<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1997
Commission File Number
0-13112
REAL ESTATE ASSOCIATES LIMITED VI
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-3778627
9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed with the Commission by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS
Real Estate Associates Limited VI ("REAL VI" or the "Partnership") is a limited
partnership which was formed under the laws of the State of California on
October 12, 1982. On April 22, 1983, REAL VI offered 4,200 units consisting of
8,400 limited partnership interests and warrants to purchase a maximum of 8,400
additional limited partnership interests through a public offering managed by
E.F. Hutton Inc.
The general partners of REAL VI are National Partnership Investments Corp.
("NAPICO"), a California corporation, (the "Corporate General Partner"), and
National Partnership Investment Associates ("NAPIA"). NAPIA is a limited
partnership formed under the California Limited Partnership Act and consists of
Messrs. Nicholas G. Ciriello, an unrelated individual, as general partner, and
Mr. Charles H. Boxenbaum as limited partner. The business of REAL VI is
conducted primarily by NAPICO.
NAPICO is a wholly owned subsidiary of Casden Investment Corporation ("CIC"),
which is wholly owned by Alan I. Casden. The current members of NAPICO's Board
of Directors are Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden and Henry
C. Casden.
REAL VI holds limited partnership interests in 26 local limited partnerships and
a general partner interest in one general partnership. REAL VI also holds a
general partner interest in Real Estate Associates III ("REA III") which, in
turn, holds limited partner interests in seven local limited partnerships. The
other general partner of REA III is NAPICO. Therefore, REAL VI currently holds
interests either directly or indirectly in 33 local limited partnership and one
local general partnership, which own a low income housing project which is
subsidized and/or has a mortgage note payable to or insured by agencies of the
federal or local government.
In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of REAL VI to vary its portfolio in
response to changing economic, financial and investment conditions; such
investments are also subject to changes in local economic circumstances and
housing patterns, as well as rising operating costs, vacancies, rent collection
difficulties, energy shortages and other factors which have an impact on real
estate values. These projects also require greater management expertise and may
have higher operating expenses than conventional housing projects.
Under recent adopted law and policy, HUD has determined not to renew HAP
Contracts on a long term basis on the existing terms. In connection with
renewals of the HAP Contracts under such new law and policy, the amount of
rental assistance payments under renewed HAP Contracts will be based on market
rentals instead of above market rentals, which was generally the case under
existing HAP Contracts. As a result, existing HAP Contracts that are renewed in
the future on projects insured by the FHA will not provide sufficient cash flow
to permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. In order to address the reduction in payments
under HAP Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 (the "MAHRAA"), which was adopted
in October 1997, provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to HAP Contracts that have been
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage loan
can be restructured to reduce the annual debt service on such loan. There can
be no assurance that the Partnership will be permitted to restructure its
mortgage indebtedness pursuant to the new HUD rules implementing MAHRAA or that
the Partnership would choose to restructure such mortgage indebtedness if it
were eligible to participate in the MAHRAA program. It should be noted that
there are uncertainties as to the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA.
Accordingly, the General Partners are unable to predict with certainty their
impact on the Partnership's future cash flow.
<PAGE> 3
The local partnerships in which REAL VI has invested were, at least initially,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. REAL VI became the
principal limited or general partner in these local partnerships pursuant to
arm's-length negotiations with these developers, or others, who normally act as
general partners. As a limited partner, REAL VI's liability for obligations of
the local limited partnership is limited to its investment. The local general
partner of the local limited partnership retains responsibility for developing,
constructing, maintaining, operating and managing the project. Under certain
circumstances of default, REAL VI has the right to replace the general partner
of the local limited partnerships but otherwise does not have control of sale or
refinancing, etc. As discussed above, REAL VI is a general partner in certain of
the local partnerships.
Although each of the partnerships in which REAL VI has invested will generally
own a project which must compete in the market place for tenants, interest
subsidies and rent supplements from governmental agencies make it possible to
offer these dwelling units to eligible "low income" tenants at a cost
significantly below the market rate for comparable conventionally financed
dwelling units in the area.
<PAGE> 4
During 1997, projects in which REAL VI had invested were substantially rented.
The following is a schedule of the status, as of December 31, 1997, of the
projects owned by local partnerships in which REAL VI, either directly or
indirectly through REA III, has invested.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED
AND GENERAL PARTNERSHIPS
IN WHICH REAL VI HAS AN INVESTMENT
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Units Authorized
For Rental
No. of Assistance Under Units Percentage of
Name & Location Units Section 8 Occupied Total Units
- --------------- ------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Local Partnerships
Boynton Terrace 89 89 89 100%
Boynton Beach, FL
Cady Brook Apts. 40 None 39 98%
Charlton, MA
Cassidy Village 98 50 92 94%
Columbus, Ohio
Century Plaza 120 120 120 100%
Hampton, VA
City Heights
Senior Citizens 151 150 151 100%
Wilkes-Bar, PA
Crockett Manor 38 38 38 100%
Trenton, TN
Denny Place 17 4 16 94%
Los Angeles, CA
Eastridge Apts. 96 65 92 96%
Briston, VA
Echo Valley Apts. 100 100 90 90%
Warwick, RI
Filmore I 32 32 31 97%
Phoenix, AZ
Grant-Ko Enterprises 40 None 38 95%
Platteville, WI
Hudson Gardens 41 41 41 100%
Pasadena, CA
Hummelstown Manor 51 50 51 100%
Hummelstown, PA
Kentucky Manor 48 None 46 96%
Oak Grove, KY
Lonsdale Housing 131 131 131 100%
Providence, RI
Mariner's Cove 500 100 480 96%
San Diego, CA
Marshall Plaza I 40 40 40 100%
Lorain, Ohio
Marshall Plaza II 50 48 49 98%
Lorain, Ohio
Menlo Estates 80 80 78 98%
Riverside County, CA
Mulberry Towers 206 205 206 100%
Scranton, PA
New-Bel-Mo 34 None 28 82%
New Glarus, Bellemont,
Monticello, WI
Oakridge Apts. II 48 None 48 100%
Biloxi, MS
Oakwood Manor 34 34 31 91%
Milan, TN
Park Place 126 125 125 99%
Ewing, NJ
</TABLE>
<PAGE> 5
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED
AND GENERAL PARTNERSHIPS
IN WHICH REAL VI HAS AN INVESTMENT
DECEMBER 31, 1997
CONTINUED
<TABLE>
<CAPTION>
Units Authorized
For Rental
No. of Assistance Under Units Percentage of
Name & Location Units Section 8 Occupied Total Units
- --------------- ------ ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Park Place Apts. 60 60 58 97%
Cleveland, TX
Parkesedge Elderly Apts. 45 45 45 100%
Parkesedge, PA
Penneco II 76 76 65 86%
Johnstown, PA
Sauk-Ko Enterprises 30 None 26 87%
Baraboo, WI
Sol 413 12 12 12 100%
Old San Juan, PR
Valley Oaks Senior 50 None 50 100%
Gault, CA
Victory Square 81 81 81 100%
Canton, Ohio
Villas de Orocovix 41 41 41 100%
Orocovix, PR
Willow Wood 19 4 19 100%
Los Angeles, CA
Peppertree 136 None 132 97%
Cypress, CA
----- ----- ----- --
TOTALS 2,760 1,829 2,679 95%
===== ===== =====
</TABLE>
<PAGE> 6
ITEM 2. PROPERTIES
The local limited and general partnerships in which REAL VI holds interests own
various multi family properties. See Item 1 for information pertaining to these
properties.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1997, the Partnership's General Partner was a plaintiff or
defendant in several suits. None of these lawsuits were related to the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
HOLDER MATTERS
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by E. F. Hutton Inc. It is not
anticipated that any public market will develop for the purchase and sale of any
partnership interests. Limited Partnership Interests may be transferred only if
certain requirements are satisfied. At December 31, 1997, there were 3,613
registered holders of units in REAL VI. Distributions have not been made from
the inception of the Partnership to December 31, 1997. The Partnership has
invested in certain government assisted projects under programs which in many
instances restrict the cash return available to project owners. The Partnership
was not designed to provide cash distributions to investors in circumstances
other than refinancing or disposition of its investments in limited
partnerships.
<PAGE> 7
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Loss from Rental
Operations $ (20,075) $ (175,242) $ (246,036) $ (238,520) $ (105,574)
Loss from Partnership
Operations (1,132,951) (1,129,499) (1,307,251) (1,110,060) (1,422,906)
Gain on Foreclosure -- 1,902,022 -- -- 4,095,110
Equity in Income (Loss)
of Limited Partnerships
and Amortization of
Acquisition Costs 625,029 603,934 415,526 433,356 (111,547)
Distribution from
Limited Partnerships
Recognized as Income 499,540 597,425 347,163 500,498 247,782
------------ ------------ ------------ ------------ ------------
Net Income (Loss) $ (28,457) $ 1,798,640 $ (790,598) $ (414,726) $ 2,702,865
============ ============ ============ ============ ============
Net Income (Loss) per
Limited Partnership
Interest $ (1) $ 107 $ (47) $ (24) $ 159
============ ============ ============ ============ ============
Total Assets $ 15,743,687 $ 15,286,368 $ 18,337,139 $ 18,725,681 $ 18,810,269
============ ============ ============ ============ ============
Investments in
Limited
Partnerships $ 5,885,699 $ 6,051,522 $ 5,619,146 $ 5,213,864 $ 5,032,639
============ ============ ============ ============ ============
Rental Property $ 3,016,049 $ 3,158,470 $ 7,285,002 $ 7,638,829 $ 7,937,314
============ ============ ============ ============ ============
Mortgage
Notes Payable $ 4,828,404 $ 4,886,300 $ 9,890,564 $ 9,993,001 $ 10,086,190
============ ============ ============ ============ ============
Notes Payable and
Amounts Due for
Partnership
Interests $ 5,795,000 $ 5,795,000 $ 5,795,000 $ 5,795,000 $ 5,795,000
============ ============ ============ ============ ============
</TABLE>
<PAGE> 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY
The Partnership's primary sources of funds include interest income on money
market funds and certificates of deposit and distributions from local
partnership in which the Partnership has invested. It is not expected that any
of the local partnerships in which the Partnership has invested will generate
cash flow sufficient to provide for distributions to the Partnership's limited
partners in any material amount.
The financial statements of the two general partnerships in which REAL VI is the
majority general partner, have been consolidated in the accompanying financial
statements. One of these partnerships is a local operating partnership which
owns and operates an apartment building. The units are leased primarily on a
month-to-month basis. These partnerships' primary source of funds are the rental
payments from tenants. Expenditures primarily include normal operating expenses
and debt service.
CAPITAL RESOURCES
REAL VI received $42,000,000 in subscriptions for units of limited partnership
interests (at $5,000 per unit) during the period April 22, l983, to March 31,
1984, pursuant to a registration statement on Form S-11.
The Partnership is committed to make additional capital contributions of $90,500
to its investee limited partnerships, if certain conditions are met. This amount
has not been reflected as a liability in the accompany financial statements. The
Partnership has no significant commitments for additional capital expenditures
to the general partnership which has been consolidated.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which REAL VI has invested could produce tax losses for as long as 20 years. Tax
benefits will decline over time as the advantages of accelerated depreciation
are greatest in the earlier years, as deductions for interest expense will
decrease as mortgage principal is amortized and as the Tax Reform Act of 1986
limits the deductions available.
On February 2, 1996, one of the consolidated general partnerships (Drexel Park)
sold its property for $6,300,000. After payment of closings costs, the
Partnership realized a gain of approximately $1,902,000 and received cash of
$830,000. The sale of this property reduced rental operations in 1997 and 1996
as compared to 1995.
