March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Consolidated Capital Properties VI
Form 10-KSB
File No. 0-14099
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-14099
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.)
55 Beattie Place, PO 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 the 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. [ ]
State issuer's revenues for its most recent fiscal year. $1,858,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Consolidated Capital Properties VI (the "Partnership" or "Registrant") was
organized on May 23, 1984, as a limited partnership under California Uniform
Limited Partnership Act. The general partner of the Partnership is ConCap
Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The
General Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"). The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2015 unless terminated prior to such date.
On December 7, 1984, the Partnership offered pursuant to a Registration
statement filed with the Securities and Exchange Commission $50,000,000 of
Limited Partnership Interest (the "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 sale of Units closed on
December 6, 1985, with 181,808 Units sold at $250 each, or gross proceeds of
approximately $45,452,000 to the Partnership. Since its initial offering, the
Registrant has not received, nor are limited partners required to make,
additional capital contributions.
The Registrant is engaged in the business of operating and holding real estate
properties for investment. By the end of fiscal 1987, the Partnership had
acquired seven properties and a 75% interest in a joint venture with an
affiliated partnership which acquired one property. The Registrant continues to
own and operate one of these properties. (See "Item 2, Description of
Properties".)
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the registrant's property. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner in
such market area, could have a material effect on the rental market for the
apartments at the Registrant's property and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for apartments is local.
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
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 Partners dated August 10, 1990. As
part of this solicitation, the Limited Partners also approved an amendment to
the Partnership Agreement limiting 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 without other rights of a limited partner except for the
economic interest previously held as a general partner. Pursuant to this
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.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which 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, the Insignia affiliate 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, the Insignia affiliate exercised the remaining portion of its option to
purchase all of the remaining outstanding capital stock of GII Realty, Inc.
Both the income and expenses of operating the property owned by the Partnership
are subject to factors outside of the Partnership's control, such as changes in
the supply and demand for similar properties resulting from various market
conditions, increases/decreases in unemployment or population shifts, changes in
the availabilty of permanent mortgage financing, changes in zoning laws, or
changes in patterns or needs of users. In addition, there are risks inherent in
owning and operating residential properties because such properties are
susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Item 6.
Management's Discussion and Analysis or Plan of Operation" included in this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Item 2. Description of Property
The following table sets forth the Partnership's investment in property:
Date of
Property Purchase Type of Ownership Use
Colony of Springdale
Apartments 02/20/87 Fee ownership subject Apartment
Springdale, Ohio to first mortgage. (1) 261 units
(1) Property is held by a limited partnership in which the Registrant owns a
100% interest.
Schedule of Property
Set forth below for the Registrant's property is the gross carrying value,
accumulated depreciation, depreciable life, method of depreciation and Federal
tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Colony of Springdale $10,407 $ 4,364 5-30 yrs S/L $ 5,472
</TABLE>
See the "Note A" included in "Item 7. Financial Statements" for a description of
the Partnership's depreciation policy and "Note L - Change in Accounting
Principle".
Schedule of Property Indebtedness
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity
(in thousands)
Colony of Springdale
<S> <C> <C> <C> <C> <C>
1st mortgage $5,590 7.79% 20 yrs 12/2019 $ --
</TABLE>
(1) See "Item 7. Financial Statements, Note G" for information with respect to
the Registrant's ability to repay this loan and other specific details
about the loan.
<PAGE>
Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for the property:
Average Annual Average Annual
Rental Rate Occupancy
(per unit)
Property 1999 1998 1999 1998
Colony of Springdale $7,114 $6,790 93% 93%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The Partnership's property is subject to competition from
other residential apartment complexes in the area. The General Partner believes
that the property is adequately insured. The property is an apartment complex
which leases units for lease terms of one year or less. No residential tenant
leases 10% or more of the available rental space. The property is in good
physical condition, subject to normal depreciation and deterioration as is
typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and the tax rate in 1999 for the property were:
1999 1999
Taxes Rate
(in thousands)
Colony of Springdale $ 128 4.57%
Capital Improvements
During the year ended December 31, 1999, the Partnership completed approximately
$395,000 of capital improvements at the property. These improvements consisted
of carpet and vinyl replacements, balcony and stairway improvements, window
replacements, roof replacements, and parking lot enhancements, and were funded
from operating cash flow and Partnership reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $78,300.
