient to cover the planned expenditures
for the ensuing twelve month period.
Based upon the current estimated value of its assets, net of its outstanding
liabilities, together with its expected operating results and capital
expenditure requirements, the General Partner believes that the Partnership's
cumulative distributions to its Limited Partners from inception through the
termination of the Partnership will be significantly less than such Limited
Partners' original Capital Contribution.
11
<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.
12
<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 General Partner. The Directors of FCFC, as of March 28,
1997, 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 June 1997.
Name Office
---- ------
Samuel Zell.......................................Chairman of the Board
Douglas Crocker II................................Director
Sheli Z. Rosenberg................................Director
Samuel Zell, 55, has been a Director of the General Partner since 1983
(Chairman of the Board since December 1985). Mr. Zell is also Chairman of
the Board of Equity Financial and Management Company ("EFMC") and Equity
Group Investments, Inc. ("EGI"), and is a trustee and beneficiary of a
general partner of Equity Holdings Limited, an Illinois Limited
Partnership, a privately owned investment partnership. He is also Chairman
of the Board of Directors of Chart House Enterprises, Inc., Ramco Energy
plc, TeleTech Holdings Inc., Anixter International Inc., American Classic
Voyages Co. and Manufactured Home Communities, Inc. ("MHC"). He is Chairman
of the Chart House Enterprises, Inc., Ramco Energy plc, Teletech Holdings
Inc., Board of Trustees of Equity Residential Properties Trust. He is a
Director of Quality Food Centers, Inc. ("QFC") and Sealy Corporation. He is
Chairman of the Board of Directors and Chief Executive Officer of Capsure
Holdings Corp. and Co-Chairman of the Board of Revco D.S., Inc.
Douglas Crocker II, 56, has been President and Chief Executive Officer
since December 1992 and a Director since January 1993 of the General
Partner. Mr. Crocker has been an Executive Vice President of EFMC since
November 1992. Mr. Crocker has been President, Chief Executive Officer and
trustee 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.
Mr. Crocker is a member of the Board of Directors of Horizon Group, Inc.
Sheli Z. Rosenberg, 55, was President and Chief Executive Officer of the
General Partner from December 1990 to December 1992 and has been a Director
of the 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 EGI since November 1994;
has been a Director of Great American Management and Investment Inc.
("Great American") since June 1984 and is a Director of various
subsidiaries of Great American. She is also a Director of Anixter
International Inc., Capsure Holdings Corp., American Classic Voyages Co.,
Jacor Communications, Inc., Revco D.S., Inc., Sealy Corporation, QFC and
MHC. She is also a trustee of Equity Residential Properties Trust. Ms.
Rosenberg is a Principal of Rosenberg & Liebentritt, P.C., counsel to the
Partnership, the General Partner and certain of their Affiliates. She had
been Vice President of First Capital Benefit Administrators, Inc. ("Benefit
Administrators") since July 22, 1987 until its liquidation in November
1995. Benefit Administrators filed for protection under the Federal
bankruptcy laws on January 3, 1995.
13
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
(b,c & e) EXECUTIVE OFFICERS
The Partnership does not have any executive officers. The executive
officers of the General Partner as of March 28, 1997 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
Gus J. Athas.............................Senior Vice President
Norman M. Field..........................Vice President - Finance and
Treasurer
PRESIDENT AND CEO - See Table of Directors above.
Gus J. Athas, 60, has been Senior Vice President of the General Partner
since March 1995. Mr. Athas has served as Senior Vice Presient, General
Counsel and Assistant Secretary of Great American since March 1995. Mr.
Athas has served as Senior Vice President, General Counsel and Secretary of
Falcon Building Products, Inc. since March 1994 and served as Vice
President and Secretary from January 1994 to March 1994. Mr. Athas has
served as Senior Vice President, General Counsel and Secretary of Eagle
Industries, Inc. ("Eagle") since May 1993. From September 1992 to May 1993,
Mr. Athas was Vice President, General Counsel and Secretary of Eagle. From
November 1987 to September 1992, Mr. Athas served as Vice President,
General Counsel and Assistant Secretary of Eagle.
Norman M. Field, 48, has been Vice President of Finance and Treasurer of
the General Partner since February 1984, and also served as Vice President
and Treasurer of Great American from July 1983 until March 1995. Mr. Field
had been Treasurer of Benefit Administrators since July 22, 1987 until its
liquidation in November 1995. Benefit Administrators filed for protectiion
under the Federal bankruptcy laws on January 3, 1995. He was Chief
Financial Officer of Equality Specialties, Inc. ("Equality"), a subsidiary
of Great American, from August 1994 to April 1995. Equality was sold in
April 1995.
(d) FAMILY RELATIONSHIPS
--------------------
There are no family relationships among any of the foregoing directors and
officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------
With the exception of the bankruptcy matter disclosed under Items 10 (a),
(b), (c) and (e), there are no involvements in certain legal proceedings
among any of the foregoing directors and officers.
14
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the General Partner, nor any director or officer of the General Partner,
received any direct remuneration from the Partnership during the year ended
December 31, 1996. However, the General Partner and its Affiliates do
compensate its directors and officers. For additional information see Item 13
(a) Certain Relationships and Related Transactions.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) As of March 1, 1997, no person of record owned or was known by the
Partnership to own beneficially more than 5% of the Partnership's 949,843
Units then outstanding.
(a) The Partnership has no directors or executive officers. As of March 1,
1997, the executive officers and directors of the General Partner, as a
group, did not own any Units.
