REDWOOD MORTGAGE INVESTORS VIII
(a California Limited Partnership)
Index to Form 10-K
December 31, 1996
Part I
Page No.
Item 1 - Business 4
Item 2 - Properties 4-6
Item 3 - Legal Proceedings 7
Item 4 - Submission of Matters to a vote of Security Holders (partners) 7
Part II
Item 5 - Market for the Registrants Partners Capital and related matters 7
Item 6 - Selected Financial Data 7-9
Item 7 - Managements Discussion and Analysis of Financial Condition and
Results of Operations 10-11
Item 8 - Financial Statements and Supplementary Data 12-39
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 40
Part III
Item 10 - Directors and Executive Officers of the Registrant 40
Item 11 - Executive Compensation 41
Item 12 - Security Ownership of Certain Beneficial Owners and management 42
Item 13 - Certain Relationships and Related Transactions 42
Part IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. 42-43
Signatures 44
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the year ended December 31, 1996 Commission file number 33-49946
- --------------------------------------------------------------------------------
REDWOOD MORTGAGE INVESTORS VIII
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-3158788
- ------------------------ -----------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
650 El Camino Real Suite G, Redwood City, CA 94063
- ------------------------------------------------------ ------------------------
(address of principal executive offices) (zip code)
Registrants telephone No. including area code (415) 365-5341
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- -------------------------------------------------------------------------------
Limited Partnership Units None
- -------------------------------------------------------------------------------
Securities registered pursuant to
Section 12(g) of the Act: Limited Partnership Units
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 XXX NO
- -------------------------------- -----------------------------
As of December 31, 1996, the limited partnership units purchased by non
affiliates was 152,415.1480 units computed at $100.00 a unit for $15,241,514.80
Documents incorporated by reference:
Portions of the Prospectus dated May 19, 1993, and a revised Prospectus came
into effect on December 4, 1996, are incorporated in Parts II, III, and IV.
Exhibits filed as part of Form S-11 Registration Statement #33-49946 are
referenced in part IV.
<PAGE>
Part I
Item 1 - Business
Redwood Mortgage Investors VIII, a California limited partnership (the
Partnership), is organized to engage in business as a mortgage lender, for the
primary purpose of making loans secured primarily by first and second deeds of
trust on California real estate. Loans are arranged and serviced by Redwood Home
Loan Co., (dba Redwood Mortgage) an affiliate of the General Partners. The
Partnerships objectives are to make loans that will: (i) yield a high rate of
return from mortgage lending; and (ii) preserve and protect the Partnerships
capital. Investors should not expect the Partnership to provide tax benefits of
the type commonly associated with limited partnership tax shelter investments.
The Partnership is intended to serve as an investment alternative for investors
seeking current income. However, unlike other investments which are intended to
provide current income, an investment in the Partnership will be less liquid,
not readily transferable, and not provide a guaranteed return over its
investment life.
Initially, a minimum of 2,500 Units ($250,000) and a maximum of 150,000 Units
$15,000,000) were sold. This initial offering closed on October 31, 1996.
Subsequently, the Partnership commenced a second offering of up to 300,000
additional Units ($30,000,000) commencing on December 4, 1996. All units are
being offered on a best efforts basis, which means that no one is guaranteeing
that any minimum number of Units will be sold, through broker-dealer member
firms of the National Association of Securities Dealers, Inc. (See TERMS OF THE
OFFERING and PLAN OF DISTRIBUTION).
The Partnership began selling Units in February, 1993, and began investing in
mortgages in April, 1993. At December 31, 1996, the Partnership has investments
in Mortgage Investments with principal balances totalling $15,642,990 with
interest rates thereon ranging from 10.00% to 14.50%. Currently First Trust
Deeds comprise 41.84% of the Mortgage Investment portfolio with Junior loans
(2nd and 3rd Trust Deeds) making up 58.16%. Owner-occupied homes, combined with
non-owner occupied Mortgage Investments, total 26.19 % of the Mortgage
Investment. Loans secured by apartments make up 16.12% of the total Mortgage
Investments. Commercial Mortgage Investments, now comprising 57.69% of the
portfolio, have increased 14.22% from last year. 74.49% of the total Mortgage
Investments, are in six counties of the Bay Area, County of San Joaquin makes up
7.49% of the Mortgage Investments and the balance of Mortgage Investments are
primarily in Northern California. Mortgage Investment size increased this past
year, and is now averaging $312,860 per Mortgage Investment, up from $231,678 in
1995. Some of the Mortgage Investments are fractionalized between affiliated
partnerships with objectives similar to those of the Partnership to further
reduce risk. Average equity per loan transaction stood at 41.79%. A 40% equity
average on loan origination is generally considered very conservative.
Generally, the more equity, the more protection for the lender. The
Partnerships Mortgage Investment portfolio is in good condition with only one
property in foreclosure as of the end of December, 1996.
Item 2 - Properties
At December 31, 1996, the Partnership owned one piece of property, a vacant lot,
through foreclosure valued at $66,991. Additionally, the Partnership wholly owns
a limited liability company (LLC), whose asset is a partially completed single
family residence. This partially completed single family residence was
originally foreclosed upon by the Partnership and subsequently transferred to
the (LLC). In 1995, the Partnership chose to allow a senior lender to foreclose
out its deed of trust on one of its secured investments. The Partnership has
commenced a legal action to collect its debt and has recorded the sum involved
as Other Receivables on the financial statements.
<PAGE>
Mortgage Investments as a Percentage of Total Mortgage Investments
First Trust Deeds $6,545,779.70
Appraised Value of Properties 14,694,294.00
Total Investment as a % of Appraisal 44.55%
Second Trust Deed Mortgage Investments 8,797,210.57
Third Trust Deed Mortgage Investments 300,000.00
First Trust Deeds due other Lenders 24,801,374.00
Second Trust Deeds due other Lenders 360,000.00
Total Debt $40,804,364.27
Appraised Property Value $70,100,408.00
Total Investments as a % of Appraisal 58.21%
Number of Mortgage Investments Outstanding 50
Average Investment $312,859.81
Average Investment as a % of Net Assets 2.13%
Largest Investment Outstanding 1,450,000.00
Largest Investment as a % of Net Assets 9.86%
Loans as a Percentage of Total Mortgage Investments
First Trust Deeds 41.84%
Second Trust Deeds 56.24%
Third Trust Deeds 1.92%
-----------------
Total 100.00%
Mortgage Investments by
Type of Property Amount Percent
Owner Occupied Homes $1,808,920.97 11.56%
Non-Owner Occupied Homes 2,288,035.93 14.63%
Apartments 2,521,515.06 16.12%
Commercial 9,024,518.31 57.69%
------------------ ------------
Total $15,642,990.27 100.00%
<PAGE>
The following is a distribution of Mortgage Investments outstanding as of
December 31, 1996 by Counties.
County Total Percent
Mortgage Investments
San Mateo $3,259,389.91 20.84%
San Francisco 3,218,843.55 20.58%
Santa Clara 3,024,309.66 19.33%
Stanislaus 1,496,312.75 9.56%
San Joaquin 1,171,192.57 7.49%
Marin 1,128,849.46 7.22%
Contra Costa 624,343.77 3.99%
Santa Barbara 416,828.99 2.66%
Alameda 396,587.00 2.53%
San Luis Obispo 300,000.00 1.92%
Fresno 129,384.67 0.83%
Mendocino 125,000.00 0.80%
El Dorado 118,810.72 0.76%
Sonoma 88,732.76 0.57%
Tuoloume 87,507.78 0.56%
Sacramento 56,896.68 0.36%
------------------------ -----------
Total $15,642,990.27 100.00%
Statement of Condition of Mortgage Investments
Number of Mortgage Investments in Foreclosure 1
<PAGE>
Item 3 - Legal Proceedings
In the normal course of business, the Partnership may become involved in various
types of legal proceedings such as assignment of rents, bankruptcy proceedings,
appointment of receivers, unlawful detainers, judicial foreclosure, etc., to
enforce the provisions of the deeds of trust, collect the debt owed under the
promissory notes, or to protect/ recoup its investment from the real property
secured by the deeds of trust. None of these actions would typically be of any
material importance. As of the date hereof, the Partnership is not involved in
any legal proceedings other than those that would be considered part of the
normal course of business.
Item 4 - Submission of matters to vote of Security Holders (Partners).
No matters have been submitted to a vote of the Partnership.
Part II
Item 5 - Market for the Registrants Units and Related Partnership Matters.
300,000 units at $100 each (minimum 20 units) are being offered (150,000 units
were previously offered and sold) through broker-dealer member firms of the
National Association of Securities Dealers on abest efforts basis (as
indicated in Part I item 1). Investors have the option of withdrawing earnings
on a monthly, quarterly, or annual basis or reinvesting and compounding the
earnings. Limited Partners may withdraw from the Partnership in accordance with
the terms of the Partnership Agreement subject to possible early withdrawal
penalties. There is no established public trading market.
