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 September 30, 2000
[ ] 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.)
55 Beattie Place, PO 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL PROPERTY INVESTORS 6
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 935
Receivables and deposits 847
Restricted escrows 320
Other assets 803
Investment properties:
Land $ 4,349
Buildings and related personal property 67,145
71,494
Less accumulated depreciation (49,769) 21,725
$ 24,630
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 92
Tenant security deposit liabilities 282
Accrued property taxes 266
Other liabilities 551
Mortgage notes payable 26,135
Partners' Deficit
General partner $ (575)
Limited partners (109,600 units
issued and outstanding) (2,121) (2,696)
$ 24,630
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues: (Restated) (Restated)
<S> <C> <C> <C> <C>
Rental income $ 2,635 $ 2,613 $ 7,924 $ 7,732
Other income 264 170 697 502
Casualty gain -- -- -- 273
Total revenues 2,899 2,783 8,621 8,507
Expenses:
Operating 1,090 1,269 3,180 3,398
Interest 510 515 1,539 1,544
Depreciation 876 748 2,596 2,205
General and administrative 211 76 577 234
Property taxes 146 124 429 395
Total expenses 2,833 2,732 8,321 7,776
Income before cumulative effect
of a change in accounting
principle 66 51 300 731
Cumulative effect on prior years
of change in accounting for the
cost of exterior painting and
major landscaping -- -- -- 302
Net income $ 66 $ 51 $ 300 $ 1,033
Net income allocated to general
partner (1%) $ 1 $ -- $ 3 $ 10
Net income allocated to limited
partners (99%) 65 51 297 1,023
$ 66 $ 51 $ 300 $ 1,033
Per limited partnership unit:
Income before cumulative effect
of a change in accounting
principle $ 0.59 $ 0.46 $ 2.71 $ 6.60
Cumulative effect on prior
years of a change in accounting
for the cost of exterior
painting and major landscaping -- -- -- 2.73
Net income $ 0.59 $ 0.46 $ 2.71 $ 9.33
Distributions per limited
partnership unit $ 1.66 $ -- $ 20.01 $ --
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
NATIONAL PROPERTY INVESTORS 6
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 109,600 $ 1 $54,800 $54,801
Partners' deficit at
December 31, 1999 109,600 $ (556) $ (225) $ (781)
Distributions to partners -- (22) (2,193) (2,215)
Net income for the nine months
ended September 30, 2000 -- 3 297 300
Partners' deficit at
September 30, 2000 109,600 $ (575) $(2,121) $(2,696)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities: (Restated)
<S> <C> <C>
Net income $ 300 $ 1,033
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 2,596 2,205
Amortization of loan costs 107 107
Casualty gain -- (273)
Cumulative effect on prior years of change in
accounting principle -- (302)
Change in accounts:
Receivables and deposits (485) (244)
Other assets (121) (169)
Accounts payable (36) (260)
Tenant security deposit liabilities 43 40
Accrued property taxes 83 123
Payable to affiliate (916) --
Other liabilities 89 63
Net cash provided by operating activities 1,660 2,323
Cash flows from investing activities:
Property improvements and replacements (1,034) (3,052)
Net (deposit to) withdrawals from restricted escrows (14) 636
Net insurance proceeds received -- 343
Net cash used in investing activities (1,048) (2,073)
Cash flows used in financing activities:
Distributions to partners (2,215) --
Net (decrease) increase in cash and cash equivalents (1,603) 250
Cash and cash equivalents at beginning of period 2,538 1,501
Cash and cash equivalents at end of period $ 935 $ 1,751
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,437 $ 1,437
At December 31, 1999 approximately $101,000 of property improvements and
replacements were included in accounts payable.
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
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" or "Registrant") 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 and nine month periods ended September 30, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.
Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. This accounting change was first
reported during the fourth quarter of 1999. Accordingly, net income for the
three and nine month periods ended September 30, 1999 has been restated to
reflect the accounting change as if it were reported then. This adjustment
increased income before the cumulative effect of the accounting change for the
three and nine month periods ended September 30, 1999 by approximately $100,000
($0.90 per limited partnership unit) and approximately $197,000 ($1.78 per
limited partnership unit), respectively. The cumulative effect adjustment of
approximately $302,000 is the result of applying the aforementioned change in
accounting principle retroactively and is included in income for 1999. The
accounting principle change will not have an effect on cash flow, funds
available for distribution or fees payable to the Managing General Partner and
affiliates.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
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 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 the Managing General Partner were
incurred during the nine months ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $433 $414
Reimbursement for services of affiliates (included in
investment properties, operating and general and
administrative expenses) 314 269
Non accountable reimbursements (included in general and
administrative expenses) 150 --
Partnership management fee (included in general and
administrative expenses) 46 --
During the nine months ended September 30, 2000 and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Partnership's properties for providing property management services. The
Partnership paid to such affiliates approximately $433,000 and $414,000 for the
nine months ended September 30, 2000 and 1999, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $314,000 and $269,000 for the
nine months ended September 30, 2000 and 1999, respectively. Approximately
$98,000 of the 2000 expense was accrued at September 30, 2000 and paid in
October 2000.
Also, for services relating to the administration of the Partnership and
operation of the Partnership's 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 earned and received $150,000
during the nine months ended September 30, 2000. No such reimbursements were
earned during the nine months ended September 30, 1999.
As compensation for services rendered in managing the Partnership, the Managing
General Partner is entitled to receive Partnership management fees in
conjunction with distributions of cash from operations, subject to certain
limitations. Approximately $46,000 of fees have been paid in conjunction with
the operating distributions made during the nine months ended September 30,
2000. No such fee was paid during the nine months ended September 30, 1999, as
no operating distributions were made during this period.
In addition, approximately $916,000 of incentive management fees resulting from
the sale of The Village Apartments in September 1998 were accrued and were
previously included on the balance sheet as "payable to affiliate". These fees
were payable to the Managing General Partner but were subordinate in payment to
the limited partners receiving a cumulative preferred return specified in the
partnership agreement. The limited partners received their cumulative preferred
return with the February 2000 distribution and the Managing General Partner was
paid the previously accrued incentive management fee.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 65,633 limited partnership
units in the Partnership representing 59.884% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 59.884% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. However, the affiliate is
required to vote its Units acquired from DeForest Ventures II, L.P. on January
19, 1996 (the date that Insignia Financial Group acquired the stock of National
Property Investors, Inc., the then parent company of the Managing General
Partner), (i) against any proposal to increase the fees and other compensation
payable by the Partnership to the Managing General Partner or to affiliates; and
(ii) on all other matters submitted by it or its affiliates, in proportion to
the votes cast by non-tendering unitholders. Except for the foregoing, no other
limitations are imposed on AIMCO's or its affiliates right to vote each Unit
acquired.
Note D - Casualty Events
In November 1998, a fire at Fairway View I caused an estimated $191,000 of
damage to the property of which approximately $186,000 was covered by insurance.
As of September 30, 1999, approximately $76,000 of insurance proceeds relating
to this event had been received and the remaining proceeds were received during
the fourth quarter of 1999. In January 1999, a second fire at Fairway View I
caused an estimated $448,000 of damage to the property of which approximately
$443,000 was covered by insurance. As of September 30, 1999, approximately
$267,000 of insurance proceeds, net of expenses, relating to this event had been
received. These fires damaged 19 units and construction was completed during the
fourth quarter of 1999. During the nine months ended September 30, 1999, a
casualty gain of approximately $273,000 was recognized consisting of the net
proceeds discussed above and the write-off of undepreciated assets damaged
during the casualties of approximately $70,000.
Note E - Distributions
During the nine months ended September 30, 2000, the Partnership distributed
cash from operations of approximately $2,215,000 (approximately $2,193,000 to
the limited partners, $20.01 per limited partnership unit) to the partners. No
distributions were made during the nine month period ending September 30, 1999.
