SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1998
Commission File Number 0-15532
MLH INCOME REALTY PARTNERSHIP VI
(Exact name of registrant as specified in governing instrument)
New York 13-3272339
(State of organization) (IRS Employer Identification No.)
World Financial Center, South Tower, 12th Floor
225 Liberty Street, New York, New York 10080-6112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 236-4930
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
Depositary Units Issued Upon
Deposit Of Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant.
Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
Supplement dated February 13, 1987 to Prospectus dated March 5, 1986 of the
Registrant, filed pursuant to Rule 424(b) is incorporated by reference in Part I
of this Annual Report on Form 10-K.
<PAGE>
PART I.
ITEM 1. BUSINESS.
The registrant, MLH Income Realty Partnership VI (the "Partnership" or the
"Registrant"), is a limited partnership which was formed on December 4, 1984
under the Uniform Limited Partnership Act of the State of New York for the
purpose of investing primarily in income-producing commercial, industrial and
residential real estate, either existing or under construction or development.
The Partnership was also permitted to invest in properties by making mortgage
loans.
The Partnership's two general partners are MLH Property Managers Inc., a
Delaware corporation (the "Managing General Partner"), and MLH Realprop
Associates VI L.P., a New York limited partnership (the "Associate General
Partner" and, together with the Managing General Partner, the "General
Partners"). The Partnership commenced its offering of up to $500,000,000 of
depositary units (the "Depositary Units") to the public in March 1986 pursuant
to a Prospectus, as supplemented, filed with the Securities and Exchange
Commission in connection with a Registration Statement on Form S-11 (No.
2-98524). The Depositary Units represent the economic rights attributable to
limited partnership interests ("Limited Partnership Interests") in the
Partnership. There are two classes of Depositary Units - Class A Units, which
were sold to individuals and entities which are not exempt from taxation, and
Class B Units, which were sold to tax exempt entities. Following the receipt of
subscriptions for 269,511 Depositary Units at $1,000 per Depositary Unit, the
Partnership suspended its offering of Depositary Units. The Partnership's first
and second closings occurred on June 6, 1986 and August 7, 1986, at which times
204,781 and 64,730 Depositary Units, respectively, were sold. As described in
the Partnership's Supplement dated February 13, 1987 to the Prospectus dated
March 5, 1986 (the "Supplement"), a copy of which is incorporated herein by
reference, in February 1987 the Partnership determined to continue the public
offering and a final closing occurred on May 7, 1987, at which time 4,329
Depositary Units were sold. In addition, 48,430 Units of Limited Partnership
Interest (together with the Depositary Units, the "Units") were sold to a
foreign corporation at four closings held on November 25, 1986, January 20,
1987, March 11, 1987 and April 23, 1987, respectively, pursuant to a private
offering. An additional five Units are held by the initial limited partner, an
affiliate of the Managing General Partner. No other capital contributions will
be made by the Unit holders or any limited partners ("Unit Holders" or "Limited
Partners") that acquired Units at these closings.
The Partnership considers its business to represent one industry segment,
investment in real property.
<PAGE>
<TABLE>
The Partnership made the following real property investments:
<S> <C> <C> <C> <C> <C>
Percentage Date
Name, Type of Property Date of Date of of of
and Location Approximate Size Acquisition Completion Portfolio* Sale
- ----------------------- ---------------- ----------- ------------ --------------- ----------
1801 Century Park East 1.25 acres 3/10/87 N/A 5% 12/19/95
land
Los Angeles, California
Barnett Plaza land 1.99 acres 3/10/87 N/A 2% 3/2/93
Orlando, Florida
American Retirement 4,997 spaces 7/31/87 1970s (except 23% 1991
Communities portfolio one community through
of nine mobile home completed in 1965) 1995 (a)
communities Florida and
California
Five Points Shopping Center 142,200 sq. ft. 9/23/87 1960 (expanded (b) 9/27/95
shopping center and renovated
Santa Barbara, California in 1982)
Bayhill Shopping Center 122,000 sq. ft. 9/23/87 1974 (b) 9/27/95
shopping center
San Bruno, California
Lompoc Shopping Center 163,000 sq. ft. 9/23/87 1960 (renovated (b) 1/24/96
shopping center in 1978 and 1995)
Lompoc, California
Santa Paula Shopping 172,600 sq. ft. 9/23/87 1961 (expanded (b) 1/24/96
Center in 1981 and
shopping center renovated in
Santa Paula, California 1994-1995)
Port Jersey Warehouse/ 1,703,000 sq. ft. 12/30/87 1972-1976 (one 23% 7/6/95
Distribution Center (six buildings); of the and
eight warehouse/ 1/12/88 (seventh buildings 1/30/96 (c)
distribution buildings building); and expanded
Jersey City and 6/20/88 (eighth in
Bayonne, New Jersey building) 1982
Fullerton Business 361,000 sq. ft. 6/16/88 1968 (one 7% 3/6/96
Center South building) and
office/warehouse 1985 (four
buildings Fullerton, buildings)
California
Sunrise Terrace mobile 300 spaces 6/16/89 1973 3% 3/21/95
home community Arroyo
Grande, California
Treasure Island mobile 266 spaces 8/1/89 1937 17% (d)
home community (d) on 27 acres
Laguna Beach, California
</TABLE>
* Represents Partnership's original cash investment in real estate which
consisted of gross proceeds of the offering less offering expenses,
acquisition fees, property purchase costs and reserves. Subsequent capital
expenditures by the Partnership are excluded.
(a) These nine mobile home communities were sold on the following dates: Poway
Royal, January 15, 1991; Heritage Village, June 24, 1994; LaCasa, June 30,
1994; Colony Cove Ellenton, August 2, 1994; LaQuinta Ridge, August 29,
1994; Bermuda Palms, August 29, 1994; Valleydale Estates, August 30, 1994;
Colony Cove New Port Richey, September 30, 1994; and Vista Diablo, November
29, 1995.
(b) These four shopping centers, in the aggregate, represented 20% of the
portfolio.
(c) Seven of these warehouse buildings were sold on July 6, 1995 and the last
one, The Macy's Building, was sold on January 30, 1996.
(d) The land formerly known as Treasure Island, which fee ownership of land and
improvements is held through a joint venture partnership, officially closed
as a mobile home park effective March 15, 1996. See Item 3, Legal
Proceedings, for a discussion of local legislation, administrative
requirements and litigation affecting this property.
<PAGE>
In previous reports filed with the Securities and Exchange Commission, the
Partnership stated that due to adverse conditions in the real estate market, and
the economy in general, it was necessary to extend the holding period for
certain of its properties beyond the originally anticipated six to ten years.
The Partnership's remaining real estate investment is the land formerly
known as Treasure Island (the "property"), a scenic, oceanfront property
situated on approximately 27 acres, including 3,000 feet of coastline along the
Pacific Ocean, in Laguna Beach, California. As previously reported, the property
was officially closed as a mobile home park on March 15, 1996 and all former
tenants have vacated the property. Treasure Island Associates ("TIA"), the joint
venture between the Partnership and an unaffiliated entity through which the
Partnership owns an interest in the property, was involved in lawsuits
concerning certain tenants. (see Item 3, Legal Proceedings, for a discussion of
local legislation, administrative requirements and litigation affecting the
potential disposition and value of this property).
In February 1996, the Partnership submitted a development proposal to the
City for the redevelopment of the property. The initial application included a
combination of detached single-family residences, multi-family housing and a
resort hotel complex including meeting rooms and restaurants. The application
consisted of a local coastal program ("LCP") and a specific plan reflecting such
uses. An LCP is required by California law because the City has not obtained
approval from the California Coastal Commission for a Local Coastal Program for
the property as required by the California Coastal Act.
The Planning Commission approved a development proposal for the property
consisting of up to 275 hotel rooms and 37 residences on April 15, 1998.
On June 2, 1998, TIA executed a contract (the "Contract") with
Vestar-Athens Resorts, L.L.C., a Phoenix, Arizona-based real estate developer
("Athens"), for the sale of the property. Athens plans to purchase the property
and develop it as an oceanfront resort community. The Contract provides for
Athens to pay TIA a monthly overhead charge along with certain expenses
associated with operating the property. TIA and Athens executed an amendment to
the Contract dated as of December 24, 1998 (the "Amendment"), that, among other
things, provides that the closing date shall be no later than September 15, 1999
and sets the purchase price for the property at $37,000,000. If the closing has
not occurred by June 1, 1999, the purchase price to be paid by Athens will
increase by an amount equal to an annualized 10% of the stated purchase price
until the closing date. The Contract is subject to several conditions, and there
can be no assurance that a sale will be consummated.
The City Council approved the master plan (the "Plan") on June 2, 1998.
Because the property is on the oceanfront, the Plan was also subject to approval
by the Coastal Commission before the City of Laguna Beach can issue further
permits and approvals to implement the Plan. On August 13, 1998 and November 6,
1998, the Coastal Commission approved the Plan subject to certain modifications
and conditions. On November 17, 1998, the City Council approved such
modifications and conditions. The Executive Director of the Coastal Commission
reported the acceptance of such modifications and conditions to the Coastal
Commission and, as a result of such report, the Plan became final on January 13,
1999.
As part of the City's implementation of the Plan, the City Council adopted
Resolution No. 98.075 on November 17, 1998 which incorporated new land use
designations and an amended land use map regarding the Plan, and Ordinance No.
1349 on December 1, 1998 which, among other things, added the Treasure Island
Specific Plan to the City's Municipal Code. On December 17, 1998 and December
29, 1998, based upon California law allowing submission of legislative actions
to the electorate for approval, certain Laguna Beach residents filed petitions
seeking a referendum to overturn Resolution No. 98.075 and Ordinance No. 1349,
respectively. The Orange County Registrar of Voters verified that each petition
contained the number of signatures required by the California Elections Code. On
January 19, 1999, in response to the referendum petitions, the City Council
scheduled a special election for Tuesday, April 27, 1999, for the purpose of
submitting Resolution No. 98.075 and Ordinance No. 1349 to the voters. If the
referenda are approved by the voters, the City Council's decisions with respect
to Resolution No. 98.075 and Ordinance No. 1349 will be affirmed; if the
referenda are disapproved, further proceedings by the Planning Commission and
the City Council regarding the Plan will be required.
The Planning Commission and City Council may now consider further permits
and approvals to implement the Plan, such as a subdivision map, site development
plan and design review.
<PAGE>
On July 6, 1998, Eugene R. Atherton, M.D. filed a Petition for Writ of
Mandate (the "Petition") in the Orange County Superior Court against the City
Council Members and others (Atherton v. City of Laguna Beach, et al., Action No.
796478). The Petition challenged the City's compliance with the California
Environmental Quality Act in its consideration of the Plan and sought a Writ of
Mandate vacating the City Council's approval of the Plan. TIA, Merrill Lynch,
Hubbard Inc. (an affiliate of the Managing General Partner) and The Athens Group
(an affiliate of the party that executed the June 2, 1998 contract for the sale
of the property) are named in the Petition as "real parties of interest."
The Court has scheduled a hearing on the merits of the Petition to be held
on April 28, 1999, at which time the Court will either announce its decision
with respect to the Petition or will take the matter under advisement for
announcement of its decision at a later date. The filing of the Petition does
not affect the processing of the Plan by the Coastal Commission or processing of
further permits and approvals to implement the Plan by the City. Counsel for the
Partnership believes that the administrative record contains substantial
evidence to support the City Council's approval of the Plan and will urge the
Court to deny the Petition. If the Court grants the Petition and vacates all or
part of the City Council's approval of the Plan, further proceedings by the
Planning Commission and the City Council regarding the Plan would be required.
The outcome of any such proceedings cannot be predicted at this time.
