<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1996
-----------------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------- --------------
Commission file number 000-21470
-----------------------------------------------
WINDSOR REAL ESTATE INVESTMENT TRUST 8
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-6109499
- --------------------------------------- ---------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
120 W. Grand Avenue, Suite 202, Escondido, California 92025
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(619) 746-2411
----------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ( )
--- ---
1
<PAGE>
TABLE OF CONTENTS
PART I
------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
SIGNATURE
2
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996
----------------
ASSETS
- ------
<S> <C>
Property held for investment:
Land $ 1,799,600
Buildings and improvements 4,772,900
Fixtures and equipment 73,300
----------------
6,645,800
Less accumulated depreciation (697,400)
----------------
5,948,400
Investment in joint venture 606,700
Cash and cash equivalents 218,700
Deferred financing costs 81,200
Other assets 39,700
----------------
$ 6,894,700
================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable $ 3,374,500
Accounts payable 10,100
Accrued expenses 64,400
Tenant deposits and other liabilities 11,700
Due to Advisor 115,300
----------------
3,576,000
----------------
Shareholders' equity:
Preferred shares of beneficial interest, no par value, unlimited
shares authorized; 98,073 shares issued and outstanding 2,121,700
Common shares of beneficial interest, no par value, unlimited
shares authorized; 90,169 shares issued and outstanding 1,922,900
Dividends paid in excess of net income (725,900)
----------------
3,318,700
----------------
$ 6,894,700
================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 278,400 $ 267,200
Equity in earnings of joint venture 6,700
Interest 2,200 7,200
Other 3,600 3,700
------------- -------------
290,900 278,100
------------- -------------
COSTS AND EXPENSES
- ------------------
Property operating 141,100 123,800
Interest 74,700 68,800
Depreciation 67,400 65,300
Advisory fee 20,100 18,000
General and administrative:
Related parties 7,800 7,300
Other 8,900 11,700
------------- -------------
320,000 294,900
------------- -------------
Net loss $ (29,100) $ (16,800)
============= =============
Net loss attributable to common shares $ (14,000) $ (8,100)
============= =============
Net loss per common share $ (0.16) $ (0.09)
============= =============
Dividends per common share $ 0.37 $ 0.37
============= =============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 560,700 $ 541,700
Equity in earnings of joint venture 16,300
Interest 5,000 13,200
Other 7,300 7,200
------------- -------------
589,300 562,100
------------- -------------
COSTS AND EXPENSES
- ------------------
Property operating 271,600 245,300
Interest 150,400 124,900
Depreciation 134,600 129,400
Advisory fee 40,200 33,000
General and administrative:
Related parties 14,200 15,200
Other 19,100 22,500
------------- -------------
630,100 570,300
------------- -------------
Net loss $ (40,800) $ (8,200)
============= =============
Net loss attributable to common shares $ (19,600) $ (5,400)
============= =============
Net loss per common share $ (0.22) $ (0.06)
============= =============
Dividends per common share $ 0.75 $ 0.72
============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
---------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (40,800) $ (8,200)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 134,600 129,400
Equity in earnings of joint venture (16,300)
Joint venture cash distributions 16,300
Amortization of deferred financing costs 8,500 1,000
Loss on sale of property held for investment 6,900
Changes in operating assets and liabilities:
Other assets 6,200 (6,700)
Accounts payable (9,200) (16,600)
Accrued expenses (800) 18,800
Tenant deposits and other liabilities (5,500) (4,200)
Due to Advisor 40,300 33,000
--------------- ---------------
Net cash provided by operating activities 140,200 146,500
--------------- ---------------
Cash flows from investing activities:
Increase in property held for investment (45,100) (70,800)
Joint venture cash distributions 5,700
Proceeds from sale of property held for investment 2,700
Investment in joint venture (578,700)
--------------- ---------------
Net cash used in investing activities (36,700) (649,500)
--------------- ---------------
Cash flows from financing activities:
Dividends paid (141,200) (135,500)
Repayment of mortgage notes payable (9,800) (1,481,000)
Proceeds from mortgage note payable 1,967,700
--------------- ---------------
Net cash (used in) provided by financing activities (151,000) 351,200
--------------- ---------------
Net decrease in cash and cash equivalents (47,500) (151,800)
Cash and cash equivalents at beginning of period 266,200 510,300
--------------- ---------------
Cash and cash equivalents at end of period $ 218,700 $ 358,500
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 143,500 $ 109,900
=============== ===============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
NOTES TO FINANCIAL STATEMENTS
------------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at June 30, 1996 and the related statements of operations for
the three and six months ended June 30, 1996 and 1995 and the statements of cash
flows for the six months ended June 30, 1996 and 1995 are unaudited. However,
in the opinion of the Advisor, they contain all adjustments, of a normal
recurring nature, necessary for a fair presentation of such financial
statements. Interim results are not necessarily indicative of results for a
full year.
The financial statements and notes are presented as permitted by Form 10-QSB and
do not contain certain information included in the Trust's annual financial
statements and notes.