The capital improvements planned for 2000 at the Partnership's property will be
made only to the extent of cash available from operations and Partnership
reserves.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matters were submitted to a vote
of the unit holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters
The Partnership, a publicly-held limited partnership, offered and sold 181,808
limited partnership units aggregating $45,452,000. The Partnership currently has
2,840 holders of record owning an aggregate of 181,300 Units. Affiliates of the
General Partner owned 73,128 units or 40.34% at December 31, 1999. No public
trading market has developed for the Units, and it is not anticipated that such
a market will develop in the future.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate (3) Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $ 500 (1) $ 2.76
01/01/99 - 12/31/99 $2,297 (2) $12.41
(1) Sales proceeds from sale of Celina Plaza in October 1997.
(2) Refinance proceeds of approximately $1,123,000 from Colony of Springdale
and approximately $1,174,000 of operating funds. Distribution was accrued
at December 31, 1999 and paid in January 2000.
(3) See "Item 6" for further details.
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, investments, and reserves for capital improvements and
contingencies totaling approximately $3,250,000 are more than the reserve
requirement of approximately $2,070,000 at December 31, 1999.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturity, refinancing, and/or property sale. The Partnership's distribution
policy is reviewed on an annual basis. There can be no assurance, however, that
the Partnership will generate sufficient funds from operations after required
capital expenditures to permit any distributions to its partners in 2000 or
subsequent periods. In addition, the Partnership is restricted from making
distributions if the working capital reserve requirement is not met by the
Partnership.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 73,128
limited partnership units in the Partnership representing 40.34% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized a net loss of approximately $206,000 for the year ended
December 31, 1999, compared to a net loss of approximately $101,000 for the year
ended December 31, 1998. The increase in net loss for the year ended December
31, 1999 is primarily due to an increase in total expenses and, to a lesser
extent, an extraordinary loss on the early extinguishment of the debt
encumbering the property (see discussion in "Liquidity and Capital Resources"
below), partially offset by an increase in total revenues. The increase in total
revenues is due to an increase in rental income which was partially offset by a
decrease in other income. The increase in rental income resulted from an
increase in rental rates. The decrease in other income is a result of lower cash
balances in interest bearing accounts in 1999. The increase in total expenses is
primarily due to an increase in general and administrative expenses and, to a
lesser extent, an increase in depreciation expense which was partially offset by
a decrease in operating expenses. The increase in general and administrative
expenses is due to an increase in legal expenses as well as the accrual of a
Partnership management fee associated with the distribution of operating cash
flow declared at December 31, 1999. The decrease in operating expenses
associated with a litigation settlement as previously disclosed in prior
quarters is due to decreases in maintenance, property, and insurance expenses.
The decrease in maintenance expense is due to a decrease in landscaping (see
change in accounting principle below) and exterior building repairs. The
decrease in property expense is primarily due to a decrease in maintenance
salaries in 1999. The decrease in insurance expense is due to a decrease in
premiums resulting from a change of insurance carrier late in 1998.
Included in general and administrative expenses at both December 31, 1999 and
1998, are management reimbursements to the General Partner allowed under the
Partnership Agreement. Costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership agreement are also included.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
decrease net loss by approximately $25,000 ($0.14 per limited partnership unit).
The cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the General Partner and
affiliates.
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.
Liquidity and Capital Resources
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $3,032,000 as compared to approximately $1,862,000 at December 31,
1998. Cash and cash equivalents increased approximately $1,170,000 from the
Partnership's previous year ended December 31, 1998. The increase is due to
approximately $1,163,000 of cash provided by financing activities and
approximately $456,000 of cash provided by operating activities which was
partially offset by approximately $449,000 of cash used in investing activities.
Cash provided by financing activities consisted of proceeds from the refinancing
of Colony of Springdale in 1999, partially offset by the payoff of the existing
mortgage, principal payments made on the mortgage encumbering the Partnership's
property and loan costs associated with the new mortgage. Cash used in investing
activities consisted of property improvements and replacements slightly offset
by net withdrawals from restricted escrows maintained by the mortgage lender.
The Partnership invests its working capital reserves in a money market account.
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 Registrant and to comply with Federal, state,
and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$78,300. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property. The capital expenditures will
be incurred only if cash is available from operations or from Partnership
reserves. To the extent that such budgeted capital improvements are completed,
the Registrant's distributable cash flow, if any, may be adversely affected at
least in the short term.