The Registrant wishes to ensure that statements made regarding expected
future developments regarding the property are accompanied by meaningful
cautionary statements pursuant to the safe harbor established in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based upon current available data and reflect the Registrant's expectations that
the referenda will result in a favorable outcome and that the property will be
sold to Athens. Actual receipt of a favorable outcome on the referenda and
closing of the sale are subject to future events and uncertainties, which could
materially affect the ability of the Registrant to obtain a favorable outcome of
the referenda and consummate the sale to Athens.
Since this is the last remaining property investment of the Registrant,
pursuant to Section 8.1 (ii) of the Registrant's Amended and Restated Agreement
of Limited Partnership, the sale of this last property will cause the
dissolution of the Registrant. The Registrant will not be liquidated, however,
until payment of a final liquidating distribution to the Registrant's partners
of all of the Registrant's remaining assets.
Neither TIA nor the Registrant is an affiliate of Athens.
The Partnership did not segregate revenues by geographic region and such a
presentation is not required because it is not necessary to understand the
Partnership's business taken as a whole.
The Partnership has no real estate investments located outside the United
States.
While the Partnership has no employees, pursuant to the Partnership's
Amended and Restated Agreement of Limited Partnership, the Partnership
reimburses affiliates of the Managing General Partner for certain expenses,
including specifically allocated payments for salaried employees rendering
certain services to or for the Partnership. Reference is made to Item 11 below.
Insurance
The current property insurance contract is for a one-year period expiring
March 1, 2000. Under this policy, the buildings and improvements owned by TIA
are covered by an all risk property policy, except for flood and earthquake
risks, with a blanket limit of liability for all perils of approximately
$1,131,000. This property insurance is subject to a deductible of $1,000 per
occurrence.
The Partnership has comprehensive general liability insurance for claims or
suits for bodily injury and property damage to third parties on a per occurrence
basis which covers all sums up to the limit of the policy, after which the
Partnership becomes legally obligated to pay. This insurance is subject to a
deductible of $2,500 per occurrence.
<PAGE>
ITEM 2 PROPERTIES
Reference is made to Item 1 for a description of the Partnerhip's real
property investments, which descripion is incorported herein by reference.
The property (as defined above) was the sole remaining investment property
owned by the Partnership during fiscal years ended 1997 and 1998.
Set forth below is a brief description of each of the real property
investments made by the Partnership. Reference is made to Notes 1,2,3,4,8 and 9
of the Notes to Consolidated Financial Statements in Item 8 below, the relevant
provisions of which are incorporated herein by reference, for additional
information concerning the property investments.
The Partnership's remaining real estate investment is the land formerly
know as Treasure Island, a scenic, oceanfront property situated on approximately
27 acres, including 3,000 feet of coastline along the Pacific Ocean, in Laguna
Beach California. Treasure Island Associates ("TIA") is the joint venture
between the Partnership and an unaffiliated entity through which the Partnership
owns the fee interest in the property. (See Item 1, Business, for a discussion
of recent developments and allowable use of the property and Item 3, Legal
Proceedings, for a discussion of local legislation, administrative requirements
and litigation, affecting this property.) TIA acquired this property on August
1, 1989. A description may be found in the Partnership's Current Report on Form
8-K dated August 15, 1989, a copy of which Report is incorporated herein by
reference.
On December 19, 1995, the Partnership sold the land and the Partnership's
interest as landlord in the ground lease for the land under the property known
as 1801 Century Park East. The sale was made to the tenant which leased the land
from the Partnership under the ground lease, after the tenant exercised its
option to purchase. Upon the distribution of the proceeds from the sale of this
property, the Unit Holders received cash distributions of Distributable Cash and
Sales Proceeds in an amount in excess of their Capital Contributions, the
threshold for the General Partners to receive 2% of all Sale Proceeds previously
or then distributed to Partners and any subsequent distribution of Sale Proceeds
(the "General Partner's 2% Interest"), in accordance with the terms of the
Partnership's Amended and Restated Agreement of Limited Partnership
("Partnership Agreement"). The Partnership's sale of 1801 Century Park East's
land is described in the Partnership's Current Report on Form 8-K dated December
28, 1995, which is incorporated herein by reference.
On March 2, 1993, the Partnership sold the land and the Partnership's
interest as landlord in the ground lease for the land under the property known
as Barnett Plaza. The sale was made to the tenant which leased the land from the
Partnership under the ground lease, after the tenant exercised its option to
purchase. The Partnership's sale of Barnett Plaza's land is described in the
Partnership's Current Report on Form 8-K dated March 15, 1993, which is
incorporated herein by reference.
American Retirement Communities ("ARC") was originally a portfolio of nine
retirement-oriented mobile home communities located in Florida and California
purchased by a joint venture partnership between the Partnership and MLH Income
Realty Partnership V ("MLHIRP V"), a public limited partnership formed by
affiliates of the Managing General Partner. The Partnership had a 66 2/3%
interest in the joint venture. ARC's portfolio was sold from January 15, 1991
through November 29, 1995. The sales are described in the Partnership's Current
Reports on Form 8-K dated November 5, 1990, January 29, 1991, July 1, 1994, July
13, 1994, August 12, 1994, September 1, 1994, September 12, 1994, October 13,
1994, and December 13, 1995, which are incorporated herein by reference.
The Partnership originally made investments in four California shopping
centers (Five Points Shopping Center, Bayhill Shopping Center, Lompoc Shopping
Center and Santa Paula Shopping Center) through a joint venture partnership
known as California Community Center Associates. On May 26, 1989, the
Partnership and an affiliate of the Managing General Partner purchased the
venture partner's interest in California Community Center Associates. On
September 27, 1995, Five Points Shopping Center, situated on 11 acres in Santa
Barbara, and Bayhill Shopping Center, situated on approximately 11 acres in San
Bruno, 12 miles south of San Francisco, were sold. The sales are described in
the Partnership's Current Report on Form 8-K dated October 11, 1995, which
report is incorporated herein by reference.
<PAGE>
On January 24, 1996, Lompoc Shopping Center, located on a 13-acre site in
Lompoc, near Vandenberg Air Force Base, and Santa Paula Shopping Center, located
on a 17-acre site in Santa Paula, approximately 65 miles northwest of Los
Angeles, were sold. The sales are described in the Partnership's Current Report
on Form 8-K dated February 6, 1996, which report is incorporated herein by
reference.
Port Jersey Warehouse/Distribution Center consisted of eight industrial
warehouse distribution buildings in Bayonne and Jersey City, New Jersey. On July
6, 1995, the Partnership sold the seven buildings located in Jersey City, New
Jersey. On January 30, 1996, the Partnership sold The Macy's Building, the
Partnership's last remaining building at the Port Jersey Warehouse/Distribution
Center in Bayonne, New Jersey. The sales are described in the Partnership's
Quarterly Report on Form 10-Q for the Quarterly Period Ended August 31, 1995,
and in the Partnership's Current Report on Form 8-K dated February 6, 1996,
respectively, which reports are incorporated herein by reference.
On March 6, 1996, the Partnership sold Fullerton Business Center South, a
complex consisting of five office/warehouse buildings located in Fullerton,
California, near Los Angeles. The sale is described in the Partnership's Current
Report on Form 8-K dated March 19, 1996, which report is incorporated herein by
reference.
On March 21, 1995, the Partnership sold Sunrise Terrace, a 300-space
retirement-oriented mobile home community located in Arroyo Grande, California.
The sale is described in the Partnership's Current Report on Form 8-K dated
April 3, 1995, which report is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
TREASURE ISLAND ASSOCIATES LITIGATION
The Partnership owns a joint venture Partnership interest in the property
formerly known as Treasure Island (the "property"), which was a mobile home
community located in Laguna Beach, California. The property was purchased by
Treasure Island Associates ("TIA"), a joint venture Partnership between the
Partnership and an unaffiliated entity, on August 1, 1989.
On May 2, 1996, George Posey, a nonresident tenant, filed an action with
the Court against TIA for trespass, constructive eviction, breach of covenant of
quiet enjoyment, declaratory relief, and unfair business practices. TIA
successfully demurred to the complaint and a first amended complaint was filed
July 19, 1996, seeking to set aside warehouseman's lien sale, cancellation of
instrument, declaratory relief, malicious prosecution, constructive eviction,
breach of covenant of quiet enjoyment, trespass, and unfair business practices.
Mr. Posey claims that TIA wrongfully sold his mobilehome at a warehouseman's
lien sale and thereafter denied him entry to the mobilehome. He seeks special
damages of $50,000, general damages of $250,000, and punitive damages of
$500,000. No trial date has been set.
In 1992, in compliance with an ordinance requiring mobile home park owners
to apply for a conditional use permit ("CUP") prior to a park closure, TIA
applied to the City of Laguna Beach for a CUP. In 1994, the City adopted a
resolution that approved the CUP but imposed conditions on TIA to mitigate the
alleged adverse impact of the closure on tenants. TIA filed a lawsuit in the
California Superior Court for the County of Orange ("the Court") challenging the
mitigation conditions and Treasure Island Residents and Owners Association
("TIROA") intervened in the action. The Court issued a Writ of Mandate
directing, among other things, the City to amend the resolution to limit the
mitigation measures. The City then issued an amended resolution effectively
complying with the Court's Writ of Mandate. TIA challenged the validity of the
mitigation measures reimposed by the amended resolution and filed a second
lawsuit with the Court. TIROA also intervened in this action.
On May 2, 1995, the City adopted a second amended resolution substantially
reducing the mitigation conditions and TIA executed a settlement agreement with
the City that settled all lawsuits filed by TIA against the City concerning the
closure of the mobile home park. TIROA challenged the second amended resolution.
TIROA's lawsuit challenging the Second Amended Resolution, the tenants'
actions filed with the Court and non-payment unlawful detainers and closure
unlawful detainers were consolidated and transferred to the Court's Complex
Litigation Panel. The Court rejected TIROA's challenge to the Second Amended
Resolution and entered judgement against TIROA's and in favor of TIA. In
addition, the Court entered a judgement of possession in favor of TIA against
all tenants in the consolidated unlawful detainer actions. TIROA and the tenants
appealed the adverse judgements.
While these appeals were pending, TIROA, the tenants and TIA resolved all
litigations through settlements.
<PAGE>
In February 1996, the Partnership submitted a development proposal to the
City for the redevelopment of the property. The initial application included a
combination of detached single-family residences, multi-family housing and a
resort hotel complex including meeting rooms and restaurants. The application
consisted of a local coastal program ("LCP") and a specific plan reflecting such
uses. An LCP is required by California law because the City has not obtained
approval from the California Coastal Commission for a Local Coastal Program for
the property as required by the California Coastal Act.
The Planning Commission approved a development proposal for the property
consisting of up to 275 hotel rooms and 37 residences on April 15, 1998.
On June 2, 1998, TIA executed a contract (the "Contract") with
Vestar-Athens Resorts, L.L.C. ("Athens") for the sale of the property. Athens, a
Phoenix, Arizona based real estate developer, plans to purchase the property and
to develop it as an oceanfront resort community. TIA and Athens executed an
amendment, dated as of December 24, 1998 (the "Amendment"), to the Contract that
provides, among other things, that the closing date shall be no later than
September 15, 1999 and sets the purchase price for the Property at $37,000,000.
If the closing has not occurred by June 1, 1999, the purchase price to be paid
by Athens will increase by an amount equal to an annualized 10% of the stated
purchase price until the closing date. The Contract is subject to several
conditions, and there can be no assurance that a sale will be consummated.
The City Council approved the master plan (the "Plan") on June 2, 1998.
Because the property is on the oceanfront, the Plan was also subject to approval
by the Coastal Commission before the City of Laguna Beach can issue further
permits and approvals to implement the Plan. On August 13, 1998 and November 6,
1998, the Coastal Commission approved the Plan subject to certain modifications
and conditions. On November 17, 1998, the City Council approved such
modifications and conditions. The Executive Director of the Coastal Commission
reported the acceptance of such modifications and conditions to the Coastal
Commission and, as a result of such report, the Plan became final on January 13,
1999.