At December 31, 1997, the Partnership has investments in 33 limited
partnerships, all of which own housing projects that were substantially all
rented. The Partnership, as a limited partner, is entitled to 90% to 99% of the
profits and losses of the local limited partnerships. The Partnership accounts
for its investments in the local limited partnerships on the equity method,
thereby adjusting its investment balance by its proportionate share of the
income or loss of the local limited partnerships. Equity in losses of limited
partnerships is recognized in the financial statements until the limited
partnership investment account is reduced to a zero balance. Losses incurred
after the limited partnership investment account is reduced to zero are not
recognized. Limited partners are not liable for losses beyond their contributed
capital.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.
<PAGE> 9
The total losses from the 33 local limited partnerships that were allocated to
the Partnership were $1,.932,000, $1,869,000 and $2,214,000 for the years ended
December 31, 1997, 1996 and 1995, respectively. However, because losses incurred
after the investment account is reduced to a zero balance are not recognized,
the Partnership recognized equity in income of limited partnerships of $642,529,
$603,934 and $415,526 for the years ended December 31, 1997, 1996 and 1995,
respectively. During the year ended December 31, 1995, the Partnership
contributed $191,044 to local limited partnerships, thereby allowing the
Partnership to recognize a loss from those partnerships in that amount, which
reduced the income recognized from the partnerships with positive investment
balances. The capital contributions for 1997 and 1996 were $15,412 and $5,294,
respectively, for each year. The cumulative amount of the unrecognized equity in
losses of certain limited partnerships was approximately $29,631,000 and
$27,372,000 as of December 31, 1997 and 1996, respectively.
Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were $499,540, $597,425 and $347,163 for
the years ended December 31, 1997, 1996 and 1995, respectively. These amounts
were recognized as income on the accompanying statements of operations, in
accordance with the equity method of accounting.
As of December 31, 1997, 1996 and 1995, the Partnership has cash and cash
equivalents of $6,611,690, $5,849,983 and $4,895,340, respectively. These
amounts are on deposit primarily with two high credit quality financial
institutions, earning interest. In addition to increasing deposits, as a result
of changing financial institutions where the cash and cash equivalents are on
deposit, the interest rate earned on such deposits in 1997 was significantly
greater than in prior years. This resulted in the Partnership earning $299,009,
$165,591 and $168,911 in interest income for the years ended December 31, 1997,
1996 and 1995, respectively. The amount of interest income varies with market
rates available and with the amount of funds available for investment. Cash
equivalents can be converted to cash to meet obligations of the Partnership as
they arise. The Partnership intends to continue investing available funds in
this manner. Should the Partnership complete the sale of interests, its
obligations may be reduced and a distribution of cash may be disbursed to the
partners.
A recurring partnership expense is the annual management fee. The fee is payable
to the Corporate General Partner of the Partnership and is calculated at .4
percent of the Partnership's invested assets. The management fee is paid to the
Corporate General Partner for its continuing management of partnership affairs.
The fee is payable beginning with the month following the Partnership's initial
investment in a local limited partnership. Management fees were $501,660,
$513,393 and $535,489 for the years ended December 31, 1997, 1996 and 1995,
respectively. The fees have decreased due to the sales of properties owned by
local partnerships, which reduced the invested assets.
Under recent adopted law and policy, HUD has determined not to renew HAP
Contracts on a long term basis on the existing terms. In connection with
renewals of the HAP Contracts under such new law and policy, the amount of
rental assistance payments under renewed HAP Contracts will be based on market
rentals instead of above market rentals, which was generally the case under
existing HAP Contracts. As a result, existing HAP Contracts that are renewed in
the future on projects insured by the FHA will not provide sufficient cash flow
to permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. In order to address the reduction in payments
under HAP Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 (the "MAHRAA"), which was adopted
in October 1997, provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to HAP Contracts that have been
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage loan
can be restructured to reduce the annual debt service on such loan. There can
be no assurance that the Partnership will be permitted to restructure its
mortgage indebtedness pursuant to the new HUD rules implementing MAHRAA or that
the Partnership would choose to restructure such mortgage indebtedness if it
were eligible to participate in the MAHRAA program. It should be noted that
there are uncertainties as to the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA.
Accordingly, the General Partners are unable to predict with certainty their
impact on the Partnership's future cash flow.
As a result of the foregoing, the Partnership is undergoing an extensive review
of disposition, refinancing or re-engineering alternatives for the properties
in which the limited partnerships have invested and are subject to HUD mortgage
and rental subsidy programs. The Partnership has incurred expenses in
connection with this review by various third party professionals, including
accounting, legal, valuation, structural and engineering costs, which amounted
to $127,514 for the year ended December 31, 1997.
<PAGE> 10
A real estate investment trust ("REIT") organized by an affiliate of NAPICO
has advised the Partnership that it intends to make a proposal to purchase from
the Partnership certain of the limited partnership interests held for
investment by the Partnership.
The REIT proposes to purchase such limited partner interests for cash, which it
plans to raise in connection with a private placement of its equity securities.
The purchase is subject to, among other things, (i) consummation of such
private placement by the REIT; (ii) the purchase of the general partner
interests in the local limited partnerships by the REIT; (iii) the approval of
HUD and certain state housing finance agencies; (iv) the consent of the limited
partners to the sale of the local limited partnership interests held for
investment by REAL VI; and (v) the consummation of a minimum number of
purchase transactions with other Casden affiliated partnerships. As of March
31, 1998, the REIT had completed buy-out negotiations with a majority of the
general partners of the local limited partnerships.
A proxy is contemplated to be sent to the limited partners setting forth the
terms and conditions of the purchase of the limited partners' interests held for
investment by the Partnership, together with certain amendments to the
Partnership Agreement and other disclosures of various conflicts of interest in
connection with the transaction.
General and administrative expenses were generally consistent for the three
years presented. General and administrative expenses were $396,600, $262,047 and
$289,923 for the years ended December 31, 1997, 1996 and 1995, respectively.
Included in general and administrative expenses are reimbursements to NAPICO for
certain expenses, which totalled $51,487, $47,231 and $43,729 for the years
ended December 31, 1997, 1996 and 1995, respectively. Also included in
partnership general and administrative expenses for 1997 is $127,514 in
expenses, approximately $89,000 of which is included in accounts payable at
December 31, 1997, related to the aforementioned third party review of the
properties owned by the local partnership.
In 1995, NAPICO received mortgage brokerage fees of $131,000 for its involvement
with the refinancing of limited partnerships' mortgages. The Partnership is
obligated on non-recourse notes payable of $5,470,000 which bear interest at 9.5
or 10.0 percent per annum and have principal maturities ranging from December
1999 to December 2012. The notes and related interest are payable from cash flow
generated from operations of the related rental properties as defined in the
notes. These obligations are collateralized by the Partnership's investments in
the limited partnerships. Unpaid interest is due at maturity of the notes. Since
no payments have been made on these notes, interest expense has remained fairly
constant and was $533,700, $519,650 and $519,650 for each of the three years in
the period ended December 31, 1997.
The results of operations of the local limited partnerships were fairly constant
during the years ended December 31, 1997, 1996 and 1995. Contributing to the
relative stability of operations at the local partnerships is the fact that
substantially all of the local partnerships are operating apartment projects
which are subsidized and have mortgage notes payable to or insured by agencies
of the federal or local government.
Total revenue for the 33 local partnerships has remained fairly constant, and
was $20,921,000, $21,246,000 and $20,571,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
Total expenses for the 33 local partnerships remained fairly consistent, and
were $22,866,000, $23,123,000 and $23,034,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
<PAGE> 11
The total net loss for the 33 local partnerships for 1997, 1996 and 1995
aggregated $1,945,000, $1,877,000 and $2,463,000, respectively. The losses
allocable to the Partnership were $1,933,000, $1,869,000 and $2,214,000 for
1997, 1996 and 1995, respectively.
During the year ended December 31, 1997, the local limited partnership that
owns Drexel III consummated the sale of the apartment complex. The Partnership
received distributions of $670,245 of which $597,601 was recognized as a return
of capital and $72,644 was recognized as distributions to income. The
Partnership financial statements reflect no investment in the Drexel III local
Partnership.
The Partnership, as a limited or general partner in the local partnerships in
which it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions and accordingly, the
status of the national economy, including substantial unemployment, concurrent
inflation, and changing legislation could increase vacancy levels, rental
payment defaults, and operating expenses, which in turn, could substantially
increase the risk of operating losses for the projects.
The Partnership has assessed the potential impact of the Year 2000 computer
systems issue on its operations. The Partnership believes that no significant
actions are required to be taken by the Partnership to address the issue and
that the impact of the Year 2000 computer systems issue will not materially
affect the Partnership's future operating results or financial condition.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(A California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
DECEMBER 31, 1997
<PAGE> 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Real Estate Associates Limited VI
(A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates
Limited VI (a California limited partnership) as of December 31, 1997 and 1996,
and the related statements of operations, partners' deficiency and cash flows
for each of the three years in the period ended December 31, 1997. Our audits
also included the financial statement schedules listed in the index on item 14.
These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 35 percent and 27 percent of
total assets as of December 31, 1997 and 1996, respectively, and the equity in
income of these limited partnerships represents 12 percent, 12 percent and 13
percent of the total net income of the Partnership for the years ended December
31, 1997, 1996 and 1995, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these limited partnerships are audited by other
auditors. Their reports have been furnished to us and our opinion, insofar as it
relates to the amounts included for these limited partnerships, is based solely
on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
management, as well as evaluating the overall financial statement presentation.
We believe our audits and the reports of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Real Estate Associates Limited VI as of December 31,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles. Also, in our opinion, based on our
audits and the reports of other auditors, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
April 6, 1998
<PAGE> 14
[SANSIVERI, KIMBALL & MCNAMEE, L.L.P. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Charlton Housing Associates
(A Limited Partnership):
We have audited the accompanying balance sheet of Charlton Housing Associates
(A Limited Partnership) (the Partnership) as of December 31, 1996, 1995 and
1994, and the related statements of revenue and expenses, cash flows, and
changes in partners' capital (deficit) for each of the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 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 Charlton Housing Associates
as of December 31, 1996, 1995 and 1994, and the results of its operations, its
cash flows, and its changes in partners' capital (deficit) for each of the
years then ended in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
information is presented for the purpose of additional analysis, as required
by USDA Rural Development, and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ SANSIVERI, KIMBALL & MCNAMEE, L.L.P.
Providence, Rhode Island
January 15, 1997
<PAGE> 15
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Charlton Housing Associates Limited Partnership
We have audited the accompanying balance sheets of Charlton Housing Associates
Limited Partnership as of December 31, 1997, and the related statements of
operations, partners' equity and cash flows for the year then ended. 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 audit. The financial statements of Charlton Housing Associates Limited
Partnership as of and for the year ended December 31, 1996, were audited by
other auditors whose report, dated January 15, 1997, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 1997 financial statements referred to above present fairly,
in all material respects, the financial position of Charlton Housing Associates
Limited Partnership as of December 31, 1997, and the results of its operations,
the changes in partners' equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated January 31, 1998, on our consideration of Charlton Housing Associates
Limited Partnership's internal control and on its compliance with laws and
regulations applicable to the financial statements.
/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 31, 1998
- 3 -
<PAGE> 16
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
AND ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners of
Cassady Village Apartments, Ltd.
