FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-14099
CONSOLIDATED CAPITAL PROPERTIES VI
(Name of small business issuer in its charter)
California 94-2940204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $3,289,000.
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1995. Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is management's belief that such trading would
not exceed $25,000,000.
PART I
Item 1. Description of Business
Consolidated Capital Properties VI (the "Partnership") was organized on May 23,
1984, as a limited partnership under the California Uniform Limited Partnership
Act. On December 7, 1984, the Partnership registered with the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933 (File No. 2-93900)
and commenced a public offering for sale of $50 million of Units. The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
Partnership subsequently filed a Form 8-A Registration Statement with the SEC
and registered under the Securities Exchange Act of 1934 (File No. 0-14099) on
December 23, 1985. The sale of Units closed on December 6, 1985, with 181,808
Units sold at $250 each, or gross proceeds of approximately $45.5 million to the
Partnership.
By the end of fiscal 1987, approximately 51% of the monies raised was invested
in seven properties and a 75% interest in a joint venture with an affiliated
partnership which acquired one property. Of the remaining 49%, 11% was required
for organizational and offering expenses, sales commissions and acquisition
fees, and 38% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement (herein so called).
The General Partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The principal place of business
for the Partnership and for the General Partner is One Insignia Financial Plaza,
Greenville, South Carolina 29602.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership was formed to acquire, own, operate and
ultimately dispose of income-producing real properties for the benefit of its
partners. At December 31, 1995, the Partnership owns two properties as
described in "Item 2 - Description of Property." Previously, the Partnership
disposed of six properties. As of December 31, 1995, the Partnership's working
capital reserves are less than the 5% of Net Invested Capital, as required by
its Partnership Agreement.
Reserves, consisting of cash and cash equivalents and securities available for
sale totalling $1,796,000 are less than the reserve requirements of $2,266,000
at December 31, 1995. The Partnership intends to replenish the working capital
reserve from cash flow from operations. The working capital requirement must be
met prior to any consideration for distributions to the partners. See "Item 6 -
Management's Discussion and Analysis or Plan of Operations" for discussion of
Partnership liquidity and capital resources.
The real estate business is highly competitive. The Registrant's real property
investments are subject to competition from similar types of properties in the
vicinities in which they are located and the Partnership is not a significant
factor in its industry. In addition, various limited partnerships have been
formed by related parties to engage in business which may be competitive with
the Registrant.
The Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an
affiliate of the General Partner. The property manager is responsible for the
day-to-day operations of each property. The General Partner has also selected
an affiliate of Insignia to provide real estate advisory and asset management
services to the Partnership. As advisor, such affiliate provides all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing. For a further
discussion of property and partnership management, see Item 12.
Upon the Partnership's formation in 1984, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Group II ("CCG"), a California general partnership, was
the non-corporate general partner. In 1988, through a series of transactions,
Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In
December 1988, CCEC filed for reorganization under Chapter 11 of the United
States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI
acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partnerships dated August 10, 1990.
As part of this solicitation, the Limited Partners also approved an amendment to
the Partnership Agreement to limited changes of control of the Partnership and
approved conversion of the general partner interest of the non-corporate general
partner, CCG, to that of a special limited partner ("Special Limited Partner")
without voting and other rights of a limited partner except for the economic
interest previously held as a general partner. Pursuant to an amendment to the
Partnership Agreement, the non-corporate general partner interest of CCG was
converted to that of a Special Limited Partner and CEI became the sole general
partner of the Partnership on December 31, 1991.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which, among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P., ("MAE") and an affiliate of
Insignia, acquired an option (exercisable in whole or in part from time to time)
to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial
exercise of such option, acquired 50.5% of that stock. As a part of the
Insignia Transaction, MAE-ICC, Inc. also acquired all of the outstanding stock
of Partnership Services, Inc., an asset management entity, and Insignia acquired
all of the outstanding stock of Coventry Properties, Inc., a property management
entity. In addition, confidentiality, non-competition, and standstill
arrangements were entered into between certain of the parties. Those
arrangements, among other things, prohibit GII Realty's former sole shareholder
from purchasing Partnership Units for a period of three years. On October 24,
1995, MAE-ICC, Inc. exercised the remaining portion of its option to purchase
all of the remaining outstanding capital stock of GII Realty, Inc.
Item 2. Description of Property
The Partnership originally acquired seven properties of which two were sold, two
were conveyed to lenders, two of three phases in a property were conveyed to the
lender and the remaining phase was sold, and one property was foreclosed on, in
fiscal years prior to 1994. The Partnership also originally acquired a 75%
interest in a real estate joint venture. In April 1994, the Partnership
purchased the remaining 25% interest in the real estate joint venture. As of
December 31, 1995, the Partnership owns two properties as noted below:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Celina Plaza Apartments 08/07/85 Fee ownership subject Apartment
El Paso, Texas to first, second and 289 units
third mortgages.
Colony of Springdale Apartments 02/20/87 Fee ownership subject Apartment
Springdale, Ohio to first mortgage. 261 units
</TABLE>
Schedule of Properties:
<TABLE>
<CAPTION>
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Celina Plaza Apartments $ 6,823 $3,460 5-19 years S/L $3,082
Colony of Springdale 9,483 2,992 5-30 years S/L 5,774
Apartments
Totals $16,306 $6,452 $8,856
</TABLE>
See Note A of the Financial Statements included in Item 7 for a description of
the Partnership's depreciation policy.
Schedule of Mortgages:
Principal Principal
Balance At Balance
December 31, Interest Maturity Due At
Property 1995 Rate Date Maturity
(dollar amounts in thousands)
Celina Plaza Apartments
1st mortgage $ 1,835 8.75% 07/97 $1,587
2nd mortgage 56 8.75% 07/97 49
3rd mortgage 4,025 (1) 07/97 4,025
Colony of Springdale
Apartments
1st mortgage 4,523 9.50% 05/01 4,152
10,439 $9,813
Mortgage discount (307)
$10,132
(1) The net wrap-around mortgage loan collateralized by Celina Plaza Apartments
requires quarterly contingent interest payments based on 50% of Celina
Plaza's cash flow as defined in the Promissory Note. Contingent interest
payments of $42,000 were required in 1995, and $138,000 were required in
1994. This loan is evidenced by an all-inclusive note which wraps around
the 1st and 2nd mortgages but is presented above as net of these loans.
Schedule of Rental Rates and Occupancy:
Average Annual Average
Rental Rates Occupancy
Property 1995 1994 1995 1994
(per unit) (per unit)
Celina Plaza Apartments $6,294 $6,187 90% 94%
Colony of Springdale
Apartments $6,124 $5,908 88% 96%
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The General
Partner believes that all of the properties are adequately insured. The
properties' lease terms are for one year or less and no tenant leases 10% or
more of the available rental space.
