<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 March 31, 1997
--------------------------
[_] 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 8
PART II
-------
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE
</TABLE>
2
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
BALANCE SHEET
-------------
(unaudited)
<TABLE>
<CAPTION>
March 31, 1997
--------------
<S> <C>
ASSETS
- ------
Property held for investment:
Land $ 1,564,100
Buildings and improvements 2,935,800
Fixtures and equipment 57,000
--------------
4,556,900
Less accumulated depreciation (542,300)
--------------
4,014,600
Property held for sale, net 1,767,400
Investments in joint ventures 871,800
Cash and cash equivalents 115,400
Deferred financing costs 68,600
Other assets 58,500
--------------
$ 6,896,300
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable $ 3,358,500
Accounts payable 13,200
Accrued expenses 71,300
Tenant deposits and other liabilities 13,500
Due to Advisor 175,600
Due to affiliate 244,000
--------------
3,876,100
--------------
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
Cumulative net loss (48,600)
Cumulative distributions (975,800)
--------------
3,020,200
--------------
$ 6,896,300
==============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
REVENUES
- --------
Rent and utilities $ 293,100 $ 282,300
Equity in earnings of joint ventures (3,800) 9,600
Interest 1,100 2,800
Other 4,300 3,700
---------- ----------
294,700 298,400
---------- ----------
COSTS AND EXPENSES
- ------------------
Property operating 144,600 130,500
Interest 78,100 75,700
Depreciation 40,600 67,200
Advisory fee 20,100 20,100
General and administrative:
Related parties 8,500 6,400
Other 8,800 10,200
---------- ----------
300,700 310,100
---------- ----------
Net loss $ (6,000) $ (11,700)
========== ==========
Net loss attributable to common shares $ (2,900) $ (5,600)
========== ==========
Net loss per common share $ (0.03) $ (0.06)
========== ==========
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 CASH FLOWS
------------------------
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
----------------------------
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,000) $ (11,700)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 40,600 67,200
Equity in earnings of joint ventures 3,800 (9,600)
Joint ventures' cash distributions 1,500 9,600
Amortization of deferred financing costs 4,200 4,300
Loss on sale of property 1,100 700
Changes in operating assets and liabilities:
Other assets 1,300 (5,400)
Accounts payable 1,200 (9,000)
Accrued expenses 13,100 7,700
Tenant deposits and other liabilities (6,200) (6,300)
Due to Advisor 20,100 20,100
----------- -----------
Net cash provided by operating activities 74,700 67,600
----------- -----------
Cash flows from investing activities:
Increase in property (25,400) (35,400)
Investment in joint venture (8,000)
Proceeds from sale of property 7,300 200
Joint venture cash distributions 700 2,400
----------- -----------
Net cash used in investing activities (25,400) (32,800)
----------- -----------
Cash flows from financing activities:
Dividends paid (70,600) (70,600)
Repayment of mortgage notes payable (5,300) (4,700)
----------- -----------
Net cash used in financing activities (75,900) (75,300)
----------- -----------
Net decrease in cash and cash equivalents (26,600) (40,500)
Cash and cash equivalents at beginning of period 142,000 266,200
----------- -----------
Cash and cash equivalents at end of period $ 115,400 $ 225,700
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (none capitalized) $ 73,900 $ 64,100
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. BASIS OF PRESENTATION
---------------------
The balance sheet at March 31, 1997 and the related statements of operations and
of cash flows for the three months ended March 31, 1997 and 1996 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. PROPERTY HELD FOR SALE
----------------------
Property held for sale consists of the Griffwood manufactured home community
located in Leesburg, Florida, which was originally purchased in October 1993.
In April 1997, the Trust sold the Griffwood community for approximately
$1,883,900 (net of selling and closing costs of $52,300 and a $60,800 real
estate commission paid to an unrelated third party). In connection with the
sale, $188,000 of sales proceeds were retained by the purchaser, a non-profit
Co-Op formed by the residents of the community for the purpose of purchasing
Griffwood. These proceeds, which are non-interest bearing, will be remitted to
the Trust as additional shares of the Co-Op are sold, but in no event later than
April 2002.
The Trust has deferred an accounting gain on sale of approximately $110,200,
pending the receipt of additional sales proceeds.
NOTE 3. INVESTMENTS IN JOINT VENTURES
-----------------------------
In February 1997, the Trust purchased an 11% interest in the Apache East Estates
and Denali Park Estates manufactured home communities located in Phoenix,
Arizona. The remaining interests in the communities were purchased by
affiliated entities. The Trust's cost of its equity interest in the communities
was $241,300. In connection with the purchase, the joint venture obtained a
$3,040,000 loan, collateralized by the communities. The Trust's share of this
loan is $334,400. The Trust also obtained a $244,000 advance from an affiliated
entity to fund its investment. The $3,040,000 loan initially bears interest at
8.375%. In March 2000 and March 2003, the interest rate adjusts to the yield on
the 3-year Treasury Note plus 2.2% and the loan is due in March 2006. The
$244,000 advance from affiliate bears interest at prime plus 2% and was repaid
in April 1997.