We have audited the accompanying balance sheets of CASSADY VILLAGE APARTMENTS,
LTD., FHA Project No. 043-44028-LDP (Partnership), as of December 31, 1997 and
1996, and the related statements of operations, changes in partners' equity and
cash flows for the years then ended. 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 generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of 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 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 Cassady Village Apartments,
Ltd. as of December 31, 1997 and 1996, and its results of operations, changes in
partners' equity and cash flows for the years then ended in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying 1997 additional
financial data (shown on pages 14 through 19) are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements of the Partnership. Such information has been subjected to the
auditing procedures applied in the audit of the 1997 basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
2
<PAGE> 17
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 1998 on our consideration of the Partnership's internal
control and a report dated January 26, 1998, on its compliance with laws and
regulations.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
January 26, 1998
<PAGE> 18
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS AND
ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners of
Cassady Village Apartments, Ltd.
We have audited the accompanying balance sheet of CASSADY VILLAGE APARTMENTS,
LTD. (an Ohio limited partnership), FHA Project Number 043-44028-LDP, (the
"Partnership") as of December 31, 1995, and the related statements of
operations, changes in partners' equity and cash flows for the year then ended.
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 audit. The financial statements of the Partnership as of
and for the year ended December 31, 1994 were audited by other auditors whose
report dated January 19, 1995, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of 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 management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 1995 financial statements referred to above present fairly,
in all material respects, the financial position of Cassady Village Apartments,
Ltd. as of December 31, 1995, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 2, 1996, on our consideration of the Partnership's internal
control structure and a report dated February 2, 1996, on its compliance with
laws and regulations.
<PAGE> 19
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The additional financial data required by the U.S.
Department of Housing and Urban Development shown on pages 13 through 19 are
presented for purposes of additional analysis and are not a required part of the
financial statements. Such information has been subjected to the procedures
applied in the audit of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 2, 1996
<PAGE> 20
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Charlton Housing Associates Limited Partnership
We have audited the accompanying balance sheet of Charlton Housing
Associates Limited Partnership as of December 31, 1997, and the related
statements of operations, partners' equity and cash flows for the year then
ended. 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 audit. The financial statements of Charlton Housing
Associates Limited Partnership as of and for the year ended December 31, 1996,
were audited by other auditors whose report, dated January 15, 1997, expressed
an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 financial statements referred to above present
fairly, in all material respects, the financial position of Charlton Housing
Associates Limited Partnership as of December 31, 1997, and the results of its
operations, the changes in partners' equity and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued
reports dated January 31, 1998, on our consideration of Charlton Housing
Associates Limited Partnership's internal control and on its compliance with
laws and regulations applicable to the financial statements.
/s/ REZNICK FEDDER & SILVERMAN
Baltimore, Maryland
January 31, 1998
<PAGE> 21
[PAUL DAMIANO LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Riverpoint Associates
a/k/a Echo Valley Associates
(A Limited Partnership)
W. Warwick, RI
We have audited the accompanying balance sheet of RIHMFC Project No.
RI-43-HO23-021 of Riverpoint Associates, a/k/a Echo Valley Associates (a limited
partnership) as of June 30, 1997, and the related statements of profit and loss
and changes in partners' capital deficiency and cash flows for the year then
ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As more fully described in Note 1 to the financial statements, the partnership
has computed depreciation on several major assets in accordance with accelerated
cost recovery system (ACRS) required for federal income tax purposes, which does
not allocate depreciation to expense over the estimated useful lives to conform
with generally accepted accounting principles. If the financial statements were
corrected for that departure from generally accepted accounting principles,
based on a straight-line depreciation method, accumulated depreciation would be
decreased by $2,147,340 as of June 30, 1997 and net income would be increased by
$68,965 for the year then ended.
In our opinion, except for the effects of computing depreciation as discussed in
the preceeding paragraph, the financial statements referred to above present
fairly in all material respects, the financial position of RIHMFC Project No.
RI-43-HO23-021 as of June 30, 1997 and the results of Its operations and the
changes in partners' capital deficiency and cash flows for the year then ended
in conformity with generally accepted accounting principles.
<PAGE> 22
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report shown on pages 11-16 are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of RIHMFC
Project No. RI-43-HO23-021. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated September 23, 1997 on our consideration of Riverpoint Associates' internal
control structure and a report dated September 23, 1997 on its compliance with
specific requirements applicable to RIHMFC-programs.
/s/ PAUL DAMIANO, CPA, PC
Lincoln, RI 02865
September 23, 1997
<PAGE> 23
[PAUL DAMIANO LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
----------------------------
The Partners
Riverpoint Associates
a/k/a Echo Valley Associates
(A Limited Partnership)
W. Warwick, RI
We have audited the accompanying balance sheet of RIHMFC Project No.
RI-43-H023-021 of Riverpoint Associates, a/k/a Echo Valley Associates (a limited
partnership) as of June 30, 1996, and the related statements of profit and loss
and changes in partners' capital deficiency and cash flows for the year then
ended. These financial statements are the responsibility of the project's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As more fully described in Note 1 to the financial statements, the partnership
has computed depreciation on several major assets in accordance with accelerated
cost recovery system (ACRS) required for federal income tax purposes, which does
not allocate depreciation to expense over the estimated useful lives to conform
with generally accepted accounting principles. If the financial statements were
corrected for that departure from generally accepted accounting principles,
based on a straight-line depreciation method, accumulated depreciation would be
decreased by $2,078,375 as of June 30, 1996 and net income would be increased by
$67,629 for the year then ended.
In our opinion, except for the effects of computing depreciation as discussed in
the preceding paragraph, the financial statements referred to above present
fairly in all material respects, the financial position of RIHMFC Project No.
RI-43-H023-021 as of June 30, 1996 and the results of its operations and the
changes in partners' capital deficiency and cash flows for the year then ended
in conformity with generally accepted accounting principles.
<PAGE> 24
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting information included in
the report shown on pages 11-16 are presented for the purposes of additional
analysis and are not a required part of the basic financial statements of RIHMFC
Project No. RI-43-H023-021. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated September 17, 1996 on our consideration of Riverpoint Associates' internal
control structure and a report dated September 17, 1996 on its compliance with
specific requirements applicable to RIHMFC-programs.
/s/ PAUL DAMIANO CPA, PC
------------------------
Lincoln, Rhode Island
September 17, 1996
<PAGE> 25
[NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Hudson Street Apartments
Culver City, California
We have audited the accompanying balance sheets of Hudson Street Apartments (a
California partnership), CHFA Project No. 79-19-S, as of December 31, 1997 and
1996 and the related statements of operations, partners' equity and cash flows
for the years then ended. 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 generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits 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 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 Hudson Street Apartments as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards we have also issued reports
dated January 23, 1998 on our consideration of Hudson Street Apartments'
internal controls and on its compliance with laws and regulations applicable to
the California Housing Financing Agency's financial assistance programs.
/s/ NANAS, STERN, BIERS, NEINSTEIN AND CO.
------------------------------------------
NANAS, STERN, BIERS, NEINSTEIN AND CO.
January 23, 1998 Beverly Hills, California
<PAGE> 26
[NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Hudson Street Apartments
Culver City, California
We have audited the accompanying balance sheets of Hudson Street Apartments (a
California partnership). CHFA Project No. 79-19-S, as of December 31, 1996 and
1995 and the related statements of operations, partners' equity and cash flows
for the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards issued by the Comptroller General
of the United States. Those standards require that we plan and perform the
audits 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 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 Hudson Street Apartments as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards we have also issued reports
dated January 22, 1997 on our consideration of Hudson Street Apartments'
Internal Control Structure and on its compliance with laws and regulations
applicable to the California Housing Financing Agency's financial assistance
programs.
/s/ NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
--------------------------------------------------
NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
January 22, 1997 Beverly Hills, California
<PAGE> 27
[KPMG PEAT MARWICK LLP LETTERHEAD]
REPORT ON AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
INDEPENDENT AUDITORS' REPORT
The Partners
Lonsdale Housing Associates:
We have audited the accompanying balance sheet of Lonsdale Housing Associates
(the "Partnership"), HUD Project RI-43-HO23-087, as of May 31, 1997, and the
related statements of profit and loss (on HUD Form 92410), changes in
partners' equity and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 the Partnership as of May 31,
1997, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated June 19, 1997 on: our consideration of the Partnership's internal control
structure, the Partnership's compliance with specific requirements applicable to
major HUD programs, and the Partnership's compliance with specific requirements
applicable to affirmative fair housing.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information included
in Schedules I through 7 is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ KPMG PEAT MARWICK LLP
June 19, 1997 Providence, Rhode Island
<PAGE> 28
[KPMG PEAT MARWICK LLP LETTERHEAD]
REPORT ON AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
INDEPENDENT AUDITORS' REPORT
The Partners
Lonsdale Housing Associates
(A Limited Partnership):
We have audited the accompanying balance sheet of Lonsdale Housing Associates (A
Limited Partnership) (the "Partnership"), HUD Project No. RI-43-HO23-087, as of
May 31, 1996, and the related statements of profit and loss (on HUD Form 92410),
changes in partners' equity and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 the Partnership as of May 31,
1996 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated June 21, 1996 on: our consideration of the Partnership's internal control
structure, the Partnership's compliance with specific requirements applicable to
major HUD programs, and the Partnership's compliance with specific requirements
applicable to affirmative fair housing.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information included in Schedules 1 through 7 is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ KPMG PEAT MARWICK LLP
Providence, Rhode Island
June 21, 1996
<PAGE> 29
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners
Lonsdale Housing Associates
(A Limited Partnership):
We have audited the accompanying balance sheet of Lonsdale Housing Associates (A
Limited Partnership) Project No. RI-43-HO23-087 as of May 31, 1995, and the
related statements of profit and loss (on HUD Form 92410), changes in partners'
equity and cash flows for the year then ended. These financial statements are
the responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Lonsdale Housing Associates (A
Limited Partnership) Project No. RI-43-HO23-087 at May 31, 1995 and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information included in Schedules
1 through 7 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly presented in all material respects in
relation to the basic financial statements taken as a whole.
/s/ KPMG PEAT MARWICK LLP
Providence, Rhode Island
June 29, 1995
<PAGE> 30
[PARENTE o RANDOLPH o ORLANDO o CAREY & ASSOCIATES LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Mulberry Associates:
We have audited the accompanying balance sheets of Mulberry Associates
(a limited partnership), FHA Project No. 034-35146-LD, as of December 31, 1997
and 1996, and the related statements of income, partners' equity (deficit) and
cash flows for the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 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 Mulberry Associates
(a limited partnership) as of December 31, 1997 and 1996, and the results of its
operations, changes in partners' equity (deficit) and cash flows for the years
then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, we have also issued a report dated January 30, 1998, on
our consideration of Mulberry Associates' (a limited partnership) internal
control, and reports dated January 30, 1998, on its compliance with specific
requirements applicable to major HUD programs and specific requirements
applicable to Fair Housing and Non-Discrimination.
<PAGE> 31
Our audit was conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying supplementary
information on pages 15 to 22 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Mulberry
Associates (a limited partnership). Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ PARENTE, RANDOLPH, ORLANDO, CAREY & ASSOCIATES
Wilkes-Barre, Pennsylvania
January 30, 1998
<PAGE> 32
[PARENTE o RANDOLPH o ORLANDO o CAREY & ASSOCIATES LETTERHEAD]
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Mulberry Associates:
We have audited the accompanying balance sheets of Mulberry Associates (a
limited partnership), FHA Project No. 034-35146-LD, as of December 31, 1996 and
1995, and the related statements of income, partners' equity (deficit) and cash
flows for the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 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 Mulberry Associates (a
limited partnership) as of December 31, 1996 and 1995, and the results of its
operations, changes in partners' equity (deficit) and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, we have also issued a report dated January 29, 1997, on
our consideration of Mulberry Associates' (a limited partnership) internal
control structure, and reports dated January 29, 1997, on its compliance with
specific requirements applicable to major HUD programs and specific requirements
applicable to Affirmative Fair Housing.
