<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended: SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10547
MERIDIAN POINT REALTY TRUST VIII CO.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 94-3058019
-------- ----------
(State or other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
655 MONTGOMERY STREET, SUITE 800, SAN FRANCISCO, CALIFORNIA 94111
- -------------------------------------------------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (415) 274-1808
NONE
- -------------------------------------------------------------------------------
(Former name, address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ -----
Indicate the number of shares outstanding of the common and preferred stock
as of the latest practicable date:
SHARES OF COMMON STOCK OUTSTANDING AS OF NOVEMBER 1, 1996: 1,609,937
SHARES OF PREFERRED STOCK OUTSTANDING AS OF NOVEMBER 1, 1996: 5,273,927
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements should be
read in conjunction with the 1995 Form 10-K of the registrant (the "Company").
These statements have been prepared in accordance with the instructions of the
Securities and Exchange Commission Form 10-Q and do not include all the
information and footnotes required by generally accepted accounting principles
for complete consolidated financial statements.
In the opinion of the Company's management, all material adjustments
of a normal and recurring nature considered necessary for a fair presentation of
results of operations for the interim periods have been included. The results
of consolidated operations for the three and nine month periods ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996.
2
<PAGE>
MERIDIAN POINT REALTY TRUST VIII CO.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
INVESTMENT IN REAL ESTATE:
Rental Properties, Net $ 82,062,032 $ 81,765,163
Less: Accumulated Depreciation (14,678,974) (12,987,770)
------------ ------------
67,383,058 68,777,393
OTHER ASSETS:
Cash and Cash Equivalents 5,723,849 5,016,216
Receivables, Net of Reserves of $25,961 and $134,971 as of
September 30, 1996 and December 31, 1995, respectively 15,069 585,771
Notes Receivable From Affiliates
Capitalized Loan Costs, Net of Accumulated Amortization of -- 228,000
$843,517 and $765,089 as of September 30, 1996 and
December 31, 1995, respectively 135,060 213,489
Capitalized Lease Commissions, Net of Accumulated
Amortization of $319,880 and $308,514 as of
September 30, 1996 and December 31, 1995, respectively 338,127 363,504
Other Assets, Net of Accumulated Amortization of $364,101 and
$1,031,863 as of September 30, 1996 and December 31, 1995,
respectively 1,102,769 1,309,952
------------ ------------
TOTAL ASSETS $ 74,697,932 $ 76,494,325
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage Notes Payable 7,624,983 $ 7,782,168
Long-term Debt 23,568,426 24,259,396
Due to Affiliates 163,000 116,209
Accounts Payable 954,143 1,073,280
Prepaid Rent, Tenant Deposits and Other 142,672 221,982
Liabilities ------------ ------------
TOTAL LIABILITIES 32,453,224 33,453,035
============ ============
SHAREHOLDERS' EQUITY:
Shares of Common and Preferred Stock, par value $0.001; an
aggregate of 50,000,000 Common and Preferred Shares
authorized; 1,609,937 Common Shares and 5,273,927 Preferred
Share issued and outstanding as of September 30, 1996 and
December 31, 1995, respectively 6,884 6,884
Paid-in Capital 65,389,820 65,389,820
Distributions in Excess of Income (23,151,996) (22,355,414)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 42,244,708 43,041,290
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 74,697,932 $ 76,494,325
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
MERIDIAN POINT REALTY TRUST VIII CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
<S> ------------------- -------------------
REVENUES: <C> <C> <C> <C>
Rentals from Real Estate Investments $2,275,596 $ 2,522,137 $ 6,818,389 $ 8,347,927
Interest and Other 69,163 88,776 173,438 250,710
---------- ----------- ----------- ------------
