FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
O ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended ________________
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 1, 1999 to March 31, 1999
Commission file number: 0-24855
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
California 33-0745418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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:
UNITS OF LIMITED PARTNERSHIP INTEREST
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 ____
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
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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.
INAPPLICABLE
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).
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PART 1.
Item 1. Business
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 multifamily housing complexes that are eligible for
low-income housing federal and, in certain cases, California income tax credits
("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 66.8% of the outstanding stock of Associates. John B. Lester, Jr.
was the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of Associates. The business of the
Partnership is conducted primarily through Associates, as the Partnership has no
employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission 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 the close of the public offering on July 9, 1998, the Partnership
had received and accepted subscriptions for 25,000 Units in the amount of
$24,918,175 net of volume and dealer discounts of $81,825. 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 each of which will own and operate a multi-family
housing complex (the "Housing 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
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
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 Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation 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 Supplements thereto" (the "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 its Housing Complex, it is
anticipated that the local general partner ("Local General Partner") will either
continue to operate such Housing Complex or take such other actions as the Local
General Partner believes to be in the best interest of the Local Limited
Partnership. Notwithstanding the preceding, circumstances beyond the control of
the General Partner or the Local General Partners may occur during the
Compliance Period, which would require the Partnership to approve the
disposition of a Housing Complex prior to the end thereof, possibly resulting in
recapture of Low Income Housing Credits.
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As of March 31, 1999, the Partnership had invested in thirteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit. Certain Local
Limited Partnerships may 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 multi-unit 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 Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not makes its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. 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 Housing
Complexes and the Partnership. 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 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.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
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 Housing
Complexes.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the thirteen Housing Complexes as of the dates and for
the periods indicated:
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<TABLE>
<CAPTION>
------------------------------ ---------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ---------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
in Local Limited Investment Number Occu- Housing Limited
Partnership Name Location General Partner Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Apartment Housing of Theodore, Apartment Developers,
Theodore Alabama Inc. and Thomas H.
Cooksey $ 1,277,000 $ 839,000 40 0% $ 2,015,490 $ 898,000
Bradley Villas Limited Bradley, Billy Wayne Bunn 501,000 501,000 20 95% 628,000 538,000
Partnership Arkansas
Chillicothe Plaza Apts. Chillicothe, MBL Development Co. 991,000 697,000 28 0% 1,554,760 246,000
L.P. Missouri
Concord Apartment Orlando, New Communities, LLC, a
Partners, L.P. Florida Colorado limited
liability Company 470,000 470,000 26 100% 782,000 293,000
El Reno Housing El Reno, Cowen Properties, Inc.,
Associates Limited Oklahoma an Oklahoma Corporation 3,040,000 3,040,000 100 0% 4,406,656 2,187,000
Partnership
Hillcrest Heights, L.P. Marshalltown, WNC & Associates, Inc. 609,000 609,000 32 69% 681,000 598,000
Iowa
Hughes Villas Limited Hughes, Billy Wayne Bunn 182,000 182,000 20 100% 337,000 765,000
Partnership Arkansas
Mansur Wood Living Carbon Cliff, Elderly Living
Center, L.P. IIlinois Development, Inc. 6,446,000 1,611,000 115 0% 8,955,955 1,420,000
Mark Twain Senior Oakland, Thomas P. Lam and
Community Limited California Marilyn S. Lam 740,000 715,000 106 91% 1,145,000 1,470,000
Partnership
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
------------------------------ ---------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ---------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
in Local Limited Investment Number Occu- Housing Limited
Partnership Name Location General Partner Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Murfreesboro Villas Murfreesboro, Murfreesboro Industrial
Limited Partnership Arkansas Development Corporation 686,000 686,000 24 54% 130,000 643,000
Spring Valley Terrace Mayer, Spring Valley Terrace,
Apartments, LLC Arizona Inc. 716,000 648,000 20 0% 590,000 997,000
United Development Co., Memphis, Harold E. Buehler, Sr.
L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,384,000 40 0% 2,693,230 876,000
United Development Co., Memphis, Harold E. Buehler, Sr.
L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 733,000 20 100% 1,061,540 378,000
---------- ---------- --- ---- ---------- ----------
$ 18,246,000 $ 12,115,000 591 47% $ 24,980,631 $ 11,309,000
========== ========== === ==== ========== ==========
</TABLE>
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<TABLE>
<CAPTION>
---------------------------------------------------------
For the year ended December 31,1998
---------------------------------------------------------
Net Income Low Income Housing
Partnership Name Rental Income (loss) Credits Allocated
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Apartment Housing of Theodore $ - $ - 98.99%
Bradley Villas Limited Partnership 47,000 (16,000) 99.00%
Chillicothe Plaza Apts. L.P. - 18,000 99.97%
Concord Apartment Partners, L.P. 87,000 (51,000) 99.98%
El Reno Housing Associates Limited Partnership - 8,000 99.98%
Hillcrest Heights, L.P. 41,000 (22,000) 99.99%
Hughes Villas Limited Partnership 93,000 (3,000) 99.00%
Mansur Wood Living Center, L.P. - 83,000 99.98%
Mark Twain Senior Community Limited Partnership 592,000 (11,000) 98.99%
Murfreesboro Villas Limited Partnership 11,000 (31,000) 99.00%
Spring Valley Terrace Apartments, LLC 7,000 (29,000) 99.98%
United Development Co., L.P. - 97.1 7,000 5,000 99.98%
United Development Co., L.P. - 97.2 53,000 (61,000) 99.98%
--------- ---------
$ 938,000 $ (110,000)
========= =========
</TABLE>
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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 March 31, 1999, there were 1,378 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.
(d) No unregistered securities were sold by the Partnership during the
three months ended March 31, 1999.
Item 5b.
The Partnership conducted an offering pursuant to a registration statement
(Commission File No. 333-24111) which was declared effective on June 23, 1997.
