SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE CHANGE ACT OF 1934
For the transition period from to
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Commission file number 2-77330
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Property Resources Fund VI
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(Exact name of registrant as specified in its charter)
California 94-2838890
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation
or organization)
P. O. Box 7777, San Mateo, California 94403-7777
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 312-2000
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N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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Limited Partnership Units Outstanding as of March 31, 1996: 21,585
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(Unaudited)
(Dollars in 000's except per share amounts) 1996 1995
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ASSETS
Rental property:
Land $2,239 $2,239
Land improvements 748 748
Buildings and improvements 7,168 7,167
Furnishings and equipment 1,012 1,005
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11,167 11,159
Less: accumulated depreciation 4,202 4,128
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6,965 7,031
Cash and cash equivalents 89 251
Note receivable 369 382
Other assets 105 32
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Total assets $7,528 $7,696
===============================================================================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Notes payable $5,130 $5,231
Note payable to affiliate 1,707 1,711
Due to General Partner 437 506
Accrued interest due to General Partner 503 493
Tenants' deposits and other liabilities 141 214
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Total liabilities 7,918 8,155
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Partners' capital (deficit):
Limited partners, 21,585 units issued and outstanding 87 21
General Partner (477) (480)
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Total partners' capital (deficit) (390) (459)
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Total liabilities and partners' capital (deficit) $7,528 $7,696
===============================================================================
See notes to financial statements.
Item 1. Financial Statements
(continued)
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
(Dollars in 000's except per share amounts) 1996 1995
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Revenue:
Rent $480 $599
Interest 10 10
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Total revenue 490 609
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Expenses:
Depreciation and amortization 74 74
Operating 258 264
Related party 83 99
General and administrative 6 10
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Total expenses 421 447
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Net income $69 $162
===============================================================================
Net income allocable to limited partners $66 $154
===============================================================================
Net income allocable to General Partner $3 $8
===============================================================================
Net income per $500 limited partnership unit-
based on 21,585 units outstanding $3.06 $7.51
===============================================================================
See notes to financial statements.
Item 1. Financial Statements
(continued)
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996
(Unaudited)
Limited Partners
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General
(Dollars in 000's) Units Amount Partner Total
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Balance, beginning of period 21,585 $21 $(480) $(459)
Net Income - 66 3 69
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Balance, end of period 21,585 $87 $(477) $(390)
==============================================================================
See notes to financial statements.
Item 1. Financial Statements
(continued)
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
(Dollars in 000's) 1996 1995
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Cash flows from operating activities:
Net income $69 $162
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Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 74 74
(Increase) decrease in other assets (73) 7
Increase in accrued interest 10 17
Decrease in tenants' deposits and other liabilities (73) (77)
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Total adjustments (62) 21
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Net cash provided by (used in) operating activities 7 183
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Cash flow from investing activities:
Principal received on note receivable 13 53
Improvements to rental property (8) (9)
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Net cash provided by investing activities 5 44
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Cash flows from financing activities:
Principal payments on notes payable (105) (105)
Principal payments to General Partner (69) (92)
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Net cash used in financing activities (174) (197)
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Net increase (decrease) in cash and cash equivalents (162) 30
Cash and cash equivalents, beginning of period 251 131
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Cash and cash equivalents, end of period $89 $161
=============================================================================
See notes to financial statements.
Item 1. Financial Statements
(continued)
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements contain all adjustments
(consisting of normal recurring accruals) which are necessary, in the opinion
of management, for a fair presentation. The statements, which do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements, should be read in
conjunction with the Partnership's financial statements for the year ended
December 31, 1995.
NOTE 2 - TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
Under the partnership agreement, the General Partner and its affiliates may
receive compensation for services rendered to the Partnership and may receive
reimbursement for certain expenses incurred on behalf of the Partnership.
During the three month period ended March 31, 1996, the Partnership made or
accrued the following payments to the General Partner or affiliates:
Property management fees, charged to related party expense $24,000
Reimbursement of data processing expenses,
charged to related party expense 4,000
Interest on advances from the General Partner,
based on the prime rate, charged to related party expense 10,000
Interest on Promissory note, collateralized
by the property Clearlake Village Apartments,
charged to related party expense 45,000
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$83,000
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NOTE 3 - NOTE RECEIVABLE
On November 15, 1994, the promissory note receivable in the amount of
$515,000, collateralized by a second deed of trust against 1600 Dell Avenue
Office complex, was amended for a principal paydown of $15,000 and an
agreement to pay an additional $35,000 on or before January 31, 1995. Fully
amortized principal and interest payments are due monthly in the amount of
$9,863 commencing on December 15, 1994 until maturity on November 15, 1999.
