<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q
                                   ---------


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

For the quarterly period ended June 30, 1998

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

For the transition period from ____________ to ____________

Commission File Number 0-10430


                         DE ANZA PROPERTIES - XII, LTD.
             (Exact name of registrant as specified in its charter)

          CALIFORNIA                                        95-3601367
(State or other jurisdiction of                        (IRS Employer Iden-
 incorporation or organization)                         tification Number)

                      9171 WILSHIRE BOULEVARD, SUITE 627
                       BEVERLY HILLS, CALIFORNIA  90210
         (Address of principal executive offices, including zip code)

                                 (310) 550-1111
            (The registrant's telephone number, including area code)


                                   NO CHANGE

              (Former name, former address and former fiscal year,
                         if changed since last report)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during 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  X   NO 
                                    ---     ---

     Pursuant to the Securities Exchange Act of 1934 Release 15502 and Rule
240.0-3(b) (17 CFR 240.0-3(b)), the pages of this document have been numbered
sequentially.  The total number of pages contained herein is 16.

                                       1
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

PART I.             FINANCIAL INFORMATION
------              ---------------------
<TABLE>
<CAPTION>
ITEM 1.      FINANCIAL STATEMENTS
<C>          <S>                                                    <C>
               Balance Sheets                                        3
 
               Statements of Income                                  5
 
               Statements of Changes in Partners'
                 Capital (Deficit)                                   7
 
               Statements of Cash Flows                              8
 
               Notes to Financial Statements                        10
 

ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS                                             14


PART II.     OTHER INFORMATION                                      15
-------      -----------------                                    
</TABLE> 

                                       2
<PAGE>
 
PART I.             FINANCIAL INFORMATION

ITEM 1.             FINANCIAL STATEMENTS


                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                                 Balance Sheets
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                             June 30,          December 31,
                                                               1998                1997
                                                             --------          ------------
<S>                                                          <C>               <C>
                                         ASSETS

CASH AND CASH EQUIVALENTS  Note 1                            $705,689          $   876,533

ACCOUNTS RECEIVABLE                                             1,481                2,289

PREPAID EXPENSES                                                   13               38,312
                                                             --------          -----------
                                                              707,183              917,134
                                                             --------          -----------

NOTES RECEIVABLE - Note 5                                      84,760              217,248
                                                             --------          -----------

PROPERTY AND EQUIPMENT - Notes 2 and 5
    Land                                                           -             1,179,884
    Land improvements                                              -             3,560,450
    Buildings and improvements                                     -             9,914,217
    Furniture and equipment                                        -               484,385
                                                             --------          -----------
                                                                   -            15,138,936

  Less accumulated depreciation                                    -             7,270,812
                                                             --------          -----------
                                                                   -             7,868,124
                                                             --------          -----------

OTHER ASSETS
  Loan costs - less accumulated amortization
    of $26,497 at December 31, 1997 -
    Note 2                                                         -                70,837
  Prepaid sale costs  Note 5                                       -                45,754
  Other                                                         1,000                1,000
                                                             --------          -----------
                                                                1,000              117,591
                                                             --------          -----------

                                                             $792,943          $ 9,120,097
                                                             ========          ===========
</TABLE>

See accompanying notes to financial statements.

                                       3
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                           Balance Sheets (Continued)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                             June 30,          December 31,
                                                               1998                1997
                                                             --------          ------------
<S>                                                          <C>               <C>
                  LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

ACCOUNTS PAYABLE AND ACCRUED EXPENSES -
  including $3,626 and $8,768 due to
  related party at June 30, 1998
  and December 31, 1997, respectively                        $ 13,300          $   124,114

DEPOSITS AND ADVANCE RENTALS                                        -               43,885

SECURED NOTE PAYABLE - Note 2                                       -            4,170,474
                                                             --------          -----------
                                                               13,300            4,338,473
                                                             --------          -----------

PARTNERS' CAPITAL (DEFICIT)
  General partners                                                  -           (1,629,110)
  Limited partners, 22,719 units issued
    and outstanding                                           779,643            6,410,734
                                                             --------          -----------
                                                              779,643            4,781,624
                                                             --------          -----------

                                                             $792,943          $ 9,120,097
                                                             ========          ===========
</TABLE>

See accompanying notes to financial statements.