TOTAL REVENUES 2,344,759 2,610,913 6,991,827 8,598,637
---------- ----------- ----------- ------------
EXPENSES:
Interest 683,700 716,999 2,059,306 2,588,859
Property Taxes 287,080 375,952 866,683 1,136,302
Property Operating Costs 242,690 453,435 945,260 1,236,354
General and Administrative 164,228 184,715 612,593 741,678
Provision for Decrease in Net
Realizable Value -- -- -- 1,182,015
Depreciation and Amortization 641,349 670,175 1,906,418 2,177,503
---------- ----------- ----------- ------------
TOTAL EXPENSES 2,019,047 2,401,276 6,390,260 9,062,711
---------- ----------- ----------- ------------
Income (Loss) Before Gain on
Sale of Properties 325,712 209,637 601,567 (464,074)
Net Gain (Loss) on Sale of Properties -- (106,060) 47,452 51,197
---------- ----------- ----------- ------------
Income (Loss) Before Extraordinary Item 325,712 103,577 649,019 (412,877)
Extraordinary Item - Prepayment
Penalty on Paydown -- (129,433) -- (129,433)
---------- ----------- ----------- ------------
NET INCOME (LOSS) $ 325,712 ($ 25,856) $ 649,019 ($ 542,310)
========== =========== =========== ============
Net Income (Loss) $ 325,712 ($ 25,856) $ 649,019 ($ 542,310)
Less Preferred Distributions Declared (369,175) (369,175) (1,107,525) (1,107,525)
---------- ----------- ------------ ------------
NET LOSS AVAILABLE TO
COMMON SHAREHOLDERS ($ 43,463) ($ 395,031) ($ 458,506) ($1,649,835)
========== =========== =========== ============
NET LOSS PER COMMON SHARE
Loss Before Extraordinary Item ($0.03) ($0.16) ($0.28) ($0.94)
Extraordinary Item -- (0.08) -- (0.08)
---------- ----------- ------------ ------------
NET LOSS PER COMMON SHARE ($0.03) ($0.24) ($0.28) ($1.02)
========== =========== =========== ============
PREFERRED DISTRIBUTIONS PAID PER SHARE $ 0.07 $ 0.07 $ 0.21 $ 0.21
========== =========== =========== ============
COMMON DISTRIBUTIONS PAID PER SHARE $ 0.07 $ 0.07 $ 0.21 $ 0.21
========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
MERIDIAN POINT REALTY TRUST VIII CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $649,019 ($542,310)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by Operating Activities:
Depreciation 1,695,575 1,939,330
Amortization - Other 210,843 238,173
Provision for Decrease in Net Realizable Value -- 1,182,015
Gain on Sale of Property (47,452) (51,197)
Prepayment Penalty on Paydown -- 129,433
Decrease in Accounts Receivable 570,702 298,367
Decrease in Notes Receivable from Affiliates 228,000 --
Decrease in Accounts Payable (119,137) (248,588)
Net Change in Other Assets and Liabilities 101,506 250,073
---------- ----------
Net Cash Provided By Operating Activities 3,289,056 3,195,296
---------- ----------
Cash Flows From Investing Activities
Improvements to Existing Real Estate (296,869) (311,723)
Cash Received on Sale of Property 73,603 1,605,124
Leasing Commissions (64,390) (102,192)
---------- ----------
Net Cash Provided By (Used in) Investing Activities (287,656) 1,191,209
---------- ----------
Cash Flows From Financing Activities
Principal Payments on Long-term Debt Facilities (690,970) (2,464,899)
Principal Payments on Mortgage Notes (157,185) (144,158)
Dividends Paid (1,445,612) (1,445,612)
---------- ----------
Net Cash Used in Financing Activities (2,293,767) (4,054,669)
---------- ----------
Net Increase in Cash and Cash Equivalents 707,633 331,836
Cash and Cash Equivalents, Beginning of Period 5,016,216 4,960,399
---------- ----------
Cash And Cash Equivalents, End of Period $5,723,849 $5,292,235
========== ==========
Supplemental Schedule of Non-Cash Transactions
Transactions Related to Sale of Property:
Net Book Value of Properties Disposed $26,151 $11,563,062
Other Liabilities Written-off, net of Other Assets -- 104,833
Paydown of Long-Term Debt Facility -- 9,809,535
Prepayment Penalties -- 129,433
Interest Paid in Escrow -- 27,650
Cash Held in Escrow -- 175,000
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
MERIDIAN POINT REALTY TRUST VIII CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. GENERAL.