As part of the City's implementation of the Plan, the City Council adopted
Resolution No. 98.075 on November 17, 1998 which incorporated new land use
designations and an amended land use map regarding the plan, and Ordinance No.
1349 on December 1, 1998 which, among other things, added the Treasure Island
Specific Plan to the City's Municipal Code. On December 17, 1998 and December
29, 1998, based upon California law allowing submission of legislative actions
to the electorate for approval, certain Laguna Beach residents filed petitions
seeking a referendum to overturn Resolution No. 98.075 and Ordinance No. 1349,
respectively. The Orange County Registrar of Voters verified that each petition
contained the number of signatures required by the California Elections Code. On
January 19, 1999, in response to the referendum petitions, the City Council
scheduled a special election for Tuesday, April 27, 1999, for the purpose of
submitting Resolution No. 98.075 and Ordinance No. 1349 to the voters. If the
referenda are approved by the voters, the City Council's decisions with respect
to Resolution No. 98.075 and Ordinance No. 1349 will be affirmed; if the
referenda are disapproved, further proceedings by the Planning Commission and
the City Council regarding the Plan will be required.
The Planning Commission and City Council may now consider further permits
and approvals to implement the Plan, such as a subdivision map, site development
plan and design review.
On July 6, 1998, Eugene R. Atherton, M.D. filed a Petition for Writ of
Mandate (the "Petition") in the Orange County Superior Court against the City
Council Members and others (Atherton v. City of Laguna Beach, et al., Action No.
796478). The Petition challenged the City's compliance with the California
Environmental Quality Act in its consideration of the Plan and sought a Writ of
Mandate vacating the City Council's approval of the Plan. TIA, Merrill Lynch,
Hubbard Inc. (an affiliate of the Managing General Partner) and The Athens Group
(an affiliate of the party that executed the June 2, 1998 contract for the sale
of the property) are named in the Petition as "real parties of interest."
The Court has scheduled a hearing on the merits of the Petition to be held
on April 28, 1999, at which time the Court will either announce its decision
with respect to the Petition or will take the matter under advisement for
announcement of its decision at a later date. The filing of the Petition does
not affect the processing of the Plan by the Coastal Commission or processing of
further permits and approvals to implement the Plan by the City. Counsel for the
Partnership believes that the administrative record contains substantial
evidence to support the City Council's approval of the Plan and will urge the
Court to deny the Petition. If the Court grants the Petition and vacates all or
part of the City Council's approval of the Plan, further proceedings by the
Planning Commission and the City Council regarding the Plan would be required.
The outcome of any such proceedings cannot be predicted at this time.
<PAGE>
PARTNERSHIP LITIGATION
On February 25, 1996, a series of putative class actions filed purportedly
on behalf of, among others, all persons who purchased limited partnership
interests in the Partnership were consolidated for pre-trial purposes by order
of the U.S. District Court for the Southern District of New York. Thereafter, a
consolidated complaint was filed pursuant to the order of the District Court. On
July 17, 1996, the Court endorsed a stipulation and order which provided, among
other things, for certification of a plaintiff class and the filing of a
supplemental pleading in the action (the "Amended Complaint") adding claims
under various New Jersey statutes. The Amended Complaint was filed, and notice
of the action was sent to all members of the class pursuant to the stipulation
and order of the Court.
On September 27, 1996, the Partnership and other defendants moved to
dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure
12(b)(6) and 9(b), on the grounds, among others, that the claims contained in
the Amended Complaint were barred by the statute of limitations. On October 15,
1996, the Court granted plaintiffs until January 17, 1997 to file a second
consolidated amended class action complaint (the "Second Amended Complaint").
Plaintiffs filed the Second Amended Complaint on January 17, 1997, and, on
February 17, 1997, defendants moved to dismiss the Second Amended Complaint.
On August 26, 1997, the Court granted the motion to dismiss, holding that
plaintiffs' RICO claims were barred by the applicable statutes of limitations
and dismissing the remaining state law claims for lack of subject matter
jurisdiction. The court declined to grant plaintiffs leave to replead. On
September 24, 1997, plaintiffs filed a notice of appeal to the Second Circuit
Court of Appeals. On August 28, 1998, the Second Circuit affirmed the dismissal
of plaintiffs' complaint. Plaintiffs have taken no further action with regard to
the lawsuit, and their time to do so has now expired.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of Unit Holders during the fourth quarter
of the fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
An established public trading market for the Units does not exist, and it
is not anticipated that such a market will develop in the future. Accordingly,
accurate information as to the market value of a Unit at any given date is not
available.
From November 9, 1992 through 1998, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch" or "MLPF&S") provided a limited partnership
secondary service through Merrill Lynch's Limited Partnership Secondary
Transaction Department ("LPSTD"). This service assisted Merrill Lynch clients
who wished to buy or sell limited partnership interests.
The following table sets forth the range of prices for which Partnership
Units were bought or sold through the LPSTD for each quarterly period within the
1997 fiscal year:
For the Quarter Ended Range
--------------------- -----------
03/31/97 $ 83 - $ 96
06/30/97 $ 88 - $ 96
09/30/97 $ 87 - $ 92
12/31/97 $ 96 - $ 98
Units were bought and sold through the LPSTD at $99 per Unit in the month
of January 1998. There were no other Partnership Units bought or sold through
the LPSTD within the 1998 fiscal year.
The Partnership's remaining real estate investment, the land formerly known
as Treasure Island, does not currently generate cash flow. It is, therefore,
expected that Unit holders will not receive further distributions until this
last property is sold.
The Limited Partners' Capital per Unit for financial reporting purposes was
$122.67 at December 31, 1998, which approximated the Partnership's net asset
value per Unit as of the same date. The net asset value was based upon the
estimated future value of the property, together with other assets less
liabilities and less the General Partners' 2% residual carried interest in
future sale proceeds. Cumulative cash distributions from all sources totaled
$1,121.58 per Unit for Limited Partners admitted June 6, 1986 (consisting of
$656.80 per Unit of sales proceeds and $464.78 per Unit of Distributable Cash).
The net asset value per Unit at December 31, 1998, plus cumulative cash
distributions paid to Limited Partners admitted on June 6, 1986, totaled
approximately $1,244.25 per Unit.
The estimated future value of the property formerly known as Treasure
Island represents the opinion of the Managing General Partner and is based on
facts and conditions existing on the date of the estimation and on a number of
assumptions concerning future circumstances, which assumptions may or may not
prove to be accurate. In addition, the property's value may fluctuate in
response to many real estate market and economic conditions. Therefore, the
current net asset value of the Partnership may be different from the
Partnership's net asset value as of December 31, 1998 because the property, if
it were sold, might be sold for a higher or lower price than the value reflected
in the December 31, 1998 net asset value. In addition, the net asset value per
Unit may not represent the Unit's current market value, and investors may or may
not be able to realize the net asset value per Unit upon disposition of their
Units.
<PAGE>
Beginning with December 1994 client account statements, MLPF&S implemented
new guidelines for valuing limited partnerships and other direct investments
reported on client account statements. As a result, MLPF&S no longer reports
general partner estimates of limited partnership net asset value on its client
account statements, although the Partnership's Managing General Partner may
continue to provide its estimate of net asset value in reports to Unit Holders.
Pursuant to the limited partnership valuation guidelines implemented in December
1994, estimated values for limited partnership interests originally sold by
MLPF&S (such as the Partnership) are provided to MLPF&S by independent
valuation services. Commencing in 1996, such estimated values are provided two
times per year. The estimated values will be based on financial and other
information available to the independent services on the prior August 15th for
reporting on December year-end client account statements, and on information
available to the services on the prior March 31st for reporting on June
month-end MLPF&S client account statements. The Managing General Partner's
estimate of its fiscal year end net asset value as set forth above was based on
the estimated future value of the property, together with other assets less
liabilities and less the General Partners' 2% residual carried interest in
future sale proceeds. The value provided by the independent services, however,
reflects the estimated value of the Partnership Units themselves based on
information that was available on August 15th. MLPF&S clients may contact their
Merrill Lynch Financial Consultants or telephone the number provided to them on
their account statements to obtain a general description of the methodology used
by the independent valuation services to determine their estimates of value.
Like the Partnership's net asset value, the estimated values provided by the
independent services are not market values and Unit Holders may not be able to
sell their Units or realize the amounts shown on their MLPF&S statements upon a
sale. In addition, Unit Holders may not realize the amount shown on their
account statements upon the liquidation of the Partnership over its remaining
life.
The Units are evidenced by depositary receipts and may be transferred by
the Unit Holders. Because of the adverse tax consequences which would have,
through the 1998 fiscal year end, resulted from transfers of Class A Units to
tax exempt entities, generally, transfers of Class A Units to tax exempt
entities were not recognized by the Partnership except for transfers upon death
and by operation of law and transfers by gift to religious, charitable,
educational or similar organizations and trusts. The Managing General Partner,
in its discretion, may permit the sale of Class B Units to some taxable
investors and to a foreign corporation organized to purchase Units with the
proceeds of a foreign offering. No transfer or assignment of any Unit shall be
made if it would result in a change in the Partnership's tax status. A transfer
will not be registered if, immediately thereafter, any transferor or transferee
would hold less than five Units (two Units for an Individual Retirement Account
or Keogh Plan) or if any transferor or transferee would hold a fraction of a
Unit (except for a transfer by gift, inheritance or family dissolution or a
transfer within a family or to an affiliate of the transferor).
The approximate number of record holders of Units at December 31, 1998 was
37,937. The Partnership's CUSIP number is 55307D204 for Class A Units and
55307D303 for Class B Units.
Distributable Cash, if any, is to be paid 90.16% to the Unit Holders and
9.84% to the General Partners. Unit Holders will receive cash distributions only
if net cash flow from operations (or reserves) is available for distribution.
The levels of operating cash distributions are dependent upon the yields
generated by the Partnership's real property investments, after taking into
account reserve requirements, capital expenditures, working capital
requirements, and investments in short-term instruments. As a result, cash
distribution levels may fluctuate from time to time. Also, as a result of
property sales, the amounts of cash from operations available for distribution,
if any, have declined. The Partnership's last remaining real estate investment,
the land formerly known as Treasure Island located in Laguna Beach, California,
does not currently generate cash flow. Considering reserve requirements, the
costs associated with the redevelopment and eventual sale of this property, the
Partnership does not expect to make future cash distributions to Limited
Partners until the sale of this last remaining property.
Total cumulative distributions paid or accrued from all sources since
inception of the Partnership to Unit Holders admitted on June 6, 1986 equals
$1,121.58 per Unit. Reference is made to Item 6, Selected Financial Data, for
total cumulative distributions made to Unit Holders admitted at subsequent
closings.
A distribution of $123.41 per Unit, representing net proceeds and related
interest from the sales during the first half of the 1996 fiscal year of Santa
Paula Shopping Center, Lompoc Shopping Center, The Macy's Building, Fullerton
Business Center South and the land under 1801 Century Park East, was paid to
Unit Holders on August 30, 1996. The Partnership did not make any cash
distributions for the fiscal years 1998 and 1997.
<PAGE>
Reference is made to Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, for further information relating
to the Partnership's cash distributions, which information is incorporated
herein by reference.
Sale or Financing Proceeds will be distributed, generally, first to the
Unit Holders until they have received distributions of Distributable Cash and
Sale or Financing Proceeds in an amount equal to their capital contributions
(which event occurred with the distribution of the net proceeds from the sale of
the land under 1801 Century Park East), second to the General Partners in an
amount such that the General Partners received 2% of the Sale or Financing
Proceeds previously or then being distributed to Partners, and third to Unit
Holders until they receive a return of their capital plus cumulative cash
distributions and Sale or Financing Proceeds equal to 6% per annum of their
adjusted capital contributions. Thereafter, once the General Partners receive an
amount not in excess of 2% of the sale proceeds (including any loan principal
repayments) received, any remaining Sale or Financing Proceeds will be
distributed 85% to the Unit Holders and 15% to the General Partners. In no event
will the General Partners receive any such Sale or Financing Proceeds (except
for their 2% interest in sale proceeds) unless the Unit Holders have received a
return of their capital contributions plus cumulative distributions of
Distributable Cash and Sale or Financing Proceeds equal to 9% per annum of their
adjusted capital contributions. Sale or Financing Proceeds, as defined in the
Partnership Agreement, excludes, at the discretion of the Managing General
Partner, amounts allocated to various purposes including improvements. Sale or
Financing Proceeds will be distributed on or before the last day of the third
month after the end of the fiscal six-month period in which such proceeds were
received by the Partnership.