The decrease in occupancy at the Celina Plaza Apartments is due to a decline in
the El Paso market resulting from military spending cuts. In December of 1994,
the managing agent evaluated the tenant base at the Colony of Springdale
Apartments and identified several tenants with large delinquent balances. In an
effort to improve the tenant base, the tenants who did not pay their outstanding
balances were evicted, thereby decreasing the property's occupancy level. This
occupancy decrease is expected to be short term as capital improvements were
madein the fourth quarter of 1995 which are expected to increase the curb appeal
of the property thereby enhancing the property's ability to attract higher
quality tenants. Ongoing property improvements at both locations, resulting in
improved consumer appeal, are expected to positively impact rental rates and
occupancy.
Schedule of Real Estate Taxes and Rates:
Real estate taxes and rates in 1995 for each property were:
1995 1995
Taxes Rate
(in thousands)
Celina Plaza Apartments $157 2.8%
Colony of Springdale Apartments 108 4.2%
Item 3. Legal Proceedings
In November 1994, Robert L. Lewis filed a class action in the Northern District
of California against ConCap Equities, Inc., LP 6 Acceptance Corporation
("LP 6") and one other party, seeking injunctive and declaratory relief, but
not monetary damages, alleging, among other things, that a tender offer by LP 6
for limited partnership units of the Partnership violated federal securities
laws and the partnership agreement and breached the general partner's fiduciary
duties. That tender offer closed and LP 6 purchased the tendered units without
Lewis having brought a motion of preliminary injunctive relief. Insignia
thereafter acquired LP 6 together with all of the tendered units purchased by
it. Plaintiff Lewis filed a Stipulation for Dismissal of Case Without
Prejudice in June of 1995 which requested the Court to dismiss the above action
without prejudice and without costs to any party. The Court approved the
stipulation on July 21, 1995.
In November 1994, Mr. C.E. Patterson and his wife, Berniece Patterson, each of
whom is a limited partner in two other affiliated partnerships (Consolidated
Capital Properties III ("CCP III") and Consolidated Capital Properties IV ("CCP
IV")), filed actions in the United States District Court for the Northern
District of California seeking declaratory and injunctive relief, but not
monetary damages, alleging, among other things, that a tender offer by LP 4
Acceptance Corporation for limited partnership units of CCP III and a tender
offer by LP 5 Acceptance Corporation for limited partnership units of CCP IV
violated the federal securities laws and the partnership agreements and breached
the general partner's fiduciary duties. The complaints named ConCap Equities,
Inc., the general partner of the Partnership and the affiliated partnerships,
and others as defendants. These actions were filed by the Pattersons as
individuals and are not class actions. In December 1994, the complaints in
these actions were amended to include Insignia, MAE and MAE-ICC, Inc. and
others as defendants in connection with a tender offer commenced in December
1994 by Insignia CCP III Acquisition, L.L.C. for limited partnership units of
CCP III and a tender offer commenced in December 1994 by Insignia CCP IV
Acquisition, L.L.C. for limited partnership units of CCP IV. On January 20,
1995, the District Court denied Plaintiffs' motion for a preliminary injunction
to enjoin each of the tender offers. The tender offers closed on January 20,
1995, and the offeror purchased the tendered units.
On March 31, 1995, the parties to the above referenced actions entered into a
settlement agreement and a standstill agreement for all actions pursuant to
which (i) Plaintiffs filed a notice of dismissal with respect to the first
amended complaints in the actions; (ii) Plaintiffs and defendants released each
other from all claims which were or could have been asserted in connection with
the first amended complaints in the actions; (iii) Plaintiffs and MacKenzie
Patterson, Inc. ("MacKenzie") will refrain from certain activities relating to
the acquisition of limited partnership interests in any partnership of which
Insignia or any of its affiliates is a general partner; (iv) Plaintiffs and
their affiliates granted to a subsidiary of Insignia a right of first refusal
in connection with the sale of limited partnership interests in the Partnership
by the Plaintiffs; and (v) Plaintiffs and their affiliates will assign to a
subsidiary of Insignia irrevocable proxies to vote any limited partnership
interests in the Partnership acquired by MacKenzie as a result of the tender
offer by MacKenzie and affiliates to acquire limited partnership interests in
the Partnership or thereafter.
On December 2, 1994, an unsolicited tender offer for up to 20,000 units of the
Partnership was filed with the Securities Exchange Commission ("SEC") by
MacKenzie and other affiliates of MacKenzie. The offer was subsequently amended
four times in January and February 1995.
On January 31, 1995, the General Partner, acting on behalf of the Partnership,
commenced an action against MacKenzie in the United States District Court for
the Southern District of New York. The complaint alleged that false and
misleading statements in and omissions from the amended MacKenzie Offer
Materials violated federal securities laws. In response to the complaint,
MacKenzie filed amendments 3 and 4 with the SEC. The General Partner, acting
on behalf of the Partnership, amended its complaint, alleging that the
supplemental offer material contained new misstatements and did not cure the
false and misleading statements in and the omissions from the amended MacKenzie
Offer Materials. The Partnership sought relief from MacKenzie's actions in the
form of an injunction against the amended MacKenzie offer, and a judgement
declaring that the untrue statements in and the omissions from the Amended
MacKenzie Offer constituted violations of federal securities laws. On March
31, 1995, the parties to the above-referenced action entered into the
settlement agreement noted above settling the action.
The Partnership is not a party to, nor is any of the Partnership's property the
subject of, any material pending legal proceedings, other than ordinary
litigation routine to the Partnership's business as of December 31, 1995.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the year ended December 31, 1995, no matters were
submitted to a vote of the Unitholders through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters
(A) No established public trading market for the Partnership's Units exists
nor is one expected to develop.
(B) Title of Class Number of Unit Holders of Record
Limited Partnership Units 3,770 as of December 31, 1995
(C) On November 3, 1994, an affiliate of the General Partner, LP6 Acceptance
Corporation, distributed an offer to purchase up to 81,585 Limited
Partner units (the "Tender Offer") for a cash price of $17.00 per Unit
to Limited Partners of record as of October 1, 1994. The Tender Offer
expired on December 2, 1994. Approximately 1,216 Limited Partners
holding 41,228 Units (22.74% of total Units) accepted the Tender Offer
and sold their Units to LP6 Acceptance Corporation for an aggregate
sales price of approximately $701,000. As a part of the Insignia
Transaction, Insignia acquired all of the outstanding capital stock of
LP6 Acceptance Corporation which had then recently consummated the
Tender Offer.
(D) In March 1995, the General Partner declared and paid distributions,
attributable to cash flow from operations, totalling approximately
$275,000 to the partners. There were no cash distributions to the
Limited Partners during the year ended December 31, 1994. See "Item 6 -
Management's Discussion and Analysis or Plan of Operations."
Item 6. Management's Discussion and Analysis or Plan of Operations
Results of Operations
The Partnership realized a net loss from operations of $750,000 for the year
ended December 31, 1995, compared to a net loss from operations of $295,000 for
the year ended December 31, 1994.
