FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998. Commission File No. 2-77330
PROPERTY RESOURCES FUND VI
(Exact Name of Registrant as Specified in its Charter)
California 942838890
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(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification number)
P.O. Box 7777, San Mateo, CA (650) 312-5824
94403-7777
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(Address of principal and Registrant's telephone number,
executive Office) including Area Code
Securities registered pursuant to Section 12(b) of Act:*
Title of each class
Limited Partnership Interests
---------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 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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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by referenced in Part
III of this Form 10-K or any amendment to this Form 10-K. X
----
No market for the shares currently exists and therefore a market value for
the Units cannot be determined.
Limited Partnership Units outstanding at December 31, 1998: 21,585
Documents Incorporated by Reference: Portions of the Prospectus of Property
Resources Fund VI dated July 12, 1982 (in Part III, Item 13) as filed with
the Securities and Exchange Commission pursuant to Rule 424(b).
PART 1
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Item 1. BUSINESS
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PROPERTY RESOURCES FUND VI (hereinafter referred to either as the
"Partnership" or the "Registrant") is a limited partnership formed in May
1982 under the Uniform Limited Partnership Act of the State of California.
The General Partner is Property Resources, Inc., a California corporation;
(the "General Partner") located at 1800 Gateway Drive, San Mateo, California
94404.
The Partnership was organized for the purpose of acquiring, improving,
developing, operating and holding for investment, income-producing real
properties from unaffiliated sellers. The Partnership expects to sell its
remaining property and terminate and dissolve the Partnership in 1999. There
is no assurance that the Partnership will be successful in this regard.
During its operating life, the Partnership acquired an interest in five real
estate assets. These assets are located in Houston, Texas; San Antonio,
Texas; Oklahoma City, Oklahoma; Salt Lake City, Utah; and Campbell,
California; as more particularly described in Item 2. Properties. The
Partnership later sold all of these assets with the exception of the asset in
Houston, Texas. Management is currently marketing the remaining property for
sale, and expects a sale of this property to occur in 1999.
The real estate business is competitive, and the Partnership is in
competition with many other entities engaged in real estate investment
activities, some of which have greater assets than the Partnership.
The Partnership will be subject to the risks generally associated with the
ownership of real property. These risks include the possibility that
operating expenses and fixed costs may exceed property revenues; economic
conditions may adversely change further in the market where the Partnership
owns property and the national market; the real estate investment climate may
change; local market conditions may change adversely due to general or local
economic conditions and neighborhood characteristics; interest rates may
fluctuate and the availability, costs and terms of mortgage financing may
change; unanticipated maintenance and renovations may arise, particularly in
older structures; changes in real estate tax rates and other operating
expenses may arise; governmental rules and fiscal policies may change;
natural disasters, including earthquakes, floods or tornadoes may result in
uninsured losses; the financial condition of the tenants of property may
deteriorate; and other factors which are beyond the control of the
Partnership may occur. The Partnership's real estate investment in its
remaining rental property will be subject to the risk of the Partnership's
inability to attract or retain tenants and a consequent decline in rental
income.
While one of the Partnership's objectives is to generate cash flow, there can
be no guarantee that the remaining property will generate sufficient revenue
to cover operating expenses and meet any required payments on any debt
obligations of the Partnership.
The opportunities for sale, and the profitability of any sale, of the
Partnership's remaining property will be subject to the risk of adverse
changes in real estate market conditions. There may be shortages or increased
costs of fuel, natural gas, water, or electric power, or allocations thereof
by suppliers or governmental regulatory bodies in the area where the
Partnership owns its property. In the event of such shortages, price
increases or allocations may occur, and the operation of its property may be
adversely affected. It is also possible that legislation on the state or
local level may be enacted which may include some form of rent control or
changes in property tax assessments. There may be changes to federal, state
or local regulations enacted relating to the protection of the environment.
The Partnership is unable to predict the extent, if any, to which such
shortages increased prices, legislation, regulations or allocations, might
occur and the degree to which the occurrence of such events might adversely
affect the property owned by the Partnership.
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may become liable for the costs of removal
or remediation of certain hazardous substances released on or in its
property. Such laws often impose such liability without regard to whether
the owner or operator knew of, or was responsible for, the release of such
hazardous substances, the presence of such substances, or the failure to
properly remediate such substances, when released. As part of the
investigation of properties prior to acquisition, the Partnership typically
has obtained inspection reports concerning the condition of the property,
including specialized environmental inspection reports concerning the
presence of hazardous substances on the property. The Partnership intends to
continue this practice. Such inspection reports, however, do not necessarily
reveal all hazardous substances or sources thereof, and substances not
considered hazardous when a property is acquired may subsequently be
classified as such by amendments to local, state, and federal laws,
ordinances, and regulations. If it is ever determined that hazardous
substances on or in a Partnership property must be removed or the release of
such substances remediated, the Partnership could be required to pay all
costs of any necessary cleanup work. However under certain circumstances, the
Partnership could make claims against other responsible parties. The
Partnership could also experience lost revenues during any such cleanup, or
lower lease rates, decreased occupancy or difficulty selling or borrowing
against the affected property either prior to or following any such cleanup.
The Partnership is not aware of any hazardous substances on or in its
properties and it has not been notified by any governmental authority of any
noncompliance, liability or other claim in connection with the environmental
condition of any of its properties.
The Americans with Disabilities Act ("ADA"), which generally requires that
buildings be made accessible to people with disabilities, and has separate
compliance requirements for "public accommodations" and "commercial
facilities". If certain uses by tenants of a building constitute a "public
accommodation", the ADA imposes liability for non-compliance on both the
tenant and the owner/operator of the building. The Partnership has conducted
inspections of its properties to determine whether the exterior and common
area of such properties are in compliance with the ADA and it believes that
its properties are in compliance. If, however, it were ever determined that
one or more of the Partnership's properties were not in compliance, the
Partnership may be subjected to unanticipated expenditures incurred to remove
access barriers, or to pay fines or damages related to such non-compliance.