The Registrant's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Partnership. On October 25,
1999, the Partnership refinanced the mortgage encumbering Colony of Springdale
Apartments. Interest on the old mortgage was 9.5%. The refinancing replaced
indebtedness of $4,281,000 with a new mortgage in the amount of $5,600,000.
Payments of approximately $46,111 are due on the first day of each month until
the loan matures on December 1, 2019. The prior note was scheduled to mature in
May 2001. The lender also required a repair escrow of approximately $135,000 to
be established. The loss on early extinguishment of debt for financial statement
purposes is approximately $40,000, consisting of the write-off of unamortized
loan costs. The General Partner will attempt to refinance such indebtedness
and/or sell the property prior to such maturity date. If the property cannot be
refinanced and/or sold for a sufficient amount, the Partnership may risk losing
such property through foreclosure.
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, investments, and reserves for capital improvements and
contingencies totaling approximately $3,250,000 are more than the reserve
requirement of approximately $2,070,000 at December 31, 1999.
A distribution of approximately $2,297,000 approximately $2,250,000 to the
limited partners or $12.41 per limited partnership unit) was accrued during
December 1999 and paid in January 2000. This distribution consisted of cash from
operations of approximately $1,175,000 (approximately $1,128,000 to the limited
partners or $6.22 per limited partnership unit) and refinancing proceeds of
approximately $1,122,000 to the limited partners ($6.19 per limited partnership
unit). A cash distribution from surplus cash of approximately $500,000 from
proceeds of the sale of Celina Plaza in October 1997 was made during the year
ended December 31, 1998 entirely to the limited partners at $2.76 per limited
partnership unit. Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves and the timing
of the debt maturity, refinancing and/or property sale. The Registrant's
distribution policy is reviewed on an annual basis. There can be no assurance,
however, that the Registrant will generate sufficient funds from operations
after required capital expenditures to permit further distributions to its
partners in 2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 73,128
units of limited partnership units in the Partnership representing 40.34% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
CONSOLIDATED CAPITAL PROPERTIES VI
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young, LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements
<PAGE>
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, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital and cash flows
for each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties VI at December 31, 1999, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
As discussed in Note L to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 24, 2000
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 3,032
Receivables and deposits 225
Restricted escrows 135
Other assets 112
Investment property (Notes G and H):
Land $ 916
Buildings and personal property 9,491
10,407
Less accumulated depreciation (4,364) 6,043
$ 9,547
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 37
Tenant security deposit liabilities 79
Accrued property taxes 120
Other liabilities 219
Distribution payable (Note F) 2,297
Mortgage note payable (Note G) 5,590
Partners' (Deficit) Capital
General partner $ (1)
Special limited partners (79)
Limited partners (181,300 units issued and
outstanding) 1,285 1,205
$ 9,547
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $ 1,687 $ 1,600
Other income 171 194
Total revenues 1,858 1,794
Expenses:
Operating 789 851
General and administrative 297 129
Depreciation 391 360
Interest 435 440
Property taxes 112 115
Total expenses 2,024 1,895
Loss before extraordinary item (166) (101)
Extraordinary loss on early extinguishment of debt (40) --
Net loss (Note I) $ (206) $ (101)
Net loss allocated to general partner (0.2%) -- --
Net loss allocated to limited partners (99.8%) (206) (101)
$ (206) $ (101)
Per limited partnership unit:
Loss before extraordinary item $ (.92) $ (.56)
Extraordinary loss on early extinguishment of debt (.22) --
Net loss $ (1.14) $ (.56)
Distribution per limited partnership unit $ 12.41 $ 2.76
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital
<S> <C> <C> <C> <C> <C>
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 (Note E) -- -- 9 (9) --
Distributions paid to
partners -- -- -- (500) (500)
Net loss for the year ended
December 31, 1998 -- -- -- (101) (101)
Partners' capital (deficit)
at December 31, 1998 181,300 1 (43) 3,750 3,708
Amortization of timing
difference (Note E) -- -- 9 (9) --
Distributions paid to
partners -- (2) (45) (2,250) (2,297)
Net loss for the year
ended December 31, 1999 -- -- -- (206) (206)
Partners' (deficit) capital
at December 31, 1999 181,300 $ (1) $ (79) $ 1,285 $ 1,205
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (206) $ (101)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 391 360
Amortization of loan costs 21 25
Loss on disposition of property 20 20
Extraordinary loss on early extinguishment of debt 40 --
Change in accounts:
Receivables and deposits 32 91
Other assets (22) 16
Accounts payable 26 (49)
Tenant security deposit liabilities 11 13
Accrued taxes 2 --
Other liabilities 141 7
Net cash provided by operating activities 456 382
Cash flows from investing activities:
Property improvements and replacements (382) (227)
Proceeds from sale of investments -- 302
Net withdrawals from restricted escrows (67) 22
Net cash (used in) provided by investing activities (449) 97
Cash flows from financing activities:
Payments on mortgage note payable (70) (66)
Repayment of mortgage note payable (4,281) --
Proceeds from mortgage note payable 5,600 --
Loan costs paid (86) --
Distributions to partners -- (500)
Net cash provided by (used in) financing activities 1,163 (566)
Net increase (decrease) in cash and cash equivalents 1,170 (87)
Cash and cash equivalents at beginning of period 1,862 1,949
Cash and cash equivalents at end of period $ 3,032 $ 1,862
Supplemental disclosure of cash flow information:
Cash paid for interest $ 412 $ 416
Supplemental disclosure of non cash activity:
Distribution payable $ 2,297 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Summary of Significant Accounting Policies
Organization: Consolidated Capital Properties VI, a California limited
partnership (the "Partnership" or "Registrant"), was formed on May 23, 1984, to
acquire and operate commercial and residential properties. The general partner
of the Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI").
The General Partner is a subsidiary of Apartment Investment and Management
Company ("AIMCO"). (see "Note B - Transfer of Control"). The directors and
officers of the General Partner also serve as executive officers of AIMCO. The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2015 unless terminated prior to such date. The Partnership operates one
apartment property located in Ohio.
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.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which 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
part of the Insignia Transaction, the Insignia affiliate 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, the Insignia affiliate exercised the remaining portion of its option to
purchase all of the remaining outstanding capital stock of GII Realty, Inc.
Consolidation: The Partnership's financial statements include the accounts of
Colony of Springdale Associates, Ltd. ("Colony Associates"), which holds fee
title to the Colony of Springdale Apartments. The results of its operations are
included in the Partnership's consolidated financial statements. All interentity
transactions between the Partnership and Colony Associates have been eliminated.
Uses 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.
Investment Properties: Investment property consists of one apartment complex and
is stated at cost. Acquisition fees are capitalized as a cost of real estate. In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", the Partnership records impairment losses on long-lived assets
used in operations when events and circumstances indicate that the assets might
be impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. Costs of apartment
properties that have been permanently impaired have been written down to
appraised value. No adjustments for impairment of value were recorded in the
years ended December 31, 1999 or 1998.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment property and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note L).
Cash and Cash Equivalents: Includes cash on hand and in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Loan Costs: Net loan costs of approximately $86,000 are included in other assets
and are being amortized on a straight-line basis over the life of the loan.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the Partnership Agreement.
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.
Segment Reporting: SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note J" for required disclosure.
Advertising Costs: The Partnership expenses the cost of advertising as incurred.
Advertising costs of approximately $45,000 in 1999 and approximately $45,000 in
1998 were charged to expense as incurred and are included in operating expenses.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Note C - 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 Partnership Agreement provides for 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 the General Partner
or affiliates of the General Partner during the years ended December 31, 1999
and 1998.
1999 1998
(in thousands)
Property management fees (included in operating $ 91 $86
expenses)
Reimbursement for services of affiliates (included
in investment property and operating and general
and administrative expenses) $ 61 $62
Partnership management fee (included in other
liabilities and general and administrative
expenses) $102 $--
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Partnership's
property as compensation for providing property management services. The
Partnership paid to such affiliates approximately $91,000 and $86,000 for the
years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $61,000 and
$62,000 for the years ended December 31, 1999 and 1998, respectively.
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 administration management
services. The General Partner received approximately $102,000 in January 2000,
resulting from the distribution declared in December 1999. No such fees were
paid in 1998.