<PAGE> 33
Our audit was conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying supplementary
information on pages 14 to 22 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Mulberry
Associates (a limited partnership). Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ PARENTE, RANDOLPH, ORLANDO, CAREY & ASSOCIATES
Wilkes-Barre, Pennsylvania
January 29, 1997
<PAGE> 34
[WEGNER LLP LETTERHEAD]
ACCOUNTANT'S REVIEW REPORT
To the Partners
New-Bel-Mo Enterprises
(A Limited Partnership)
Fennimore, Wisconsin
We have reviewed the accompanying balance sheets of New-Bel-Mo Enterprises (a
limited partnership) RECDS Case No. 58-023-0391456911, as of December 31, 1997,
1996 and 1995 and the related statements of operations and partners deficit and
cash flows for the years then ended in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the project's owners.
A review consists principally of inquiries of Project personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Our reviews were made for the purpose of expressing limited assurance that there
are no material modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted accounting
principles. The supplementary information listed in the table of contents is
presented only for supplementary analysis purposes. Such information has been
subjected to the inquiry and analytical procedures applied in the reviews of the
basic financial statements, and we are not aware of any material modifications
that should be made thereto.
/s/ WEGNER LLP
Wegner LLP
Madison, Wisconsin
January 16, 1998
<PAGE> 35
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
AND ADDITIONAL FINANCIAL DATA REQUIRED BY
THE TENNESSEE HOUSING DEVELOPMENT AGENCY AND
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners
Oakwood Manor Associates, Ltd.
We have audited the accompanying balance sheets of OAKWOOD MANOR ASSOCIATES,
LTD. (a Tennessee limited partnership), THDA Project No. 8.9.02 (the
"Partnership"), as of December 31, 1997 and 1996 and the related statements of
income, changes in partners' equity and cash flows for the years then ended.
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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 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 Oakwood Manor Associates, Ltd.
as of December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying 1997 additional
financial data (shown on pages 13 through 20) are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements of the Partnership. Such information has been subjected to the
auditing procedures applied in the audit of the 1997 basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
<PAGE> 36
In accordance with Government Auditing Standards, we have also issued a report
dated March 2, 1998 on our consideration of the Partnership's internal control
and a report dated March 2, 1998 on its compliance with laws and regulations.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Los Angeles, California
March 2, 1998
<PAGE> 37
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS AND
ADDITIONAL FINANCIAL DATA REQUIRED BY
THE TENNESSEE HOUSING DEVELOPMENT AGENCY AND THE
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners of
Oakwood Manor Associates, Ltd.
We have audited the accompanying balance sheet of OAKWOOD MANOR ASSOCIATES, LTD.
(a Tennessee limited partnership), THDA Project Number 8.9.02 (the
"Partnership") as of December 31, 1995, and the related statements of
operations, changes in partners' equity and cash flows for the year then ended.
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 audit. The financial statements of the Partnership as of
and for the year ended December 31, 1994 were audited by other auditors whose
report dated February 15, 1995, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 1995 financial statements referred to above present fairly,
in all material respects, the financial position of Oakwood Manor Associates,
Ltd. as of December 31, 1995, and the results of its operations, changes in its
partners' equity, and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 19, 1996 on our consideration of the Partnership's internal
control structure and a report dated February 19, 1996 on its compliance with
laws and regulations.
<PAGE> 38
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying additional financial data shown on
pages 14 through 20 is presented for purposes of additional analysis and is not
a required part of the financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Los Angeles, California
February 19, 1996
<PAGE> 39
[FISHBEIN & COMPANY, P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
January 15, 1998
Partners
Park Place Associates
We have audited the accompanying balance sheets of PARK PLACE ASSOCIATES
(A New Jersey Limited Partnership) as of December 31, 1997, 1996, and 1995, and
the related statements of operations, equity and cash flows for the years then
ended. 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 generally accepted auditing
standards and Government Auditing Standards" issued by the Comptroller General
of the United States. Those standards require that we plan and perform the
audits 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 management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
The Partnership's policy is to prepare its financial statements on the
basis of accounting practices prescribed or permitted by the New Jersey Housing
& Mortgage Finance Agency. These practices differ in some respects from
generally accepted accounting principles as more fully described in Note 1-b to
the financial statements. Accordingly, the accompanying statements of operations
are not intended to present the results of operations in conformity with
generally accepted accounting principles.
In our opinion, except as noted in the preceding paragraph, the
financial statements referred to above present fairly, in all material respects,
the financial position of Park Place Associates as of December 31, 1997, 1996
and 1995, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
<PAGE> 40
[FISHBEIN & COMPANY, P.C. LETTERHEAD] Page 2
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental information
included in this report (shown on pages 12 through 19) is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of the Partnership. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, we have also issued a report dated January 15, 1998, on
our consideration of Park Place Associates' internal control structure and
reports dated January 15, 1998, on its compliance with specific requirements
applicable to major HUD programs and fair housing and nondiscrimination.
/s/ FISHBEIN & COMPANY, P.C.
Elkins Park, Pennsylvania
<PAGE> 41
[LEONIAK, BAIR & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Partners
Parkesedge Associates
State College, Pennsylvania
We have audited the accompanying balance sheets of Parkesedge Associates
as of December 31, 1997 and 1996, and the related statements of income and
partnership equity, and cash flows for the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 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 Parkesedge
Associates as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued
our report dated February 4, 1998 on our consideration of Parkesedge Associates'
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants.
/s/ LEONIAK, BAIR & COMPANY
State College, Pennsylvania
February 4, 1998
<PAGE> 42
[LEONIAK, BAIR & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Partners
Parkesedge Associates
State College, Pennsylvania
We have audited the accompanying balance sheets of Parkesedge Associates
as of December 31, 1996 and 1995, and the related statements of income and
partnership equity, and cash flows for the years then ended. 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 generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 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 aspects, the financial position of Parkesedge Associates as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards, we have also issued a
report dated February 1, 1997 on our consideration of Parkesedge Associates'
internal control structure and a report dated February 1, 1997 on its
compliance with laws and regulations.
/s/ LEONIAK, BAIR & COMPANY
State College, Pennsylvania
February 1, 1997
<PAGE> 43
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
AND ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Owners of
Penneco Associates of Johnstown II
We have audited the accompanying balance sheets of PENNECO ASSOCIATES OF
JOHNSTOWN II, (the "Project") FHA Project No. PA-28-0004-025, as of December 31,
1997 and 1996, and the related statements of operations, changes in project
deficit and cash flows for the years then ended. These financial statements are
the responsibility of the Project's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 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 Penneco Associates of Johnstown
II, as of December 31, 1997 and 1996, and its results of operations, changes in
project deficit and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The financial statements have been prepared assuming the Project will continue
as a going concern. As discussed in Notes 3 and 6 to the financial statements,
the Project's capital deficit, unpaid property taxes and legal judgment raise
substantial doubt about the Project's ability to continue as a going concern.
Management's plans regarding these matters are described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
In accordance with Government Auditing Standards, we have also issued a report
dated February 12, 1998 on our consideration of the Project's internal control
and a report dated February 12, 1998, on its compliance with laws and
regulations.
<PAGE> 44
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying 1997 additional
financial data (shown on pages 14 through 18) are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements. This information has been subjected to the procedures applied in the
audit of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 12, 1998
<PAGE> 45
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS AND
ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Owners of
Penneco Associates of Johnstown II
We have audited the balance sheet of PENNECO ASSOCIATES OF JOHNSTOWN II, FHA
Project Number PA-28-0004-009, as of December 31, 1995, and the statements of
operations, changes in project deficit and cash flows for the year then ended.
These financial statements are the responsibility of the Project's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management as well as evaluating the overall financial statement
presentation. We believe our audit provides 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 Penneco Associates of Johnstown
II as of December 31, 1995, and the results of its operations, changes in
project deficit and cash flows for the year then ended in conformity with
generally accepted accounting principles.
The financial statements have been prepared assuming the Project will continue
as a going concern. As discussed in Notes 3 and 4 to the financial statements,
the Project's capital deficit, unpaid property taxes and legal judgment raise
substantial doubt about the Project's ability to continue an a going concern.
Management's plans regarding these matters are described in Note 4. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
In accordance with Government Auditing Standards, we have also issued a report
dated February 7, 1996, on our consideration of the Project's internal control
structure and a report dated February 7, 1996, on its compliance with laws and
regulations.
<PAGE> 46
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The additional financial data shown on pages 14
through 18 are presented for purposes of additional analysis and are not a
required part of the financial statements. This information has been subjected
to the procedures applied in the audit of the financial statements and, in our
opinion, is stated fairly in all material respects in relation to the financial
statements taken as a whole.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 7, 1996
<PAGE> 47
INDEPENDENT AUDITORS' REPORT
To the Partners
Sol 413 Limited Dividend Partnership
We have audited the accompanying balance sheet of Sol 413 Limited
Dividend Partnership as of December 31, 1997, and the related statements of
profit and loss (on HUD Form No. 92410), partners' deficit and cash flows for
the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Sol 413 Limited
Dividend Partnership, as of December 31, 1997, and the results of its
operations, the changes in partners' deficit and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 21
through 25 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, such information is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
<PAGE> 48
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued reports dated
January 12, 1998, on our consideration of Sol 413 Limited Dividend Partnership's
internal control and on its compliance with specific requirements applicable to
major and nonmajor HUD programs, fair housing and non-discrimination, and laws
and regulations applicable to the financial statements.
San Juan, Puerto Rico Federal Employer Identification
January 12, 1998, except Note F Number: 66-0432941
which is as of March 3, 1998
Audit Principal: William T. Riley, Jr.
<PAGE> 49
[SANTIAGO, RILEY & REZNICK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sol 413 Limited Dividend Partnership
We have audited the accompanying balance sheet of Sol 413 Limited
Dividend Partnership as of December 31, 1996, and the related statements of
profit and loss (on HUD Form No. 92410), partners' deficit and cash flows for
the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Sol 413 Limited
Dividend Partnership, as of December 31, 1996, and the results of its
operations, changes in partners' deficit and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 20
through 25 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, except for the effects, if any, of the items
discussed in the third paragraph, such information is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
<PAGE> 50
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued reports dated
January 13, 1997, on our consideration of Sol 413 Limited Dividend Partnership's
internal control structure and on its compliance with specific requirements
applicable to major and nonmajor HUD Programs, affirmative fair housing, and
laws and regulations applicable to the financial statements.
/s/ SANTIAGO, RILEY & REZNICK
[SEAL]
San Juan, Puerto Rico Federal Employer
January 13, 1997 Identification Number:
66-0432841
Audit Principal: William T. Riley, Jr.
<PAGE> 51
[SANTIAGO, RILEY & REZNICK LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sol 413 Limited Dividend Partnership
We have audited the accompanying balance sheet of Sol 413 Limited Dividend
Partnership as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' deficit, and cash flows for the year
then ended. 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 audit.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards and Government Auditing
Standards, issued by the Comptroller General of 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The Partnership has not maintained certain customary accounting records
and supporting documents relating to transactions with a general partner as
discussed in Note E. We were unable to satisfy ourselves by other auditing
procedures as to the possible effects of transactions with the general partner.
In our opinion, except for the effects, if any, of the items discussed in
the preceding paragraph, the financial statements referred to above present
fairly, in all material respects, the financial position of Sol 413 Limited
Dividend Partnership, as of December 31, 1995, and the results of its
operations, changes in partners' deficit, and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
<PAGE> 52
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 19
through 24 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, except for the effects, if any, of the items
discussed in the third paragraph, such information is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued
reports dated January 25, 1996, on our consideration of Sol 413 Limited Dividend
Partnership's internal control structure and on its compliance with specific
requirements applicable to major and nonmajor HUD programs, affirmative fair
housing, and laws and regulations applicable to the financial statements.