Rental income, property operations expense, interest expense and depreciation
expense increased for the year ended December 31, 1995, primarily due to the
purchase of the remaining 25% of the Colony of Springdale Apartments in April of
1994 (See Note C in the Notes to Consolidated Financial Statements in Item 7).
Property operations expense also increased due to advertising and rental costs
incurred in efforts to increase occupancy. Interest expense for the year ended
December 31, 1995, was also increased by the refinancing of the debt on the
Colony of Springdale Apartments in April of 1994 with an interest rate of 9.5%
compared to the 8.5% rate that was in effect in the first quarter of 1994. This
increase in interest expense for the year ended December 31, 1995, was partially
offset by a decrease in interest paid on the debt at the Celina Plaza Apartments
for the year ended December 31, 1995. Under the terms of the Celina Plaza loan,
the Partnership is obligated to remit a portion of the property's cash flow to
the lien-holder as additional interest. Due to the property's need for capital
improvements, additional interest expense of $42,000 was paid for the year ended
December 31, 1995, as opposed to additional interest of $138,000 paid for the
year ended December 31, 1994. Administrative expenses increased due to
approximately $193,000 in legal costs, net of insurance, associated with the
Partnership's required responses to various tender offers and other litigation
(See Item 3. Legal Proceedings). The administrative expense increase was also
affected by the special management fee of approximately $24,000 paid in
conjunction with the distribution made to the Limited Partners in March of 1995
(See Note G in the Notes to Consolidated Financial Statements in Item 7) and
increased expense reimbursements related to the combined efforts of the Dallas
and Greenville partnership administration staffs during the management
transition period in the first and second quarters of 1995. The reimbursements
for the Dallas office amounted to $53,000 for the year ended December 31, 1995.
The increased costs related to the transition efforts were incurred to minimize
any disruption in the year-end reporting function including the financial
reporting and K-1 preparation and distribution. The General Partner expects
recurring administrative expenses to be reduced now that the management
transition is completed.
The Partnership's proportionate income in the affiliated joint venture was
eliminated due to the purchase of the Colony of Springdale Apartments in April
of 1994. (See Note C in the Notes to Consolidated Financial Statements in
Item 7).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
As of December 31, 1995, the Partnership had unrestricted cash of $1,311,000 as
compared to $414,000 at December 31, 1994. Net cash provided by operating
activities decreased primarily due to an increase in restricted cash and
increased property operating costs. Net cash provided by investing activities
increased primarily due to the nonrecurring purchase of the remaining 25%
interest in the Colony of Springdale Apartments impacting 1994 cash flows. The
increase in cash provided by investing activities was also affected by the
increase in proceeds from the sale of securities available for sale and the
decrease in deposits to restricted escrows, which was offset by the increase in
property improvements in 1995. Net cash used in financing activities increased
due to increased distributions to partners and the absence of any refinancing
activity in 1995.
The Partnership is required to maintain working capital reserves for
contingencies of not less than 5% of Net Invested Capital as defined in the
Partnership Agreement. In the event expenditures are made from these reserves,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Reserves, consisting of cash and cash
equivalents, tenant security deposits and securities available for sale
totalling $1,796,000 are less than the reserve requirement of $2,266,000 at
December 31, 1995. The Partnership intends to replenish the working capital
reserve from cash flow from operations. The working capital requirement must
be met prior to any consideration for distributions to the partners.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical
assets and meet other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of approximately $10.1 million, net of discounts,
matures at various times with balloon payments due at maturity, at which time
the properties will either be refinanced or sold. Future cash distributions
will depend on the levels of net cash generated from operations, capital
expenditure requirements, property sales and the availability of cash reserves.
During the year of 1995, distributions of $275,000 were declared and paid. No
cash distributions were made in 1994.
At January 1, 1994, the Partnership owned a 75% interest in a real estate joint
venture which held title to the Colony of Springdale Apartments, a 261-unit
apartment complex located in Springdale, Ohio. The joint venture's note payable
of $3.1 million, which was secured by the property, was scheduled to mature in
March 1995. Preliminary discussions with lenders indicated that a refinancing
would be difficult under the joint venture ownership structure. In order to
facilitate the refinancing, title to the property was transferred to Colony
Associates, a limited partnership in which the Partnership owned a 75% interest,
in March 1994.
In April 1994, the Partnership acquired the remaining 25% interest in Colony
Associates, the limited partnership which holds fee title to the Colony of
Springdale Apartments, in a business combination accounted for as a purchase.
The total cost of the acquisition, which was based on the appraised value of a
25% undivided partial interest in the joint venture, totaled $908,000. The
acquisition price exceeded the current book value of 25% of the net assets of
Colony Associates by $74,000, which was related to land, buildings and
improvements, and is being amortized using the straight-line method over the
estimated remaining useful lives of the assets.
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark's Chapter 11 bankruptcy proceeding. These claims
related to Southmark's activities while it exercised control (directly, or
indirectly through its affiliates) over the Partnership. The Bankruptcy Court
set the Partnership's and the other affiliated partnerships' allowed claim at
$11 million, in the aggregate. In March 1994, the Partnership received 901
shares of Southmark Corporation Redeemable Series A Preferred Stock and 6,589
shares of Southmark Corporation New Common Stock with an aggregate market value
on the date of receipt of approximately $7,000 and approximately $49,000 in
cash representing the Partnership's share of the recovery, based on its pro
rata share of the claims filed.
Item 7. Financial Statements
CONSOLIDATED CAPITAL PROPERTIES VI
LIST OF FINANCIAL STATEMENTS
Reports of Independent Auditors
Consolidated Balance Sheet - December 31, 1995
Consolidated Statements of Operations - Years ended December 31, 1995
and 1994
Consolidated Statement of Changes in Partners Capital (Deficit) - Years
ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1995 and
1994
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties VI
We have audited the accompanying consolidated balance sheet of Consolidated
Capital Properties VI as of December 31, 1995, and the related consolidated
statements of operations, changes in partners capital (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. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership s management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Consolidated Capital Properties VI as of December 31, 1995, and the consolidated
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 5, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<TABLE>
<CAPTION>
To the Partners of
Consolidated Capital Properties VI:
<S> <C>
We have audited the accompanying consolidated statements of operations, partners'
capital (deficit) and cash flows of Consolidated Capital Properties VI (a
California limited partnership) for the year ended December 31, 1994. 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.
