<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 September 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
incorporation or organization) Identification No.)
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
SIGNATURE
</TABLE>
2
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
September 30, 1996
------------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $1,799,600
Buildings and improvements 4,760,200
Fixtures and equipment 73,200
----------
6,633,000
Less accumulated depreciation (763,100)
----------
5,869,900
Investment in joint venture 601,900
Cash and cash equivalents 235,300
Deferred financing costs 77,000
Other assets 43,400
----------
$6,827,500
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable $3,369,200
Accounts payable 23,200
Accrued expenses 84,100
Tenant deposits and other liabilities 8,700
Due to Advisor 135,400
----------
3,620,600
----------
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 (837,700)
----------
3,206,900
----------
$6,827,500
==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30
--------------------
1996 1995
-------- --------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $294,800 $280,200
Equity in earnings of joint venture 3,200 13,400
Interest 2,400 4,100
Other 4,200 2,900
-------- --------
304,600 300,600
-------- --------
COSTS AND EXPENSES
- ------------------
Property operating 168,600 137,300
Interest 74,500 79,100
Depreciation 67,000 65,600
Advisory fee 20,100 20,000
General and administrative:
Related parties 7,700 7,300
Other 7,900 9,100
-------- --------
345,800 318,400
-------- --------
Net loss $(41,200) $(17,800)
======== ========
Net loss attributable to common shares $(19,800) $ (8,500)
======== ========
Net loss per common share $ (0.22) $ (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>
Nine Months Ended
September 30
--------------------
1996 1995
-------- --------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $855,500 $821,900
Equity in earnings of joint venture 19,500 13,400
Interest 7,400 17,300
Other 11,500 10,100
-------- --------
893,900 862,700
-------- --------
COSTS AND EXPENSES
- ------------------
Property operating 440,200 382,600
Interest 224,900 204,000
Depreciation 201,600 195,000
Advisory fee 60,300 53,000
General and administrative:
Related parties 21,900 22,500
Other 27,000 31,600
-------- --------
975,900 888,700
-------- --------
Net loss $(82,000) $(26,000)
======== ========
Net loss attributable to common shares $(39,300) $(13,900)
======== ========
Net loss per common share $ (0.44) $ (0.15)
======== ========
Dividends per common share $ 1.12 $ 1.09
======== ========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------------------
1996 1995
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(82,000) $ (26,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 201,600 195,000
Equity in earnings of joint venture (19,500) (13,400)
Joint venture cash distributions 19,500
Amortization of deferred financing costs 12,700
Loss on sale of property held for investment 18,400
Changes in operating assets and liabilities:
Other assets 2,500 8,000
Accounts payable 3,900 (17,500)
Accrued expenses 18,900 32,000
Tenant deposits and other liabilities (8,500) (13,600)
Due to Advisor 60,400 53,000
-------- ----------
Net cash provided by operating activities 227,900 217,500
-------- ----------
Cash flows from investing activities:
Increase in property held for investment (50,100) (81,800)
Joint venture cash distributions 10,500
Proceeds from sale of property held for investment 7,700
Investment in joint venture (578,700)
-------- ----------
Net cash used in investing activities (31,900) (660,500)
-------- ----------
Cash flows from financing activities:
Dividends paid (211,800) (206,100)
Repayment of mortgage notes payable (15,100) (1,485,500)
Proceeds from mortgage note payable 1,965,700
-------- ----------
Net cash (used in) provided by financing activities (226,900) 274,100
-------- ----------
Net decrease in cash and cash equivalents (30,900) (168,900)
Cash and cash equivalents at beginning of period 266,200 510,300
-------- ----------
Cash and cash equivalents at end of period $235,300 $ 341,400
======== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 213,800 $ 189,600
========= ==========
</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 September 30, 1996 and the related statements of operations
for the three and nine months ended September 30, 1996 and 1995 and the
statements of cash flows for the nine months ended September 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 nine months ended September 30, 1996
and for the period from June 1995 (date of acquisition) to September 1995,
follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Total revenues $450,500 $162,800
-------- --------
Expenses:
Property operating 239,100 74,400
Interest 108,300 38,600
Depreciation 54,200 16,400
-------- --------
401,600 129,400
-------- --------
Net income $ 48,900 $ 33,400
======== ========
</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 nine months ended
September 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
7
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and .5% of uninvested assets. The fee is subject to limitation if the Trust's
total operating expenses (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 nine months ended
September 30, 1996, the Trust accrued advisory fees of $20,100 and $60,300,
respectively, payable to the Advisor; and $20,000 and $53,000 for the three and
nine months ended September 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 $9,300 and $8,600 for such costs during the three
months ended September 30, 1996 and 1995, respectively; and $26,500 for both the
nine months ended September 30, 1996 and 1995. These costs are included in
property operating and general and administrative expenses in the accompanying
Statements of Operations.
8
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WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
September 30, 1996 as compared to December 31, 1995
- ---------------------------------------------------
The Trust's primary source of cash during the nine months ended September 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 $235,300 at September 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
$3,206,900 at September 30, 1996 due to a net loss of $82,000 for the nine
months ended September 30, 1996 and cash dividends of $211,800 during the same
period.
At September 30, 1996, the Trust's total mortgage debt, including its
proportionate share of joint venture debt, was $4,009,200, consisting entirely
of variable rate debt. The average rate of interest on the variable rate debt
was 8.3% at September 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
- ---------------------
Nine months ended September 30, 1996 as compared to nine months ended September
- -------------------------------------------------------------------------------
30, 1995
- --------
The results of operations for the nine months ended September 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 $82,000 and $26,000 for the nine months ended September 30, 1996 and 1995,
respectively. The net loss per common share was $0.44 in 1996 compared to $0.15
in 1995.