Subsequent to September 30, 2000, the Partnership distributed cash from
operations of approximately $497,000 (approximately $492,000 to the limited
partners, $4.49 per limited partnership unit) to the partners. In association
with this distribution, the Managing General Partner was paid a Partnership
management fee of approximately $45,000.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of six apartment complexes
located in Alabama (3), Louisiana (2) and Maryland (1). The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three and nine month periods ended September 30,
2000 and 1999, is shown in the tables below (in thousands). The "Other" column
includes Partnership administration related items and income and expense not
allocated to the reportable segment.
Three Months Ended September 30, 2000 Residential Other Totals
Rental income $ 2,635 $ -- $ 2,635
Other income 263 1 264
Interest expense 510 -- 510
Depreciation 876 -- 876
General and administrative expense -- 211 211
Segment profit (loss) 276 (210) 66
Nine Months Ended September 30, 2000 Residential Other Totals
Rental income $ 7,924 $ -- $ 7,924
Other income 693 4 697
Interest expense 1,539 -- 1,539
Depreciation 2,596 -- 2,596
General and administrative expense -- 577 577
Segment profit (loss) 873 (573) 300
Total assets 24,204 426 24,630
Capital expenditures for investment
properties 933 -- 933
Three Months Ended September 30, 1999 Residential Other Totals
(Restated)
Rental income $ 2,613 $ -- $ 2,613
Other income 170 -- 170
Interest expense 515 -- 515
Depreciation 748 -- 748
General and administrative expense -- 76 76
Segment profit (loss) 127 (76) 51
Nine Months Ended September 30, 1999 Residential Other Totals
(Restated)
Rental income $ 7,732 $ -- $ 7,732
Other income 487 15 502
Casualty gain 273 -- 273
Interest expense 1,544 -- 1,544
Depreciation 2,205 -- 2,205
General and administrative expense -- 234 234
Cumulative effect on prior years of
change in accounting principle 302 -- 302
Segment profit (loss) 1,252 (219) 1,033
Total assets 26,552 266 26,818
Capital expenditures for investment
properties 3,052 -- 3,052
Note G - 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, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Managing General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of six apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Ski Lodge Apartments 91% 94%
Montgomery, Alabama (1)
Panorama Terrace II Apartments 93% 94%
Birmingham, Alabama
Place du Plantier Apartments 91% 93%
Baton Rouge, Louisiana
Fairway View Apartments 95% 96%
Baton Rouge, Louisiana
Colony at Kenilworth Apartments 96% 92%
Towson, Maryland (2)
Alpine Village Apartments 95% 96%
Birmingham, Alabama
(1) The Managing General Partner attributes the decrease in occupancy to a
weakened local market.
(2) The Managing General Partner attributes the increase in occupancy to
improved marketing efforts and a strong local economy.
Results of Operations
The Partnership's net income for the nine months ended September 30, 2000 was
approximately $300,000 compared to net income of approximately $1,033,000 (as
restated) for the comparable period in 1999. The Partnership's net income for
the three months ended September 30, 2000, was approximately $66,000 compared to
net income of approximately $51,000 (as restated) for the three months ended
September 30, 1999. The decrease in net income for the nine months ended
September 30, 2000 is primarily attributable to the cumulative effect on prior
years of a change in accounting principle and casualty gain, which were both
recognized during the first quarter of 1999. Income before the cumulative effect
on prior years of a change in accounting principle was approximately $300,000
and $731,000 (as restated) for the nine months ended September 30, 2000 and
1999, respectively. The decrease in income before the cumulative effect on prior
years of a change in accounting principle for the nine months ended September
30, 2000 is primarily attributable to an increase in total expenses partially
offset by an increase in total revenues. The increase in income before the
cumulative effect on prior years of a change in accounting principle for the
three months ended September 30, 2000 is primarily attributable to an increase
in total revenues partially offset by an increase in total expenses.