The Partnership's only business consists of the real estate investment
activity described above. Therefore, information about industry segments is
not applicable. The business is not seasonal.
Item 2. PROPERTIES
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During its investment phase, the Partnership acquired four existing rental
properties and completed construction of a fifth property, Grouse Run
Apartments. The investment phase of the Partnership is complete and the
Partnership does not intend to purchase additional properties. The
Partnership has bought and sold property as follows:
PROPERTY DATE ACQUIRED DATE SOLD
Clearlake Village Apartments August 1982 -
Waterbury Plaza office complex December 1982 June 1990
Space Savers One and Space Savers
Three mini-warehouses April 1983 June 1994
1600 Dell Avenue office/warehouse December 1983 November 1988
Grouse Run Apartments July 1984 June 1998
The remaining property is managed by Continental Property Management Co.
("CPMC"), an affiliate of the General Partner, which performs the leasing and
management related services for the properties.
As discussed in Note 3 to the financial statements, the fee interest in
Clearlake Village Apartments is held through the Partnership's consolidated
subsidiary, Property Resources Fund VI Subsidiary, L.P. (the "Subsidiary").
Management is currently marketing this property for sale, and expects a sale
to occur in 1999. In the opinion of management, the level of insurance
coverage is adequate for this property and within industry standards.
CLEARLAKE VILLAGE APARTMENTS
- ----------------------------
The Clearlake Village Apartments are located in the Clearlake City area of
Houston, Harris County, Texas. The apartment complex was completed in 1976.
Situated on a 5-acre site, the complex consists of 174 garden style
apartments in 14 buildings. Apartment units include 24 two-bedroom, two-bath
units of 850 square feet; 40 two-bedroom, one-bath units of 800 square feet;
70 one-bedroom, one-bath units of 670 square feet; and 40 efficiency units of
507 square feet. The property's total net rentable area is 119,580 square
feet. As of December 31, 1998, monthly rental rates ranged from $375 to $565
and the occupancy rate was 93%. Amenities for residents include a 4,000
square foot clubhouse/exercise room, as well as a swimming pool, laundry, and
storage facilities. The secured loan is owed to an unaffiliated party,
carries interest at 8.88% and matures in 2006.
Item 3. LEGAL PROCEEDINGS
-----------------
There are no material legal proceedings pending to which the Partnership is a
party or which any of its properties is the subject, required to be reported
hereunder. From time to time, the Partnership may be a party to ordinary
routine litigation incidental to its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters have been submitted during the fourth quarter of the fiscal year
ended December 31, 1998, which required the vote of security holders.
PART II
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Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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As of December 31, 1998, there were 21,585 limited partnership units
outstanding and 1,126 unit holders of record. There are no dividends.
However, the limited partnership unit holders may be entitled to certain cash
distributions as provided in the limited partnership agreement.
The units are not freely transferable and no market for the units presently
exists or is likely to develop.
Item 6. SELECTED FINANCIAL DATA
-----------------------
(Dollars in Thousands,
except unit and per 1998 1997 1996 1995 1994
unit amounts)
- -------------------------------------------------------------------
Total revenues $1,572 $2,122 $2,039 $2,178 $2,614
Gain on sale of $2,049 - - - -
property
Gain on restructured $447 - - - $272
debt
Net income (loss) $2,714 $455 $330 $430 $663
Net income (loss) per $124.07 $20.01 $14.50 $18.95 $29.56
unit1
Number of limited
partnership 21,585 21,585 21,585 21,585 21,585
units outstanding
Balance sheet data:
Total assets $3,420 $7,661 $7,809 $7,696 $7,960
Notes payable $2,121 $6,559 $6,986 $6,942 $7,363
Accumulated
partners' capital
(deficit) $558 $326 $(129) $(459) $(889)
Other Data:
Cash Flows
Operating $371 $827 $466 $826 $545
Investing $6,836 $(117) $4 $14 $289
Financing $(6,473) $(580) $(442) $(720) $(819)
Total rentable square
footage at end of 119,580 321,104 321,104 321,104 321,104
year:
Number of properties
at end of year: 1 2 2 2 2
1 Per $500 limited partnership unit outstanding, exclusive of amounts
allocable to the General Partner.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
- ---------------------
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997.
Net income for the year ended December 31, 1998 increased $2,259,000 (496%)
as compared to the prior year, primarily due to gain on sale of the Grouse
Run Apartments property ("Grouse Run"), as discussed below.
Total revenues decreased $550,000 (26%) in the year ended December 31, 1998
to $1,572,000, as compared to $2,122,000 for the year ended December 31,
1997. This was due primarily to the sale of the Grouse Run in June 1998.
Rental revenues increased at both properties, primarily as a result of
increased average rental rates. The average occupancy rates remained
relatively stable. The average occupancy rates for each of the properties in
1998 and 1997 respectively, were 93% and 94% at Grouse Run and 94% and 93% at
Clearlake.
Total expenses decreased $313,000 (19%) in 1998, as compared to 1997. The
decrease was primarily caused by reduced administrative, payroll, utility and
depreciation expenses following the sale of Grouse Run in June 1998.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996.
Net income for the year ended December 31, 1997 increased $125,000 (38%) as
compared to the prior year, primarily due to an increase in average rental
rates, as discussed below.
Total revenues increased $83,000 (4%) in the year ended December 31, 1997 to
$2,122,000, as compared to $2,039,000 for the year ended December 31, 1996.