/s/ SANTIAGO, RILEY & REZNICK
[SEAL]
San Juan, Puerto Rico Federal Employer
January 25, 1996 Identification Number:
66-0432841
Audit Principal: William T. Riley, Jr.
<PAGE> 53
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
AND ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners of
Victory Square Apartments,
Limited Partnership
We have audited the accompanying balance sheets of VICTORY SQUARE APARTMENTS,
LIMITED PARTNERSHIP, FHA Project No. 042-35196-LDP, as of December 31, 1997 and
1996, and the related statements of operations, changes in partners' equity and
cash flows for the years then ended. 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 generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 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 Victory Square Apartments,
Limited Partnership as of December 31, 1997 and 1996, and its results of
operations, changes in partners' equity and cash flows for the years then ended
in conformity with generally accepted accounting principles.
<PAGE> 54
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying 1997 additional
financial data (shown on pages 13 through 19) are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements of the Partnership. Such information has been subjected to the
auditing procedures applied in the audit of the 1997 basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 9, 1998 on our consideration of the Partnership's internal
control and a report dated February 9, 1998, on its compliance with laws and
regulations.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 9, 1998
<PAGE> 55
[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS AND
ADDITIONAL FINANCIAL DATA REQUIRED BY
THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
To the Partners of
Victory Square Apartments, Ltd.
We have audited the accompanying balance sheet of VICTORY SQUARE APARTMENTS,
LTD. (an Ohio limited partnership), FHA Project Number 042-35196-LDP, as of
December 31, 1995, and the related statements of operations, changes in
partners' equity and cash flows for the year then ended. 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 audit. The financial statements of Victory Square Apartments, Ltd. as of and
for the year ended December 31, 1994 were audited by other auditors whose report
dated January 19, 1995, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the 1995 financial statements referred to above present fairly,
in all material respects, the financial position of Victory Square Apartments,
Ltd. at December 31, 1995, and the results of its operations, changes in
partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated February 2, 1996, on our consideration of the Partnership's internal
control structure and a report dated February 2, 1996, on its compliance with
laws and regulations.
<PAGE> 56
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The additional financial data shown on pages 13
through 18 are presented for purposes of additional analysis and are not a
required part of the financial statements. Such information has been subjected
to the procedures applied in the audit of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
Chicago, Illinois
February 2, 1996
<PAGE> 57
REAL ESTATE ASSOCIATES LIMITED VI
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 5,885,699 $ 6,051,522
RENTAL PROPERTY, net of accumulated depreciation (Note 1) 3,016,049 3,158,470
CASH AND CASH EQUIVALENTS (Note 1) 6,611,690 5,849,983
CASH, restricted (Note 3) 38,465 35,750
OTHER ASSETS 174,284 190,643
------------- ------------
TOTAL ASSETS $ 15,726,187 $ 15,286,368
============= ============
LIABILITIES AND PARTNERS' DEFICIENCY
LIABILITIES:
Mortgage notes payable related to properties (Notes 4 and 9) $ 4,828,404 $ 4,886,300
Notes payable and amounts due for partnership
interests (Notes 5 and 9) 5,795,000 5,795,000
Accrued interest payable (Notes 5 and 9) 6,103,244 5,650,383
Accounts payable 117,968 47,372
Other liabilities 38,465 35,750
------------- ------------
16,883,081 16,414,805
------------- ------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 6 and 7)
PARTNERS' DEFICIENCY:
General partners (362,758) (362,474)
Limited partners (794,136) (765,963)
------------- ------------
(1,156,894) (1,128,437)
------------- ------------
TOTAL LIABILITIES AND PARTNERS' DEFICIENCY $ 15,726,187 $ 15,286,368
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 58
REAL ESTATE ASSOCIATES LIMITED VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
RENTAL OPERATIONS:
Revenues $ 1,070,895 $ 1,211,516 $ 2,715,123
----------- ------------ ------------
Expenses:
General and administrative 84,870 162,929 429,258
Operating 369,779 395,170 1,040,846
Management fees - affiliate (Note 6) 53,500 76,862 165,018
Depreciation and amortization (Note 1) 156,480 210,414 381,897
Interest 426,337 541,383 944,140
----------- ------------ ------------
1,090,970 1,386,758 2,961,159
----------- ------------ ------------
LOSS FROM RENTAL OPERATIONS (20,075) (175,242) (246,036)
----------- ------------ ------------
PARTNERSHIP OPERATIONS:
Interest income 299,009 165,591 168,911
----------- ------------ ------------
Expenses:
Management fees - general partner (Note 6) 501,660 513,393 535,489
Mortgage brokerage fees - general partner
(Note 6) - - 131,100
General and administrative 396,600 262,047 289,923
Interest 533,700 519,650 519,650
----------- ------------ ------------
1,431,960 1,295,090 1,476,162
----------- ------------ ------------
LOSS FROM PARTNERSHIP OPERATIONS (1,132,951) (1,129,499) (1,307,251)
----------- ------------ ------------
GAIN ON SALE OF RENTAL PROPERTY (Note 1) - 1,902,022 -
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS 625,029 603,934 415,526
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 499,540 597,425 347,163
----------- ------------ ------------
NET INCOME (LOSS) $ (28,457) $ 1,798,640 $ (790,598)
=========== ============ ============
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP INTEREST (Note 1) $ (1) $ 107 $ (47)
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 59
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
DEFICIENCY, January 1, 1995 $ (372,554) $(1,763,925) $(2,136,479)
Net loss, 1995 (7,906) (782,692) (790,598)
----------- ----------- -----------
DEFICIENCY, December 31, 1995 (380,460) (2,546,617) (2,927,077)
Net income, 1996 17,986 1,780,654 1,798,640
----------- ----------- -----------
DEFICIENCY, December 31, 1996 (362,474) (765,963) (1,128,437)
Net income, 1997 (285) (28,172) (28,457)
----------- ----------- -----------
DEFICIENCY, December 31, 1997 $ (362,758) $ (794,136) $(1,156,894)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 60
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (28,457) $ 1,798,640 $ (790,598)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Gain on sale of rental property 0 (1,902,022) --
Equity in income of limited partnerships
and amortization of acquisition costs (642,529) (603,934) (415,526)
Depreciation and amortization 156,480 210,414 353,827
(Increase) decrease in receivables from
limited partnerships -- 1,000 256,250
Decrease in other assets 2,300 136,670 5,581
Increase in accrued interest payable 452,861 396,403 419,435
(Decrease) increase in accounts payable 70,596 (146,129) 87,006
(Decrease) increase in other liabilities 2,715 (95,421) (1,948)
----------- ----------- -----------
Net cash provided by (used in) operating activities 31,466 (204,379) (85,973)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions to limited partnerships recognized
as a return of capital 823,764 176,852 201,288
Decrease in restricted cash (2,715) 48,588 562
Decrease in short term investments -- 125,000 --
Capital contribution to investee limited partnership (32,912) (5,294) (191,044)
Addition to rental property -- -- --
Proceeds from sale of rental property 5,818,140 --
----------- ----------- -----------
Net cash provided by investing activities 788,137 6,163,286 10,806
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of mortgages (57,896) (5,004,264) (102,437)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 761,707 954,643 (177,604)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 5,849,983 4,895,340 5,072,944
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 6,611,690 $ 5,849,983 $ 4,895,340
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for interest $ 507,176 $ 664,630 $ 1,044,356
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 61
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Real Estate Associates Limited VI (the "Partnership"), was formed under
the California Limited Partnership Act on October 12, 1982. The
Partnership was formed to invest primarily in other limited partnerships
or joint ventures which own and operate primarily federal, state or
local government-assisted housing projects and to acquire, lease, sell
or mortgage real or personal property. The general partners are Coast
Housing Investments Associates (CHIA), a limited partnership, and
National Partnership Investments Corp. (NAPICO) a wholly owned
subsidiary of Casden Investment Corporation, the corporate general
partner. Casden Investment Corporation owns 100 percent of NAPICO's
stock. The limited partner of CHIA is an officer of NAPICO. The business
of Real VI is conducted primarily by NAPICO.
The consolidated financial statements include the accounts of Real
Estate Associates Limited VI and its majority-owned general
partnerships. All significant intercompany accounts and transactions
have been eliminated in consolidation. Losses in excess of the minority
interest in equity that would otherwise be attributed to the minority
interest are being allocated to the Partnership.
The Partnership offered and issued 4,200 units of limited partner
interests through a public offering. Each unit was comprised of two
limited partner interests and a warrant granting the investor the right
to purchase two additional limited partner interests. An additional
8,410 interests were issued from the exercise of warrants and the sale
of interests associated with warrants not exercised. The general
partners have a 1 percent interest in operating profits and losses of
the Partnership. The limited partners have the remaining 99 percent
interest in proportion to their respective investments.
The Partnership shall be dissolved only upon the expiration of 50
complete calendar years (December 31, 2032) from the date of the
formation of the partnership or the occurrence of various other events
as specified in the Partnership agreement.
Upon total or partial liquidation of the Partnership or the disposition
or partial disposition of a project or project interest and distribution
of the proceeds, the general partners will be entitled to a liquidation
fee as stipulated in the Partnership agreement. The limited partners
will have a priority return equal to their invested capital attributable
to the project(s) or project interest(s) sold and shall receive from the
sale of the project(s) or project interest(s) an amount sufficient to
pay state and federal income taxes, if any, calculated at the maximum
rate then in effect. The general partner's liquidation fee may accrue
but shall not be paid until the limited partners have received
distributions equal to 100 percent of their capital contributions.
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 reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
5.
<PAGE> 62
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
METHOD OF ACCOUNTING FOR INVESTMENTS IN LIMITED PARTNERSHIPS
The investments in limited partnerships are accounted for on the equity
method. Acquisition, selection and other costs related to the
acquisition of the projects have been capitalized as part of the
investment account and are being amortized on a straight line basis over
the estimated lives of the underlying assets, which is generally 30
years.
RENTAL PROPERTY AND DEPRECIATION
Rental property is stated at cost. Depreciation is provided on the
straight-line and accelerated methods over the estimated useful lives of
the buildings and equipment. Pursuant to a purchase agreement in which
the Partnership acquired its interest from independent withdrawing
general partners, certain rental property was revalued to reflect the
purchase price.
Substantially all of the apartment units are leased on a month-to-month
basis.
The costs of rental property and estimated useful lives for depreciation
are as follows:
<TABLE>
<CAPTION>
Estimated
Useful
Lives 1997 1996
------------- ----------- -----------
<S> <C> <C> <C>
Land $ 1,557,180 $1,557,180
Buildings 25 years 3,283,659 3,283,659
Equipment 3 to 5 years 824,580 824,580
----------- -----------
5,665,419 5,665,419
Less-Accumulated Depreciation
and Amortization 2,649,370 2,506,949
----------- -----------
$ 3,016,049 $ 3,158,470
=========== ===========
</TABLE>
On February 2, 1996, one of the consolidated general partnerships
(Drexel Park) sold its property for $6,300,000. After payment of
closings costs, the Partnership realized a gain of approximately
$1,902,000 in 1996
NET INCOME (LOSS) PER LIMITED PARTNERSHIP INTEREST
Net income (loss) per limited partnership interest was computed by
dividing the limited partners' share of net income (loss) by the number
of limited partnership interests outstanding during the year. The number
of limited partnership interests was 16,810 for all years presented.