The increase in total expenses for both the three and nine month periods ended
September 30, 2000 is due to an increase in depreciation and general and
administrative expenses partially offset by a decrease in operating expense. The
increase in depreciation expense is due to depreciable assets being placed into
service over the past twelve months at the Partnership's properties. The
increase in general and administrative expense is due to an increase in
non-accountable reimbursements and Partnership management fees resulting from
distributions made during 2000 as well as an increase in the cost of services
included in the management reimbursements to the Managing General Partner as
allowed under the Partnership Agreement. The decrease in operating expense is
primarily due to a decrease in contract yard and ground work at Ski Lodge
Apartments, floor covering repairs at Colony at Kenilworth Apartments, Panarama
Terrace II Apartments and Place du Plantier Apartments, and interior
improvements at Ski Lodge Apartments and Panorama Terrace II Apartments.
Also included in general and administrative expense for the nine months ended
September 30, 2000 and 1999 are costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement.
For the nine months ended September 30, 2000, total revenues increased due to an
increase in rental and other income partially offset by a decrease in the
casualty gain. The casualty gain recognized during the nine months ended
September 30, 1999 is discussed below. For the three months ended September 30,
2000, total revenues increased due to increases in rental and other income. The
increase in rental income primarily due to the increase in occupancy at Colony
at Kenilworth Apartments and an increase in the average rental rates at all of
the Partnership's properties partially offset by a decrease in occupancy at Ski
Lodge Apartments. The increase in other income is primarily due to an increase
in miscellaneous income at all properties, late fees at Ski Lodge Apartments,
Panorama Terrace Apartments, and Alpine Village Apartments, utility
reimbursements and telephone commissions at all the properties, and laundry
income at Colony at Kenilworth Apartments.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. This accounting change was first
reported during the fourth quarter of 1999. Accordingly, net income for the
three and nine month periods ended September 30, 1999 has been restated to
reflect the accounting change as if it were reported then. This adjustment
increased income before the cumulative effect of the accounting change for the
three and nine month periods ended September 30, 1999 by approximately $100,000
($0.90 per limited partnership unit) and approximately $197,000 ($1.78 per
limited partnership unit), respectively. The cumulative effect adjustment of
approximately $302,000 is the result of applying the aforementioned change in
accounting principle retroactively and is included in income for 1999. The
accounting principle change will not have an effect on cash flow, funds
available for distribution or fees payable to the Managing General Partner and
affiliates.
In November 1998, a fire at Fairway View I caused an estimated $191,000 of
damage to the property of which approximately $186,000 was covered by insurance.
As of September 30, 1999, approximately $76,000 of insurance proceeds relating
to this event had been received and the remaining proceeds were received during
the fourth quarter of 1999. In January 1999, a second fire at Fairway View I
caused an estimated $448,000 of damage to the property of which approximately
$443,000 was covered by insurance. As of September 30, 1999, approximately
$267,000 of insurance proceeds, net of expenses, relating to this event had been
received. These fires damaged 19 units and construction was completed during the
fourth quarter of 1999. During the nine months ended September 30, 1999, a
casualty gain of approximately $273,000 was recognized consisting of the net
proceeds discussed above and the write-off of undepreciated assets damaged
during the casualties of approximately $70,000.
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.
Capital Resources and Liquidity
At September 30, 2000, the Partnership had cash and cash equivalents of
approximately $935,000 as compared to approximately $1,751,000 at September 30,
1999. For the nine months ended September 30, 2000, cash and cash equivalents
decreased by approximately $1,603,000 from the Partnership's year ended December
31, 1999. The decrease in cash and cash equivalents is due to approximately
$2,215,000 of cash used in financing activities and approximately $1,048,000 of
cash used in investing activities partially offset by approximately $1,660,000
of cash provided by operating activities. Cash used in financing activities
consists of distributions to the partners. Cash used in investing activities
consists of property improvements and replacements and net deposits to
restricted escrows maintained by the mortgage lenders. The Partnership invests
its working capital reserves in a money market account.
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 and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
for each of the Partnership's properties are detailed below.