Rental revenues increased at both properties, primarily as a result of
increased average rental rates. The average occupancy rates remained
relatively stable. The average occupancy rates for each of the properties in
1997 and 1996 respectively, were 94% and 93% at Grouse Run and 93% and 94% at
Clearlake.
Total expenses decreased $42,000 (2%) in 1997, as compared to 1996. This was
due to a decline in operating expenses of $23,000 and decreasing total
interest expenses. The decline in operating expenses was mainly a result of
lower utility and repair costs at the two apartment complexes. Interest
expense (including related party interest payments) declined $21,000 as a
result of the Partnership's payments to reduce debt in 1997. Interest
payments of $4,000 were charged to related party expense in 1997, compared to
$141,000 in 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of December 31, 1998, the Partnership had one operating property,
Clearlake Village Apartments ("Clearlake"). The Partnership owns fee
interests in the buildings and the land upon which these buildings are
located, and the property is subject to a mortgage, as more fully described
in Note 3 to the consolidated financial statements.
As of December 31, 1998, cash and cash equivalents totaled $1,143,000. As of
December 31, 1998, accrued interest due to General Partner amounted to
$527,000. 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.
On August 12, 1996, the note payable to affiliate, collateralized by
Clearlake, was repaid from the proceeds of a new loan from an unaffiliated
lender. In connection with the new loan, the Partnership formed Property
Resources Fund VI Subsidiary, L.P. (the "Subsidiary") and contributed its fee
interest in Clearlake to the Subsidiary. Although the General Partner of the
Partnership is a 1% sole General Partner in the Subsidiary, the partnership
agreement of the Subsidiary is structured such that no economic benefit
accrues to the General Partner as a result of the asset contribution.
Accordingly, the minority interest of the Subsidiary's General Partner has
not been accounted for in the accompanying consolidated financial statements.
The Partnership presently believes that its existing cash and funds available
are adequate to meet its liquidity needs in the reasonably forseeable
future. Furthermore, management is currently marketing the remaining
property for sale, and expects a sale to occur in 1999.
IMPACT OF INFLATION
- -------------------
The Partnership's management believes that inflation may have a positive
effect on the property portfolio, but this effect generally will not be fully
realized until the Partnership sells the remaining property.
YEAR 2000
- ---------
The Partnership has evaluated whether its computer systems, including on-site
and embedded systems, and those of third parties with whom the Partnership
interacts will function properly by, at or during the year 2000. The
Partnership has determined certain of its own systems are not currently year
2000 compliant. Management has a plan to replace or upgrade these systems
within the next nine months. The Partnership does not expect that the costs
associated with these replacements or upgrades will have a materially adverse
impact on its financial position, results of operations or cash flows in
future periods. However, failure to successfully replace or upgrade these
systems could result in material disruptions to its business.
The Partnership is managed and advised by certain affiliates of Franklin
Resources, Inc. It is reliant on these entities for its basic computer
network and certain other applications. Management is monitoring the progress
of these entities in achieving year 2000 compliance and does not currently
anticipate a materially adverse impact on the Partnership's business as a
result of their non-compliance.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
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PAGE
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Report of Independent Accountants 9
Consolidated Balance Sheets as of December 31, 1998 and 1997 10
Consolidated Statements of Income for the Years 11
Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Partners' Capital (Deficit) for the 12
Years Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the Years 13
Ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements 14 - 18
Schedule III - Real Estate and Accumulated 19 - 20
Depreciation
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Partners
Property Resources Fund VI
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Property Resources Fund VI at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
the financial statement schedule are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
San Francisco, California
January 29, 1999
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
--------------------------
(Dollars in thousands) 1998 1997
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ASSETS:
Real estate:
Land $999 $2,239
Land improvements 179 781
Buildings and improvements 2,286 7,347
Furnishings and equipment 418 1,050
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3,882 11,417
Less: accumulated depreciation 1,911 4,708
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Total real estate, net 1,971 6,709
Cash and cash equivalents 1,143 409
Note receivable - 237
Other assets, net 306 306
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Total assets $3,420 $7,661
=====================================================================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
Liabilities:
Notes payable $2,121 $6,559
Accrued interest due to General Partner 527 527
Deposits and other liabilities 214 249
- ---------------------------------------------------------------------
Total liabilities 2,862 7,335
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Partners' capital (deficit):
Limited partners, 21,585 units issued and 962 766
outstanding
General Partner (404) (440)
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Total partners' capital 558 326
=====================================================================
Total liabilities and partners' capital $3,420 $7,661
=====================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
(Dollars in thousands, except unit and per 1998 1997 1996
unit amounts)
- ----------------------------------------------------------------------
REVENUES:
Rent $1,507 $2,088 $2,000
Interest and dividends 65 34 39
- ----------------------------------------------------------------------
Total revenues 1,572 2,122 2,039
- ----------------------------------------------------------------------
EXPENSES:
Interest, other than related party 202 204 88
Depreciation 186 288 291
Property operating 817 1,032 1,055
Related party 97 126 254
General and administrative 52 17 21
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Total expenses 1,354 1,667 1,709
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Operating income before sale property 218 455 330
Gain on sale of property 2,049 - -
- ----------------------------------------------------------------------
Net income before extraordinary item 2,267 455 330
Extraordinary item - Gain on early 447 - -
extinguishment of debt
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NET INCOME $2,714 $455 $330
======================================================================
Net income allocable to limited partners $2,678 $432 $313
======================================================================
Net income allocable to General Partner $36 $23 $17
======================================================================