Meridian Point Realty Trust VIII Co. (the "Company") is a corporation
organized for the purpose of acquiring, operating, holding for investment and
ultimately selling income-producing commercial and industrial real estate. The
general purpose of the Company is to seek income that qualifies under the REIT
Provisions of the Internal Revenue Code. At such time as it is in the best
interest of the Company's shareholders to do so, the Board of Directors intends
to make investments in such a manner as to comply with the requirements of the
REIT Provisions of the Internal Revenue Code with respect to the composition of
the Company's investments and the derivation of its income. The Company
commenced operations on October 17, 1988.
2. CONSOLIDATION.
The consolidated financial statements include the Company and NASH-IND
Corporation, a wholly-owned corporate subsidiary of the Company. All
significant intercompany transactions and balances have been eliminated.
3. STATEMENTS OF CASH FLOWS.
For purposes of the statements of cash flows, the Company considers all
short-term investments with a maturity of three months or less to be cash
equivalents.
Cash paid for interest was $680,609 and $793,994 for the three months
ended September 30, 1996 and 1995, respectively. For the nine months ended
September 30, 1996 and 1995, cash paid for interest was $2,059,306 and
$2,668,205.
4. RENTALS FROM REAL ESTATE INVESTMENTS.
Certain of the Company's leases require lessees to pay all or a portion
of real estate taxes, insurance, and operating costs ("Expense Recaptures").
Expense Recaptures for the prior year which are overbilled are refunded to the
lessees. Expense Recaptures of $88,682 and $331,521 were included in Rentals
from Real Estate Investments for the three months ended September 30, 1996 and
1995, respectively. Expense Recaptures for the nine months ended September 30,
1996 and 1995 totaled $256,840 and $1,091,648, respectively.
5. INVESTMENTS IN REAL ESTATE AND DEPRECIATION METHODS.
Investments in Real Estate are stated at the lower of depreciated cost
or net realizable value. Net realizable value for financial reporting purposes:
(i) is evaluated and identified quarterly by the Company on a property by
property basis using undiscounted cashflows; (ii) is measured by comparing the
Company's estimate of fair value based upon either sales comparables or the net
cash expected to be generated by the property (comprised of the forecasted
operations for the property based upon historical results, together with
management's estimates of the property's future occupancy, lease rates and
capital improvement requirements), less estimated carrying costs (including
interest) throughout the anticipated holding period, plus the estimated cash
proceeds from the ultimate disposition of the property; and (iii) is not
necessarily an indication of the property's current value or the amount that
will be realized upon the ultimate disposition of the property. To the extent
net realizable value is less than carrying value, a Provision for Decrease in
Net Realizable Value is recorded. Net realizable value is not necessarily an
indication of the property's current value or the amount that will be realized
on its disposition. As of
6
<PAGE>
September 30, 1996 and December 31, 1995, the Company had recognized a
cumulative Provision for Decrease in Net Realizable Value of $5,167,000. This
amount was recorded in years prior to 1996.
Depreciation and amortization have been calculated under the straight-
line method, based upon the estimated useful lives of the assets. Property and
property additions are depreciated over 35 years. Expenditures for maintenance,
repairs, and improvements which do not materially prolong the normal useful life
of an asset are charged to operations as incurred. Leasing commissions and
tenant improvements are amortized under the straight-line method over the term
of the related lease.
6. LONG-TERM DEBT FACILITY.
As of September 30, 1996 and December 31, 1995, there was outstanding
under a facility with an insurance company $23,568,426 and $24,259,396,
respectively. This facility has provided the Company with financing for
property acquisitions, capital improvements, and general operating needs.
