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 12-30
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 31
Part III
Item 10 - Directors and Executive Officers of the Registrant 31
Item 11 - Executive Compensation 32
Item 12 - Security Ownership of Certain Beneficial Owners and management 33
Item 13 - Certain Relationships and Related Transactions 33
Part IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. 33-34
Signatures 35
<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 XXXX 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 1.98%
Largest Investment Outstanding 1,450,000.00
Largest Investment as a % of Net Assets 9.19%
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 Loans 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.
3000,000 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 a best 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>
<TABLE>
Financial condition and results of operation for the Partnership for three
years to December 31, 1996 were:
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
Formation loan due from Redwood Mortgage ......................... 1,073,706 775,229 525,256
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
------------ ------------ ------------
$ 17,827,406 $ 13,384,337 $ 7,479,792
------------ ------------ ------------
</TABLE>
<TABLE>
Liabilities and Partners Capital
December 31,
-----------------------------------------------------
1996 1995 1994
-------------- ------------- -----------
<S> <C> <C> <C>
Liabilities:
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 ................................................................ 15,778,364 11,470,327 7,290,492
- - --------------------------------------------------------------------------------- ----------- ----------- -----------
$17,827,406 $13,384,337 $ 7,479,792
----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
Statement of Income
<S> <C> <C> <C>
Gross revenue ................................................................ $1,570,723 $ 964,780 $ 468,546
Expenses ..................................................................... 337,198 109,039 44,234
---------- ---------- ----------
Income before interest credited to Partners in applicant status .............. 1,233,525 855,741 424,312
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 distributions .................. $ 81 $ 80 $ 79
========== ========== ==========
<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 with interest rates ranging 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%).
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. 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.
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.
<PAGE>
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.
<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.
/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, at estimated net
realizable value ..................................................................... 66,991 0
Investment in limited liability corporation, at cost which
approximates market .................................................................. 191,139 0
Formation loan due from Redwood Mortgage ............................................... 1,073,706 775,229
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
----------- -----------
$17,827,406 $13,384,337
=========== ===========
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
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 ....................................................................... 15,778,364 11,470,327
----------- -----------
$17,827,406 $13,384,337
=========== ===========
<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
--------------- ------------ -------------
<S> <C> <C> <C>
Revenues:
Interest on Mortgage Investments ........................................... $1,562,296 $ 945,573 $ 450,983
Interest on bank deposits .................................................. 4,083 13,120 15,739
Late charges ............................................................... 3,847 3,876 1,704
Miscellaneous .............................................................. 497 2,211 120
---------- ---------- ----------
---------- ---------- ----------
1,570,723 964,780 468,546
---------- ---------- ----------
Expenses:
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
---------- ---------- ----------
337,198 109,039 44,234
---------- ---------- ----------
Income before interest credited to partners in applicant status .............. 1,233,525 855,741 424,312
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
--------------------------------------------------------------
PARTNERS IN UNALLOCATED
APPLICANT GENERAL LIMITED SYNDICATION
STATUS PARTNERS PARTNERS COSTS TOTAL
-------------- ------------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1993 ............ 128,772 2,887 2,809,535 (190,342) 2,622,080
Contributions on application ............. 4,560,683 0 0 0 0
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) 4,542 4,504,282 0 4,508,824
Net income ............................... 0 4,099 405,770 0 409,869
Syndication costs incurred ............... 0 0 0.00 (81,023) (81,023)
Allocation of syndication costs ......... 0 (347) (34,349) 34,696 0
Partners withdrawals ..................... 0 (3,444) (165,814) 0 (169,258)
----------- ----------- ----------- ----------- -----------
Balances at December 31, 1994 ............ 189,300 7,737 7,519,424 (236,669) 7,290,492
Contributions on application ............. 3,634,264 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) 3,588 3,831,211 0 3,834,799
Net income ............................... 0 8,368 828,465 0 836,833
Syndication costs incurred ............... 0 0 0 (175,334) (175,334)
Allocation of syndication costs .......... 0 (859) (85,045) 85,904 0
Partners withdrawals ..................... 0 (7,509) (308,554) 0 (316,063)
Early withdrawal penalties ............... 0 0 (564) 164 (400)
----------- ----------- ----------- ----------- -----------
Balances at December 31, 1995 ............ $ 0.00 11,325 11,784,937 (325,935) 11,470,327
Contributions on application ............. 4,172,718 0 0 0 0
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) 4,224 3,859,312 0 3,863,536
Net income ............................... 0 12,309 1,218,598 0 1,230,907
Syndication costs incurred ............... 0 0 0 (214,689) (214,689)
Allocation of syndication costs .......... 0 (1,177) (116,523) 117,700 0
Partners withdrawals ..................... 0 (11,132) (553,027) 0 (564,159)
Early withdrawal penalties ............... 0 0 (12,108) 4,550 (7,558)
----------- ----------- ----------- ----------- -----------
Balances at December 31, 1996 ............ 310,937 15,549 16,181,189 (418,374) 15,778,364
=========== =========== =========== =========== ===========
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VIII
(A Califonira Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
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
Increase in allowance for doubtful accounts ........................... 78,651 26,032 13,120
Increase in account 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 ........................... 1,462,412 803,274 364,974
----------- ----------- -----------
Cash flows from investing activities:
Net (increase) decrease in:
Mortgage Investments ............................................... (3,595,738) (5,562,545) (4,148,033)
Formation loan ..................................................... (298,477) (249,973) (319,302)
Accounts receivables, unsecured .................................... (4,018) (71,316) 0
Real estate acquired through foreclosure ........................... (66,991) 0 0
Investment in limited liability corporation ........................ (191,139) 0 0
----------- ----------- -----------
Net cash used in investing activities ............................... (4,156,363) (5,883,834) (4,467,335)
----------- ----------- -----------
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)
Early withdrawal penalties, net .......................................... (7,558) (400) 0
Syndication costs incurred ............................................... (214,689) (175,334) (81,023)
----------- ----------- -----------
Net cash provided by financing activities ........................... 2,978,067 5,063,702 4,319,071
----------- ----------- -----------
Net increase in 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. 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>
<TABLE>
The following summarizes Formation Loan transactions to December 31, 1996:
<CAPTION>
Initial Subsequent Total
Offering of Offering of
$15,000,000 $30,000,000
--------------- --------------- ---------------
<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>
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
----------- ----------- ------ --------- --------
<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
Revenues and expenses are accounted for on the accrual basis of accounting.