Net income per $500 limited partnership
unit-based $124.07 $20.01 $14.50
on 21,585 units outstanding
======================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
LIMITED General
(Dollars in thousands) PARTNERS Partner Total
Units
Amount
- ------------------------------------------------------------------------
Balance, January 1, 1996 21,585 $21 $(480) $(459)
Net income - 313 17 330
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Balance, December 31, 1996 21,585 334 (463) (129)
Net income - 432 23 455
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Balance, December 31, 1997 21,585 766 (440) 326
Distribution - (2,482) - (2,482)
Net income - 2,678 36 2,714
========================================================================
Balance, December 31, 1998 21,585 $962 $(404) $558
========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
----------------------------------------------------
(Dollars in thousands) 1998 1997 1996
- ------------------------------------------------------------------------
Net income $2,714 $455 $330
Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation and amortization 199 301 304
(Increase) decrease in other assets (11) 94 (260)
Increase in accrued interest - 3 31
(Decrease) increase in deposits
and other liabilities (35) (26) 61
Extraordinary gain on extinguishment of (447) - -
debt
Gain on sale of property (2,049) - -
- ------------------------------------------------------------------------
Net cash provided by operating activities 371 827 466
- ------------------------------------------------------------------------
Improvements to rental property (26) (200) (58)
Principal payments on note receivable 236 83 62
Net proceeds from sale of property 6,626 - -
- ------------------------------------------------------------------------
Net cash provided by (used in) investing 6,836 (117) 4
activities
Proceeds from note payable - - 2,167
Increase in deferred loan costs - - (133)
Principal payments on notes payable (3,991) (427) (2,123)
Distributions to Limited Partner (2,482) - -
Repayments to General Partner - (153) (353)
- ------------------------------------------------------------------------
Net cash used in financing activities (6,473) (580) (442)
- ------------------------------------------------------------------------
Net increase in cash and cash equivalents 734 130 28
Cash and cash equivalents,
beginning of year 409 279 251
- ------------------------------------------------------------------------
Cash and cash equivalents,
end of year $1,143 $409 $279
========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------
ORGANIZATION AND BUSINESS ACTIVITY
Property Resources Fund VI (the "Partnership") is a California limited
partnership formed on May 3, 1982 for the purpose of investing in
income-producing real estate. Property Resources, Inc. is the General
Partner.
As of December 31, 1998, there were 21,585 limited partnership units
outstanding. The units are not freely transferable and no public market for
the units exists or is likely to develop.
As of December 31, 1998, the Partnership owned a 174 unit garden-style
apartment rental property (Clearlake Village Apartments), located in Houston,
Texas. As discussed in Note 3, the fee interest in Clearlake Village
Apartments is held through the Partnership's consolidated subsidiary,
Property Resources Fund VI Subsidiary, L.P. (the "Subsidiary"). Management is
currently marketing this property for sale, and expects a sale to occur in
1999.
SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND BASIS OF PREPARATION
- --------------------------------------
The accompanying consolidated financial statements include the accounts of
the Partnership and its majority-owned Subsidiary (Note 3). All significant
intercompany accounts and transactions have been eliminated.
These financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. Management have decided to sell the
Partnership's remaining property and dissolve the Partnership. A proxy
statement announcing this intention was sent to members in April 1998 and has
since been approved. No sale of the remaining Property had occurred at
December 31, 1998; however, management is currently actively seeking a buyer
of the Property. Accordingly, it is possible that the Partnership will not
continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary if
the Partnership will not continue as a going concern. Management believes
that the market value of the Partnership's remaining property is at least
equal to its book value. Accordingly, management does not expect any material
losses to be undertaken in the event of the liquidation of the Partnership.
However, there can be no assurance that the eventual sales price of the
property will not result in a loss or that a sale will be consummated.
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 differ from those estimates.
REAL ESTATE
- -----------
Real estate is stated at cost, adjusted for write-downs for impairment, and
depreciated using the straight-line method over 10 to 20 years for land
improvements, 10 to 35 years for buildings and improvements and 4 to 5 years
for furnishings and equipment. Significant improvements and betterments are
capitalized. The cost and related accumulated depreciation of assets sold
are removed from the accounts and any gain or loss is reflected in
operations. Maintenance and repairs are charged to expense when incurred.
Pursuant to the Partnership's historical investment objectives, property
purchased has been held for extended periods. During the holding period,
management periodically, but at least annually, evaluates whether rental
property has suffered impairment in value. Management's analyses include
consideration of estimated undiscounted future cash flows during the expected
holding period in comparison with carrying values, prevailing market
conditions and other economic matters. In 1986 and 1987, the Partnership
recorded reductions in the carrying amounts of Clearlake Village Apartments
and Grouse Run Apartments to state the carrying amounts at fair value at the
date of the adjustments. Management currently intends to dispose of the
remaining rental property and, in that regard, commenced marketing activity
in 1998. As of December 31, 1998, management believes that the fair value
exceeds the current carrying amount; however, there can be no assurance that
the eventual sale of the rental property, which may occur in the forthcoming
year, will not result in additional losses.
CASH AND CASH EQUIVALENTS
- -------------------------
The Partnership classifies all highly liquid investments with original
maturities of three months or less from the date acquired as cash equivalents.
INCOME TAXES
- ------------
Under federal and state income tax regulations, the income or loss of a
partnership flows through to the partners and is reported on their individual
income tax returns; accordingly, no provision for income taxes is made in
these consolidated financial statements.
OTHER ASSETS
- ------------
Other assets include deferred loan fees that are amortized over the life of
the related loan, which approximates the effective interest method. At
December 31, 1998, other assets also included impound accounts held by the
lender of the note payable collateralized by the Clearlake Village Apartments
for real estate taxes, insurance and capital improvements.
CONCENTRATION OF CREDIT RISK
- ----------------------------
Financial instruments, which potentially subject the Partnership to
concentrations of credit risk, consisted principally of a note receivable and
money market securities. The Partnership collected the full amount on the
note receivable during 1998.