As of the close of the public offering on July 9, 1998, the Partnership had
received subscriptions for 25,000 Units, for an aggregate amount of capital
contributions of $24,918,175, net of volume and dealer discounts of $81,825. At
March 31, 1999, the above capital contributions consisted of cash of $24,879,575
and notes receivable of $38,600. At March 31, 1999, approximately $3,248,440 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 $1,665,473 and wholesaling and other organization
and offering expenses of approximately $750,000 which were paid or to be paid to
non-affiliates. At March 31, 1999, approximately $21,670,000 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
Affiliates Paid to Others Total
---------- -------------- -----
<S> <C> <C> <C>
Acquisition Fees through 3/31/99 $ 1,747,300 $ - $ 1,747,300
Acquisition costs through 3/31/99 - 170,300 170,300
Lower tier partnerships - 18,246,000 18,246,000
Reserves or available to be invested - 1,506,400 1,506,400
----------- ----------- -----------
Total $ 1,747,300 $ 19,922,700 $ 21,670,000
=========== =========== ===========
</TABLE>
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Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>
March 31 December 31
---------------------------------- ----------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 3,103,129 $ 7,612,155 $ 3,521,888 $ 4,889,574
Funds held in escrow
disbursement account 4,834,997 - 5,505,543 608,850
Subscriptions and notes
receivable 38,600 597,350 879,800 631,885
Investments in limited
partnerships, net 19,968,445 6,756,695 19,927,953 2,398,460
Loans receivable - 360,194 - 878,894
Other assets 30,814 24,552 68,482 5,042
--------------- --------------- --------------- ---------------
$ 27,975,985 $ 15,350,946 $ 29,903,666 $ 9,412,705
=============== =============== =============== ===============
LIABILITIES
Due to limited partnerships $ 6,131,391 $ 1,836,775 $ 8,051,777 $ 860,671
Accrued fees and expenses due to
general partner and affiliates 159,973 564,249 97,387 361,900
----------- ----------- ----------- -----------
6,291,364 2,401,024 8,149,164 1,222,571
----------- ----------- ----------- -----------
PARTNERS' EQUITY 21,684,621 12,949,922 21,754,502 8,190,134
----------- ----------- ----------- -----------
$ 27,975,985 $ 15,350,946 $ 29,903,666 $ 9,412,705
=========== =========== =========== ===========
Selected results of operations, cash flows, and other information for the
Partnership for the three months ended March 31, 1999 and for the year ended
December 31, 1998 and the period August 29, 1997 (date operations commenced)
through December 31, 1997 is as follows:
March 31 December 31
---------------------------------- -----------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
Income (loss) from operations $ (21,156) $ 45,200 $ 164,828 $ (87)
Equity in income (loss) of
limited partnerships (22,000) (13,585) (110,194) 2,395
----------- ----------- ----------- -----------
Net income $ (43,156) $ 31,615 $ 54,634 $ 2,308
=========== =========== =========== ===========
Net income allocated to:
General partner $ (431) $ 316 $ 546 $ 23
=========== =========== =========== ===========
Limited partners $ (42,725) $ 31,299 $ 54,088 $ 2,285
=========== =========== =========== ===========
Net income per limited partner
unit $ (1.71) $ 2.51 $ 2.57 $ 1.13
=========== =========== =========== ===========
Outstanding weighted limited
partner units 25,000 12,456 21,008 2,029
=========== =========== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
March 31 December 31
---------------------------------- ----------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Net cash provided by (used in):
Operating activities $ 15,016 $ 33,326 $ (115,775) $ 1,839
Investing activities (1,251,140) (2,125,841) (14,513,730) (2,962,516)
Financing activities 817,365 4,815,096 13,261,819 7,850,251
----------- ----------- ----------- -----------
Net change in cash and cash
equivalents (418,759) 2,722,581 (1,367,686) 4,889,574
Cash and cash equivalents,
beginning of period 3,521,888 4,889,574 4,889,574 -
----------- ----------- ----------- -----------
Cash and cash equivalents, end
of period $ 3,103,129 $ 7,612,155 $ 3,521,888 $ 4,889,574
=========== =========== =========== ===========
Low Income Housing Credit per Unit was as follows for the years ended December
31:
1998 1997
---- ----
Federal $ 21 $ -
State - -
----------- -----------
Total $ 21 $ -
=========== ===========
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at March 31, 1999 consisted primarily of $3,103,000 in
cash, $4,835,000 in cash in escrow, $39,000 in subscriptions receivable and
aggregate investments in the thirteen Local Limited Partnerships of $19,968,000.
Liabilities at March 31, 1999 primarily consisted of $6,131,000 due to limited
partnerships, $47,000 in annual asset management fees and $113,000 in advances
and other payables due to the General Partner or affiliates.
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(43,000), reflecting a decrease of $75,000 from the net income experienced for
the three months ended March 31, 1998. The change is primarily due to a decrease
in interest income of $39,000 to $14,000 for the three months ended March 31,
1999 from $53,000 for the three months ended March 31, 1998 and an increase in
equity in losses of limited partnerships of $8,000 to $(22,000) for the three
months ended March 31, 1999 from $(14,000) for the three months ended March 31,
1998. In addition, amortization expense increased by $8,000, asset management
fees increased by $16,000 and other operating expenses increased by $3,000.
Year Ended December 31, 1998 Compared to Period Ended December 31, 1997. The
Partnership's net income for 1998 was $55,000, reflecting an increase of $53,000
from the net income experienced in 1997. The increase in net income is primarily
due to interest income, which increased to $286,000 in 1998 from $10,000 in
1997, offset by an increase in equity in losses of limited partnerships of
$112,000, an increase of $66,000 in annual asset management fees, and a $45,000
increase in amortization expense.
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Cash Flows
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net decrease in cash during the three months ended March 31, 1999 was
$(419,000), compared to a net increase in cash for the three months ended March
31, 1998 of $2,723,000. The change was due primarily to a decrease in capital
contributions of $5,411,000 and an increase in cash paid to the General Partner
or affiliates of $18,000, offset by an increase in collections of notes
receivable due from limited partners of $880,000, a decrease in offering
expenses paid of $533,000, a decrease in investments in limited partnerships of
$608,000 and a decrease in acquisition fees and costs of $266,000.
Year Ended December 31, 1998 Compared to Period Ended December 31, 1997. Net
decrease in cash in 1998 was $(1,368,000), compared to a net increase in cash in
1997 of $4,890,000. The change was due primarily to an increase in investments
in limited partnerships of $6,763,000, an increase in funds held in escrow
disbursement accounts of $4,288,000, an increase in capitalized acquisition
costs of $500,000, and an increase in cash used in operating activities of
$118,000. These increases are offset by an increase in capital contributions of
$5,742,000 and an increase in collections on notes receivable of $632,000,
reduced by $962,000 for increases in offering costs.