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 results of operations and cash flows of Consolidated
Capital Properties VI for the year ended December 31, 1994, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen, LLP
Dallas, Texas
March 23, 1995
</TABLE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1995
Assets
Cash and cash equivalents:
Unrestricted $1,311
Restricted--tenant security deposits 95
Securities available for sale 390
Prepaid and other assets 652
Investment properties:
Land $ 1,652
Buildings and personal property 14,654
16,306
Less accumulated depreciation (6,452) 9,854
$12,302
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 485
Mortgage notes and interest payable 10,314
Partners' Capital (Deficit)
General partners $ (5)
Special limited partners (70)
Limited partners (181,288 units issued
and outstanding) 1,578 1,503
$12,302
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1995 1994
Revenues:
Rental income $3,139 $2,719
Interest and other income 150 180
Proportionate income in
affiliated joint venture -- 21
Total revenues 3,289 2,920
Expenses:
Property operations 2,029 1,632
Depreciation 676 539
Interest 874 835
Administrative 460 209
Total expenses 4,039 3,215
Net loss $ (750) $ (295)
Net loss allocated to general partners (0.2%) $ (2) $ (1)
Net loss allocated to limited partners (99.8%) (748) $ (294)
$ (750) $ (295)
Net loss per limited partnership unit $(4.13) $(1.62)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited Special
Partnership General Limited Limited
Units Partner Partner Partners Total
<S> <C> <C> <C> <C> <C>
Original capital contributions 181,808 $ 1 $ -- $45,452 $45,453
Partners' capital (deficit)
at December 31, 1993 181,340 (1) (77) 2,901 2,823
Abandonment of limited
partnership units (40) -- -- -- --
Net loss for the year ended
December 31, 1994 -- (1) -- (294) (295)
Amortization of timing
difference -- -- 9 (9) --
Partners' capital (deficit)
at December 31, 1994 181,300 $ (2) $ (68) $ 2,598 $ 2,528
Abandonment of limited
partnership units (12) -- -- -- --
Net loss for the year ended
December 31, 1995 -- (2) -- (748) (750)
Amortization of timing
difference -- -- 9 (9) --
Distributions paid -- (1) (11) (263) (275)
Partners' capital (deficit)
at December 31, 1995 181,288 $ (5) $ (70) $ 1,578 $ 1,503
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (750) $ (295)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization of
discounts and loan costs 904 753
Proportionate income in affiliated
joint venture -- (21)
Change in accounts:
Tenant security deposits (95) --
Prepaid and other assets (26) (160)
Accounts payable and accrued expenses 53 172
Interest payable 33 28
Net cash provided by operating activities 119 477
Cash flows from investing activities:
Property improvements and replacements (483) (226)
Purchase of securities available for sale (5,713) (1,656)
Proceeds from sale of securities available
for sale 7,519 889
Distribution from investment in affiliated
joint venture -- 60
Deposits to restricted escrows (80) (152)
Purchase of remaining interest in joint venture -- (908)
Cash received in purchase of interest in
affiliated joint venture -- 92
Net cash provided by (used in)
investing activities 1,243 (1,901)
Cash flows from financing activities:
Payments on mortgage notes payable (190) (163)
Partners distributions (275) --
Proceeds from refinancing -- 4,600
Repayment of note payable -- (3,073)
Direct financing costs -- (114)
Net cash (used in) provided by financing
activities (465) 1,250
Net increase (decrease) in cash 897 (174)
Cash at beginning of period 414 588
Cash at end of period $ 1,311 $ 414
Supplemental disclosure of cash flow information:
Cash paid for interest $ 614 $ 608
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
CONSOLIDATED CAPITAL PROPERTIES VI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
Note A - Organization and Summary of Significant Accounting Policies
<TABLE>
Organization
<S> <C>
Consolidated Capital Properties VI, a California limited partnership (the
"Partnership"), was formed on May 23, 1984, to acquire and operate commercial and
residential properties. As of December 31, 1995 the Partnership owns two
residential properties located in or near major urban areas in the United States.
At the time of the Partnership's formation, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Group II ("CCG"), a California general partnership, was
the non-corporate general partner. In 1988, through a series of transactions,
Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In
December 1988, CCEC filed for reorganization under Chapter 11 of the United
States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, ConCap
Equities, Inc. (the "General Partner" or "CEI") acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited
partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing
general partner in all 16 partnerships. The selection of CEI as the sole
managing general partner was approved by a majority of the Limited Partners in
the Partnership and in each of the Affiliated Partnerships pursuant to a
solicitation of the Limited Partners dated August 10, 1990. As part of this
solicitation, the Limited Partners also approved an amendment to the Partnership
Agreement to limit changes of control of the Partnership.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P., ("MAE") an affiliate of
Insignia Financial Group, Inc. ("Insignia"), acquired an option (exercisable in
whole or in part from time to time) to purchase all of the stock of GII Realty,
Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that
stock. As a part of the Insignia Transaction, MAE-ICC, Inc. also acquired all of
the outstanding stock of Partnership Services, Inc., an asset management entity,
and Insignia acquired all of the outstanding stock of Coventry Properties, Inc.,
a property management entity. In addition, confidentiality, non-competition, and
standstill arrangements were entered into between certain of the parties. Those
arrangements, among other things, prohibit GII Realty's former sole shareholder
from purchasing Partnership Units for a period of three years. On October 24,
1995, MAE-ICC, Inc. exercised the remaining portion of its option to purchase all
of the remaining outstanding capital stock of GII Realty, Inc.
On December 31, 1991, the non-corporate general partner interest of CCG was
converted to that of a Special Limited Partner, as more fully described in Note
E.
Note A - Organization and Summary of Significant Accounting Policies (continued)
Consolidation
As of January 1, 1994, the Partnership owned a 75% interest in a real estate
joint venture which held title to the Colony of Springdale Apartments. On March
8, 1994, title to the property was transferred to Colony of Springdale
Associates, Ltd. ("Colony Associates"), a limited partnership in which the
Partnership owned a 75% interest. On April 22, 1994, the Partnership purchased
the remaining 25% interest in Colony Associates, (See Note C).
The Partnership's financial statements include the accounts of Colony Associates,
which holds fee title to the Colony of Springdale Apartments. The results of its
operations are included in the Partnership's financial statements from the date
of acquisition of the remaining 25% interest. All intercompany transactions
between the Partnership and Colony Associates have been eliminated.
Investment Properties
Prior to the fourth quarter of 1995, investment properties were carried at the
lower of cost or estimated fair value, which was determined using the higher of
the property's non-recourse debt amount, when applicable, or the net operating
income of the investment property capitalized at a rate deemed reasonable for the
type of property. During the fourth quarter of 1995 the Partnership adopted FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. The impairment loss is
measured by comparing the fair value of the asset to its carrying amount. The
effect of adoption was not material.
Depreciation
Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 5 to 30 years.
Cash and cash equivalents
Unrestricted - Unrestricted cash includes cash on hand, demand deposits,
money market funds, and U.S. Treasury Bills with original maturities of three
months or less. At certain times the amount of cash deposited at a bank may
exceed the limit on insured deposits.