Ski Lodge Apartments
Approximately $208,000 has been budgeted for 2000 for capital improvements at
Ski Lodge Apartments consisting primarily of carpet replacement, appliance
replacements, wall coverings, parking lot improvements, and HVAC upgrades. The
Partnership completed approximately $236,000 in budgeted and unbudgeted capital
expenditures at Ski Lodge Apartments as of September 30, 2000, consisting
primarily of interior decorating, appliance replacements, structural
improvements, floor covering replacements, and HVAC upgrades. These improvements
were funded from operating cash flow and replacement reserves. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Panorama Terrace II Apartments
Approximately $138,000 has been budgeted for 2000 for capital improvements at
Panorama Terrace II Apartments consisting primarily of floor covering
replacements, structural improvements, and appliance replacements. The
Partnership completed approximately $78,000 in budgeted and unbudgeted capital
expenditures at Panorama Terrace II Apartments as of September 30, 2000,
consisting primarily of floor covering replacements, HVAC upgrades and
structural improvements. These improvements were funded from operating cash
flow. Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Place du Plantier Apartments
Approximately $871,000 has been budgeted for 2000 for capital improvements at
Place du Plantier Apartments consisting primarily of floor covering
replacements, appliance replacements, plumbing replacements, and structural
improvements. The Partnership completed approximately $70,000 in capital
expenditures at Place du Plantier Apartments as of September 30, 2000,
consisting primarily of light fixture replacements, floor covering replacements,
and appliance replacements. These improvements were funded from operating cash
flow and replacement reserves. Additional improvements may be considered and
will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.
Fairway View I Apartments
Approximately $82,000 has been budgeted for 2000 for capital improvements at
Fairway View I Apartments consisting primarily of floor covering replacements,
appliance replacements, HVAC upgrades, plumbing enhancements, and structural
improvements. The Partnership completed approximately $107,000 in budgeted and
unbudgeted capital expenditures at Fairway View I Apartments as of September 30,
2000, consisting primarily of structural improvements, HVAC upgrades, floor
covering replacements, and appliance replacements. These improvements were
funded from operating cash flow. Additional improvements may be considered and
will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.
Colony at Kenilworth Apartments
Approximately $583,000 has been budgeted for 2000 for capital improvements at
Colony at Kenilworth Apartments consisting primarily of roof replacement, floor
covering replacements, appliance replacements, lighting upgrades, other building
improvements, and wall coverings. The Partnership completed approximately
$316,000 in capital expenditures at Colony at Kenilworth Apartments as of
September 30, 2000, consisting primarily of lighting upgrades, structural
improvements, floor covering replacements, HVAC replacements, and roof
replacements. These improvements were funded from operating cash flow and
replacement reserves. Additional improvements may be considered and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Alpine Village Apartments
Approximately $138,000 has been budgeted for 2000 for capital improvements at
Alpine Village Apartments consisting primarily of appliance replacements,
plumbing improvements, other building improvements, and floor covering
replacements. The Partnership completed approximately $126,000 in budgeted and
unbudgeted capital expenditures at Alpine Village Apartments as of September 30,
2000, consisting primarily of floor covering replacements, plumbing
improvements, structural improvements, furniture and fixtures, and appliance
replacements. These improvements were funded from operating cash flow.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of $26,135,000 requires interest payments only with the full
payment of principal due in November 2003. The Managing General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity date. If the properties cannot be refinanced or sold for a sufficient
amount, the Partnership may risk losing such properties through foreclosure.
During the nine months ended September 30, 2000, the Partnership distributed
cash from operations of approximately $2,215,000 (approximately $2,193,000 to
the limited partners, $20.01 per limited partnership unit) to the partners. No
distributions were made during the nine month period ending September 30, 1999.
Subsequent to September 30, 2000, the Partnership distributed cash from
operations of approximately $497,000 (approximately $492,000 to the limited
partners, $4.49 per limited partnership unit) to the partners. The Partnership's
distribution policy is reviewed on a quarterly basis. Future cash distributions
will depend on the levels of net cash generated from operations, the
availability of cash reserves, and the timing of the debt maturity, refinancings
and/or property sales. There can be no assurance, however, that the Partnership
will generate sufficient funds from operations after required capital
improvements to permit additional distributions to its partners during the
remainder of 2000 or subsequent periods.
<PAGE>
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, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Managing General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
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 September 30, 2000.
<PAGE>
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/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