A description of the Partnership units, transfer restrictions and withdrawal
provisions is more fully described under the section entitled Description of
Units and summary of Limited Partnership Agreement, pages 67 through 75 of the
Prospectus, a part of the referenced Registration Statement, which is
incorporated by reference.
Item 6 - Selected Financial Data
Redwood Mortgage Investors VIII began operations in April 1993. Financial
results for years 1984 to 1995 for prior partnerships are incorporated by
reference to the Prospectus (S-11) dated December 4, 1996, Table III pages 104
through 138.
<PAGE>
Financial condition and results of operation for the Partnership for three years
to December 31, 1996 were:
<TABLE>
Balance Sheet
Assets
<CAPTION>
December 31,
------------------------------------------------------
1996 1995 1994
-------------- ------------- --------------
<S> <C> <C> <C>
Cash $664.434 $380,318 $397,176
Accounts Receivable:
Mortgage investments secured by Deeds of Trust 15,642,990 12,047,252 6,484,707
Accrued interest and other fees 196,530 113,301 75,345
Advances on Mortgage Investments 8,679 8,431 1,053
Other receivables - Unsecured 75,334 71,316 0
Less allowance for losses (117,803) (39,152) (13,120)
Investment in Limited Liability Corporation 191,139 0 0
Real estate owned, net 66,991 0 0
Organization cost net of amortization 4,375 6,875 9,375
Prepaid Expenses 20,720 17,718 0
Due from General Partners/Related Companies 311 3,049 0
-------------- ------------- --------------
$16,753,700 $12,609,108 $6,954,536
-------------- ------------- --------------
Liabilities and Partners Capital
December 31,
-----------------------------------------------------
1996 1995 1994
------------- ------------- -------------
Liabilities:
<S> <C> <C> <C>
Deferred interest $217,480 $0 $0
Note payable - Bank 1,500,000 1,910,000 0
Accounts payable 20,625 4,010 0
Subscriptions to partnership in applicant status 310,937 0 189,300
-------------- ------------- -------------
$2,049,042 $1,914,010 $189,300
-------------- ------------- -------------
Partners Capital
Limited partners subject to redemption 14,693,293 10,687,031 6,759,865
General Partners 11,365 8,067 5,371
-------------- ------------- -------------
$14,704,658 $10,695,098 $6,765,236
-------------- ------------- -------------
$16,753,700 $12,609,108 $6,954,536
============== ============= =============
</TABLE>
<PAGE>
<TABLE>
Statement of Income
<CAPTION>
<S> <C> <C> <C>
Gross revenue $1,726,635 $1,050,236 $497,673
Expenses 493,110 194,495 73,361
--------------- ------------ -----------
Income before interest credited to Partners in applicant 1,233,525 855,741 424,312
status
Interest credited to Partners in applicant status 2,618 18,908 14,443
--------------- ------------ --- -----------
Net Income $1,230,907 $836,833 $409,869
=============== ============ ===========
Net income to General Partners (1%) $12,309 $8,368 $4,099
=============== ============ ===========
Net Income to Limited Partners (99%) $1,218,598 $828,465 $405,770
=============== ============ ===========
Net Income per $1,000 invested by Limited Partners for
entire period (annualized)
- where income is reinvested and compounded $84 $83 $81
=============== ============ ===========
- where partner receives income in monthly $81 $80 $79
distributions
=============== ============ ===========
<FN>
The financial results for the year ending December 31, 1994, reflects net income
of $409,869 which is an annualized yield of approximately 8.16% based on the
average amount invested during the year. Annualized yield for 1995 was 8.33%,
and for 1996 was 8.39%. An average annualized yield since inception through
December 31, 1996, was 8.36%.
</FN>
</TABLE>
<PAGE>
Item II
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On December 31, 1996, the Partnership was in the offering stage of its second
offering, and contributed capital totalled $15,242,954 (Limited Partners). Of
this amount, $310,937 remained in applicant status. The Partnership has sought
and received approval of an additional offering of $30,000,000 from the
Securities and Exchange Commission, the State of California and the NASD,
effective on December 4, 1996. Accordingly, the Partnership had approval of an
aggregate offering of $45,000,000 in Units of $100 each.
At December 31, 1996, the Partnerships Mortgage Investments outstanding totalled
$15,642,990. The primary reason for an increase in Mortgage Investments
Outstanding to $6,484,707, $12,047,252 and $15,642,990 was the additional
capital admitted to the Partnership through sale of Limited Partnership Units
and subsequent admittance of Partners Capital of $4,508,824, $3,834,799 and
$3,863,536, and through the reinvestment of earnings by partners who have
elected to reinvest earnings of $205,607, $439,492 and $683,695 for the years
ended December 31, 1994, December 31, 1995 and December 31, 1996 respectively
and to a lesser extent, from the line of credit. The effect of more outstanding
Mortgage Investments raised the interest on Mortgage Investments for the years
ended 1994, 1995 and 1996 to $480,110, $1,031,029 and $1,718,208 respectively.
Interest rates on Mortgage Investments ranged from 10.00% to 14.50%. The
Partnership began funding Mortgage Investments on April 14, 1993 and as of
December 31, 1996, distributed earnings at an average annualized yield of 8.36%.
Currently, mortgage interest rates have decreased a little from those prevalent
at the inception of the Partnership. New loans will be originated at these lower
interest rates. The result is to reduce the average return across the entire
Mortgage Investment portfolio held by the Partnership. In the future, interest
rates likely will change from their current levels. The General Partners cannot
at this time predict at what levels interest rates will be in the future.
Although the rates charged by the Partnership are influenced by the level of
interest rates in the market, the General Partners do not anticipate that rates
charged by the Partnership to its borrowers will change significantly from the
beginning of 1997 over the next 12 months. Based upon the rates payable in
connection with the existing Mortgage Investments, the current and anticipated
interest rates to be charged by the Partnership and the General Partners
experience, the General Partners anticipate that the annualized yield will range
between eight & nine percent (8% - 9%).
During 1994, the Partnership did not have a credit line; therefore Interest on
Note Payable-Bank was -0-. The Partnership established a line of credit with a
commercial bank secured by its Mortgage Investments and has increased the limit
from $3,000,000 to $5,000,000. For the years ended 1995 and 1996 Interest on
Note Payable-Bank was $25,889 and $188,635 respectively. The primary reason for
this increase was that the Partnership did not have access to the credit
facility until September, 1995. Therefore, the usage of the credit line in 1995
was limited to the last quarter of the calendar year. Currently, it has borrowed
$1,500,000 at an interest rate of prime + 1/2%. This facility could increase as
the Partnerships capital increases. This added source of funds will help in
maximizing the Partnership yield by allowing the Partnership to minimize the
amount of funds in lower yield investment accounts when appropriate Mortgage
Investments are not currently available because the mortgage investments made by
the Partnership bear interest at a rate in excess of the rate payable to the
bank which extended the line of credit. As a result, once the principal and
interest is paid to the bank, the amount to be retained by the Partnership will
be greater than without the use of the line of credit. As of December 31, 1996,
the balance remained at $1,500,000 and in accordance with the line of credit,
the Partnership paid all accrued interest as of that date.
The Partnerships income and expenses, accruals and delinquencies are within the
normal range of the General Partners expectations, based upon their experience
in managing similar Partnerships over the last nineteen years. Borrowers
foreclosures, as set forth under Results of Operations, are a normal aspect of
Partnership operations and the General Partners anticipate that they will not
have a material effect on liquidity. Cash is constantly being generated from
interest earnings, late charges, pre-payment penalties, amortization of
principal and pay-off on Mortgage Investments. Currently, cash flow exceeds
Partnership expenses and earnings payout requirements. As mortgage investment
opportunities become available, excess cash and available funds are invested in
new mortgage investments.
<PAGE>
The General Partners are regularly reviewing the Mortgage Investments
portfolio, examining the status of delinquencies, the underlying collateral
securing these properties, borrowers payment records, etc.. Data on the local
real estate market and on the national and local economy are studied. Based upon
this information and other data, loss reserves are increased or decreased.
Currently loss reserves are $117,803 which the General Partners consider
adequate. Because of the number of variables involved, the magnitude of the
swings possible and the General Partners inability to control many of these
factors, actual results may and do sometimes differ significantly from estimates
made by the General Partners.
Its now clear the Northern California recession reached bottom in 1993. Since
then, the California economy has been improving, slowly at first, but now, more
vigorously. This improvement is reflective in increasing property values, in job
growth, personal income growth, etc., which all translates into more loan
activity. Which of course, is healthy for our lending activity.
At the time of subscription to the Partnership, Limited Partners make an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound earnings in their capital account. For the years
ended December 31, 1995 and December 31, 1996 the Partnership made distributions
of earnings to Limited Partners after allocation of syndication costs of,
$303,477 and $418,380 respectively. Distribution of Earnings to Limited Partners
after allocation of syndication costs for the years ended December 31, 1995 and
December 31, 1996 to Limited Partners capital accounts and not withdrawn was
$439,942 and $683,695 respectively. As of December 31, 1995 and December 31,
1996 Limited Partners electing to withdraw earnings represented 40% and 34% of
the Limited Partners outstanding capital accounts.