The Partnership places excess cash in money market securities with Franklin
Money Fund, an investment company managed by an affiliate of the General
Partner, and in money market securities of companies with strong credit
ratings and, by policy, limits credit exposure to any one issuer.
The Partnership reserves for potential credit losses associated with tenant
receivables, as appropriate, and such losses have been within management's
expectations.
REVENUE RECOGNITION
- -------------------
The properties are leased to tenants under short-term operating leases for
typically six to twelve month periods. Revenue is recognized as earned.
NEW PRONOUNCEMENTS BY THE FINANCIAL ACCOUNTING STANDARDS BOARD
- --------------------------------------------------------------
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("FAS 130") establishes the disclosure requirements for reporting
comprehensive income in an entity's annual and interim financial statements.
The Partnership has no items of other comprehensive income and accordingly,
net income equals comprehensive income for all periods presented.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Partnership has adopted Statement of Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information", ("FAS
131"), which establishes new requirements for reporting segment
information. The Partnership has determined that it has one reportable
segment under FAS 131.
NOTE 2 - NOTE RECEIVABLE
- ------------------------
During 1998 the Partnership realized $237,000 in full settlement on a
note receivable.
NOTE 3 - NOTES PAYABLE
- ----------------------
IN THOUSANDS 1998 1997
- -------------------------------------------------------------------
CLEARLAKE VILLAGE APARTMENTS
Note payable, collateralized by deed of trust,
bearing interest at a fixed rate of 8.88%,
monthly principal and interest payments of $18 2,121 2,143
until maturity in 2006.
GROUSE RUN APARTMENTS
Amended note payable, collateralized by deed
of trust,
bearing interest at a fixed rate of 9.96%, - 4,416
monthly principal
payments of $34 until maturity in 1999.
====================
$2,121 $6,559
====================
On August 12, 1996, a note payable to affiliate, collateralized by the
Clearlake Village Apartments, was repaid from the proceeds of a new loan from
an unaffiliated lender. In connection with the new loan, the Partnership
formed Property Resources Fund VI Subsidiary, L.P. (the "Subsidiary") and
contributed its fee interest in Clearlake Village Apartments to the
Subsidiary. Although the General Partner of the Partnership is a 1% sole
General Partner in the Subsidiary, the partnership agreement of the
Subsidiary is structured such that no economic benefit accrues to the General
Partner as a result of the asset contribution. Accordingly, the minority
interest of the Subsidiary's General Partner has not been accounted for in
the accompanying consolidated financial statements.
On October 1, 1994, the Grouse Run note payable was amended. The amendment
was accounted for as a troubled debt restructuring 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. The Partnership fully repaid this loan during
the year ended December 31, 1998 following the sale of Grouse Run Apartments,
and as a result of the extinguishment of this debt, $447 was recognized as an
extraordinary gain.
Aggregate principal payments required in future years are as follows:
(Dollars in thousands)
1999 $24
2000 26
2001 28
2002 31
2003 34
Thereafter 1,978
- ------------------------------------------
$2,121
- ------------------------------------------
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Interest paid on notes payable for the years ended December 31, 1998, 1997
and 1996, was $189,000, $191,000, and $169,000, respectively. At December 31,
1998 and 1997 the fair values of notes payable approximated its carrying
value. The fair values of notes payable are estimated using interest rates
offered to the Partnership on debt of similar maturity and risk.
NOTE 4 - DISTRIBUTION OF INCOME
- -------------------------------
ALLOCATIONS TO PARTNERS
- -----------------------
The limited partnership agreement provides for allocation of income and cash
distributions. In the periods presented, allocations of income to partners
were calculated as follows:
Income or loss arising from operations was allocated 95% to the limited
partners in the ratio of capital contributions and 5% to the General
Partner as a partnership management fee.
Income or loss arising from the sale or disposition of assets was
allocated 99% to the limited partners in the ratio of their capital
contributions and 1% to the General Partner.
Cash distributions from operations are allocated 100% to the limited partners,
except upon liquidation or termination.
NOTE 5 - TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
- -------------------------------------------------------------
TRANSACTIONS WITH GENERAL PARTNER
- ---------------------------------
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,
summarized as follows and reflected as related party expense in the
consolidated statements of income.
(Dollars in thousands) 1998 1997 1996
- -------------------------------------------------------------------
RELATED PARTY EXPENSE
Property management fees $76 $104 $99
Reimbursement for accounting
and data processing expenses 21 18 14
Interest on advances from the General - 4 30
Partner
Interest on promissory note
collateralized by - - 111
the property Clearlake Village
Apartments
=========================
$97 $126 $254
=========================
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (CONTINUED)
- ---------------------------------------------------------------------
A promissory note payable to Franklin Resources, Inc., the parent of the
General Partner, which was collateralized by the Clearlake Village Apartments
was repaid on August 12, 1996 from the proceeds of a new loan from an
unaffiliated lender (Note 3).
INTEREST DUE TO GENERAL PARTNER
- -------------------------------
As of December 31, 1998, accrued interest due to the General Partner was
$527,000. This was accrued on advances that were required to pay for various
capital improvements and to support operating cash flow deficits. The
principal portion of the advances was fully repaid in 1997.
NOTE 6 - SALE OF RENTAL PROPERTY
- --------------------------------
On June 30, 1998, the Partnership sold the Grouse Run Apartments property to
an unaffiliated buyer for a total sales price of $6,902,500 resulting in net
cash proceeds to the Partnership of $6,625,750. In connection with the sale,
the Partnership recognized a gain of $2,049,000.