6
<PAGE> 63
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of unrestricted cash and bank
certificates of deposit with maturities of three months or less. The
Partnership has its cash and cash equivalents on deposit primarily with
two high credit quality financial institutions Such cash and cash
equivalents are in excess of the FDIC insurance limit.
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 26 limited
partnerships and a general partner interest in one general partnership.
In addition, REAL VI holds a general partner interest in Real Estate
Associates III ("REA III"), a California general partnership. NAPICO is
also a general partner in REA III. REA III, in turn, holds limited
partner interests in seven limited partnerships. In total, therefore,
the Partnership holds interests, either directly or indirectly through
REA III, in 33 limited partnerships and one general partnership, which
own residential low income rental projects consisting of 2,624 apartment
units. The mortgage loans of these projects are payable to or insured by
various governmental agencies.
The Partnership, as a limited partner, is entitled to between 90 percent
and 99 percent of the profits and losses of the limited partnerships it
has invested in directly. The Partnership is also entitled to 99.9
percent of the profits and losses of REA III. REA III holds a 99 percent
interest in each of the limited partnerships in which it has invested.
As of December 31, 1997, the Partnership is obligated, if certain
conditions are met, to invest an additional $90,500 in its investee
partnerships at various times in the future. This amount has not been
recorded as a liability in the accompanying financial statements.
Equity in losses of unconsolidated limited partnerships are recognized
in the financial statements until the limited partnership investment
account is reduced to a zero balance or to a negative amount equal to
further capital contributions required. Losses incurred after the
limited partnership investment account is reduced to zero are not
recognized. The cumulative amount of the unrecognized equity in losses
of unconsolidated limited partnerships was approximately $29,631,000 and
$27,372,000 as of December 31, 1997 and 1996, respectively.
7
<PAGE> 64
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Distributions from the unconsolidated limited partnerships are accounted
for as a return of capital until the investment balance is reduced to
zero. Subsequent distributions received are recognized as income.
The following is a summary of the investments in unconsolidated limited
partnerships and reconciliation to the limited partnership accounts:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Investment balance, beginning of year $ 6,051,522 $ 5,619,146
Capital contributions to limited partnerships 15,412 5,294
Cash distributions recognized as a return of capital (823,764) (176,852)
Amortization of additional basis and capitalized
acquisition costs and fees (117,951) (244,391)
Equity in income of limited partnerships 760,480 848,325
----------- -----------
Investment balance, end of year $ 5,885,699 $ 6,051,522
=========== ===========
</TABLE>
The difference between the investment per the accompanying balance
sheets at December 31, 1997 and 1996, and the deficiency per the limited
partnerships' combined financial statements is due primarily to
cumulative unrecognized equity in losses of limited partnerships,
additional basis and costs capitalized to the investment account and
cumulative distributions recognized as income.
Selected financial information from the combined financial statements at
December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997, of the limited partnerships in which the
Partnership has invested directly or indirectly, is as follows:
<TABLE>
<CAPTION>
Balance Sheets
--------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 49,936 $ 54,130
========= =========
Total assets $ 67,970 $ 72,075
========= =========
Mortgage loans payable $ 67,569 $ 71,021
========= =========
Total liabilities $ 98,879 $ 100,740
========= =========
Deficiency of the Real Estate Associates Limited VI $ (29,604) $ (26,876)
========= =========
Deficiency of other partners $ (1,306) $ (1,777)
========= =========
</TABLE>
8
<PAGE> 65
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
<TABLE>
<CAPTION>
Statements of Operations
------------------------
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total revenue $ 20,921 $ 21,246 $ 20,571
======== ======== ========
Interest expense $ 5,155 $ 5,561 $ 5,720
======== ======== ========
Depreciation $ 3,592 $ 3,597 $ 3,529
======== ======== ========
Total expenses $ 22,866 $ 23,123 $ 23,034
======== ======== ========
Net loss $ (1,945) $ (1,877) $ (2,463)
======== ======== ========
Net loss allocable to the Partnership $ (1,933) $ (1,869) $ (2,214)
======== ======== ========
</TABLE>
Land and buildings above have been adjusted for the amount by which the
investments in the limited partnerships exceed the Partnership's share
of the net book value of the underlying net assets of the investee which
are recorded at historical costs. Depreciation on the adjustment is
provided for over the estimated remaining useful lives of the
properties.
An affiliate of NAPICO is the general partner in 10 of the limited
partnerships included above, and another affiliate receives property
management fees ranging from 5 percent to 7 percent of the revenue from
seven of these partnerships. The affiliate received property management
fees of $164,908, $179,660 and $178,106 in 1997, 1996 and 1995
respectively. The following sets forth the significant data for the
partnerships in which an affiliate of NAPICO was the general partner,
reflected in the accompanying financial statements using the equity
method of accounting:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $ 9,443 $ 12,049
======== ========
Total liabilities $ 13,178 $ 14,813
======== ========
Deficiency of Real Estate Associates Limited VI $ (3,633) $ (2,674)
======== ========
Deficiency of other partners $ (102) $ (89)
======== ========
Total revenue $ 2,629 $ 3,213 $ 3,136
======== ======== ========
Net loss $ (383) $ (340) $ (502)
======== ======== ========
</TABLE>
9
<PAGE> 66
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
During the year ended December 31, 1997, the local limited partnership
that owns Drexel III consumated the sale of the apartment complex. The
Partnership received distributions of $670,245 of which $597,601 was
recognized as a return of capital and $72,644 was recognized as
distributions to income. The Partnership financial statements reflect
no investment in the Drexel III local Partnership.
3. CASH, RESTRICTED
Restricted cash at December 31, 1997 and 1996 consists of tenants'
security deposits.
4. MORTGAGE NOTE PAYABLE RELATED TO PROPERTY
Mortgage notes payable related to properties consist of the following at
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Mortgage note bears interest at 8.78 percent (9.5
percent in 1995) per annum, with monthly principal
and interest payments of $40,385, due September
10, 2006.
$ 4,886,300 $ 4,886,300
============ ===========
</TABLE>
The notes are collateralized by the rental properties.
The mortgage note payable at December 31, 1997 requires principal
payments as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 63,189
1999 68,966
2000 75,270
2001 82,152
2002 89,662
Thereafter through 2006 4,449,165
----------
$4,828,404
==========
</TABLE>
5. NOTES PAYABLE AND AMOUNTS DUE FOR PARTNERSHIP INTERESTS
Certain of the Partnership's investments involved purchases of
partnership interests from partners who subsequently withdrew from the
operating partnership. The purchase of these interests provides for
additional cash payments of approximately $325,000, based upon specified
events as outlined in the purchase agreements. Such amounts have been
recorded as liabilities. In addition, the Partnership is obligated on
non-recourse notes payable of $5,470,000 which bear interest at 9.5 or
10.0 percent per annum and have principal maturities ranging from
December 1998 to December 2012. Effective January 1, 1997, the interest
rates for two notes totalling $2,810,000 changed to 10 percent per terms
of the note.
10
<PAGE> 67
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
5. NOTES PAYABLE AND AMOUNTS DUE FOR PARTNERSHIP INTERESTS (CONTINUED)
The notes and related interest are payable from cash flow generated from
operations of the related rental properties as defined in the notes.
These obligations are collateralized by the Partnership's investments in
the limited partnerships. Unpaid interest is due at maturity of the
notes.
Maturity dates of the notes payable and related accrued interest are as
follows:
<TABLE>
<CAPTION>
Accrued
Years Ending December 31, Notes Interest
------------------------- ---------- ----------
<S> <C> <C>
1998 $ $
1999 940,000 1,149,634
2000
2001 2,810,000 2,896,590
2002 920,000 989,792
Thereafter 800,000 1,100,077
----------- -----------
$5,470,000 $6,103,244
========== ==========
</TABLE>
Under recent adopted law and policy, HUD has determined not to renew HAP
Contracts on a long term basis on the existing terms. In connection with
renewals of the HAP Contracts under such new law and policy, the amount of
rental assistance payments under renewed HAP Contracts will be based on market
rentals instead of above market rentals, which was generally the case under
existing HAP Contracts. As a result, existing HAP Contracts that are renewed in
the future on projects insured by the FHA will not provide sufficient cash flow
to permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. In order to address the reduction in payments
under HAP Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 (the "MAHRAA"), which was adopted
in October 1997, provides for the restructuring of mortgage loans insured by
the FHA with respect to properties subject to HAP Contracts that have been
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage loan
can be restructured to reduce the annual debt service on such loan. There can
be no assurance that the Partnership will be permitted to restructure its
mortgage indebtedness pursuant to the new HUD rules implementing MAHRAA or that
the Partnership would choose to restructure such mortgage indebtedness if it
were eligible to participate in the MAHRAA program. It should be noted that
there are uncertainties as to the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA.
Accordingly, the General Partners are unable to predict with certainty their
impact on the Partnership's future cash flow.
As a result of the foregoing, the Partnership is undergoing an extensive review
of disposition, refinancing or re-engineering alternatives for the properties
in which the limited partnerships have invested and are subject to HUD mortgage
and rental subsidy programs. The Partnership has incurred expenses in
connection with this review by various third party professionals, including
accounting, legal, valuation, structural and engineering costs, which amounted
to $127,514 for the year ended December 31, 1997.
A real estate investment trust ("REIT") organized by an affiliate of NAPICO
has advised the Partnership that it intends to make a proposal to purchase from
the Partnership certain of the limited partnership interests held for
investment by the Partnership.
11
<PAGE> 68
REAL ESTATE ASSOCIATES LIMITED VI AND SUBSIDIARIES
(a California limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
5. NOTES PAYABLE AND AMOUNTS DUE FOR PARTNERSHIP INTERESTS (CONTINUED)
The REIT proposes to purchase such limited partner interests for cash,
which it plans to raise in connection with a private placement of its
equity securities. The purchase is subject to, among other things, (i)
consummation of such private placement by the REIT; (ii) the purchase of
the general partner interests in the local limited partnerships by the
REIT; (iii) the approval of HUD and certain state housing finance
agencies; (iv) the consent of the limited partners to the sale of the
local limited partnership interests held for investment by REAL VI; and
(v) the consummation of a minimum number of purchase transactions with
other Casden affiliated partnerships. As of March 31, 1998, the REIT had
completed buy-out negotiations with a majority of the general partners
of the local limited partnerships.
A proxy is contemplated to be sent to the limited partners setting forth
the terms and conditions of the purchase of the limited partners'
interests held for investment by the Partnership, together with certain
amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the transaction.
6. FEES AND EXPENSES DUE TO GENERAL PARTNER AND AFFILIATE
Under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to NAPICO for an annual
management fee equal to .4 percent of the original invested assets of
the partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interests in the capital accounts of
the respective partnerships.
For one of the properties owned by the Partnership, an affiliate of
NAPICO receives a management fee of 5 percent of its gross revenues plus
reimbursement of certain expenses. The Partnership paid management fees
to the affiliate of approximately $12,000 and $107,000 in 1996 and 1995,
respectively. An affiliate of the minority general partner of a general
partnership that is consolidated, manages the property owned by that
partnership. The fee is calculated based on five percent of gross
collections plus reimbursement of certain expenses. The Partnership paid
management fees to the affiliate of approximately $60,000, $65,000 and
$58,000 in 1997, 1996 and 1995, respectively. In 1995, NAPICO received
mortgage brokerage fees of $131,000 for its involvement with the
refinancing of limited partnerships' mortgages (Note 2).
The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $51,487, $47,231 and $43,729 in 1997, 1996
and 1995, respectively, and is included in operating expenses.
12
<PAGE> 69
7. CONTINGENCIES
The corporate general partner of the Partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business. In
addition, the Partnership is involved in several lawsuits. In the
opinion of management and the corporate general partner, the claims will
not result in any material liability to the Partnership.