The Partnership also allows the Limited Partners to withdraw their capital
account subject to certain limitations (see liquidation provisions of
Partnership Agreement). For the years ended December 31, 1995 and December 31,
1996, $5,640 and $146,755 were liquidated subject to the 10% penalty for early
withdrawal. These withdrawals are within the normally anticipated range that the
General Partners would expect in their experience in this and other
Partnerships. The General Partners would expect in their experience in this and
other Partnership. The General Partners expect that a small percentage of
Limited Partners will elect to liquidate their capital accounts over one year
with a 10% early withdrawal penalty. In originally conceiving the Partnership,
the General Partners wanted to provide Limited Partners needing their capital
returned a degree of liquidity. Generally, Limited Partners electing to withdraw
over one year need to liquidate investment to raise cash. The trend we are
experiencing in withdrawals by Limited Partners electing a one year liquidation
program represents a small percentage of Limited Partner capital as of December
31, 1995 and December 31, 1996 respectively and is expected by the General
Partners to commonly occur at these levels.
Additionally, for the years ended December 31, 1995 and December 31,1996 $0
and $0 were liquidated by Limited Partners who have elected a liquidation
program over a period of five years or longer. Once the initial five year hold
period has passed the General Partners expect to see an increase in liquidations
due to the ability of Limited Partners to withdraw without penalty. This ability
to withdraw after five years by Limited Partners has the effect of providing
Limited Partner liquidity which the General Partners then expect a portion of
the Limited Partners to avail themselves of. This has the anticipated effect of
the partnership growing, primarily through reinvestment of earnings in years one
through five. The General Partners expect to see increasing numbers of Limited
Partner withdrawals in years five through eleven, at which time the bulk of
those Limited Partners who have sought withdrawal have been liquidated. After
year eleven, the gross figures generally should subside and the Partnership
capital again tends to increase.
<PAGE>
Item 8 - Financial Statements and Supplementary Data
Redwood Mortgage Investors VIII, a California Limited Partnership's list of
Financial Statements and Financial Statement schedules:
A-Financial Statements
The following financial statements of Redwood Mortgage Investors VIII are
included in Item 8:
- Independent Auditors Report,
- Balance Sheets - December 31, 1996, and December 31, 1995,
- Statements of Income for the three years ended December 31, 1996.
- Statements of Partners Capital for the three years ended December 31, 1996
- Statements of Cash Flows for the three years ended December 31, 1996.
- Notes to Financial Statements - December 31, 1996.
B-Financial Statement Schedules
The following financial statement schedules of Redwood Mortgage Inventors
VIII are included in Item 8.
- Schedule VIII - Valuation of Qualifying Accounts,
- Schedule II, - Amounts receivable from related parties and
underwriters, promoters, and employees other
than related parties
- Schedule XII - Mortgage Investments on real estate.
- Schedule IX - Short Term Borrowings.
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1996
(With Auditors Report Thereon)
<PAGE>
PARODI & CROPPER
CERTIFIED PUBLIC ACCOUNTANTS
3658 Mount Diablo Blvd., Suite #205
Lafayette CA 94549
(510) 284-3590
INDEPENDENT AUDITORS REPORT
THE PARTNERS
REDWOOD MORTGAGE INVESTORS VIII
We have audited the financial statements and related schedules of REDWOOD
MORTGAGE INVESTORS VIII (A California Limited Partnership) listed in Item 8 on
form 10-K including balance sheets as of December 31, 1996 and 1995 and the
statements of income, changes in partners capital and cash flows for the three
years ended December 31, 1996. These financial statements are the responsibility
of the Partnerships management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of REDWOOD MORTGAGE INVESTORS
VIII as of December 31, 1996 and 1995, and the results of its operations and
cash flows for the three years ended December 31, 1996, in conformity with
generally accepted accounting principles. Further, it is our opinion that the
schedules referred to above present fairly the information set forth therein in
compliance with the applicable accounting regulations of the Securities and
Exchange Commission.
As explained in notes 2 (k) and 11 to the financial statements, the
formation loan receivable from Redwood Mortgage has been reclassified as a
reduction in Partners Capital until collections are received. There was no
effect on net income.
/S/ A. Bruce Cropper
PARODI & CROPPER
Lafayette, California
February 28, 1997
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Cash $664,434 $380,318
--------------- ---------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 15,642,990 12,047,252
Accrued Interest on Mortgage Investments 196,530 113,301
Advances on Mortgage Investments 8,679 8,431
Accounts receivables, unsecured 75,334 71,316
--------------- ---------------
15,923,533 12,240,300
Less allowance for doubtful accounts 117,803 39,152
--------------- ---------------
15,805,730 12,201,148
--------------- ---------------
Real Estate owned, acquired through foreclosure,
held for sale 66,991 0
Investment in limited liability corporation, at cost which
approximates market 191,139 0
Organization costs, less accumulated amortization of $8,125
and $5,625, respectively 4,375 6,875
Due from related companies 311 3,049
Prepaid expense-deferred loan fee 20,720 17,718
--------------- ---------------
$16,753,700 $12,609,108
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
LIABILITIES AND PARTNERS CAPITAL
<CAPTION>
Liabilities:
<S> <C> <C>
Accounts payable and accrued expenses $20,625 $4,010
Note payable - bank line of credit 1,500,000 1,910,000
Deferred interest income 217,480 0
Subscriptions to partnership in applicant status 310,937 0
--------------- ---------------
2,049,042 1,914,010
Partners Capital $17,827,406 $13,384,337
=============== ===============
Partners Capital:
Limited partners capital, subject to redemption (note 4E):
Net of unallocated syndication costs of $414,190 and
$322,677 for 1996 and 1995, respectively:
and formation loan receivable of $1,073,706 and $775,229
for 1996 and 1995, respectively 14,693,293 10,687,031
General Partners Capital, net of unallocated syndication
costs
of $4184 and $3,258 for 1996 and 1995 respectively 11,365 8,067
--------------- ---------------
Total Partners Capital 14,704,658 10,695,098
--------------- ---------------
Total Liabilities and Partners Capital $16,753,700 $12,609,108
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994
------------- -------------- --------------
Revenues:
<S> <C> <C> <C>
Interest on Mortgage Investments $1,718,208 $1,031,029 $480,110
Interest on bank deposits 4,083 13,120 15,739
Late charges 3,847 3,876 1,704
Miscellaneous 497 2,211 120
------------- -------------- --------------
1,726,635 1,050,236 497,673
Expenses:
Mortgage servicing fees 155,912 85,456 29,127
Interest on note payable - bank 188,638 25,889 0
Amortization of loan origination fees 11,999 2,531 0
Provision for doubtful accounts and losses on real estate
acquired through foreclosure 55,383 26,032 13,120
Asset management fee - General Partner 17,053 11,587 5,906
Amortization of organization costs 2,500 2,500 2,500
Clerical costs through Redwood Mortgage 38,799 22,769 10,664
Professional services 17,687 16,178 10,244
Printing, supplies and postage 1,192 92 917
Other 3,947 1,461 883
------------- -------------- --------------
493,110 194,495 73,361
Income before interest credited to partners in applicant 1,233,525 855,741 424,312
status
Interest credited to partners in applicant status 2,618 18,908 14,443
------------- -------------- --------------
Net Income $1,230,907 $836,833 $409,869
============= ============== ==============
Net income: To General Partners(1%) $12,309 $8,368 $4,099
To Limited Partners (99%) 1,218,598 828,465 405,770
============= ============== ==============
Total - net income $1,230,907 $836,833 $409,869
============= ============== ==============
Net income per $1,000 invested by Limited
Partners for entire period:
- -where income is reinvested and compounded $ 84 $ 83 $ 81
============= ============== ==============
- -where partner receives income in monthly distributions $ 81 $ 80 $ 79
============= ============== ==============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
PARTNERS CAPITAL
--------------------------------------------------------------
LIMITED PARTNERS CAPITAL
--------------------------------------------------------------
Capital
Partners In Account Unallocated Formation
Applicant Limited Syndication Loan
Status Partners Costs Receivable Total
-------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1993 $128,772 $2,809,535 $(188,439) $(205,954) $2,415,142
Contributions of Application 4,560,683 0 0 0 0
Formation loan increases 0 0 0 (319,302) (319,302)
Interest credited to partners in 14,443 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn (5,774) 0 0 0 0
Transfers to Partners capital (4,508,824) 4,504,282 0 0 4,504,282
Net Income 0 405,770 0 0 405,770
Syndication costs incurred 0 0 (80,213) 0 (80,213)
Allocation of syndication costs 0 (34,349) 34,349 0 0
Partners withdrawals 0 (165,814) 0 0 (165,814)
-------------- ------------ ------------- ------------ ------------
Balances at December 31, 1994 189,300 7,519,424 (234,303) (525,256) 6,759,865
Contributions of Application 3,634,264 0 0 (250,373) (250,373)
Formation loan increases 0 0 0 0 0
Interest credited to partners in 18,908 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn (7,673) 0 0 0 0
Transfers to Partners capital (3,834,799) 3,831,211 0 0 3,831,211
Net Income 0 828,465 0 0 828,465