NOTE 7 - RECONCILIATION TO FEDERAL INCOME TAX BASIS OF ACCOUNTING (UNAUDITED)
- -----------------------------------------------------------------------------
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the accompanying
financial statements are as follows:
- ---------------------------------------------------------------------
(Dollars in thousands) 1998 1997 1996
- ---------------------------------------------------------------------
Net income - financial statements $2,714 $455 $330
Differences resulting from:
Depreciation 23 (54) (53)
Interest expense (631) (374) (374)
Gain on disposition of property 2,714 48 36
Other 57 - (32)
======================================================================
Net income (loss) income tax method $4,877 $75 $(93)
======================================================================
Net taxable income (loss) per limited
partnership unit and net of amounts
allocable to the General Partner $138.50 $3.50 $(4.33)
======================================================================
- ---------------------------------------------------------------------
(Dollars in thousands) 1998 1997 1996
- ---------------------------------------------------------------------
Partners' capital (deficit) - $558 $326 $(129)
financial statements
Differences resulting from:
Depreciation (2,068) (4,965) (4,911)
Interest Expense - (1,223) (849)
Gain on disposition of property - (138) (186)
Write-down on rental property 1,255 1,452 1,452
Note restructuring - 2,028 2,028
Note restructuring basis adjustment (28) (2,305) (2,305)
======================================================================
Partners' capital (deficit) income tax $(283) $(4,825) $(4,900)
method
======================================================================
PROPERTY RESOURCES FUND VI
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF, AND FOR THE YEAR ENDED DECEMBER 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost
Capitalized
Initial Subsequent To Gross Amount at Which
COST TO FUND ACQUISITION CARRIED AT CLOSE OF PERIOD
Life on Which
Depreciaton in
Accum- Latest Operations
Carry- Buildings ulated Date of Statements is
Encum- Improve- ing and Deprecia- construc Date Computed
Description brances Land Buildings ments Costs Land Improvement Total tion -tion Acquire
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
174 unit
apartment
complex in
Houston,
Texas $2,121 $999 $3,662 $447 - $999 $2,883 $3,882 $1,911 1976 08/82 Note 2
Notes 1,
3 and 4
</TABLE>
R E A L E S T A T E A N D A C C U M U L A T E D D E P R E C I A T I O N
NOTES:
(1) The aggregate cost for federal income tax purposes is $4,414.
(2) Depreciation is computed using useful lives of 10-20 years for land
improvements, 10-35 years for buildings, improvements and 4-5 years for
furnishings and equipment and the life of the related lease for tenant
improvements.
(3) The total cost carried at the close of the period has been adjusted to
reflect the Partnership's reduction in the carrying values for the apartment
complex located in Houston, Texas.
(4) RECONCILIATION OF REAL ESTATE
1998 1997 1996
---------------------------
Balance at beginning of period $11,417 $11,217 $11,159
Dispositions (7,561) - -
Improvements 26 200 58
---------------------------
Balance at end of period $3,882 $11,417 $11,217
===========================
(5) RECONCILIATION OF ACCUMULATED DEPRECIATION
1998 1997 1996
---------------------------
Balance at beginning of period $4,708 $4,420 $4,128
Dispositions (2,983) - -
Depreciation expense for the 186 288 292
period
---------------------------
Balance at end of period $1,911 $4,708 $4,420
===========================
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER AND THE
ADVISOR
The Partnership does not now, nor will it in the future, have directors or
executive officers. Property Resources, Inc. (the "General Partner"),
manages and directs the affairs of the Partnership and has general
responsibility in all matters affecting the business of the Partnership. The
officers and directors of the General Partner are as follows:
NAME POSITION
David P. Goss Chief Executive Officer, President and a Director
Charles B. Johnson Director
Rupert H. Johnson, Jr. Director
Charles E. Johnson Director
Richard S. Barone Senior Vice President - Legal and Secretary
Martin L. Flanagan Vice President - Finance and Chief Financial Officer
Mark A. TenBoer Vice President - Asset Management
David N. Popelka Vice President - Asset Management
Principal officers of the subsidiary of the General Partner, Continental
Property Management Co., are as follows:
Thomas J. Bennett President, Chief Financial Officer
and Sole Director
DAVID P. GOSS, age 51, is Chief Executive Officer, President and Director of
the General Partner (1987 to date). He is also Chief Executive Officer,
President and Director of Property Resources Equity Trust (1987 to date),
Franklin Properties, Inc. (1988 to date) and Franklin Select Realty Trust
(1989 to date). Previously, he was Corporate Counsel of Franklin Resources,
Inc. Prior to joining Franklin Resources, Inc., Mr. Goss served as Senior
Vice President -Legal of a real estate investment and property management
company. Prior to that, he was with the Securities and Exchange Commission
in San Francisco, California. Mr. Goss has a B.A. degree from the University
of California, Berkeley, and a J.D. degree from the New York University
School of Law.
CHARLES B. JOHNSON, age 66, is President, Chief Executive Officer and
Director, Franklin Resources, Inc.; Chairman of the Board and Director,
Franklin Advisers, Inc., Franklin Advisory Services, Inc., Franklin
Investment Advisory Services, Inc. and Franklin Templeton Distributors, Inc.;
Director, Franklin/Templeton Investor Services, Inc. and Franklin Templeton
Services, Inc.; officer and/or director or trustee, as the case may be, of
most of the other subsidiaries of Franklin Resources, Inc. and of 50 of the
investment companies in the Franklin Templeton Group of Funds.
