March 22, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: National Property Investors 6
Form 10-KSB
File No. 0-11864
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. 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.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-11864
NATIONAL PROPERTY INVESTORS 6
(Name of small business issuer 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)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
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___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Partnership's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $11,494,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
PART I
Item 1. Description of Business
National Property Investors 6 (the "Partnership" or the "Registrant") is a
California limited partnership formed as of October 15, 1982. NPI Equity
Investments, Inc. (the "Managing General Partner" or "NPI Equity"), a Florida
corporation, became the Partnership's Managing General Partner on June 21, 1991.
The Managing General Partner is a subsidiary of Apartment Investment and
Management Company ("AIMCO") (see "Transfer of Control"). The Partnership
Agreement provides that the Partnership is to terminate on December 31, 2006,
unless terminated prior to such date.
The Partnership, through its public offering of Limited Partnership Units, sold
109,600 units aggregating $54,800,000. The general partner contributed capital
in the amount of $1,000 for a 1% interest in the Partnership. Since its initial
offering, the Registrant has not received, nor are limited partners required to
make, additional capital contributions. The Partnership is engaged in the
business of operating and holding real estate properties for investment. The
Partnership currently owns and operates six apartment complexes (see "Item 2.
Description of Properties").
The Partnership has no full time employees. Management and administrative
services are provided by the Managing General Partner and by agents retained by
the Managing General Partner. These services were provided by an affiliate of
the Managing General Partner for the years ended December 31, 1999 and 1998.
The business in which the Partnership is engaged is highly competitive. There
are other residential properties within the market area of the Registrant's
properties. The number and quality of competitive properties, including those
which may be managed by an affiliate of the Managing General Partner, in such
market area could have a material effect on the rental market for the apartments
at the Partnership's properties and the rents that may be charged for such
apartments. While the Managing General Partner and its affiliates own and/or
control a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for the apartments is local.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
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 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.
Item 2. Description of Properties
The following table sets forth the Partnership's investments in properties:
<TABLE>
<CAPTION>
Date of
Properties Purchase Type of Ownership Use
<S> <C> <C> <C>
Ski Lodge Apartments 07/19/84 Fee ownership, subject to Apartment
Montgomery, Alabama first mortgage 522 units
Panorama Terrace II Apartments 10/16/84 Fee ownership, subject to Apartment
Birmingham, Alabama first mortgage 116 units
Place du Plantier Apartments 05/01/84 Fee ownership, subject to Apartment
Baton Rouge, Louisiana first mortgage 268 units
Fairway View I Apartments 05/31/84 Fee ownership, subject to Apartment
Baton Rouge, Louisiana first mortgage 242 units
Colony at Kenilworth Apartments 03/15/84 Fee ownership, subject to Apartment
Towson, Maryland first mortgage 383 units
Alpine Village Apartments 10/16/84 Fee ownership, subject to Apartment
Birmingham, Alabama first mortgage 160 units
</TABLE>
<PAGE>
Schedule of Properties
Set forth below for each of the Partnership's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation, and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Properties Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Ski Lodge $15,684 $11,524 5-27.5 yrs S/L $ 2,697
Panorama Terrace II 4,671 3,174 5-27.5 yrs S/L 1,203
Place du Plantier 11,201 7,505 5-27.5 yrs S/L 2,872
Fairway View I 10,159 6,509 5-27.5 yrs S/L 2,381
Colony at Kenilworth 23,226 14,879 5-27.5 yrs S/L 5,160
Alpine Village 5,620 3,582 5-27.5 yrs S/L 1,710
Totals $70,561 $47,173 $16,023
</TABLE>
See "Note A" to the financial statements included in "Item 7. Financial
Statements" for a description of the Partnership's depreciation policy and "Note
L - Change in Accounting Principle".
Schedule of Properties Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Properties 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Ski Lodge $ 6,800 7.33% (1) 11/01/03 $ 6,800
Panorama Terrace II 1,450 7.33% (1) 11/01/03 1,450
Place du Plantier 3,800 7.33% (1) 11/01/03 3,800
Fairway View I 4,000 7.33% (1) 11/01/03 4,000
Colony at Kenilworth 7,985 7.33% (1) 11/01/03 7,985
Alpine Village 2,100 7.33% (1) 11/01/03 2,100
Totals $26,135 $26,135
</TABLE>
(1) Interest only payments.
(2) See "Item 7. Financial Statements - Note C" for information with respect
to the Registrant's ability to prepay these loans and other specific
details about the loans.