Syndication costs incurred 0 0 (173,581) 0 (173,581)
Allocation of syndication costs 0 (85,045) 85,045 0 0
Partners withdrawals 0 (308,554) 0 0 (308,554)
Early withdrawal penalties 0 (564) 162 400 (2)
-------------- ------------ ------------- ------------ ------------
Balances at December 31, 1995 0 11,784,937 (322,677) (775,229) 10,687,031
Contributions on Application 4,172,718 0 0 0 0
Formation loan increases 0 0 0 (314,996) (314,996)
Formation loan payments 0 0 0 8,961 8,961
Interest credited to partners in 2,618 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn (863) 0 0 0 0
Transfers to Partners capital (3,863,536) 3,859,312 0 0 3,859,312
Net Income 0 1,218,598 0 0 1,218,598
Syndication costs incurred 0 0 (212,542) 0 (212,542)
Allocation of syndication costs 0 (116,523) 116,523 0 0
Partners withdrawals 0 (553,027) 0 0 (553,027)
Early withdrawal penalties 0 (12,108) 4,506 7,558 (44)
-------------- ------------ ------------- ------------ ------------
Balances at December 31, 1996 $310,937 $16,181,189 $(414,190) $(1,073,706) $14,693,293
============== ============ ============= ============ ============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
PARTNERS CAPITAL
------------------------------------------------------------------------------
GENERAL PARTNERS CAPITAL
----------------------------------------------------------
Capital Unallocated Total
Account Syndication Total Partners
General Costs Capital
Partners
---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Balances at December 31, 1993 $2,887 $(1,903) $984 $2,416,126
Contributions of Application 0 0 0 0
Formation loan increases 0 0 0 (319,302)
Interest credited to partners in 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn 0 0 0 0
Transfers to Partners capital 4,542 0 4,542 4,508,824
Net Income 4,099 0 4,099 409,869
Syndication costs incurred 0 (810) (810) (81,023)
Allocation of syndication costs (347) 347 0 0
Partners withdrawals (3,444) 0 (3,444) (169,258)
---------------- ----------------- ----------------- ---------------
Balances at December 31, 1994 7,737 (2,366) 5,371 6,765,236
Contributions of Application 0 0 0 0
Formation loan increases 0 0 0 (250,373)
Interest credited to partners in 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn 0 0 0 0
Transfers to Partners capital 3,588 0 3,588 3,834,799
Net Income 8,368 0 8,368 836,833
Syndication costs incurred 0 (1,753) (1,753) (175,334)
Allocation of syndication costs (859) 859 0 0
Partners withdrawals (7,509) 0 (7,509) (316,063)
Early withdrawal penalties 0 2 2 0
---------------- ----------------- ----------------- ---------------
Balances at December 31, 1995 11,325 (3,258) 8,067 10,695,098
Contributions on Application 0 0 0 0
Formation loan increases 0 0 0 (314,996)
Formation loan payments 8,961
Interest credited to partners in 0 0 0 0
applicant status
Upon admission to partnership:
Interest withdrawn 0 0 0 0
Transfers to Partners capital 4,224 0 4,224 3,863,536
Net Income 12,309 0 12,309 1,230,907
Syndication costs incurred 0 (2,147) (2,147) (214,689)
Allocation of syndication costs (1,177) 1,177 0 0
Partners withdrawals (11,132) 0 (11,132) (564,159)
Early withdrawal penalties 0 44 44 0
---------------- ----------------- ----------------- ---------------
Balances at December 31, 1996 $15,549 $(4,184) $11,365 $14,704,658
================ ================= ================= ===============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
---------------------------------------------------
1996 1995 1994
-------------- ------------- -------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $1,230,907 $836,833 $409,869
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of organization costs 2,500 2,500 2,500
Provision for doubtful accounts. 78,651 26,032 13,120
Provision for losses (gains) on real estate held for sale (23,268) 0 0
Increase in accounts payable 16,615 4,010 0
(Increase) in accrued interest & advances (83,477) (45,334) (63,008)
(Increase) decrease in amount due from related companies 2,738 (3,049) 2,493
(Increase) in deferred loan fee (3,002) (17,718) 0
(Increase) in deferred interest income 217,480 0 0
-------------- ------------- -------------
Net cash provided by operating activities 1,439,144 803,274 364,974
Cash flows from investing activities:
Principal collected on Mortgage Investments 9,019,190 1,508,190 1,641,847
Mortgage Investments made (13,148,944) (7,133,221) (5,789,880)
Disposition of real estate held for sale 299,154 0 0
Accounts receivables, unsecured (4,018) (8,830 0
--------------- ------------- -------------
Net cash used in investing activities (3,834,618) (5,633,861) (4,148,033)
--------------- ------------- -------------
Cash flows from financing activities
Increase (decrease) in note payable-bank (410,000) 1,910,000 0
Contributions by partner applicants 4,172,718 3,634,264 4,560,683
Interest credited to partners in applicant status 2,618 18,908 14,443
Interest withdrawn by partners in applicant status (863) (7,673) (5,774)
Partners withdrawals (564,159) (316,063) (169,258)
Syndication costs incurred (214,689) (175,334) (81,023)
Formation loan increases (314,996) (250,373) (319,302)
Formation loan collections 8,961 0 0
--------------- ------------- -------------
Net cash provided by financing activities 2,679,590 4,813,729 3,999,769
--------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents 284,116 (16,858) 216,710
Cash - beginning of period 380,318 397,176 180,466
--------------- ------------- -------------
Cash - end of period $664,434 $380,318 $397,176
=============== ============= =============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND GENERAL
Redwood Mortgage Investors VIII, (the Partnership) is a California Limited
Partnership, of which the General Partners are D. Russell Burwell, Michael R.
Burwell and Gymno Corporation, a California corporation owned and operated by
the individual General Partners. The partnership was organized to engage in
business as a mortgage lender for the primary purpose of making loans secured by
Deeds of Trust on California real estate. Mortgage Investments are being
arranged and serviced by Redwood Home Loan Co. dba Redwood Mortgage, an
affiliate of the General Partners. At December 31, 1996, the Partnership was in
the offering stage, wherein contributed capital totalled $15,242,954 in limited
partner contributions of an approved aggregate offering of $45,000,000, in units
of $100 each (152,429). Of this amount, $310,937 remained in applicant status.
A minimum of 2,500 units ($250,000) and a maximum of 150,000 units
($15,000,000) were initially offered through qualified broker-dealers. This
initial offering was closed in October, 1996. In December 1996, the Partnership
commenced a second offering of an additional 300,000 Units ($30,000,000) of
which the total of $310,937 was in applicant status at December 31, 1996. As
Mortgage Investments are identified, partners are transferred from applicant
status to admitted partners participating in Mortgage Investment operations.
Each months income is distributed to partners based upon their proportionate
share of partners capital. Some partners have elected to withdraw income on a
monthly, quarterly or annual basis.
A. Sales Commissions - Formation Loan Sales commissions are not paid
directly by the Partnership out of the offering proceeds. Instead, the
Partnership will loan to Redwood Mortgage, an affiliate of the General Partners,
amounts to pay all sales commissions and amounts payable in connection with
unsolicited orders. This loan is referred to as the Formation Loan. It is
unsecured and non-interest bearing.
The Formation Loan relating to the initial $15,000,000 offering totalled
$1,074,840, which was 7.2% of limited partners contributions of $14,932,017
(under the limit of 9.1% relative to the initial offering). It is to be repaid,
without interest, in ten annual installments of principal, which must commence
on January 1, following the year the initial offering closes, which was in 1996.
The Formation Loan relating to the second offering ($30,000,000) totalled
$15,384 at December 31, 1996, which was 4.9% of the limited partners
contributions of $310,937. Sales commissions range from 0% (units sold by
General Partners) to 9% of gross proceeds. The Partnership anticipates that the
sales commissions will approximate 7.6% based on the assumption that 65% of
investors will reinvest earnings, thus generating 9% commissions. The principal
balance of the Formation Loan will increase as additional sales of units are
made each year. The amount of the annual installment payment to be made by
Redwood Mortgage, during the offering stage, will be determined at annual
installments of one-tenth of the principal balance of the Formation Loan as of
December 31 of each year. Such payment shall be due and payable by December 31
of the following year with the first such payment to be made by December 31,
1997. Upon completion of the offering, the balance will be repaid in ten equal
annual installments.
<PAGE>
The following summarizes Formation Loan transactions to December 31, 1996:
<TABLE>
Initial Subsequent Total
Offering of Offering of
$15,000,000 $30,000,000
--------------- --------------- ---------------
<CAPTION>
<S> <C> <C> <C>
Limited Partner contributions $14,932,017 $310,937 $15,242,954
=============== =============== ===============
Formation Loan made $1,074,840 15,384 1,090,224
Payments to date (8,960) 0 (8,960)
Early withdrawal penalties applied (7,558) 0 (7,558)
--------------- --------------- ---------------
Balance December 31, 1996 $1,058,322 $15,384 $1,073,706
=============== =============== ===============
Percent loaned of Partners contributions 7.2% 4.9% 7.2%
=============== =============== ===============
</TABLE>
The formation loan, which is receivable from Redwood Mortgage, an affiliate
of the General Partners, has been deducted from Limited Partners Capital in the
balance sheet. As amounts are collected from Redwood Mortgage, the deduction
from capital will be reduced (see note 11).
B. Other Organizational and Offering Expenses Organizational and offering
expenses, other than sales commissions, (including printing costs, attorney and
accountant fees, registration and filing fees and other costs), will be paid by
the Partnership.
Through December 31, 1996, organization costs of $12,500 and syndication
costs of $670,610 had been incurred by the Partnership with the following
distribution:
<TABLE>
Syndication Costs
--------------------------------------------
Offering
----------------------------
Initial Subsequent Organization
15,000,000 30,000,000 Total Costs Total
----------- ----------- ----------- --------- ----------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Costs incurred $569,865 100,745 670,610 12,500 683,110
Early withdrawal penalties (4,714) 0 (4,714) 0 (4,714)
applied
Allocated and amortized to (247,522) 0 (247,522) (8,125) (255,647)
date
----------- ---- ----------- --- ----------- ---- --------- ---- ----------
December 31, 1996 balance $317,629 100,745 418,374 4,375 422,749
=========== ==== =========== === =========== ==== ========= ==== ==========
</TABLE>
Organization and syndication costs attributable to the initial offering
($15,000,000) were limited to the lesser of 10% of the gross proceeds or
$600,000 with any excess being paid by the General Partners. Applicable gross
proceeds were $14,932,017. Related expenditures totalled $582,365 ($569,865
syndication costs plus $12,500 organization expense) or 3.90%.
As of December 31, 1996, syndication costs attributable to the subsequent
offering ($30,000,000) totalled $100,745, with the costs of the offering
document being greater at the initial stages. The syndication costs payable by
the Partnership are estimated to be $1,200,000 if the maximum is sold (4% of
$30,000,000). The General Partners will pay any syndication expenses (excluding
selling commissions) in excess of ten percent of the gross proceeds or
$1,200,000.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A Accrual Basis
Revenues and expenses are accounted for on the accrual basis of accounting
wherein income is recognized as earned and expenses are recognized as incurred.
Once a loan is categorized as impaired, interest is no longer accrued thereon.
B. Management Estimates
In preparing the financial statements, management is required to make
estimates based on the information available that affect the reported amounts of
assets and liabilities as of the balance sheet date and revenues and expenses
for the related periods. Such estimates relate principally to the determination
of the allowance for doubtful accounts, including the valuation of impaired
mortgage investments, and the valuation of real estate acquired through
foreclosure. Actual results could differ significantly from these estimates.
C. Mortgage Investments, Secured by Deeds of Trust
The Partnership has both the intent and ability to hold the mortgage
investments to maturity, i.e., held for long-term investment. They are therefore
valued at cost for financial statement purposes with interest thereon being
accrued by the simple interest method.
Financial Accounting Standards Board Statements (SFAS) 114 and 118
(effective January 1, 1995) provide that if the probable ultimate recovery of
the carrying amount of a mortgage investment, with due consideration for the
fair value of collateral, is less than the recorded investment and related
amounts due and the impairment is considered to be other than temporary, the
carrying amount of the investment (cost) shall be reduced to the present value
of future cash flows. The adoption of these statements did not have a material
effect on the financial statements of the Partnership because that was the
valuation method previously used on impaired loans.
At December 31, 1996, 1995, and 1994, there were no mortgage investments
categorized as impaired by the Partnership. Had there been a computed amount for
the reduction in carrying values of impaired loans, the reduction would have
been included in the allowance for doubtful accounts.
As presented in Note 10 to the financial statements the average mortgage
investment to appraised value of security at the time the losses were
consummated was 58.21%. When a loan is valued for impairment purposes, an
updating is made in the valuation of collateral security. However, such a low
loan to value ratio has the tendency to minimize reductions for impairment.
D. Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents
include interest bearing and non-interest bearing bank deposits.
E. Real Estate Owned, Held for Sale
Real Estate owned, held for sale, includes real estate acquired through
foreclosure and is stated at the lower of the recorded investment in the
property, net of any senior indebtedness, or at the propertys estimated fair
value, less estimated costs to sell. At December 31, 1996, there was one such
piece of property with costs totaling $71,991 less a reduction of $5,000 to
arrive at the net fair value of $66,991.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Effective January 1, 1996, the Partnership adopted the provisions of
Statement No 121 (SFAS 121) of the Financial Accounting Standards Board,
Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to
be disposed of. The adoption of SFAS 121 did not have a material impact on the
Partnerships financial position because the methods indicated were essentially
those previously used by the Partnership.
F. Investment in Limited Liability Corporation (see Note 7)
The Partnership carries its investment in limited liability Corporation as
investment in real estate, which is at the lower of costs or fair value, less
estimated costs to sell.
G. Income Taxes
No provision for Federal and State income taxes is made in the financial
statements since income taxes are the obligation of the partners if and when
income taxes apply.
H. Organization and Syndication Costs
The Partnership bears its own organization and syndication costs (other
than certain sales commissions and fees described above) including legal and
accounting expenses, printing costs, selling expenses, and filing fees.
Organizational costs have been capitalized and will be amortized over a five
year period. Syndication costs are charged against partners capital and are
being allocated to individual partners consistent with the partnership
agreement.
I. Allowance for Doubtful Accounts
Mortgage Investments and the related accrued interest, fees, and advances
are analyzed on a continuous basis for recoverability. Delinquencies are
identified and followed as part of the Mortgage Investment system. A provision
is made for doubtful accounts to adjust the allowance for doubtful accounts to
an amount considered by management to be adequate, with due consideration to
collateral values, to provide for unrecoverable accounts receivable, including
impaired mortgage investments, unspecified mortgage investments, accrued
interest and advances on mortgage investments, and other accounts receivable
(unsecured). The composition of the allowance for doubtful accounts as of
December 31, 1996, and 1995 was as follows:
<TABLE>
December 31,
----------------------------------
1996 1995
---- -----
<S> <C> <C>
Impaired mortgage investments $0 $0
Unspecified mortgage investments 72,803 9,152
Amounts receivable, unsecured 45,000 30,000
---------- -----------
$117,803 $39,152
=============== ===============
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
J. Net Income Per $1,000 Invested
Amounts reflected in the statements of income as net income per $1,000
invested by Limited Partners for the entire period are actual amounts allocated
to Limited Partners who have their investment throughout the period and have
elected to either leave their earnings to compound or have elected to receive
monthly distributions of their net income. Individual income is allocated each
month based on the Limited Partners pro rata share of Partners Capital.
Because the net income percentage varies from month to month, amounts per $1,000
will vary for those individuals who made or withdrew investments during the
period, or select other options. However, the net income per $1,000 average
invested has approximated those reflected for those whose investments and
options have remained constant.
K. Reclassifications and Changes in Presentation
Certain reclassifications not affecting net income have been made to prior
year amounts to conform to the current year presentation. In addition, the
formation loan previously categorized as an asset has been deducted from Limited
Partners Capital until collected from Redwood Mortgage, an affiliate of the
General Partners (see note 11).
NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES
The following are commissions and/or fees which are paid to the General
Partners and/or related parties.
A. Mortgage Brokerage Commissions For fees in connection with the review,
selection, evaluation, negotiation and extension of Partnership Mortgage
Investments in an amount up to 12% of the Mortgage Investments until 6 months
after the termination date of the offering. Thereafter, mortgage brokerage
commissions will be limited to an amount not to exceed 4% of the total
Partnership assets per year. The mortgage brokerage commissions are paid by the
borrowers, and thus, not an expense of the partnership.
B. Mortgage Servicing Fees Monthly mortgage servicing fees of up to 1/8 of
1% (1.5% annual) of the unpaid principal, is paid to Redwood Mortgage, or such
lesser amount as is reasonable and customary in the geographic area where the
property securing the mortgage is located. Mortgage servicing fees of $155,912,
$85,456 and $29,127 were incurred for years 1996, 1995 and 1994 respectively.
C. Asset Management Fee The General Partners will receive a monthly fees
for managing the Partnerships Mortgage Investment portfolio and operations equal
to 1/32 of 1% of the net asset value (3/8 of 1% annual). Management fees of
$17,053, $11,587 and $5,906 were incurred for years 1996, 1995 and 1994,
respectively.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996
D. Other Fees The Partnership Agreement
provides for other fees such as reconveyance, mortgage assumption and mortgage
extension fees. Such fees are incurred by the borrowers and are paid to parties
related to the General Partners.
E. Income and Losses All income will be credited or charged to partners in
relation to their respective partnership interests. The partnership interest of
the General Partners (combined) shall be a total of 1%.
F. Operating Expenses The General Partners or their affiliate (Redwood
Mortgage) are reimbursed by the Partnership for all operating expenses actually
incurred by them on behalf of the Partnership, including without limitation,
out-of-pocket general and administration expenses of the Partnership, accounting
and audit fees, legal fees and expenses, postage and preparation of reports to
Limited Partners. Such reimbursements are reflected as expenses in the Statement
of Income.
The General Partners collectively or severally were to contribute 1/10 of
1% in cash contributions as proceeds from the offering are admitted to limited
Partner capital. As of December 31, 1996 a General Partner, GYMNO Corporation,
had contributed $15,241, as capital in accordance with Section 4.02(a) of the
Partnership Agreement.
NOTE 4 - OTHER PARTNERSHIP PROVISIONS
A. Applicant Status Subscription funds received from purchasers of units
are not admitted to the Partnership until appropriate lending opportunities are
available. During the period prior to the time of admission, which is
anticipated to be between 1-120 days in most cases, purchasers subscriptions
will remain irrevocable and will earn interest at money market rates, which are
lower than the anticipated return on the Partnerships Mortgage Investment
portfolio.
During the periods ending December 31, 1996, 1995, and 1994, interest
totalling $2,618, $18,908 and $14,443 respectively, was credited to partners in
applicant status. As Mortgage Investments were made and partners were
transferred to regular status to begin sharing in income from Mortgage
Investments secured by deeds of trust, the interest credited was either paid to
the investors or transferred to partners capital along with the original
investment.
B. Term of the Partnership The term of the Partnership is approximately 40
years, unless sooner terminated as provided. The provisions provide for no
capital withdrawal for the first five years, subject to the penalty provision
set forth in (E) below. Thereafter, investors have the right to withdraw over a
five-year period, or longer.
C. Election to Receive Monthly, Quarterly or Annual Distributions Upon
subscriptions, investors elect either to receive monthly, quarterly or annual
distributions of earnings allocations, or to allow earnings to compound. Subject
to certain limitations, an investor may subsequently change his election.
D. Profits and Losses Profits and losses are allocated among the Limited
Partners according to their respective capital accounts after 1% is allocated to
the General Partners.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
E. Liquidity, Capital Withdrawals and Early Withdrawals There are
substantial restrictions on transferability of Units and accordingly an
investment in the Partnership is illiquid. Limited Partners have no right to
withdraw from the partnership or to obtain the return of their capital account
for at least one year from the date of purchase of Units. In order to provide a
certain degree of liquidity to the Limited Partners after the one-year period,
Limited Partners may withdraw all or part of their Capital Accounts from the
Partnership in four quarterly installments beginning on the last day of the
calendar quarter following the quarter in which the notice of withdrawal is
given, subject to a 10% early withdrawal penalty. The 10% penalty is applicable
to the amount withdrawn as stated in the Notice of Withdrawal and will be
deducted from the Capital Account and the balance distributed in four quarterly
installments. Withdrawal after the one-year holding period and before the
five-year holding period will be permitted only upon the terms set forth in the
Partnership Agreement.
Limited Partners will also have the right after five years from the date of
purchase of the Units to withdraw from the partnership on an installment basis,
generally over a five year period in twenty (20) quarterly installments or
longer. Once this five year period expires, no penalty will be imposed if
withdrawal is made in twenty (20) quarterly installments or longer.
Notwithstanding the five-year (or longer) withdrawal period, the General
partners will liquidate all or part of a Limited Partners capital account in
four quarterly installments beginning on the last day of the calendar quarter
following the quarter in which the notice of withdrawal is given, subject to a
10% early withdrawal penalty applicable to any sums withdrawn prior to the time
when such sums could have been withdrawn pursuant to the five-year (or longer)
withdrawal period.
The Partnership will not establish a reserve from which to fund withdrawals
and, accordingly, the Partnerships capacity to return a Limited Partners
capital is restricted to the availability of Partnership cash flow.
F. Guaranteed Interest Rate For Offering Period During the period
commencing with the day a Limited Partner is admitted to the Partnership and
ending 3 months after the offering termination date, the General partners shall
guarantee an earnings rate equal to the greater of actual earnings from mortgage
operations or 2% above The Weighted Average cost of Funds Index for the Eleventh
District Savings Institutions (Savings & Loan & Thrift Institutions) as computed
by the Federal Home Loan Bank of San Francisco on a monthly basis, up to a
maximum interest rate of 12%. To date, actual realization exceeded the
guaranteed amount for each month.
NOTE 5- LEGAL PROCEEDINGS
The Partnership is not a defendant in any legal actions.
NOTE 6 - NOTE PAYABLE - BANK LINE OF CREDIT
The Partnership has a bank line of credit of up to $5,000,000 at .5% over
prime secured by its Mortgage Investment portfolio. The note payable balances
were $1,500,000 and $1,910,000 at December 31, 1996, and 1995, respectively, and
the interest rate was 8.75% at December 31, 1996, (8.25% prime plus .50%).
NOTE 7 - INVESTMENT IN LIMITED LIABILITY CORPORATION As a result of
acquiring real property through foreclosure, the Partnership has contributed its
interest (principally land) to a Limited Liability Corporation which will
complete the construction and sell the property. The Partnership expects to
realize a profit from the venture.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 8 - INCOME TAXES
The following reflects a reconciliation from net assets (Partners Capital)
reflected in the financial statements to the tax basis of those net assets:
<TABLE>
December 31,
------------------------------------------
1996 1995
----------------- ---------------
<S> <C> <C>
Net Assets - Partners Capital per financial statements $14,704,658 $10,695,098
Unamortized syndication costs 418,374 325,935
Allowance for doubtful accounts 117,803 39,152
----------------- ---------------
Formation loans receivable 1,073,706 775,229
----------------- ---------------
Net assets tax basis $16,314,541 $11,835,414
================= ===============
</TABLE>
In 1996, approximately 55% of taxable income was allocated to tax exempt
organizations, i.e., retirement plans. Such plans do not have to file income tax
returns unless their unrelated business income exceeds $1,000. Applicable
amounts become taxable when distribution is made to participants.
NOTE 9 - FAIR VALUE OF FINANCIAL INVESTMENTS
The following methods and assumptions were used to estimate the fair value
of financial instruments:
(a) Cash and Cash Equivalents The carrying amount equals fair value. All
amounts, including interest bearing, are subject to immediate withdrawal.
(b) The carrying value of mortgage investments (see note 2(c) is
$15,642,990. The fair value of these investments of $16,451,970 is estimated
based upon projected cash flows discounted at the estimated current interest
rates at which similar loans would be made. The applicable amount of the
allowance for doubtful accounts along with accrued interest and advances related
thereto should also be considered in evaluating the fair value versus the
carrying value.
<PAGE>
NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At
December 31, 1996, there were 50 Mortgage Investments outstanding with the
following characteristics:
<TABLE>
<S> <C>
Number of Mortgage Investments outstanding 50
Total Mortgage Investments outstanding $15,642,990
Average Mortgage Investment outstanding $312,860
Average Mortgage Investment as percent of total 2.00%
Average Mortgage Investment as percent of Partners Capital 2.13%
Largest Mortgage Investment outstanding $1,450,000
Largest Mortgage Investment as percent of total 9.27%
Largest Mortgage Investment as percent of Partners Capital 9.86%
Number of counties where security is located (all California) 16
Largest percentage of Mortgage Investments in one county 20.84%
Average Mortgage Investment to appraised value of security at time loan was consummated 58.21%
Number of Mortgage Investments in foreclosure status 1
Amount of Mortgage Investments in foreclosure $118,811
The following categories of mortgage investments are pertinent at December
31, 1996 and 1995:
December 31,
------------------------------------------
1996 1995
----------------- ---------------
<S> <C> <C>
First Trust Deeds $6,545,779 $4,996,887
Second Trust Deeds 8,797,211 7,050,365
Third Trust Deeds 300,000 0
----------------- ---------------
Total mortgage investments 15,642,990 12,047,252
Prior liens due other lenders 25,161,374 26,965,234
----------------- ---------------
Total debt $40,804,364 $39,012,486
================= ===============
Appraised property value at time of loan $70,100,408 $61,347,449
================= ===============
Total investments as a percent of appraisals 58.21% 63.59%
================= ===============
Investments by Type of Property
Owner occupied homes $1,808,921 $2,300,576
Non-Owner occupied homes 2,288,036 1,844,507
Apartments 2,521,515 2,664,963
Commercial 9,024,518 5,237,206
================= ===============
$15,642,990 $12,047,252
================= ===============
<FN>
The interest rates on the mortgage investments range from 10.00% to 14.50%
at December 31, 1996.
</FN>
</TABLE>
<PAGE>
Scheduled maturity dates of mortgage investments as of December 31, 1996
are as follows:
Year Ending
December 31,
-------------------
1997 $2,381,155
1998 3,268,418
1999 2,427,585
2000 2,377,963
2001 2,865,997
Thereafter 2,321,872
===============
$15,642,990
===============
The scheduled maturities for 1997 include approximately $468,000 in loans
which are past maturity at December 31, 1996. Interest payment on these loans
are current..