                                       4
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                              Statements of Income
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                            Six Months           Six Months
                                                              Ended                Ended
                                                             June 30,             June 30,
                                                               1998                 1997
                                                            ----------           ----------
<S>                                                        <C>                   <C>
INCOME
  Rent                                                     $    84,626           $1,134,559
  Interest and dividends                                        81,733               25,240
  Other                                                          6,362               91,895
  Gain on sale of property and equipment                    11,748,033               76,998
                                                           -----------           ----------
                                                            11,920,754            1,328,692
                                                           -----------           ----------

EXPENSES
  Depreciation and amortization                                 70,937              105,317
  Salaries - including $6,716 and $7,612
    paid to related party in 1998 and
    1997, respectively - Note 3                                 56,858               96,785
  Professional fees and services -
    including $8,883 and $29,057 paid
    to related party in 1998 and 1997,
    respectively - Note 3                                       55,938               98,616
  Other                                                         20,513               44,344
  Interest                                                      11,349              153,491
  Maintenance, repairs and supplies                             11,307              127,246
  Insurance                                                     10,736               29,838
  Payroll taxes and employee benefits                            9,467               21,349
  Utilities                                                      6,339               88,507
  Real estate taxes                                              5,629               77,806
                                                           -----------           ----------
                                                               259,073              843,299
                                                           -----------           ----------

NET INCOME                                                 $11,661,681           $  485,393
                                                           ===========           ==========

NET INCOME
  GENERAL PARTNERS                                         $ 1,629,110           $    4,854
                                                           ===========           ==========
  LIMITED PARTNERS                                         $10,032,571           $  480,539
                                                           ===========           ==========

INCOME PER 1% GENERAL
  PARTNER INTEREST - Note 4                                $ 16,291.10           $    48.54
                                                           ===========           ==========

INCOME PER LIMITED
  PARTNERSHIP UNIT - Note 4                                $    441.59           $    21.15
                                                           ===========           ==========
</TABLE>

See accompanying notes to financial statements.

                                       5
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                              Statements of Income
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months         Three Months
                                                               Ended                Ended
                                                              June 30,             June 30,
                                                                1998                 1997
                                                            ------------         ------------
<S>                                                         <C>                  <C>
INCOME
  Rent                                                        $  1,476             $562,653
  Interest and dividends                                         7,506               12,790
  Other                                                             99               84,159
  Gain on sale of property and equipment                        91,308               76,998
                                                              --------             --------
                                                               100,389              736,600
                                                              --------             --------

EXPENSES
  Depreciation and amortization                                     50                1,813
  Salaries - including $3,461 and $3,889
    paid to related party in 1998 and
    1997, respectively - Note 3                                  3,461               49,254
  Professional fees and services -
    including $1,086 and $15,966 paid
    to related party in 1998 and 1997,
    respectively - Note 3                                        3,791               53,190
  Other                                                          6,869               28,842
  Interest                                                          -                77,008
  Maintenance, repairs and supplies                                 -                74,253
  Insurance                                                     (2,431)              14,916
  Payroll taxes and employee benefits                              272                9,901
  Utilities                                                       (171)              43,292
  Real estate taxes                                                 (7)              38,498
                                                              --------             --------
                                                                11,834              390,967
                                                              --------             --------

NET INCOME                                                    $ 88,555             $345,633
                                                              ========             ========

NET INCOME
  GENERAL PARTNERS                                            $     -              $  3,456
                                                              ========             ========
  LIMITED PARTNERS                                            $ 88,555             $342,177
                                                              ========             ========

INCOME PER 1% GENERAL
  PARTNER INTEREST - Note 4                                         -                $34.56
                                                              ========             ========

INCOME PER LIMITED
  PARTNERSHIP UNIT - Note 4                                   $   3.90             $  15.06
                                                              ========             ========
</TABLE>

See accompanying notes to financial statements.

                                       6
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

              Statements of Changes in Partners' Capital (Deficit)
                                  (Unaudited)

                   For the Six Months Ended June 30, 1998 and
                      For the Year Ended December 31, 1997

<TABLE>
<CAPTION>
                                                           General             Limited
                                         Total             Partners            Partners
                                         -----             --------            --------
<S>                                  <C>                 <C>                 <C>
BALANCE - January 1, 1997            $  3,586,232        $(1,648,564)        $  5,234,796

DISTRIBUTIONS TO PARTNERS                (750,000)                -              (750,000)

NET INCOME - for the year
  ended December 31, 1997               1,945,392             19,454            1,925,938
                                     ------------        -----------         ------------

BALANCE - December 31, 1997             4,781,624         (1,629,110)           6,410,734

DISTRIBUTIONS TO PARTNERS             (15,663,662)                -           (15,663,662)

NET INCOME - for the six
  months ended June 30,
  1998                                 11,661,681          1,629,110           10,032,571
                                     ------------        -----------         ------------

BALANCE  June 30, 1998               $    779,643                 -          $    779,643
                                     ============        ===========         ============
</TABLE>

See accompanying notes to financial statements.