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.
When property is acquired through foreclosure, it is held for sale to
return the funds to the Mortgage Investment portfolio. Such property is recorded
at cost which includes the principal balance of the former Mortgage Investment
made by the Partnership, plus accrued interest, payments made to keep the senior
loans current, costs of obtaining title and possession, less rental income, or
at estimated net realizable value, if less. The difference between such costs
and estimated net realizable value is included in an allowance for losses and
deducted from cost in the Balance Sheet to arrive at the carrying value of such
property. ($66,991 at December 31, 1996).
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 account to adjust the allowance for doubtful accounts to an
amount considered by management to be adequate to provide for unrecoverable
accounts receivable.
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 and the valuation of real estate acquired
through foreclosure. Actual results could differ significantly from these
estimates.
No provision for Federal and State income taxes will be made in the
financial statements since income taxes are the obligation of the partners if
and when income taxes apply.
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.
NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES
The following are commissions and/or fees which will be 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, loan brokerage
commissions will be limited to an amount not to exceed 4% of the total
Partnership assets per year. The loan brokerage commissions are paid by the
borrowers, and thus, not an expense of the partnership.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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. Currently, such servicing fees are at
1/12 of 1% per month (1% annually). Amounts remitted to the Partnership and
recorded as interest on Mortgage Investments is net of such fees. In 1994,
$15,278 of the total mortgage servicing fees of $44,405 were waived by Redwood
Mortgage. In 1995, and 1996, Redwood Mortgage received the total mortgage
servicing fees earned of $85,456 and $155,912 respectively.
C. Asset Management Fee The General Partners will receive a monthly fee 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). Fees were reduced by the
General Partners from $17,718 to $5,906 in 1994, with the difference being
waived. In 1995, and 1996, fees were reduced from $34,773 to $11,587 and from
$51,158 to $17,053 respectively, with the differences being waived by the
General Partners.
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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.
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VIII
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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.
NOTE 8 - 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:
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 1.98%
Largest Mortgage Investment outstanding $1,450,000
Largest Mortgage Investment as percent of total 9.27%
Largest Mortgage Investment as percent of Partners Capital 9.19%
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 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.
<PAGE>
<TABLE>
SCHEDULE II AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES. Rule 12-03
<CAPTION>
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
<CAPTION>
Column A Column B Column C Column D Column E
Description Balance Additions Deductions Balance at
beginning of ---------------------------- Describe End of Period
period (1) (2)
Charged to Charged to
Costs & Expenses Other accounts -
Describe
Year Ended
12/31/96
Deducted from
Asset accounts:
<S> <C> <C> <C> <C> <C>
Allowance for
Doubtful accts ..................... $ 39,152 $ 55,383 $ 23,268 0.00 $117,803
</TABLE>
<PAGE>
<TABLE>
SCHEDULE XII
MORTGAGE INVESTMENTS ON REAL ESTATE.
RULE 12-29 MORTGAGE LOANS ON REAL ESTATE
<CAPTION>
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
<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
<PAGE>
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
<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
</TABLE>
<PAGE>
Schedule XII
Reconciliation of carrying amount of Mortgage Investments at close of
period (12/31/96)
Balance at beginning of period 1/01/96 $12,047,252
Additions during period:
New Mortgage Investments $13,148,944
Other 0 $13,148,944
- - -------------------------------------------------------------------------------
$25,196,196
Deduction during period:
Collections of principal $9,019,190
Foreclosures 534,016
Cost of Mortgage Investments sold 0
Amortization of Premium 0
Other 0 $9,553,206
- - -------------------------------------------------------------------------------
Balance at close of period (12/31/96) $15,642,990
-------------------
<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
Short-Term Borrowings of Period Interest Rate Outstanding Outstanding Average
During the Period During the Period Interest Rate
during 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. Loan Servicing Fee for $155,912
servicing Loans
General Partners Asset Management Fee for
&/or Affiliate managing assets ...
($34,105 waived by the General Partners) $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 Loan 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
III. 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-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 664434
<SECURITIES> 0
<RECEIVABLES> 15923533
<ALLOWANCES> 157803
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17827406
<CURRENT-LIABILITIES> 0
<BONDS> 0
2049042
0
<COMMON> 0
<OTHER-SE> 15778364
<TOTAL-LIABILITY-AND-EQUITY> 17827406
<SALES> 0
<TOTAL-REVENUES> 1570723
<CGS> 0
<TOTAL-COSTS> 93177
<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>
