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 June 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)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 425
Receivables and deposits 917
Restricted escrows 368
Other assets 647
Investment properties:
Land $ 4,349
Buildings and related personal property 66,708
71,057
Less accumulated depreciation (48,893) 22,164
$ 24,521
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 94
Tenant security deposit liabilities 256
Accrued property taxes 184
Other liabilities 430
Mortgage notes payable 26,135
Partners' Deficit
General partner $ (574)
Limited partners (109,600 units
issued and outstanding) (2,004) (2,578)
$ 24,521
</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 Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues: (Restated) (Restated)
<S> <C> <C> <C> <C>
Rental income $ 2,646 $ 2,574 $ 5,289 $ 5,119
Other income 254 172 433 332
Casualty gain -- -- -- 273
Total revenues 2,900 2,746 5,722 5,724
Expenses:
Operating 1,006 1,068 2,090 2,129
Interest 514 514 1,029 1,029
Depreciation 884 721 1,720 1,457
General and administrative 231 65 366 158
Property taxes 137 125 283 271
Total expenses 2,772 2,493 5,488 5,044
Income before cumulative effect
of a change in accounting
principle 128 253 234 680
Cumulative effect on prior years
of change in accounting for the
cost of exterior painting and
major landscaping -- -- -- 302
Net income $ 128 $ 253 $ 234 $ 982
Net income allocated to general
partner (1%) $ 1 $ 3 $ 2 $ 10
Net income allocated to limited
partners (99%) 127 250 232 972
$ 128 $ 253 $ 234 $ 982
Per limited partnership unit:
Income before cumulative effect
of a change in accounting
principle $ 1.16 $ 2.28 $ 2.12 $ 6.14
Cumulative effect on prior
years of a change in accounting
for the cost of exterior
painting and major landscaping -- -- -- 2.73
Net income $ 1.16 $ 2.28 $ 2.12 $ 8.87
Distribution per limited
partnership unit $ 12.70 $ -- $ 18.35 $ --
</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 -- (20) (2,011) (2,031)
Net income for the six months
ended June 30, 2000 -- 2 232 234
Partners' deficit at
June 30, 2000 109,600 $ (574) $(2,004) $(2,578)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities: (Restated)
<S> <C> <C>
Net income $ 234 $ 982
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,720 1,457
Amortization of loan costs 71 71
Casualty gain -- (273)
Cumulative effect on prior years of change in
accounting principle -- (302)
Change in accounts:
Receivables and deposits (555) (358)
Other assets 71 19
Accounts payable (34) (236)
Tenant security deposit liabilities 17 3
Accrued property taxes 1 60
Payable to affiliate (916) --
Other liabilities (32) 67
Net cash provided by operating activities 577 1,490
Cash flows from investing activities:
Property improvements and replacements (597) (1,845)
Net (deposit to) withdrawals from restricted escrows (62) 271
Net insurance proceeds received -- 343
Net cash used in investing activities (659) (1,231)
Cash flows used in financing activities:
Distributions to partners (2,031) --
Net (decrease) increase in cash and cash equivalents (2,113) 259
Cash and cash equivalents at beginning of period 2,538 1,501
Cash and cash equivalents at end of period $ 425 $ 1,760
Supplemental disclosure of cash flow information:
Cash paid for interest $ 958 $ 958
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 six month periods ended June 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 six month periods ended June 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 six
month periods ended June 30, 1999 by approximately $118,000 ($1.07 per limited
partnership unit) and approximately $97,000 ($0.88 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 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.
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.
<PAGE>
The following transactions with affiliates of the Managing General Partner were
incurred during the six months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $289 $274
Reimbursement for services of affiliates (included in
investment properties, operating and general and
administrative expenses) 130 185
Non accountable reimbursements (included in general and
administrative expenses) 150 --
Partnership management fee (included in general and
administrative expenses) 35 --
During the six months ended June 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 $289,000 and $274,000 for the
six months ended June 30, 2000 and 1999, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $130,000 and $185,000 for the
six months ended June 30, 2000 and 1999, respectively.
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 six months ended June 30, 2000. No such reimbursements were earned
during the six months ended June 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 $35,000 of fees have been paid in conjunction with
the operating distributions made during the six months ended June 30, 2000. No
such fee was paid during the six months ended June 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
are 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.
AIMCO and its affiliates currently own 64,116 limited partnership units in the
Partnership representing 58.50% 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. As a result of its
ownership of 58.50% 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 the affiliate's 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 June 30, 1999, approximately $76,000 of insurance proceeds relating to
this event had been received and the remaining proceeds were received during the
second half 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 June 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 six months ended June 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 six months ended June 30, 2000, the Partnership distributed cash from
operations of approximately $2,031,000 (approximately $2,011,000 to the limited
partners, $18.35 per limited partnership unit) to the partners. No distributions
were made during the six month period ending June 30, 1999.