(a) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Affiliates of the General Partner provide leasing, supervisory and property
management services to the Partnership. Compensation for these property
management services may not exceed 6% of the gross receipts from the
property being managed where the General Partner or Affiliates provide
leasing, re-leasing and leasing-related services, or 3% of gross receipts
where the General Partner or Affiliates do not perform leasing, re-leasing
and leasing-related services for a particular property. For the year ended
December 31, 1996, these Affiliates were entitled to leasing, property
management and supervisory fees of $968,000, of which $32,000 was due as of
December 31, 1996. Other Affiliates of the General Partner were also
entitled to receive $207,300 for fees, compensation and reimbursements for
insurance and personnel services fees. Compensation for these services are
on terms which are fair, reasonable and no less favorable to the Partnership
than reasonably could be obtained from unaffiliated persons. Of these
amounts, $4,300 was due to Affiliates as of December 31, 1996.
In addition to the principal balance, the Partnership is also obligated to
an Affiliate for interest incurred on the Front-End Fees Loan. The Affiliate
was entitled to $1,016,600 in interest for the year ended December 31, 1996.
Of this amount $87,500 was due to the Affiliate as of December 31, 1996. In
accordance with the Partnership Agreement, neither the General Partner nor
its Affiliates shall lend money to the Partnership with interest rates and
other finance charges and fees in excess of the lesser of the amounts that
are charged by unrelated lending institutions on comparable loans for the
same purpose in the same locality or 2% above the prime rate of interest
charged by Chase Manhattan Bank.
Pursuant to a modification of the Partnership's Front-End Fees Loan, the
Partnership has the option to defer payment of interest on this loan for a
49-month period beginning March 1, 1993. All deferred amounts shall be due
and payable on April 1, 1997, and shall not be subordinated to repayment to
the Limited Partners. As of December 31, 1996, the Partnership had not
exercised its option to defer the payment of interest on this loan.
15
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner
shall be entitled to receive subsequent to November 22, 1988, the
Termination of the Offering, a Portfolio Management Fee, payable quarterly,
which shall be an amount equal to the lesser of (i) 0.5% of the gross value
of the Partnership's assets (not reduced by indebtedness collateralized by
such assets), all as estimated by the General Partner in its reasonable
discretion, plus, to the extent the Portfolio Management Fee paid in any
prior year was less than 0.5% of the gross value of the Partnership's
assets in such prior year, the amount of such deficit, or (ii) an amount
equal to the remainder obtained by subtracting the aggregate amount
previously paid to the General Partner as Portfolio Management Fees during
such fiscal year, from an amount equal to 10% of the Partnership's
aggregate Cash Flow (as defined in the Partnership Agreement) (computed
prior to the deduction for Portfolio Management Fees) for such fiscal year.
For the year ended December 31, 1996, in conjunction with the suspension of
distributions of Cash Flow (as defined in the Partnership Agreement) to
Limited Partners, the General Partner was not paid a Portfolio Management
Fee.
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from a Major Capital Event) are
allocated 1% to the General Partner and 99% to the Limited Partners as a
group. Net Losses from a Major Capital Event are allocated: first, prior
to giving effect to any distributions of Sale or Refinancing Proceeds from
the transaction, to the General Partner and Limited Partners with positive
balances in their Capital Accounts, in proportion to and to the extent of
such positive balances; and second, the balance, if any, 1% to the General
Partner and 99% to the Limited Partners as a group. Net Profits from a
Major Capital Event are allocated: first, prior to giving effect to any
distributions of Sale or Refinancing Proceeds from the transaction, Net
Profit in the amount of the Minimum Gain (as defined in the Partnership
Agreement) attributable to the property that is the subject of such Major
Capital Event is allocated to the General Partner and Limited Partners with
negative balances in their Capital Accounts, pro rata in proportion to such
respective negative balances; second, to the General Partner and each
Limited Partner in proportion to and to the extent of such amounts, if any,
equal to the amount of Sale or Refinancing Proceeds to be distributed to
each such General Partner or Limited Partner with respect to such Major
Capital Event; and third, the balance, if any, 20% to the General Partner
and 80% to the Limited Partners as a group. Notwithstanding anything to
the contrary, there shall be allocated to the General Partner not less than
1% of all items of Partnership income, gain, loss, deduction and credit
during the existence of the Partnership. For the year ended December 31,
1996, the General Partner was allocated a Net Profit of $21,600 which
included $9,800 of gain from the sale of Partnership properties.
ANTEC Corporation ("ANTEC"), which is in the business of designing,
engineering, manufacturing and distributing cable television products, and
approximately 30% owned by Anixter International Inc. (formerly known as
Itel Corporation), an Affiliate of the General Partner, is obligated to the
Partnership under a lease of office space at Prentice Plaza. During the
year ended December 31, 1996, the Partnership's 50% share of ANTEC's rent
and related payments amounted to $293,400. The per square foot rent paid
by ANTEC is comparable to that paid by other tenants at Prentice Plaza.
Manufactured Homes Communities, Inc. ("MHC"), a real estate investment
trust which is in the business of owning and operating mobil home
communities, an Affiliate of the General Partner, is obligated to the
Partnership under a lease of office space at Prentice Plaza. During the
year ended December 31, 1996, the Partnership's 50% share of MHC's rent
amounted to $29,900. The per square foot rent paid by MHC is comparable to
that paid by other tenants at Prentice Plaza.
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
Partnership, the General Partner and certain of their Affiliates. Sheli Z.
Rosenberg, President and Chief Executive Officer of the General Partner
from December 1990 to December 1992 and a director of the General Partner
since December 1983, is a Principal of Rosenberg. For the year ended
December 31, 1996, Rosenberg was entitled to $194,300 for legal fees from
the Partnership. As of December 31, 1996, $63,100 was due to Rosenberg.
Compensation for these services are on terms which are fair, reasonable and
no less favorable to the Partnership than reasonably could be obtained from
unaffiliated persons.
(c) No management person is indebted to the Partnership.
(d) None.
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a,c & d) See Index of Financial Statements, Schedule and Exhibits on page
A-1 of Form 10-K.
(b) Reports on Form 8-K:
As disclosed in Item 6 of the Registrant's Form 10-Q, for the quarter ended
September 30, 1996, a report on Form 8-K was filed on October 30, 1996,
reporting the sale of the Equitable of Iowa Building.
17
<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 AND GROWTH FUND - SERIES XII
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Dated: March 28, 1997 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/ SAMUEL ZELL March 28, 1997 Chairman of the Board and
- -------------------------- -------------- Director of the General Partner
SAMUEL ZELL
/s/ DOUGLAS CROCKER II March 28, 1997 President, Chief Executive Officer and
- -------------------------- -------------- Director of the General Partner
DOUGLAS CROCKER II
/s/ SHELI Z. ROSENBERG March 28, 1997 Director of the General Partner
- -------------------------- --------------
SHELI Z. ROSENBERG
/s/ GUS J. ATHAS March 28, 1997 Senior Vice President
- -------------------------- --------------
GUS J. ATHAS
/s/ NORMAN M. FIELD March 28, 1997 Vice President - Finance and Treasurer
- -------------------------- --------------
NORMAN M. FIELD
</TABLE>
18
<PAGE>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<TABLE>
<CAPTION>
Pages
-------------
<S> <C>
Report of Independent Auditors A-2
Balance Sheets as of December 31, 1996 and 1995 A-3
Statements of Partners' Capital for the Years
Ended December 31, 1996, 1995, 1994 A-3
Statements of Income and Expenses for the Years
Ended December 31, 1996, 1995, 1994 A-4
Statements of Cash Flows for the Years Ended
December 31, 1996, 1995, 1994 A-4
Notes to Financial Statements A-5 to A-9
</TABLE>
SCHEDULE FILED AS PART OF THIS REPORT
III - Real Estate and Accumulated Depreciation as of A-10 and A-11
December 31, 1996
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.
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-37 of the Partnership's
definitive Prospectus dated May 8, 1987; Registration Statement No. 33-12269,
filed pursuant to Rule 424(b), is incorporated herein by reference.
EXHIBIT (10) Material Contracts
Real Estate Sale Agreement for the sale of the Partnership's investment in
Equitable of Iowa Building filed as an exhibit to the Partnership's Report on
Form 8-K dated October 30, 1996 is incorporated herein by reference.
Real Estate Sale Agreement for the sale of the Partnership's investment in
Sentry Park West Office Campus filed as an exhibit to the Partnership's Report
on Form 8-K dated September 12, 1996 is incorporated herein by reference.
EXHIBIT (13) Annual Report to Security Holders
The 1995 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
commission.
EXHIBIT (27) Financial Data Schedule
A-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partners
First Capital Income and Growth Fund - Series XII,
A Real Estate Limited Partnership
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Income and
Growth Fund - Series XII, A Real Estate Limited Partnership, as of December 31,
1996 and 1995, and the related statements of income and expenses, partners'
capital and cash flows for each of the three years in the period ended December
31, 1996, and the financial statement schedule listed in the accompanying index.
These financial statements and schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 and Growth
Fund - Series XII, A Real Estate Limited Partnership at December 31, 1996 and
1995, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
Chicago, Illinois
March 14, 1997
A-2
<PAGE>
BALANCE SHEETS
December 31, 1996 and 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 13,074,900 $ 14,678,900
Buildings and improvements 73,507,400 89,326,600
- ------------------------------------------------------------------------------
86,582,300 104,005,500
Accumulated depreciation and amortization (21,081,700) (25,675,600)
- ------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 65,500,600 78,329,900
Cash and cash equivalents 6,900,600 4,983,400
Investments in debt securities 496,300
Restricted cash 100,000 80,000
Rents receivable 549,700 563,300
Escrow deposits 747,600 147,700
Other assets (net of accumulated amortization on
loan acquisition costs of $1,167,200 and
$1,281,500, respectively) 477,900 910,700
- ------------------------------------------------------------------------------
$ 74,772,700 $ 85,015,000
- ------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $ 48,858,400 $ 60,405,300
Front-End Fees Loan payable to Affiliate 13,434,400 13,434,400
Accounts payable and accrued expenses 1,939,800 2,687,900
Due to Affiliates 186,900 179,400
Security deposits 221,800 321,500
Other liabilities 144,500 155,200
- ------------------------------------------------------------------------------
64,785,800 77,183,700
- ------------------------------------------------------------------------------
Partners' capital:
General Partner (deficit) (1,675,000) (1,696,600)
Limited Partners (1,000,000 Units issued, 949,843
Units outstanding) 11,661,900 9,527,900
- ------------------------------------------------------------------------------
9,986,900 7,831,300
- ------------------------------------------------------------------------------
$ 74,772,700 $ 85,015,000
- ------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the Years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital, January
1, 1994 $(1,415,300) $ 39,375,300 $37,960,000
Repurchase of Units (1,001,000) (1,001,000)
Net (loss) for the year ended December
31, 1994 (147,400) (14,594,600) (14,742,000)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December
31, 1994 (1,562,700) 23,779,700 22,217,000
Repurchase of Units (999,300) (999,300)
Net (loss) for the year ended December
31, 1995 (133,900) (13,252,500) (13,386,400)
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December
31, 1995 (1,696,600) 9,527,900 7,831,300
Net income for the year ended December
31, 1996 21,600 2,134,000 2,155,600
- -------------------------------------------------------------------------------
Partners' (deficit) capital, December
31, 1996 $(1,675,000) $ 11,661,900 $ 9,986,900
- -------------------------------------------------------------------------------
</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, 1996, 1995 and 1994
(All dollars rounded to nearest 00s except Unit and per Unit amounts)
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $16,602,000 $ 17,433,800 $ 16,353,100
Interest 320,900 244,900 156,600
Net gain on sales of properties 976,300 188,500
- --------------------------------------------------------------------------
17,899,200 17,678,700 16,698,200
- --------------------------------------------------------------------------
Expenses:
Interest:
Affiliates 1,016,600 1,090,000 924,100
Nonaffiliates 4,188,100 4,725,900 4,253,400
Depreciation and amortization 2,616,700 4,068,200 4,389,000
Property operating:
Affiliates 1,134,900 1,036,300 964,300
Nonaffiliates 2,047,500 2,277,600 2,336,800
Real estate taxes 2,078,000 2,441,000 2,465,200
Insurance--Affiliate 155,200 151,100 185,300
Repairs and maintenance 2,280,100 2,322,500 2,418,100
General and administrative:
Affiliates 54,700 66,600 55,800
Nonaffiliates 171,800 185,900 198,200
Provisions for value impairment 12,700,000 13,250,000
- --------------------------------------------------------------------------
15,743,600 31,065,100 31,440,200
- --------------------------------------------------------------------------
Net income (loss) $ 2,155,600 $(13,386,400) $(14,742,000)
- --------------------------------------------------------------------------
Net income (loss) allocated to
General Partner $ 21,600 $ (133,900) $ (147,400)
- --------------------------------------------------------------------------
Net income (loss) allocated to
Limited Partners $ 2,134,000 $(13,252,500) $(14,594,600)
- --------------------------------------------------------------------------
Net income (loss) allocated to
Limited Partners per Unit $ 2.25 $(13.89) $ (15.14)
- --------------------------------------------------------------------------
Weighted average number of Units
outstanding 949,843 953,845 963,785
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,155,600 $(13,386,400) $(14,742,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 2,616,700 4,068,200 4,389,000
Net (gain) on sale or disposition
of properties (976,300) (188,500)
Provisions for value impairment 12,700,000 13,250,000
Changes in assets and liabilities:
Decrease (increase) in rents
receivable 13,600 (22,900) 245,300
Decrease (increase) in other assets 360,600 (248,700) 249,700
(Decrease) increase in accounts
payable and accrued expenses (748,100) 179,400 97,600
Increase (decrease) in due to
Affiliates 7,500 (70,900) 52,800
(Decrease) in other liabilities (10,700) (57,900) (306,500)
- --------------------------------------------------------------------------------
Net cash provided by operating
activities 3,418,900 3,160,800 3,047,400
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant
improvements (899,500) (945,500) (2,186,500)
(Increase) in investments in debt
securities (496,300)
Proceeds from the sale of commercial
rental properties 12,189,100 4,698,000
(Increase) in restricted certificate
of deposit (20,000)
(Increase) decrease in escrow
deposits (599,900) 262,500 (370,400)
- --------------------------------------------------------------------------------
Net cash provided by (used for)
investing activities 10,173,400 (683,000) 2,141,100
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on mortgage loans
payable (1,085,200) (1,240,500) (449,200)
Proceeds from mortgage loans payable 4,875,000 19,417,700
Repayment of mortgage loans payable (10,461,700) (4,424,300) (23,627,200)
Repurchase of Units (999,300) (1,001,000)
Loan costs incurred, net of refunds (28,500) (62,600) (117,700)
(Decrease) increase in security
deposits (99,700) 18,300 14,600
- --------------------------------------------------------------------------------
Net cash (used for) financing
activities (11,675,100) (1,833,400) (5,762,800)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 1,917,200 644,400 (574,300)
Cash and cash equivalents at the
beginning of the year 4,983,400 4,339,000 4,913,300
- --------------------------------------------------------------------------------
Cash and cash equivalents at the end
of the year $ 6,900,600 $ 4,983,400 $ 4,339,000
- --------------------------------------------------------------------------------
Supplemental information:
Interest paid during the year $ 5,281,700 $ 5,779,800 $ 5,057,500
- --------------------------------------------------------------------------------
</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 included in the Registration Statement and
incorporated herein by reference.
ORGANIZATION:
The Partnership was formed on February 24, 1987, by the filing of a Certificate
and Agreement of Limited Partnership with the Recorder of Deeds of Cook County,
Illinois, and commenced the Offering of Units on May 8, 1987. The Certificate
and Agreement, as amended and restated, authorized the sale to the public of
500,000 Units (with the General Partner's option to increase to 1,000,000
Units) and not less than 14,000 Units pursuant to the Prospectus. On June 9,
1987, the required minimum subscription level was reached and the Partnership's
operations commenced. The General Partner exercised its option to increase the
Offering to 1,000,000 Units, which amount was sold prior to the Termination of
the Offering in November 1988. The Partnership was formed to invest primarily
in existing, improved, income-producing real estate.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2017. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial statements include the Partnership's 50% interest in three joint
ventures and its 25% interest in another joint venture with Affiliated
partnerships. Two of the 50% joint ventures and the 25% joint venture were
formed for the purpose of each acquiring a 100% interest in certain real
property and one of the 50% joint ventures (prior to its liquidation in 1996)
was formed for the purpose of acquiring a preferred majority interest in
certain real property. These joint ventures are operated under the common
control of the General Partner. Accordingly, the Partnership's pro rata share
of the joint ventures' revenues, expenses, assets, liabilities and Partners'
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 individual
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 held for investment 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. Upon classifying a commercial rental property as held for disposition,
no further depreciation or amortization of such property is provided for in the
financial statements. Lease acquisition fees are recorded at cost and amortized
over the life of the lease. Repair and maintenance costs are expensed as
incurred; expenditures for improvements are capitalized and depreciated over
the estimated life of such improvements.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets is
impaired, and if so, how impairment losses should be measured and reported in
the financial statements. Management is not aware of any indicator that would
result in any significant impairment loss. Evaluation of the potential
impairment of the value of the Partnership's assets is performed on an
individual property basis.
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan is refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is charged to expense.
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 with a maturity
of three months or less when purchased.
Investments in debt securities are comprised of obligations of the United
States government totaling $496,300 and are classified as held-to-maturity.
These investments are carried at their amortized cost basis in the financial
statements which approximated fair market value at December 31, 1996. All of
these securities had a maturity of less than one year when purchased.
A-5
<PAGE>
The Partnership's financial statements include financial instruments, including
receivables, escrow deposits, restricted cash, trade liabilities and mortgage
debt. The Partnership considers the disclosure of the fair value of its
mortgage debt to be impracticable due to the general illiquid nature of the
real estate financing market and an inability to obtain comparable financing on
certain properties. The fair value of all other financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1996 and 1995.
Certain reclassifications have been made to the previously reported 1995 and
1994 statements in order to provide comparability with the 1996 statements.
These reclassifications had no effect on net (loss) or Partners' capital
(deficit).
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner shall
be entitled to receive subsequent to November 22, 1988, the Termination of the
Offering, a Portfolio Management Fee, payable quarterly, which shall be an
amount equal to the lesser of (i) 0.5% of the gross value of the Partnership's
assets (not reduced by indebtedness collateralized by such assets), all as
estimated by the General Partner in its reasonable discretion, plus, to the
extent the Portfolio Management Fee paid in any prior year was less than 0.5%
of the gross value of the Partnership's assets in such prior year, the amount
of such deficit, or (ii) an amount equal to the remainder obtained by
subtracting the aggregate amount previously paid to the General Partner as
Portfolio Management Fees during such fiscal year, from an amount equal to 10%
of the Partnership's aggregate Cash Flow (as defined in the Partnership
Agreement) (computed prior to the deduction for Portfolio Management Fees) for
such fiscal year. For the years ended December 31, 1996, 1995 and 1994 in
conjunction with the suspension of distributions of Cash Flow (as defined in
the Partnership Agreement) to Limited Partners, the General Partner was not
paid a Portfolio Management Fee.
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from a Major Capital Event) are
allocated 1% to the General Partner and 99% to the Limited Partners as a group.
Net Losses from a Major Capital Event are allocated: first, prior to giving
effect to any distributions of Sale or Refinancing Proceeds from the
transaction, to the General Partner and Limited Partners with positive balances
in their Capital Accounts, in proportion to and to the extent of such positive
balances; and second, the balance, if any, 1% to the General Partner and 99% to
the Limited Partners as a group. Net Profits from a Major Capital Event are
allocated: first, prior to giving effect to any distributions of Sale or
Refinancing Proceeds from the transaction, Net Profit in the amount of the
Minimum Gain attributable to the property that is the subject of such Major
Capital Event is allocated to the General Partner and Limited Partners with
negative balances in their Capital Accounts, pro rata in proportion to such
respective negative balances; second, to the General Partner and each Limited
Partner in proportion to and to the extent of such amounts, if any, equal to
the amount of Sale or Refinancing Proceeds to be distributed to each such
General Partner or Limited Partner with respect to such Major Capital Event;
and third, the balance, if any, 20% to the General Partner and 80% to the
Limited Partners as a group. Notwithstanding anything to the contrary, there
shall be allocated to the General Partner not less than 1% of all items of
Partnership income, gain, loss, deduction and credit during the existence of
the Partnership. For the year ended December 31, 1996, the General Partner was
allocated a Net Profit of $21,600, which included a net gain of $9,800 from the
sales of Partnership properties. For the year ended December 31, 1995, the
General Partner was allocated a Net (Loss) of $(133,900), which included a
(loss) from provisions for value impairment of $(127,000). For the year ended
December 31, 1994, the General Partner was allocated a Net (Loss) of
$(147,400), which included Net Profit of $1,900 from the sales of properties
and a (loss) from provisions for value impairment of $(132,500).
Fees and reimbursements paid and payable by the Partnership to Affiliates were
as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------
1996 1995 1994
---------------------------------------------------
Paid Payable Paid Payable Paid Payable
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $1,006,800 $ 32,000 $1,092,100 $ 70,800 $ 726,300 $167,400
Interest expense on
Front-End Fees Loan
(Note 3) 1,021,300 87,500 1,075,700 92,200 898,900 77,900
Reimbursement of
property insurance
premiums, at cost 155,200 None 146,400 None 177,300 None
Loan refinancing fees None None None None 18,000 None
Reimbursement of
expenses at cost:
--Accounting 47,000 3,700 31,700 12,200 29,900 3,700
--Investor
communication 15,500 600 23,100 2,800 12,200 1,300
--Legal 132,600 63,100 43,700 1,400 216,000 None
--Other 300 None 1,300 None None None
- ------------------------------------------------------------------------------------
$2,378,700 $186,900 $2,414,000 $179,400 $2,078,600 $250,300
- ------------------------------------------------------------------------------------
</TABLE>
ANTEC Corporation ("Antec"), which is in the business of designing,
engineering, manufacturing and distributing cable television products, and
approximately 30% owned by Anixter International Inc. (formerly known as Itel
Corporation), an Affiliate of the General Partner, is obligated to the
Partnership under a lease of office space at Prentice Plaza. During the years
ended December 31, 1996, 1995 and 1994 the Partnership's 50% share of ANTEC's
rent amounted to $293,400, $189,000 and $194,100, respectively. The per square
foot rent paid by ANTEC is comparable to that paid by other tenants at Prentice
Plaza.
Manufactured Home Communities, Inc. ("MHC") a real estate investment trust,
which is in the business of owning and operating mobile home communities, an
Affiliate of the General Partner, is obligated to the Partnership under a lease
of office space at Prentice Plaza. During the years ended December 31, 1996,
1995 and 1994 the Partnership's 50% share of MHC's rent amounted to $29,900,
$22,100 and $9,900, respectively. The per square foot rent paid by MHC is
comparable to that paid by other tenants at Prentice Plaza.
A-6
<PAGE>
On-site property management for the Partnership's properties is provided by
Affiliates of the General Partner for fees ranging from 3% to 6% of gross rents
received by the properties based upon the terms of the individual management
agreements.
3. FRONT-END FEES LOAN PAYABLE TO AFFILIATE:
The Partnership borrowed from the General Partner an amount needed for the
payment of securities sales commissions, Offering and Organizational Expenses
and other Front-End Fees, other than Acquisition Fees. Repayment of the
principal amount of the Front-End Fees Loan is subordinated to payment to the
Limited Partners of 100% of their Original Capital Contribution from Sale or
Refinancing Proceeds. Interest on the outstanding balance of this loan is due
and payable monthly at a rate no greater than the cost of funds obtained by the
General Partner from unaffiliated lenders.
As of December 31, 1996, the Partnership had drawn $13,434,400 under the Front-
End Fees Loan agreement. The interest rate paid on the Front-End Fees Loan is
subject to change in accordance with the loan agreement. The weighted average
interest rate for the year ended December 31, 1996 was 7.43%. As of December
31, 1996, the interest rate was 7.56%.
Pursuant to a modification of this loan agreement, the Partnership has the
option to defer payment of interest on this loan for a 49-month period
beginning March 1, 1993. In addition, any interest payments made by the
Partnership from April 1, 1993 through March 31, 1997 may be borrowed from the
General Partner. All deferred and subsequently borrowed amounts (including
accrued interest thereon) shall be due and payable on April 1, 1997, and shall
not be subordinated to payment of Original Capital Contributions to Limited
Partners. As of December 31, 1996, the Partnership had not exercised its option
to defer the payment of interest on this loan. During the year ended December
31, 1996, the General Partner transferred this loan to an Affiliate.
4. RESTRICTED CASH:
Restricted certificate of deposit at December 31, 1996 represented a Eurodollar
investment in the amount of $100,000 which has been pledged as collateral for a
letter of credit issued to the Louisville Gas & Electric Company.
5. MORTGAGE LOANS PAYABLE:
Mortgage loans payable at December 31, 1996 and 1995, consisted of the
following loans which are non-recourse:
<TABLE>
<CAPTION>
Principal Balance at Average Estimated
Property Pledged as ------------------------ Interest Maturity Periodic Balloon
Collateral 12/31/96 12/31/95 Rate (a) Date Payment (b) Payment (b)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Regency Park Shopping
Center (25%) (d) $ 3,854,600 $ 3,958,600 7.50% 12/31/1997 $ 29,800 $ 3,777,400
Prentice Plaza (50%) 4,838,100 4,875,000 7.50% 12/19/2000 (e) $ 4,658,200
Meidinger Tower 22,405,300 22,405,300 6.69% 10/15/1998 (f) $22,405,300
Deerfield Mall 17,760,400 18,241,300 7.60% 3/1/2001 $154,257 $15,313,900
Equitable of Iowa
Building (g) 6,187,500 7.86%
Sentry Park West Office
Campus (50%) (g) 4,737,600 7.94%
- ---------------------------------------------------------------------------------------------
$48,858,400 $60,405,300
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) The average interest rate represents an average for the year ended December
31, 1996. Interest rates are subject to change in accordance with the
provisions of the loan agreements for Meidinger Tower and Prentice Plaza.
As of December 31, 1996, interest rates on the loans collateralized by
Meidinger Tower and Prentice Plaza were 6.625% and 7.50%, respectively.
(b) Represents level monthly principal and interest payments, paid in arrears.
(c) This repayment may require either sale or refinancing of the respective
property.
(d) In August 1996, the joint venture which owns Regency, in which the
Partnership has a 25% interest with Affiliated partnerships, executed an
agreement (the "Extension") with the mortgage lender to modify the terms of
this mortgage loan. Significant terms of the Extension, which were
retroactive to January 1, 1996, include: 1) an extension of the maturity
date to December 31, 1997; 2) monthly principal and interest payments based
on a 23-year amortization schedule with a per annum interest rate of 7.5%;
and 3) net property cash flow (as defined in the Extension), if any, after
deducting scheduled principal and interest payments, approved capital and
tenant improvements and leasing commissions, is required to be deposited
into a non-interest bearing reserve account maintained by the lender to be
used for capital and tenant improvements, leasing commissions and operating
deficits of Regency.
(e) In addition to monthly interest, monthly principal payments are $3,070
starting February 1, 1996 and increasing to $3,343, $3,638, $3,960 and
$4,305 on January 1 of each subsequent year from 1997 through 2000,
respectively.
(f) For the year ended December 31, 1996, the Partnership made only monthly
interest payments as the property did not generate excess cash flow (as
defined in the restructured loan agreement). On March 3, 1997, the
Partnership received an advance of $228,100 for capital and tenant
improvements.
(g) These properties were sold and the mortgage loans were fully repaid during
1996 (see Note 11 for additional information).
Principal amortization of mortgage loans payable for each of the next five
years as of December 31, 1996 was as follows:
<TABLE>
<S> <C>
1997 $ 4,413,200
1998 23,008,200
1999 650,800
2000 5,360,600
2001 15,425,600
--------
$48,858,400
--------
</TABLE>
A-7
<PAGE>
The amounts scheduled above do not consider principal payment requirements
based on property cash flow, which must each be paid periodically, as well as
amounts which are available but unfunded to the Partnership under certain
mortgage loans.
6. REPURCHASE OPTION:
On January 1, 1991, the Repurchase Option period commenced for the repurchase
of Limited Partnership Interests. This Repurchase Option, as defined in the
Partnership Agreement, allowed Limited Partners to resell their Interests to
the Partnership. During 1995, the fifth and final year of the Repurchase Option
period, the partnership paid a price equal to 115% of the Limited Partners'
Original Capital Contribution reduced by all prior distributions previously
made to the Limited Partner. The maximum amount of Interests that the
Partnership was obligated to purchase during the Repurchase Option period was
0.25% of the total Original Capital Contribution for each and every calendar
quarter during the Repurchase Option period. As of December 31, 1996, the
Partnership repurchased 50,157 Units which represented Original Capital
Contributions of $5,015,700. The repurchase of these Units, reduced by all
prior distributions previously made to the Limited Partners, resulted in a net
reduction of Limited Partners' Capital and net payments by the Partnership of
$4,581,400.
7. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rental income due on noncancelable
leases as of December 31, 1966 was as follows:
<TABLE>
<S> <C>
1997 $ 8,851,900
1998 8,198,500
1999 6,865,600
2000 5,886,300
2001 5,170,600
Thereafter 22,296,000
--------------
$57,268,900
--------------
</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 operating expense
reimbursements and percentage rents. Percentage rents earned for the years
ended December 31, 1996, 1995 and 1994 were $147,400, $164,600 and $167,600,
respectively. Of these amounts, $121,700, $114,900 and $96,700, respectively,
were realized from Equitable, which was sold during 1996.
8. INCOME TAX:
The Partnership utilizes the accrual basis of accounting for both income tax
reporting and financial statement purposes. Financial statement results will
differ from income tax results due to the use of differing depreciation lives
and methods, the recognition of rents received in advance as taxable income and
the Partnership's provisions for value impairment. The net effect of these
accounting differences for the year ended December 31, 1996 was that the
results for Federal income tax reporting purposes was a (loss) of ($11,984,900)
while for financial statement purposes net income was $2,155,600. The aggregate
cost of commercial rental properties for federal income tax purposes at
December 31, 1996 was $116,269,800.
9. ASSET HELD FOR DISPOSITION:
During 1996, the Partnership modified its mortgage obligation on the loan
secured by Regency. Among other provisions, the modification provides for a
maturity date of December 31, 1997.The Partnership is marketing Regency for
sale and expects to complete a sale transaction prior to December 31, 1997.
Accordingly, the Partnership began classifying Regency as "Held for
Disposition" effective December 31, 1996. The Partnership's carrying basis, net
of accumulated depreciation and amortization, of Regency on the Balance Sheet
as of December 31, 1996 was $3,875,800 and does not exceed the estimated fair
value, less costs to sell. The Partnership's share of net income/(loss)
(exclusive of provisions for value impairments) of Regency, included in the
Statements of Income and Expenses for the years ended December 31, 1996, 1995
and 1994 was $10,500, $(70,200) and $(163,100), respectively.
10. DISTRIBUTIONS:
Commencing with the quarter ended June 30, 1992, cash distributions to Partners
were suspended and no further distributions will be made until such time as the
Partnership's cash position is increased to a level that is expected to be
sufficient to meet all of the anticipated capital expenditures, debt repayments
and other working capital requirements during the next several years.
11. PROPERTY SALES AND DISPOSITIONS:
On October 16, 1996, the Partnership consummated the sale of Equitable for a
price of $7,000,000. Proceeds from this transaction approximated $520,000,
which was net of closing prorations, estimated selling expenses and the
repayment of the mortgage loan collateralized by Equitable. The Partnership
recorded a net gain of $160,200 for financial statement purposes in connection
with this sale. Provisions for value impairment recorded during prior years
reported cumulatively amounted to $6,500,000. For income tax reporting
purposes, the Partnership recorded a net (loss) of $(7,742,500) for the year
ended December 31, 1996, in connection with this sale.
On August 28, 1996, the joint venture which owned Sentry West consummated the
sale of Sentry West for $11,650,000. The Partnership's 50% share of the
proceeds from this transaction, which was net of closing prorations, selling
expenses and the repayment of the mortgage loan for Sentry West was
approximately $894,000. The net gain reported by the Partnership for
A-8
<PAGE>
financial statement purposes was $816,100. The Partnership's share of
provisions for value impairment recorded during prior years reported
cumulatively amounted to $5,000,000. For income tax reporting purposes, the
Partnership recorded a net (loss) of $(4,762,500) for the year ended December
31, 1996 in connection with this sale.
On April 22, 1994, the joint venture which owned Sentry East, located in Blue
Bell, Pennsylvania, in which the Partnership had a 50% interest, sold one of
the remaining three office buildings situated in this office campus for a sale
price of $1,198,500. The joint venture incurred selling expenses of $95,600.
The joint venture received net Sale Proceeds of $1,102,900, of which the
Partnership's share was $551,500. The (loss) reported by the Partnership for
financial statement purposes was $(280,700) and was previously recorded as part
of the provisions for value impairment in 1992.
On June 29, 1994, the joint ventures which owned Park Central Office Park I, II
and III ("Park Central"), located in Greenville, South Carolina, in which the
Partnership had 50% interests, sold Park Central for a sale price of
$7,250,000. The outstanding indebtedness on Park Central I and II of $7,000,000
was satisfied at closing. The joint ventures incurred selling expenses of
$143,700. The joint ventures received net Sale Proceeds of $106,300, of which
the Partnership's share was $53,200. The (loss) reported by the Partnership for
financial statement purposes was $(4,654,000) of which a total of $(4,550,000)
was previously recorded as part of the provisions for value impairment in 1992
and 1993.
On December 29, 1994, the joint venture which owned Sentry East sold the
remaining two office buildings situated in this office campus for a sale price
of $1,286,300. The joint venture incurred selling expenses of $99,900. The
joint venture received net Sale Proceeds of $1,186,400, of which the
Partnership's share was $593,200. The gain reported by the Partnership for
financial statement purposes was $292,500 which represented a partial recovery
of the (loss) from provisions for value impairment recorded in 1992.
All of the above sales and disposition were all-cash transactions, with no
further involvement on the part of the Partnership.
