FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from.........to.........
Commission file number 0-11864
NATIONAL PROPERTY INVESTORS 6
(Exact name of small business issuer as specified in its charter)
California 13-3140364
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL PROPERTY INVESTORS 6
BALANCE SHEET
(Unaudited)
March 31, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 3,175
Receivables and deposits 489
Restricted escrows 1,607
Other assets 898
Investment in Tenant-in-Common property 162
Investment properties:
Land $ 4,349
Buildings and related personal property 60,201
64,550
Less accumulated depreciation (42,256) 22,294
$ 28,625
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 89
Tenant security deposit liabilities 189
Accrued property taxes 103
Other liabilities 343
Mortgage notes payable 26,135
Partners' Capital (Deficit)
Limited partners' (109,600 units issued and
outstanding) $ 2,296
General partner's (530) 1,766
$ 28,625
See Accompanying Notes to Financial Statements
b)
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months
Ended March 31,
1998 1997
Revenues:
Rental income $ 2,432 $ 2,313
Other income 235 234
Total revenues 2,667 2,547
Expenses:
Operating 1,020 997
Interest 515 515
Depreciation 677 651
General and administrative 99 60
Property taxes 119 116
Total expenses 2,430 2,339
Equity in net income of tenant-in-common
property 60 111
Net income $ 297 $ 319
Net income allocated to general partner (1%) $ 3 $ 3
Net income allocated to limited partners (99%) 294 316
$ 297 $ 319
Net income per limited partnership unit $ 2.68 $ 2.88
See Accompanying Notes to Financial Statements
c)
NATIONAL PROPERTY INVESTORS 6
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner's Partners' Total
<S> <C> <C> <C> <C>
Original capital contributions 109,600 $ 1 $ 54,800 $ 54,801
Partners' (deficit) capital at
December 31, 1997 109,600 $ (533) $ 2,002 $ 1,469
Net income for the three
months ended March 31, 1998 -- 3 294 297
Partners' (deficit) capital at
March 31, 1998 109,600 $ (530) $ 2,296 $ 1,766
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
d)
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 297 $ 319
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 677 651
Amortization of loan costs 36 36
Equity in net income of tenant-in-common property (60) (111)
Change in accounts:
Receivables and deposits (13) (25)
Other assets 84 (2)
Accounts payable (48) (310)
Tenant security deposit liabilities (5) (10)
Accrued property taxes (35) 65
Other liabilities 13 (159)
Net cash provided by operating activities 946 454
Cash flows from investing activities:
Property improvements and replacements (180) (248)
Net receipts from (deposits to) restricted escrows 80 (114)
Distributions from tenant-in-common property -- 759
Net cash (used in) provided by investing
activities (100) 397
Cash flows from financing activities:
Distributions paid -- (10,621)
Net cash used in financing activities -- (10,621)
Net increase (decrease) in cash and cash equivalents 846 (9,770)
Cash and cash equivalents at beginning of period 2,329 13,933
Cash and cash equivalents at end of period $ 3,175 $ 4,163
Supplemental information:
Cash paid for interest $ 479 $ 479
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
e)
NATIONAL PROPERTY INVESTORS 6
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of National Property Investors 6
(the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1998, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1998. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the year ended
December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation (see "Note B").
NOTE B - CHANGE IN METHOD OF REPORTING THE OWNERSHIP OF TENANT-IN-COMMON
PROPERTY
National Property Investors 6 owns a 75.972% interest in The Village Apartments
(the "Village") (see Note D). Through the third quarter of 1997, the
Partnership consolidated its pro rata share of assets, liabilities and
operations of the Village. During the fourth quarter of 1997, the Partnership
decided to reflect its interest in the Village utilizing the equity method due
to the inability of the Partnership to control the major operating and financial
policies of the Village. Under the equity method, the original investment is
increased by advances to the Village and the Partnership's share of the earnings
of the Village. The investment is decreased by distributions from the Village
and the Partnership's share of losses of the Village. At March 31, 1998, the
Partnership's investment account had a balance of $162,000.
The statements of operations and cash flows for the period ended March 31, 1997
have been restated to reflect this change as a change in the reporting entity.