Restricted cash - tenant security deposits - The Partnership requires
security deposits from new lessees for the duration of the lease with such
deposits being considered restricted cash. Deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
Note A - Organization and Summary of Significant Accounting Policies (continued)
Restricted Escrows
The Partnership maintains tax and insurance escrows and a repair escrow with the
lenders totalling approximately $293,000 at December 31, 1995, which are included
in prepaid and other assets.
Reclassification
Certain reclassifications have been made to the 1994 information to conform to
the 1995 presentation.
Securities Available For Sale
In 1994, the Partnership adopted Statements of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
Securities available for sale ("Securities") are stated at fair value. As the
Securities' fair value approximate their cost, any unrealized gains or losses are
immaterial and therefore have not been recorded in the accompanying financial
statements. The cost of Securities sold is determined using the specific
identification method.
The Securities mature as follows:
Description Cost Maturity
(in thousands)
U.S. Treasury Bills $ 34 May 1996
U.S. Treasury Notes 51 July 1996
U.S. Treasury Notes 298 February 1998
Equity Securities 7 N/A
$ 390
Fair Value
In 1995, the Partnership implemented Statement of Financial Accounting Standards
No. 107, "Disclosure about Fair Value of Financial Instruments," which requires
disclosure of fair value information about financial instruments for which it is
practicable to estimate that value. The carrying amount of the Partnership's
cash and cash equivalents approximates fair value due to short-term maturities.
The Partnership estimates the fair value of its fixed rate mortgages by
discounted cash flow analysis, based on estimated borrowing rates currently
available to the Partnership.
Note A - Organization and Summary of Significant Accounting Policies (continued)
Discounts on Notes Payable
Discounts on notes payable are amortized using the straight-line method over the
remaining terms of the related notes.
Rental Income
The Partnership leases its residential property under short-term operating
leases. Lease terms are generally one year or less in duration.
Income Taxes
No provision has been made in the financial statements for Federal income taxes
because, under current law, no Federal income taxes are paid directly by the
Partnership. The Partners are responsible for their respective shares of
Partnership net income or loss.
The tax basis of the Partnership's assets and liabilities is approximately $5.2
million greater than the assets and liabilities as reported in the financial
statements.
Allocation of Net Income and Net Loss
The Partnership Agreement, as amended and as described more fully in Note E,
provides for net income and net losses for both financial and tax reporting
purposes to be allocated 99.8% to the Limited Partners and .2% to the General
Partner.
Advertising Costs
Advertising costs of approximately $62,000 in 1995, and $36,000 in 1994 are
charged to expenses as incurred and are included in operating expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Note B - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and
affiliates of Insignia for the management and administration of all of the
Partnership activities, as provided for in the Partnership agreement.
The Partnership has paid the property management fees noted below based upon
collected gross rental revenues ("Rental Revenues") for property management
services in each of the years ended December 31, 1995, and 1994, respectively.
For the year ended December 31, 1994, a portion of such property management fees
equal to 4% of Rental Revenues was paid to the property management companies
performing day-to-day property management services and a portion equal to 1% of
Rental Revenues was paid to Partnership Services, Inc. ("PSI") for advisory
services related to day-to-day operations. Coventry Properties, Inc.
("Coventry") an affiliate of the General Partner provided the day-to-day property
management responsibilities for one of the Partnership's properties during 1994.
In late December 1994, an affiliate of Insignia assumed day-to-day property
management responsibilities for all of the Partnership's properties. Fees paid
to Insignia and affiliates for the year ended December 31, 1995, and fees paid to
PSI and Coventry for the year ended December 31, 1994, have been reflected in the
following table as compensation to related parties in the applicable periods:
Years Ended December 31,
1995 1994
(in thousands)
Property management fees $159 $ 97
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the limited
partners to be paid to the General Partner for executive and administrative
management services. The Partnership paid approximately $24,000 to affiliates of
the General Partner during 1995 under this provision of the Partnership
Agreement. No such fees were paid or accrued in 1994.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. The General Partner and its affiliates, which includes
Coventry for the year ended December 31, 1994, received reimbursements as
reflected in the following table:
Years Ended December 31,
1995 1994
(in thousands)
Reimbursement for services of affiliates $115 $98
In July 1995, the Partnership began insuring its properties under a master policy
through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payment on these
Note B - Related Party Transactions (continued)
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the General Partner by virtue of the
agent's obligations is not significant.
On November 3, 1994, an affiliate of the General Partner, LP6 Acceptance
Corporation, distributed an offer to purchase up to 81,585 Limited Partner units
(the "Tender Offer") for a cash price of $17.00 per Unit to Limited Partners of
record as of October 1, 1994. The Tender Offer expired on December 2, 1994.
Approximately 1,216 Limited Partners holding 41,228 Units (22.74% of total Units)
accepted the Tender Offer and sold their Units to LP6 Acceptance Corporation for
an aggregate sales price of approximately $701,000. As a part of the Insignia
Transaction, Insignia acquired all of the outstanding capital stock of LP6
Acceptance Corporation which had then recently consummated the Tender Offer.
Note C - Purchase of Remaining Interest in Affiliated Joint Venture
As of January 1, 1994, the Partnership owned a 75% interest in a real estate
joint venture which held title to the Colony of Springdale Apartments, a 261-unit
apartment complex located in Springdale, Ohio. The joint venture's note payable
of $3.1 million, which was secured by the property, was scheduled to mature in
March 1995. Preliminary discussions with lenders indicated that a refinancing
would be difficult under the joint venture ownership structure. In order to
facilitate the refinancing, title to the property was transferred to Colony
Associates, a limited partnership in which the Partnership owned a 75% interest,
in March 1994.
In April 1994, the Partnership acquired the remaining 25% interest in Colony
Associates, the limited partnership which holds fee title to the Colony of
Springdale Apartments, in a business combination accounted for as a purchase.
The total cost of the acquisition, which was based on the appraised value of a
25% undivided partial interest in the joint venture, totaled $908,000. The
acquisition price exceeded the current book value of 25% of the net assets of
Colony Associates by $74,000, which was related to land, buildings and
improvements, and is being amortized using the straight-line method over the
estimated remaining useful lives of the assets.
The results of operations of Colony Associates are included in the accompanying
statements of operations from the date of acquisition. The original 75%
investment in Colony Associates was accounted for under the equity method.
Accordingly, the results of operations of Colony Associates prior to the
acquisition are included in "Proportionate income (loss) in affiliated joint
venture" in the accompanying statements of operations.
Note C - Purchase of Remaining Interest in Affiliated Joint Venture (continued)
The following table sets forth the assets and liabilities of Colony Associates as
of the acquisition date:
As of April 22, 1994
(date of acquisition)
(in thousands)
Net real estate $ 6,406
Cash received in purchase (a) 92
Other assets 79
6,577
Note and interest payable (3,088)
Other liabilities (154)
$ 3,335
(a) Cash received in purchase represents cash balances in the property's
bank accounts as of the purchase date and is reflected in the 1994
statement of cash flows as "cash received in purchase of interest in
affiliated joint venture."