6
<PAGE>
The Trust's investments in joint ventures consist of interests in three
manufactured home communities at March 31, 1997. The combined condensed results
of operations of the joint venture properties (including Apache East Estates and
Denali Park Estates since their purchase) for the three months ended March 31,
1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Total revenues $ 228,300 $ 162,000
----------- -----------
Expenses:
Property operating 127,100 84,400
Interest 64,600 35,800
Depreciation 36,300 17,800
----------- -----------
228,000 138,000
----------- -----------
Net income $ 300 $ 24,000
=========== ===========
</TABLE>
NOTE 4. 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 both the three months ended March 31,
1997 and 1996 was 90,169.
NOTE 5. RELATED PARTY TRANSACTIONS
--------------------------
The Advisor is entitled to receive from the Trust various fees and compensation
which are summarized as follows:
Operational Stage
- -----------------
For management of the Trust's business, the Advisor is paid 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 (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 both
the three months ended March 31, 1997 and 1996, the Trust accrued advisory fees
$20,100 payable to the Advisor.
The Trust reimburses The Windsor Corporation for certain direct expenses, and
employee, executive and administrative time incurred on the Trust's behalf. The
Trust was charged $10,300 and $7,600 for such costs during the three months
ended March 31, 1976 and 1996, respectively. These costs are included in
property operating and general and administrative expenses in the accompanying
Statements of Operations.
7
<PAGE>
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Changes in Financial Condition
- ------------------------------
March 31, 1997 as compared to December 31, 1996
- -----------------------------------------------
The Trust's primary sources of cash during the three months ended March 31, 1997
were from the operations of its investment properties and an advance from an
affiliated entity. The primary uses of cash during the same period were for a
joint venture investment, cash dividends, and debt service.
In February 1997, the Trust purchased an 11% interest in the Apache East Estates
and Denali Park Estates manufactured home communities located in Phoenix,
Arizona. The remaining interests in the communities were purchased by
affiliated entities. The Trust's cost of its equity interest in the communities
was $241,300. In connection with the purchase, the joint venture obtained a
$3,040,000 loan, collateralized by the communities. The Trust's share of this
loan is $334,400. The Trust also obtained a $244,000 advance from an affiliated
entity to fund its investment. The $3,040,000 loan initially bears interest at
8.375%. In March 2000 and March 2003, the interest rate adjusts to the yield on
the 3-year Treasury Note plus 2.2% and the loan is due in March 2006. The
$244,000 advance from affiliate bears interest at prime plus 2% and was repaid
in April 1997.
In April 1997, the Trust sold the Griffwood community for approximately
$1,883,900 (net of selling and closing costs of $52,300 and a $60,800 real
estate commission paid to an unrelated third party). The sale of the community
was considered to be in the best interests of the shareholders as it was
becoming increasingly difficult to maintain occupancy at the community due to
its smaller homesites. It was felt that the investment in the Phoenix
communities provided a much better return potential to the investors. In
connection with the sale, $188,000 of sales proceeds were retained by the
purchaser, a non-profit Co-Op formed by the residents of the community for the
purpose of purchasing Griffwood. These proceeds, which are non-interest
bearing, will be remitted to the Trust as additional shares of the Co-Op are
sold, but in no event later than April 2002. The proceeds from the sale were
used to repay the advance from an affiliated entity and to replenish cash
reserves.
At March 31, 1997, the Trust's total mortgage debt, including its proportionate
share of joint venture debt, was $4,338,200, consisting entirely of variable
rate debt. The average rate of interest on the variable rate debt was 8.4% at
March 31, 1997. Approximately, $1.3 million of mortgage debt was repaid in
April 1997 in connection with the sale of the Griffwood community, as discussed
previously.
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
- ---------------------
Three months ended March 31, 1997 as compared to three months ended March 31,
- -----------------------------------------------------------------------------
1996
- ----
The results of operations for the three months ended March 31, 1997 and 1996 are
not directly comparable due to the purchase of interests in the Apache East
Estates and Denali Park Estates manufactured home communities in February 1997.
The Trust incurred net losses of $6,000 and $11,700 for the three months ended
March 31, 1997 and 1996, respectively. Net loss per common
8
<PAGE>
share was $0.03 in 1997 and $0.06 in 1996.