<PAGE>
Rental Rates and Occupancy
Average annual rental rates and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Properties 1999 1998 1999 1998
Ski Lodge $5,247 $5,042 93% 94%
Panorama Terrace II (1) 6,003 6,045 94% 91%
Place du Plantier 6,691 6,316 94% 92%
Fairway View I 6,752 6,507 95% 96%
Colony at Kenilworth (1) 9,030 8,737 94% 87%
Alpine Village 6,174 6,278 95% 93%
(1) The Managing General Partner attributes the increase in occupancy to an
increase in marketing efforts.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The properties of the Partnership are subject to competition
from other residential apartment complexes in the area. The Managing General
Partner believes that the properties are adequately insured. The properties are
apartment complexes which lease units for terms of one year or less. No tenant
leases 10% or more of the available rental space. The properties are in good
physical condition, subject to normal depreciation and deterioration as is
typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Ski Lodge $ 93 3.45%
Panorama Terrace II 44 7.26%
Place du Plantier 42 9.89%
Fairway View I 57 9.89%
Colony at Kenilworth 245 4.84%
Alpine Village 50 7.26%
Capital Improvements
Ski Lodge Apartments
The Partnership completed approximately $328,000 in capital expenditures at Ski
Lodge Apartments as of December 31, 1999, consisting primarily of floor covering
replacements, HVAC replacements, parking lot improvements, ground lighting,
structural improvements, and pool improvements. These improvements were funded
from operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $156,600.
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
The Partnership completed approximately $94,000 in capital expenditures at
Panorama Terrace II Apartments as of December 31, 1999, consisting primarily of
clubhouse renovations, appliance replacements, HVAC replacements, and floor
covering replacements. These improvements were funded from operating cash flow
and replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $34,800. 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
The Partnership completed approximately $465,000 in capital expenditures at
Place du Plantier Apartments as of December 31, 1999, consisting primarily of
air conditioning improvements, floor covering replacements, fencing, parking lot
improvements, and roof replacements. These improvements were funded from
operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $80,400.
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
The Partnership completed approximately $974,000 in capital expenditures at
Fairway View I Apartments as of December 31, 1999, consisting primarily of
parking lot improvements, major landscaping, structural improvements, roof
replacements due to two fires at the property, and floor covering replacements.
These improvements were funded from operating cash flow, insurance proceeds, and
replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $72,600. 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
The Partnership completed approximately $2,017,000 in capital expenditures at
Colony at Kenilworth Apartments as of December 31, 1999, consisting primarily of
parking lot improvements, appliances, exterior painting, floor covering
replacements, roof replacements, and structural improvements. These improvements
were funded from operating cash flow and replacement reserves. The Partnership
is currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $114,900. 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
The Partnership completed approximately $201,000 in capital expenditures at
Alpine Village Apartments as of December 31, 1999, consisting primarily of floor
covering replacements, plumbing improvements, appliances, and air conditioning
upgrades. These improvements were funded from operating cash flow and
replacement reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $48,000. 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.
Item 3. 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 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia 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 and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). 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 own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, 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
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
Managing General Partner and its affiliates terminated the proposed settlement.
Certain plaintiffs have filed a motion to disqualify some of the plaintiffs'
counsel in the action. 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.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 1999.
PART II
Item 5. Market for the Partnership's Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, offered and sold 109,600
Limited Partnership Units aggregating $54,800,000. As of December 31, 1999, the
Partnership had 109,600 units outstanding held by 2,483 limited partners of
record. Affiliates of the Managing General Partner owned 63,091 units or 57.56%
at December 31, 1999. No public trading market has developed for the Units, and
it is not anticipated that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $17,402 (1) $157.19
01/01/99 - 12/31/99 $ -- $ --
(1) Consists of $3,652,000 of cash from operations and $13,750,000 of cash
from funds from The Village sale in 1998 (see "Item 6" for further
details).
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 distributions to its partners
during the year 2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 63,091 limited partnership units in the Partnership representing 57.56% of
the outstanding units. 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. 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.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB 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 operation. 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.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1999, was
approximately $1,349,000 compared to net income of approximately $13,803,000 for
the year ended December 31, 1998. The decrease in net income for the year ended
December 31, 1999, is primarily attributable to a decrease in the Partnership's
share of net income of the tenant-in-common property partially offset by the
extraordinary loss on the early extinguishment of the property's debt, as a
result of the gain recognized on the sale of The Village during the year ended
December 31, 1998. Excluding the results of the Village, the Partnership
realized a net loss for the year ended December 31, 1998, of approximately
$809,000. The increase in net income excluding the results of The Village for
the year ended December 31, 1999 as compared to 1998, is due to the cumulative
effect on prior years of a change in accounting principle (see discussion
below), an increase in total revenues, and a decrease in total expenses. The
increase in total revenues is due to an increase in rental revenue and the
recognition of a casualty gain (see discussion below) partially offset by a
decrease in other income. Rental income increased due to an increase in
occupancy at all of the Partnership's properties, excluding Ski Lodge and
Fairway View whose occupancies slightly decreased. The decrease in other income
is primarily due to a decrease in interest income as the result of lower average
cash balances held in interest-bearing accounts. Total expenses decreased due to
decreases in operating expenses, general and administrative expenses and
incentive compensation fees partially offset by increases in depreciation and
property tax expenses. The decrease in operating expense is primarily due to a
decrease in maintenance expense as a result of repair projects being completed
in 1998 at most of the Partnership's properties and the change in accounting
principle discussed below. General and administrative expense decreased due to
the increase of Partnership management fees and non-accountable reimbursements
paid with the distributions of operating cash in 1998. No distributions of
operating cash were accrued or paid in 1999. Incentive compensation fees
decreased as a result of fees associated with the sale of The Village on
September 30, 1998. The increase in depreciation expense is due to the increase
in improvements and replacements placed into service in the last twelve months.