The Partnership has assessed the potential impact of the Year 2000
computer systems issue on its operations. The Partnership believes that
no significant actions are required to be taken by the Partnership to
address the issue and that the impact of the Year 2000 computer systems
issue will not materially affect the Partnership's future operating
results or financial condition.
8. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners. The major differences in tax and financial
reporting result from the use of different bases and depreciation
methods for the properties held by the limited partnerships. Differences
in tax and financial reporting also arise as losses are not recognized
for financial reporting purposes when the investment balance has been
reduced to zero or to a negative amount equal to further capital
contributions required.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to
estimate that value. The mortgage notes payable are insured by HUD and
are collateralized by the rental properties. The operations generated by
the properties and investee limited partnerships are subject to various
government rules, regulations and restrictions which make it
impracticable to estimate the fair value of the mortgage notes payable
and related accrued interest. The carrying amount of other assets and
liabilities reported on the balance sheets that require such disclosure
approximates fair value due to their short-term maturity.
10. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the loss of limited
partnerships on a quarterly basis using estimated financial information
furnished by the various local operating general partners. The equity in
income (loss) of limited partnerships reflected in the accompanying
annual consolidated financial statements is based primarily upon audited
financial statements of the investee limited partnerships. The increase
of approximately $196,000, between the estimated nine-month equity in
income and the actual 1997 year end equity in income, has been recorded
in the fourth quarter.
<PAGE> 70
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED VI
INVESTMENTS IN LIMITED PARTNERSHIPS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Year Ended December 31, 1997
-----------------------------------------------------------------------------------------------
Cash
Balance Distri- Balance Future
January Capital butions Equity in December Capital
Limited Partnerships 1, 1997 Contributions Received Income/(Loss) 31, 1997 Contributions
- ---------------------------- ------------- --------------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Boynton Terrace $ $ $ $ $
Cady Brook Apts. 335,451 (4,777) 58,590 389,264
Cassidy Village 264,704 (957) (13,128) 250,619
City Heights
Crockett Manor 7,000 (7,000)
Denny Place 15,000
Drexel Park III 597,601 3,118 (600,719)
Eastridge Apts.
EchoValley Apts. 22,392 (9,490) 53,085 65,987
Filmore I
Grant-Ko Enterprises
Hudson Gardens 350,946 (19,855) 71,636 402,727
Hummelstown Manor
Kentucky Manor
Lakewind East Apts.
Lonsdale Elderly 883,427 (70,635) 199,309 1,012,101
Mariner's Cove
Marshall Plaza I
Marshall Plaza II
Menlo Estates
Mulberry Towers 2,800,336 (55,252) 160,271 2,905,355
New-Bel-Mo Enterprises (25,500) (25,500) 25,500
Oakridge Apts.
Oakwood Manor 173,689 (15,697) 15,713 173,705
Park Place Apts., TX
Park Place Apts., NJ 305,027 (40,825) 111,000 375,202
Parkesedge Elderly Apts. 214,016 20,369 234,385 18,000
Paula Maria Apts.
(Century Plaza) 5,294 (5,294)
Penneco II (25,000) (25,000) 25,000
Sauk-Ko Enterprises
SOL 413 (22,000) 2,500 (22,000) 22,000
Valley Oak Apts.
Victory Square 176,433 (263) (27,316) 148,854
Villas de Orocovix
Willow Wood
------------- --------------- ------------ -------------- ------------- --------------
$ 6,051,522 $ 32,912 $ (823,764) $ 625,029 $ 5,885,699 $ 90,500
============= =============== ============ ============== ============= ==============
</TABLE>
<PAGE> 71
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VI
INVESTMENTS IN LIMITED PARTNERSHIPS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Year Ended December 31, 1996
------------------------------------------------------------------------------------------------
Cash
Balance Distri- Balance Future
January Capital butions Equity in December Capital
Limited Partnerships 1, 1996 Contributions Received Income/(Loss) 31, 1996 Contributions
- --------------------------- ------------- --------------- ------------ -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Boynton Terrace $ $ $ $ $
Cady Brook Apts. 298,129 (4,778) 42,100 335,451
Cassidy Village 308,841 (2,397) (41,740) 264,704
City Heights
Crockett Manor
Denny Place
Drexel Park III 572,502 (16,035) 41,134 597,601
Eastridge Apts.
EchoValley Apts. 22,392 22,392
Filmore I
Grant-Ko Enterprises
Hudson Gardens 293,015 (19,747) 77,678 350,946
Hummelstown Manor
Kentucky Manor
Lakewind East Apts.
Lonsdale Elderly 769,348 (34,597) 148,676 883,427
Mariner's Cove
Marshall Plaza I
Marshall Plaza II
Menlo Estates
Mulberry Towers 2,662,471 (55,252) 193,117 2,800,336
New-Bel-Mo Enterprises (25,500) (25,500) 25,500
Oakridge Apts.
Oakwood Manor 166,065 (5,390) 13,014 173,689
Park Place Apts., TX
Park Place Apts., NJ 230,507 (33,362) 107,882 305,027
Parkesedge Elderly Apts. 196,044 17,972 214,016 18,000
Paula Maria Apts. 5,294 (5,294)
Penneco II (25,000) (25,000) 25,000
Sauk-Ko Enterprises
SOL 413 (22,000) (22,000) 22,000
Valley Oak Apts.
Victory Square 194,724 (18,291) 176,433
Villas de Orocovix
Willow Wood
------------- --------------- ------------ -------------- ------------- --------------
$ 5,619,146 $ 5,294 $ (176,852) $ 603,934 $ 6,051,522 $ 90,500
============= =============== ============ ============== ============= ==============
</TABLE>
<PAGE> 72
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VI
INVESTMENTS IN LIMITED PARTNERSHIPS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Year Ended December 31, 1995
----------------------------------------------------------------------------
Cash
Balance Distri- Balance Future
January Capital butions Equity in December Capital
Limited Partnerships 1, 1995 Contributions Received Income (Loss) 31, 1995 Contributions
- -------------------- ------- ------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Boynton Terrace $ $ $ $ $ $
Cady Brook Apts. 259,446 38,683 298,129
Cassidy Village 336,069 (27,228) 308,841
City Heights
Crockett Manor 20,000 (20,000)
Denny Place 95,000 (95,000)
Drexel Park III 563,333 (16,035) 25,204 572,502
Eastridge Apts.
Echo Valley Apts.
Filmore I
Grant-Ko Enterprises
Hudson Gardens 296,493 (76,161) 72,683 293,015
Hummelstown Manor
Kentucky Manor
Lakewind East Apts.
Lonsdale Elderly 669,175 (34,888) 135,061 769,348
Mariner's Cove
Marshall Plaza I
Marshall Plaza II
Menlo Estates
Mulberry Towers 2,522,709 (55,252) 195,014 2,662,471
New-Bel-Mo Enterprises (25,500) (25,500) 25,500
Oakridge Apts. II
Oakwood Manor 160,734 250 (5,444) 10,525 166,065
Park Place Apts., TX
Park Place Apts., NJ 104,301 (3,196) 129,402 230,507
Parkesedge Elderly Apts. 139,401 56,643 196,044 18,000
Paula Maria Apts. 5,294 (5,294)
Penneco II (25,000) (25,000) 25,000
Sauk-Ko Enterprises
SOL 413 (22,000) (22,000) 22,000
Valley Oak Apts.
Victory Square 234,703 (5,018) (34,961) 194,724
Villas de Orocovix
Willow Wood 70,500 (70,500)
---------- -------- ---------- --------- ---------- ---------
$5,213,864 $191,044 $ (201,288) $ 415,526 $5,619,146 $ 90,500
========== ======== ========== ========= ========== =========
</TABLE>
<PAGE> 73
SCHEDULE
(Continued)
REAL ESTATE ASSOCIATES LIMITED VI
INVESTMENTS IN LIMITED PARTNERSHIPS
FOR THE YEARS ENDED
DECEMBER 31, 1997, 1996 AND 1995
NOTES: 1. Equity in losses represents the Partnership's allocable share
of the net loss from the limited partnerships for the year.
Equity in losses of the limited partnerships will be recognized
until the investment balance is reduced to zero or below zero to
an amount equal to future capital contributions to be made by
the Partnership.
2. Cash distributions from the limited partnerships will be treated
as a return of the investment and will reduce the investment
balance until such time as the investment is reduced to an
amount equal to additional contributions. Distributions
subsequently received will be recognized as income.
<PAGE> 74
REAL ESTATE ASSOCIATES LIMITED VI SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VI HAS INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Buildings, Furnishings Total
& Equipment Land
Number Outstanding Amount Carried Buildings,
of Mortgage at Close of Furnishings Accumulated Construction
Partnership/Location Units Loan Land Year & Equipment Depreciation Period
- -------------------- ----- ----------- ---------- --------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Boynton Terrace 89 $ 5,040,000 $ 208,001 $ 4,124,446 $ 4,332,447 $ 1,983,264 1983-1984
Boyton Beach, FL
Cadybrook 40 1,044,337 89,225 1,812,932 1,902,157 584,134 (A)
Charlton, MA
City Heights 151 3,821,287 0 5,219,777 5,219,777 3,615,716 (A)
Wilkes-Barre, PA
Crockett Manor 38 1,036,649 10,000 1,259,214 1,269,214 639,424 (A)
Trenton, TN
Eastridge Apts. 96 609,960 101,500 1,561,103 1,662,603 1,357,935 (A)
Bristol, VA
Echo Valley 100 1,191,666 103,011 3,924,545 4,027,556 3,551,211 (A)
Warwick, RI
Filmore I 32 1,195,181 115,000 1,312,495 1,427,495 673,170 (A)
Phoenix, AZ
Grant-Ko Enterprises 40 1,233,460 100,000 1,408,873 1,508,873 678,907 (A)
Platteville, WS
Hudson Gardens 41 1,479,363 252,855 2,011,719 2,264,574 1,039,449 (A)
Pasadena, CA
Hummelstown Manor 51 1,743,485 98,839 1,745,476 1,842,315 1,622,098 1983
Hummelstown, PA
Kentucky Manor 48 1,399,089 100,696 1,428,380 1,529,076 880,955 (A)
Oak Grove, KY
Lonsdale Housing 131 3,046,650 214,833 6,362,322 6,577,155 3,804,286 (A)
Providence, RI
Mariner's Cove 500 13,452,668 0 16,131,324 16,131,324 8,248,949 1983-1984
San Diego, CA
Menlo Estates 80 2,754,581 492,061 3,679,693 4,171,754 2,018,152 (A)
Riverside, CA
Mullberry Towers 206 5,553,525 199,754 7,668,230 7,867,984 3,123,460 (A)
Scranton, PA
New-Bel-Mo Enterprises 34 997,500 78,078 1,147,760 1,225,838 537,438 (A)
New Glarus, Bellevile,
Monticello, WS
Oakridge Apts. 48 1,200,901 55,000 1,500,221 1,555,221 1,318,591 (A)
Biloxi, MS
Oakwood 34 652,873 61,538 777,542 839,080 297,395 (A)
Milan, TN
Park Place 128 5,812,027 304,166 7,347,967 7,652,133 2,696,031 1983-1984
Ewing, NJ
Park Place Apts. 60 1,897,974 146,305 2,267,692 2,413,997 1,335,771 (A)
Cleveland, TX
Parkesedge Elderly Apts. 45 1,482,445 160,000 1,091,891 1,251,891 0 (A)
Parkesedge, PA
Penneco II 76 1,931,934 79,627 2,792,000 2,871,627 1,474,150 (A)
Johnstown, PA
Sauk-Ko Enterprises 30 813,276 60,000 1,166,773 1,226,773 547,096 (A)
Baraboo, WS
SOL-413 12 365,928 50,000 389,858 419,858 197,426 (A)
Old San Juan, PR
Valley Oaks Senior 50 1,771,000 121,464 1,906,110 2,027,574 1,019,676 (A)
Galt, CA
Villas de Orocovix 41 1,425,043 59,550 1,717,435 1,776,985 911,674 (A)
Orocovix, PR
Cassidy Village 98 1,099,059 156,850 2,021,621 2,178,471 904,109 (A)
Columbus, OH
Denny Place 17 415,608 290,000 1,070,594 1,360,594 497,167 (A)
Los Angeles, CA
Marshall Plaza I 40 220,469 68,414 709,014 777,428 317,089 (A)
Loraine, OH
Marshall Plaza II 50 310,499 78,901 919,854 998,755 411,382 (A)
Loraine, OH
Paula Maria I 120 1,085,850 215,730 2,852,574 3,068,304 1,509,024 (A)
Hampton, VA
Victory Square 81 1,006,226 36,630 1,794,845 1,831,475 802,693 (A)
Canton, OH
Willow Wood 19 479,066 290,000 1,097,181 1,387,181 513,147 (A)
Los Angeles, CA
Additional basis of real
estate due to REAL VI's
capital contribution to
limited partnership not
recorded by Investee
limited partnership 107,796 6,537,625 6,645,421 4,115,124
----- ----------- ---------- ----------- ------------ -----------
TOTAL 2,624 67,569,379 4,503,824 98,739,086 103,242,910 53,307,093
===== =========== ========== =========== ============ ===========
</TABLE>
(A) This project was complete when REAL VI entered the Partnership.