Rent and utilities revenues increased from $282,300 in 1996 to $293,100 in 1997.
The overall occupancy of the Trust's three wholly-owned properties decreased
slightly from 97% at March 31, 1996 to 95% at March 31, 1997. Despite the
slight decrease in occupancy, revenues improved due mainly to rent increases
implemented during the past year. These include $7 per month at West Star
effective January 1997, $11 per month at El Frontier effective August 1996, and
$6 per month at Griffwood effective May 1996.
Equity in earnings of joint ventures represents the Trust's share of the net
income of three joint venture properties in 1997 and one joint venture property
in 1996 (as discussed previously, two joint venture interests were acquired in
February 1997). Equity in earnings of joint ventures decreased from $9,600 in
1996 to a $3,800 loss in 1997. The reason for the decrease is mainly due to a
decline in occupancy at the Long Lake Village community. During 1996, a number
of lower quality non-owner occupied mobile homes were removed from the community
in order to upgrade the resident profile and the long-term value of the
community. These spaces are now being marketed aggressively to higher quality
owner occupied homes and the Advisor believes that the decline in occupancy will
be temporary.
Interest income decreased from $2,800 in 1996 to $1,100 in 1997 due mainly to
lower cash balances maintained by the Trust.
Property operating expense increased from $130,500 in 1996 to $144,600 in 1997
due mainly to higher wage and utilities costs.
Interest expense increased from $75,700 in 1996 to $78,100 in 1997 due mainly to
interest incurred on the $244,000 advance from affiliate, as discussed
previously.
Depreciation expense decreased from $67,200 in 1996 to $40,600 in 1997, because
the Griffwood community has not been depreciated since the decision to market it
for sale was made in December 1996.
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 fees
of $20,100 were accrued during both the three months ended March 31, 1997 and
1996.
General and administrative expenses increased slightly from $16,600 in 1996 to
$17,300 in 1997 due to higher employee time charges from the Advisor.
9
<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
1) A Form 8-K (dated March 5, 1997) was filed with regards to the
Trust's acquisition of interests in the Apache East Estates and
Denali Park Estates manufactured home communities located in
Phoenix, Arizona.
The item reported in this current report was Item 2 (acquisition or
disposition of assets).
2) A Form 8-K/A (dated April 28, 1997) was filed with regards to the
Trust's acquisition of interests in the Apache East Estates and
Denali Park Estates manufactured home communities located in
Phoenix, Arizona and with regards to the Trust's sale of the
Griffwood manufactured home community located in Leesburg, Florida.
The items reported in this current report were Item 2 (acquisition
or disposition of assets) and Item 7 (financial statements, proforma
financial information and exhibits).
A summary of the financial information included in the report
follows:
a) Financial Statements and Proforma Financial Information of
Apache East Estates and Denali Park Estates Manufactured Home
Communities.
b) Proforma Financial Information of Windsor Real Estate
Investment Trust 8.
10
<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: May 12, 1997
11
<PAGE>
Exhibit 11
WINDSOR REAL ESTATE INVESTMENT TRUST 8
--------------------------------------
COMPUTATION OF NET LOSS PER COMMON SHARE (1)
----------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended March 31
------------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Net Loss $ (6,000) $ (11,700)
Less:
Dividends Paid - Preferred (36,800) (36,800)
- Common (33,800) (33,800)
--------- ---------
Overdistributed Earnings $ (76,600) $ (82,300)
========= =========
Allocation of Overdistributed Earnings (2)
- ------------------------------------------
Preferred $ (39,900) $ (42,900)
Common (36,700) (39,400)
--------- ---------
$ (76,600) $ (82,300)
========= =========
Earnings Per Common Share
- -------------------------
Dividends Paid $ 33,800 $ 33,800
Allocation of Overdistributed Earnings (36,700) (39,400)
--------- ---------
Net Loss Attributable to Common Shares $ (2,900) $ (5,600)
========= =========
Weighted Average Common Shares Outstanding 90,169 90,169
========= =========
Net Loss Per Common Share $ (0.03) $ (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 MARCH 31, 1997 AND THE
RELATED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 115,400
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,652,000
<DEPRECIATION> 870,000
<TOTAL-ASSETS> 6,896,300
<CURRENT-LIABILITIES> 0
<BONDS> 3,358,500
0
2,121,700
<COMMON> 1,922,900
<OTHER-SE> (1,024,400)
<TOTAL-LIABILITY-AND-EQUITY> 6,896,300
<SALES> 0
<TOTAL-REVENUES> 294,700
<CGS> 0
<TOTAL-COSTS> 144,600
<OTHER-EXPENSES> 78,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,100
<INCOME-PRETAX> (6,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,000)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