Rent and utilities revenues increased from $821,900 in 1995 to $855,500 in 1996.
The overall occupancy of the Trust's three wholly-owned properties was 94% at
September 30, 1996 compared to 96% at September 30, 1995. Offsetting the slight
decrease in occupancy were rent increases implemented during the past year
including $8 per month at West Star effective January 1996; $11 and $7 per month
at El Frontier effective August 1996 and August 1995, respectively; and $6 and
$12 per month at Griffwood effective May 1996 and May 1995, respectively.
Equity in earnings of joint venture, which represents the Trust's 40% interest
in the net income of the Long Lake manufactured home community, increased from
$13,400 in 1995 to $19,500 in 1996. The Long Lake community was 87% occupied at
September 30, 1996 compared to 100% at September 30, 1995. The Advisor feels
that the best long term course of action is to reduce the number of non-
9
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owner occupied mobile homes located in the community. Several of these homes
have been removed from the community in 1996 resulting 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.
Despite the decrease in occupancy, equity in earnings of joint venture increased
in 1996 as the 1995 amounts only reflect the results of operations of the
community since its purchase in June 1995.
Interest income decreased from $17,300 in 1995 to $7,400 in 1996 due mainly to
lower cash balances maintained by the Trust.
Property operating expenses increased from $382,600 in 1995 to $440,200 in 1996
due mainly to higher property taxes and utility costs, and losses incurred on
the sale of park owned mobile homes at the Griffwood community.
Interest expense increased from $204,000 in 1995 to $224,900 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 $53,000 in 1995 to $60,300 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 from $54,100 in 1995 to $48,900 in
1996.
Three months ended September 30, 1996 as compared to three months ended
- -----------------------------------------------------------------------
September 30, 1995
- ------------------
The Trust incurred net losses of $41,200 and $17,800 for the three months ended
September 30, 1996 and 1995, respectively. The net loss per common share was
$0.22 in 1996 compared to $0.09 in 1995.
Rent and utilities revenues increased from $280,200 in 1995 to $294,800 in 1996
primarily due to rent increases, as discussed previously.
Interest income decreased from $4,100 in 1995 to $2,400 in 1996 due mainly to
lower cash balances maintained by the Trust.
Property operating expenses increased from $137,300 in 1995 to $168,600 in 1996
due mainly to higher property taxes and utility costs, and losses incurred on
the sale of park owned mobile homes at the Griffwood community.
Interest expense decreased from $79,100 in 1995 to $74,500 in 1996 due mainly to
lower average interest rates.
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 was $20,100 and $20,000 for the three months ended September 30, 1996
and 1995, respectively.
General and administrative expenses decreased from $16,400 in 1995 to $15,600 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>
Exhibit 11
----------
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
COMPUTATION OF NET LOSS PER COMMON SHARE (1)
----------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ----------------------
1996 1995 1996 1995
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net loss $ (41,200) $(17,800) $ (82,000) $ (26,000)
Less:
Dividends paid
Preferred (36,800) (36,900) (110,300) (107,500)
Common (33,800) (33,800) (101,400) (98,600)
Unpaid preferred
dividends (3,100)
--------- -------- --------- ---------
Overdistributed Earnings $(111,800) $(88,500) $(293,700) $(235,200)
========= ======== ========= =========
Allocation of
- -------------
Overdistributed
---------------
Earnings (2)
------------
Preferred $ (58,200) $(46,200) $(153,000) $(122,700)
Common (53,600) (42,300) (140,700) (112,500)
--------- -------- --------- ---------
$(111,800) $(88,500) $(293,700) $(235,200)
========= ======== ========= =========
Loss Per
- --------
Common Share
------------
Dividends Paid $ 33,800 $ 33,800 $ 101,400 $ 98,600
Allocation of
Overdistributed
Earnings (53,600) (42,300) (140,700) (112,500)
--------- -------- --------- ---------
Net Loss Attributable to
Common Shares $ (19,800) $ (8,500) $ (39,300) $ (13,900)
========= ======== ========= =========
Weighted Average
Common Shares
Outstanding 90,169 90,169 90,169 90,169
========= ======== ========= =========
Net Loss
Per Common
Share $ (0.22) $ (0.09) $ (0.44) $ (0.15)
========= ======== ========= =========
</TABLE>
Notes
- -----
(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.
12
<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: November 11, 1996
13
<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 SEPTEMBER 30, 1996 AND THE
RELATED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE NINE MONTHS THEN
ENDED AND IS QUALIFIED IN THE ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 235,300
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,633,000
<DEPRECIATION> 763,100
<TOTAL-ASSETS> 6,827,500
<CURRENT-LIABILITIES> 0
<BONDS> 3,369,200
0
2,121,700
<COMMON> 1,922,900
<OTHER-SE> (837,700)
<TOTAL-LIABILITY-AND-EQUITY> 6,827,500
<SALES> 0
<TOTAL-REVENUES> 893,900
<CGS> 0
<TOTAL-COSTS> 440,200
<OTHER-EXPENSES> 310,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224,900
<INCOME-PRETAX> (82,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,000)
<EPS-PRIMARY> (0.44)
<EPS-DILUTED> 0
</TABLE>