RUPERT H. JOHNSON, JR., age 58, is Executive Vice President and Director,
Franklin Resources, Inc. and Franklin Templeton Distributors, Inc.; President
and Director, Franklin Advisers, Inc. and Franklin Investment Advisory
Services, Inc.; Senior Vice President and Director, Franklin Advisory
Services, Inc.; Director, Franklin/Templeton Investor Services, Inc.; and
officer and/or director or trustee, as the case may be, of most of the other
subsidiaries of Franklin Resources, Inc. and of 53 of the investment
companies in the Franklin Templeton Group of Funds.
Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
CHARLES E. JOHNSON, age 42, is Senior Vice President and Director, Franklin
Resources, Inc.; Senior Vice President, Franklin Templeton Distributors,
Inc.; President and Director, Templeton Worldwide, Inc.; Chairman and
Director, Templeton Investment Counsel, Inc.; Vice President, Franklin
Advisers, Inc.; officer and/or director of some of the other subsidiaries of
Franklin Resources, Inc.; and officer and/or director or trustee, as the case
may be, of 34 of the investment companies in the Franklin Templeton Group of
Funds.
RICHARD S. BARONE, age 48, is Senior Vice President - Legal and Secretary of
the General Partner (1988 to date). He is also Secretary of Franklin
Properties, Inc., Property Resources Equity Trust and Franklin Select Realty
Trust (1989 to date). He is also Senior Vice President - Legal of Franklin
Properties, Inc. (1988 to date) and Corporate Counsel of Franklin Resources,
Inc. (1988 to date). Previously, Mr. Barone was employed by the Robert A.
McNeil Corporation as Corporate Counsel from 1982 until June, 1987, during
which period he also held the positions of Vice President-Legal (1984 to
1987) and Secretary (1986 to 1987). Prior to 1982, he was in a private law
practice in San Mateo, California. Mr. Barone received a B.A. degree and a
J.D. degree from the University of San Francisco. He is a member of the
State Bar of California.
MARTIN L. FLANAGAN, age 38, is Vice President - Finance and Chief Financial
Officer of the General Partner, Property Resources Equity Trust and Franklin
Properties, Inc., Inc. (1993 to date). He is also Senior Vice President, and
Chief Financial Officer of Franklin Resources, Inc.; Senior Vice President
and Treasurer of Franklin/Templeton Distributors, Inc., Franklin Advisers,
Inc., and Franklin Institutional Services Corporation; Treasurer of Franklin
Management, Inc., and Franklin Trust Company; Senior Vice President of
Franklin/Templeton Investor Services, Inc. and Franklin Agency, Inc.; a
Director of Templeton/National Bank of Greece Management (Luxembourg),
Templeton Investment Management (Singapore), Templeton Investment Management
(Hong Kong), Templeton Funds Investment Annuity Company, Templeton Funds
Trust Company, Templeton Funds Management, Inc., Templeton Holding Ltd.,
Templeton/Franklin Investment Services, Inc., Templeton Life Assurance Ltd.,
Templeton Quantitative Advisors, Inc., Templeton Emerging Markets, Templeton
Management (Luxembourg), Templeton Unit Trust Managers, Ltd., and Templeton
Investment Management, Ltd. (Edinburgh); Executive Vice President, Chief
Operating Officer and a Director of Templeton Worldwide, Inc. and Templeton
International, Inc.; Executive Vice President and a Director of T.G.H.
Holdings, Ltd.; Chairman of the Board of Templeton Global Strategic Services,
Inc.; General Manager of Templeton Financial Advisory Services, S.A.;
Managing Director of Templeton Global Investors, Ltd.; President and Chief
Executive Officer of Templeton Global Investors; and Executive Vice President
and a Director of Templeton, Galbraith & Hansberger, Ltd. and Templeton
Investment Counsel, Inc. From 1982 to 1983, he was an auditor for Arthur
Andersen & Company. Mr. Flanagan received a B.A. degree from Southern
Methodist University and is a Certified Public Accountant and a Chartered
Financial Analyst. He is currently a member of the American Institute of
Certified Public Accountants and the International Society of Financial
Analysts.
MARK A. TENBOER, age 42, is Vice President - Asset Management for the General
Partner, Property Resources, Inc. (1991 to date). He is also Vice President -
Finance and Chief Financial Officer of Franklin Select Realty Trust (1993 to
date). From 1983 to 1991 he was Director - Portfolio Management and
Controller of the General Partner and Franklin Properties, Inc. Previous to
his employment with the General Partner he was associated with Genstar
Corporation as Supervisor - Internal Audit from 1980 to 1983 and with
Deloitte Haskins & Sells as an auditor from 1978 to 1980. He received a B.S.
degree in Accounting from the University of Illinois. Mr. TenBoer is a
Certified Public Accountant and a real estate broker.
DAVID N. POPELKA, age 46, has served since 1992 as Vice President - Asset
Management for the General Partner, Property Resources, Inc. Prior to
joining the General Partner, Mr. Popelka was Vice President - Portfolio
Management for the Glenborough Management Company in Redwood City,
California. Mr. Popelka is a graduate of Illinois State University and
received a Masters degree in Business Administration from the University of
Washington Graduate School of Business. He has been a guest lecturer on real
estate investments and finance at Golden Gate University. Mr. Popelka is a
real estate broker licensed by the State of California.
THOMAS J. BENNETT, age 50, has served since 1988 as the President of
Continental and since 1989 as sole Director and Chief Financial Officer of
Continental. Previously, he served as Regional Vice President, Utah Region,
of Continental. From 1983 to 1986, Mr. Bennett was employed as Senior
Property Manager with Prowswood Ltd., in Utah, and the Irvine Company,
Irvine, California. He is a graduate of California State University at Long
Beach and is a Certified Property Manager of the Institute of Real Estate
Management.
