FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
OR
o 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 and Series 6
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
California 33-0745418
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
NONE
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 ____
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
Supplement Dated January 21, 1998 To Prospectus Dated June 23, 1997,
filed pursuant to Rule 424, is incorporated by reference into Part I hereof.
2
<PAGE>
Item 1. Business
WNC Housing Tax Credit Fund VI, L.P., Series 5
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 5 (the "Partnership") was formed
under the California Revised Limited Partnership Act on March 3, 1997 and
commenced operations on August 29, 1997. The Partnership was formed to invest
primarily in other limited partnerships or limited liability companies which
will own and operate multi-family housing complexes that will qualify for low
income housing credits (the "Low Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner".) Wilfred N. Cooper, Sr., through the Cooper Revocable
Trust, owns just less than 70% of the outstanding stock of Associates. John B.
Lester, Jr. is the original limited partner of the Partnership and owns, through
the Lester Family Trust, just less than 30% of the outstanding stock of
Associates. The business of the Partnership is conducted primarily through the
General Partner as the Partnership has no employees of its own.
Pursuant to a registration statement (Commission File No. 333-24111) which was
declared effective on June 23, 1997, the Partnership commenced a public offering
of 25,000 units of Limited Partnership Interest ("Units"), at a price of $1,000
per Unit. As of December 31, 1997, the Partnership had received and accepted
subscriptions for 9,834 Units net of volume and dealer discounts of $38,620, in
the amount of $9,795,380, of which $351,150 was represented by promissory notes
of the subscribers. Holders of Units are referred to herein as "Limited
Partners."
Description of Business
- -----------------------
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
local limited partnerships and local limited liability companies ("Local Limited
Partnerships") each of which will own and operate an apartment complex
("Apartment Complex") which will qualify for the Low Income Housing Credit. In
general, under Section 42 of the Internal Revenue Code, an owner of low-income
housing can receive the Low Income Housing Credit to be used against Federal
taxes otherwise due in each year of a ten-year period. The Apartment Complex is
subject to a 15-year compliance period (the "Compliance Period").
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Apartment Complex prior to the end of
the applicable Compliance Period. Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by the general
partners or managing members of the respective Local Limited Partnerships (the
"Local General Partners"), but generally only to require such Local General
Partners to use their respective best efforts to find a purchaser for the
Apartment Complexes (and then subject to the ability of government lenders to
disapprove of transfers), it is not possible at this time to predict whether the
liquidation of substantially all of the Partnership's assets and the disposition
of the proceeds, if any, in accordance with the Partnership's Agreement of
Limited Partnership, as amended by the First Amendment thereto ("Partnership
Agreement") will be able to be accomplished promptly at the end of the 15-year
period. If a Local Limited Partnership is unable to sell an Apartment Complex,
it is anticipated that the Local General Partner will either continue to operate
such Apartment Complex or take such other actions as the Local General Partner
believes to be in the best interest of the Local Limited Partnership. In
addition, circumstances beyond the control of the General Partner may occur
during the Compliance Period which would require the Partnership to approve the
disposition of an Apartment Complex prior to the end thereof.
3
<PAGE>
As of December 31, 1997, the Partnership had invested in two Local Limited
Partnerships. Each of these Local Limited Partnerships owns an Apartment Complex
that is or is expected to be eligible for the Low Income Housing Credit. All of
theses Local Limited Partnerships also benefit from government programs
promoting low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multifamily residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Apartment Complexes owned by the
Local Limited Partnerships will be readily marketable. Additionally, there can
be no assurance that the Partnership will be able to dispose of its interests in
the Local Limited Partnerships at the end of the Compliance Period. The value of
the Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the
Apartment Complexes and the Partnership. The Apartment Complexes could be
subject to loss through foreclosure. In addition, each Local Limited Partnership
is subject to risks relating to environmental hazards and natural disasters
which might be uninsurable. Because the Partnership's ability to control its
operations will depend on these and other factors beyond the control of the
General Partner and the Local General Partners, there can be no assurance that
the anticipated Low Income Housing Credits will be available to Limited
Partners.
As of December 31, 1997, the two Apartment Complexes were still under
construction. The Apartment Complexes were being developed by the respective
Local General Partners who acquired the sites and applied for applicable
mortgages and subsidies. The Partnership became the principal limited partner or
non-managing member in these Local Limited Partnerships pursuant to arm's-length
negotiations with the respective Local General Partners. As a limited partner or
non-managing member, the Partnership's liability for obligations of each Local
Limited Partnership is limited to its investment. The Local General Partners of
each Local Limited Partnership retain responsibility for developing,
constructing, maintaining, operating and managing the Apartment Complex.
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1997
Percentage
Total Units Units of Units
Name & Location Units Completed Occupied Occupied
<S> <C> <C> <C> <C>
Chillicothe Plaza Apartments
Chillicothe (Livingston County),
Missouri 28 0 0 0%
Spring Valley Terrace Apartments
Mayer (Yavapai County), Arizona 20 0 0 0%
-- - - -
48 0 0 0%
=== === = ==
</TABLE>
For additional information respecting the above-referenced Local Limited
Partnerships and the Local Limited Partnerships identified for acquisition by
the Partnership, there is hereby incorporated herein by reference the
information included under the caption "Local Limited Partnership Investments"
4
<PAGE>
in the Supplement dated January 21, 1998 to the Prospectus dated June 23, 1997.
The referenced portion of the Supplement is appended hereto as Exhibit 99.1. The
Partnership will not acquire the Local Limited Partnership identified therein
"TULSA-CRESTVIEW."
WNC Housing Tax credit Fund VI, L.P., Series 6
- ----------------------------------------------
WNC Housing Tax Credit Fund VI, L.P., Series 6 was formed under the California
Revised Limited Partnership Act on March 3, 1997 but has not yet commenced
operations. Accordingly, no additional information respecting WNC Housing Tax
Credit Fund VI, L.P., Series 6 is included in this annual report on Form 10-K.
Item 2. Properties
- -------------------
Through its investment in Local Limited Partnerships the Partnership holds an
interest in Apartment Complexes. See Item 1 for information pertaining to these
Apartment Complexes.
Item 3. Legal Proceedings
- --------------------------
NONE
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
NONE
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------------------------------------------------------------------------------
Item 5a.
(a) The Units are not traded on a public exchange but are being sold through a
public offering. It is not anticipated that any public market will develop for
the purchase and sale of any Unit. Units can be assigned only if certain
requirements in the Partnership Agreement are satisfied.
(b) At December 31,1997, there were 536 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships. The Limited Partners received no Low
Income Housing Credits in 1997.
Item 5b.
The Partnership is conducting an offering pursuant to a registration statement
(Commission File No. 333-24111) which was declared effective on June 23, 1997.
As of December 31, 1997 the Partnership had received subscriptions for 9,834
Units, for an aggregate amount of capital contributions of $9,795,380 net of
volume and dealer discounts of $38,630 in an offering which commenced on July
16, 1997. At December 31, 1997, the above capital contributions consisted of
cash of $8,812,345, subscriptions receivable of $631,885 and notes receivable of
$351,150. At December 31, 1997, approximately $1,257,500 was paid or due to
Associates or WNC Capital Corporation, the dealer-manager for the offering, for
selling commissions, wholesaling activities and in reimbursement of other
organization and offering expenses. Included therein are selling commissions of
approximately $650,500 and wholesaling and other organization and offering
expenses of approximately $322,300 which were paid or to be paid to
5
<PAGE>
non-affiliates. At December 31, 1997, approximately $8,537,500 (net proceeds
after selling commissions and offering expenses) is invested or available to be
invested in Local Limited Partnership Interests or Reserves as follows:
<TABLE>
<CAPTION>
Paid or to be paid to Paid or to be
General Partner or affiliate paid to others Total
---------------------------- -------------- -----
<S> <C> <C> <C>
Acquisition fees $ 664,500 $ 664,500
Acquisition costs $ 36,500 36,500
Lower tier partnerships 1,697,300 1,697,300
Reserves or available to
be invested 6,139,200 6,139,200
-------- ---------- ----------
Total $ 664,500 $ 7,873,000 $8,537,500
========== ========= =========
</TABLE>
Item 6. Selected Financial Data
- --------------------------------
August 29
(Date operations
commenced) through
December 31,1997
----------------
Revenue $10,012
Partnership operating expenses (10,099)
Equity in income of
Local Limited Partnerships 2,395
-----
Net income $2,308
======
Net income per Limited
Partnership Interest $1.13
=====
Total assets $9,412,705
==========
Net investment in
Local Limited Partnerships $2,398,460
==========
Capital contributions payable to
Local Limited Partnerships $860,671
========
Accrued fees and expenses due to
affiliates $361,900
========
Tax credits per $1,000 invested $0
==
6
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
- -------------------------------
The Partnership is raising equity capital from investors by means of it offering
and is applying such capital to the purchase price and acquisition fees and
costs of Local Limited Partnerships Interests, reserves and expenses. As of
August 29, 1997, the Partnership had received cash subscription funds in excess
of $1,400,000, thereby satisfying the minimum offering condition. As of December
31, 1997 and March 19, 1998 the Partnership had received and accepted
subscription funds in the amounts of $9,795,380 (9,834 Units), and $14,346,005
(14,409 Units), respectively, of which $351,150 and $468,650, respectively, were
represented by promissory notes of investors.
Approximately 75% of the proceeds from the sale of Units have been committed to
the purchase price and acquisition fees and costs of eight Local Limited
Partnership Interests, reserves and expenses of the offering. The Partnership
requires a total of approximately $10,841,000 in this regard. As of December 31,
1997 and March 19, 1998, the Partnership had made capital contributions of
$836,632 and $3,693,095, respectively, to Local Limited Partnerships
As of December 31, 1997 the Partnership was indebted to Associates in the amount
of $361,900 The component items of such indebtedness were as follows: accrued
acquisition fees of approximately $62,900, advances to pay front-end fees and
costs of approximately $294,300, and other advances of approximately $4,700.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash and cash equivalents of approximately $5,498,400 for the period
ended December 31, 1997. This increase in cash was provided by the Partnership's
financing activities, including the proceeds from the offering. Cash from
financing activities for the period ended December 31, 1997 of approximately
$7,917,800 was sufficient to fund the investing activities of the Partnership in
the aggregate amount of approximately $2,416,500 which consisted primarily of
capital contributions to Local Limited Partnerships, loans to Local Limited
Partnerships and acquisition costs and fees of approximately $836,600, $878,900
and 701,000, respectively. Cash provided and used by the operating activities of
the Partnership was minimal compared to its other activities. Cash provided by
operations consisted primarily of interest received on cash deposits, and cash
used consisted primarily of payments for operating fees and expenses. The major
components of all these activities are discussed in greater detail below.
It is not expected that any of the Local Limited Partnerships in which the
Partnership has invested or will invest will generate cash from operations
sufficient to provide distributions to the Limited Partners in any material
amount. Such cash from operations, if any, would first be used to meet operating
expenses of the Partnership, including payment of the asset management fee to
the General Partner.
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 by the General Partner.
Nevertheless, the General Partner anticipates that capital raised from the sale
of the Units will be sufficient to fund the Partnership's 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 excluding payment of the asset management fee as well as expenses
attendant to the preparation of tax returns and reports to the Limited Partners
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 Limited Partners' promissory notes, from which a
7
<PAGE>
portion of the working capital reserves is expected to be funded. To the extent
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 General Partner may
also apply any cash distributions received from the Local Limited Partnerships
for such purposes or to replenish or increase working capital reserves.
Under its Partnership Agreement the Partnership does not have the ability to
assess the Limited Partners 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
contributed by the general partners of the Local Limited Partnerships, 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 general
partners of the Local Limited Partnerships, (iii) other equity sources (which
could adversely affect the Partnership's interest in Low Income Housing Credits,
cash flow and/or proceeds of sale or refinancing of the Apartment Complexes and
result in adverse tax consequences to the Limited Partners), 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 requirement 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 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 their 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 Local Limited Partnership promissory
notes and disbursed to fund the deferred obligations of the Partnership.
Results of Operations
- ---------------------
As reflected on its Statements of Operations, the Partnership had income of
approximately $2,308 for the period ended December 31, 1997. The component items
of revenue and expense are discussed below.
Revenue. The Partnership's revenue consists entirely of interest earned on
Limited Partner promissory notes and cash deposits held in financial
institutions (i) as reserves, or (ii) pending investment in Local Limited
Partnerships. Interest revenue in future years will be a function of prevailing
interest rates and the amount of cash balances. It is anticipated that the
Partnership will maintain cash reserves in an amount not materially in excess of
the minimum amount required by its Partnership Agreement, which is 3% of capital
contributions.
Expenses. The most significant component of operating expenses is expected to be
the asset management fee. The asset management fees is equal to the greater of
(i) $2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds, and will
be decreased or increased annually based on changes to the Consumer Price Index.
No management fees were incurred for the period ended December 31, 1997.
Amortization expense consists of the amortization over a period of 30 years of
acquisition fees and other expenses attributable to the acquisition of Local
Limited Partnership Interests.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------
NONE.
8
<PAGE>
Item 8. Financial Statements and Supplementary Data
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
with
INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 5
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
VI, L.P., Series 5 (a California Limited Partnership) (the "Partnership") as of
December 31, 1997, and the related statements of operations, partners' equity
(deficit) and cash flows for the period August 29, 1997 (date operations
commenced) through December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit. We did not audit
the financial statements of the limited partnership or the limited liability
corporation in which WNC Housing Tax Credit Fund VI, L.P., Series 5 is a limited
partner and investor member, respectively. These investments, as discussed in
Note 3 to the financial statements, are accounted for by the equity method. The
investments in these entities represented 25% of the total assets of WNC Housing
Tax Credit Fund VI, L.P., Series 5 at December 31, 1997. The financial
statements of the limited partnership were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for this limited partnership, is based solely on the report of
the other auditors.
We conducted our audit 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 audit and the report of the other auditors provides a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a
California Limited Partnership) as of December 31, 1997, and the results of its
operations and its cash flows for the period August 29, 1997 (date operations
commenced) through December 31, 1997, in conformity with generally accepted
accounting principles.
/S/Corbin & Wertz
-----------------
CORBIN & WERTZ
Irvine, California
March 19, 1998
<PAGE>
<TABLE>
<CAPTION>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
BALANCE SHEET
December 31, 1997
ASSETS
<S> <C>
Cash and cash equivalents $ 5,498,424
Subscriptions receivable (Note 6) 631,885
Loans receivable (Note 2) 878,894
Investments in limited partnerships and limited liability
corporations (Note 3) 2,398,460
Other assets 5,042
-------------
$ 9,412,705
==============
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
<S> <C>
Liabilities:
Payables to limited partnerships and limited liability
corporations (Note 4) $ 860,671
Accrued fees and advances due to General Partner
and affiliate (Note 4) 361,900
-------------
Total liabilities 1,222,571
-------------
Commitments and contingencies (Note 7)
Partners' equity (deficit) (Notes 6, 7 and 8):
General partner (12,452)
Limited partners (25,000 units authorized, 9,834
units outstanding at December 31, 1997) 8,202,586
-------------
Total partners' equity 8,190,134
------------
$ 9,412,705
==============
</TABLE>
See accompanying notes to financial statements
FS-2
<PAGE>
<TABLE>
<CAPTION>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
<S> <C>
Interest income $ 10,012
-------------
Operating expenses:
Amortization 2,256
Other 7,843
-------------
Total operating expenses 10,099
-------------
Loss from operations (87)
-------------
Equity in income from limited partnership and limited
liability corporation (Note 3) 2,395
-------------
Net income $ 2,308
=============
Net income allocated to:
General partner $ 23
=============
Limited partners $ 2,285
=============
Net income per weighted limited partner units $ 1.13
=============
Outstanding weighted limited partners units 2,029
=============
</TABLE>
See accompanying notes to financial statements
FS-3
<PAGE>
<TABLE>
<CAPTION>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
General Limited
Partner Partners Total
-------------- ---------------- ---------------
<S> <C> <C> <C>
Contribution from General Partner $ 100 $ 1,000 $ 1,100
Sale of limited partnership units, net of
discounts of $38,620 - 9,795,380 9,795,380
Sale of limited partnership units issued for
promissory notes receivable (Note 6 ) - (351,150) (351,150)
Offering expenses (12,575) (1,244,929) (1,257,504)
Net income 23 2,285 2,308
------------- ------------- -------------
Equity (deficit) at December 31, 1997 $ (12,452) $ 8,202,586 $ 8,190,134
============== ============== ==============
</TABLE>
See accompanying notes to financial statements
FS-4
<PAGE>
<TABLE>
<CAPTION>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
<S> <C>
Cash flows from operating activities:
Net income $ 2,308
Adjustments to reconcile net income to net cash used in
operating activities:
Amortization 2,256
Equity in income from limited partnership and limited
liability corporation (2,395)
Change in other assets (5,042)
--------------
Net cash used in operating activities (2,873)
-------------
Cash flows from investing activities:
Investments in limited partnership and limited liability
corporation, net (836,632)
Loans receivable (878,894)
Capitalized acquisition costs and fees (638,140)
-------------
Net cash used in investing activities (2,353,666)
-------------
Cash flows from financing activities:
Capital contributions 8,813,445
Increase in due to general partner and affiliates 4,712
Offering expenses (963,194)
-------------
Net cash provided by financing activities 7,854,963
-------------
Net change in cash and cash equivalents 5,498,424
Cash and cash equivalents, beginning of period -
-------------
Cash and cash equivalents, end of period $ 5,498,424
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for:
Interest $ -
=============
Income taxes $ 800
=============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITES:
For the period ended December 31, 1997, the Partnership incurred but did not
pay offering expenses and acquisition fees of $294,310 and $62,878,
respectively (see Note 4).
See accompanying notes to financial statements
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership") was formed
under the California Revised Limited Partnership Act on March 3, 1997, and
commenced operations on August 29, 1997. Prior to August 29, 1997, the
Partnership was considered a development-stage enterprise. The Partnership was
formed to invest primarily in other limited partnerships and limited liability
corporations ("Investees") which will own and operate multi-family housing
complexes that will qualify for low income housing credits.
The general partner is WNC Tax Credit Partners, IV, L.P. (the "General
Partner"), a California limited partnership. WNC & Associates, Inc. is the
general partner of 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.
The Partnership shall continue in full force and effect until December 31, 2052,
unless terminated prior to that date, pursuant to the Partnership agreement or
law.
Pursuant to the Partnership agreement, the Partnership is authorized to sell
25,000 Units at $1,000 per Unit ("Units") of which 9,834 Units in the amount of
$9,795,380, net of discounts of $38,620 for volume purchases, had been sold as
of December 31, 1997. The General Partner has a 1% interest in operating profits
and losses, taxable income and loss and in 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 Agreement) and the General Partner has received a
subordinated disposition fee (as described in Note 4), 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.
The Partnership's investments are subject to the risks incident to the
management and ownership of multifamily residential real estate, and include the
risks that neither the Partnership's investments nor the apartment complexes
owned by the Investees will be readily marketable. Additionally there can be no
assurance that the Partnership will be able to dispose of its interests in the
Investees. The value of the Partnership's investments will be subject to changes
in national and local economic conditions, including unemployment conditions,
which could adversely impact vacancy levels, rental payment defaults and
operating expenses. This, in turn, could substantially increase the risk of
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
operating losses for the apartment complexes and the Partnership. The apartment
complexes could be subject to loss through foreclosure. In addition, each
Investee is subject to risks relating to environmental hazards which might be
uninsurable. Because the Partnership's ability to control its operations will
depend on these and other factors beyond the control of the General Partner and
the general partner or managing member of the Investees, there can be no
assurance that Partnership operations will be profitable or that the anticipated
housing tax credits will be available to limited partners.
Method of Accounting For Investments in Limited Partnerships
- ------------------------------------------------------------
The Partnership accounts for its investments using the equity method of
accounting, whereby the Partnership adjusts its investment balance for its share
of the Investees' results of operations and for any distributions received. The
accounting policies of the Investees are consistent with the Partnership. Costs
incurred by the Partnership in acquiring the investments are capitalized as part
of the investment and amortized over 30 years (see Note 3).
Losses from Investees allocated to the Partnership will not be recognized to the
extent that the investment balance would be adjusted below zero.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. Cash
equivalents consist of a money market account and funds in escrow from sale of
units.
Concentration of Credit Risk
- ----------------------------
As of December 31, 1997, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum.
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with the
selling of limited partnership interests in the Partnership. The General Partner
is obligated to pay all offering and organization costs in excess of 14.5%
(including sales commissions) of the total offering proceeds. Offering expenses
are reflected as a reduction of limited partners' capital. Through December 31,
1997, the Partnership incurred offering expenses and selling expenses of
$607,044 and $650,460, respectively.
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partner unit is computed by dividing the limited partners'
share of net loss by the weighted number of limited partner units outstanding
during the period.
NOTE 2 - LOANS RECEIVABLE
- -------------------------
Loans receivable represent amounts loaned by the Partnership to certain
Investees in which the Partnership may invest. These loans will be applied
against the first capital contribution due if the Partnership ultimately invests
in such entities. In the event that the Partnership does not invest in such
entities, the loans are to be repaid with interest at a rate which is equal to
the rate charged to the holder (8.75% at December 31, 1997). Loans receivable
with a balance of $778,894 at December 31, 1997 were collectible from two
limited partnerships, one of which was acquired in 1998, and one of which is in
negotiations to be acquired (see Note 7). Loans receivable with a balance of
$100,000 at December 31, 1997 were collectible from one limited partnership and
are to be repaid to the Partnership in 1998.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS AND LIMITED LIABILITY CORPORATIONS
- -------------------------------------------------------------------------------
As of December 31, 1997, the Partnership had acquired interests in two
Investees, each of which owns one apartment complex consisting of an aggregate
of 48 apartment units. As of December 31, 1997, construction or rehabilitation
of the apartment complexes had been partially completed. The respective general
or managing partners of the Investees manage the day to day operations of the
entities. Significant Investee business decisions require approval from the
Partnership. The Partnership, as a limited partner or investor member, is
generally entitled to 99%, as specified in the partnership or limited liability
corporation agreements, of the operating profits and losses of the Investees
upon its acquisition of such investments.
The Partnership's investment in the limited partnership and limited liability
corporation as shown in the accompanying balance sheet as of December 31, 1997
is approximately $1,559,000 greater than the Partnership's equity as shown in
the Investees' financial statements. This difference is primarily due to
acquisition costs related to the acquisition of the investments that have been
capitalized in the Partnership's investment account and are being amortized over
30 years and certain capital contributions accrued but not paid (see Note 4).
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS AND LIMITED LIABILITY
- ------------------------------------------------------------------
CORPORATIONS, continued
- -----------------------
Following is a summary of the equity method activity of the investment in the
limited partnership and the limited liability corporation for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Investments, beginning of year $ -
Capital contributions 836,632
Capital contributions payable 860,671
Capitalized acquisition fees and costs 701,018
Equity in income of limited partnership and limited liability corporation 2,395
Amortization of acquisition fees and costs (2,256)
-------------
$ 2,398,460
==============
</TABLE>
Approximate combined condensed financial information from the individual
financial statements of the limited partnership and the limited liability
corporation at December 31, 1997 and for the period then ended is as follows:
<TABLE>
<CAPTION>
COMBINED CONDENSED BALANCE SHEETS
ASSETS
<S> <C>
Land $ 93,000
Construction in progress 357,000
Other assets (including restricted cash of $189,000) 643,000
-------------
$ 1,093,000
==============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Construction loans payable $ 149,000
Other liabilities 29,000
-------------
Total liabilities 178,000
-------------
Partners' equity:
WNC Housing Tax Credit Fund VI, L.P., Series 5 839,000
Other partners 76,000
-------------
Total partners' equity 915,000
-------------
$ 1,093,000
==============
</TABLE>
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED CONDENSED STATEMENT OF OPERATIONS
<S> <C>
Total revenue $ 2,000
Total expenses -
-------------
Net income $ 2,000
=============
Net income allocable to Partnership $ 2,000
=============
</TABLE>
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership is obligated to
the General Partner or its affiliates for the following items:
Acquisition fees of up to 7% of the gross proceeds from the sale of
Partnership Units as compensation for services rendered in connection
with the acquisition of Investees. Through December 31, 1997, the
Partnership incurred acquisition fees of $664,500. Accumulated
amortization was insignificant for 1997.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of Investees. These reimbursements
will not exceed 1.5% of the gross proceeds. As of December 31, 1997,
the Partnership incurred acquisition costs of $36,518, which have been
included in investments in limited partnerships and limited liability
corporations. Accumulated amortization was insignificant for 1997.
An annual asset management fee equal to the greater amount of (i)
$2,000 for each apartment complex, or (ii) 0.275% of gross proceeds. In
either case, the fee will be decreased or increased annually based on
changes to the Consumer Price Index. However, in no event will the
maximum amount exceed 0.2% of the invested assets (defined as the
Partnership's capital contributions plus its allocable percentage of
the mortgage debt encumbering the apartment complexes) of the limited
partnerships. As of December 31, 1997, asset management fees have not
been incurred.