As of March 31, 1996, the outstanding balance of the note was $369,000.
Item 1. Financial Statements
(continued)
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 4 - Grouse Run Apartments
On October 1, 1994, the Grouse Run note payable was amended. The amendment
provides for fixed interest at 9.96%, amortized on a 30-year schedule. A
principal payment of $800,000 was made by the Partnership concurrent with the
effective date of the amendment. The note's maturity date was extended to
October 1, 1999. As of March 31, 1996, the amended note's face value
principal balance was $3,842,000.
The amended note payable is classified as a troubled debt restructuring and,
in accordance with Statement of Financial Accounting Standards No. 15, the
Partnership is carrying the amended note equal to the total future cash
payments payable and is not recognizing interest expense between the
restructuring and the maturity of the amended note.
NOTE 5- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
For the three month period ended March 31, 1996, the Partnership paid
interest on the note payable to affiliate of $45,000.
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion
and Analysis of Financial Condition
and Results of Operations
Results of Operations
COMPARISON OF THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
Net income for the quarter ended March 31, 1996 amounted to $69,000, a
decrease of $93,000 as compared to the same period in 1995. The decrease is
due to the following factors: a derease in rental revenue of $119,000; a
decrease in operating expenses of $6,000; a decrease in related party of
$16,000, and a decrease in general and administrative expense of $4,000.
Rental revenue for the quarter decreased $119,000, or 20%, primarily due to
the end of the leaseback period of Space Sacers One and Three in June, 1995.
The decrease in rental revenue from Space Savers One and Three was partially
offset by an increase in rental revenue of $27,000 by the Partnership's two
remaining properties. The increase in rental revenue for the two remaining
Partnership properties was attributable to an increase in the average
occupancy rate at Clearlake Village Apartments and at Grouse Run Apartments.
For the quarter ended March 31, 1996 and 1995 the average occupancy rate at
Clearlake Village Apartments was 94% and 92% and at Grouse Run Apartments it
was 91% and 87%, respectively.
Total expenses decreased $26,000, or 6%, from $447,000 in 1995 to $421,000.
The decrease in total expenses was primarily due to a decrease in related
party expense, as a result of a decrease in data processing expenses and
interest expense on advances from the General Partner. The decrease in total
expenses was also attributable to a decrease in operating expenses of $6,000
due to the end of the leaseback period of Space Savers One and Three in June,
1995. The decrease in operating expense from Space Savers One and Three of
$40,000 was partially offset by an increase in operating expense of $34,000
by the Partnership's two remaining properties.
Liquidity and Capital Resources
In July, 1983, the Partnership completed a public offering of its limited
partnership units with total proceeds of $10,795,500 from the sale of 21,585
limited partnership units. The Partnership acquired five properties with an
aggregate cost of $23,526,000.
As of March 31, 1996, the Partnership had two operating properties:
Clearlake Village Apartments and Grouse Run Apartments. The buildings and
the land upon which the buildings are located are owned directly by the
Partnership in fee. All Partnership properties are subject to mortgages.
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion
and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources (Continued)
As of March 31, 1996, cash and cash equivalents totaled $89,000. As of March
31, 1996, the General Partner had advanced, $437,000 plus accrued interest of
$503,000, to the Partnership to pay for various capital improvements and to
support operating cash flow deficits. The General Partner presently intends
to continue to make such advances to the Partnership as necessary.
Consequently, management believes that the Partnership's current sources of
funds will be adequate to meet both its short-term and long-term capital
commitments and operating requirements.
The Partnership presently believes that funds available from improved
operations and from its note receivable due in 1999 will permit it to repay
advances owed to the General Partner. The Partnership also believes that the
present trend toward improved operations at its properties will permit it to
repay the Grouse Run note payable due in 1999 either from the sale of a
property or a loan refinancing.
Impact of Inflation
The Partnership's management believes that inflation may have a positive
effect on the Partnership's property portfolio, but this effect generally
will not be fully realized until such properties are sold or exchanged.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports an Form 8-K
(a) Not applicable
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended March 31, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROPERTY RESOURCES FUND VI
By:/s/David P. Goss
David P. Goss
Chief Executive Officer
Date: May 13, 1996
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGISTRANT'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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