INTEREST AND PRINCIPAL MATURITIES
Under the insurance company facility, there are outstanding five
advances totaling $23,568,426 at September 30, 1996. These advances bear fixed
interest rates for periods ranging from six months to three years. Under the
existing facility agreements, the various advances and the corresponding
interest rate contracts mature on the dates specified below.
<TABLE>
ADVANCE AND
NOTIONAL AMOUNT INTEREST MATURITY
AS OF 9/30/96 RATE DATE
--------------- ---- -----------------
<S> <C> <C>
$ 3,422,183 7.81% December 1996
5,969,858 8.87% June 1997
11,362,289 8.87% June 1997
2,814,096 8.80% May 1988
-----------
$23,568,426
===========
</TABLE>
7. DISPOSITION OF PROPERTY.
On May 25, 1995, the Company sold the Kroger property located in
Jackson, Mississippi. The selling price of $2,000,000 was paid entirely in
cash. The Company received net proceeds of $1,927,677, after deductions for
closing costs and prorated items totaling $72,323. In connection with the sale,
the Company recognized a gain on sale of property of $157,257 in the three
months ended June 30, 1995. The property had been previously written down to
its net realizable value.
On July 24, 1995, the Company sold the Tropicana Marketplace located in
Las Vegas, Nevada for a selling price of $10,218,000. Net proceeds amounted to
$9,644,065 after (I) $398,935 of adjustments for closing costs, interest earned
and pro-rations, and (ii) adjustment for an escrow holdback amounting to
$175,000. The net proceeds from the sale and additional funds of $322,553
deposited by the Company into an escrow account totaling $9,996,618 were
remitted to the insurance company as additional principal reduction totaling
$9,809,535, prepayment penalties amounting to $129,433, and an interest payment
of $27,650. As a result of this payment, an interest rate contract maturing in
October 1995 with a notional amount of $5,541,419 was paid off completely, and
the amount due in December 1996 was reduced (see Note 6).
In 1996 the Company sold all of its personal property for $73,603
resulting in a gain on sale of $47,452.
7
<PAGE>
8. NET INCOME (LOSS) PER COMMON SHARE.
Net income (loss) per common share is determined by dividing net
income, after deduction of preferred stock dividends, by the weighted average
number of shares of common stock outstanding during the year. Weighted average
common shares outstanding for the nine months ended September 30, 1996 and 1995
was 1,609,937.
9. INCOME TAXES.
The Company intends to qualify and elect to be treated as a real estate
investment trust ("REIT") for the year ending December 31, 1996. As such, the
Company should be allowed a deduction for dividends paid to shareholders if the
Company satisfies certain income, asset and distribution requirements.
Accordingly, no provision for federal income taxes has been made in the
accompanying Consolidated Statements of Operations for the three and nine months
ended September 30, 1996 and 1995.
10. DECLARATION OF DIVIDENDS.
Under the Company's articles of incorporation, the Board cannot declare
any dividends on common shares until it had first declared dividends on the
preferred shares' annual preference amount as computed under those articles.
The preferred shares generally have a non-cumulative preferential right
to such current dividends as are declared each year by the Board up to an amount
equal to the lesser of (a) 6% of the aggregate adjusted stated value of
preferred shares, (b) earnings and profits for the prior year, or (c) the amount
legally available for distribution by the Company.
On March 12, 1996, the Board of Directors (the "Board") declared
dividends in the amount of $0.07 per preferred share and $0.07 per common share,
payable on March 29, 1996 to shareholders of record on March 19, 1996.
On June 14, 1996, the Board declared dividends in the amount of $0.07
per preferred share and $0.07 per common share, payable on June 28, 1996 to
shareholders of record on June 21, 1996.
On September 13, 1996, the Board declared dividends in the amount of
$0.07 per preferred share and $0.07 per common share, payable on September 30,
1996 to shareholders of record on September 23, 1996.
11. MANAGEMENT AGREEMENT.
Effective December 1, 1995, the Company terminated the Amended and
Restated Employee Leasing Agreement with Meridian Point Properties, Inc. ("MPP")
of San Francisco, California and entered into a management agreement with TIS
Financial Services, Inc. ("TIS") of San Francisco, California. Under the new
management agreement, the Company retained TIS to manage its assets, properties
and investments in addition to performing administrative services for the
Company. The agreement expires on December 31, 1996 and is on a month-to-month
basis thereafter. The Company pays a base management fee to TIS for services
rendered under the agreement a base management fee calculated on an annual basis
to be an amount equal to 0.75% of the Company's Average Invested Assets, as
defined in the agreement. This agreement requires that TIS pay the employment
expenses of its personnel.
Under the new management agreement with TIS, the Company accrued
$500,449 as the estimated management fee for the nine months ended September 30,
1996. For the three months ended September 30, 1996, the accrual of estimated
TIS management fee was $167,008. All of these amounts
8
<PAGE>
are included in Property Operating Costs. During the three months ended
September 30, 1995, the Company accrued $133,131 payable to MPP as its share of
allocated overhead costs. Of this amount, $87,401 is included in Property
Operating Costs and $106,013 in General and Administrative. During the nine
months ended September 30, 1995, the Company accrued $453,382 payable to MPP as
its share of allocated overhead costs. Of this amount, $289,719 is included in
Property Operating Costs and $163,563 in General and Administrative.
9
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company owns a geographically diversified portfolio of real estate
equity interests consisting of income-producing industrial and commercial real
estate. The following discussion should be read in conjunction with the
Company's Consolidated Balance Sheets, Consolidated Statements of Operations and
Consolidated Statements of Cash Flows and the notes thereto included on pages 2
through 9 of this report. Unless otherwise defined in this report, or unless
the context otherwise requires, the capitalized words or phrases referred to in
this section either: (a) describe accounting terms that are used as line items
in such financial statements, or (b) have the meanings ascribed to them in such
financial statements and the notes thereto.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's main sources of liquidity are: (i) cash flows from
operating activities, (ii) cash reserves, and (iii) net proceeds from the sale
of the Company's real properties. A summary of the Company's historical cash
flows is as follows:
<TABLE>
For the Nine Months Ended
September 30,
-------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows provided by (used in):
Operating activities $ 3,289,056 $ 3,195,296
Investing activities (287,656) 1,191,209
Financing activities (2,293,734) (4,054,669)
</TABLE>
In addition to cash flows and net income, management and industry analysts
generally consider Funds From Operations to be one additional measure of the
performance of an equity Real Estate Investment Trust (REIT) because, together
with net income and cash flows, Funds From Operations provides investors with an
additional basis to evaluate the ability of the Company to incur and service
debt and to fund acquisitions and other capital expenditures. However, Funds
From Operations does not measure whether cash flow is sufficient to fund all of
the Company's cash needs including principal amortization, capital improvements,
and distributions to shareholders. Funds From Operations also does not
represent cash generated from operating, investing or financing activities as
determined in accordance with generally accepted accounting principles. Funds
From Operations should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flow as a measure of liquidity. Funds From Operations represents net income
(loss) adjusted for depreciation on real property and amortization of tenant
improvement costs and lease commissions, gains from the sale of property and net
realizable value (NRV) provisions. A reconciliation of the Company's net income
(loss) to Funds From Operations is as follows:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net income (loss) before Extraordinary Item $ 649,019 ($ 412,877)
Reconciling items:
Depreciation and amortization 1,906,418 2,177,503
Gain on sales of property (47,452) (51,197)
---------- -----------
Funds from operations, including NRV provision 2,507,985 1,713,429
NRV provision -- 1,182,015
---------- -----------
Funds from operations, excluding NRV provision $2,507,985 $ 2,895,444
========== ===========
</TABLE>
10
<PAGE>
The decrease in Funds From Operations, excluding NRV provision, of $387,459
for the nine months ended September 30, 1996 as compared with the same period in
1995 is primarily due to the sales in May and July 1995 of the Kroger property,
located in Jackson, Mississippi, and the Tropicana Marketplace, located in Las
Vegas, Nevada. (See "Material Changes in Results of Operations".)