Included in general and administrative expense for the year ended December 31,
1999 and 1998, are reimbursements to the Managing General Partner allowed under
the Partnership Agreement associated with its management of the Partnership. In
addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
In November 1998, a fire at Fairway View I caused an estimated $191,000 of
damage to the property of which approximately $186,000 is covered by insurance.
As of December 31, 1999, all insurance proceeds relating to this event have been
received. 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 is covered by
insurance. As of December 31, 1999, approximately $299,000 of insurance proceeds
relating to this fire event have been received. These fires damaged 19 units and
construction was completed during the fourth quarter of 1999. In relation to the
two fires, approximately $90,000 has been written off for undepreciated assets
that were damaged and the Partnership recognized a casualty gain of
approximately $395,000 in 1999.
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. The effect of the change in 1999 was
to increase net income by approximately $571,000 ($5.16 per limited partnership
unit). The cumulative effect adjustment of approximately $302,000 is the result
of applying the aforementioned change in accounting principle retroactively and
is included in net 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.
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
expenses. 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 December 31, 1999, the Partnership had cash and cash equivalents of
approximately $2,538,000 as compared to approximately $1,501,000 at December 31,
1998. For the year ended December 31, 1999, cash and cash equivalents increased
by approximately $1,037,000 from the Partnership's year ended December 31, 1998.
The increase in cash and cash equivalents is due to approximately $4,098,000 of
cash provided by operating activities partially offset by approximately
$3,061,000 of cash used in investing activities. Cash used in investing
activities consists primarily of property improvements and replacements
partially offset by net withdrawals from restricted escrows maintained by
mortgage lenders and net insurance proceeds received. 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. The Partnership is
currently evaluating the capital improvement needs of the properties for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $507,300. 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 each 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.
No distributions were made during the twelve month period ending December 31,
1999. During the twelve months ended December 31, 1998, the Partnership
distributed approximately $17,402,000 (approximately $17,228,000 to the limited
partners, $157.19 per limited partnership unit) to the partners. The
distribution represents the Partnership's share of the proceeds from the sale of
The Village of approximately $13,750,000 (approximately $13,612,000 to the
limited partners or $124.20 per limited partnership unit) and approximately
$3,652,000 (approximately $3,616,000 to the limited partners or $32.99 per
limited partnership unit) from operations. 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
distributions to its partners during the year 2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 63,091 limited partnership units in the Partnership representing 57.56% of
the outstanding units. 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. 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.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue. At this time, the Managing Agent does not
believe that the Partnership's businesses, results of operations or financial
condition will be materially adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
NATIONAL PROPERTY INVESTORS 6
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet - December 31, 1999
Statements of Operations - Years ended December 31, 1999 and 1998
Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998
Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
National Property Investors 6
We have audited the accompanying balance sheet of National Property Investors 6
as of December 31, 1999, and the related statements of operations, changes in
partners' (deficit) capital and cash flows for each of the two years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors 6
at December 31, 1999, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
As discussed in Note L to the financial statements, the Partnership changed its
method of accounting to capitalize the cost of exterior painting and major
landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTY INVESTORS 6
BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
Assets
<S> <C>
Cash and cash equivalents $ 2,538
Receivables and deposits 362
Restricted escrows 306
Other assets 789
Investment properties (Notes C and F):
Land $ 4,349
Buildings and related personal property 66,212
70,561
Less accumulated depreciation (47,173) 23,388
$ 27,383
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 229
Tenant security deposits payable 239
Payable to affiliate (Note E) 916
Accrued property taxes 183
Other liabilities 462
Mortgage notes payable (Note C) 26,135
Partners' Deficit
General partner $ (556)
Limited partners (109,600 units issued and
outstanding) (225) (781)
$ 27,383
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1999 1998
Revenues:
Rental income $10,417 $ 9,920
Other income 682 846
Casualty gain 395 --
Total revenues 11,494 10,766
Expenses:
Operating 4,388 4,674
Depreciation 3,119 2,781
Interest 2,058 2,051
General and administrative 358 680
Property taxes 524 473
Incentive compensation fee (Note E) -- 916
Total expenses 10,447 11,575
Equity in net income of tenant-in-common
property (Note G) -- 15,250
Income before cumulative effect of a change in
accounting principle and extraordinary item 1,047 14,441
Cumulative effect on prior years of a change in