For acting as a broker, an affiliate of the General Partner was entitled to
receive 1% of the proceeds of the new mortgage. The Partnership paid to such
affiliates $56,000 for the year ended December 31, 1999. This amount is
reflected in other assets and is being amortized over the life of the loan.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 73,128
units of limited partnership units in the Partnership representing 40.34% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
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, investments and reserves for capital improvements and
contingencies totaling approximately $3,250,000 are more than the reserve
requirement of approximately $2,070,000 at December 31, 1999.
Note E - 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 a general partner.
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 Partners in order to
eliminate their tax basis negative capital accounts.
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 difference between the Special
Limited Partner's 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 F - Distributions
A distribution of approximately $2,297,000 approximately $2,250,000 to the
limited partners or $12.41 per limited partnership unit) was accrued during
December 1999 and paid in January 2000. This distribution consisted of cash from
operations of approximately $1,175,000 (approximately $1,128,000 to the limited
partners or $6.22 per limited partnership unit) and refinancing proceeds of
approximately $1,122,000 to the limited partners ($6.19 per limited partnership
unit). A cash distribution from surplus cash of approximately $500,000 from
proceeds of the sale of Celina Plaza in October 1997 was made during the year
ended December 31, 1998 entirely to the limited partners at $2.76 per limited
partnership unit.
Note G - Mortgage Note Payable
The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands)
Colony of Springdale
<S> <C> <C> <C> <C> <C>
1st mortgage $5,590 $ 46 7.79% 12/2019 $ --
</TABLE>
The mortgage note payable is non-recourse and secured by pledge of the apartment
property and by pledge of revenues from the apartment property. The note has a
prepayment penalty requirement if repaid prior to maturity. Further, the
property may not be sold subject to existing indebtedness.
On October 25, 1999, the Partnership refinanced the mortgage encumbering Colony
of Springdale Apartments. Interest on the old mortgage was 9.5%. The refinancing
replaced indebtedness of $4,281,000 with a new mortgage in the amount of
$5,600,000. Payments of approximately $46,111 are due on the first day of each
month until the loan matures on December 1, 2019. The prior note was scheduled
to mature in May 2001. The lender also required a repair escrow of approximately
$135,000 to be established. The loss on early extinguishment of debt for
financial statement purposes is approximately $40,000, consisting of the
write-off of unamortized loan costs.
Scheduled principal payments of the mortgage note payable subsequent to December
31, 1999 are as follows (in thousands):
2000 $ 122
2001 132
2002 143
2003 154
2004 167
Thereafter 4,872
Total $5,590
<PAGE>
Note H - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrance Land Property Acquisition
(in thousands) (in thousands)
Colony of Springdale
<S> <C> <C> <C> <C>
Springdale, Ohio $5,590 $ 909 $8,358 $1,140
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
Colony of Springdale
<S> <C> <C> <C> <C> <C> <C> <C>
Springdale, Ohio $ 916 $ 9,491 $10,407 $ 4,364 2/20/87 5-30
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation"
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $10,061 $ 9,866
Property improvements 382 227
Disposals of property (36) (32)
Balance at end of year $10,407 $10,061
Accumulated Depreciation
Balance at beginning of year $ 3,989 $ 3,641
Additions charged to expense 391 360
Disposals of property (16) (12)
Balance at end of year $ 4,364 $ 3,989
The aggregate cost of the investment property for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $9,584,000 and $9,189,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $4,112,000 and $3,724,000,
respectively.
Note I - Income Taxes
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
consolidated financial statements of the Partnership.
The following is a reconciliation of reported net loss and Federal taxable
income or loss (in thousands, except unit data):
1999 1998
Net loss as reported $ (206) $ (101)
Add (deduct):
Depreciation differences 2 16
Unearned income (3) (11)
Other 15 --
Accruals and prepaids 135 (2)
Loss on disposal 20 20
Federal taxable loss $ (37) $ (78)
Federal taxable loss per limited
partnership unit $ (.20) $ (.41)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $ 1,205
Land and buildings (872)
Accumulated depreciation 268
Syndication and distribution costs 4,989
Distribution Payable 2,298
Other 443
Net assets - Federal tax basis $ 8,331
Note J - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
residential properties. The Partnership's residential property segment consists
of one apartment complex in Ohio. The Partnership rents apartment units to
tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: Segment
information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes Partnership administration related items
and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
Rental income $ 1,687 $ -- $ 1,687
Other income 96 75 171
Interest expense 435 -- 435
Depreciation 391 -- 391
General and administrative expense -- 297 297
Extraordinary loss on early
extinguishment of debt (40) -- (40)
Segment income (loss) 16 (222) (206)
Total assets 6,750 2,797 9,547
Capital expenditures for investment
property 382 -- 382
1998 Residential Other Totals
Rental income $ 1,600 $ -- $ 1,600
Other income 97 97 194
Interest expense 440 -- 440
Depreciation 360 -- 360
General and administrative expense -- 129 129
Segment loss (69) (32) (101)
Total assets 6,435 1,889 8,324
Capital expenditures for investment
property 227 -- 227
Note K - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note L - Change In Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
decrease net loss by approximately $25,000 ($0.14 per limited partnership unit).