The Company's principal applications of its cash resources are (i) operating
expenses related to real estate operations, general and administrative expenses,
interest expense, and legal costs, (ii) capital improvements, and (iii)
principal payments under its long-term debt facilities and mortgage notes
payable. During the first nine months of 1996, Funds From Operations were
sufficient to fully fund the Company's cash needs. The Company considers its
ability to generate cash from operations adequate to meet its presently
foreseeable cash requirements. However, (i) unanticipated decreases in revenues
and/or unanticipated increases in expenses, (ii) an unanticipated decrease in
property values resulting in additional required principal payments, or (iii)
renegotiation of the Company's debt facility on terms unfavorable to the Company
(see Note 6 to the Company's financial statements) could adversely affect cash
flow and cause the Company to make use of other sources of liquidity.
Funds From Operations may be affected in the future by changes in rental rates
and occupancy levels. As of September 30, 1996, the Company's properties were
94% occupied. Through the end of 1997, leases covering approximately 17% of the
Company's leased space are scheduled to expire.
As of September 30, 1996, the Company had cash and cash equivalents of
approximately $5.7 million.
Based on management's estimates of the values as of December 31, 1995, the
Company is in compliance with all covenants contained in the loan agreement for
its facility. The lender, however, has complete discretion regarding valuations
and is currently reviewing management's estimates of value. If the lender were
to calculate a loan-to-value ratio greater than 55%, the Company would have to
make an Excess Cash payment, and the Company's dividends could be restricted.
(See Note 6 to the Company's financial statements.)
During the nine months ended September 30, 1996, the Company determined that a
soil settlement problem at the 1033 East Maricopa property in Phoenix, Arizona
was more extensive than previously suspected. After further investigation the
Company began legal proceedings against the entity from which the property was
purchased and a related party. During the 3rd quarter of 1996 the Company
reached a tentative settlement with these parties which, if concluded as
anticipated, will offset, to a material extent, any loss regarding this
property. Furthermore, the Company is now investigating the possibility of
insurance recoveries regarding this property.
Capital expenditures for the nine months ended September 30, 1996 and 1995
totaled $296,869 and $311,723, respectively.
During the nine months ended September 30, 1996 and the nine months ended
September 30, 1995, distributions totaling $1,445,612 were made to shareholders.
Information with regard to the declaration and payment of these distributions is
as follows:
11
<PAGE>
<TABLE>
<CAPTION>
Per Preferred Per Common
Date Declared Record Date Payable Date Share Share
------------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
1996
- ----
March 12, 1996 March 19, 1996 March 29, 1996 $0.07 $0.07
June 14, 1996 June 21, 1996 June 28, 1996 0.07 0.07
September 13, 1996 September 23, 1996 September 30, 1996 0.07 0.07
1995
- ----
April 28, 1995 May 4, 1995 May 15, 1995 0.07 0.07
June 7, 1995 June 20, 1995 June 30, 1995 0.07 0.07
September 8, 1995 September 19, 1995 September 29, 1995 0.07 0.07
</TABLE>
MATERIAL CHANGES IN RESULTS OF OPERATIONS.
Rentals from Real Estate Investments totaled $6,818,389 and $8,347,927 for
the nine months ended September 30, 1996 and 1995, respectively. The decrease
of $1,529,538 in 1996 is primarily due to the sale in 1995 of two of the
Company's rental properties and a decrease of $834,808 in Expense Recaptures in
1996 as compared to 1995.
Compared to the same period in 1995, Interest and Other revenue decreased by
$77,272 to $173,438 for the nine month period ended September 30, 1996. The
decrease is primarily due to decreases in the Company's average cash balances
available for investment. Prior year funds available for investment increased
as a result of the suspension of dividend payments during the first nine months
of 1994 and the two preceding years.