<PAGE> 75
SCHEDULE III
REAL ESTATE ASSOCIATES LIMITED VI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VI HAS INVESTMENTS
DECEMBER 31, 1997
NOTES: 1. Each local partnership has developed, owns and operates the
housing project. Substantially all project costs, including
construction period interest expense, were capitalized by the
local partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the projects. The estimated composite
useful lives of the buildings are generally from 25 to 40 years.
3. Investments in property and equipment-limited partnerships:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Land Equipment Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1995 $ 4,551,180 $ 99,542,079 $ 104,093,259
Net additions, 1995 10,365 748,766 759,131
------------- ------------- -------------
Balance, December 31, 1995 4,561,545 100,290,845 104,852,390
Net additions, 1996 19,721 846,147 865,868
------------- ------------- -------------
Balance, December 31, 1996 4,581,266 101,136,992 105,718,258
Net additions, 1997 (77,442) (2,397,906) (2,475,348)
------------- ------------- -------------
Balance, December 31, 1997 $ 4,503,824 $ 98,739,086 $ 103,242,910
============= ============= =============
</TABLE>
<PAGE> 76
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED VI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL VI HAS INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Buildings,
Furnishings
And
Equipment
-----------
<S> <C>
Accumulated Depreciation:
Balance at January 1, 1995 $44,768,883
Net additions for 1995 3,359,377
-----------
Balance at December 31, 1995 48,128,260
Net additions for 1996 3,459,872
-----------
Balance at December 31, 1996 51,588,132
Net deletions for 1997 1,718,961
-----------
Balance at December 31, 1997 $53,307,093
===========
</TABLE>
<PAGE> 77
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY CONSOLIDATED LOCAL PARTNERSHIPS
IN WHICH REAL VI HAS INVESTMENTS
DECEMBER 31, 1997
Investments in property and equipment-general partnerships
(continued):
The total cost of land, buildings, and equipment for federal income tax
purposes at December 31, 1997 is approximately $5,665,419.
<TABLE>
<CAPTION>
Buildings
Furnishings,
And
Land Equipment Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1995 $ 1,935,839 $ 10,141,782 $ 12,077,621
Additions during 1995 -- -- --
------------ ------------ ------------
Balance, December 31, 1995 1,935,839 10,141,782 12,077,621
Deletions during 1996 (378,659) (6,033,543) (6,412,202)
------------ ------------ ------------
Balance, December 31, 1996 1,557,180 4,108,239 5,665,419
Activity during 1997 -- -- --
------------ ------------ ------------
Balance, December 31, 1997 $ 1,557,180 $ 4,108,239 $ 5,665,419
============ ============ ============
</TABLE>
<PAGE> 78
SCHEDULE III
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED VI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY CONSOLIDATED LOCAL PARTNERSHIPS
IN WHICH REAL VI HAS INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Equipment
-----------
ACCUMULATED DEPRECIATION:
-------------------------
<S> <C>
Balance at January 1, 1995 $ 4,438,792
Net additions for 1995 353,827
-----------
Balance at December 31, 1995 4,792,619
Net additions for 1996 198,237
Net deletions for 1996 (2,483,907)
-----------
Balance at December 31, 1996 2,506,949
Net additions for 1997 142,421
-----------
Balance at December 31, 1997 $ 2,649,370
===========
</TABLE>
<PAGE> 79
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
REAL ESTATE ASSOCIATES LIMITED VI (the "Partnership") has no directors or
executive officers of its own.
National Partnership Investment Corp. ("NAPICO" or "the Managing General
Partner") is a wholly-owned subsidiary of Casden Investment Corporation, an
affiliate of The Casden Company. The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.
CHARLES H. BOXENBAUM, 68, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.
BRUCE E. NELSON, 46, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 52, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.
Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Company. Prior to that,
he was the president and chairman of Mayer Group, Inc., which he joined in 1975.
He is also chairman of Mayer Management, Inc., a real estate management firm.
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.
<PAGE> 80
Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern California. He holds a
Bachelor of Science degree and a Masters in Business Administration degree from
the University of Southern California.
HENRY C. CASDEN, 54, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.
Mr. Casden has been President and Chief Operating Officer of The Casden Company,
as well as a director of NAPICO since February 1988. He became secretary of both
companies in late 1994. From 1982 to 1988, Mr. Casden was of counsel and a
partner in the Los Angeles law firm of Troy, Casden & Gould. From 1978 to 1981,
he was of counsel and a partner in the Los Angeles law firm of Loeb & Loeb. From
1972 to 1978, Mr. Casden was a member of the Beverly Hills law firm of Fink &
Casden, Professional Corporation.
Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.
BOB SCHAFER, 56, Senior Vice President of Finance.
Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years. Mr.
Schafer is a member of the California Society of Certified Public Accountants.
He holds a Bachelor of Science degree in accounting from Woodbury University,
Los Angeles.
PATRICIA W. TOY, 68, Senior Vice President - Communications and Assistant
Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 37, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.
NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and
does not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.
<PAGE> 81
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
Real Estate Associates Limited VI has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to .5
percent of the invested assets, including the Partnership's allocable share of
the mortgages related to real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes its
initial contribution to the local partnership. In addition, the Partnership
reimburses the Corporate General Partner for certain expenses.
The Corporate General Partner received mortgage brokerage fees in connection
with the refinancing of certain limited partnerships' mortgages. In addition, an
affiliate of the Corporate General Partner is responsible for the on-site
property management for a property owned by the Partnership and for certain
properties owned by the limited partnerships in which the Partnership has
invested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The general partners own all of the outstanding general partnership
interests of REAL VI; no person is known to own beneficially in excess
of 5% of the outstanding limited partnership interests.
(b) With the exception of the initial limited partner, Bruce Nelson, who is
an officer of the corporate general partner, none of the officers or
directors of the corporate general partner own directly or beneficially
any limited partnership interests in REAL VI.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. ("NAPICO"). The Partnership is obligated to NAPICO for an
annual management fee equal to .4 percent of the original invested assets of the
limited partnerships. Invested assets is defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage loans
related to the Partnership's interest in the capital accounts of the respective
partnerships. Management fees were $501,660, $513,393 and $535,489 for the years
ended December 31, 1997, 1996 and 1995, respectively.
In 1995, NAPICO received mortgage brokerage fees of $131,000 for its involvement
with the refinancing of limited partnerships' mortgages.
The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $51,487, $47,231 and $43,729 in 1997, 1996 and 1995, respectively,
and is included in operating expenses.
For one of the properties owned by the Partnership, an affiliate of NAPICO
receives a management fee of 5 percent of its gross revenues plus reimbursement
of certain expenses. The Partnership paid management fees to the affiliate of
approximately $12,000 and $107,000 in 1996 and 1995, respectively. An affiliate
of the minority general partner of a general partnership that is consolidated,
manages the property owned by that partnership. The fee is calculated based on
five percent of gross collections plus reimbursement of certain expenses. The
Partnership paid management fees to the affiliate of approximately $60,000,
$65,000 and $58,000 in 1997, 1996 and 1995, respectively.
<PAGE> 82
A real estate investment trust ("REIT") organized by an affiliate of NAPICO
has advised the Partnership that it intends to make a proposal to purchase
from the Partnership certain of the limited partnership interests held for
investment by the Partnership.
The REIT proposes to purchase such limited partner interests for cash, which it
plans to raise in connection with a private placement of its equity securities.
The purchase is subject to, among other things, (i) consummation of such
private placement by the REIT; (ii) the purchase of the general partner
interests in the local limited partnerships by the REIT; (iii) the approval of
HUD and certain state housing finance agencies; (iv) the consent of the limited
partners to the sale of the local limited partnership interests held for
investment by REAL VI; and (v) the consummation of a minimum number of purchase
transactions with other Casden affiliated partnerships. As of March 31, 1998,
the REIT had completed buy-out negotiations with a majority of the general
partners of the local limited partnerships.
A proxy is contemplated to be sent to the limited partners setting forth the
terms and conditions of the purchase of the limited partners' interests held
for investment by the Partnership, together with certain amendments to the
Partnership Agreement and other disclosures of various conflicts of interest in
connection with the transaction.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Operations for the years ended December 31, 1997,
1996 and 1995
Consolidated Statements of Partners' Equity (Deficiency) for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.
Notes to Consolidated Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED VI REAL ESTATE III AND THE LIMITED
PARTNERSHIPS:
Schedule - Investments in Limited Partnerships, December 31, 1997, 1996 and
1995.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1997.
The remaining schedules are omitted because any required information is included
in the financial statements and notes thereto.
EXHIBITS
(3) Articles of incorporation and bylaws: The registrant is not incorporated.
The Partnership Agreement was filed with Form S-11 #2-82090 incorporated
herein by reference.
(10) Material contracts: The registrant is not party to any material contracts,
other than the Restated Certificate and Agreement of Limited Partnership
dated October 12, l982, and the forty contracts representing the
partnership investment in local limited and general partnerships as
previously filed at the Securities Exchange Commission, File #2-282090
which is hereby incorporated by reference.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1997.
<PAGE> 83
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California.
REAL ESTATE ASSOCIATES LIMITED VI
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.
General Partner
/s/ CHARLES H. BOXENBAUM
- --------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer
/s/ BRUCE E. NELSON
- --------------------------------------
Bruce E. Nelson
Director and President
/s/ ALAN I. CASDEN
- --------------------------------------
Alan I. Casden
Director
/s/ HENRY C. CASDEN
- --------------------------------------
Henry C. Casden
Director
/s/ BOB E. SCHAFER
- --------------------------------------
Bob E. Schafer
Senior Vice President of Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,611,690
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,611,690
<PP&E> 5,665,419
<DEPRECIATION> 2,649,370
<TOTAL-ASSETS> 15,743,687
<CURRENT-LIABILITIES> 117,968
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,139,394
<TOTAL-LIABILITY-AND-EQUITY> 15,743,687
<SALES> 0
<TOTAL-REVENUES> 2,511,973
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,562,893
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 960,037
<INCOME-PRETAX> 10,957
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,957
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,957
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