accounting for the cost of exterior painting and
major landscaping (Note L) 302 --
Equity in extraordinary loss on early extinguishment
of debt of tenant-in-common property (Note G) -- (638)
Net income $ 1,349 $13,803
Net income allocated to general partner (1%) $ 13 $ 138
Net income allocated to limited partners (99%) 1,336 13,665
$ 1,349 $13,803
Per limited partnership unit:
Income before cumulative effect on a change in
accounting principle and extraordinary item $ 9.46 $130.44
Cumulative effect on prior years of a change in
accounting for the cost of painting and major
landscaping 2.73 --
Extraordinary item -- (5.76)
Net income $ 12.19 $124.68
Distributions per limited partnership unit $ -- $157.19
Proforma amounts assuming the new accounting principle
was applied retroactively:
Net income $ 1,047 $13,834
Net income per limited partnership unit $ 9.46 $124.96
See Accompanying Notes to Financial Statements
<PAGE>
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(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) capital at
December 31, 1997 109,600 $ (533) $ 2,002 $ 1,469
Net income for the year ended
December 31, 1998 -- 138 13,665 13,803
Distribution to partners -- (174) (17,228) (17,402)
Partners' deficit at
December 31, 1998 109,600 (569) (1,561) (2,130)
Net income for the year ended
December 31, 1999 -- 13 1,336 1,349
Partners' deficit at
December 31, 1999 109,600 $ (556) $ (225) $ (781)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,349 $ 13,803
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 3,119 2,781
Amortization of loan costs 142 136
Cumulative effect on prior years of change in
accounting principle (302) --
Loss on disposal of property -- 15
Casualty gain (395) --
Equity in net income from tenant-in-common property -- (15,250)
Extraordinary loss on early extinguishment of tenant-
in-common property debt -- 638
Change in accounts:
Receivables and deposits 153 (39)
Other assets (76) 27
Accounts payable (93) 84
Tenant security deposits payable 32 13
Accrued property taxes 53 (8)
Payable to affiliates -- 916
Other liabilities 116 16
Net cash provided by operating activities 4,098 3,132
Cash flows from investing activities:
Net withdrawals from restricted escrows 663 718
Property improvements and replacements (4,209) (1,990)
Distribution from tenant-in-common property -- 14,714
Net insurance proceeds received 485 --
Net cash (used in) provided by investing
activities (3,061) 13,442
Cash flows used in financing activities:
Distributions paid -- (17,402)
Net increase (decrease) in cash and cash equivalents 1,037 (828)
Cash and cash equivalents at beginning of year 1,501 2,329
Cash and cash equivalents at end of year $ 2,538 $ 1,501
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,916 $ 1,916
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 101 $ 231
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
NATIONAL PROPERTY INVESTORS 6
Notes to Financial Statements
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization
National Property Investors 6 (the "Partnership" or the "Registrant") is a
California limited partnership formed as of October 15, 1982. The Partnership is
engaged in the business of operating and holding for investment income producing
real estate properties. NPI Equity Investments, Inc. (the "Managing General
Partner" or "NPI Equity"), a Florida corporation, became the Partnership's
Managing General Partner on June 21, 1991. The Managing General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO") (see "Note B
- - Transfer of Control"). The Partnership Agreement provides that the Partnership
is to terminate on December 31, 2006, unless terminated prior to such date. The
Partnership operates six residential properties in Alabama (3), Louisiana (2),
and Maryland (1).
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Allocation of Income, Loss and Distributions
Income, loss and distributions of cash of the Partnership are allocated between
the general and limited partners in accordance with the provisions of the
Partnership Agreement.
Fair Value of Financial Statements
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Depreciation
Depreciation is provided by the straight-line method over the estimated lives of
the apartment properties and related personal property. For Federal income tax
purposes, the accelerated cost recovery method is used (1) for real property
over 15 years for additions prior to March 16, 1984, 18 years for additions
after March 15, 1984 and before May 9, 1985, and 19 years for additions after
May 8, 1985, and before January 1, 1987, and (2) for personal property over 5
years for additions prior to January 1, 1987. As a result of the Tax Reform Act
of 1986, for additions after December 31, 1986, the modified accelerated cost
recovery method is used for depreciation of (1) real property over 27 1/2 years
and (2) personal property additions over 5 years.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note L).
Loan Costs
Loan costs of approximately $1,003,000, less accumulated amortization of
approximately $436,000, are included in other assets and are being amortized on
a straight-line basis over the life of the loans.
Tenant Security Deposits
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. Deposits are
refunded when the tenant vacates, provided the tenant has not damaged its space
and is current on rental payments.
Leases
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on leases. The Managing General
Partner's policy is to offer rental concessions during particularly slow months
or in response to heavy competition from other similar complexes in the area.
Concessions are charged to income as incurred.
Investment Properties
Investment properties consist of six apartment complexes and are stated at cost.
Acquisition fees are capitalized as a cost of real estate. In accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", the Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
No adjustments for impairment of value were recorded in the years ended December
31, 1999 and 1998.