During the three months ended March 31, 1999 and the year ended December 31,
1998, accrued payables, which consist of related party management fees and
advances due to the General Partner, increased by $63,000 and decreased by
$265,000, respectively.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 1999, to be sufficient to meet all currently forseeable
future cash requirements.
Subsequent to March 31, 1999, the Partnership is in negotiations to acquire one
additional Local Limited Partnership interest which would commit the Partnership
to additional capital contributions of $670,000, of which $0 has been advanced
as of March 31, 1999.
Impact of Year 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its general partner. IT systems include computer hardware and software used
to produce financial reports and tax return information. This information is
then used to generate reports to investors and regulatory agencies, including
the Internal Revenue Service and the Securities and Exchange Commission. The IT
systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. Except for one telephone system, the non-IT
systems of WNC are year 2000 compliant. The one telephone system will require
the replacement of one computer and one software application, both of which will
be completed on or before October 1, 1999.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. There can be no assurance that this
compliance information is correct. There also can be no assurance that the
systems of other, less-important service providers and outside vendors will be
year 2000 compliant.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $20,000. The
cost to replace the telephone system noted above will be less than $5,000. The
cost to deal with potential year 2000 issues of other outside vendors cannot be
estimated at this time.
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<PAGE>
Risk of Year 2000 Issues
The most reasonable and likely result from non-year 2000 compliance of systems
of the service providers noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Local Limited Partnerships
Status of Readiness
WNC is in the process of obtaining year 2000 certifications from each Local
General Partner of each Local Limited Partnership. Those certifications will
represent to the Partnership that the IT and non-IT systems critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT systems of property management companies, independent
accountants, electrical power providers, financial institutions and
telecommunications carriers used by the Local Limited Partnership are year 2000
compliant.
There can be no assurance that the representations in the certifications will be
correct. There also can be no assurance that the systems of other,
less-important service providers and outside vendors, upon which the Local
Limited Partnerships rely, will be year 2000 compliant.
Costs to Address Year 2000 Issues
There will be no cost to the Partnership as a result of assessing year 2000
issues for the Local Limited Partnerships. The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.
Risk of Year 2000 Issues
There may be Local General Partners who indicate that they or their property
management company are not year 2000 compliant and do not have plans to become
year 2000 compliant before the end of 1999. There may be other Local General
Partners who are unwilling to respond to the certification request. The most
likely result of either non-compliance or failure to respond will be the removal
and replacement of the property management company and/or the Local General
Partner with year 2000 compliant operators.
Despite the efforts to obtain certifications, there can be no assurance that the
Partnership will be unaffected by year 2000 issues. The most reasonable and
likely result from non-year 2000 compliance will be the disruption of normal
business operations for the Local Limited Partnerships, including but not
limited to the possible failure to properly collect rents and meet their
obligations in a timely manner. This disruption would, in turn, lead to delays
by the Local Limited Partnerships in performing reporting and fiduciary
responsibilities on behalf of the Partnership. The worst-case scenario would
include the initiation of foreclosure proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary to minimize the risk of foreclosure, including the removal and
replacement of a Local General Partner by the Partnership. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NONE.
Item 8. Financial Statements and Supplementary Data
12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 5
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
VI, L.P., Series 5 (a California Limited Partnership) (the "Partnership") as of
March 31, 1999 and December 31, 1998, and the related statements of operations,
partners' equity (deficit) and cash flows for the three months ended March 31,
1999 and the year ended December 31, 1998. 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 audits. A significant
portion of the financial statements of the limited partnerships in which the
Partnership is a limited partner were audited by other auditors whose reports
have been furnished to us. As discussed in Note 3 to the financial statements,
the Partnership accounts for its investments in limited partnerships using the
equity method. The portion of the Partnership's investment in limited
partnerships audited by other auditors represented 37% and 33% of the total
assets of the Partnership at March 31, 1999 and December 31, 1998, respectively.
Our opinion, insofar as it relates to the amounts included in the financial
statements for the limited partnerships which were audited by others, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the 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 March 31, 1999 and December 31, 1998, and
the results of its operations and its cash flows for the three months ended
March 31, 1999 and the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
August 12, 1999
13
<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 partnerships in which WNC Housing Tax
Credit Fund VI, L.P., Series 5 is a limited partner. These investments, as
discussed in Note 3 to the financial statements, are accounted for by the equity
method. The investment in these limited partnerships represented 25% of the
total assets of WNC Housing Tax Credit Fund V, L.P., Series 5 at December 31,
1997. The financial statements of the limited partnerships were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for these limited partnerships, is based solely
on the reports 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 reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund V, 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
14
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 3,103,129 $ 7,612,155 $ 3,521,888 $ 4,889,574
Funds held in escrow disbursement account 4,834,997 - 5,505,543 608,850
Subscriptions and notes receivable (Note 7) 38,600 597,350 879,800 631,885
Loans receivable (Note 2) - 360,194 - 878,894
Investments in limited partnerships (Note 3) 19,968,445 6,756,695 19,927,953 2,398,460
Other assets 30,814 24,552 68,482 5,042
----------- ----------- ------------ -----------
$ 27,975,985 $ 15,350,946 $ 29,903,666 $ 9,412,705
=========== =========== ============ ===========
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Due to limited partnerships (Note 5) $ 6,131,391 $ 1,836,775 $ 8,051,777 $ 860,671
Accrued fees and expenses due to General
Partner and affiliates (Note 4) 159,973 564,249 97,387 361,900
----------- ----------- ------------ -----------
Total liabilities 6,291,364 2,401,024 8,149,164 1,222,571
----------- ----------- ------------ -----------
Commitments and contingencies (Note 8)
Partners' equity (deficit) (Notes 7 and 8)
General partner (32,246) (18,619) (31,162) (12,452)
Limited partners (25,000 units authorized,
25,000, 15,377, 25,000 and 9,834 units
outstanding at March 31, 1999, March 31,
1998 (unaudited), December 31, 1998 and
1997, respectively) 21,716,867 12,968,541 21,785,664 8,202,586
----------- ----------- ------------ -----------
Total partners' equity 21,684,621 12,949,922 21,754,502 8,190,134
