FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
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: 333-24111
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 6
California 33-0745418
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626 (714)662-5565
(Address of Principal Offices) (Telephone number)
N/A
(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 ____ No X
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WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
(A California Limited Partnership)
INDEX TO FORM 10-Q
For the Quarter Ended June 30, 1997
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet, June 30, 1997 ........................................3
Notes to Balance Sheet...............................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................8
Signatures...............................................................9
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
(A Development-Stage Enterprise)
BALANCE SHEET
June 30, 1997
ASSETS
Cash $1,100
------
$1,100
------
LIABILITIES AND PARTNER'S CAPITAL
Commitments and contingencies (Note 2) Partners' capital (Note 1):
General partner $ 100
Original limited partner 1,000
-----
Total partners' equity 1,100
-----
$1,100
------
See accompanying notes to balance sheet.
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO BALANCE SHEET
June 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") was
formed pursuant to the laws of California on March 3, 1997 and has not commenced
operations. The Partnership was formed to invest primarily in other limited
partnerships which will own and operate multi-family housing complexes that will
qualify for low income housing credits.
The general partner is WNC & Associates, Inc. (the "General Partner").
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 70% of the
outstanding stock of WNC & Associates, Inc. John B. Lester, Jr. is the original
limited partner of the Partnership and owns, through the Lester Family Trust,
30% of the outstanding stock of WNC & Associates, Inc.
Allocations Under the Terms of the Partnership Agreement
The General Partner has a 1% interest in operating profits and losses,
taxable income and losses and cash available for distribution from the
Partnership. The limited partners will be allocated the remaining 99% of these
items in proportion to their respective investments.
After the limited partners have received proceeds from a sale or
refinancing equal to their capital contributions and their return on investment
(as defined in the Partnership's Agreement of Limited Partnership) and the
General Partner has received a subordinated disposition fee (as described in
Note 2 below), any additional sale or refinancing proceeds will be distributed
90% to the limited partners (in proportion to their respective investments) and
10% to the General Partner.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The Partnership is offering up to 25,000 limited partnership units at
$1,000 per unit (the "Units"). The accompanying balance sheet does not include
certain Partnership legal, accounting, and other organization and offering costs
paid and to be paid by the General Partner and/or affiliates of the General
Partner. If the minim offering amount of $1,400,000 is raised, the Partnership
will be required to reimburse the General Partner and/or its affiliates for such
fees out of the proceeds of the offering, up to certain maximum levels set forth
below. In the event the Partnership is unable to raise the minimum offering
amount, the General Partner will absorb all organization and offering costs.
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO BALANCE SHEET - (Continued)
June 30, 1997
The Units are being offered by WNC Capital Corporation, a wholly-owned
subsidiary of the General Partner.
If the minimum offering amount of $1,400,000 is raised, the Partnership
will be obligated to the General Partner or affiliates for certain acquisition,
management and other fees as set forth below:
Acquisition fees up to 7.0%, as defined, of the gross proceeds
from the sale of Units.
Reimbursement for organizational, offering, dealer-manager,
selling and acquisition expenses advanced by the General Partner or
affiliates on behalf of the Partnership. These reimbursements plus all
other organizational and offering expenses inclusive of sales
commissions and dealer-manager fees will not exceed 14.5% of the gross
proceeds. No amounts have been paid through June 30, 1997 to the
General Partner or affiliates. The estimated costs to be paid in the
event the minimum offering amount is raised are $203,000. Such amounts,
except for acquisition expenses estimated at $21,000, will be recorded
as a reduction to equity and recorded as liability.
An annual management fee equal to 0.2% of the invested assets
(defined by the Partnership's Agreement of Limited Partnership as the
sum of the Partnership's capital contributions to limited partnerships
plus its allocable percentage of the permanent financing of the limited
partnerships).
A subordinated disposition fee in an amount equal to 1% of the
sales price of real estate sold. Payment of this fee is subordinated to
the limited partners receiving distributions equal to their capital
contributions and their return on investment (as defined in the
Partnership's Agreement of Limited Partnership) and is payable only if
services are rendered in the sales effort.