Replacement Reserve Escrow
The Partnership maintains replacement reserve escrows at each of its properties
to fund replacement, refurbishment or repair of improvements to the property
pursuant to the mortgage note documents. As of December 31, 1999, the balance in
these accounts are approximately $306,000.
Segment Reporting
SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note J"
for required disclosure.
Advertising Costs
Advertising costs of approximately $166,000 in 1999 and approximately $162,000
in 1998 were charged to expense as incurred and are included in operating
expenses.
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 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 - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Interest Interest Maturity Due At
1999 Only Rate Date Maturity
(in thousands) (in thousands)
Properties
<S> <C> <C> <C> <C> <C>
Ski Lodge $ 6,800 $ 42 7.33% 11/01/03 $ 6,800
Panorama Terrace II 1,450 9 7.33% 11/01/03 1,450
Place du Plantier 3,800 23 7.33% 11/01/03 3,800
Fairway View I 4,000 24 7.33% 11/01/03 4,000
Colony at Kenilworth 7,985 49 7.33% 11/01/03 7,985
Alpine Village 2,100 13 7.33% 11/01/03 2,100
$26,135 $ 160 $26,135
</TABLE>
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. The mortgage notes payable include prepayment penalties if
repaid prior to maturity. Further, the properties may not be sold subject to
existing indebtedness.
Scheduled principal payments of the mortgage notes payable subsequent to
December 31, 1999 are as follows (in thousands):
2000 $ --
2001 --
2002 --
2003 26,135
$26,135
Note D - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (loss) (in thousands, except per unit data):
December 31,
1999 1998
Net income as reported $ 1,349 $13,803
Add (deduct):
Depreciation differences 559 301
Prepaid rent (77) 173
Gain on sale of The Village -- 5,175
Other 171 157
Federal taxable income $ 2,002 $19,609
Federal taxable income per limited
partnership unit $ 18.08 $177.13
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities as reported $ (781)
Land and buildings (2,139)
Accumulated depreciation (5,226)
Syndication and distribution costs 6,295
Prepaid rent 189
Other 266
Accounts payable 916
Net liabilities - tax basis $ (480)
Note E - 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 property management services based on a percentage of revenue and
for reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following payments were accrued or paid to the Managing General Partner and
affiliates of the Managing General Partner during each of the years ended
December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees (included in operating $556 $536
expenses)
Reimbursement for services of affiliates,
(included in operating, general and
administrative expenses, and investment
properties) 354 384
Partnership management fee (included in general
and administrative expenses) -- 152
Non-accountable reimbursement (included in general
and administrative expenses) -- 150
Incentive management fee (included in payable to
affiliate) -- 916
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $556,000 and
$536,000 for the years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $354,000 and
$384,000 for the years ended December 31, 1999 and 1998, respectively. Included
in "Reimbursements for services of affiliates" for the years ended December 31,
1999 and 1998, is approximately $115,000 and $80,000, respectively, in
reimbursements for construction oversight costs.
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 $152,000 of fees have been paid in 1998 in
conjunction with the operating distributions made during the year ended December
31, 1999.
For services relating to the administration of the Partnership and operation of
the Partnership's property, the Managing General Partner is entitled to receive
payment for the 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 year ended
December 31, 1999.
Upon the sale of the Partnership properties, NPI Equity will be entitled to an
Incentive Compensation Fee equal to a declining percentage of the difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity, if any, will be dependent upon the year in which the property is
sold. Payment of the Incentive compensation Fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised investment in the Partnership at February
1, 1992, and (b) distributions from all sources (capital transactions as well as
cash flow) of an amount equal to six percent (6%) per annum cumulative,
non-compounded, on their appraised investment in the Partnership at February 1,
1992. As a result of the sale of The Village in 1998, the Managing General
Partner became entitled to an Incentive Compensation Fee of approximately
$916,000.
NPI Equity is entitled to receive 1% of distributions of cash from operations
and an allocation of 1% of the net income or loss of the Partnership. NPI Equity
received distributions of $174,000 for the year ended December 31, 1998. No such
distributions were received during the year ended December 31, 1999.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 63,091 limited partnership units in the Partnership representing 57.56% of
the outstanding units. 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. 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.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series. The maximum draw available
to the Partnership under the Partnership Revolver is $500,000. Loans under the
Partnership Revolver will have a term of 365 days, be unsecured and bear
interest at the rate of 2% per annum in excess of the prime rate announced from
time to time by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of NPI Equity (whether or not for
Cause); (ii) the sale or refinancing of a property by the Partnership (whether
or not a borrowing under the Partnership Revolver was made with respect to such
property); or (iii) the liquidation of the Partnership. The Partnership has not
borrowed under the Partnership Revolver, to date.