Under the terms of the Partnership Agreement, the General Partners will not
retain any of the sale proceeds resulting from the anticipated sale of the
property to Athens under the pending contract between Athens and TIA.
Taxable income arising from current operations generally will be allocated
in the same proportions as distributions of Distributable Cash (or, if there is
no Distributable Cash, 99% to the Unit Holders and 1% to the General Partners).
Taxable income arising from a sale or financing will generally be allocated
first, 1% of the taxable income to the General Partners; second, to each Unit
Holder and each General Partner in an amount equal to any negative amount of his
capital account; and third, first to the General Partners in an amount equal to
the lesser of (a) the amount of Sale or Financing Proceeds distributed to them
in connection with the sale or financing or (b) an amount sufficient to increase
the aggregate positive amount of their capital accounts to the amount referred
to in (a) above, second, to the Class A Unit Holders so as to equalize the
average capital account balances of the Class A and Class B Unit Holders, and
third, the balance to the Unit Holders. Any tax loss will be allocated 99% to
the Unit Holders and 1% to the General Partners. In no event will the General
Partners be allocated less than 1% of taxable income arising from any source.
Through September 30, 1993, depreciation deductions allocable to Unit Holders
were allocated solely to Class A Unit Holders. In 1995, any differences
resulting from prior special allocations of depreciation deductions have been
eliminated between the per Unit Capital Account balances of the Class A and
Class B Unit Holders.
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of the selected financial data for the
Partnership:
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
FOR THE YEARS ENDED DECEMBER 31, 1998
and 1997 and NOVEMBER 30, 1996, 1995 AND 1994
(Dollars in Thousands, Except Per Unit Data)
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------------- ------------- ------------- -------------- -------------
Total Operating Revenues...................... $ 811 $ 1,145 $ 5,458 $21,605 $ 51,599
Net income (loss) (a)......................... (502) (726) 1,681 (8,383) 22,888
Net income (loss) allocated to
Limited Partners (a)....................... (502) (726) (2,639) (9,677) 20,227
Total assets - end of year (b)................ 40,208 40,916 41,745 175,664 269,976
Cumulative Limited Partners'
distributions paid or payable - end of year... 359,281 359,281 359,281 319,509 215,765
Limited Partners' capital
- end of year (c)........................ 39,533 40,035 40,798 83,209 196,630
Per Unit Data (d):
Net income (loss) (a).................... (1.56) (2.25) (8.19) (30.03) 62.76
Distributions paid or payable (c)........ -- -- 123.41 321.91 236.67
Limited Partners' capital
- end of year......................... 122.67 124.23 126.59 258.19 610.13
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing in Item 8 of this Annual
Report.
(a) Net income for 1996 includes gains on the sales of three real estate
investments of $1,369,000, (none of which is allocated to the Limited
Partners) and a loss on the sale of one real estate investment of $430,000
(100%, or $1.33 per Unit, allocated to the Limited Partners).
Net loss for 1995 includes gains on the sales of three real estate
investments of $2,769,000, ($2,387,000, or $7.41 per unit, allocated to the
Limited Partners) and losses on the sale of two real estate investments of
$1,820,000 (100%, or $5.65 per Unit, allocated to the Limited Partners).
Net income for 1995 also includes a writedown for impairment of assets of
$18,600,000 (100%, or $57.71 per Unit, allocated to the Limited Partners).
Net income for 1994 includes gains on the sales of seven real estate
investments of $18,344,000, ($17,164,000, or $53.26 per unit, allocated to
the Limited Partners). Net income for 1994 also includes a writedown for
impairment of assets of $10,500,000 (100%, or $32.58 per Unit, allocated to
the Limited Partners).
(b) Total assets are net of accumulated depreciation and are net of a
$13,941,000 writedown for impairment of assets. Total assets are net of
additional writedowns for impairment of assets of $18,600,000 and
$10,500,000 in 1995 and 1994, respectively.
(c) Cumulative Limited Partners' distributions paid through December 31, 1998
have been allocated to the Limited Partners based upon the dates they
became Unit Holders and are summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage
Return of
Cumulative Original
Date Became Cumulative Distributions Capital
Unit Holder Units Distributions Per Unit Contribution
- -----------------------------------------------------------------------------------------------------
June 6, 1986 204,786 $229,684,000 $1,121.58 112%
August 7, 1986 64,730 72,050,000 1,113.08 111%
November 25, 1986 25,200 27,670,000 1,098.01 110%
January 20, 1987 7,477 8,153,000 1,090.41 109%
March 11, 1987 15,500 16,795,000 1,083.56 108%
April 23, 1987 253 272,000 1,075.10 108%
May 7, 1987 4,329 4,657,000 1,075.75 108%
</TABLE>
Such cumulative Limited Partners' distributions included sales proceeds and
related interest totalling $211,670,000, or $656.80 per Unit. For income tax
purposes, all cash distributions are a tax-free return of capital until the cash
received exceeds the tax basis of his/her partnership investment. Taxable income
or losses of the Partnership are passed through to the Partners for inclusion in
their respective tax returns, as reflected on the Federal Schedules K-1
distributed to the Partners each year.
Distributions per Unit paid or payable for each of the last five years
consist of the following:
Fiscal Distrbutable Sales
Year Cash Proceeds Total
------ ------------ -------- -------
1998 $ - $ - $ -
1997 - - -
1996 - 123.41 123.41
1995 36.78 285.13 321.91
1994 50.00 186.67 236.67
(d) Per Unit data is computed by dividing the Limited Partners' allocable
portion of the respective items by 322,275 Units. For financial reporting
purposes, net income or loss is allocated 90.16% to the Limited Partners
and 9.84% to the General Partners except for certain adjustments which may
be necessary in allocating gains and losses on property dispositions or
impairment writedowns.
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Change in Fiscal Year
Effective January 1, 1997, the Partnership changed its fiscal year from a
twelve month period ending November 30 to a twelve month period ending December
31. During the 31 day transition period of December 1, 1996 through December 31,
1996, the Partnership incurred a net loss of approximately $37,000, which
reflects the net operations of the property and general and administrative
expenses of the Partnership, net of interest earned on the Partnership's
securities investments. The $162,000 decrease in cash and cash equivalents
primarily resulted from the operating loss as well as from disbursements for
redevelopment costs of the property.
Liquidity and Capital Resources
Because the land formerly known as Treasure Island is the remaining
property investment of the Partnership, pursuant to Section 8.1 (ii) of the
Partnership's Amended and Restated Agreement of Limited Partnership, the sale of
this last property will cause the dissolution of the Partnership. The
Partnership will not be liquidated, however, until payment of a final
liquidating distribution to the Partnership's partners of all of the
Partnership's remaining assets. (see Item 3, Legal Proceedings, for a discussion
of local legislation, administrative requirements and litigation affecting the
potential disposition and value of this property).
At December 31, 1998, the Partnership and its consolidated joint venture
had cash and equivalents of approximately $4.7 million. Such funds are expected
to be utilized for reserve requirements, redevelopment of the property, working
capital requirements and, to the extent available, cash distributions to the
Partners. In total, cash and equivalents decreased $1,685,000 from fiscal 1997
to fiscal 1998 primarily due to disbursements for certain costs and expenses
related to the redevelopment of the property.
Cash used in operating activities primarily resulted from the Partnership's
operating loss net of interest income earned on the Partnership's portfolio of
cash equivalents. Cash flows from operating activities decreased from 1997 to
1998 and from 1996 to 1997 primarily due to the sales of various real estate
investments in fiscal 1996.
Cash flows from investing activities includes the receipt of proceeds from
the sales of real estate investments during the first half of fiscal 1996
totalling approximately $42.9 million. Cash flows from investing activities are
also affected by increases and decreases in the Partnership's portfolio of cash
equivalents. Such cash flows are affected by disbursements for the redevelopment
of the property.
Cash flows from financing activities relate entirely to distributions paid
to the Partners. Distributions of distributable cash and/or proceeds from the
sale of properties, if any, are made semi-annually on or before the last day of
the third month following the end of the six month period. Thus, distributions
relating to the second half of each year are paid in the first half of the
subsequent year. There were no distributions paid in fiscal 1998 and 1997.
Distributions paid in the first half of fiscal 1996 included $83.7 million
($259.60 per Unit paid in December 1995) relating to proceeds from sales of four
real estate investments in the second half of fiscal 1995 plus $5.9 million
($16.53 per Unit paid in January 1996) of distributable cash related to the
second half of fiscal 1995.
Cash Distributions
Considering reserve requirements for the costs associated with the
redevelopment and eventual sale of the Partnership's last property (which
currently does not generate cash flows from operations), the Partnership does
not expect to make future cash distributions to Limited Partners until the sale
of this last property. Distributions of future sales proceeds will be made in
accordance with the Partnership's Amended and Restated Agreement of Limited
Partnership. Buyers and sellers of Units will receive such distributions in
accordance with the terms of the Partnership's transfer documents. The level and
timing of distributions of sales proceeds will be dependent on the timing of the
future sale of the remaining property and the ultimate sale price achieved, as
well as on reserve requirements.
<PAGE>
Results of Operations
Significant fluctuations in the Partnership's operating results for the
year ended December 31, 1998, as compared to 1997, and for the year ended
December 31, 1997, as compared to 1996, are primarily attributable to the
following:
In fiscal 1996, the Partnership sold five real estate investments: Santa
Paula Shopping Center ("Santa Paula"), Lompoc Shopping Center ("Lompoc"), The
Macy's Building and its ground lease interest in 1801 Century Park East ("1801
Land") and Fullerton Business Center South ("Fullerton"). The sale of The Macy's
Building resulted in a gain to the Partnership of approximately $1.4 million,
while no gain or loss was recorded for the sale of the 1801 Land. For Santa
Paula and Lompoc a gain of $27,000 was recognized at the time of sale, while for
Fullerton, the Partnership recorded a loss at the sale date totaling $430,000.
The decreases in rental income, property operating expenses and
depreciation expense for 1998, as compared to 1997, and for 1997, as compared to
1996, primarily relate to the sales of various investments in fiscal 1996.
The decrease in interest income for 1998, as compared to 1997, as well as
the decrease for 1997 as compared to 1996 primarily relates to earnings on the
net sales proceeds from the above mentioned property sales which had been
invested in the Partnership's portfolio of cash equivalents and marketable debt
securities prior to the distribution of such proceeds to the Partners.
Year 2000 Compliance Initiative
The year 2000 ("Y2K") problem is the result of a widespread programming
technique that causes computer systems to identify a date based on the last two
numbers of a year, with the assumption that the first two numbers of the year
are "19". As a result, the year 2000 would be stored as "00", causing computers
to incorrectly interpret the year as 1900. Left uncorrected, the Y2K problem may
cause information technology systems (e.g., computer databases) and
non-information technology systems (e.g., elevators) to produce incorrect data
or cease operating completely.
Overall, Registrant believes that it has identified and evaluated its
internal Y2K problem and that it is devoting sufficient resources to renovating
technology systems that are not already Y2K compliant. Registrant has been
working with third-party software vendors to ensure that computer programs
utilized by Registrant are Y2K compliant. In addition, Registrant has contacted
third parties to ascertain whether these entities are addressing the Y2K issue
within their own operation.