Item 11. EXECUTIVE COMPENSATION
The Partnership is a limited partnership and has no officers or directors who
were paid any direct remuneration. As discussed in Item 13 below, however,
the Partnership is managed by its General Partner and does pay for various
services provided by the General Partner.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1998, no person is known by the Registrant to own
beneficially, more than five percent (5%) of the Units.
The Partnership is a limited partnership and has no officers or directors. As
of December 31, 1998, no director, officer or employee of the General
Partner, performing functions similar to those of an officer, beneficially
owned, either directly or indirectly, any partnership units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership pays fees for various services provided by the General
Partner to the Partnership. In connection with the formation of the
Partnership, Property Resources, Inc. contributed $3,000 to the capital of
the Partnership. Property Resources, Inc. will receive compensation in the
following amounts for the following services rendered (capitalized terms are
defined in the Certificate and Agreements of Limited Partnership as set forth
in the Prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) and are incorporated herein by reference):
1.For management of the Partnership properties, Continental
Property Management Co. (CPMC), an affiliate of Property Resources, Inc., is
entitled to receive a monthly management fee equal to 5% of the monthly
collected gross revenues. However, such amounts are not to exceed the
prevailing rates for comparable services in the localities where the
properties are located. In 1998, property management fees of $76,000 were
accrued or paid to CPMC.
2. As compensation for its services in managing the Partnership,
Property Resources, Inc. is entitled to receive partnership management fees
equal to 5% of the Adjusted Funds Provided by Operations After Debt Service.
In 1998, no partnership management fees were paid to Property Resources, Inc.
3. As compensation to the General Partner in connection with the sale
of the Partnership properties, the General Partner is entitled to receive a
Subordinated Real Estate Commission from the Partnership. The Subordinated
Real Estate Commission shall not exceed the lesser of (i) a percentage of the
gross sales price of the property sold equal to one-half of the normal
competitive rate charged for similar services by unaffiliated parties that
render such services as an ongoing public activity in the same geographic
location for comparable property; or (ii) three percent (3%) of the gross
sales price of the property. The payment of the commission is also subject
to other requirements as set forth in Paragraph 9.5 of the Limited
Partnership Agreement. The payment of the Subordinated Real Estate
Commission shall be made only after the Limited Partners receive an aggregate
amount, in cash, which when added to prior Distributions, equal (i) to the
total Original Invested Capital of the Limited Partners plus (ii) a per annum
return on their Adjusted Invested Capital equal to six percent (6%) in the
Partnership's first calendar year or a portion thereof, increasing annually
in an amount of one percent (1%) until it reaches the rate of ten percent
(10%) in the fifth year, then ten percent (10%) per annum thereafter,
commencing at the time each original Limited Partner is admitted to the
Partnership. In 1998, no Subordinated Real Estate Commissions were paid to
the General Partner.
4. As additional compensation for services rendered in connection with
the management and operation of the Partnership, the General Partner shall be
entitled to receive a Subordinated Incentive Fee equal to 15% of the Cash
From Sales or Refinancing remaining after the Partnership has distributed to
the Limited Partners an aggregate amount which when added to prior
Distributions to Holders is equal to: (i) the total of Original Invested
Capital plus (ii) a per annum return on their Adjusted Invested Capital equal
to 6% in the Partnership's first calendar year or portion thereof, increasing
annually in an amount of 1% until it reaches a rate of 10% in the fifth year,
then 10% per annum thereafter, commencing at the time each original Limited
Partner is admitted to the Partnership. No Incentive Fees were paid to the
General Partner in 1998.
5. Net income and net loss from operations of the Partnership is
allocated 5% to the General Partner and 95% to the Limited Partners.
6. Under the Limited Partnership Agreement, the General Partner may
receive reimbursement for certain expenses incurred on behalf of the
Partnership. In 1998, the General Partner was reimbursed $21,000 for
accounting and data processing costs and services provided to the
Partnership.
Advances from the General Partner at December 31, 1998, consisted entirely of
accrued interest of $527,000. Interest on advances is accrued at the prime
rate, which was 8.25% from January to March of 1997 and was 8.5% from April
1997 onwards. The Partnership incurred no interest expense on advances for
the year ended December 31, 1998.
The Partnership has not issued any warrants, options or rights to purchase
its securities. No officer or member of management of the General Partner is
indebted to the Partnership. There were no transactions in which any of the
following persons had or is to have a direct or indirect material interest
other than that set forth above: (i) any officer, director or nominee for
election as director of the General Partner; (ii) any security holder owning
more than 5% of the Partnership's securities; or (iii) any relative or spouse
of any of the foregoing persons, or any relative to such spouse, who has the
same home as such person or who is a director or officer of the General
Partner of the Partnership.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. The financial statements and schedules of the Partnership included
in Item 8 of the report are listed on the index on page 8.
2. The supplemental financial statement schedule of the Partnership
included in Item 8 of this report is listed on the index on page 8.
3. Exhibits:
(3) Partnership Agreement1
(10) Material contracts2
Franklin Resources, Inc. Promissory Note
1 Documents were filed in the Partnership's Form S-11 Registration
Statement (Registration No. 2-77330) and are incorporated herein by
reference.
2 Documents were filed on Form 8, dated December 30, 1993, and are
incorporated herein by reference.
(b) Reports on Form 8-K.
The Partnership did not file any reports on form 8-K during the quarter
ended December 31, 1998.
SIGNATURE
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.
PROPERTY RESOURCES FUND VI
(Registrant)
Date: By:
David P. Goss
Chief Executive Officer
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.
SIGNATURE TITLE DATE
Chief Executive
Officer
- ------------------------ ----------------
David P. Goss
Director
- ------------------------ ----------------
Charles B. Johnson
Director
- ------------------------ ----------------
Rupert H. Johnson, Jr.
Director
- ------------------------ ----------------
Charles E. Johnson