The cumulative effect, had this change been applied to prior periods, is not
material. The accounting principle change will not have an effect on cash flow,
funds available for distribution or fees payable to the General Partner and
affiliates.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Consolidated Capital Properties VI (the "Partnership" or the "Registrant") has
no officers or directors. ConCap Equities, Inc. (the "General Partner" or "CEI")
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 the General Partner, 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 or
directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council. He
received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
Neither the director nor the officers of the General Partner received any
remuneration from the Registrant.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as provided below, as of December 31, 1999, no person was known to CEI to
own of record or beneficially more than five percent of the Units of the
Partnership.
Entity Number Percent
of Units of Total
Insignia Properties, LP 42,480 23.43%
(an affiliate of AIMCO)
AIMCO Properties, LP 30,648 16.91%
(an affiliate of AIMCO)
Insignia Properties, L.P is indirectly ultimately owned by AIMCO. Its business
address is 55 Beattie Place, Greenville, SC 29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the General Partner owns any Units.
As of December 31, 1999, the following persons were known to CEI to be the
beneficial owners of more than five percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust 100,000 100%
55 Beattie Place
Greenville, SC 29602
Insignia Properties Trust is an affiliate of AIMCO.
Item 12. Certain Relationships and Related 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 Partnership Agreement provides for 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 the General Partner
or affiliates of the General Partner during the years ended December 31, 1999
and 1998:
1999 1998
(in thousands)
Property management fees $ 91 $86
Reimbursement for services of affiliates $ 61 $62
Partnership management fee $102 $--
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Registrant's property as compensation for providing property management
services. The Registrant paid to such affiliates approximately $91,000 and
$86,000 for the years ended December 31, 1999 and 1998, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $61,000 and $62,000 for the
years ended December 31, 1999 and 1998, respectively.
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 administration management
services. The General Partner received approximately $102,000 in January 2000,
resulting from the distribution declared in December 1999. No such fees were
paid in 1998.
For acting as a broker, an affiliate of the General Partner was entitled to
receive 1% of the proceeds of the new mortgage. The Partnership paid to such
affiliates $56,000 for the year ended December 31, 1999. This amount is
reflected in other assets and is being amortized over the life of the loan.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 73,128
units of limited partnership units in the Partnership representing 40.34% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
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.
<PAGE>
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for
Change in Accounting Principle, is filed as an exhibit to this
report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
(b) Reports on Form 8-K filed during the fourth quarter of 1999:
None.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES VI
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Senior Vice President
and Controller
Date:
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities on the date indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES VI
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT incorporated by reference to Exhibit 2.1 filed with the
Registrant's Current Report on Form 8-K dated October 1, 1998.
3 Certificate 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
the 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 Certain Property Management Services dated
April 9, 1991, by and between CCMLP and ConCap Capital 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 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).
10.6 Assignment and Assumption Agreement (Investor Services Agreement) dated
October 23, 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).
<PAGE>
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).
10.10Letter 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).
10.11Property 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).
10.12Assignment and Assumption Agreement (Property Management Agreement No.
421) dated May 13, 1993, by and between Coventry Properties, Inc. and 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).
10.13Assignment and Agreement as to Certain Property 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).
10.14Property Management Agreement No. 515 dated June 1, 1993, by and between
the Partnership and Coventry Properties, Inc.
10.15Assignment and Agreement as to Certain Property Management Services dated
November 17, 1993, by and between Coventry Properties, Inc. and Partnership
Services, Inc.
10.16Stock 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).
10.17Exercise 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).