Note D - Commitment
The Partnership is required to maintain working capital reserves for
contingencies of not less than 5% of Net Invested Capital as defined in the
Partnership Agreement. In the event expenditures are made from these reserves,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Reserves, consisting of cash and cash equivalents,
tenant security deposits and securities available for sale totalling $1,796,000
are less than the reserve requirement of $2,266,000 at December 31, 1995. The
Partnership intends to replenish the working capital reserve from cash flow from
operations. The working capital requirement must be met prior to any
consideration for distributions to the partners.
Note E - Change in Status of Non-Corporate General Partner
In the year ended December 31, 1991, the Partnership Agreement was amended to
convert the General Partner interests held by the non-corporate General Partner,
Consolidated Capital Group II ("CCG"), to that of a special Limited Partner
("Special Limited Partner"). The Special Limited Partner does not have a vote
and does not have any of the other rights of a Limited Partner except the right
to inspect the Partnership's books and records; however, the Special Limited
Partner will retain the economic interest in the Partnership which it previously
owned as general partner.
Note E - Change in Status of Non-Corporate General Partner (continued)
ConCap Equities, Inc. ("CEI") became the sole general partner of the Partnership
effective December 31, 1991. In connection with CCG's conversion, a special
allocation of gross income was made to the Special Limited Partner in order to
eliminate its tax basis negative capital account.
After the conversion, the various owners of interests in the Special Limited
Partner transferred portions of their interests to CEI so that CEI now holds a
.2% interest in all allocable items of income, loss and distribution. The
difference between the Special Limited Partner's capital accounts for financial
statement and tax reporting purposes is being amortized to the Limited Partners'
capital account as the components of the timing differences which created the
balance reverse.
Note F - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark's Chapter 11 bankruptcy proceeding. These claims
related to Southmark's activities while it exercised control (directly, or
indirectly through its affiliates) over the Partnership. The Bankruptcy Court
set the Partnership's and the other affiliated partnerships' allowed claim at $11
million, in the aggregate. In March 1994, the Partnership received 901 shares of
Southmark Corporation Redeemable Series A Preferred Stock and 6,589 shares of
Southmark Corporation New Common Stock with an aggregate market value on the date
of receipt of approximately $7,000 and approximately $49,000 in cash representing
the Partnership's share of the recovery, based on its pro rata share of the
claims filed.
Note G - Distributions
In March 1995, the Partnership declared and paid distributions, attributable to
cash flow from operations, totalling approximately $275,000 to the partners.
Note H - Notes Payable
In April 1994, the General Partner obtained a refinancing of $3.1 million of
mortgage debt secured by the Colony of Springdale Apartments. Under the terms of
the refinancing agreement, the new first-lien mortgage of approximately $4.6
million bears interest at 9.5% and matures in May 2001. After repayment of the
existing debt, payment of refinancing and closing costs, and establishment of a
capital improvement escrow, the Partnership received net proceeds of
approximately $1.2 million.
</TABLE>
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
(dollar amounts in thousands)
<C> <C> <C> <C> <C>
Celina Plaza Apartments
1st mortgage $ 1,835 $ 26 8.75% 07/97 $ 1,587
2nd mortgage 56 1 8.75% 07/97 49
3rd mortgage 4,025 -- (1) 07/97 4,025
Colony of Springdale
Apartments
1st mortgage 4,523 40 9.50% 05/01 4,152
10,439(2)
Mortgage discount (307)
Totals $ 10,132 $ 67 $ 9,813
<FN>
(1) The net wrap-around mortgage loan collateralized by Celina Plaza Apartments
requires quarterly contingent interest payments based on 50% of Celina
Plaza's cash flow as defined in the Promissory Note. Contingent interest
payments of $42,000 were required in 1995, and $138,000 were required in
1994. This loan is evidenced by an all-inclusive note which wraps around
the 1st and 2nd mortgages but is presented above as net of these loans.
(2) The estimated fair values of the Partnership's aggregate debt (excluding the
Celina Plaza 3rd mortgage) is $6,680,000. This value represents a general
approximation of possible value and is not necessarily indicative of the
amounts Partnership may pay in actual market transactions. Due to the
difficulty of forecasting the future cash flows of the Celina Plaza Apartments, the
Partnership has determined that it is not practicable to estimate the fair
value of the $4,025,000 third mortgage.
</TABLE>
Note H - Notes Payable (continued)
Scheduled maturities of principal are as follows:
Years Ending December 31,
(in thousands)
1996 $ 212
1997 5,820
1998 66
1999 73
2000 80
Thereafter 4,188
$10,439
Note I - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Celina Plaza Apartments
El Paso, Texas $ 5,916 $ 736 $ 4,930 $1,157
Colony of Springdale
Apartments
Springdale, Ohio 4,523 909 8,358 216
Totals $10,439 $1,645 $13,288 $1,373
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1995
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C>
Celina Plaza Apartments
El Paso, Texas $ 736 $ 6,087 $ 6,823 $3,460 8/07/85 5-19
Colony of Springdale
Springdale, Ohio 916 8,567 9,483 2,992 2/20/87 5-30
Totals $1,652 $14,654 $16,306 $6,452
</TABLE>
Note I - Investment Properties and Accumulated Depreciation (continued)
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1995 1994
(in thousands)
Investment Properties
Balance at beginning of year $15,823 $ 6,711
Property improvements: 483 226
Consolidation of investment previously
reported under the equity method -- 8,886
Balance at End of Year $16,306 $15,823
Accumulated Depreciation
Balance at beginning of year $ 5,776 $ 2,831
Additions charged to expense 676 539
Consolidation of investment previously
reported under the equity method -- 2,406
Balance at end of year $ 6,452 $ 5,776
<TABLE>
<S> <C>
The aggregate cost of the real estate for Federal income tax purposes at December
31, 1995 and 1994 is approximately $15,469,000 and $14,987,000. The accumulated
depreciation taken for Federal income tax purposed at December 31, 1995 and 1994
is approximately $6,613,000 and $6,026,000, respectively.
Note J - Abandoned Limited Partnership Units
For the years ended December 31, 1995 and 1994, the number of Limited Partnership
Units decreased by 12 and 40 units respectively, due to limited partners
abandoning their units. In abandoning Limited Partnership Units, a limited
partner relinquishes all right, title and interest in the Partnership as of the
date of abandonment.
Item 8. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
As reported in the Partnership's Form 8-K filed May 10, 1995, as of May 3, 1995,
Arthur Andersen L.L.P., the independent accountant previously engaged as the
principal accountant to audit the financial statements of the Partnership was
dismissed. As of the same date, the firm of Ernst & Young L.L.P. was engaged to
provide that service for the Partnership.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The General Partner manages and
controls the Registrant and has general responsibility and authority in all
matters affecting its business.