                                       7
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                            Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                           Six Months             Six Months
                                                             Ended                   Ended
                                                            June 30,               June 30,
                                                              1998                   1997
                                                           ----------             ----------
<S>                                                       <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Gross rents received from real estate
    operations                                            $     46,739            $1,130,079
  Cash paid to suppliers and employees -
    including $30,892 and $38,990
    paid to related party in 1998
    and 1997, respectively                                    (234,689)             (566,762)
  Interest paid                                                (25,561)             (153,996)
  Interest and other income received                            82,504               116,973
                                                          ------------            ----------

     Net cash (used in) provided by
       operating activities                                   (131,007)              526,294
                                                          ------------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to property and equipment                           (1,716)              (81,604)
  Payments received on notes receivable                        132,488                54,535
  Sale of property and equipment                            20,107,599               100,000
  Sales and closing costs                                     (444,072)              (16,623)
                                                          ------------            ----------

     Net cash provided by
       investing activities                                 19,794,299                56,308
                                                          ------------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Distributions to partners                                (15,663,662)             (375,000)
  Principal payments on secured
    notes payable                                           (4,170,474)              (25,985)
                                                          ------------            ----------

     Net cash used in
       financing activities                                (19,834,136)             (400,985)
                                                          ------------            ----------

NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                            (170,844)              181,617

CASH AND CASH EQUIVALENTS:
  BALANCE AT BEGINNING OF PERIOD                               876,533               631,598
                                                          ------------            ----------

  BALANCE AT END OF PERIOD                                    $705,689              $813,215
                                                          ============            ==========
</TABLE>

See accompanying notes to financial statements.

                                       8
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                      Statements of Cash Flows (Continued)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          Six Months              Six Months
                                                             Ended                   Ended
                                                           June 30,                June 30,
                                                             1998                    1997
                                                          ----------              ----------
<S>                                                      <C>                      <C>
RECONCILIATION OF NET INCOME TO NET CASH
  (USED IN) PROVIDED BY OPERATING ACTIVITIES
    Net income                                           $ 11,661,681              $485,393
    Adjustments to reconcile net income
     to net cash (used in) provided by
      operating activities
        Depreciation and amortization                          70,937               105,317
        Gain on sale of property and equipment            (11,748,033)              (76,998)
    Changes in operating assets and
     liabilities
        Decrease in accounts receivable                           808                 1,313
        Decrease in prepaid expenses                           38,299                29,659
        Decrease in accounts payable and
           accrued expenses                                  (110,814)              (12,736)
        Decrease in deposits and advance
          rentals                                             (43,885)               (5,654)
                                                         ------------              --------

          Net cash (used in) provided by
            operating activities                         $   (131,007)             $526,294
                                                         ============              ========
</TABLE>

See accompanying notes to financial statements.

                                       9
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                         Notes to Financial Statements
                                  (Unaudited)

                    June 30, 1998 and December 31, 1997 and
           For the Six and Three Months Ended June 30, 1998 and 1997


NOTE 1 - BASIS OF PRESENTATION

         The accompanying financial statements have been prepared in accordance
         with generally accepted accounting principles for interim financial
         information and with the instructions to Form 10-Q and Regulation S-X.
         Accordingly, they do not include all of the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements. In the opinion of management, all adjustments
         (consisting of normal recurring accruals) have been included. Operating
         results during the six and three months ended June 30, 1998 are not
         necessarily indicative of the results that may be expected for the year
         ending December 31, 1998. For further information, refer to the
         financial statements and footnotes thereto included in the
         Partnership's annual report on Form 10-K for the year ended December
         31, 1997.

         Cash and Cash Equivalents
         -------------------------

         The Partnership invests its cash not needed for working capital in
         highly liquid short-term investments consisting primarily of money
         market funds and certificates of deposit, with original maturities
         ranging generally from one to three months. The Partnership considers
         all such items to be cash equivalents.