The Managing General Partner is responsible for providing administrative
and accounting services necessary to support Registrant's operations, including
maintenance of the books and records, maintenance of the partner database,
issuance of financial reports and tax information to partners and processing
distribution payments to partners. In 1995, Merrill Lynch established the Year
2000 Compliance Initiative, which is an enterprisewide effort to address the
risks associated with the Y2K problem, both internal and external. The
integration testing phase, which will occur throughout 1999, validates that a
system can successfully interface with both internal and external systems.
Merrill Lynch continues to survey and communicate with third parties whose Year
2000 readiness is important to the company. Based on the nature of the response
and the importance of the product or service involved, Merrill Lynch determines
if additional testing is needed.
Merrill Lynch will participate in further industrywide testing currently
scheduled for March and April 1999, which will involve an expanded number of
firms, transactions, and conditions.
Although Registrant has not finally determined the cost associated with its
Year 2000 readiness efforts, Registrant does not anticipate the cost of the Y2K
problem to be material to its business, financial condition or results of
operations in any given year. However, there can be no guarantee that the
systems of other companies on which Registrant's systems rely will be timely
converted, or that a failure to convert by another company or a conversion that
is incompatible with Registrant's systems would not have a material adverse
effect on Registrant's business, financial condition or results of operations.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
INDEX
PAGE
Report of Independent Auditors 20
Consolidated Balance Sheets, December 31, 1998 and 1997 21
Consolidated Statements of Operations 22
for the Years Ended December 31, 1998 and 1997 and
November 30, 1996
Consolidated Statements of Changes in Partners' Capital 23
for the Years Ended December 31, 1998 and 1997,
the One Month Ended December 31, 1996,
and the Year Ended November 30, 1996
Consolidated Statements of Cash Flows 24
for the Years Ended December 31, 1998 and 1997
and November 30, 1996
Notes to Consolidated Financial Statements 25
FINANCIAL STATEMENT SCHEDULES:
- -----------------------------
Real Estate and Accumulated Depreciation - Schedule III 32
________________________________________________________________________________
Schedules Note Filed:
All schedules except those indicated above have been omitted as the
required information is not applicable or the information is shown in the
consolidated financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
MLH Income Realty Partnership VI and Consolidated Joint Ventures
We have audited the consolidated financial statements of MLH Income Realty
Partnership VI and consolidated joint ventures as of December 31, 1998 and 1997,
and the related consolidated statements of operations, changes in partners'
capital and cash flows for each of the two years in the period ended December
31, 1998 and for the one year period ended November 30, 1996. Our audits also
included the financial statement schedule listed in the Index at Item 14 (a).
These financial statements and schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MLH Income Realty Partnership VI and consolidated joint ventures at December 31,
1998 and 1997, and the consolidated results of their operations and their cash
flows for each of the two years in the period ended December 31, 1998 and for
the one year period ended November 30, 1996 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
February 19, 1999
New York, New York
<PAGE>
<TABLE>
<CAPTION>
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(Dollars in Thousands)
<S> <C> <C>
1998 1997
--------- ---------
ASSETS:
REAL ESTATE INVESTMENTS:
Investment property (Notes 1,2,3,4,8 and 9)
Land $ 26,716 $ 26,716
Other real estate assets (Note 1) 8,617 7,696
--------- ---------
Total real estate investments 35,333 34,412
--------- ---------
OTHER ASSETS:
Cash and equivalents (Notes 1 and 6) 4,749 6,434
Interest and other receivables, net of allowances
of $0 in 1998 and $1,091 in 1997 122 62
Prepaid expenses and other 4 8
--------- ---------
Total other assets 4,875 6,504
--------- ---------
TOTAL $ 40,208 $ 40,916
========= =========
LIABILITIES:
Accounts payable and accrued expenses $ 161 $ 367
Other liabilities 514 514
--------- ---------
Total liabilities 675 881
--------- ---------
PARTNERS' CAPITAL (Notes 1, 7 and 8):
General Partners:
Capital contributions 25 25
Cumulative income 20,405 20,405
Cumulative distributions (20,430) (20,430)
--------- ---------
- -
--------- ---------
Limited Partners (322,275 Units):
Capital contributions, net of offering expenses 294,968 294,968
Cumulative income 103,846 104,348
Cumulative distributions (359,281) (359,281)
--------- ---------
39,533 40,035
--------- ---------
Total Partners' capital 39,533 40,035
--------- ---------
TOTAL $ 40,208 $ 40,916
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND NOVEMBER 30, 1996
(In Thousands, Except Unit and Per Unit Data)
<S> <C> <C> <C>
1998 1997 1996
--------------- -------------- ---------------
OPERATING REVENUES:
Rental and management fees $ 523 $ 740 $ 1,693
Interest 288 405 2,396
Gains on sales of real
estate investments (Note 4) - - 1,369
--------------- -------------- ---------------
Total operating revenues 811 1,145 5,458
--------------- -------------- ---------------
OPERATING EXPENSES:
Property operating 1,042 1,555 2,303
Depreciation - - 288
General and administrative 271 316 757
Losses on sales of real estate
investments (Notes 1 and 4) - - 430
--------------- -------------- ---------------
Total operating expenses 1,313 1,871 3,778
--------------- -------------- ---------------
(LOSS) INCOME FROM OPERATIONS (502) (726) 1,680
MINORITY INTEREST IN CONSOLIDATED
JOINT VENTURE'S OPERATIONS - - 1
--------------- -------------- ---------------
NET (LOSS) INCOME (Note 8) $ (502) $ (726) $ 1,681
=============== ============== ===============
NET INCOME ALLOCATED TO
GENERAL PARTNERS (Note 1) $ - $ - $ 4,320
=============== ============== ===============
NET LOSS ALLOCATED TO LIMITED PARTNERS $ (502) $ (726) $ (2,639)
=============== ============== ===============
NET LOSS PER UNIT OF LIMITED
PARTNERSHIP INTEREST $ (1.56) $ (2.25) $ (8.19)
=============== ============== ===============
UNITS OF LIMITED PARTNERSHIP INTEREST 322,275 322,275 322,275
=============== ============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997, THE ONE MONTH ENDED
DECEMBER 31, 1996 AND FOR THE YEAR ENDED NOVEMBER 30, 1996
(Dollars in Thousands)
<S> <C> <C> <C>
Limited
General Partners
Partners (322,275 Units) Total
----------- ---------------- -------------
BALANCE NOVEMBER 30, 1995 $ - $ 83,209 $ 83,209
Net income (loss) 4,320 (2,639) 1,681
Distributions (4,320) (39,772) (44,092)
----------- ------------ -----------
BALANCE NOVEMBER 30, 1996 - 40,798 40,798
Net loss - (37) (37)
----------- ------------ -----------
BALANCE DECEMBER 31, 1996 - 40,761 40,761
Net loss - (726) (726)
----------- ------------ -----------
BALANCE DECEMBER 31, 1997 - 40,035 40,035
Net loss - (502) (502)
----------- ------------ -----------
BALANCE DECEMBER 31, 1998 $ - $ 39,533 $ 39,533
=========== ============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997 and November 30, 1996
(Dollars in Thousands)
<S> <C> <C> <C>
1998 1997 1996
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (502) $ (726) $ 1,681
Items reconciling net (loss) income to net cash
provided by (used in) operating activities:
Gains on sales of real estate investments (Note 4) -- -- (1,369)
Losses on sales of real estate investments (Note 4) -- -- 430
Depreciation -- -- 288
Minority interest in consolidated joint
venture's operations -- -- (1)
Distributions of earnings to venture partner
in consolidated joint venture -- -- (85)
Bad debt expense (recovery) (16) (85) 919
Changes in operating assets and liabilities:
Interest and other receivables (44) 37 585
Accounts payable and accrued expenses (206) 196 (517)
Other assets and other liabilities, net 4 (6) 108
--------- --------- ---------
Net cash provided by (used in)operating activities (764) (584) 2,039
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of real estate investments,
net of selling expenses (Note 4) -- -- 42,901
Property improvements (921) (1,903) (4,350)
Settlement of escrow account -- -- 1,299
Maturities of marketable debt securities -- -- 80,948
Purchases of marketable debt securities -- -- (26,344)
--------- --------- ---------
Net cash provided by (used in) investing activities (921) (1,903) 94,454
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to partners -- -- (133,663)
--------- --------- ---------
Net cash used in financing activities -- -- (133,663)
--------- --------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (1,685) (2,487) (37,170)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 6,434 8,921 46,253
--------- --------- ---------
CASH AND EQUIVALENTS, END OF PERIOD $ 4,749 $ 6,434 $ 9,083
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
MLH Income Realty Partnership VI (the "Partnership" or the "Registrant")
was formed under the New York Uniform Limited Partnership Act on December 4,
1984. The Partnership made equity investments in nineteen income-producing
properties located throughout the United States.
The Partnership's remaining real estate investment is the land formerly
known as Treasure Island (the "property"). The property was officially closed as
a mobile home park on March 15, 1996 and all former tenants have vacated the
property. Treasure Island Associates (TIA), the joint venture between the
Partnership and an unaffiliated entity through which the Partnership owns an
interest in the property, was involved in lawsuits concerning certain tenants
and the closing of the property as a mobile home park. See Note 9 for a
discussion of local legislation, administrative requirements and litigation
affecting the property.
TIA and an unaffiliated entity, and Vestar-Athens Resorts, L.L.C., a
Phoenix, Arizona-based real estate developer ("Athens"), executed an amendment
dated as of December 24, 1998 (the "Amendment"), to the Contract (the
"Contract") for the sale of the property. Athens plans to purchase the property
and develop it as an oceanfront resort community. The Contract provides for
Athens to pay to TIA a monthly overhead charge along with certain costs and
expenses associated with operating the property. The Amendment, among other
things, provides that the closing date shall be no later than September 15, 1999
and sets the purchase price for the property at $37,000,000. If the closing has
not occurred by June 1, 1999, the purchase price to be paid by Athens will
increase by an amount equal to an annualized 10% of the stated purchase price
until the closing date. The Contract is subject to several conditions, and there
can be no assurance that a sale will be consummated.
Certain Laguna Beach residents have submitted referendum petitions in
opposition to actions taken by the Laguna Beach City Council necessary to
implement the project. The referendum petitions oppose the adoption by the City
Council of resolutions approving the Specific Plan contained in the Treasure
Island Local Coastal Program and an amendment to the City's General Plan
necessary to implement the project, and the approval by the City Council of an
ordinance amending the City Zoning Code, which are necessary to implement the
Treasure Island Local Coastal Program. On January 19, 1999 in response to the
referendum petitions, the City Council scheduled a special election for Tuesday,
April 27, 1999.
The Amendment provides that, in the event that there is an unfavorable
outcome from the referenda, Athens may terminate the Contract. In such case, TIA
may then attempt to sell the property to another buyer. Unfavorable outcome of
the referenda may reduce the purchase price that can ultimately be obtained upon
the sale of the property.
The Registrant wishes to ensure that statements made regarding expected
future developments regarding the property are accompanied by meaningful
cautionary statements pursuant to the safe harbor established in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based upon current available data and reflect the Registrant's expectations that
the referenda will result in a favorable outcome and that the property will be
sold to Athens. Actual receipt of a favorable outcome on the referenda and
closing of the sale are subject to future events and uncertainties, which could
materially affect the ability of the Registrant to obtain a favorable outcome of
the referenda and consummate the sale to Athens.
Since this is the last remaining property investment of the Registrant,
pursuant to Section 8.1 (ii) of the Registrant's Amended and Restated Agreement
of Limited Partnership, the sale of this last property will cause the
dissolution of the Registrant. The Registrant will not be liquidated, however,
until payment of a final liquidating distribution to the Registrant's partners
of all of the Registrant's remaining assets.
Neither TIA nor the Registrant is an affiliate of Athens.
<PAGE>
The following is a summary of significant accounting policies followed by
the Partnership in the preparation of its consolidated financial statements:
Principles of Consolidation
The consolidated financial statements include the accounts of the
Partnership and its joint venture: Treasure Island Associates and, through their
respective dates of liquidation, American Retirement Communities Partnership
("ARCP"), California Community Center Associates ("CCCA") and MLH Jersey City
Urban Renewal Partnership. Intercompany accounts and transactions have been
eliminated in consolidation.
Investment Properties and Related Depreciation
The net carrying value of the investment properties represents the total
cost to the Partnership (including purchase price and fees, acquisition fees,
property purchase costs) and the capitalization of improvements made subsequent
to acquisition, less impairment writedowns and accumulated depreciation.
Depreciation was generally provided using the straight-line method over
estimated lives of 35 years with certain improvements depreciated over shorter
estimated lives. Expenditures for construction-in-progress are included in other
real estate assets until placed in service. Routine repairs and maintenance are
expensed as incurred.
Other Real Estate Assets
Other real estate assets consist solely of redevelopment costs related to
Treasure Island Associates.
Impairment of Assets
The Partnership regularly considers the recoverability of the net carrying
values of its properties and other assets, and determines the need for any
writedowns when there has been a significant decline in market value. No
writedowns of assets were required in 1998, 1997 and 1996.
Cash Equivalents
The Partnership classifies its investments in debt securities, including
those considered to be cash equivalents, as securities held-to-maturity and
carries them at amortized cost on the accompanying consolidated balance sheet.
The purchase cost of such securities is included in "cash and equivalents" . All
such securities mature within one year, and any unrealized gains or losses on
these securities for the year ended December 31, 1998 are immaterial.
Income Taxes
No provision has been made in the accompanying consolidated financial
statements for any income taxes since, pursuant to provisions of the internal
revenue code, each item of income, gain, loss, deduction or credit is reportable
by the Partners. The Partnership is subjuect to California franchsise taxes.
Allocations Among Partners
Pursuant to the Partnership Agreement, Distributable Cash from operations
if any, will be allocated 90.16% to the Limited Partners and 9.84% to the
Managing General Partners. In addition to the distribution of cash from
operations, the Partnership Agreement provides for the General Partners, as a
class, to receive 2% of Sale or Financing Proceeds to be distributed,
representing their residual carried interest.
Under the terms of the Partnership Agreement the General Partners will not
retain any of the sale proceeds resulting from the anticipated sale of the
property to Athens under the pending contract between Athens and TIA.
The General Partners are required to make additional capital contributions
under certain limited circumstances upon liquidation of the Partnership.
Net income or loss is allocated to the Partners in accordance with the
Partnership Agreeement.
Use Of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
<PAGE>
Change In Fiscal Year
Effective January 1, 1997, the Partnership changed its fiscal year from a
twelve month period ending November 30 to a twelve month period ending December
31. The first such fiscal year began on January 1, 1997 and ended on December
31, 1997. The following is condensed information regarding the consolidated
results of operations and cash flows for the 31 day transition period of
December 1, 1996 through December 31, 1996 (dollars in thousands):
Condensed Consolidated Statement of Operations:
Operating revenues............................... $ 86
Operating expenses............................... (123)
------
Net loss......................................... $ (37)
======
Net loss per Unit of Limited Partnership interest $(0.11)
======
Condensed Consolidated Statement of Cash Flows:
Net loss......................................... $ (37)
Changes in operating assets and liabilities...... (115)
------
Net cash used in operating activities............ (152)
Net cash used in investing activities............ (10)
------
Net decrease in cash and equivalents............. (162)
Cash and equivalents, beginning of period........ 9,083
------
Cash and equivalents, end of period.............. $8,921
======
2. INVESTMENT PROPERTIES
The Partnership made equity investments in income-producing properties
located throughout the United States. Certain properties were owned through
joint venture arrangements, generally with affiliates of the Managing General
Partner who may have been entitled to allocations of sales proceeds under
certain circumstances on disposition. All but one real estate investment ("the
property") has been sold (see Notes 3 and 4). The investment in real estate
(including the consolidated joint venture interests) were composed of the
following property at December 31, 1998 and 1997 (dollars in thousands):
Dec. 31,
1998 Approximate
Number Size (Unaudited) 1998 1997
--------- --------------- ------- --------
Land held for redevelopment 1 27 acres $26,716 $ 26,716
======== ======= ========
3. JOINT VENTURES
Treasure Island Associates
On August 1, 1989, the Partnership, through a joint venture partnership,
acquired an interest in a 266-space mobile home community located in Laguna
Beach, California for a total amount, including purchase price and fees, of
$43,000,000.
4. SALES OF REAL ESTATE INVESTMENTS
There were no sales during the years ended December 31, 1998 and 1997.
During fiscal year 1996, the Partnership sold five real estate investments:
Santa Paula Shopping Center, Lompoc Shopping Center , The Macy's Building and
its ground lease interest in 1801 Century Park East and Fullerton Business
Center South. Net sales proceeds from these sales were approximately $42.9
million and the Partnership realized a net gain of $939,000.
<PAGE>
5. TRANSACTIONS WITH AFFILIATES
The Partnership reimburses the Managing General Partner (or an affiliate)
for certain expenses relating to the administration of the Partnership and its
properties, in accordance with the Partnership Agreement. In addition, an
affiliate of the Managing General Partner provided property management services
for one property (that was sold in 1996). For the years ended December 31, 1998
and 1997 and November 30, 1996, such reimbursable expenses were as follows:
1998 1997 1996
-------- --------- ---------
Direct out-of-pocket operating expenses... $86,000 $111,000 $ 341,000
Property management fees.................. -- -- 1,000
6. CASH EQUIVALENTS AND MARKETABLE DEBT SECURITIES
The following is a summary of the Partnership's held-to-maturity
securities, which are classified as cash equivalents on the accompanying
consolidated balance sheets (see also Note 1) (in thousands):
Gross Gross Estimated
Unrealized Unrealized Market
Cost Gains Losses Value
------- ---------- ---------- ---------
December 31, 1998:
- -----------------
Cash equivalents:
Commercial paper............ $ 4,695 $ 17 $ -- $ 4,712
======= ======= ====== =======
December 31, 1997:
- -----------------
Cash equivalents:
Commercial paper............ $ 6,319 $ 54 $ -- $ 6,373
======= ======= ====== =======
All of the Partnership's investments in debt securities are classified as
held-to-maturity and, at December 31, 1998, have scheduled maturities of less
than one year. There were no gross realized gains or losses on sales of
held-to-maturity securities in 1998, 1997 and 1996.
<PAGE>
7. RECONCILIATION OF INCOME TAX METHOD OF ACCOUNTING
The differences between the method of accounting for income tax reporting
and the accrual method of accounting used in the accompanying consolidated
financial statements are explained below. Since there are two classes of Limited
Partner Depository Units, Class A Units (which were sold to individuals and
entities which are not exempt from taxation) and Class B Units (which were sold
to tax exempt entities), tax basis net income (loss) and partners' capital are
shown for each Limited Partner class and for the General Partners. The primary
difference in the allocation of taxable income (loss) between Class A and Class
B partners is that all depreciation items are allocated to Class A Limited
Partners through September 30, 1993.
Year Ended
December 31, November 30,
----------- --------- ---------
1998 1997 1996
----------- --------- ---------
Net income(loss)-financial
statements, year-end December 31, 1998
and 1997 and November 30, 1996 $ (502) $ (726) $ 1,681
Differences resulting from:
Depreciation (238) (238) (334)
Gains and losses on sales of real
estate investments -- -- (17,663)
Provision for impairment of assets -- -- --
Bad debt expense (857) (572) --
--------- --------- ---------
Net loss-income tax method,
year-end December 31, 1998
and 1997 and November 30, 1996 $ (1,597) $ (1,536) $ (16,316)
========= ========= =========
Limited Partners' share-Class A $ (796) $ (774) $ (10,394)
========= ========= =========
Limited Partners' share-Class B $ (785) $ (762) $ (10,242)
========= ========= =========
General Partners' share $ (16) $ -- $ 4,320
========= ========= =========
Partners' capital-financial statements,
as of December 31, 1998 and 1997
and November 30, 1996 $ 39,533 $ 40,035 $ 40,798
Cumulatve differences resulting from:
Depreciation (16,147) (15,909) (15,652)
Gains and losses on sales of real
estate investments (10,112) (10,112) (10,112)
Provision for impairment of assets 43,041 43,041 43,041
Other 800 1,657 2,077
--------- --------- ---------
Partners, capital-income tax method,
as of December 31, 1998 and 1997
and November 30, 1996 $ 57,115 $ 58,712 $ 60,152
========= ========= =========
Limited Partners' share-Class A $ 28,777 $ 29,573 $ 30,299
========= ========= =========
Limited Partners' share-Class B $ 28,354 $ 29,139 $ 29,853
========= ========= =========
General Partners' share $ (16) $ - $ -
========= ========= =========
8. NET ASSET VALUE AND APPRAISALS (UNAUDITED)
The Partnership's Capital per Unit for financial reporting was $122.67 as
of December 31, 1998 which approximates the Partnership's net asset value per
Unit as of the same date. The net asset value was based upon the estimated
future value of the property, together with other assets less liabilities and
less the General Partners' 2% residual carried interest in future sale proceeds.
Cumulative cash distributions from all sources totalled $1,121.58 per Unit for
Limited Partners admitted on June 6, 1986. The net asset value per Unit at
December 31, 1998 plus cumulative cash distributions to Limited Partners
admitted on June 6, 1986 totalled $1,244.25 per Unit.
<PAGE>
9. LITIGATION
TREASURE ISLAND ASSOCIATES LITIGATION
The Partnership owns a joint venture Partnership interest in the property
formerly known as Treasure Island (the "property"), which was a mobile home
community located in Laguna Beach, California. The property was purchased by
Treasure Island Associates ("TIA"), a joint venture Partnership between the
Partnership and an unaffiliated entity, on August 1, 1989.
On May 2, 1996, George Posey, a nonresident tenant, filed an action with
the Court against TIA for trespass, constructive eviction, breach of covenant of
quiet enjoyment, declaratory relief, and unfair business practices. TIA
successfully demurred to the complaint and a first amended complaint was filed
July 19, 1996, seeking to set aside warehouseman's lien sale, cancellation of
instrument, declaratory relief, malicious prosecution, constructive eviction,
breach of covenant of quiet enjoyment, trespass, and unfair business practices.
Mr. Posey claims that TIA wrongfully sold his mobilehome at a warehouseman's
lien sale and thereafter denied him entry to the mobilehome. He seeks special
damages of $50,000, general damages of $250,000, and punitive damages of
$500,000. No trial date has been set.
In 1992, in compliance with an ordinance requiring mobile home park owners
to apply for a conditional use permit ("CUP") prior to a park closure, TIA
applied to the City of Laguna Beach (the "City") for a CUP. In 1994, the City
adopted a resolution that approved the CUP but imposed conditions on TIA to
mitigate the alleged adverse impact of the closure on tenants. TIA filed a
lawsuit in the California Superior Court for the County of Orange ("the Court")
challenging the mitigation conditions and Treasure Island Residents and Owners
Association ("TIROA") intervened in the action. The Court issued a Writ of
Mandate directing, among other things, the City to amend the resolution to limit
the mitigation measures. The City then issued an amended resolution effectively
complying with the Court's Writ of Mandate. TIA challenged the validity of the
mitigation measures reimposed by the amended resolution and filed a second
lawsuit with the Court. TIROA also intervened in this action.
On May 2, 1995, the City adopted a second amended resolution substantially
reducing the mitigation conditions and TIA executed a settlement agreement with
the City that settled all lawsuits filed by TIA against the City concerning the
closure of the mobile home park. TIROA challenged the second amended resolution.