12. PROVISIONS FOR VALUE IMPAIRMENT:
Due to the depressed economic environment in the retail industry, regional
factors affecting the Partnership's retail and office properties and other
matters relating specifically to certain of the Partnership's properties, there
was uncertainty as to the Partnership's ability to recover the net carrying
value of certain of its properties during the remaining estimated holding
periods. Accordingly, it was deemed appropriate to reduce the bases of such
properties in the Partnership's financial statements during the years ended
December 31, 1995 and 1994. The provisions for value impairment were considered
non-cash events for the purposes of the Statements of Cash Flows and were not
utilized in the determination of Cash Flow (as defined in the Partnership
Agreement). The following summary of the provisions for value impairment
reported by the Partnership for the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Property 1995 1994
--------------------------------------------
<S> <C> <C>
Meidinger Tower $ 2,200,000 $ 7,000,000
Deerfield Mall 5,800,000
Equitable of Iowa
Building 2,500,000 4,000,000
Sentry Park West Office
Campus 1,500,000
Regency Park Shopping
Center 1,000,000 750,000
1800 Sherman 1,200,000
--------------------------------------------
$12,700,000 $13,250,000
--------------------------------------------
</TABLE>
A-9
<PAGE>
FIRST CAPITAL INCOME AND GROWTH FUND - SERIES XII
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ----------------- ------------ -------------------------- ----------------------- --------------------------------------
Costs
Initial cost capitalized subsequent Gross amount at which
to Partnership to acquisition carried at close of period
-------------------------- ----------------------- --------------------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs (1) Land ments Total (2)(3)
- ----------------- ------------ ------------ ------------ ----------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office Buildings:
- -----------------
Prentice Plaza
(Englewood, CO)
(50% Interest) 4,838,100 1,139,600 7,390,200 1,062,400 40,800 1,139,600 8,493,400 9,633,000
Meindinger Tower
(Louisville, KY)
(100% Interest) 22,405,300 937,500 39,718,400 4,292,000 238,500 958,000 30,028,400 30,986,400 (4)
1800 Sherman
Office Building
(Evanston, IL)
(50% interest) None 1,319,000 6,147,100 868,200 26,900 1,319,000 5,842,200 7,161,200 (4)
Shopping Centers:
- -----------------
Regency Park
Shopping Center
(Jacksonville, FL)
(25% Interest) 3,854,600 2,062,600 6,158,300 230,800 89,600 1,040,800 4,153,000 5,193,800 (4)
Deerfield Mall
(Deerfield
Beach, FL)
(100% interest) 17,760,400 9,607,900 30,996,300 1,610,800 192,900 8,617,500 24,990,400 33,607,900 (4)
------------ ------------ ------------ ----------- --------- ----------- ------------ ------------
$ 48,858,400 $ 15,066,600 $ 90,410,300 $ 8,064,200 $ 588,700 $13,074,900 $ 73,507,400 $ 86,582,300
============ ============ ============ =========== ========= =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
--------- --------- -------- -----------
Life on
which
deprecia-
tion in lat-
Accumu- est income
lated Date of statements
Deprecia- construc- Date is com-
tion (2) tion Acquired puted
---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Office Buildings:
- -----------------
Prentice Plaza
(Englewood, CO) 35(5)
(50% Interest) 3,091,500 1985 Mar. 1988 2-10(6)
Meindinger Tower
(Louisville, KY) 35(5)
(100% Interest) 9,238,800 1982 Oct. 1988 1-10(6)
1800 Sherman
Office Building
(Evanston, IL) 35(5)
(50% interest) 1,237,900 1986 Mar. 1991 3-10(6)
Shopping Centers:
- -----------------
Regency Park
Shopping Center
(Jacksonville, FL) 35(5)
(25% Interest) 1,318,000 1985 Feb. 1988 5-10(6)
Deerfield Mall
(Deerfield
Beach, FL) 35(5)
(100% interest) 6,195,500 1987 Jan. 1989 1-5(6)
------------
$ 21,081,700
============
</TABLE>
See accompanying notes on the following page.
A-10
<PAGE>
FIRST CAPITAL INCOME AND GROWTH FUND - SERIES XII
NOTES TO SCHEDULE III
Note 1. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 2. The following is a reconciliation of activity in columns E and F.
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------------------------------------------------
1996 1995 1994
-------------------------- -------------------------- --------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at the beginning
of the year $104,005,500 $25,675,600 $115,760,000 $21,732,700 $133,558,700 $19,714,000
Additions during the
year:
Improvements 899,500 945,500 2,186,500
Provisions for
depreciation 2,616,700 3,942,900 4,245,000
Deductions during the
year:
Cost of real estate
disposed (18,322,700) (6,735,200)
Accumulated depreciation
on real estate disposed (7,210,600) (2,226,300)
Provisions for value
impairment (12,700,000) (13,250,000)
------------ ----------- ------------ ----------- ------------ -----------
Balance at the end of
the year $ 86,582,300 $21,081,700 $104,005,500 $25,675,600 $115,760,000 $21,732,700
============ =========== ============ =========== ============ ===========
</TABLE>
Note 3. The aggregate cost for federal income tax purposes as of December 31,
1996 was $116,269,800.
Note 4. Included provisions for value impairment. See Note 12 of Notes to
Financial Statements for additional information.
Note 5. Estimated useful life for building in years.
Note 6. Estimated useful life for improvements in years.
A-11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000811117
<NAME> First Capital Income and Growth Fund-Series XII
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 6,900,600
<SECURITIES> 496,300
<RECEIVABLES> 549,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,794,200
<PP&E> 86,582,300
<DEPRECIATION> 21,081,700
<TOTAL-ASSETS> 74,772,700
<CURRENT-LIABILITIES> 2,348,500
<BONDS> 62,292,800
0
0
<COMMON> 0
<OTHER-SE> 9,986,900
<TOTAL-LIABILITY-AND-EQUITY> 74,772,700
<SALES> 0
<TOTAL-REVENUES> 17,899,200
<CGS> 0
<TOTAL-COSTS> 7,695,700
<OTHER-EXPENSES> 226,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,204,700
<INCOME-PRETAX> 2,155,600
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,155,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,155,600
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.25
</TABLE>