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 a return on investment (as defined in the
Partnership Agreement) and is payable only if services are rendered in
the sales effort.
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
<TABLE>
<CAPTION>
Accrued fees and advances due the General Partner and affiliate consist of the
following at December 31, 1997:
<S> <C>
Acquisition fees $ 62,878
Advances made for acquisition costs, organizational,
offering and selling expenses 294,310
Other 4,712
-------------
$ 361,900
==============
</TABLE>
Payables to limited partnerships and limited liability corporations represents
amounts which are due at various times based on conditions specified in the
Investee agreements. These contributions are non-interest bearing, are payable
in installments and are due upon the Investee achieving certain development and
operating benchmarks (generally within two years of the Partnership's initial
investment).
NOTE 5 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
NOTE 6 - SUBSCRIPTIONS AND NOTES RECEIVABLE
- -------------------------------------------
As of December 31, 1997, the Partnership had received subscriptions for 9,834
units which included subscriptions receivable of $631,885 and promissory notes
of $351,150. Limited partners who subscribed for ten or more units of limited
partnerships interest ($10,000) could elect to pay 50% of the purchase price in
cash upon subscription and the remaining 50% by the delivery of a promissory
note payable, together with interest at the rate of 5.5% per annum, due no later
than 13 months after the subscription date. Since the promissory notes had not
been collected prior to the issuance of the financial statements, the unpaid
balance was reflected as a reduction of partners' equity in the accompanying
financial statements as of December 31, 1997.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
Subsequent to December 31, 1997, the Partnership acquired three limited
partnership interests which required capital contributions totaling
approximately $3,967,000, of which $518,700 has been advanced as of December 31,
1997 and has been reflected in loans receivable in the accompanying balance
sheet. The Partnership is negotiating to acquire three additional limited
partnership interests which would commit the Partnership to additional capital
contributions of approximately $2,529,000 of which $260,194 has been advanced as
of December 31, 1997 and has been reflected in loans receivable in the
accompanying balance sheet (see Note 2).
FS-11
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period August 29, 1997 (Date Operations
Commenced) Through December 31, 1997
NOTE 8 - SUBSEQUENT EVENT
- -------------------------
From January 1, 1998 through March 19, 1998, the Company has received
subscriptions for an additional 4,575 units.
FS-12
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NONE.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
The directors of Associates are Wilfred N. Cooper, Sr., who serves as Chairman
of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and
Kay L. Cooper. Substantially all of the shares of Associates are owned by
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, and John B. Lester,
Jr., through the Lester Family Trust.
WILFRED N. COOPER, SR., age 67, has been the principal shareholder and a
Director of WNC & ASSOCIATES, INC. since its organization in 1971, of SHELTER
RESOURCE CORPORATION since its organization in 1981 and of WNC RESOURCES, INC.
from its organization in 1988 through its acquisition by WNC & ASSOCIATES, INC.
in 1991, serving as President of those companies until 1992 and as Chief
Executive Officer since 1992, and has been a Director of WNC CAPITAL CORPORATION
since its organization. He is also a general partner with WNC & ASSOCIATES, INC.
in WNC FINANCIAL GROUP, L.P. and WNC TAX CREDIT PARTNERS, L.P. During 1970 and
1971 he was a principal of Creative Equity Development Corporation, a
predecessor of WNC & ASSOCIATES, INC., and of Creative Equity Corporation, a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell International Corporation, last serving as its manager of housing
and urban developments. Previously, he had responsibility for new business
development including factory-built housing evaluation and project management in
urban planning and development. Mr. Cooper is a Director of the Executive
Committee of the National Association of Home Builders (NAHB) and a past
Chairman of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a Director of the Affordable Housing Tax Credit Coalition, a past
President of the Rural Builders Council of California (RBCC), and a past
President of Southern California Chapter II of the Real Estate Syndication and
Securities Institute (RESSI) of the National Association of Realtors (NAR). Mr.
Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 64, has been a shareholder, a Director and Secretary of
WNC & ASSOCIATES, INC. since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC CAPITAL CORPORATION since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC RESOURCES, INC. from 1988
through its acquisition by WNC & ASSOCIATES, INC. in 1991. From 1973 to 1986 he
was Chairman of the Board and Vice President or President of E & L Associates,
Inc., a provider of engineering and construction services to the oil refinery
and petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at WNC & ASSOCIATES, INC. include property
acquisitions and company operations. Mr. Lester graduated from the University of
Southern California in 1956 with a Bachelor of Science degree in Mechanical
Engineering.
10
<PAGE>
DAVID N. SHAFER, age 45, has been a Director of WNC & ASSOCIATES, INC. since
1997, a Senior Vice President since 1992, and General Counsel since 1990, and
served as Asset Management Director from 1990 to 1992, and has been a Director
and Secretary of WNC Management, Inc. since its organization. Previously he was
employed as an associate attorney by the law firms of Morinello, Barone, Holden
& Nardulli from 1987 until 1990, Frye, Brandt & Lyster from 1986 to 1987 and
Simon and Sheridan from 1984 to 1986. Mr. Shafer is a Director and President of
RBCC, a member of NAHB's Rural Housing Council, a past President of Southern
California Chapter II of RESSI, a past Director of the Council of Affordable and
Rural Housing and Development and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree and from the University of San Diego in 1986 with a Master
of Law degree in Taxation.
WILFRED N. COOPER, JR., age 35, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Director since 1997 and a Senior Vice President or
Vice President since 1992. Mr. Cooper heads the Acquisition Originations
department at WNC, has been President of, and a registered principal with, WNC
CAPITAL CORPORATION, a member firm of the NASD, since its organization, and has
been a Director of WNC Management Inc. since its organization. Previously, he
was employed as a government affairs assistant by Honda North America from 1987
to 1988, and as a legal assistant with respect to Federal legislative and
regulatory matters by the law firm of Schwartz, Woods and Miller from 1986 to
1987. Mr. Cooper is an alternate director and member of NAHB's Rural Housing
Council and serves as Chairman of its Membership Committee. Mr. Cooper graduated
from The American University in 1985 with a Bachelor of Arts degree.
THEODORE M. PAUL, age 42, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990, and has been a Director
and Chief Financial Officer of WNC Management Inc. since its organization.
Previously, he was a Vice President and Chief Financial Officer of National
Partnership Investments Corp., a sponsor and general partner of syndicated
partnerships investing in affordable rental housing qualified for tax credits,
from 1986 until 1990, and was employed as an associate by the accounting firms
of Laventhol & Horwath, during 1985, and Mann & Pollack Accountants, from 1979
to 1984. Mr. Paul is a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants. His
responsibilities at WNC & ASSOCIATES, INC. include supervision of investor
partnership accounting and tax reporting matters and monitoring the financial
condition of the Local Limited Partnerships in which the Partnership will
invest. Mr. Paul graduated from the University of Illinois in 1978 with a
Bachelor of Science degree and is a Certified Public Accountant in the State of
California.
THOMAS J. RIHA, age 43, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994, and has been a Director and Chief Executive Officer
of WNC Management Inc. since its organization. He has more than 17 years'
experience in commercial and multi-family real estate investment and management.
Previously, Mr. Riha was employed by Trust Realty Advisor, a real estate
acquisition and management company, from 1988 to 1994, last serving as Vice
President - Operations. His responsibilities at WNC & ASSOCIATES, INC. include
monitoring the operations and financial performance of, and regulatory
compliance by, properties in the WNC portfolio. Mr. Riha graduated from the
California State University, Fullerton in 1977 with a Bachelor of Arts degree
(cum laude) in Business Administration with a concentration in Accounting and is
a Certified Public Accountant in the State of California and a member of the
American Institute of Certified Public Accountants.
SY P. GARBAN, age 52, has 20 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed as Executive Vice
President by MRW, Inc., Newport Beach, California from 1980 to 1989, a real
estate development and management firm. Mr. Garban is a member of the
International Association of Financial Planners. He graduated from Michigan
State University in 1967 with a Bachelor of Science degree in Business
Administration.
11
<PAGE>
CARL FARRINGTON, age 55, has been associated with WNC & ASSOCIATES, INC. since
1993, and has served as Director - Originations since 1994. Mr. Farrington has
more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
DAVID TUREK, age 43, has been Director - Originations of WNC & ASSOCIATES, INC.
since 1996. He has 23 years' experience in real estate finance and acquisitions.