NOTE 2. INVESTMENT IN JOINT VENTURE
---------------------------
The Trust's investment in joint venture consists of a 40% undivided interest in
one manufactured home community, acquired in June 1995. The condensed results
of operations of the joint venture for the six months ended June 30, 1996
follows:
<TABLE>
<CAPTION>
1996
--------------
<S> <C>
Total revenues $ 306,000
--------------
Expenses:
Property operating 157,500
Interest 71,800
Depreciation 36,000
--------------
265,300
--------------
Net income $ 40,700
==============
</TABLE>
NOTE 3. NET LOSS PER COMMON SHARE
-------------------------
Net loss per common share is calculated using the two class method and is based
on the weighted average number of common shares outstanding during the period
and the net loss allocated to the common shareholders. The weighted average
number of common shares outstanding during the three and six months ended June
30, 1996 and 1995 was 90,169.
NOTE 4. RELATED PARTY TRANSACTIONS
--------------------------
The Advisor is entitled to receive various fees and compensation from the Trust
which are summarized as follows:
Operational Stage
- -----------------
For management of the Trust's business, the Advisor earns an advisory fee of 1%
of invested assets and .5% of uninvested assets. The fee is subject to
limitation if the Trust's total operating expenses
7
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(as defined) for the year exceed the greater of 2% of the Trust's average
invested assets or 25% of the Trust's net income. The fee is also subordinated
to preferred shareholders receiving a minimum of 6% and a maximum of 7% annual
cumulative dividend, and to common shareholders receiving a 6% annual
noncumulative dividend. During the three and six months ended June 30, 1996,
the Trust accrued advisory fees of $20,100 and $40,200, respectively, payable to
the Advisor; and $18,000 and $33,000 for the three and six months ended June 30,
1995, respectively.
The Trust reimburses The Windsor Corporation for certain direct expenses, and
employee, executive and administrative time, which are incurred on the Trust's
behalf. The Trust was charged $9,600 and $8,800 for such costs during the three
months ended June 30, 1996 and 1995, respectively; and $17,200 and $17,900 for
the six months ended June 30, 1996 and 1995, respectively. These costs are
included in property operating and general and administrative expenses in the
accompanying Statements of Operations.
8
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
June 30, 1996 as compared to December 31, 1995
- ----------------------------------------------
The Trust's primary source of cash during the six months ended June 30, 1996 was
from the operations of its investment properties. The primary uses of cash
during the same period were for cash dividends, debt service and capital
improvements.
There have been no significant changes in the financial condition of the Trust
since December 31, 1995. The Trust's cash balance decreased from $266,200 at
December 31, 1995 to $218,700 at June 30, 1996, due mainly to dividends and
capital improvements exceeding cash provided from operations.
Shareholders' equity decreased from $3,500,700 at December 31, 1995 to
$3,318,700 at June 30, 1996 due to a net loss of $40,800 for the six months
ended June 30, 1996 and cash dividends of $141,200 during the same period.
At June 30, 1996, the Trust's total mortgage debt, including its proportionate
share of joint venture debt, was $4,014,600, consisting entirely of variable
rate debt. The average rate of interest on the variable rate debt was 8.3% at
June 30, 1996.
The future sources of cash for the Trust will be provided from property
operations, cash reserves and ultimately from the sale of property. The future
uses of cash will be for property and Trust operations, debt service and cash
dividends to shareholders. The Advisor believes that the future sources of cash
are sufficient to meet the working capital requirements of the Trust for the
foreseeable future.
Results of Operations
- ---------------------
Six months ended June 30, 1996 as compared to six months ended June 30, 1995
- ----------------------------------------------------------------------------
The results of operations for the six months ended June 30, 1996 and 1995 are
not directly comparable due to the purchase of an interest in the Long Lake
Village manufactured home community in June 1995. The Trust incurred net losses
of $40,800 and $8,200 for the six months ended June 30, 1996 and 1995,
respectively. Net loss per common share was $0.22 in 1996 compared to $0.06 in
1995.
Rent and utilities revenues increased from $541,700 in 1995 to $560,700 in 1996.
The overall occupancy of the Trust's three wholly-owned properties was 95% at
both June 30, 1996 and 1995. Rent increases implemented during the past year
include $8 per month at West Star effective January 1996, $7 per month at El
Frontier effective August 1995, and $6 and $12 per month at Griffwood effective
May 1996 and May 1995, respectively.
Equity in earnings of joint venture represents the Trust's 40% interest in the
net income of the Long Lake manufactured home community, acquired in June 1995.
The Long Lake community was 89% occupied at June 30, 1996 compared to 100% at
June 30, 1995. The General Partners feel that the best long term course of
action is to reduce the number of non-owner occupied mobile homes located in the
community. Several of these homes have been removed from the community in 1996
resulting
9
<PAGE>
in a decrease in occupancy. The vacant spaces are being marketed for owner
occupied homes and the General Partners believe that the decrease in occupancy
is temporary. A $10 per month rent increase was implemented in January 1996.
Interest income decreased from $13,200 in 1995 to $5,000 in 1996 due mainly to
lower cash balances maintained by the Trust.
Property operating expenses increased from $245,300 in 1995 to $271,600 in 1996
due mainly to higher property taxes and utility costs.