One loan in the principal amount of $118,811 had interest paid through
September 1, 1996, and is in foreclosure. That loan which is the only loan
categorized as delinquent, is not considered impaired because the underlying
security is sufficient to cover amount due.
The cash balance at December 31, 1996 of $664,434 was in one bank with
interest bearing balances totalling $605,871. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $564,434.
NOTE 11 - CHANGE IN PRESENTATION
The formation loan receivable from Redwood Mortgage, an affiliate of the
General Partners, has been categorized as a reduction in Limited Partners
Capital, the source of the funds. It was previously reflected as an asset. As
payments are received, or early withdrawal penalties realized, the formation
loan balance will be reduced and restored to Limited Partners Capital. The
total of the formation loan outstanding was $1,073,706 and $775,229 at December
31, 1996 and 1995, respectively.
In addition, Limited Partners Capital and General Partners Capital are
reflected separately in the Balance Sheet, whereas they were previously
reflected separately in the Statement of Changes in Partners Capital.
<PAGE>
SCHEDULE II AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES. Rule 12-03
<TABLE>
Column A Column B Column C Column D Column E
Name of Debtor Balance Beginning Additions Deductions Balance at end of period
of period 12/31/95 (1) (2) (1) (2)
Amounts Amounts Current Not Current
collected written off 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Redwood Mortgage $775,229 $314,996 $8,960 $7,559 $0.00 $1,073,706
<FN>
The above schedule represents the formation loan borrowed by Redwood
Mortgage from the Partnership to pay for the selling commissions on units. It is
an unsecured loan and will not bear interest. It will be repaid to the
Partnership in ten annual installments as described in Note 1 A to the financial
statements. The amount written off represents the proportionate amount of early
withdrawal penalties allocated to the formation loan as provided in the
prospectus.
</FN>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
REDWOOD MORTGAGE INVESTORS VIII
Column A Column B Column C Column D Column E
Description Balance Additions Deductions Balance at
------------------------------------
beginning of (1) (2) Describe End of Period
of period Charged to Charged (credited)
Costs & Expenses to Other accounts -
Describe
<CAPTION>
Year Ended
12/31/96
Deducted from
Asset accounts:
Allowance for
<S> <C> <C> <C> <C> <C>
Doubtful accts $39,152 $78,651 $0 0.00 $117,803
Cumulative
write-down of
Real Estate
held for sale
(REO) $0 (23,268) (28,268) 0 5,000
- ------------------ ----------------- ------------------- ------------------- ---------------- ----------------
Totals $39,152 $55,383 $(28,268)(a) $0 $122,803
<FN>
(a) represents gain on disposition of REO
</FN>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE XII
MORTGAGE INVESTMENTS ON REAL ESTATE.
RULE 12-29 MORTGAGE LOANS ON REAL ESTATE
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J
Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic
Rate Maturity Payment Liens of amount of amount of Lien County
Date Terms Mortgage Mortgage Mortgage Location
Investments Investments Investments
(original subject to
amount) Delinq.
Principal
or Interest
========= ========= ========== ========== ========== ============ ============ ============ ========== ================
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Apts 14.500% 01/01/94 1,570.84 164,805 130,000.00 130,000.0 0.00 2nd Mtg San Mateo
Comm. 13.750% 10/01/96 458.33 0.00 40,000.00 40,000.00 0.00 1st Mtg Santa Clara
Comm 12.500% 04/05/08 1,235.89 0.00 100,273.36 87,507.78 0.00 1st Mtg Tuolume
Res. 12.000% 05/01/98 721.32 0.00 70,125.00 69,084.03 0.00 1st Mtg San Francisco
Res. 12.000% 07/01/98 1,337.20 37,236 130,000.00 118,810.72 118,810.72 2nd Mtg El Dorado
Comm 12.000% 09/01/03 848.61 0.00 82,500.00 81,345.94 0.00 1st Mtg Alameda
Comm 11.000% 09/01/05 846.15 846,019 67,500.00 56,896.68 0.00 2nd Mtg Sacramento
Comm 12.000% 11/01/98 2,057.23 5,635 200,000.00 74,423.44 0.00 2nd Mtg San Francisco
Comm 10.000% 12/01/98 1,689.33 0.00 192,500.00 190,039.09 0.00 1st Mtg Alameda
Comm 12.000% 02/01/99 5,131.13 0.00 468,000.00 503,457.45 0.00 1st Mtg Santa Clara
Res. 10.500% 03/01/99 402.49 0.00 44,000.00 43,334.36 0.00 1st Mtg Santa Clara
Res 10.250% 04/01/97 797.79 63,244 93,400.00 88,732.76 0.00 2nd Mtg Sonoma
Comm 12.000% 06/01/04 4,476.20 0.00 425,000.00 416,828.99 0.00 1st Mtg Santa Barbara
Comm 10.750% 06/01/97 2,508.33 0.00 280,000.00 280,000.00 0.00 1st Mtg San Mateo
Apts 11.500% 11/01/99 1,980.58 713,917 200,000.00 198,204.19 0.00 2nd Mtg San Joaquin
Res. 11.000% 12/01/03 3,185.37 1,060,486 325,000.00 319,746.90 0.00 2nd Mtg San Francisco
Res 11.000% 04/01/99 4,999.70 775,649 525,000.00 520,343.77 0.00 2nd Mtg Contra Costa
Apts 11.500% 04/01/05 1,928.65 0.00 400,000.00 194,758.33 0.00 1st Mtg San Francisco
Res. 11.500% 04/01/00 792.24 259,886 80,000.00 79,439.15 0.00 2nd Mtg San Mateo
Comm 11.875% 05/01/05 2,088.00 0.00 200,000.00 197,605.96 0.00 1st Mtg San Francisco
Comm 12.500% 07/01/00 1,387.44 0.00 130,000.00 129,384.67 0.00 1st Mtg Fresno
Res 11.750% 07/01/00 802.36 74,551 66,000.00 65,201.97 0.00 2nd Mtg Alameda
Apts 12.000% 08/01/00 6,951.28 3,033,304 660,000.00 653,937.66 0.00 2nd Mtg San Joaquin
Res 11.000% 09/01/05 688.76 0.00 50,000.00 46,312.75 0.00 1st Mtg Stanislaus
Comm 12.000% 11/30/98 7,500.00 3,000,000 750,000.00 750,000.00 0.00 2nd Mtg San Mateo
Comm 12.000% 10/01/96 600.00 290,711 60,000.00 60,000.00 0.00 2nd Mtg Alameda
Res 12.250% 10/01/96 2,476.18 395,597 250,000.00 238,000.00 0.00 2nd Mtg San Francisco
Comm. 12.000% 12/31/99 10,500.00 5,691,116 1,050,000.00 1,050,000.00 0.00 2nd Mtg Santa Clara
Res. 12.000% 04/30/97 7,078.21 0.00 770,000.00 687,851.60 0.00 1st Mtg Marin
Apts 11.875% 01/01/01 4,330.76 0.00 425,000.00 423,554.55 0.00 1st Mtg San Mateo
Res 11.875% 01/01/01 2,292.76 0.00 225,000.00 224,234.71 0.00 1st Mtg San Mateo
Comm 12.500% 01/01/06 3,415.23 0.00 320,000.00 319,050.72 0.00 1st Mtg San Joaquin
Comm 11.750% 02/01/99 1,018.34 0.00 104,000.00 104,000.00 0.00 1st Mtg Contra Costa
Comm 11.875% 02/01/06 4,541.40 0.00 435,000.00 432,524.66 0.00 1st Mtg San Mateo
Comm 12.000% 03/01/01 789.92 0.00 75,000.00 74,582.34 0.00 1st Mtg San Mateo
Comm 12.000% 12/31/01 9,792.73 5,492,794 955,000.00 979,272.93 0.00 2nd Mtg Santa Clara
Land 12.500% 04/01/98 3,125.00 574,089 300,000.00 300,000.00 0.00 3rd Mtg San Luis Obispo
Comm 12.000% 03/15/98 4,000.00 300,000 400,000.00 400,000.00 0.00 2nd Mtg Santa Clara
Res 11.500% 04/01/06 1,039.81 0.00 105,000.00 104,706.97 0.00 1st Mtg San Francisco
Res 11.500% 02/27/97 1,197.92 150,301 125,000.00 125,000.00 0.00 2nd Mtg San Francisco
Res 11.750% 11/01/97 2,904.47 0.00 325,000.00 290,572.52 0.00 1st Mtg San Mateo
Res 12.000% 12/01/97 4,552.97 0.00 910,000.00 440,997.86 0.00 1st Mtg Marin
Res 12.000% 08/01/01 1,250.00 0.00 125,000.00 125,000.00 0.00 1st Mtg Mendocino
Apts 12.000% 02/01/98 9,106.84 883,750 1,427,500.00 921,060.33 0.00 2nd Mtg San Francisco
Res 11.500% 09/01/11 759.33 0.00 65,000.00 64,586.83 0.00 1st Mtg San Mateo
Res 11.000% 08/30/98 4,079.17 372,417 445,000.00 445,000.00 0.00 2nd Mtg San Mateo
Comm 12.000% 03/01/01 684.60 74,754 65,000.00 64,895.15 0.00 2nd Mtg San Mateo
</TABLE>
<PAGE>
<TABLE>
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J
Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic
Rate Maturity Payment Liens of amount of amount of Lien County
Date Terms Mortgage Mortgage Mortgage Location
Investments Investments Investments
(original subject to
amount) Delinq.