Previously, from 1995 to 1996 Mr. Turek served as a consultant for a national
Low Income Housing Credit sponsor where he was responsible for on-site
feasibility studies and due diligence analyses of Low Income Housing Credit
properties, from 1992 to 1995 he served as Executive Vice President for Levcor,
Inc., a multi-family development company, and from 1990 to 1992 he served as
Vice President for the Paragon Group where he was responsible for Tax Credit
development activities. Mr. Turek graduated from Southern Methodist University
in 1976 with a Bachelor of Business Administration degree.
N. PAUL BUCKLAND, age 36, has been employed by WNC & ASSOCIATES, INC. since 1994
and currently serves as Director - Acquisitions. He has 11 years' experience in
analysis pertaining to the development of multi-family and commercial
properties. Previously, from 1986 to 1994 he served on the development team of
the Bixby Ranch which constructed more than 700 apartment units and more than
one million square feet of "Class A" office space in California and neighboring
states, and from 1984 to 1986 he served as a land acquisition coordinator with
Lincoln Property Company where he identified and analyzed multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.
MICHELE M. TAYLOR, age 43, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 40, has been employed by WNC & ASSOCIATES, INC. since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 61, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
12
<PAGE>
(a) Organization and Offering Expenses. The Partnership accrued or paid the
General Partner or its affiliates as of December 31, 1997 approximately
$1,257,500 for selling commissions and other fees and expenses of the
Partnership's offering of Units. Of the total accrued or paid, approximately
$972,800 was paid or to be paid to unaffiliated persons participating in the
Partnership's offering or rendering other services in connection with the
Partnership's offering.
(b) Acquisition fees in an amount equal to 7.0% of the gross proceeds of the
Partnership's Offering ("Gross Proceeds"). Through December 31, 1997, the
aggregate amount of acquisition fees paid or accrued was approximately $664,500.
(c) The Partnership reimbursed the General Partner or its affiliates as of
December 31, 1997 for acquisition expenses not to exceed 1.5% of the Gross
Proceeds expended by such persons on behalf of the Partnership in the amounts
$36,518.
(d) An annual asset management fee in an amount equal to 0.2% of Invested Assets
which are attributable to apartment units receiving government assistance.
"Invested Assets" means the sum of the Partnership's investment in Local Limited
Partnerships and the Partnership's allocable share of the amount of the
indebtedness related to the Apartment Complexes.
(e) The Partnership did not reimbursed the General Partner or its affiliates as
of December 31, 1997 for any operating expenses expended by such persons on
behalf of the Partnership.
.
(f) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
Local Limited Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the Return on Investment to the Limited Partners. "Return on
Investment" means an annual, cumulative but not compounded, "return" to the
Limited Partners (including Low Income Housing Credits) as a class on their
adjusted capital contributions commencing for each Limited Partner on the last
day of the calendar quarter during which the Limited Partner's capital
contribution is received by the Partnership, calculated at the following rates:
(i) 14% through December 31, 2006, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been paid.
(g) The General Partner will receive 1% of the Low Income Housing Credits. No
Low Income Housing Credits have been allocated.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
County Bank, a California Corporation, 550 West Main, Merced California owns 830
of the 9,834 Units outstanding as of December 31, 1997 (8.44%) and is the only
person known to the General Partner to own beneficially in excess of 5% of the
outstanding Units.
(b) Security Ownership of Management
Neither the General Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or beneficially
any Units in the Partnership.
13
<PAGE>
(c) Changes in Control
The management and control of the General Partner may be changed at any time in
accordance with its organizational documents, without the consent or approval of
the Limited Partners. In addition, the Partnership Agreement provides for the
admission of one or more additional and successor General Partners in certain
circumstances.
First, with the consent of any other General Partners and a majority-in-interest
of the Limited Partners, any General Partner may designate one or more persons
to be successor or additional General Partners. In addition, any General Partner
may, without the consent of any other General Partner or the Limited Partners,
(i) substitute in its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets, stock or
other evidence of equity interest and continued its business, or (ii) cause to
be admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership will
be classified a partnership for Federal income tax purposes. Finally, a
majority-in-interest of the Limited Partners may at any time remove the General
Partner of the Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
All of the Partnership's affairs are managed by the General Partner. The
transactions with the General Partner are primarily in the form of fees paid by
the Partnership for services rendered to the Partnership, as discussed in Item
11 and in the notes to the accompanying financial statements.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Report of independent public accountants
Balance sheet as of December 31, 1997
Statement of operations for the period July 15, 1997 (date operations commenced)
to December 31, 1997 Statement of cash flows for the period July 15, 1997 (date
operations commenced) to December 31, 1997 Statements of Partners' Equity for
the years ended December 31, 1997 Notes to financial statements
Financial Statement Schedules:
N/A
Exhibits
3.1: Agreement of Limited Partnership dated as of March 3, 1997, filed as
Exhibit 3.1 to Post-Effective Amendment No. 1 to the Registration Statement, is
hereby incorporated herein as Exhibit 3.1.
3.2 First Amendment to Agreement of Limited Partnership dated as of August 29,
1997
Material Contracts
10.1 Amended and Restated Agreement of Limited Partnership of Chillicothe Plaza
Apts., L.P. filed as exhibit 10.1 to the current report on Form 8-K dated
November 11, 1997, is herein incorporated by reference as Exhibit 10.1.
10.2 Amended and Restated Agreement of Spring Valley Terrace Apartments, L.L.C.
filed as Exhibit 10.3 to Post-effective Amendment No. 1 to Registration
statement, is herein incorporated by reference as Exhibit 10.2.
14
<PAGE>
10.3 Amended and Restated Agreement of Limited Partnership of El Reno Housing
Associates Limited Partnership filed as Exhibit 10.1 to the current report on
Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit
10.3.
10.4 Second Amended and Restated Agreement of Limited Partnership of Hughes
Villas Limited Partnership filed as Exhibit 10.2 to the current report on Form
8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 10.4.
10.5 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.3 to the
current report on Form 8-K dated January 15, 1998, is herein incorporated by
reference as Exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Mark Twain Senior
Community Limited Partnership filed as Exhibit 10.3 to the current report on
Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit
10.5.
99.1 Relevant portions of the Supplement dated January 21, 1998, portions of
which are incorporated by reference into Part I hereof.
REPORTS ON 8-K.
Form 8K Current Report dated November 5, 1997
15
<PAGE>
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, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5 and Series 6
By:_____________________________________________________
WNC & Associates, Inc. General Partner
By:_____________________________________________________
John B. Lester, Jr. President of WNC & Associates, Inc.
Date: March 31, 1998
By:_____________________________________________________
Theodore M. Paul Vice-President, Finance of WNC & Associates, Inc.
Date: March 31, 1998
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 capacities and on the dates indicated.
By:_____________________________________________________
Wilfred N. Cooper, Sr. Chairman of the Board of WNC & Associates, Inc.
Date: March 31, 1998
By:_____________________________________________________
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: March 31, 1998
By:_____________________________________________________ David N Shafer Director
of WNC & Associates, Inc.
Date: March 31, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001036500
<NAME> WNC HOUSING TAX CREDIT FUND VI L.P., SERIES 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 5,498,424
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,498,424
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,412,705
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,190,134
<TOTAL-LIABILITY-AND-EQUITY> 9,412,705
<SALES> 0
<TOTAL-REVENUES> 12,395
<CGS> 0
<TOTAL-COSTS> 10,099
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,308
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,308
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 0
</TABLE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- --------------------------------------------------------------------------------
99.1 Relevant portions of the Supplement Dated January 21, 1998 To Prospectus
Dated June 23, 1997
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P.,
SERIES 5
[GRAPHIC OMITTED]
Supplement Dated January 21, 1998
To Prospectus Dated June 23, 1997
This Supplement is part of, and should be read in conjunction with, the
Prospectus of WNC Housing Tax Credit Fund VI, L.P., Series 5 ("Series 5") dated
June 23, 1997 (the "Prospectus"). This Supplement supersedes all previous
supplements. Capitalized terms used but not defined in this Supplement have the
meanings given to them in the Prospectus.
TABLE OF CONTENTS
Page
Status of Series 5 Offering............................................... 1
Local Limited Partnership Investments....................................... 2
Federal Income Tax Considerations........................................... 8
Profits, Losses and Tax Credits............................................. 9
Management................................................................. 9
Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................... 10
Prior Performance Summary.................................................. 11
Financial Statements...................................................... FS-1
Prior Performance Tables.................................................. A-1
First Amendment to Partnership Agreement................................... B-1
As indicated in the chart which follows, the information presented
herein either adds to or supersedes similar information included in the
Prospectus, or constitutes information which has no corresponding information in
the Prospectus.