Additionally, certain reclassifications were made in the 1997 statement of
operations to conform to the current year presentation. These changes had no
effect on the net income of the Partnership or on the net income per limited
partnership unit.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Managing General Partner is wholly-owned by
Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group,
Inc. ("Insignia"). The Partnership Agreement provides for payments to affiliates
for services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following transactions with affiliates of Insignia were incurred during the
three month periods ended March 31, 1998 and 1997 (in thousands):
Three Months Ended
March 31,
1998 1997
Property management fees (included in operating
expenses) $132 $120
Reimbursement for services of affiliates, including
$24,000 and $34,000 of construction services
reimbursements in 1998 and 1997, respectively
(included in general and administrative
and operating expenses, and investment properties) 100 83
For services relating to the administration of the Partnership and operation of
partnership properties, the Managing General Partner is entitled to receive
payment for non-accountable expenses up to a maximum of $150,000 per year, based
upon the number of Partnership units sold, subject to certain limitations. The
Managing General Partner was entitled to receive $150,000 in 1996. The
Partnership accrued such fees in 1996 and paid these fees in January 1997.
For the period from January 1, 1997, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an insurer unaffiliated with the Managing General
Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which received payments on these obligations from the agent. The amount
of the Partnership's insurance premiums that accrued to the benefit of the
affiliate of the Managing General Partner by virtue of the agent's obligations
was not significant.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
the third quarter of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
NOTE D - TENANT-IN-COMMON PROPERTY
The Partnership currently owns The Village as a tenant-in-common with National
Property Investors 5 ("NPI 5"), an affiliated public limited partnership. NPI 5
acquired a 24.028% undivided interest with the Partnership owning the remaining
75.972%. Effective December 31, 1997, the property is accounted for under the
equity method of accounting (see "Note B"). At March 31, 1998, the
Partnership's investment account had a balance of $162,000.
The condensed balance sheet of the Village at March 31, 1998, is summarized as
follows (in thousands):
March 31,
1998
Assets
Investment property, net $ 9,850
Other assets 1,397
Total $ 11,247
Liabilities and Partners' Capital
Mortgage note payable $ 10,869
Other liabilities 244
Partners capital 134
Total $ 11,247
Condensed statements of operations of the Village for the three month periods
ending March 31, 1998 and 1997 are as follows (in thousands):
Three Months Ended
March 31,
1998 1997
Total revenues $ 1,134 $ 1,125
Operating and other expenses 613 540
Depreciation 198 189
Mortgage interest 245 249
Total expenses 1,056 978
Net income $ 78 $ 147
NOTE E - DISTRIBUTIONS
In December 1996, the Partnership declared a distribution of approximately
$10,621,000 payable to the partners. The distribution was paid in January 1997,
with approximately $10,515,000 being paid to the limited partners ($95.94 per
limited partnership unit) and approximately $106,000 being paid to the Managing
General Partner. The distribution represented net proceeds from the mortgage
refinancings in 1996 and cash from operations.
NOTE F - SUBSEQUENT EVENT
Subsequent to March 31, 1998, the Partnership entered in an agreement with an
unaffiliated party to sell the Village, the Partnership's tenant-in-common
property. The potential purchaser is currently inspecting the property, pursuant
to the Contract to Purchase and Sell Property. The Managing General Partner
expects the sale to be completed by July 1998.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of six apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 1998 and 1997:
Average
Occupancy
Property 1998 1997
Ski Lodge Apartments
Montgomery, Alabama 94% 89%
Panorama Terrace II Apartments
Birmingham, Alabama 91% 86%
Place du Plantier Apartments
Baton Rouge, Louisiana 89% 93%
Fairway View I Apartments
Baton Rouge, Louisiana 94% 92%
Colony at Kenilworth Apartments
Towson, Maryland 88% 84%
Alpine Village Apartments
Birmingham, Alabama 91% 91%
The Managing General Partner attributes the occupancy increase at Ski Lodge to
improved conditions in the local market. During 1997, many new apartments were
constructed in the Birmingham area, which caused a decrease in occupancy at
Panorama Terrace. Management has been able to increase occupancy in 1998 by
attracting tenants back to Panorama Terrace with reduced rental rates. Colony
at Kenilworth's increased occupancy is the result of a new marketing program
started in 1997, which focuses on marketing the property to students at the area
colleges and universities. The decrease in occupancy at Place du Plantier is due
to the expiration during the first quarter of 1998 of six-month leases offered
to appeal to the local student population. The property is experimenting with
various leasing options to maximize its occupancy throughout the year while
maintaining its appeal to students attending the local university. Physical
occupancy at Place du Plantier had improved to 91% by mid-April. Management
continues to monitor and adjust rental rates at all properties to maximize total
revenue.