10.18Exercise of the remaining portion 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 October 24, 1995).
10.19Contract to Purchase and Sell Property made and entered into as of August
13, 1997, but effective October 20, 1997, by and between Consolidated
Capital Properties VI, a California limited partnership, and The Vandenburg
Organization, a Texas corporation regarding Celina Plaza Apartments.
<PAGE>
10.20Assignment and assumption of Leases dated October 13, 1997, by and between
Consolidated Capital Properties VI, a California limited partnership and
The Vandenburg Organization, a Texas corporation regarding Celina Plaza
Apartments.
10.21Blanket Conveyance, Bill of Sale and Assignment dated October 13, 1997, by
and between Consolidated Capital Properties VI, a California limited
partnership and The Vandenburg Organization, a Texas corporation regarding
Celina Plaza Apartments.
10.22Multi-family note between Colony of Springdale Associates, Ltd. and GMAC
Commercial Mortgage Corporation dated October 25, 1999.
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).
18 Independent Accountants' Preferability Letter for Change in Accounting
Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
ConCap Equities, Inc.
General Partner of Consolidated Capital Properties VI
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note L of Notes to the Consolidated Financial Statements of Consolidated Capital
Properties VI included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<PAGE>
Exhibit 10.22
FHLMC Loan No. 002724618
MULTIFAMILY NOTE
(MULTISTATE)
US $5,600,000.00 As of October 25, 1999
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Five Million Six
Hundred Thousand and 00/100 Dollars (US $5,600,000.00), with interest on the
unpaid principal balance at the annual rate of seven and seven hundred ninety
thousandths percent (7.790%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Forty Six Thousand One Hundred Eleven and 41/100 Dollars (US
$46,111.41), shall be payable on the first day of each month beginning on
December 1, 1999, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on November 1, 2019 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to Zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
<PAGE>
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
WITNESS:
COLONY OF SPRINGDALE ASSOCIATES, LTD., a Texas
limited partnership
Print Name:
By: CCP/VI Springdale GP, L.L.C.,
a South Carolina limited liability
company, its general partner
Print Name:
By: Consolidated Capital Properties VI,
a California limited partnership
its sole and managing member
By: Concap Equities, Inc.,
a Delaware corporation,
its managing general partner
By:
Name:
Title:
75-2535118
Borrower's Social Security/Employer ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE, AS
OF THIS 25th DAY OF OCTOBER, 1999.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.250% U.S. Treasury Security
due February 1, 2016, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The following paragraph is added to Paragraph 7 of the Note ("Late Charges"):
Notwithstanding any contrary provision contained in this Note, if any sum
payable under this Note is not paid within three (3) days from the date on which
it is due or the earliest time permitted under applicable law for a late payment
charge to accrue, Borrower shall pay to Lender upon demand an amount equal to
the lesser of (a) five percent (5%) of such unpaid sum or (b) the maximum amount
permitted by applicable law in order to defray a portion of the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. If the day
when any payment required under this Note is due is not a Business Day (as
defined in Paragraph 10 of the Note), then payment shall be due on the first
Business Day thereafter.
2. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past due for more
than thirty (30) days or (b) any other event of Default has occurred and is
continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of (1) the maximum interest rate which may
be collected from Borrower under applicable law or (2) the greater of (i) three
percent (3%) above the Interest Rate or (ii) four percent (4.0%) above the
then-prevailing Prime Rate. As used herein, the term "Prime Rate" shall mean the
rate of interest announced by The Wall Street Journal from time to time as the
"Prime Rate".
3. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer charges, taxes,
fire, hazard or other insurance premiums, ground rents in accordance with the
terms of the Security Instrument.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from CONSOLIDATED
CAPITAL PROPERTIES VI 1999 Fourth Quarter 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000755908
<NAME> CONSOLIDATED CAPITAL PROPERTIES VI
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,032
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 10,407
<DEPRECIATION> 4,364
<TOTAL-ASSETS> 9,547
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 5,590
0
0
<COMMON> 0
<OTHER-SE> 1,205
<TOTAL-LIABILITY-AND-EQUITY> 9,547
<SALES> 0
<TOTAL-REVENUES> 1,858
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,024
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 435
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (40)
<CHANGES> 0
<NET-INCOME> (206)
<EPS-BASIC> (1.14)<F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