Supplement Presentation Relationship to Prospectus
Presentation
Status of Series 5 Offering New Information
Local Limited Partnership Investments New Information
Federal Income Tax Considerations Adds to or supersedes "Federal Income
Tax Considerations"
Profits, Losses and Tax Credits Supersedes a portion of "Profits and
Losses for Tax Purposes,
Tax Credits and Cash Distributions"
Management Adds to "Management"
Management's Discussion and Analysis Supersedes "Management's Discussion
Of Financial Condition and Results of and Analysis of Finanical Condition"
Operations
Prior Performance Summary Adds to "Prior Performance Summary"
Financial Statements Adds to "Financial Statements"
Prior Performance Tables Adds to "Prior Performance Tables"
First Amendment to Partnership Agreement Adds to "Partnership Agreement"
STATUS OF SERIES 5 OFFERING
As of the date hereof, Series 5 has received subscriptions in the
amount of $10,375,780 (10,406 Units), of which $356,500 currently is represented
by Promissory Notes.
WNC6-12/SUPP1297
1
<PAGE>
LOCAL LIMITED PARTNERSHIP INVESTMENTS
Included herein is a discussion of nine Local Limited Partnership
Interests acquired or identified for acquisition by Series 5. The Apartment
Complexes owned by these Local Limited Partnerships are located in six states
and are being developed and constructed by seven different development teams.
Each of the Apartment Complexes has received a reservation of Low Income Housing
Credits. While the Fund Manager believes that Series 5 is reasonably likely to
retain or acquire an interest in each of these Local Limited Partnerships,
Series 5 may not do so as a result of the failure by a Local Limited Partnership
to satisfy one or more conditions precedent to the payment of each installment
payment, the inability of Series 5 to raise additional capital necessary to
complete the purchase of the Local Limited Partnership Interests identified
herein, the purchase of Local Limited Partnership Interests other than those
identified herein, or other factors. Moreover, the terms of any acquisition may
differ from those as described. Accordingly, investors should not rely on the
ability of Series 5 to retain or acquire an investment in all these Local
Limited Partnerships on the indicated terms in deciding whether to invest in
Series 5.
Series 5 has acquired a Local Limited Partnership Interest in
Chillicothe Plaza Apartments, L.P., a Missouri limited partnership
("CHILLICOTHE"); and Spring Valley Terrace Apartments, L.L.C., an Arizona
limited liability company ("SPRING VALLEY"). Series 5 expects to acquire a Local
Limited Partnership Interest in Apartment Housing of Theodore, Ltd., an Alabama
limited partnership ("APT. HOUSING"); Bradley Villas, Limited Partnership, an
Arkansas limited partnership ("BRADLEY"); El Reno Housing Associates Limited
Partnership, an Oklahoma limited partnership ("EL RENO"); Hughes Villas, L.P.,
an Arkansas limited partnership ("HUGHES"); Mark Twain Senior Community, L.P., a
California limited partnership ("MARK TWAIN"); Murfreesboro Villas, L.P., an
Arkansas limited partnership ("MURFREESBORO"); and Tulsa-Crestview Housing
Partners, Ltd., a Texas limited partnership qualified to do business in Oklahoma
("TULSA-CRESTVIEW").
APT. HOUSING owns the Harbor Run Apartments in Theodore, Alabama;
BRADLEY owns the Bradley Villas Apartments in Bradley, Arkansas; CHILLICOTHE
owns the Chillicothe Plaza Apartments in Chillicothe, Missouri; EL RENO owns the
Ashton Place Retirement Community Apartments in El Reno, Oklahoma; HUGHES owns
the Hughes Villas Apartments in Hughes, Arkansas; MARK TWAIN owns the Mark Twain
Senior Community Apartments in Oakland, California; MURFREESBORO owns the
Murfreesboro Villas Apartments in Murfreesboro, Arkansas; SPRING VALLEY owns the
Spring Valley Terrace Apartments in Mayer, Arizona; and TULSACRESTVIEW owns the
Crestview Duplexes in Tulsa, Oklahoma.
The following tables contain information concerning the Apartment
Complexes and the Local Limited Partnerships identified herein:
WNC6-12/SUPP1297
2
<PAGE>
<TABLE>
LOCAL
LIMITED
PROJECT ACTUAL OR ESTIMATED PERMANENT PARTNER-
NAME AND ESTIMATED DEVELOP- MORTGAGE SHIP'S
LOCAL NUMBER LOCATION CONSTRUCTION MENT COST NUMBER OF BASIC LOAN ANTICIPATED YEAR CREDITS
LIMITED OF OF COMPLETION (INCLUDING APARTMENT MONTHLY PRINCIPAL TAX CREDITS TO BE FIRST
PARTNERSHIP BUILDINGS PROPERTY DATE LAND COST) UNITS RENTS AMOUNT (1) AVAILABLE
<S> <C> <C> <C> <C> <C> <C> <C>
APT. HOUSING Harbor Run Theodore October 1998 $2,320,000 4 1BR units $226 $341,000 $2,072,153 1998
Apartments (Mobile 24 2BR units $284 CB (2)
County), 12 3BR units $319
5 buildings Alabama $815,000
AHFA
(3)
BRADLEY Bradley Villas Bradley January 1998 $1,013,574 8 2BR units $331 $110,685 $867,500 1998
Apartments (Lafayette 20 2BR units $348 HB (4)
County),
4 buildings Arkansas $400,000
ADFA (5)
CHILLICOTHE Chillicothe Chillicothe June 1998 $1,900,000 24 2BR units $300 $775,000 $1,554,768 1998
Plaza (Livingston 4 3BR units $335 MHDC (6)
Apartments County),
Missouri
7 buildings
EL RENO Ashton Place El Reno August 1998 $5,266,619 60 1BR units $387 $2,403,000 $4,406,215 1999
Retirement (Canadian 40 2BR units $462 GAC(8)
Community County),
Apartments Oklahoma
26 buildings (7)
HUGHES Hughes Villas Hughes September $1,000,021 20 2BR units $398 $384,000 $298,484 1997
Apartments (St. Francis 1996 ADFA (9)
County),
4 buildings Arkansas $384,015
RD (10)
MARK TWAIN Mark Twain Oakland July 1996 $2,564,670 100 Efficiency $338-$407 $1,200,000 $1,019,835 1998
Senior (Alameda 6 1BR units $415 HSA (12)
Community County),
Apartments California $295,957
RACO(13)
3 buildings
(7)(11)
MURFREES- Murfreesboro Murfreesboro March 1998 $1,279,746 10 2BR units $258 $232,019 $1,116,770 1998
BORO Villas (Pike County), 14 2BR units $294 HB (14)
Apartments Arkansas
$400,000
6 buildings ADFA (5)
SPRING VALLEY Spring Valley Mayer August 1998 $1,480,057 20 1 BR units $140-$265 $162,000 $1,102,150 1998
Terrace (Yavapai WMB (15)
Apartments County),
Arizona $462,987
2 buildings HAC (16)
TULSA- Crestview Tulsa September $3,709,000 32 1BR units $379 $1,070,000 $3,748,880 1998
CRESTVIEW Duplexes (Tulsa 1998 24 2BR units $463 MFCM (17)
County),
29 building Oklahoma
(7)
<FN>
(1) Low Income Housing Credits are available over a 10-year period. For the year
in which the credit first becomes available, Series 5 will receive only that
percentage of the annual credit which corresponds to the number of months during
which Series 5 was a limited partner of the Local Limited Partnership, and
during which the Apartment Complex was completed and in service. See the
discussion under "The Low Income Housing Credit" in the Prospectus.
(2) Colonial Bank ("CB") will provide the first mortgage loan for a term of 20
years at an annual interest rate of 9.5%. Principal and interest will be payable
monthly, based on a 40-year amortization schedule. Outstanding principal will be
due upon maturity.
(3) Alabama Housing Finance Authority ("AHFA"), using HOME funds, will provide
the second mortgage loan for a term of 40 years at an annual interest rate of
0.5%. Principal and interest will be payable monthly, based on a 40-year
amortization schedule.
WNC6-12/SUPP1297
3
<PAGE>
(4) Horizon Bank ("HB") will provide the first mortgage loan for a term of 15
years at an annual interest rate of 9%. Principal and interest will be payable
monthly, based on a 15-year amortization schedule.