TIROA's lawsuit challenging the Second Amended Resolution, the tenants'
actions filed with the Court and non-payment unlawful detainers and closure
unlawful detainers were consolidated and transferred to the Court's Complex
Litigation Panel. The Court rejected TIROA's challenge to the Second Amended
Resolution and entered judgement against TIROA's and in favor of TIA. In
addition, the Court entered a judgement of possession in favor of TIA against
all tenants in the consolidated unlawful detainer actions. TIROA and the tenants
appealed the adverse judgements.
While these appeals were pending, TIROA, the tenants and TIA resolved all
litigations through settlements.
In February 1996, the Partnership submitted a development proposal to the
City for the redevelopment of the property. The initial application included a
combination of detached single-family residences, multi-family housing and a
resort hotel complex, including meeting rooms and restaurants. The application
consisted of a local coastal program ("LCP") and a specific plan reflecting such
uses. An LCP is required by California law because the City has not obtained
approval from the California Coastal Commission for a Local Coastal Program for
the property as required by the California Coastal Act.
The Planning Commission approved a development proposal for the property
consisting of up to 275 hotel rooms and 37 residences on April 15, 1998.
On June 2, 1998, TIA executed a contract (the "Contract") with
Vestar-Athens Resorts, L.L.C., a Phoenix, Arizona-based real estate developer
("Athens"), for the sale of the property. Athens plans to purchase the property
and develop it as an oceanfront resort community. The Contract provides for
Athens to pay to TIA a monthly overhead charge along with certain expenses
associated with operating the property. TIA and Athens executed an amendment to
the Contract dated as of December 24, 1998 (the "Amendment"), that, among other
things, provides that the closing date shall be no later than September 15, 1999
and sets the purchase price for the property at $37,000,000. If the closing has
not occurred by June 1, 1999, the purchase price to be paid by Athens will
increase by an amount equal to an annualized 10% of the stated purchase price
until the closing date. The Contract is subject to several conditions, and there
can be no assurance that a sale will be consummated.
<PAGE>
The City Council approved the master plan (the "Plan") on June 2, 1998.
Because the property is on the oceanfront, the Plan was also subject to approval
by the Coastal Commission before the City of Laguna Beach can issue further
permits and approvals to implement the Plan. On August 13, 1998 and November 6,
1998, the Coastal Commission approved the Plan subject to certain modifications
and conditions. On November 17, 1998, the City Council approved such
modifications and conditions. The Executive Director of the Coastal Commission
reported the acceptance of such modifications and conditions to the Coastal
Commission and, as a result of such report, the Plan became final on January 13,
1999.
As part of the City's implementation of the Plan, the City Council adopted
Resolution No. 98.075 on November 17, 1998 which incorporated new land use
designations and an amended land use map regarding the Plan, and Ordinance No.
1349 on December 1, 1998 which, among other things, added the Treasure Island
Specific Plan to the City's Municipal Code. On December 17, 1998 and December
29, 1998, based upon California law allowing submission of legislative actions
to the electorate for approval, certain Laguna Beach residents filed petitions
seeking a referendum to overturn Resolution No. 98.075 and Ordinance No. 1349,
respectively. The Orange County Registrar of Voters verified that each petition
contained the number of signatures required by the California Elections Code. On
January 19, 1999, in response to the referendum petitions, the City Council
scheduled a special election for Tuesday, April 27, 1999, for the purpose of
submitting Resolution No. 98.075 and Ordinance No. 1349 to the voters. If the
referenda are approved by the voters, the City Council's decisions with respect
to Resolution No. 98.075 and Ordinance No. 1349 will be affirmed; if the
referenda are disapproved, further proceedings by the Planning Commission and
the City Council regarding the Plan will be required.
The Planning Commission and City Council may now consider further permits
and approvals to implement the Plan, such as a subdivision map, site development
plan and design review.
On July 6, 1998, Eugene R. Atherton, M.D. filed a Petition for Writ of
Mandate (the "Petition") in the Orange County Superior Court against the City
Council Members and others (Atherton v. City of Laguna Beach, et al., Action No.
796478). The Petition challenged the City's compliance with the California
Environmental Quality Act in its consideration of the Plan and sought a Writ of
Mandate vacating the City Council's approval of the Plan. TIA, Merrill Lynch,
Hubbard Inc. (an affiliate of the Managing General Partner) and The Athens Group
(an affiliate of the party that executed the June 2, 1998 contract for the sale
of the property) are named in the Petition as "real parties of interest."
The Court has scheduled a hearing on the merits of the Petition to be held
on April 28, 1999, at which time the Court will either announce its decision
with respect to the Petition or will take the matter under advisement for
announcement of its decision at a later date. The filing of the Petition does
not affect the processing of the Plan by the Coastal Commission or processing of
further permits and approvals to implement the Plan by the City. Counsel for the
Partnership believes that the administrative record contains substantial
evidence to support the City Council's approval of the Plan and will urge the
Court to deny the Petition. If the Court grants the Petition and vacates all or
part of the City Council's approval of the Plan, further proceedings by the
Planning Commission and the City Council regarding the Plan would be required.
The outcome of any such proceedings cannot be predicted at this time.
PARTNERSHIP LITIGATION
On February 25, 1996, a series of putative class actions filed purportedly
on behalf of, among others, all persons who purchased limited partnership
interests in the Partnership were consolidated for pre-trial purposes by order
of the U.S. District Court for the Southern District of New York. Thereafter, a
consolidated complaint was filed pursuant to the order of the District Court. On
July 17, 1996, the Court endorsed a stipulation and order which provided, among
other things, for certification of a plaintiff class and the filing of a
supplemental pleading in the action (the "Amended Complaint") adding claims
under various New Jersey statutes. The Amended Complaint was filed, and notice
of the action was sent to all members of the class pursuant to the stipulation
and order of the Court.
On September 27, 1996, the Partnership and other defendants moved to
dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure
12(b)(6) and 9(b), on the grounds, among others, that the claims contained in
the Amended Complaint were barred by the statute of limitations. On October 15,
1996, the Court granted plaintiffs until January 17, 1997 to file a second
consolidated amended class action complaint (the "Second Amended Complaint").
Plaintiffs filed the Second Amended Complaint on January 17, 1997, and, on
February 17, 1997, defendants moved to dismiss the Second Amended Complaint.
On August 26, 1997, the Court granted the motion to dismiss, holding that
plaintiffs' RICO claims were barred by the applicable statutes of limitations
and dismissing the remaining state law claims for lack of subject matter
jurisdiction. The court declined to grant plaintiffs leave to replead. On
September 24, 1997, plaintiffs filed a notice of appeal to the Second Circuit
Court of Appeals. On August 28, 1998, the Second Circuit affirmed the dismissal
of plaintiffs' complaint. Plaintiffs have taken no further action with regard to
the lawsuit, and their time to do so has now expired.
<PAGE>
<TABLE>
SCHEDULE III
MLH INCOME REALTY PARTNERSHIP VI
AND CONSOLIDATED JOINT VENTURES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
<S> <C> <C> <C>
Cost
Initial Capitalized
Cost to the Subsequent to Gross Amount at which Carried
Partnership (A) Acquisition at Close of Period (B) (C)
--------------------- ----------- ----------------------------
Buildings Land, Bldgs Buildings
and and and
Encum Improve Improve Impairment Improve Accumulated
Description -brances Land -ments -ments Writedown (D) Land -ments Total Depreciation
- ------------------------- -------- ----------- --------- ---------- ------------- ---------- ------- -------- ------------
Land (formerly known
as Treasure Island)
Laguna Beach, California - $38,924,000 $4,076,000 $2,275,000 $(18,559,000) $26,716,000 - $26,716,000 -
======== =========== ========== ========== ============ =========== ======= =========== ========
Estimated
Useful lives
Used in
Computation of
Date of Date Depreciation and
Contruction Acquired Amoritization
- ----------- -------- -----------------
1937 8/01/89 35 years
See Notes 2, 3, 4 and 8 of Notes to Consolidated Financial Statements.
(A) The initial cost to the Partnership is the contract purchase price of the properties at the date of the purchase.
(B) The aggregate cost of properties owned at December 31, 1998 for Federal income tax purposes was $46,288,000.
(C) Reconciliation of investment properties owned: 1998 1997 1996
----------- ----------- -------------
Opening balance $26,716,000 $26,716,000 $71,624,000
Sales of investment properties - - (45,458,000)
Improvements - - 550,000
----------- ----------- -----------
Balance at end of period $26,716,000 $26,716,000 $26,716,000
=========== =========== ===========
(D) The Partnership recorded impairment writedowns to its real estate investments in 1995, 1994 and 1992, as detailed below:
Property: 1995 1994 1992
----------- ----------- -------------
Land (formerly known as Treasure Island) $ 8,000,000 $ 3,300,000 $ 7,259,000
----------- ----------- -------------
$ 8,000,000 $ 3,300,000 $ 7,259,000
=========== =========== =============
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Partnership is a limited partnership and has no directors or officers.
The names and dates of election of the directors and the executive officers
of the Managing General Partner are as follows:
Date of
Name Officer Election
- ----------------------------- --------------------- -----------
Jack A. Cuneo Director 8/22/84
Chairman, Chief
Executive Officer 5/1/97
President and Chief
Operating Officer 3/1/97
Michael R. Cowan Director and
Senior Vice President 11/4/98
James V. Caruso Director and 4/30/97
Vice President 1/1/97
Christina M. Titus Executive Vice President 2/1/98
Sharon D. McKenzie Chief Financial Officer and
Vice President 11/4/98
Robert A. Aufenanger was a Director of the Managing General Partner of the
Partnership from March 3, 1997 and Senior Vice President from May 1, 1997
through October 1998. Audrey A. Bommer was Chief Financial Officer and Vice
President of the Managing General Partner of the Partnership from July 1, 1997
through November 4, 1998.
There is no family relationship among any of the foregoing persons. All of
the directors have been elected to serve until the next annual meeting of
shareholders of the Managing General Partner or until their successors are duly
elected and qualify or until their earlier death, resignation or removal. All of
the officers have been elected to serve until their successors are elected and
qualify or until their earlier death, resignation or removal.
ML&Co. and its subsidiaries, MLPF&S and Hubbard are affiliated with the
Registrant. No other entity mentioned in the following biographical summaries is
affiliated with the Registrant.
The business experience of the directors and executive officers of the
Managing General Partner is indicated below.
Jack A. Cuneo (age 51) joined MLPF&S in 1975 and became a Director of the
Managing General Partner of the Partnership on August 22, 1984. Mr. Cuneo became
President and Chief Operating Officer of the Managing General Partner of the
Partnership effective March 1, 1997 and was elected Chairman and Chief Executive
Officer on May 1, 1997. Prior to joining MLPF&S, Mr. Cuneo was a consultant and
real estate broker in Massachusetts specializing in commercial, residential and
investment properties. He is a graduate of the City College of New York, has
done post-graduate work toward a Ph.D. and was a part-time lecturer at the
University of Massachusetts from 1969 to 1972. Mr. Cuneo is a member of the
Commercial and Retail Development Council of the Urban Land Institute, the
Pension Real Estate Association and is a member of the Policy Advisory Board of
the Center for Real Estate and Urban Economics at the University of California
at Berkeley.
<PAGE>
Michael R. Cowan (age 45) has been Senior Vice President and a Director of
the Managing General Partner of the Partnership since November 1998. Mr Cowan
joined Merrill Lynch in 1986 and is a Senior Vice President of its Corporate
Services where he is responsible for Merrill Lynch's real estate, purchasing and
support services worldwide. Mr Cowan is a graduate of the University of Notre
Dame.
James V. Caruso (age 47) has been a Vice President of the Managing General
Partner of the Partnership since January 1997 and a Director since April 1997.
Mr. Caruso joined Merrill Lynch in 1975 and is a Director in its Investment
Banking Group ("IBK"). He is responsible for managing the IBK Corporate
Accounting Department and the Controller's area of the Partnership Analysis &
Finance Group. Since June 1992, Mr. Caruso has also performed administrative
services for Merrill Lynch's retail partnerships. He is a graduate of Pace
University.