----------- ----------- ------------ -----------
$ 27,975,985 $ 15,350,946 $ 29,903,666 $ 9,412,705
=========== =========== ============ ===========
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
<TABLE>
<CAPTION>
March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Interest income $ 14,427 $ 52,896 $ 286,005 $ 10,012
---------- ---------- ----------- ----------
Operating expenses:
Amortization (Notes 3 and 4) 15,334 6,764 47,350 2,256
Asset management fees (Note 4) 16,795 872 66,382 -
Other 3,454 60 7,445 7,843
---------- ---------- ----------- ----------
Total operating expenses 35,583 7,696 121,177 10,099
---------- ---------- ----------- ----------
Income (loss) from operations (21,156) 45,200 164,828 (87)
Equity in income (losses) of limited
partnerships (Note 3) (22,000) (13,585) (110,194) 2,395
---------- ---------- ----------- ----------
Net income (loss) $ (43,156) $ 31,615 $ 54,634 $ 2,308
========== ========== =========== ==========
Net income (loss) allocated to:
General partner $ (431) $ 316 $ 546 $ 23
========== ========== =========== ==========
Limited partners $ (42,725) $ 31,299 $ 54,088 $ 2,285
========== ========== =========== ==========
Net income (loss) per limited partner unit $ (1.71) $ 2.51 $ 2.57 $ 1.13
========== ========== =========== ==========
Outstanding weighted limited partner units 25,000 12,456 21,008 2,029
========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
Contribution from General Partner and initial limited
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 7) - (351,150) (351,150)
Offering expenses (12,575) (1,244,929) (1,257,504)
Net income 23 2,285 2,308
----------- ------------ ------------
Equity (deficit), December 31, 1997 (12,452) 8,202,586 8,190,134
Sale of limited partnership units, net of discounts
of $43,205 - 15,122,795 15,122,795
Sale of limited partnership units issued for
promissory notes receivable (Note 7) - (38,600) (38,600)
Collection of notes receivable - 351,150 351,150
Offering expenses (19,256) (1,906,355) (1,925,611)
Net income 546 54,088 54,634
----------- ------------ ------------
Equity (deficit), December 31, 1998 (31,162) 21,785,664 21,754,502
Collection of notes receivable - 38,600 38,600
Offering expenses (653) (64,672) (65,325)
Net loss (431) (42,725) (43,156)
----------- ------------ ------------
Partners' equity (deficit) at March 31, 1999 $ (32,246) $ 21,716,867 $ 21,684,621
=========== ============ ============
</TABLE>
See accompanying notes to financial statements
17
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
<TABLE>
<CAPTION>
March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (43,156) $ 31,615 $ 54,634 $ 2,308
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Amortization 15,334 6,764 47,350 2,256
Equity in loss (income) of limited
partnerships 22,000 13,585 110,194 (2,395)
Change in other assets 37,668 (19,510) (63,440) (5,042)
Change in accrued fees and expenses due
to general partner and affiliates (16,830) 872 (264,513) 4,712
---------- ---------- ----------- ----------
Net cash provided by (used in) operating
activities 15,016 33,326 (115,775) 1,839
---------- ---------- ----------- ----------
Cash flows from investing activities:
Investments in limited partnerships (1,920,386) (2,467,221) (9,357,460) (836,632)
Funds held in escrow disbursement account 670,546 608,850 (4,896,693) (608,850)
Loans receivable - - 878,894 (878,894)
Capitalized acquisition costs and fees 1,590 (267,785) (1,138,786) (638,140)
Distributions from limited partnerships - 315 315 -
---------- ---------- ----------- ----------
Net cash used in investing activities (1,248,250) (2,125,841) (14,513,730) (2,962,516)
---------- ---------- ----------- ----------
Cash flows from financing activities:
Capital contributions - 5,410,960 14,555,545 8,813,445
Offering expenses (65,325) (595,864) (1,925,611) (963,194)
Collection on notes receivable 879,800 - 631,885 -
---------- ---------- ----------- ----------
Net cash provided by financing activities 814,475 4,815,096 13,261,819 7,850,251
---------- ---------- ----------- ----------
Net increase (decrease) in cash and cash
equivalents (418,759) 2,722,581 (1,367,686) 4,889,574
Cash and cash equivalents, beginning of period 3,521,888 4,889,574 4,889,574 -
---------- ---------- ----------- ----------
Cash and cash equivalents, end of period $ 3,103,129 $ 7,612,155 $ 3,521,888 $ 4,889,574
========== ========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Taxes paid $ - $ - $ 800 $ 800
========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
18
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and 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, a California Limited Partnership
(the "Partnership"), was formed on March 3, 1997 under the laws of the state of
California, and commenced operations on August 29, 1997. The Partnership was
formed to invest primarily in other limited partnerships and limited liability
companies (the "Local Limited Partnerships") which own and operate multi-family
housing complexes (the "Housing Complex") that are eligible for low income
housing credits. The local general partners (the "Local General Partners") of
each Local Limited Partnership retain responsibility for maintaining, operating
and managing the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. Wilfred N. Cooper, Sr., through the Cooper
Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B. Lester was
the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of WNC.
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.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). The offering of Units concluded on July 9, 1998 at which
time 25,000 Units representing subscriptions in the amount of $24,918,175, net
of discount of $54,595 for volume purchases and $27,230 for dealer discounts,
had been accepted. The General Partner has a 1% interest in operating profits
and losses, taxable income and losses, in cash available for distribution from
the Partnership and tax credits. The limited partners will be allocated the
remaining 99% interest 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 proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 4) from the remainder, 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.
Change in Reporting Year End
The Partnership has elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 3.
Due to the change in year end, unaudited financial information as of and for the
three months ended March 31, 1998 is included in the financial statements for
comparative purposes only. The financial statements as of and for the three
months ended March 31, 1998 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of financial position and results of
operations of the Partnership for the interim period.
19
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
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 multi-unit 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 Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. 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 Housing Complexes and the
Partnership. 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 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.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting for Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership's are consistent with those of the Partnership. Costs incurred by
the Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Note 3).
Losses from limited partnerships for the years ended December 31, 1998 and 1997
have been recorded by the Partnership based on reported results provided by the
Local Limited Partnerships. Losses from limited partnerships for the three
months ended March 31, 1999 and 1998 have been estimated by management of the
Partnership. Losses from Local Limited Partnerships allocated to the Partnership
are not recognized to the extent that the investment balance would be adjusted
below zero.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with selling
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 and amounted to
$3,248,440, $3,183,115 and $1,257,504 as of March 31, 1999 and December 31, 1998
and 1997, respectively.