(5) Arkansas Development Finance Authority ("ADFA"), using HOME funds, will
provide the second mortgage loan for a term of 35 years at an annual interest
rate of 1%. Principal and interest will be payable annually, based on a 35-year
amortization schedule.
(6) Missouri Housing Development Commission ("MHDC") will provide the mortgage
loan for a term of 35 years at an annual interest rate of 1%. Principal and
interest will be payable monthly, based on a 35-year amortization schedule.
(7) Property designed for senior citizens.
(8) Greystone & Co. ("GAC") will provide the mortgage loan for a term of 18
years at an annual interest rate of 7.8%. Principal and interest will be payable
monthly, based on a 30-year amortization schedule. Outstanding principal will be
due upon maturity.
(9) ADFA will provide the first mortgage loan for a term of 30 years at an
annual interest rate of 6%. Principal and interest will be payable monthly,
based on a 30-year amortization schedule.
(10) Rural Development ("RD") will provide the second mortgage loan for a term
of 50 years at an annual interest rate of 1%. Principal and interest will be
payable monthly, based on a 50-year amortization schedule.
(11) Rehabilitation property.
(12) Home Savings of America ("HSA") will provide the first mortgage loan for a
term of 15 years at an annual interest rate of 8.72%. Principal and interest
will be payable monthly, based on a 30-year amortization schedule. Outstanding
principal will be due upon maturity.
(13) Redevelopment Agency of the City of Oakland ("RACO") will provide the
second mortgage loan for a term of 30 years at an annual interest rate of 6%.
Principal and interest will be payable from cash flow, based on a 30-year
amortization schedule. Outstanding principal will be due upon maturity.
(14) Horizon Bank ("HB") will provide the first mortgage loan for a term of 15
years at an annual interest rate of 10%. Principal and interest will be payable
monthly, based on a 15-year amortization schedule.
(15) Washington Mutual Bank, FA ("WMB") will provide the first mortgage loan for
a term of 15 years at an annual interest rate equal to the rate established by
the Federal Home Loan Bank of San Francisco Community Advance Program plus 2%.
Principal and interest will be payable monthly, based on a 30-year amortization
schedule. Outstanding principal will be due on maturity.
(16) Human Action for Chandler, an Arizona non-profit corporation dba
Coordinated Community Services of Arizona ("HAC"), will provide the second
mortgage loan for a term of 20 years at an annual interest rate of 1%. Principal
and interest will be payable from available net cash flow. Outstanding principal
will be due upon maturity.
(17) Multi Family Capital Markets ("MFCM") will provide the mortgage loan for a
term of 18 years at an annual interest rate of 8.3%. Principal and interest will
be payable monthly, based on a 30-year amortization schedule. Outstanding
principal will be due upon maturity.
</FN>
</TABLE>
Theodore (THEODORE): Theodore (population 6,500) is in Mobile County, in
southern Alabama near the Gulf of Mexico, near the intersection of Interstate
Highway 10 and U.S. Highway 90, approximately 20 miles southwest of Mobile. The
major employers for Theodore residents are Mobile County School System,
University of South Alabama and University of South Alabama Medical Facilities.
WNC6-12/SUPP1297
4
<PAGE>
Bradley (BRADLEY): Bradley (population 600) is in Lafayette County, in
southwestern Arkansas, near the Louisiana and Texas borders, at the intersection
of State Highways 29 and 160, approximately 25 miles southeast of Texarkana. The
major employers for Bradley residents are Falcon Products (chairs for hotels and
restaurants) and Pilgrim's Pride (chicken feed).
Chillicothe (CHILLICOTHE): Chillicothe (population 9,000) is the county seat of
Livingston County, and is in north-central Missouri at the intersection of U.S.
Highways 36 and 65, approximately 75 miles northeast of Kansas City. The major
employers for Chillicothe residents are Hendrick Medical Center, Chillicothe
School District, Donaldson Company (air filter manufacturing), and Lambert
Manufacturing (gloves/hats).
El Reno (EL RENO): El Reno (population 16,000) is in Canadian County, in central
Oklahoma, at the intersection of Interstate Highway 40 and U.S. Highway 81,
approximately eight miles from the Oklahoma City limits and approximately 27
miles from the center of Oklahoma City. The major employers for El Reno
residents are Federal Aviation Administration, CMI Corporation and Mustang
Independent Schools.
Hughes (HUGHES): Hughes (population 1,800) is in St. Francis County, in
east-central Arkansas, at the intersection of U.S. Highway 79 and State Highway
38, approximately 25 miles southwest of Memphis, Tennessee. The major employers
for Hughes residents are Arkansas Sock and Rag and Bill's Dollar Store.
Oakland (MARK TWAIN): Oakland (population 376,000) is in Alameda County in
northern California, approximately 10 miles east of San Francisco. The major
employers for Oakland residents are Kaiser Permanente, New United Motor
Manufacturing, Inc. and the Port of Oakland.
Murfreesboro (MURFREESBORO): Murfreesboro (population 1,500) is in Pike County,
in southwest Arkansas, at the intersection of State Highways 19 and 26,
approximately 60 miles southwest of Little Rock. The major employers for
Murfreesboro residents are Murfreesboro Diamond (newspaper) and Aalf's
Manufacturing Inc. (denim jeans).
Mayer (SPRING VALLEY): Mayer (population 1,800) is in Yavapai County in central
Arizona on State Highway 69 near Interstate Highway 17, approximately 20 miles
southeast of Prescott. The major employers for Mayer residents are Yavapai
County, Yavapai Regional Medical Center, and Caradon Better Built.
Tulsa (TULSA-CRESTVIEW): Tulsa (population 500,000) is the county seat of Tulsa
County, and is in eastern Oklahoma, at the intersection of Interstate Highway 44
and U.S. Highway 75. The major employers for Tulsa residents are American
Airlines, Southwestern Bell, and Boeing North American.
WNC6-12/SUPP1297
5
<PAGE>
<TABLE>
SHARING RATIOS:
LOCAL ALLOCATIONS (4) ESTIMATED
GENERAL AND SERIES 5'S ACQUISITION
LOCAL LOCAL PARTNER(S)' SHARING SALE OR CAPITAL FEES PAYABLE
LIMITED GENERAL PROPERTY DEVELOPMENT RATIOS: REFINANCING CONTRIBUTION TO FUND
PARTNERSHIP PARTNER(S) MANAGER (1) FEE (2) CASH FLOW (3) PROCEEDS (5) (6) MANAGER
<S> <C> <C> <C> <C> <C> <C>
APT. HOUSING Thomas H. Apartment $300,700 WNC: Greater 98.99/.01/1 $1,312,916 $122,000
Cooksey (7) Services and of 15% or $250 50/50
Management Co. LGP: 40% of the
Apartment (8) balance
Developers, Inc. The balance:
(7) 50/50
BRADLEY Billy Bunn Bunn Real $144,920 WNC: $500 99/1 $532,196 $49,000
(9) Estate and LGP: $1,000 50/50
Property Manage- The balance: 50/50
ment Co. (10)
CHILLICOTHE MBL The Remas $231,000 WNC: Greater of 98.99/.01/1 $981,049 $91,000
Development, Company 15% or $500 50/50
Co. (11) (12) LGP: 40% of the
balance
The balance: 50/50
EL RENO Cowen Insignia $689,212 WNC: Greater of 99.98/.01/.01 $3,039,985 $282,000
Properties, Inc Residential 20% or $4,000 40/60
(13) Group, L.P. LGP: 40% of the
(14) balance
The balance:
40/60
HUGHES Billy Bunn Southland $161,000 WNC: $500 99/1 $177,300 $22,000
(9) Management Co. LGP: $1,000 50/50
(15) The balance: 50/50
MARK TWAIN Thomas P. Lam Professional $133,553 WNC: 15% 98.99/.01/1 $683,290 $63,000
(16) Apartment LGP: 50% 50/50
Management The balance:
(17) 50/50
MURFREESBORO MIDC Bunn Real $184,946 WNC: $500 99/1 $684,474 $63,000
(18) Estate and LGP: $1,000 50/50
Property Manage- The balance: 50/50
ment Co. (10)
SPRING VALLEY Spring Valley Kay-Kay Realty $219,137 WNC: $500 99.98/.01/.01 $716,254 $66,000
Terrace, Inc. Corp. (20) LGP: $1,000 40/60
(19) The balance: HAC
TULSA-CRESTVIEW Grace Housing Barnes Real $512,108 WNC: Greater of 98.99/.01/1 $2,523,437 $234,000
Partners, Ltd. Estate 15% or $1,500 20/80
(21) Services, Inc. LGP: 40%
(22) The balance: 50/50
Barnes
Affordable
Properties (21)
New Faith
Baptist Church
(21)
<FN>
(1) The maximum annual management fee payable to the property manager generally
is determined pursuant to lender regulations. Each Local General Partner is
authorized to employ either itself or one of its Affiliates, or a third party,
as property manager for leasing and management of the Apartment Complex so long
as the fee therefore does not exceed the amount authorized and approved by the
lender for the Apartment Complex.