Interest and Amortization of Debt Premium for the nine months ended September
30, 1996 decreased by $533,515 as compared to the comparable prior year period
because of principal paydowns on the mortgage notes payable and long-term debt
facility. The average debt outstanding during the nine months ended September
30, 1996 was $31,620,391 as compared to $40,982,557 during the comparable prior
year period.
Property Taxes totaled $866,683 and $1,136,302 for the nine months ended
September 30, 1996 and 1995, respectively. The decrease of $269,619 is
primarily due to a decrease in the assessed values of the Company's properties
with a consequent reduction in property taxes and the sale in 1995 of two of the
Company's rental properties.
Property Operating Costs for the nine months ended September 30, 1996 were
$291,094 less than in the comparable period of the prior year. The decrease is
primarily the result of the 1995 property sales. However, the 1996 amount
includes the entire management fee paid to TIS Financial Services, Inc. whereas,
in 1995, only a portion of the fee paid to MPP was included in this expense
category.
Compared to the same period in 1995, General and Administrative costs
decreased by $129,085 to $612,593 for the nine month period ended September 30,
1996. This decrease is primarily due to the exclusion of any portion of
management fees paid to TIS Financial Services, Inc. from general and
administrative costs (see Note 11 to the Company's consolidated financial
statements) as compared to the amounts paid in 1995 to Meridian Point Properties
("MPP") for costs incurred by MPP in conducting the Company's daily operations.
The decrease was partially offset by increases in professional fees incurred in
connection with the Company's termination of the employee leasing agreement with
MPP and the review and evaluation of strategic business plans for the Company.
During the nine months ended September 30, 1995, the Company recognized a
Provision for Decrease in Net Realizable Value totaling $1,182,015 in connection
with the pending sale of the Tropicana property.
12
<PAGE>
Included in Net Income are the non-cash expenses of Depreciation and
Amortization. For the nine months ended September 30, 1996 and 1995, these
expenses totaled $1,827,989 and $2,095,112, respectively. The decrease of
$267,123 during 1996, compared to 1995, is primarily due to the sale of two of
the Company's rental properties in 1995.
On May 25, 1995, the Company sold the Kroger property. In connection with
this sale, the Company recognized a Gain on Sale of Property totaling $157,257.
The property had previously been written down to its net realizable value.
On July 24, 1995, the Company sold the Tropicana Marketplace property. In
connection with this sale, the Company recognized a loss on sale of property
totaling $106,060. The property had previously been written down to its
estimated net realizable value.
The Company incurred a prepayment penalty amounting to $129,433 in connection
with the principal paydown it made on its insurance company facility with
proceeds received from the sale of Tropicana Marketplace.
During the nine months ended September 30, 1996, the Company sold all of its
personal property at a gain of $47,452.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings which the Company or any
partnership in which the Company has an interest is a party, or to which
any of the assets of the Company or any such partnership is subject.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRANT
MERIDIAN POINT REALTY TRUST VIII CO.
November 1, 1996 By: /s/ Lorraine O. Legg
-------------------------------------
Lorraine O. Legg,
President and Chief Executive Officer
(Principal Executive Officer)
November 1, 1996 By: /s/ John E. Castello
-------------------------------------
John E. Castello,
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,723,849
<SECURITIES> 0
<RECEIVABLES> 41,030
<ALLOWANCES> 25,961
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 82,062,032
<DEPRECIATION> 14,678,974
<TOTAL-ASSETS> 74,697,932
<CURRENT-LIABILITIES> 1,259,815
<BONDS> 0
0
5,274
<COMMON> 1,610
<OTHER-SE> 42,237,824
<TOTAL-LIABILITY-AND-EQUITY> 74,697,932
<SALES> 0
<TOTAL-REVENUES> 7,039,279
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,330,954
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,059,306
<INCOME-PRETAX> 649,019
<INCOME-TAX> 0
<INCOME-CONTINUING> 649,019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 649,019
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