The name of the directors and executive officers of ConCap Equities, Inc.
("CEI"), the Partnership's General Partner, as of December 31, 1995, their age
and the nature of all positions with CEI presently held by them are set forth
below. There are no family relationships between or among any officers and
directors.
Name Age Position
Carroll D. Vinson 55 President, Director
Robert D. Long, Jr. 28 Controller, Principal
Accounting Officer
William H. Jarrard, Jr. 49 Vice President
John K. Lines 36 Secretary
Kelley M. Buechler 38 Assistant Secretary
Carroll D. Vinson has been President of CEI since December 1994 and President of
the Metropolitan Asset Enhancement, L.P. ("MAE") subsidiaries since August 1994.
Prior to that, during 1993 to August 1994, Mr. Vinson was affiliated with Crisp,
Hughes & Co. (a regional CPA firm) and engaged in various other investment and
consulting activities, which included portfolio acquisitions, asset dispositions,
debt restructurings and financial reporting. Briefly, in early 1993, Mr. Vinson
served as President and Chief Executive Officer of Angeles Corporation, a real
estate investment firm. From 1991 to 1993, Mr. Vinson was employed by Insignia
in various capacities including Managing Director-President during 1991. From
1986 to 1990, Mr. Vinson was President and Director of U.S. Shelter Corporation,
a real estate services company, which sold substantially all of its assets to
Insignia in December 1990.
Robert D. Long, Jr. has been Controller and Chief Accounting Officer of CEI since
December 1994 and Chief Accounting Officer and Controller of the MAE subsidiaries
since February 1994. Prior to joining MAE in September 1993, Mr. Long served as
a senior regional accountant with Insignia Management Group, Inc. since December
1991. From January 1991 until December 1991, Mr. Long was associated with the
accounting firm of Harshman, Lewis and Associates. From July 1989 until January
1991, Mr. Long was an auditor for the State of Tennessee. He is a graduate of
the University of Memphis.
William H. Jarrard, Jr. has been Vice President of CEI since December 1994, Vice
President of the MAE subsidiaries since January 1992 and Managing Director-
Partnership Administration of Insignia since January 1991. During the five years
prior to joining Insignia in 1991, he served in a similar capacity for U.S.
Shelter. Mr. Jarrard is a graduate of the University of South Carolina and a
certified public accountant.
John K. Lines has been Secretary of CEI since December 1994, Secretary of the
MAE subsidiaries since August 1994 and General Counsel and Secretary of Insignia
since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant
General Counsel and Vice President of Ocwen Financial Corporation in West Palm
Beach, Florida. From October 1991 until April 1993, Mr. Lines was a Senior
Attorney with Banc One Corporation in Columbus, Ohio. From May 1984 until
October 1991, Mr. Lines was employed as an associate with Squire Sanders &
Dempsey in Columbus, Ohio.
Kelley M. Buechler has been Assistant Secretary of CEI since December 1994,
Assistant Secretary of the MAE subsidiaries since January 1992, and Assistant
Secretary of Insignia since January 1991. During the five years prior to joining
Insignia in 1991, she served in a similar capacity for U.S. Shelter. Ms.
Buechler is a graduate of the University of North Carolina.
CEI is the general partner of the Partnership and 13 other Affiliated
Partnerships as of December 31, 1995.
Item 10. Executive Compensation
No direct compensation was paid or payable by the Partnership to directors or
officers for the year ended December 31, 1995, nor was any direct compensation
paid or payable by the Partnership to directors or officers of the General
Partner for the year ended December 31, 1995. The Partnership has no plans to
pay any such remuneration to any directors or officers of the General Partner in
the future.
See "Item 7 - Financial Statements," Note B - Related Party Transactions, for
amounts of compensation and reimbursement of salaries paid by the Partnership to
the General Partner and its affiliates and the former general partner and former
affiliates.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of February 1996, no person was known to CEI
to own of record or beneficially more than five percent of the Units of
the Partnership.
Number of Percent
Name and Address Units Of Total
LP6 Acceptance Corporation 41,188 22.72%
One Insignia Financial
Greenville, SC 29602
The Units reflected above were acquired by LP6 Acceptance Corporation, an
affiliate of the Partnership and CEI, pursuant to its offer dated
November 3, 1994, to purchase Units for a purchase price of $17.00 per
Unit (the "Tender Offer").
LP6 Acceptance Corporation is owned 100% by Insignia.
As of February 1996, no other person was known to CEI to own of record or
beneficially more than 5 percent (5%) of the Units of the Partnership.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own
any Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of February 1996, the following persons were known to CEI to be the
beneficial owners of more than 5 percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
GII Realty, Inc. 100,000 100%
One Insignia Financial
Greenville, SC 29602
GII Realty, Inc. is owned by MAE-ICC, Inc. (See Item 1).
Item 12. Certain Relationships and Related Transactions
Transactions with Current Management and Others
Except for the transactions described below, neither CEI nor any of its
directors, officers or associates, or any associates of any of them, has had any
interest in any other transaction to which the Partnership is a party. Please
refer to "Item 7 - Financial Statements," Note B - Related Party Transactions,
for the amounts and items of permissible compensation and fees paid to the
General Partner and its affiliates and other related parties for the last two
years.
The Partnership has paid property management fees based upon collected gross
rental revenues ("Rental Revenues") for property management services in each of
the years ended December 31, 1995, and 1994, respectively. For the year ended
December 31, 1994, a portion of such property management fees equal to 4% of
Rental Revenues was paid to the property management companies performing day-to-
day property management services and a portion equal to 1% of Rental Revenues was
paid to Partnership Services, Inc. ("PSI") for advisory services related to day-
to-day operations. Coventry Properties, Inc. ("Coventry") an affiliate of the
General Partner provided the day-to-day property management responsibilities for
one of the Partnership's properties during 1994. In late December 1994, an
affiliate of Insignia Financial Group, Inc. ("Insignia") assumed day-to-day
property management responsibilities for all of the Partnership's properties.
All of the above-referenced agreements with affiliates of CEI and related parties
of the Partnership are subject to the conditions and limitations imposed by the
Partnership Agreement.
Conversion of Non-Corporate General Partner; Special Allocation
In the year ended December 31, 1991, the Partnership Agreement was amended to
convert the general partner interest held by the non-corporate general partner,
CCG, to that of a special limited partner ("Special Limited Partner"). The
Special Limited Partner does not have a vote and does not have any of the other
rights of a Limited Partner except the right to inspect the Partnership's books
and records; however, the Special Limited Partner will retain the economic
interest in the Partnership which it previously owned as general partner. CEI
became the sole general partner of the Partnership effective as of December 31,
1991. In connection with CCG's conversion, a special allocation of gross income
was made to the Special Limited Partner in order to eliminate its tax basis
negative capital account.
After the conversion, the various owners of interests in the Special Limited
Partner transferred portions of their interests to CEI so that CEI now holds a
.2% interest in all allocable items of income, loss and distribution. The
difference between the Special Limited Partners' capital accounts for financial
statement and tax reporting purposes is being amortized to the Limited Partners'
capital account as the components of the timing differences which created the
balance reverse.
Purchase of Remaining Interest in Affiliated Joint Venture
In February 1987, the Partnership, together with an affiliated limited
partnership, Consolidated Capital Properties VII ("CCP VII"), entered into a
joint venture to acquire Colony of Springdale Apartments, a 261-unit complex,
located in Springdale, Ohio. The Partnership owned a 75% interest in the joint
venture and CCP VII owned the remaining 25% interest. The total purchase price
of the property was $7.9 million. The Partnership's investment in the joint
venture was accounted for using the equity method, under which the Partnership's
share of the joint venture's earnings or losses were included in operations and
under which distributions were credited to the investment when received. In
March 1994, title to the property was transferred to Colony of Springdale
Associates, Ltd. ("Colony Associates"), a limited partnership in which the
Partnership owned a 75% interest. In April 1994, the Partnership acquired the
remaining 25% interest in Colony Associates, the limited partnership which holds
fee title to the Colony of Springdale Apartments, in a business combination
accounted for as a purchase. The total cost of the acquisition, which was based
on the appraised value of a 25% undivided partial interest in the joint venture,
totaled $908,000. The acquisition price exceeded the net book value of 25% of
the net assets of Colony Associates by $74,000, which was allocated to land,
buildings and improvements, and is being depreciated using the straight-line
method over the estimated remaining useful lives of the assets.
Litigation with Former Related Parties
Please refer to "Item 7 - Financial Statements" and "Note B - Related Party
Transactions," for the amounts and items of compensation and fees paid to former
affiliates.
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark's Chapter 11 bankruptcy proceeding. These claims
related to Southmark's activities while it exercised control (directly, or
indirectly through its affiliates) over the Partnership. The Bankruptcy Court
set the Partnership's and the other affiliated partnerships' allowed claim at $11
million, in the aggregate. In March 1994, the Partnership received 901 shares of
Southmark Corporation Redeemable Series A Preferred Stock and 6,589 shares of
Southmark Corporation New Common Stock with an aggregate market value on the date
of receipt of approximately $7,000 and approximately $49,000 in cash representing
the Partnership's share of the recovery, based on its pro rata share of the
claims filed.
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Exhibits: See Exhibit Index contained herein.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of 1995:
A Form 8-K dated October 24, 1995 was filed reporting a change in the
ownership of GII Realty, Inc., the sole stockholder of the general
partner of the Registrant.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES VI
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: March 22, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/Carroll D. Vinson President Date: March 22, 1996
Carroll D. Vinson
/s/Robert D. Long, Jr. Controller and Principal Date: March 22, 1996
Robert D. Long, Jr. Accounting Officer
</TABLE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
<S> <C>
3 Certificates of Limited Partnership as
amended to date.
10.1 Bill of Sale and Assignment dated October 23, 1990, by
and between CCEC and ConCap Services Company
(Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990).
10.2 Assignment and Assumption Agreement dated October 23,
1990, by and between CCEC and ConCap Management Limited
Partnership ("CCMLP") (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.3 Property Management Agreement No. 119 dated April 9,
1991, by and between Colony Springdale Associates and
CCMLP. (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1991).
10.4 Assignment and Agreement as to CertainProperty
Management Services dated April9, 1991, by and between
CCMLP and ConCapCapital Company. (Incorporated by
reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.5 Investor Services Agreement dated October23, 1990, by
and between the Partnership and CCEC (Incorporated by
reference to theQuarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.6 Assignment and Assumption Agreement (Investor Services
Agreement) dated October23, 1990, by and between CCEC
and ConCap Services Company. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended
December 31, 1990).
10.7 Letter of Notice dated December 20, 1991, from
Partnership Services, Inc. ("PSI") to the Partnership
regarding the change in ownership and dissolution of
ConCap Services Company whereby PSI assumed the
Investor Services Agreement. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.8 Financial Services Agreement dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.9 Assignment and Assumption Agreement (Financial Services
Agreement) dated October 23, 1990, by and between CCEC
and ConCap Capital Company (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.10 Letter of Notice dated December 20, 1991, from PSI to
the Partnership regarding the change in ownership and
dissolution of ConCap Capital Company whereby PSI
assumed the Financial Services Agreement. (Incorporated
by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.11 Property Management Agreement No. 421 dated May 13,
1993, by and between the Partnership and Coventry
Properties, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993).
10.12 Assignment and Assumption Agreement (Property
Management Agreement No. 421) dated May 13, 1993, by
and between Coventry Properties, Inc. R&B Apartment
Management Company, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on
Form 10- Q for the quarter ended September 30, 1993).
10.13 Assignment and Agreement as to CertainProperty
Management Services dated May 13, 1993, by and between
Coventry Properties, Inc. and Partnership Services,
Inc. (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993).
10.14 Property Management Agreement No. 515 dated June 1,
1993, by and between the Partnership and Coventry
Properties, Inc.
10.15 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993, by and
between Coventry Properties, Inc. and Partnership
Services, Inc.
10.16 Stock and Asset Purchase Agreement, dated December 8,
1994 (the "Gordon Agreement"), among MAE-ICC, Inc.
("MAE-ICC"), Gordon Realty Inc. ("Gordon"), GII Realty,
Inc. ("GII Realty"), and certain other parties.
(Incorporated by reference to Form 8-K dated December
8, 1994)
10.17 Exercise of the Option (as defined in the Gordon
Agreement), dated December 8, 1994, between MAE-ICC and
Gordon. (Incorporated by reference to Form 8-K dated
December 8, 1994)
11 Statement regarding computation of Net Income per
Limited Partnership Unit (Incorporated by reference to
Note 1 of Item 8 - Financial Statements of this Form
10-K).
16.1 Letter, Dated August 12, 1992, from Ernst & Young to
the Securities and Exchange Commission regarding change
in certifying accountant. (Incorporated by reference
to Form 8-K dated August 6, 1992)
16.2 Letter dated May 9, 1995 from the Registrant's former
independent accountant regarding its concurrence with
the statements made by the Registrant regarding a
change in the certifying accountant. (Incorporated by
reference to Form 8-K dated May 3, 1995)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Captial Properties VI 1995 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000755908
<NAME> CONSOLIDATED CAPITAL PROPERTIS VI
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,311
<SECURITIES> 390
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,306
<DEPRECIATION> 6,452
<TOTAL-ASSETS> 12,302
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 10,314
0
0
<COMMON> 0
<OTHER-SE> 1,503
<TOTAL-LIABILITY-AND-EQUITY> 12,302
<SALES> 0
<TOTAL-REVENUES> 3,289
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 874
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (750)
<EPS-PRIMARY> (4.13)
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