(2) Each Local Limited Partnership will pay its Local General Partner(s) or an
Affiliate of its Local General Partner(s) a development fee in the amount set
forth, for services incident to the development and construction of the
Apartment Complex, which services include: negotiating the financing commitments
for the Apartment Complex; securing necessary approvals and permits for the
development and construction of the Apartment Complex; and obtaining allocations
of Low Income Housing Credits. This payment will be made in installments after
receipt of each installment of the capital contributions made by Series 5.
(3) Reflects the amount of the net cash flow from operations, if any, to be
distributed to Series 5 ("WNC") and the Local General Partner(s) ("LGP") of the
Local Limited Partnership for each year of operations. Generally, to the extent
that the
WNC6-12/SUPP1297
6
<PAGE>
specific dollar amounts which are to be paid to WNC are not paid annually, they
will accrue and be paid from sale or refinancing proceeds as an obligation of
the Local Limited Partnership.
(4) Subject to certain special allocations, reflects the respective percentage
interests in profits, losses and Low Income Housing Credits of (a) in the case
of APT. HOUSING, CHILLICOTHE, EL RENO, MARK TWAIN, SPRING VALLEY and
TULSA-CRESTVIEW (i) Series 5, (ii) WNC Housing, L.P., an Affiliate of the
Sponsor which is the special limited partner, and (iii) the Local General
Partner(s); and (b) in the case of BRADLEY, HUGHES and MURFREESBORO (i) Series 5
and (ii) the Local General Partner(s).
(5) Reflects the percentage interests of (i) Series 5 and (ii) the Local General
Partner(s), in any net cash proceeds from sale or refinancing of the Apartment
Complex, after payment of the mortgage loan and other Local Limited Partnership
obligations (see, e.g., note 3), and the following, in the order set forth: the
capital contributions of Series 5; the capital contribution of WNC Housing, L.P.
(if applicable); and the capital contribution of the Local General Partner(s).
(6) Series 5 will make its capital contributions to the Local Limited
Partnership in stages, with each contribution due when certain conditions
regarding construction or operations of the Apartment Complex have been
fulfilled. See "Investment Policies" and "Terms of the Local Limited Partnership
Agreements" under "Investment Objectives and Policies" in the Prospectus.
(7) Thomas H. Cooksey has been involved in real estate development and
apartment management since 1980 and is the general partner of partnerships that
own apartment complexes located in 65 towns, principally in Alabama. Mr.
Cooksey, age 56, has represented to Series 5 that, as of March 1, 1997, he had a
net worth in excess of $10,000,000. Apartment Developers, Inc. was formed in
1993 by Mr. Cooksey, Charles Farrow, Jr. and Kay Wallace to act as a corporate
general partner of the Local Limited Partnership which owns the Apartment
Complex. Mr. Cooksey is the president and owner of the corporation. Apartment
Developers, Inc. has represented to Series 5 that its shareholders' equity is
nominal.
(8) Apartment Services and Management Co. was formed in 1986. Thomas H.
Cooksey is president and owner of 50% of the corporation. Apartment Services and
Management Co. manages in excess of 2,700 apartment units, more than 1,750 of
which are Tax Credit units.
(9) Billy Bunn, age 45, has represented to Series 5 that, as of April 1,
1997, he had a net worth in excess of $2,000,000.
(10) Bunn Real Estate and Property Management Co. manages in excess of 100
apartment units, more than 25 of which are Tax Credit units.
(11) D. Kim Lingle is the president of MBL Development, Co., which has the
primary goal of developing and constructing affordable housing. Ted Scwermer is
vice president of MBL Development, Co. and is also the uncle of Mr. Lingle. Mr.
Lingle and Mr. Scwermer have a background in banking and development. MBL
Development, Co. has represented to Series 5 that, as of December 31, 1996, its
total shareholder's equity was in excess of $700,000.
(12) The Remas Company is owned by William F. Gillen, who has 26 years'
experience in multi-family and commercial property management. Prior to forming
The Remas Company, Mr. Gillen was vice president of administration and
operations of Midland Property Management, Inc., a Kansas City-based real estate
development and property management firm, where he was employed for 14 years.
The Remas Company currently manages seven apartment complexes including three
government-subsidized properties.
(13) Cowen Properties, Inc. was formed by E. Allen Cowen, II, who has been
involved in real estate development for over 27 years. In 1969 Mr. Cowen formed
Allen Construction Company, which was principally involved in multi-family
housing projects. He later formed Cowen Properties, Inc., which is primarily
involved in Tax Credit housing. Mr. Cowen has developed 24 affordable housing
properties. Mr. Cowen, age 53, has represented to Series 5 that, as of August
31, 1997, he had a net worth in excess of $1,200,000.
(14) Insignia Management Group was formed in 1990, with the acquisition of
more than 48,000 apartment units in more than 30 states from U. S. Shelter
Corporation. In January 1997, Insignia Management Group changed its name to
Insignia Residential Group, L.P.
WNC6-12/SUPP1297
7
<PAGE>
(15) Southland Management Co. manages in excess of 600 apartment units,
more than 300 of which are Tax Credit units.
(16) Thomas P. Lam has been involved in real estate development and
management for 20 years. He has developed 28 properties, including five
affordable housing developments. Mr. Lam, age 59, has represented to Series 5
that, as of September 23, 1997, he had a net worth in excess of $1,600,000.
(17) Professional Apartment Management ("PAM") was formed in 1969. PAM provides
management services for over 5,700 apartment units, more than 600 of which are
Tax Credit units.
(18) Murfreesboro Industrial Development Corp. ("MIDC") has represented to
Series 5 that, as of July 1, 1997, it had a net worth in excess of $200,000.
(19) Spring Valley Terrace, Inc. is an Arizona corporation owned by HAC.
Sam Cioffi is vice-president and director of HAC. Mr. Cioffi has more than 25
years' experience in housing and community development. Spring Valley Terrace,
Inc. has represented to Series 5 that, as of September 30, 1997, it had a
nominal net worth. Construction completion and operating deficit guarantees will
be provided by HAC. HAC has represented to Series 5 that, as of June 30, 1997,
it had unrestricted net assets of approximately $200,000 and temporarily
restricted net assets of approximately $3,400,000.
(20) Kay-Kay Realty Corp. is an Arizona corporation which has been managing
properties for 18 years in Arizona. The company currently manages ten properties
consisting of 560 units. Four of the properties are Tax Credit properties.
(21) Grace Housing Partners, Ltd. was formed in 1996 solely for the purpose
of serving as one of the general partners of TULSA-CRESTVIEW. The general
partner of Grace Housing Partners, Ltd. is Aslan Real Estate, Ltd. Barnes
Properties, Inc. dba Barnes Affordable Properties was formed in 1983 to own,
manage, finance, develop and design multi-family and luxury master-planned
communities. Arthur Barnes, chairman of the board, has 36 years' experience in
real estate. New Faith Baptist Church was formed in 1979. Grace Housing
Partners, Ltd., Barnes Affordable Properties and New Faith Baptist Church have
represented to Series 5 that their respective net worths are nominal.
Construction completion and operating deficit guarantees will be provided by
Bruce A. Hall, Robert Voelker, and Aslan Real Estate, Ltd. Mr. Hall, age 41, has
represented to Series 5 that, as of July 31, 1997, he had a net worth in excess
of $800,000. Mr. Voelker, age 39, has represented to Series 5 that, as of
September 3, 1997, he had a net worth in excess of $700,000. Aslan Real Estate,
Ltd. has represented to Series 5 that, as of March 31, 1997, it had a net worth
in excess of $2,000,000.
(22) Barnes Real Estate Services, Inc. was formed as DMB Investments, Inc.
in 1990 to provide management for all phases of multi-family developments.
Barnes Real Estate Services, Inc. currently manages in excess of 2,250 apartment
units, more than 1,260 of which are Tax Credit units.
</FN>
</TABLE>