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 six month periods ended June 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 June 30, 2000 Residential Other Totals
Rental income $ 2,646 $ -- $ 2,646
Other income 253 1 254
Interest expense 514 -- 514
Depreciation 884 -- 884
General and administrative expense -- 231 231
Segment profit (loss) 358 (230) 128
Six Months Ended June 30, 2000 Residential Other Totals
Rental income $ 5,289 $ -- $ 5,289
Other income 430 3 433
Interest expense 1,029 -- 1,029
Depreciation 1,720 -- 1,720
General and administrative expense -- 366 366
Segment profit (loss) 597 (363) 234
Total assets 24,457 64 24,521
Capital expenditures for investment
properties 496 -- 496
Three Months Ended June 30, 1999 Residential Other Totals
(Restated)
Rental income $ 2,574 $ -- $ 2,574
Other income 167 5 172
Interest expense 514 -- 514
Depreciation 721 -- 721
General and administrative expense -- 65 65
Segment profit (loss) 313 (60) 253
<PAGE>
Six Months Ended June 30, 1999 Residential Other Totals
(Restated)
Rental income $ 5,119 $ -- $ 5,119
Other income 317 15 332
Casualty gain 273 -- 273
Interest expense 1,029 -- 1,029
Depreciation 1,457 -- 1,457
General and administrative expense -- 158 158
Cumulative effect on prior years of
change in accounting principle 302 -- 302
Segment profit (loss) 1,125 (143) 982
Total assets 26,802 130 26,932
Capital expenditures for investment
properties 1,845 -- 1,845
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 will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. 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 H - Subsequent Event
Subsequent to June 30, 2000, the Partnership distributed cash from operations of
approximately $196,000 (approximately $182,000 to the limited partners, $1.66
per limited partnership unit) to the partners.
<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 six
months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Ski Lodge Apartments 91% 94%
Montgomery, Alabama (1)
Panorama Terrace II Apartments 94% 95%
Birmingham, Alabama
Place du Plantier Apartments 91% 93%
Baton Rouge, Louisiana
Fairway View Apartments 95% 98%
Baton Rouge, Louisiana (2)
Colony at Kenilworth Apartments 96% 90%
Towson, Maryland (3)
Alpine Village Apartments 96% 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 decrease in occupancy to
students moving out during the summer school session. In the prior year,
this seasonality effect was mitigated by a major employer using the
property for their summer interns.
(3) 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 six months ended June 30, 2000 was
approximately $234,000 compared to net income of approximately $982,000 for the
comparable period in 1999. The Partnership's net income for the three months
ended June 30, 2000, was approximately $128,000 compared to net income of
approximately $253,000 for the three months ended June 30, 1999. The decrease in
net income for the six months ended June 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 $234,000 and $680,000 for the six months ended June
30, 2000 and 1999, respectively. This decrease in income before the cumulative
effect on prior years of a change in accounting principle for the six months
ended June 30, 2000 is primarily attributable to an increase in total expenses.
The decrease for the three month period was due to an increase in total expenses
partially offset by an increase in total revenues. The increase in total
expenses for both the three and six month periods ended June 30, 2000 is due to
an increase in depreciation expense and general and administrative 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 the first and second quarter of 2000.
Included in general and administrative expense for the six months ended June 30,
2000 and 1999, 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.
For the six months ended June 30, 2000, total revenues remained constant and the
decrease in the casualty gain was offset by the increase in rental and other
income. The casualty gain recognized during the six months ended June 30, 1999
is discussed below. For the three months ended June 30, 2000, total revenues
increased due to increases in rental and other income. The increase in rental
income is primarily due to an increase in the average rental rate at all of the
Partnership's investment properties. The increase in other income is primarily
due to an increase in miscellaneous income and late charges at Ski Lodge
Apartments and Panorama Terrace II Apartments and telephone income at all of the
Partnership's investment properties.
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 six month periods ended June 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 six
month periods ended June 30, 1999 by approximately $118,000 ($1.07 per limited
partnership unit) and approximately $97,000 ($0.88 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 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.
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 June 30, 1999, approximately $76,000 of insurance proceeds relating to
this event had been received and the remaining proceeds were received during the
second half 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 June 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 six months ended June 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.
<PAGE>
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 June 30, 2000, the Partnership had cash and cash equivalents of approximately
$425,000 as compared to approximately $1,760,000 at June 30, 1999. For the six
months ended June 30, 2000, cash and cash equivalents decreased by approximately
$2,113,000 from the Partnership's year ended December 31, 1999. The decrease in
cash and cash equivalents is due to approximately $2,031,000 of cash used in
financing activities and approximately $659,000 of cash used in investing
activities partially offset by approximately $577,000 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 $201,000 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 $139,000 in capital expenditures at Ski
Lodge Apartments as of June 30, 2000, consisting primarily of interior
decorating, appliance replacements, plumbing fixture replacements, 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 $49,000 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 $34,000 in budgeted and unbudgeted capital
expenditures at Panorama Terrace II Apartments as of June 30, 2000, consisting
primarily of floor covering replacements, plumbing fixture replacement, and
other building 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.
<PAGE>
Place du Plantier Apartments
Approximately $112,000 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 $38,000 in capital
expenditures at Place du Plantier Apartments as of June 30, 2000, consisting
primarily of light fixture replacements, floor covering replacements, office
equipment, 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 $102,000 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 $61,000 in capital
expenditures at Fairway View I Apartments as of June 30, 2000, consisting
primarily of building improvements, HVAC upgrades, office equipment, 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 $539,000 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
$148,000 in capital expenditures at Colony at Kenilworth Apartments as of June
30, 2000, consisting primarily of building 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 $160,000 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 $76,000 in capital
expenditures at Alpine Village Apartments as of June 30, 2000, consisting
primarily of floor covering replacements, plumbing improvements, 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 six months ended June 30, 2000, the Partnership distributed cash from
operations of approximately $2,031,000 (approximately $2,011,000 to the limited
partners, $18.35 per limited partnership unit) to the partners. No distributions
were made during the six month period ending June 30, 1999. Subsequent to June
30, 2000, the Partnership distributed cash from operations of approximately
$196,000 (approximately $182,000 to the limited partners, $1.66 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 will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. 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 June 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:
