FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period_________to_________
Commission file number 0-14099
CONSOLIDATED CAPITAL PROPERTIES VI
(Exact name of small business issuer as specified 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)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1998
Assets
Cash and cash equivalents $ 1,871
Receivables and deposits 131
Restricted escrows 97
Other assets 81
Investment property:
Land $ 916
Buildings and related personal property 9,073
9,989
Less accumulated depreciation (3,815) 6,174
$ 8,354
Liabilities and Partners' Capital (Deficit)
Liabilities:
Accounts payable $ 32
Tenant security deposit liabilities 64
Accrued property taxes 59
Other liabilities 70
Mortgage note payable 4,375
Partners' Capital (Deficit):
General partner's $ 1
Special limited partners' (48)
Limited partners' (181,300 units issued
and outstanding) 3,801 3,754
$ 8,354
See Accompanying Notes to Consolidated Financial Statements
b)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 405 $ 700 $ 778 $ 1,407
Other income 49 75 109 142
Total revenues 454 775 887 1,549
Expenses:
Operating 217 291 424 661
General and administrative 35 42 68 80
Depreciation 87 183 174 365
Interest 110 251 220 486
Property taxes 26 73 56 146
Total expenses 475 840 942 1,738
Net loss $ (21) $ (65) $ (55) $ (189)
Net loss allocated to
general partner (.2%) $ -- $ -- $ -- $ --
Net loss allocated to limited
partners (99.8%) (21) (65) (55) (189)
$ (21) $ (65) $ (55) $ (189)
Net loss per limited
partnership unit $ (.12) $ (.36) $ (.30) $ (1.04)
Distributions per limited
partnership unit $ -- $ -- $ 2.76 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital contributions 181,808 $ 1 $ -- $45,452 $45,453
Partners' capital (deficit)
at December 31, 1997 181,300 $ 1 $ (52) $ 4,360 $ 4,309
Amortization of timing
difference -- -- 4 (4) --
Distributions paid to partners -- -- -- (500) (500)
Net loss for the six months
ended June 30, 1998 -- -- -- (55) (55)
Partners' capital (deficit)
at June 30, 1998 181,300 $ 1 $ (48) $ 3,801 $ 3,754
See Accompanying Notes to Consolidated Financial Statements
d)
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (55) $ (189)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 174 365
Amortization of loan costs and discounts 12 114
Change in accounts:
Receivables and deposits 218 (2)
Other assets 12 (27)
Accounts payable (28) (146)
Tenant security deposit liabilities 9 (10)
Accrued property taxes (59) 34
Other liabilities (1) 16
Net cash provided by operating activities 282 155
Cash flows from investing activities:
Property improvements and replacements (123) (50)
Proceeds from sale of investments 302 --
Dividends received from investments -- 3
Net deposits to restricted escrows (7) (46)
Net cash provided by (used in) investing activities 172 (93)
Cash flows from financing activities:
Payments on mortgage notes payable (32) (112)
Distributions paid to limited partners (500) --
Net cash used in financing activities (532) (112)
Net decrease in cash and cash equivalents (78) (50)
Cash and cash equivalents at beginning of period 1,949 1,478
Cash and cash equivalents at end of period $1,871 $1,428
Supplemental disclosure of cash flow information:
Cash paid for interest $ 209 $ 359
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
e)
CONSOLIDATED CAPITAL PROPERTIES VI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties VI (the "Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Equities, Inc. ("CEI" or the "General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
month periods ended June 30, 1998, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for the
fiscal year ended December 31, 1997.
Certain reclassifications have been made to the 1997 balances to conform to the
1998 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an
affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership
Agreement provides for certain payments to affiliates for services and the
reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following expenses were paid or accrued to affiliates of the General Partner
for the six months ended June 30, 1998 and 1997 (in thousands):
1998 1997
Property management fees
(included in operating expenses) $ 42 $ 79
Reimbursements for services of affiliates
(included in general and administrative
expenses) 33 51
In addition, the Partnership paid approximately $1,000 during each of the six
month periods ended June 30, 1998 and 1997, to an affiliate of the General
Partner for construction oversight reimbursements related to capital
improvements and major repair projects.
The Partnership Agreement also provides for a special management fee equal to 9%
of the total distributions from operations made to the Limited Partners to be
paid to the General Partner for executive and administrative management
services. No such fees were paid or accrued in 1998 or 1997.
For the period from January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
General Partner but with an 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 master policy. The agent assumed the financial
obligations to the affiliate of the General Partner, which received payments on
these obligations from the agent. The amount of the Partnership's insurance
premiums that accrued to the benefit of the affiliate of the General Partner by
virtue of the agent's obligations was not significant.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the General Partner of the Partnership.
NOTE C - 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. Cash and cash equivalents, tenant security
deposits and investments, totaling approximately $2,095,000 exceed the reserve
requirement of approximately $2,070,000 at June 30, 1998.
NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER
During 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 special limited
partners ("Special Limited Partners"). The Special Limited Partners do not have
a vote and do 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 Partners retained the economic interest in the Partnership which they
previously owned as general partner.
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 Partners in order to eliminate its tax basis
negative capital account.
After the conversion, the various Special Limited Partners 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 differences between the Special
Limited Partners' capital accounts for financial statement and tax reporting
purposes are being amortized to the Limited Partners' capital accounts as the
components of the timing differences which created the balance reverse.
NOTE E - DISTRIBUTIONS
In the first quarter of 1998, the Partnership declared and paid a cash
distribution to the limited partners in the amount of $500,000 ($2.76 per
limited partnership unit). The distribution was from surplus funds from the sale
of Celina Plaza in October 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one apartment complex, Colony
of Springdale Apartments, located in Springdale, Ohio. The average occupancy for
the six month periods ended June 30, 1998 and 1997, was 92% and 89%,
respectively.
The Partnership realized net losses of approximately $55,000 and $189,000 for
the six month periods ended June 30, 1998 and 1997, respectively. The
Partnership realized net losses of approximately $21,000 and $65,000 for the
three months ended June 30, 1998 and 1997, respectively. The decrease in net
loss is primarily attributable to the improvement in operations arising from the
sale of Celina Plaza in the third quarter of 1997. Celina Plaza incurred net
losses of approximately $65,000 and $131,000 for the three and six month periods
ended June 30, 1997. Contributing to the decrease in net loss was a decrease in
administrative costs due to a decrease in reimbursements to the General Partner
in 1998 due to the sale of Celina Plaza in the third quarter of 1997. The
Partnership realized an increase in the net loss of its remaining property from
approximately $8,000 for the six month period ended June 30, 1997, to $32,000
for the six month period ended June 30, 1998. This increase is primarily due to
the increase in utility costs at the property and increased maintenance
expenses, including exterior building repairs, landscaping and interior
painting. Partially offsetting these increases in expense is an increase in
rental income. The increase in rental income resulted from an increase in
occupancy, as noted above. Additionally, due to stricter tenant qualification
procedures, instituted in 1997, bad debt expense also declined.
Included in operating expenses for the Partnership's remaining property for the
six months ended June 30, 1998, is approximately $34,000 of major repairs and
maintenance comprised primarily of major landscaping and exterior building
improvements. The amount of major repairs and maintenance included in operating
expenses for the Partnership's remaining property for the six months ended June
30, 1997, is not significant.
On October 20, 1997, the Partnership sold Celina Plaza Apartments, located in El
Paso, Texas, to an unaffiliated party, The Vandenburg Organization, a Texas
corporation. The sales price of the property was $6,600,000 and the sale
resulted in net proceeds of approximately $6,456,000, after payment of closing
costs. The net proceeds were used to pay accrued taxes and to pay-off the
mortgage debt secured by this property. Excess proceeds after such payments
amounted to approximately $779,000 to the Partnership.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property 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.
At June 30, 1998, the Partnership had cash and cash equivalents of approximately
$1,871,000 as compared to approximately $1,428,000 at June 30, 1997. The net
decrease in cash and cash equivalents for the six month periods ended June 30,
1998 and 1997, were approximately $78,000 and $50,000, respectively. Net cash
provided by operating activities increased due to an increase in cash provided
by receivables and deposits as a result of the return of funds held in escrow
for taxes on Celina Plaza. Net cash provided by investing activities increased
due to the sale of the Partnership's investment in Treasury bills. The increase
in cash provided by investing activities was partially offset by an increase in
property improvements and replacement expenditures at Colony of Springdale. Net
cash used in financing activities increased due to the distribution of $500,000
from the proceeds of the sale of Celina Plaza during the first quarter of 1998.
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 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 $4,375,000 has a maturity date of May 2001, at
which time the property will either be sold or the mortgage refinanced. In the
first quarter of 1998, the Partnership declared and paid a cash distribution to
the limited partners in the amount of $500,000 ($2.76 per limited partnership
unit). The distribution was from surplus funds from the sale of Celina Plaza.
There were no distributions made during the six months ended June 30, 1997.
Future cash distributions will depend on the levels of net cash generated from
operations, capital expenditure requirements, a property sale or refinancing and
the availability of cash reserves.
Year 2000
The Partnership is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The General Partner believes that with modifications to
existing software and conversions to new software, the Year 2000 Issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the
Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates to acquire limited partnership units, the management of partnerships
by Insignia affiliates as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The General Partner believes
the action to be without merit, and intends to vigorously defend it. On June 24,
1998, the General Partner filed a motion seeking dismissal of the action.
In May 1998, the Partnership and its General Partner were named as respondents
in a Petition in Los Angeles Superior Court. The Petition, brought by a limited
partner of the Partnership, seeks performance by the General Partner of certain
alleged contractual obligations under the Partnership Agreement and compliance
with certain alleged statutory requirements. Service on the Partnership was
only recently accomplished, and the General Partner has not yet replied to the
Petition.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner believes that all such pending
or outstanding litigation will be resolved without a material adverse effect
upon the business, financial condition or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K: None filed during the quarter ended June 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES VI
By: CONCAP EQUITIES, INC.
General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/Ronald Uretta
Ronald Uretta
Vice President and Treasurer
Date: August 5, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Consolidated Capital Properties VI 1998 Second Quarter 10-QSB
and is qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000755908
<NAME> CONSOLIDATED CAPITAL PROPERTIES VI
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,871
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 9,989
<DEPRECIATION> 3,815
<TOTAL-ASSETS> 8,354
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,375
0
0
<COMMON> 0
<OTHER-SE> 3,754
<TOTAL-LIABILITY-AND-EQUITY> 8,354
<SALES> 0
<TOTAL-REVENUES> 887
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 722
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 220
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55)
<EPS-PRIMARY> (.30)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