Principal
or Interest
========= ========== ========= ========== ========== ============ ============ ============ ========== ===============
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comm 11.750% 11/01/01 10,089.29 0.00 975,000.00 974,457.59 0.00 1st Mtg San Francisco
Comm 12.000% 02/01/99 84.98 20,800 18,000.00 8,244.92 0.00 2nd Mtg Santa Clara
Land 12.000% 01/01/00 14,500 880,313 1,450,000.00 1,450,000.00 0.00 2nd Mtg Stanislaus
---------- ---------- ------------ ------------ ------------
Total $160,595.13 $25,161,374.00 $17,113,798.36 $15,642,990.27 $118,810.72
<FN>
Notes:
None of the above loans is considered impaired. Therefore, none of them has
been written down, although the allowance for doubtful accounts includes $72,803
relating to the above loans and accrued interest receivable and advances related
thereto.
Amounts reflected in column G (carrying amount of mortgage investments)
represents both cost and the tax basis of the loans.
</FN>
</TABLE>
<PAGE>
<TABLE>
Schedule XII
Reconciliation of carrying amount (cost) of Mortgage Investments at close
of periods
<CAPTION>
Year ended December 31,
----------------------------------------------------------
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance at beginning of year $12,047,252 $6,484,707 $2,336,674
--------------- --------------- ---------------
Additions during period:
New Mortgage Investments 13,148,944 7,133,221 5,789,880
Other 0 0 0
--------------- --------------- ---------------
Total Additions 13,148,944 7,133,221 5,789,880
--------------- --------------- ---------------
Deductions during period:
Collections of principal 9,019,190 1,508,190 1,641,847
Foreclosures 534,016 0 0
Cost of Mortgage Investments sold 0 0 0
Amortization of Premium 0 0 0
Other 0 62,486 0
--------------- --------------- ---------------
Total Deductions 9,553,206 1,570,676 1,641,847
--------------- --------------- ---------------
Balance at close of year $15,642,990 $12,047,252 $6,484,707
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
SCHEDULE IX
SHORT TERM BORROWINGS
REDWOOD MORTGAGE INVESTORS VIII - RULE 12-10
<CAPTION>
Column A Column B Column C Column D Column E Column F
Category of Aggregate Balance at End Weighted Average Maximum Amount Average Amount Weighted Average
Short-Term Borrowings of Period Interest Rate Outstanding Outstanding Interest Rate
during
During the Period During the Period the period
======================= ================ =================== ===================== =================== ===================
<S> <C> <C> <C> <C> <C>
Year-Ended 12/31/96 $1,500,000 9.15% $3,000,000 $2,071,270 9.15%
</TABLE>
<PAGE>
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
The Partnership has neither changed its accountants nor does it have any
disagreement on any matter of accounting principles, practices or financial
statement disclosures.
Part III
Item 10 - Directors and Executive Officers of the Registrant
The Partnership has no Officers or Directors. Rather, the activities of the
Partnership are managed by the three General Partners of which two individuals
are D. Russell Burwell and Michael R. Burwell. The third General Partner is
Gymno Corporation, a California corporation, formed in 1986. The Burwells are
the two shareholders of Gymno Corporation, a California corporation, on an equal
(50-50) basis.
<PAGE>
Item 11 - Executive Compensation
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
As indicated above in Item 10, the Partnership has no officers or
directors. The Partnership is managed by the General Partners. There are certain
fees and other items paid to management and related parties.
A more complete description of management compensation is found in the
Prospectus, pages 6-7, under the section Compensation of the General Partners
and the Affiliates, which is incorporated by reference. Such compensation is
summarized below.
The following compensation has been paid to the General Partners and
Affiliates for services rendered during the year ended December 31, 1996. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus.
Entity Receiving Compensation Description of Compensation Amount
and Services Rendered
- ------------------------------------- ------------------------------------------
I. Redwood Mortgage. Mortgage Servicing Fee for servicing
Mortgage Investments...............$155,912
General Partners &/or Affiliate Asset Management Fee for
managing assets................... $17,053
General Partners 1% interest in profits............ $12,309
Less allowance for syndication costs 1,177
------
$11,132
II. FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED BY COMPANIES RELATED TO
THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE
PARTNERSHIP)
Redwood Mortgage Mortgage Brokerage Commissions for services in
connection with the review, selection,
evaluation, negotiation, and extension of the
Mortgage Investments paid by the borrowers and
not by the Partnership $389,043
Redwood Mortgage Processing and Escrow Fees for services in
connection with notary, document preparation,
credit investigation, and escrow fees payable by
the borrowers and not by the Partnership $10,333
II. IN ADDITION, THE GENERAL PARTNERS AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME. $38,799
<PAGE>
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The General Partners are to own a combined total of 1% of the Partnership
including a 1% portion of income and losses.
Item 13 - Certain Relationships and Related Transactions
Refer to footnote 3 of the notes to financial statements in Part II item 8
which describes related party fees and data.
Also refer to the Prospectus dated December 4, 1996, (incorporated herein
by reference) on pages 4-5 Compensation of General Partners and Affiliates and
page 5 Conflicts of Interest.
Part IV
Item 14 - Exhibits, Financial Statements and Schedules, and Reports on Form 8-K.
A. Documents filed as part of this report are incorporated:
1. In Part II, Item 8 under A - Financial Statements.
2. The Financial Statement Schedules are listed in Part II -
Item 8 under B - Financial Statement Schedules.
<PAGE>
3. Exhibits.
Exhibit No. Description of Exhibits
- ----------------- --------------------------
3.1 Limited Partnership Agreement
3.2 Form of Certificate of Limited Partnership Interest
3.3 Certificate of Limited Partnership
10.1 Escrow Agreement
10.2 Servicing Agreement
10.3 (a) Form of Note secured by Deed of Trust for
Construction Loans which provides for principal and
interest payments.
(b) Form of Note secured by Deed of Trust for
Commercial and Multi-Family loans which provides for
principal and interest payments
(c) Form of Note secured by Deed of Trust for
Commercial and Multi-Family loans which provides for
interest only payments
(d) Form of Note secured by Deed of Trust for Single
Family Residential Loans which provides for interest
and principal payments.
(e) Form of Note secured by Deed of Trust for Single
Family Residential loans which provides for interest
only payments.
10.4 (a) Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing to accompany
Exhibits 10.3 (a), and (c).
(b) Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing to accompany
Exhibit 10.3 (b).
(c) Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing to accompany
Exhibit 10.3 (c).
10.5 Promissory Note for Formation Loan
10.6 Agreement to Seek a Lender
24.1 Consent of Parodi & Cropper
24.2 Consent of Stephen C. Ryan & Associates
All of these exhibits were previously filed as the exhibits to Registrants
Statement on Form S-11 (Registration No. 33-49946 and incorporated by reference
herein).
B. Reports of Form 8-K.
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
C. See A (3) above.
D. See A (2) above. Additional reference is made to the prospectus
(S-11 filed as part of the Registration Statement) to pages 94 through
97 and revised Prospectus dated December 4, 1996, for financial data
related to Gymno Corporation, a General Partner.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on the 19th day of March,
1997.
REDWOOD MORTGAGE INVESTORS VIII
By: /S/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, General Partner
By: /S/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, General Partner
By: Gymno Corporation, General Partner
By: /S/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, President
By: /S/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacity indicated on the 19th day of March, 1997.
Signature Title Date
/S/ D. Russell Burwell
- ----------------------
D. Russell Burwell General Partner March 19, 1997
/S/ Michael R. Burwell
- ----------------------
Michael R. Burwell General Partner March 19, 1997
/S/ D. Russell Burwell
- -----------------------
D. Russell Burwell President of Gymno Corporation, March 19, 1997
(Principal Executive Officer);
Director of Gymno Corporation
/S/ Michael R. Burwell
- -----------------------
Michael R. Burwell Secretary/Treasurer of Gymno March 19, 1997
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 664434
<SECURITIES> 0
<RECEIVABLES> 15923533
<ALLOWANCES> 117803
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16753700
<CURRENT-LIABILITIES> 0
<BONDS> 0
2049042
0
<COMMON> 0
<OTHER-SE> 14704658
<TOTAL-LIABILITY-AND-EQUITY> 16753700
<SALES> 0
<TOTAL-REVENUES> 1726635
<CGS> 0
<TOTAL-COSTS> 249089
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 55383
<INTEREST-EXPENSE> 191256
<INCOME-PRETAX> 1230907
<INCOME-TAX> 0
<INCOME-CONTINUING> 1230907
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1230907
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