         Depreciation
         ------------

         Pursuant to generally accepted accounting principles the Partnership
         ceased to depreciate Warner Oaks Apartments ("Warner Oaks") from the
         time it determined to sell the property (see Note 5).
 
NOTE 2 - SECURED NOTE PAYABLE

     Secured note payable at December 31, 1997 consisted of the following:
 
              Note collateralized by a first trust
              deed, payable in monthly
              installments of $29,997, including
              interest until December 15, 1997.
              Thereafter, the monthly payment
              changes annually on each December
              15th. Interest accrues at 2.5% over
              the FHLB's 11th District Cost of
              Funds Index, not to exceed 12.9%,
              adjusted monthly. Unpaid principal
              and accrued interest are due
              November 15, 2008. The interest rate
              in effect at December 31, 1997 was
              7.44%. The note was paid on January
              14, 1998 upon the sale of Warner
              Oaks.                                          $4,170,474
                                                             ==========
 

                                       10
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                    June 30, 1998 and December 31, 1997 and
           For the Six and Three Months Ended June 30, 1998 and 1997


NOTE 3 - TRANSACTIONS WITH RELATED PARTIES

         Pursuant to a former management agreement dated October 1, 1985, as
         amended, De Anza Assets, Inc., a former affiliate of the operating
         general partner (OGP), was paid a management fee in the amount of 5% of
         the annual gross receipts from the operations of the Partnership's
         properties. The payment of this fee is subordinated to the priority
         distribution to the limited partners of 7% of their adjusted capital
         contributions each year and is noncumulative, except in the case of a
         sale, refinancing or other disposition of the Partnership's properties.
         In that case, the difference between the management fee actually paid
         and the management fee that would have been paid if it were not
         subordinated is payable out of proceeds of the sale, refinancing or
         other disposition after payment of the limited partners' priority
         return and capital contribution and the general partners' incentive
         interest. However, management fees payable subsequent to a consummated
         refinancing are not subordinated to the limited partners' priority
         return to the extent the subordination would have been caused by
         increased debt service charges. At December 31, 1996, cumulative
         accrued fees of $565,022 to De Anza Assets, Inc. were subordinated and
         included in management and condominium conversion fees payable to
         affiliate or related party. Shortly before the sale to an affiliate of
         Manufactured Home Communities, Inc. (MHC), as discussed in Note 5, De
         Anza Assets, Inc. assigned its rights to receipt of these fees to the
         Gelfand Family Trust. In December 1997, this payable was written off
         when it became apparent that it would not be paid from proceeds from
         the then pending sale of Warner Oaks Apartments under the terms of the
         partnership agreement.

         On August 18, 1994, subsequent to the sale of the Mark and the property
         management business of De Anza Group, Inc. (DAG), as discussed in Note
         5, the property management of Warner Oaks and the two remaining spaces
         at San Luis Bay was assumed by Terra Vista Management, Inc. (Terra
         Vista). Terra Vista is wholly owned by Michael D. Gelfand, president of
         the OGP and the son of Herbert M. Gelfand. Herbert M. Gelfand, together
         with Beverly Gelfand, is the sole shareholder of the OGP and an
         individual general partner. At December 31, 1996, cumulative accrued
         fees to Terra Vista of $153,500, were subordinated and included in
         management and condominium conversion fees payable to affiliate or
         related party. In December 1997, this payable was written off when it
         became apparent that it would not be paid from proceeds from the then
         pending sale of Warner Oaks Apartments under the terms of the
         partnership agreement.

         Pursuant to the partnership agreement, a condominium conversion fee
         equal to 1% of the sales price of the San Luis Bay homesites sold is
         due to DAG (see Note 5). Payment of this fee was deferred pursuant to
         the partnership agreement's requirement regarding subordination to
         payment of the limited partners' priority return and capital
         contribution, the general partners' incentive interest and deferred
         management fees. Subordinated cumulative accrued fees of $77,809 were
         included in management and condominium conversion fees payable to an
         affiliate or related party at December 31, 1996. Shortly before the
         sale to MHC, De Anza Assets, Inc. assigned its rights to receive these
         fees to the Gelfand Family Trust. In December 1997, this payable was
         written off when it became apparent that it would not be paid from
         proceeds from the then

                                       11
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                    June 30, 1998 and December 31, 1997 and
           For the Six and Three Months Ended June 30, 1998 and 1997


NOTE 3 - TRANSACTIONS WITH RELATED PARTIES (Continued)

         pending sale of Warner Oaks Apartments under the terms of the
         partnership agreement.