20
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and 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.
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. The
Partnerships cash equivalents consisted of investments in tax exempt bonds
totaling $2,730,675 and $3,400,000 as of March 31, 1999 and December 31, 1998,
respectively.
Concentration of Credit Risk
At March 31, 1999, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.
Net Income (Loss) Per Limited Partner Unit
Net income (loss) per limited partnership unit is calculated pursuant to
Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net
income (loss) per unit includes no dilution and is computed by dividing loss
available to limited partners by the weighted average number of units
outstanding during the period. Calculation of diluted net income per unit is not
required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
Reclassifications
Certain prior year balances have been reclassified to conform to the 1999
presentation.
NOTE 2 - LOANS RECEIVABLE
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. These loans are
generally 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. Loans receivable with a
balance of $758,894 at December 31, 1997 were collectible from two limited
partnerships, both of which were acquired in 1998. Loans receivable with a
balance of $100,000 at December 31, 1997 were collectible from one limited
partnership and were repaid to the Partnership in 1998.
21
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of March 31, 1999 and December 31, 1998 and 1997, the Partnership has
acquired limited partnership interests in 13 Local Limited Partnerships, each of
which owns one Housing Complex consisting of an aggregate of 591 apartment
units. As of March 31, 1999 and December 31, 1998 construction or rehabilitation
of 5 of the Housing Complexes were still in process. The respective general
partners of the Local Limited Partnerships manage the day-to-day operations of
the entities. Significant Local Limited Partnership business decisions require
approval from the Partnership. The Partnership, as a limited partner, is
generally entitled to 99%, as specified in the Local Limited Partnership
agreements, of the operating profits and losses, taxable income and losses and
tax credits of the Local Limited Partnerships.
The Partnership's investments in limited partnerships as reflected in the
balance sheets at December 31, 1998 and 1997, are approximately $10,382,000 and
$1,559,000, respectively, greater than the Partnership's equity as shown in the
Local Limited Partnerships' financial statements. This difference is primarily
due to acquisition, selection, and other costs related to the acquisition of the
investments which have been capitalized in the Partnership's investment account
and to capital contributions payable to the limited partnerships which were
netted against partner capital in the Local Limited Partnerships' financial
statements (see Notes 4 and 5).
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. As of March 31, 1999, no investment accounts in
Local Limited Partnerships reached a zero balance.
The following is a summary of the equity method activity of the investments in
limited partnerships for the periods presented:
<TABLE>
<CAPTION>
For the Three
Months Ended For the Years Ended
March 31 December 31
------------- ---------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Investments per balance sheet, beginning of period $ 19,927,953 $ 2,398,460 $ -
Capital contributions - 9,357,460 836,632
Capital contributions payable - 7,191,106 860,671
Capitalized acquisition fees and costs 77,826 1,138,786 701,018
Distributions paid - (315) -
Equity in income (losses) of limited partnerships (22,000) (110,194) 2,395
Amortization of paid acquisition fees and costs (15,334) (47,350) (2,256)
----------- ----------- ----------
Investments in limited partnerships, end of period $ 19,968,445 $ 19,927,953 $ 2,398,460
=========== =========== ==========
</TABLE>
22
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. Approximate combined condensed financial information from the
individual financial statements of the individual financial statements of the
Local Limited Partnerships as of December 31 and for the years then ended is as
follows:
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1998 1997
---- ----
ASSETS
<S> <C> <C>
Buildings and improvements, net of accumulated
depreciation for 1998 of $797,000 $ 9,037,000 $ -
Land 755,000 93,000
Construction in progress 10,010,000 357,000
Other assets 1,649,000 643,000
------------ ------------
$ 21,451,000 $ 1,093,000
============ ============
LIABILITIES
Mortgage and construction loans payable $ 11,309,000 $ 149,000
Other liabilities (including due to related parties at
December 31, 1998 and 1997 of $177,000 and $0,
respectively) 712,000 29,000
------------ ------------
12,021,000 178,000
------------ ------------
PARTNERS' CAPITAL
WNC California Housing Tax Credits VI, L.P., Series 5 9,546,000 839,000
Other partners (116,000) 76,000
------------ ------------
9,430,000 915,000
------------ ------------
$ 21,451,000 $ 1,093,000
============ ============
</TABLE>
23
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues $ 1,088,000 $ 2,000
------------ ------------
Expenses:
Operating expenses 644,000 -
Interest expense 268,000 -
Depreciation and amortization 286,000 -
------------ ------------
Total expenses 1,198,000 -
------------ ------------
Net (income) loss $ (110,000) $ 2,000
============ ============
Net (income) loss allocable to the Partnership $ (110,000) $ 2,000
============ ============
Net (income) loss recorded by the Partnership $ (110,000) $ 2,000
============ ============
</TABLE>
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired.
NOTE 4 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or their affiliates for the following items:
Acquisition fees of up to 7% of the gross proceeds from the sale of Units
as compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. As of March 31, 1999 and December 31, 1998 and
1997, the Partnership incurred acquisition fees of $1,747,298, $1,670,772
and $664,500, respectively. Accumulated amortization of these capitalized
costs was $59,860, $45,936 and $2,131 as of March 31, 1999 and December 31,
1998 and 1997, respectively.
Reimbursement of costs incurred by the General Partner in connection with
the acquisition of Local Limited Partnerships. These reimbursements have
not exceeded 1.5% of the gross proceeds. As of March 31, 1999 and December
31, 1998 and 1997, the Partnership incurred acquisition costs of $170,333,
$169,033 and $36,518, respectively, which have been included in investments
in limited partnerships. Accumulated amortization was $5,080, $3,670 and
$125 for March 31, 1999 and December 31, 1998, 1997, respectively.
An annual asset management fee not to exceed 0.2% of the invested assets
(defined as the Partnership's capital contributions plus reserves of the
Partnership of up to 5% of gross proceeds plus its allocable percentage of
the mortgage debt encumbering the housing complexes) of the Local Limited
Partnerships. Management fees of $16,795 were incurred during the three
months ended March 31, 1999 and $66,382 and $0 were incurred for 1998 and
1997, respectively, of which $36,000 was paid during the three months ended
March 31, 1999 and $0 was paid during 1998 and 1997, respectively.
24
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
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 the General Partner or its affiliates
render services in the sales effort.