<PAGE>
Note F - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Ski Lodge $ 6,800 $ 672 $11,587 $ 3,425
Panorama Terrace II 1,450 323 2,972 1,376
Place du Plantier 3,800 840 7,773 2,588
Fairway View I 4,000 762 7,048 2,349
Colony at Kenilworth 7,985 1,306 13,187 8,733
Alpine Village 2,100 359 3,515 1,746
$26,135 $ 4,262 $46,082 $20,217
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And
Related
Personal Accumulated Year of Date Depreciable
Description Land Properties Total Depreciation Construction Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Ski Lodge $ 676 $15,008 $15,684 $11,524 1977 07/84 5-27.5
Panorama Terrace II 330 4,341 4,671 3,174 1973 10/84 5-27.5
Place du Plantier 844 10,357 11,201 7,505 1974 05/84 5-27.5
Fairway View I 767 9,392 10,159 6,509 1974 05/84 5-27.5
Colony at
Kenilworth 1,366 21,860 23,226 14,879 1967 03/84 5-27.5
Alpine Village 366 5,254 5,620 3,582 1972 10/84 5-27.5
Totals $4,349 $66,212 $70,561 $47,173
</TABLE>
<PAGE>
Reconciliation of Real Estate and Accumulated Depreciation:
December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $66,540 $64,370
Property improvements and replacements 4,079 2,221
Disposals of investment property (360) (51)
Cumulative effect on prior years of change
in accounting principle 302 --
Balance at end of year $70,561 $66,540
Accumulated Depreciation
Balance at beginning of year $44,324 $41,579
Additions charged to expense 3,119 2,781
Disposals of investment property (270) (36)
Balance at end of year $47,173 $44,324
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $68,422,000 and $64,997,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $52,399,000 and $49,839,000,
respectively.
Note G - Tenant-In-Common Property
The Partnership owned 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%.
The property was accounted for under the equity method of accounting.
On June 30, 1998, The Village, located in Voorhees Township, New Jersey, was
sold to an unaffiliated party for an adjusted sales price of approximately
$30,102,000. After repayment of the mortgage note payable and closing expenses,
the net proceeds from the sale were approximately $18,211,000. The sale resulted
in a gain of approximately $19,946,000 for the tenant-in-common joint venture
and an extraordinary loss on the early extinguishment of debt of approximately
$840,000, representing prepayment penalties and the write off of the remaining
unamortized loan costs. The Partnership's equity in the net income of this
tenant-in-common property was approximately $15,250,000 for 1998. The
Partnership's equity in the extraordinary loss on early extinguishment of debt
was approximately $638,000 for 1998.
The Village tenant-in-common joint venture with NPI 5 was terminated in 1998
after the distribution of the proceeds from the sale.
Condensed statements of operations of the Village for the year ended December
31, 1998 are as follows (in thousands):
1999
Revenues:
Rental income $ 2,182
Other income 150
Gain on sale of property 19,946
Total revenues 22,278
Expenses:
Operating and other expenses 1,244
Depreciation 395
Mortgage interest 486
Total expenses 2,125
Income before extraordinary loss 20,153
Extraordinary loss on early
extinguishment of debt 840
Net income $19,313
Note H - 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 December 31, 1999, all insurance proceeds relating to this event have been
received. 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 December 31, 1999, approximately $299,000 of insurance
proceeds relating to this fire event has been received. These fires damaged 19
units and construction was completed during the fourth quarter of 1999. In
relation to the two fires, approximately $90,000 has been written off for
undepreciated assets that were damaged and the Partnership recognized a casualty
gain of approximately $395,000 in 1999.
Note I - Distributions
There were no distributions for the year ended December 31, 1999. During the
year ended December 31, 1998, the Partnership distributed approximately
$17,402,000 (approximately $17,228,000 to the limited partners, $157.19 per
limited partnership unit) to the partners. The distribution represents the
Partnership's share of the proceeds from the sale of The Village of
approximately $13,750,000 (approximately $13,612,000 to the limited partners or
$124.20 per limited partnership unit) and approximately $3,652,000
(approximately $3,616,000 to the limited partners or $32.99 per limited
partnership unit) from operations.
Note J - Disclosures about Segments of an Enterprise and Related Information
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 properties segment consists of 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 described in the summary of significant accounting policies.
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 years 1999 and 1998 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.
1999 Residential Other Totals
Rental income $10,417 $ -- $10,417
Other income 664 18 682
Casualty gain 395 -- 395
Interest expense 2,058 -- 2,058
Depreciation 3,119 -- 3,119
General and administrative expense -- 358 358
Cumulative effect on prior years of
change in accounting principle 302 -- 302
Segment profit (loss) 1,689 (340) 1,349
Total assets 27,176 207 27,383
Capital expenditures for investment
properties 4,079 -- 4,079
1998 Residential Other Totals
Rental income $ 9,920 $ -- $ 9,920
Other income 682 164 846
Interest expense 2,051 -- 2,051
Depreciation 2,781 -- 2,781
General and administrative expense -- 680 680
Incentive compensation fee -- 916 916
Equity in income of tenant-in-common -- 15,250 15,250
Extraordinary loss on early
extinguishment of tenant-in-
common debt -- 638 638
Segment profit 623 13,180 13,803
Total assets 25,463 593 26,056
Capital expenditures for investment
properties 2,221 -- 2,221
Note K - 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 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia 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 and the Insignia Merger (see
"Note B - Transfer of Control"). 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 own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, 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 class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. 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.