Interest expense increased from $124,900 in 1995 to $150,400 in 1996 due mainly
to approximately $570,000 of additional long-term indebtedness incurred by the
Trust in connection with the refinancing of El Frontier in May 1995.
Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business. The fee is computed based on invested and uninvested
asset levels and is subject to certain subordination provisions. Advisory fee
expense increased from $33,000 in 1995 to $40,200 in 1996 due to a higher
invested asset level subsequent to the acquisition of the 40% interest in Long
Lake Village in June 1995.
General and administrative expenses decreased slightly from $37,700 in 1995 to
$33,300 in 1996.
Three months ended June 30, 1996 as compared to three months ended June 30, 1995
- --------------------------------------------------------------------------------
The results of operations for the three months ended June 30, 1996 and 1995 are
not directly comparable due to the purchase of an interest in the Long Lake
Village manufactured home community in June 1995. The Trust incurred net losses
of $29,100 and $16,800 for the three months ended June 30, 1996 and 1995,
respectively. Net loss per common share was $0.16 in 1996 compared to $0.09 in
1995.
Rent and utilities revenues increased from $267,200 in 1995 to $278,400 in 1996
primarily due to rent increases, as discussed previously.
Interest income decreased from $7,200 in 1995 to $2,200 in 1996 due mainly to
lower cash balances maintained by the Trust.
Property operating expenses increased from $123,800 in 1995 to $141,100 in 1996
due mainly to higher property taxes and utility costs.
Interest expense increased from $68,800 in 1995 to $74,700 in 1996 due mainly to
approximately $570,000 of additional long-term indebtedness incurred by the
Trust in connection with the refinancing of El Frontier in May 1995.
Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business. The fee is computed based on invested and uninvested
asset levels and is subject to certain subordination provisions. Advisory fee
expense increased from $18,000 in 1995 to $20,100 in 1996 due to a higher
invested asset level subsequent to the acquisition of the 40% interest in Long
Lake Village in June 1995.
General and administrative expenses decreased slightly from $19,000 in 1995 to
$16,700 in 1996.
10
<PAGE>
PART II
-------
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a) Exhibits and Index of Exhibits
11) Computation of Net Loss Per Common Share
27) Financial Data Schedule
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the period covered
by this Form 10-QSB.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
(Registrant)
By /s/ John A. Coseo, Jr.
--------------------------------------------------
JOHN A. COSEO, JR.
Chairman, Chief Executive Officer,
President, Secretary
Date: August 12, 1996
12
<PAGE>
Exhibit 11
----------
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
COMPUTATION OF NET LOSS PER COMMON SHARE (1)
----------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net loss $ (29,100) $ (16,800) $ (40,800) $ (8,200)
Less:
Dividends paid
Preferred (36,800) (36,900) (73,600) (70,700)
Common (33,800) (33,800) (67,600) (64,800)
Unpaid preferred
dividends (3,100)
-------------- -------------- -------------- --------------
Overdistributed Earnings $ (99,700) $ (87,500) $ (182,000) $ (146,800)
============== ============== ============== ==============
Allocation of
- -------------
Overdistributed
---------------
Earnings (2)
------------
Preferred $ (51,900) $ (45,600) $ (94,800) $ (76,600)
Common (47,800) (41,900) (87,200) (70,200)
-------------- -------------- -------------- --------------
$ (99,700) $ (87,500) $ (182,000) $ (146,800)
============== ============== ============== ==============
Earnings Per
- ------------
Common Share
------------
Dividends Paid $ 33,800 $ 33,800 $ 67,600 $ 64,800
Allocation of
Overdistributed
Earnings (47,800) (41,900) (87,200) (70,200)
-------------- -------------- -------------- --------------
Net Loss Attributable to
Common Shares $ (14,000) $ (8,100) $ (19,600) $ (5,400)
============== ============== ============== ==============
Weighted Average
Common Shares
Outstanding 90,169 90,169 90,169 90,169
============== ============== ============== ==============
Net Loss
Per Common
Share $ (0.16) $ (0.09) $ (0.22) $ (0.06)
============== ============== ============== ==============
</TABLE>
Note
- ----
(1) Net loss per common share is computed using the two class method.
(2) Overdistributed earnings are allocated evenly, on a per share basis, between
common and preferred shares.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF WINDSOR REAL ESTATE INVESTMENT TRUST 8 AS OF JUNE 30, 1996 AND THE
RELATED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE SIX MONTHS THEN ENDED
AND IS QUALIFIED IN THE ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 218,700
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,645,800
<DEPRECIATION> 697,400
<TOTAL-ASSETS> 6,894,700
<CURRENT-LIABILITIES> 0
<BONDS> 3,374,500
0
2,121,700
<COMMON> 1,922,900
<OTHER-SE> (725,900)
<TOTAL-LIABILITY-AND-EQUITY> 6,894,700
<SALES> 0
<TOTAL-REVENUES> 589,300
<CGS> 0
<TOTAL-COSTS> 271,600
<OTHER-EXPENSES> 208,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 150,400
<INCOME-PRETAX> (40,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (40,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,800)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0
</TABLE>