The accrued fees and expenses due to General Partner and affiliates consist of
the following at December 31:
<TABLE>
<CAPTION>
March 31 December 31
------------- --------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Acquisition fees $ 77,778 $ 1,252 $ 62,878
Asset management fee payable 47,177 66,382 -
Advances from WNC 26,759 25,884 294,310
Other 8,259 3,869 4,712
----------- ---------- -----------
Total $ 159,973 $ 97,387 $ 361,900
=========== ========== ===========
</TABLE>
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the respective limited partnership
agreements. These contributions are payable in installments and are generally
due upon the limited partnerships achieving certain development and operating
benchmarks (generally within two years of the Partnership's initial investment).
NOTE 6 - 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 7 - SUBSCRIPTIONS AND NOTES RECEIVABLE
During 1998, the Partnership received subscriptions for 15,166 Units which
included promissory notes of $615,250, of which $576,650 were collected in 1999
prior to the issuance of the December 31, 1998 financial statements, leaving an
unpaid balance of $38,600. As this balance was paid in 1999 prior to issuance of
the March 31, 1999 financial statements it is reflected as capital contributed
during the three months ended March 31, 1999.
In 1997, the Partnership had received promissory notes of $351,150 related to
the sale of Units, of which $48,000 was collected in 1998 and $303,150 was
collected in 1999. Promissory notes collected subsequent to year end and prior
to the issuance of the financial statements are recorded as a capital
contribution and an asset in the financial statements. Any unpaid balance as of
the issuance of the 1998 financial statements was reflected as a reduction of
partners' equity in the financial statements.
25
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Year Ended December 31, 1998 and For The Period August 29, 1997
(Date Operations Commenced) Through December 31, 1997
NOTE 7 - SUBSCRIPTIONS AND NOTES RECEIVABLE, continued
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, of which, all of the subscription receivables were collected and
$48,000 of the promissory notes were collected in 1998. 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. Subscriptions and notes receivable collected subsequent to
year-end prior to the issuance of the 1997 financial statements were recorded as
a capital contribution and an asset. Any unpaid balance at that date was
reflected as a reduction of partners' equity in the accompanying financial
statements.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Subsequent to March 31, 1999, the Partnership is in negotiations to acquire one
additional Local Limited Partnership interest which would commit the Partnership
to additional capital contributions of $670,000, of which $0 has been advanced
as of March 31, 1999.
26
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III
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 WNC & Associates, Inc. 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. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 68, is the founder, Chief Executive Officer and a
Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a
general partner in some of the programs previously sponsored by the Sponsor. Mr.
Cooper has been involved in real estate investment and acquisition activities
since 1968. Previously, during 1970 and 1971, he was founder and 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 where
he had responsibility for factory-built housing evaluation and project
management in urban planning and development. Mr. Cooper is a Director of the
National Association of Home Builders (NAHB) and a National Trustee for NAHB's
Political Action Committee, a Director of the National Housing Conference (NHC)
and a member of NHC's Executive Committee and a Director of the National
Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956
with a Bachelor of Arts degree.
John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC
Capital Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, 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 graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 36, is Executive Vice President, a Director and a
member of the Acquisition Committee of WNC & Associates, Inc. He is President
of, and a registered principal with, WNC Capital Corporation, a member firm of
the NASD, and is a Director of WNC Management, Inc. He has been involved in
investment and acquisition activities with respect to real estate since he
joined the Sponsor in 1988. Prior to this, he served as Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate
Director of NAHB. He graduated from The American University in 1985 with a
Bachelor of Arts degree.
David N. Shafer, age 47, is Senior Vice President, a Director, General Counsel,
and a member of the Acquisition Committee of WNC & Associates, Inc., and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in
real estate investment and acquisition activities since 1984. Prior to joining
the Sponsor in 1990, he was practicing law with a specialty in real estate and
taxation. Mr. Shafer is a Director and President of the California Council of
Affordable Housing 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 (cum laude) and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.
27
<PAGE>
Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. 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 and a member of the American Institute of Certified Public
Accountants.
Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., 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.
N. Paul Buckland, age 36, is Vice President - Acquisitions of WNC & Associates,
Inc. He has been involved in real estate acquisitions and investments since 1986
and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he
served on the development team of the Bixby Ranch that constructed apartment
units and Class A office space in California and neighboring states, and 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.
David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. 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:
(a) Organization and Offering Expenses. The Partnership accrued or paid the
General Partner or its affiliates as of March 31, 1999 and December 31,
1998 approximately $3,248,000 and $3,183,000, respectively, for selling
commissions and other fees and expenses of the Partnership's offering
of Units. Of the total accrued or paid, approximately $2,498,000 and
$2,433,000, respectively, 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.
28
<PAGE>
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the
gross proceeds of the Partnership's Offering ("Gross Proceeds"). As of
March 31, 1999 and December 31, 1998, the aggregate amount of
acquisition fees paid or accrued was approximately $1,747,300 and
$1,670,800, respectively.
(c) Acquisition Expense. The Partnership reimbursed the General Partner or
its affiliates as of March 31, 1999 and December 31, 1998 for
acquisition expense, not to exceed 1.5% of the Gross Proceeds, expended
by such persons on behalf of the Partnership in the amounts $170,000
and $169,000, respectively.
(d) Annual Asset Management Fee. An annual asset management fee in an
amount equal to 0.2% of the Invested Assets of the Partnership.
"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 mortgage loans and other debts related to the Housing
Complexes owned by such Local Limited Partnerships. Fees of $17,000 and
$66,000 were incurred for the three months ended March 31, 1999 and the
year ended December 31, 1998, of which $36,000 was paid during the
three months ended March 31, 1999 and $0 was paid during the year ended
December 31, 1998.
(e) Operating Expenses. The Partnership reimbursed the General Partner or
its affiliates for operating expenses of approximately $0 and $4,500
during the three months ended March 31, 1999 and the year ended
December 31, 1998, respectively, expended by such persons on behalf of
the Partnership.
(f) Subordinated Disposition Fee. 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) 12%
through December 31, 2008, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been paid.
(g) Interest in Partnership. The General Partner will receive 1% of the Low
Income Housing Credits. The General Partner was allocated Low Income
Housing Credits of $441 for the year ended December 31, 1998. No Low
Income Housing Credits were allocated for the period ended December 31,
1997. The General Partners are also entitled to receive 1% of cash
distributions. There were no distributions of cash to the General
Partner during the three months ended March 31, 1999 or the year ended
December 31, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known 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.