         In addition, Terra Vista was paid $30,992 and $38,990 during the six
         months ended June 30, 1998 and 1997, respectively, for performing
         bookkeeping, legal, regional management, computer, disposition and
         investor relations services necessary for the operation of the
         Partnership and its properties. Of the $30,992, $4,873 is attributable
         to the three months ended June 30, 1998 (compared to $17,290 paid for
         the three months ended June 30, 1997).

NOTE 4 - INCOME PER 1% GENERAL PARTNER INTEREST AND LIMITED PARTNERSHIP UNIT

         Income per limited partnership unit is computed based on the limited
         partners' share of net income as shown on the Statements of Income and
         Changes in Partners' Capital (Deficit) and the number of limited
         partnership units outstanding (22,719 units). The general partners'
         share of net income has not been included in this computation. Income
         per 1% general partner interest is computed based on the general
         partners' share of net income as shown on the Statements of Operations
         and Changes in Partners' Capital (Deficit).

NOTE 5 - SALE OF PROPERTY AND EQUIPMENT

         San Luis Bay
         ------------

         On May 2, 1989, the Partnership entered into an agreement to sell San
         Luis Bay Mobile Estates (the 162-space mobile home community in Avila
         Beach, California) to the residents for an aggregate sales price of
         $8,850,000 and, pursuant to that agreement, subdivided the property
         into condominium units in 1991. The Partnership provided purchase money
         financing for up to 80% of the individual homesite price, payable in
         monthly payments, including interest at 10%, based on a loan
         amortization schedule of 30 years, with a balloon payment of unpaid
         principal and interest due at the end of seven years. At June 30, 1998
         and December 31, 1997, respectively, the outstanding amounts due under
         such notes totaled $84,760 and $217,248. Those residents who purchased
         their homesites for cash received a 10% discount off their purchase
         price.

         The Partnership sold 160 homesites prior to 1995. On May 1, 1997, the
         Partnership sold one of the two remaining spaces at San Luis Bay for
         $100,000. Net proceeds, after commission and sale and closing costs of
         $7,112, was $92,888. On June 30, 1998, the Partnership sold the last
         remaining homesite for $107,599. Net proceeds, after sale and closing
         costs of $2,609, was $104,990.

                                       12
<PAGE>
 
                         DE ANZA PROPERTIES - XII, LTD.
                            (A Limited Partnership)

                   Notes to Financial Statements (Continued)
                                  (Unaudited)

                    June 30, 1998 and December 31, 1997 and
           For the Six and Three Months Ended June 30, 1998 and 1997


NOTE 5 - SALE OF PROPERTY AND EQUIPMENT (Continued)
 
         The Mark
         --------

         On August 18, 1994 the Partnership sold The Mark to an affiliate of
         MHC, a real estate investment trust, as part of an overall transaction
         for the sale of the related management business of DAG and other mobile
         home communities affiliated with DAG. In connection with the sale, the
         Partnership established various reserves totaling $230,097. The
         $230,097 was used to establish the following cash reserves:

<TABLE>
              <S>                                  <C>
              MHC Reserve                          $ 42,000
              General Reserve                       130,094
              Independent Committee Reserve          58,003
</TABLE>

         The MHC Reserve was required by MHC. It was released in 1995, at which
         time the gain on sale was recognized. The General Reserve and
         Independent Committee Reserve were established to fund contingent
         liabilities that may arise out of the MHC transaction. During 1996 and
         1995, $29,001 of the Independent Committee Reserve and the $42,000 MHC
         Reserve, respectively, were released and distributed to the limited
         partners as a return of original capital. During 1997, the balance of
         the reserves, $159,096, was released.

         Pursuant to the guidelines of Financial Accounting Standards No. 66,
         "Accounting for Sales of Real Estate," the Partnership deferred in 1994
         the recognition of gain on that portion of the sales proceeds,
         represented by the MHC Reserve, General Reserve and Independent
         Committee Reserve, totaling $230,097. As these reserves were released
         or expended, gain on sale was recognized. During 1996 and 1995, the
         Partnership recognized as income $29,001 attributable to the
         Independent Committee Reserve released and $42,000 attributable to the
         MHC Reserve released, respectively. During 1997, the Partnership
         recognized as income $29,001 and $130,094 attributable to the
         Independent Committee Reserve released and the General Reserve
         released, respectively.

         Warner Oaks Apartments
         ----------------------

         In March 1997, the Partnership began actively marketing the Warner Oaks
         Apartment complex. In accordance with Statement of Financial Accounting
         Standards No. 121, the Partnership ceased depreciating the assets'
         carrying value at that time. On October 15, 1997, the Partnership
         entered into a contract to sell Warner Oaks Apartments to Bay Apartment
         Communities, Inc., a Maryland Corporation, unaffiliated with the
         Partnership, for an all-cash price of $20,000,000. The sale closed on
         January 14, 1998. After payment of mortgage debt of $4,170,474,
         broker's commission of $300,000, transfer taxes of $112,000 and sales
         costs of approximately $75,217, the Partnership netted sale proceeds
         of$15,342,309. On February 19, 1998, net proceeds of $15,329,526 were
         distributed to the limited partners as a combination of gain
         distributions and return of original capital.

                                       13
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources
-------------------------------


  The Partnership's quick ratio increased to 53.1:1 from 3.9:1, including cash
  balances of $705,689 and $876,533 at June 30, 1998 and December 31, 1997,
  respectively. The increase is due to a decrease in deposits and advance
  rentals and operating payables following the sale of Warner Oaks Apartments,
  the sale of the remaining space at San Luis Bay and the receipt of balloon
  payments on notes receivable. The Partnership's cash balance is its immediate
  source of liquidity.

  On January 14, 1998, the Partnership sold Warner Oaks Apartments, as discussed
  in Note 5 to the financial statements, and expects to wind up its operations
  in 1998 and dissolve. The Warner Oaks Apartments sale and related
  distribution, sale of the one remaining space at San Luis Bay and receipt of
  the balance of some note receivables, leaves the Partnership with only three
  remaining notes receivable and cash reserves as assets. The Partnership
  expects to collect its notes receivable (all of which mature in 1998) in order
  to liquidate and terminate the Partnership in 1998. No assurance can be given,
  however, that such termination will occur. As of June 30, 1998, the amount of
  the notes receivable outstanding was approximately $84,760.

  Other than as described elsewhere, there are no known trends, demands,
  commitments, events or uncertainties which are reasonably likely to materially
  affect the Partnership's liquidity.

Results of Operations
---------------------

  The comparison of results of operations for the six and three months ended
  June 30, 1998 and 1997 is dominated by the sale of Warner Oaks Apartments.

  Rental and other income decreased 92.5% and 99.7% during the six and three
  months ended June 30, 1998 over the same periods in 1997 primarily due to the
  sale of Warner Oaks Apartments on January 14, 1998. Interest and dividend
  income increased and decreased, respectively, during the six and three months
  ended June 30, 1998 over the same periods in 1997 because interest was earned
  on sale proceeds held for a short period until their distribution.

  Expenses decreased 69.3% and 97.0% during the six and three months ended June
  30, 1998 over the same periods in 1997 primarily due to the sale of Warner
  Oaks Apartments on January 14, 1998. Additionally, according to generally
  accepted accounting principles, from the time the Partnership determined to
  sell Warner Oaks Apartments it ceased to depreciate the carrying value of the
  assets. This decrease in depreciation expense is offset in part by the write
  off of loan costs in 1998 following the repayment of mortgage debt with Warner
  Oaks Apartments sale proceeds.

  Other than as described above, there are no known trends or uncertainties
  which have had or can be reasonably expected to have a material effect on
  continuing operations.

                                       14
<PAGE>
 
PART II.  OTHER INFORMATION

ITEM NUMBER
-----------

  1. LEGAL PROCEEDINGS

     No new material legal proceedings were commenced during the three months
     ended June 30, 1998 and there are none pending.

  2. CHANGES IN SECURITIES

     None.

  3. DEFAULTS UPON SENIOR SECURITIES

     None.

  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

  5. OTHER INFORMATION

     None.

  6. EXHIBITS AND REPORTS ON FORM 8-K

     Exhibit 27 - Financial Data Schedule

                                       15
<PAGE>
 
PART II.  OTHER INFORMATION (Continued)


                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          DE ANZA PROPERTIES - XII, LTD.
                                                  (Registrant)
 

                                          By  DE ANZA CORPORATION
                                              A California Corporation
                                              Operating General Partner
 
 
Date:  August 10, 1998                    By  /s/ Michael D. Gelfand
                                              ----------------------
                                              Michael D. Gelfand
                                              President and
                                                Chief Financial Officer

                                       16