Note L - 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. The effect of the change in 1999 was
to increase net income by approximately $571,000 ($5.16 per limited partnership
unit). The cumulative effect adjustment of approximately $302,000 is the result
of applying the aforementioned change in accounting principle retroactively and
is included in net 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.
The effect of the new method for each quarter of 1999 on net income and net
income per limited partnership unit before the cumulative effect is as follows:
Increase/(Decrease) in Per limited
Net income partnership unit
(in thousands)
First Quarter $(21) $ (.19)
Second Quarter 118 1.07
Third Quarter 100 .90
Fourth Quarter 374 3.38
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
National Property Investors 6 (the "Partnership" or the "Registrant") has no
officers or directors. The names and ages of, as well as the positions and
offices held by, the present executive officers and directors of NPI Equity
Investments, Inc. ("NPI Equity" or "Managing General Partner") are set forth
below. There are no family relationships between or among any officers or
directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Form, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
No directors or officers of the Managing General Partner received any
remuneration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, as of December 31, 1999, no person or entity was known to
own of record or beneficially more than five percent of the Units of the
Partnership.
Number of Units Percentage
Insignia Properties, LP 48,033 43.82%
(an affiliate of AIMCO)
AIMCO Properties LP 15,058 13.74%
(an affiliate of AIMCO)
Insignia Properties LP is indirectly ultimately owned by AIMCO. Their business
address is 55 Beattie Place, Greenville, SC 29602.
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the Managing General Partner owns any Units.
Item 12. Certain Relationships and Related Transactions
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 property management services based on a percentage of revenue and
for reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following payments were accrued or paid to the Managing General Partner and
affiliates of the Managing General Partner during each of the years ended
December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees $556 $536
Reimbursement for services of affiliates 354 384
Partnership management fee -- 152
Non-accountable reimbursement -- 150
Incentive management fee -- 916
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $556,000 and
$536,000 for the years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $354,000 and
$384,000 for the years ended December 31, 1999 and 1998, respectively. Included
in "Reimbursements for services of affiliates" for the years ended December 31,
1999 and 1998, is approximately $115,000 and $80,000, respectively, in
reimbursements for construction oversight costs.
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 $152,000 of fees have been paid in 1998 in
conjunction with the operating distributions made during the year ended December
31, 1999.
For services relating to the administration of the Partnership and operation of
the Partnership's property, the Managing General Partner is entitled to receive
payment for the 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 year ended
December 31, 1999.
Upon the sale of the Partnership properties, NPI Equity will be entitled to an
Incentive Compensation Fee equal to a declining percentage of the difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity, if any, will be dependent upon the year in which the property is
sold. Payment of the Incentive compensation Fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised investment in the Partnership at February
1, 1992, and (b) distributions from all sources (capital transactions as well as
cash flow) of an amount equal to six percent (6%) per annum cumulative,
non-compounded, on their appraised investment in the Partnership at February 1,
1992. As a result of the sale of The Village in 1998, the Managing General
Partner became entitled to an Incentive Compensation Fee of approximately
$916,000.
NPI Equity is entitled to receive 1% of distributions of cash from operations
and an allocation of 1% of the net income or loss of the Partnership. NPI Equity
received distributions of $174,000 for the year ended December 31, 1998. No such
distributions were received during the year ended December 31, 1999.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 63,091 limited partnership units in the Partnership representing 57.56% of
the outstanding units. 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. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. 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.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series. The maximum draw available
to the Partnership under the Partnership Revolver is $500,000. Loans under the
Partnership Revolver will have a term of 365 days, be unsecured and bear
interest at the rate of 2% per annum in excess of the prime rate announced from
time to time by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of NPI Equity (whether or not for
Cause); (ii) the sale or refinancing of a property by the Partnership (whether
or not a borrowing under the Partnership Revolver was made with respect to such
property); or (iii) the liquidation of the Partnership. The Partnership has not
borrowed under the Partnership Revolver, to date.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change in
Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of calendar year 1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
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:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Partnership and in the capacities and on the
dates indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
EXHIBIT INDEX
Exhibit
2.1 NPI, Inc. Stock Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2 to the Partnership's Current Report
on Form 8-K dated August 17, 1995.
2.2 Partnership Units Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia
Financial Group, Inc. ("Insignia") with the Securities and Exchange
Commission on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995, incorporated by
reference to Exhibit 2.2 to Form 8-K filed by Insignia Financial Group,
Inc. with the Securities and Exchange Commission on September 1, 1995.