(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.
29
<PAGE>
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
The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interest in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
30
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, March 31, 1999 and 1998 (Unaudited) and December 31,
1998 and 1997
Statements of Operations for the three months ended March 31, 1999
and 1998 (Unaudited) and for the year ended December 31, 1998 and the
period August 29, 1997 (Date Operations Commenced) through December
31, 1997
Statements of Partners' Equity (Deficit) for the three months ended
March 31, 1999 and for the year ended December 31, 1998 and the
period August 29, 1997 (Date Operations Commenced) through December
31, 1997
Statements of Cash Flows for the three months ended March 31, 1999 and
1998 (Unaudited) and for the year ended December 31, 1998 and the
period August 29, 1997 (Date Operations Commenced) through December
31, 1997
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial State-
ment Schedules
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
1. A Form 8-K dated May 13, 1999 was filed on May 14, 1999 reporting the
Partnership's change in fiscal year end to March 31. No financial
statements were included.
(c) Exhibits.
3.1 Agreement of Limited Partnership dated as of March 3, 1997 included
as Exhibit 3.1 to the Form 10-K filed for the year ended December 31,
1997, is hereby incorporated herein as Exhibit 3.1.
3.2 First Amendment to Agreement of Limited Partnership dated August 29,
1997 included as Exhibit 3.2 to the Form 10-K filed for the year ended
December 31, 1997, is hereby incorporated as Exhibit 3.2.
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.
31
<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 incorpora-
ted 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 refer-
ence 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 incorpora-
ted by reference as Exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Bradley
Villas, L.P. filed as Exhibit 10.1 to Form 8-K dated April 1, 1998 is
herein incorporated as Exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Murfreeburo
Villas filed as Exhibit 10.5 to Form 8-K dated April 1, 1998
is herein incorporated as Exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of United Devel-
opment Co., L.P. - 97-2 filed as Exhibit 10.3 to Form 8-K dated April
30, 1998 is herein incorporated as Exhibit 10.8.
10.10 Second Amended and Restated Agreement of Limited Partnership of United
Development Co., L.P. - 97-2 filed as Exhibit 10.2 to Form 8-K dated
April 30, 1998 is herein incorporated as Exhibit 10.9.
10.11 Second Amended and Restated Agreement of Limited Partnership of
United Development Co., L.P. - 97-1 filed as Exhibit 10.3 to Form 8-K
dated April 30, 1998 is herein incorporated as Exhibit 10.10.
10.12 Second Amended and Restated Agreement of Limited Partnership of Concord
Apartment Partners, L.P. filed as Exhibit 10.1 to Form 8-K dated May
31, 1998 is herein incorporated as Exhibit 10.11.
10.13 Amended and Restated Agreement of Limited Partnership of Mansur Wood
Living Center, L.P. filed as Exhibit 10.1 to Form 8-K dated September
19, 1998 is herein incorporated as Exhibit 10.12.
10.14 Amended and Restated Agreement of Apartment Housing of Theodore, LTD
filed as Exhibit 10.23 to Post-Effective Amendment No 3 to Registration
Statement dated May 1, 1998 is herein incorporated as Exhibit 10.13.
21.1 Financial Statements of Mansur Wood Elderly Living Center, L.P., for
the year ended December 31, 1998 together with auditors report thereon;
a significant subsidiary of the Partnership, filed as exhibit 21.1 to
Form 10-K dated August 5, 1999 is herein incorporated by reference as
Exhibit 21.1.
(d) Financial statement schedules follow, as set forth in subsection (a)(2)
hereof.
32
<PAGE>
Report of Independent Certified Public Accountants on
Financial Statement Schedules
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 5
The audits referred to in our report dated August 12, 1999, relating to the 1999
and 1998 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 5
(the "Partnership"), which is contained in Item 8 of this Form 10-K, included
the audit of the accompanying financial statement schedules. The financial
statement schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statement schedules
based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
August 12, 1999
33
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
----------------------------------- ------------------------------------------------
As of March 31, 1999 As of December 31, 1998
----------------------------------- ------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Apartment Housing Theodore,
of Theodore Alabama $ 1,277,000 $ 839,000 $ 898,000 $ 1,651,000 $ - $ 1,651,000
Bradley Villas Bradley,
Limited Partnership Arkansas 501,000 501,000 538,000 1,000,000 23,000 977,000
Chillicothe Plaza Chillicothe,
Apts. L.P. Missouri 991,000 697,000 246,000 1,008,000 - 1,008,000
Concord Apartment Orlando,
Partners, L.P. Florida 470,000 470,000 293,000 442,000 26,000 416,000
El Reno Housing Associates El Reno,
Limited Partnership Oklahoma 3,040,000 3,040,000 2,187,000 4,032,000 - 4,032,000
Hillcrest Heights, L.P. Marshalltown,
Iowa 609,000 609,000 598,000 1,209,000 14,000 1,195,000
Hughes Villas Limited Hughes,
Partnership Arkansas 182,000 182,000 765,000 986,000 76,000 910,000
Mansur Wood Living Carbon Cliff,
Center, L.P. Illinois 6,446,000 1,611,000 1,420,000 2,060,000 - 2,060,000
Mark Twain Senior Community Oakland,
Limited Partnership California 740,000 715,000 1,470,000 2,509,000 575,000 1,934,000
</TABLE>
34
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
---------------------------------- ------------------------------------------------
As of March 31, 1999 As of December 31, 1998
---------------------------------- ------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Murfreesboro Villas Limited Murfreesboro,
Partnership Arkansas 686,000 686,000 643,000 1,258,000 20,000 1,238,000
Spring Valley Terrace Mayer,
Apartments, LLC Arizona 716,000 648,000 997,000 1,428,000 14,000 1,414,000
United Development Co., Memphis,
L.P. - 97.1 Tennessee 1,845,000 1,384,000 876,000 1,922,000 1,000 1,921,000