The Partnership realized net income of $297,000 for the three months ended March
31, 1998, compared to net income of $319,000 for the three months ended March
31, 1997. The decrease in net income is primarily due to decreased equity in net
income of tenant-in-common property and an increase in total expenses.
Partially offsetting the decrease in equity in net income of tenant-in-common
property and increased total expenses was an increase in rental income due to an
overall increase in rental rates and occupancy, as discussed above. Expenses
increased primarily due to increased depreciation, operating and general and
administrative expenses. Depreciation expenses increased as a result of property
improvements and replacements completed during 1997. General and administrative
expenses increased primarily due to increased expense reimbursements. Net
income at the tenant-in-common property, the Village, decreased primarily due to
increased utility costs, in part due to decreased occupancy, and maintenance
expenses related to the completion of the 1997 exterior painting project
Included in operating expense is approximately $42,000 of major repairs and
maintenance comprised primarily of exterior building repairs and landscaping for
the three months ended March 31, 1998. Included in operating expense for the
three months ended March 31, 1997 is approximately $53,000 of major repairs and
maintenance comprised primarily of exterior building and swimming pool repairs.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At March 31, 1998, the Partnership had cash and cash equivalents of
approximately $3,175,000 compared to approximately $4,163,000 at March 31, 1997.
The net increase in cash and cash equivalents for the period ended March 31,
1998 was $846,000 compared to a net decrease of $9,770,000 for the period ended
March 31, 1997. Net cash provided by operating activities increased primarily
due to the decreases in cash used for accounts payable and other liabilities in
1998 due to the timing of payments. Net cash used in investing activities
increased due to a distribution from the tenant-in-common property in 1997. Net
cash used in financing activities decreased due to a distribution being paid in
1997.
The Managing General Partner has extended to the Partnership a $500,000 line of
credit. At the present time, the Partnership has no outstanding amounts due
under this line of credit, and the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents,
the line of credit is the Partnership's only unused source of liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of $26,135,000 matures November 1, 2003, with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales, refinancings, and the availability of
cash reserves. The Partnership declared a distribution of $10,621,000 in 1996,
which was paid in January 1997. No distributions were declared or paid during
the first quarter of 1998. The Managing General Partner anticipates that a
distribution from operations will be made in 1998.
Subsequent to March 31, 1998, the Partnership entered in an agreement with an
unaffiliated party to sell the Village, the Partnership's tenant-in-common
property. The potential purchaser is currently inspecting the property, pursuant
to the Contract to Purchase and Sell Property. The Managing General Partner
expects the sale to be completed by July 1998.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date of
this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates to acquire limited partnership units, the management of partnerships
by Insignia affiliates, as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The Managing General Partner
was only recently served with the complaint, which it believes to be without
merit, and intends to vigorously defend the action.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: None filed during the quarter ended March 31, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NATIONAL PROPERTY INVESTORS 6
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Vice President and Treasurer
Date: May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
National Property Investors 6 1998 First Quarter 10-QSB and is qualified
in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000708870
<NAME> NATIONAL PROPERTY INVESTORS 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,175
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 64,550
<DEPRECIATION> 42,256
<TOTAL-ASSETS> 28,625
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 26,135
0
0
<COMMON> 0
<OTHER-SE> 1,766
<TOTAL-LIABILITY-AND-EQUITY> 28,625
<SALES> 0
<TOTAL-REVENUES> 2,667
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,430
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 515
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297
<EPS-PRIMARY> 2.68<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