2.5 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT incorporated by reference to Exhibit 2.1 in the Registrant's
Current Report on Form 8-K dated as of October 1, 1998.
3.4 (a) Agreement of Limited Partnership, incorporated by reference to Exhibit
A to the Prospectus of the Partnership dated January 12, 1983, included in
the Partnership's Registration Statement on Form S-11 (Reg. No. 2-80141).
(b) Amendments to Agreement of Limited Partnership, incorporated by reference
to the Definitive Proxy Statement of the Partnership dated April 3, 1991.
(c) Amendments to the Partnership Agreement, incorporated by reference to the
Statement Furnished in Connection with the Solicitation of the Registrant
dated August 28, 1992.
10.13Amended and Restated First Mortgage Note, dated September 30, 1993, made
by the Partnership for the benefit of The Travelers Insurance Company, as
it pertains to The Village Apartments incorporated by reference to the
Partnership's Quarterly Report on Form 10-Q for the period ended September
30, 1993.
10.15Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Alpine Village Apartments, and Lehman Brothers Holdings
Inc., a Delaware Corporation. (Incorporated by reference to the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.)
<PAGE>
10.16Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Alpine Village Apartments, and
Lehman Brothers Holdings Inc., a Delaware Corporation. (Incorporated by
reference to the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.)
10.17Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Colony at Kenilworth Apartments, and Lehman Brothers
Holdings Inc., a Delaware Corporation. (Incorporated by reference to the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.)
10.18Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Colony of Kenilworth Apartments,
and Lehman Brothers Holdings Inc., a Delaware Corporation. (Incorporated by
reference to the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.)
10.19Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Fairway View I Apartments, and Lehman Brothers Holdings
Inc., a Delaware Corporation. (Incorporated by reference to the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.)
10.20Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Fairway View I Apartments, and
Lehman Brothers Holdings Inc., a Delaware Corporation. (Incorporated by
reference to the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.)
10.21Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Place du Plantier Apartments, and Lehman Brothers Holdings
Inc., a Delaware Corporation. (Incorporated by reference to the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.)
10.22Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Place du Plantier Apartments, and
Lehman Brothers Holdings Inc., a Delaware Corporation. (Incorporated by
reference to the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.)
10.23Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Panorama Terrace II Apartments, and Lehman Brothers
Holdings Inc., a Delaware Corporation. (Incorporated by reference to the
Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1996.)
<PAGE>
10.24Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Panorama Terrace II Apartments,
and Lehman Brothers Holdings Inc., a Delaware Corporation. (Incorporated by
reference to the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1996.)
10.25Multifamily Note dated September 30, 1996, by and between the Partnership,
with respect to Ski Lodge Apartments, and Lehman Brothers Holdings Inc., a
Delaware Corporation. (Incorporated by reference to the Partnership's
Annual Report on Form 10-KSB for the year ended December 31, 1996.)
10.26Amended and Restated Multifamily Note dated November 1, 1996, by and
between the Partnership, with respect to Ski Lodge Apartments, and Lehman
Brothers Holdings Inc., a Delaware Corporation. (Incorporated by reference
to the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1996.)
10.27Contract of Sale between Registrant and Hometown America, L.L.C.
incorporated by reference to Exhibit (10.21; 10.22; 10.23) to the
Registrant's current report on Form 8-K dated July 16, 1998.
10.28Amendment to Contract of Sale between Registrant and Hometown America,
L.L.C. incorporated by reference to Exhibit (10.21; 10.22; 10.23) to the
Registrant's current report on Form 8-K dated July 16, 1998.
10.29Second Amendment to Contract of Sale between Registrant and Hometown
America, L.L.C. incorporated by reference to Exhibit (10.21; 10.22; 10.23)
to the Registrant's current report on Form 8-K dated July 16, 1998.
16 Letter dated November 11, 1998, from the Registrant's former independent
accountants regarding its concurrence with the statements made by the
Registrant; incorporated by reference to the Registrant's Current Report on
Form 8-K dated November 10, 1998.
18 Independent Accountants' Preferability Letter for Change in Accounting
Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
NPI Equity Investments, Inc.
Managing General Partner of National Property Investors 6
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note L of Notes to the Financial Statements of National Property Investors 6
included in its Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. You have
advised us that you believe that the change is to a preferable method in your
circumstances because it provides a better matching of expenses with the related
benefit of the expenditures and is consistent with policies currently being used
by your industry and conforms to the policies of the Managing General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors 6 1999 Fourth Quarter 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000708870
<NAME> National Property Investors 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,538
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 70,561
<DEPRECIATION> 47,173
<TOTAL-ASSETS> 27,383
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 26,135
0
0
<COMMON> 0
<OTHER-SE> (781)
<TOTAL-LIABILITY-AND-EQUITY> 27,383
<SALES> 0
<TOTAL-REVENUES> 11,494
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,447
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,058
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 302
<NET-INCOME> 1,349
<EPS-BASIC> 12.19 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