United Development Co., Memphis,
L.P. - 97.2 Tennessee 743,000 733,000 378,000 1,094,000 48,000 1,046,000
---------- ---------- ---------- ---------- -------- ----------
$ 18,246,000 $ 12,155,000 $ 11,309,000 $ 20,599,000 $ 797,000 $ 19,802,000
========== ========== ========== ========== ======== ==========
</TABLE>
35
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
--------------------------------------------------------------------
For the year ended December 31,1998
--------------------------------------------------------------------
Year
Rental Net Income Investment Estimated Useful Life
Partnership Name Income (Loss) Acquired Status (Years)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apartment Housing of Theodore $ - $ - 1998 1999 Under Construction
Bradley Villas Limited Partnership 47,000 (16,000) 1998 Completed 40.0
Chillicothe Plaza Apts. L.P. - 18,000 1997 1999 Under Construction
Concord Apartment Partners, L.P. 87,000 (51,000) 1998 Completed 30.0
El Reno Housing Associates Limited
Partnership - 8,000 1998 1999 40.0
Hillcrest Heights, L.P. 41,000 (22,000) 1998 Completed 27.0
Hughes Villas Limited Partnership 93,000 (3,000) 1998 Completed 40.0
Mansur Wood Living Center, L.P. - 83,000 1998 2000 27.5
Mark Twain Senior Community 27.5
Limited Partnership 592,000 (11,000) 1998 Completed
Murfreesboro Villas Limited 40.0
Partnership 11,000 (31,000) 1998 Completed
Spring Valley Terrace Apartments, 40.0
LLC 7,000 (29,000) 1997 Completed
United Development Co., L.P. - 97.1 7,000 5,000 1998 1999 27.5
United Development Co., L.P. - 97.2 53,000 (61,000) 1998 Completed 27.5
-------- ---------
$ 938,000 $ (110,000)
======== =========
</TABLE>
36
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
As of December 31, 1998
-----------------------------------------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Apartment Housing Theodore,
of Theodore Alabama $ 1,277,000 $ 638,000 $ 898,000 $ 1,651,000 $ - $ 1,651,000
Bradley Villas Bradley,
Limited Partnership Arkansas 532,000 501,000 538,000 1,000,000 23,000 977,000
Chillicothe Plaza Chillicothe,
Apts. L.P. Missouri 991,000 697,000 246,000 1,008,000 - 1,008,000
Concord Apartment Orlando,
Partners, L.P. Florida 470,000 470,000 293,000 442,000 26,000 416,000
El Reno Housing Associates El Reno,
Limited Partnership Oklahoma 3,040,000 2,280,000 2,187,000 4,032,000 - 4,032,000
Hillcrest Heights, L.P. Marshalltown,
Iowa 609,000 609,000 598,000 1,209,000 14,000 1,195,000
Hughes Villas Limited Hughes,
Partnership Arkansas 182,000 182,000 765,000 986,000 76,000 910,000
Mansur Wood Living Carbon Cliff,
Center, L.P. Illinois 6,446,000 831,000 1,420,000 2,060,000 - 2,060,000
Mark Twain Senior Community Oakland,
Limited Partnership California 740,000 715,000 1,470,000 2,509,000 575,000 1,934,000
</TABLE>
37
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
As of December 31, 1998
-----------------------------------------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Murfreesboro Villas Limited Murfreesboro,
Partnership Arkansas 686,000 686,000 643,000 1,258,000 20,000 1,238,000
Spring Valley Terrace Mayer,
Apartments, LLC Arizona 716,000 358,000 997,000 1,428,000 14,000 1,414,000
United Development Co., Memphis,
L.P. - 97.1 Tennessee 1,845,000 1,384,000 876,000 1,922,000 1,000 1,921,000
United Development Co., Memphis,
L.P. - 97.2 Tennessee 743,000 733,000 378,000 1,094,000 48,000 1,046,000
---------- ---------- ---------- ---------- -------- ----------
$ 18,277,000 $ 10,084,000 $ 11,309,000 $ 20,599,000 $ 797,000 $ 19,802,000
========== ========== ========== ========== ======== ==========
</TABLE>
38
<PAGE>
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
--------------------------------------------------------------------
For the year ended December 31,1998
--------------------------------------------------------------------
Year
Rental Net Income Investment Estimated Useful Life
Partnership Name Income (Loss) Acquired Status (Years)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Apartment Housing of Theodore $ - $ - 1998 1999 Under Construction
Bradley Villas Limited Partnership 47,000 (16,000) 1998 Completed 40.0
Chillicothe Plaza Apts. L.P. - 18,000 1997 1999 Under Construction
Concord Apartment Partners, L.P. 87,000 (51,000) 1998 Completed 30.0
El Reno Housing Associates Limited
Partnership - 8,000 1998 1999 40.0
Hillcrest Heights, L.P. 41,000 (22,000) 1998 Completed 27.0
Hughes Villas Limited Partnership 93,000 (3,000) 1998 Completed 40.0
Mansur Wood Living Center, L.P. - 83,000 1998 2000 27.5
Mark Twain Senior Community 27.5
Limited Partnership 592,000 (11,000) 1998 Completed
Murfreesboro Villas Limited 40.0
Partnership 11,000 (31,000) 1998 Completed
Spring Valley Terrace Apartments, 40.0
LLC 7,000 (29,000) 1997 Completed
United Development Co., L.P. - 97.1 7,000 5,000 1998 1999 27.5
United Development Co., L.P. - 97.2 53,000 (61,000) 1998 Completed 27.5
-------- ---------
$ 938,000 $ (110,000)
======== =========
</TABLE>
39
<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
By: WNC & Associates, Inc. General Partner
By: /s/ John B. Lester, Jr
John B. Lester, Jr.
President of WNC & Associates, Inc.
Date: August 27, 1999
By: /s/ Michael L. Dickenson
Michael L. Dickenson
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: August 27, 1999
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 /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr. Chairman of the Board of WNC & Associates, Inc.
Date: August 27, 1999
By: /s/ John B. Lester, Jr
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: August 27, 1999
By: /s/ David N. Shafer
David N Shafer Director of WNC & Associates, Inc.
Date: August 27, 1999
40
<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 3,103,129
<SECURITIES> 0
<RECEIVABLES> 38,600
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,141,729
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,975,985
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,684,621
<TOTAL-LIABILITY-AND-EQUITY> 27,975,985
<SALES> 0
<TOTAL-REVENUES> 14,427
<CGS> 0
<TOTAL-COSTS> 35,583
<OTHER-EXPENSES> 22,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (43,156)
<INCOME-TAX> 0
<INCOME-CONTINUING> (43,156)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,156)
<EPS-BASIC> (1.71)
<EPS-DILUTED> 0
</TABLE>