NOTE 3 - INCOME TAXES
The Partnership will not incur a provision for income taxes since all
income taxes and losses will be allocated to the Partners for inclusion in their
respective returns.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Series 5
As reflected in its financial statements, WNC Housing Tax Credit Fund
VI, L.P., Series 5 (the `Partnership") currently has only nominal funds, as it
is newly-formed, has not yet commenced operations and the capital anticipated to
be raised through its public offering of Units has not yet become available.
The Partnership plans to raise equity capital from investors by means
of its public offering, and then to apply such funds, including the installment
payments on the investor Promissory Notes as received, to the purchase price and
acquisition fees and costs of Local Limited Partnership Interests, reserves and
expenses of the offering.
It is not expected that any of the Local Limited Partnerships in which
the Partnership will invest will generate cash from operations sufficient to
provide distributions to the Unitholders in any significant amount, Such cash
from operations, if any, would first be used to meet operating expenses of the
Partnership, including the payment of the Asset Management Fee.
The Partnership's investments will not be readily marketable and may be
affected by adverse general economic conditions which, in turn, could
substantially increase the risk of operating losses for the Apartment Complexes,
the Local Limited Partnerships and the Partnership. These problems may result
from a number of factors, many of which cannot be controlled. Nevertheless, the
General Partner anticipates that capital raised from the sale of the Units will
be sufficient to fund the Partnership's future investment commitments and
proposed operations.
The Partnership will establish working capital reserves of at least 3%
of Capital Contributions, an amount which is anticipated to be sufficient to
satisfy general working capital and administrative expense requirements of the
Partnership including payment of the Asset Management Fee as well as expenses
attendant to the preparation of tax returns and reports to the Unitholders and
other investor servicing obligations of the Partnership. Liquidity would,
however, be adversely affected by unanticipated or greater than anticipated
operating costs. The Partnership's liquidity could also be affected by defaults
or delays in payment of the investor Promissory Notes, from which a portion of
the working capital reserves is expected to be funded. To the extend that
working capital reserves are insufficient to satisfy the cash requirements of
the Partnership, it is anticipated that additional funds would be sought through
bank loans or other institutional financing. The Partnership may also apply any
cash distributions received from the Local Limited Partnerships for such
purposes or to replenish or increase working capital reserves.
Under the Partnership Agreement the Partnership does not have the ability
to assess the Unitholders for additional Capital Contributions to provide
capital if needed by the Partnership or Local Limited Partnerships. Accordingly,
if circumstances arise that cause the Local Limited Partnerships to require
capital in addition to that contributed by the Partnership and any equity of the
Local General Partners, the only sources from which such capital needs will be
able to be satisfied (other than the limited reserves available at the
Partnership level) will be (i) third-party debt financing (which may not be
available if, as expected, the Apartment Complexes owned by the Local Limited
Partnerships are already substantially leveraged), (ii) additional equity
contributions or advances of the Local General Partners, (iii) other equity
sources (which could adversely affect the Partnership's interest in Tax Credits,
cash flow and/or proceeds of sale or refinancing of the Apartment Complexes and
result in adverse tax consequences to the Unitholders), or (iv) the sale or
disposition of the Apartment Complexes (which could have the same adverse
effects as discussed in (iii)above). There can be no assurance that funds from
any of such sources would be readily available in sufficient amounts to fund the
capital requirements of the Local Limited Partnerships in question. If such
funds are not available, the Local Limited Partnerships would risk foreclosure
on their Apartment Complexes if they were unable to renegotiate the terms of
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their first mortgages and any other debt secured by the Apartment Complexes
to the extent the capital requirements of the Local Limited Partnerships relate
to such debt.
The Partnership's capital needs and resources are expected to undergo
major changes during its first several years of operations as a result of the
completion of its offering of Units and its acquisition of investments.
Thereafter, the Partnership's capital needs and resources are expected to be
relatively stable over the holding periods of the investments, except to the
extent of proceeds received in payment of Promissory Notes and disbursed to fund
the Partnership's deferred obligations.
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Part II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
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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.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5 and Series 6
(Registrant)
By: WNC & Associates, Inc. General Partner
By: /s/ John B. Lester, Jr. President
John B. Lester, Jr. President
Date: August 22, 1997
By: /s/ Theodore M. Paul
Theodore M. Paul Vice President - Finance
Date: August 22, 1997
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