Christina M. Titus (age 48) joined Hubbard in 1980 and is Executive Vice
President of the Managing General Partner of the Partnership. Prior to joining
Hubbard, she was associated with the law firm of Trubin Sillcocks, New York, New
York. Ms. Titus graduated from Georgetown University Law School and is a member
of the New York Bar.
Sharon D. McKenzie (age 40) is a Vice President and the Chief Financial
Officer of the Managing General Partner of the Partnership, and is responsible
for its accounting, treasury and tax functions. Ms. McKenzie joined Hubbard in
1992 and is an Assistant Vice President of Merrill Lynch. Prior to joining
Hubbard, Ms. McKenzie held senior accounting positions at Deloitte & Touche. She
is a Certified Public Accountant and a graduate of Cornell University. Ms.
McKenzie received an MBA in Accounting from Pace University.
ITEM 11. EXECUTIVE COMPENSATION
The General Partners are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Unit Holders, and a share of
taxable income or tax loss. Descriptions of such distributions and allocations
are contained in Item 7 above, which descriptions are incorporated herein by
reference.
The General Partners as a class may, under certain circumstances, for any
fiscal semi-annual period defer and/or waive all or a portion of, their share of
Distributable Cash. Any amount so deferred or waived shall be distributed to the
Unit Holders. Amounts which are deferred by the General Partners shall be
payable to the General Partners at any time they so elect from available cash.
If the General Partners have not made such an election with respect to all of
such deferred portion of Distributable Cash prior to the liquidation of the
Partnership, then the General Partners shall receive an amount equal to all of
their remaining deferred portion of Distributable Cash and shall thereafter not
defer any other Distributable Cash. Upon making a waiver, the General Partners
relinquish their right to receive the amount so waived.
The General Partners did not receive any cash distributions for the fiscal
year ended December 31, 1998.
The General Partners and their affiliates were paid certain fees and
commissions and reimbursed for certain out-of-pocket expenses (including
specifically allocated payments for salaried employees rendering certain
services). Information concerning such fees, commissions and reimbursements is
contained in Note 5 of Notes to Consolidated Financial Statements in Item 8
above, which information is incorporated herein by reference.
Affiliates of the General Partners may be paid fees, subject to certain
conditions, for providing property management or leasing services with respect
to some Partnership properties, for providing mortgage brokerage services in
connection with financing properties or for acting in the normal course of its
business as a broker, dealer or principal in connection with the acquisition by
the Partnership of money-market type investments or financial futures.
<PAGE>
The relationships of the Managing General Partner (and its directors and
officers), the Associate General Partner and certain of their affiliates are
described in Item 10 above and Item 12 below, which descriptions are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person is known to the Partnership to be the beneficial owner of
more than five percent of the Units.
(b) None of the directors or executive officers of the Managing General
Partner is a beneficial owner of Depositary Units of the Partnership.
The Amended and Restated Agreement of Limited Partnership of the
Partnership provides that all cash distributions and allocations of income and
loss to the General Partners be distributed or allocated, as the case may be,
50% to the Managing General Partner and 50% to the Associate General Partner.
The General Partners' share of cash distributions and income and loss is
described in Item 5 above, which description is incorporated herein by
reference.
All of the outstanding shares of common stock of the Managing General
Partner are owned by MLH Group Inc., a Delaware corporation which is a
wholly-owned subsidiary of Hubbard. Hubbard is a wholly-owned subsidiary of
Merrill Lynch Group, Inc., a Delaware corporation, which is in turn a
wholly-owned subsidiary of ML&Co. ML&Co. is also the parent company of MLPF&S,
the selling agent of the Units. The general partner of the Associate General
Partner is a wholly-owned subsidiary of the Managing General Partner, and the
limited partner of the Associate General Partner is a wholly-owned subsidiary of
Hubbard.
Additional information with respect to the directors and executive officers
of the Managing General Partner is contained in Item 10 above, which information
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Annual Report:
Financial Statements (See Index to Consolidated Financial Statements filed
as part of Item 8 of this Annual Report).
Financial Statement Schedules (See Index to Consolidated Financial
Statements filed as part of Item 8 of this Annual Report).
Exhibits
(2) Not Applicable
(3) Amended and Restated Agreement of Limited Partnership dated as of
March 5, 1986 set forth in Exhibit A to the Prospectus is incorporated
herein by reference.
(4) Reference is made to Exhibit (3) hereto.
(9) Not applicable
(10) (a) The following documents are incorporated herein by reference to
Exhibits 1 through 6, inclusive, to the Partnership's Current Report
on Form 8-K dated August 15, 1989.
(i) Amended and Restated Agreement of General Partnership of
Treasure Island Associates dated July 31, 1989 between MLH Income
Realty Partnership VI and the Loren Realty Investment Company, Inc.
(ii) Partial Amendment and Complete Restatement of Agreement for
Exchange of Real Property and Joint Escrow Instructions among
Hix-Rubenstein Partnership, Treasure Island Park and Treasure Island
Trailer Park dated as of February 24, 1989.
(iii) Property Purchase Agreement Assignment dated as of August
1, 1989 among Treasure Island Trailer Park, Hix-Rubenstein
Partnership, Treasure Island Park and Treasure Island Associates.
(iv) Assignment of Agreement for Exchange of Real Property and
Joint Escrow Instructions dated as of July 31, 1989 among Treasure
Island Trailer Park, Treasure Island Associates, Hix-Rubenstein
Partnership, The First American Financial Corporation and Treasure
Island Park
(v) Agreement of Sale and Assignment and Escrow Instructions
dated as of August 1, 1989 between Hix-Rubenstein Partnership and
Treasure Island Associates.
(vi) Property Management Agreement dated as of August 1, 1989
between Treasure Island Associates and Richard A. Hall d/b/a Equity
Management Group.
(10) (b) Agreement of Purchase and Sale between the Partnership and Sunrise
Terrace Mobilehome Owners Association, as amended, is incorporated
herein by reference to Exhibit 1 to the Partnership's Current Report
on Form 8-K dated April 3, 1995.
(10) (c) The following exhibits are incorporated herein by reference to
Exhibits 1 and 2 to the Partnership's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1995:
(i) Agreement of Purchase and Sale between the Partnership and
Keystone-New Jersey property Holding Corp.
(ii) Property Management Agreement between the Partnership and
MLH Management Corp.
(10) (d) Agreement of Purchase and Sale and Joint Escrow Instructions
between California Community Centers Associates and AMB Retail Income
Fund, Inc. is incorporated herein by reference to Exhibit 1 to the
Partnership's Current Report on Form 8-K dated October 11, 1995.
(10) (e) Agreement of Purchase and Sale between American Retirement
Communities Partnership and Aubrey Meyerson Company, as amended and
assigned, is incorporated herein by reference to Exhibit 1 to the
Partnership's Current Report on Form 8-K dated December 13, 1995.
<PAGE>
(10) (f) Agreement of Purchase and Sale and Joint Escrow Instructions
between California Community Centers Associates and M&H Realty
Partners III L.P., as amended, is incorporated herein by reference to
Exhibit 1 to the Partnership's Current Report on Form 8-K dated
February 1996.
(10) (g) Agreement of Purchase and Sale between the Partnership and
Keystone-New Jersey Property Holding Corp., is incorporated herein by
reference to Exhibit 2 to the Partnership's Current Report on Form 8-K
dated February 6, 1996.
(10) (h) Agreement of Purchase and Sale between the Partnership and Runise
Corporation, is incorporated herein by reference to Exhibit 1 to the
Partnership's Current Report on Form 8-K dated March 19, 1996.
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(16) Not Applicable
(18) Not Applicable
(21) List of Subsidiaries of the Partnership. A copy of such List is filed
with this Annual Report.
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Article 6 Financial Data Summary for the year ended December 31, 1997
10-K. A copy of such Summary is filed with this Annual Report.
(28) Not Applicable
<PAGE>
<TABLE>
<S> <C> <C>
(99) (a) Supplement dated February 13, 1987 to Prospectus of the
Partnership dated March 5, 1986, filed pursuant to Rule 424(b), is
incorporated herein by reference.
(b) The following Current Reports of the Partnership on Form 8-K are
incorporated herein by reference.
(i) The Partnership's Current Report on Form 8-K dated August 15, 1989.
(ii) The Partnership's Current Report on Form 8-K dated November 5, 1990.
(iii)The Partnership's Current Report on Form 8-K dated January 29, 1991.
(iv) The Partnership's Current Report on From 8-K dated March 15, 1993.
(v) The Partnership's Current Report on Form 8-K dated July 1, 1994.
(vi) The Partnership's Current Report on Form 8-K dated July 13, 1994.
(vii) The Partnership's Current Report on Form 8-K dated August 12, 1994.
(viii)The Partnership's Current Report on Form 8-K dated September 1, 1994.
(ix The Partnership's Current Report on Form 8-K dated September 12, 1994.
(x) The Partnership's Current Report on Form 8-K dated October 13, 1994.
(xi) The Partnership's Current Report on Form 8-K dated April 3, 1995.
(xii) The Partnership's Current Report on Form 8-K dated October 11, 1995.
(xiii)The Partnership's Current Report on Form 8-K dated December 13, 1995.
(xiv)The Partnership's Current Report on Form 8-K dated December 28, 1995.
(xv)The Partnership's Current Report on Form 8-K dated February 6, 1996.
(xvi)The Partnership's Current Report on Form 8-K dated March 19, 1996.
(99) (c) Item 5 of Part II of the Partnership's Quarterly Report on
Form 10-Q for the quarter ended August 31, 1995 is incorporated
herein by reference.
(b) No Reports on Form 8-K were filed during the last quarter of the
fiscal period covered by this Annual Report.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MLH INCOME REALTY PARTNERSHIP VI
By: MLH Property Managers Inc.
Managing General Partner
Date: March ___, 1999 By: /s/Jack A. Cuneo
Jack A. Cuneo
President, Chief Executive Officer,
Chairman and Chief Operating Officer
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 and on the dates indicated.
Date: March __, 1999 /s/Jack A. Cuneo
Jack A. Cuneo
Director of Managing General Partner
Date: March __, 1999 /s/ Michael R. Cowan
Michael R. Cowan
Director of Managing General Partner
Date: March __, 1999 /s/James V. Caruso
James V. Caruso
Director of Managing General Partner
<PAGE>
EXHIBIT 21
----------
Subsidiaries of the Partnership
-------------------------------
MLH Property Managers Inc., a Delaware corporation, which is the
Partnership's Managing General Partner.
MLH Realprop Associates VI L.P., a New York limited partnership, which is
the Partnership's Associate General Partner.
MLHIR VI Incorporated, a Delaware corporation, which is the general partner
of the Partnership's Associate General Partner.
MLHIR VI Assignor Inc., a Delaware corporation, which is the Assignor
Limited Partner and a wholly-owned subsidiary of the Managing General Partner.
Treasure Island Associates, a California general partnership, of which the
Partnership is a general partner.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the fourth
quarter of 1998 Form 10-K Balance Sheets and Statements of Operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 27,728,694
<INVESTMENTS-AT-VALUE> 26,715,816
<RECEIVABLES> 122,106
<ASSETS-OTHER> 8,621,075
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,208,055
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 674,566
<TOTAL-LIABILITIES> 674,566
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
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<OVERDISTRIBUTION-NII> 0
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<NET-ASSETS> 39,553,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 287,789
<OTHER-INCOME> 523,525
<EXPENSES-NET> 1,313,306
<NET-INVESTMENT-INCOME> (501,992)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (501,992)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NET-CHANGE-IN-ASSETS> (501,992)
<ACCUMULATED-NII-PRIOR> 0
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<AVERAGE-NET-ASSETS> 39,784,485
<PER-SHARE-NAV-BEGIN> 124.23
<PER-SHARE-NII> (1.56)
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
