<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the three months ended September 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-16857
Brauvin Income Properties L.P. 6
(Name of small business issuer as specified in its charter)
Delaware 36-1276801
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
(312) 759-7660
(Issuer's telephone number)
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
(Title of class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
INDEX
PART I
Page
Item 1. Consolidated Financial Statements . . . . . . . . . . . . . . .4
Consolidated Statements of Net Assets in Liquidation
as of September 30, 1999 (Liquidation Basis) and
Balance Sheet at December 31, 1998
(Going Concern Basis).. . . . . . . . . . . . . . . . . . . . .5
Consolidated Statement of Changes in Net Assets in
Liquidation for the period July 12, 1999 to
September 30, 1999 (Liquidation Basis) . . . . . . . . . . . .6
Consolidated Statements of Operations for the period
January 1, 1999 to July 12, 1999 and for the nine
months ended September 30, 1998
(Going Concern Basis).. . . . . . . . . . . . . . . . . . . . .7
Consolidated Statements of Operations for the period
July 1, 1999 thru July 12, 1999 and for the three
months ended September 30,1998
(Going Concern Basis) . . . . . . . . . . . . . . . . . . . . .8
Consolidated Statements of Partners' Capital for the
period January 1, 1998 to July 12, 1999
(Going Concern Basis). . . . . . . . . . . . . . . . . . . . .9
Consolidated Statements of Cash Flows for the period
January 1, 1999 to July 12, 1999 and for the nine
months ended September 30, 1998
(Going Concern Basis). . . . . . . . . . . . . . . . . . . . 10
Notes to Consolidated Financial Statements . . . . . . . . . 11
Item 2. Management's Discussion and Analysis or Plan
of Operation. . . . . . . . . . . . . . . . . . . . . . . . . 18
PART II
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 24
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 24
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 24
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 24
Item 6. Exhibits, and Reports on Form 8-K . . . . . . . . . . . . . . 24
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Except for the December 31, 1998 Consolidated Balance Sheet
(Going Concern Basis), the following Consolidated Statement of Net
Assets in Liquidation as of September 30, 1999 (Liquidation
Basis),Consolidated Statement of Changes in Net Assets in
Liquidation for the period July 12, 1999 to September 30, 1999
(Liquidation Basis), Consolidated Statements of Operations for the
period January 1, 1999 to July 12, 1999 and for the nine months
ended September 30, 1998 (Going Concern Basis), Consolidated
Statements of Operations for the period July 1, 1999 to July 12,
1999 and the three months ended September 30, 1998 (Going Concern
Basis), Consolidated Statement of Partners' Capital for the period
January 1, 1998 to July 12, 1999 (Going Concern Basis) and the
Consolidated Statements of Cash Flows for the period January 1,
1999 thru July 12, 1999 and for the nine months ended September 30,
1998 (Going Concern Basis) for Brauvin Income Properties L.P. 6
(the "Partnership") are unaudited but reflect, in the opinion of
the management, all adjustments necessary to present fairly the
information required. All such adjustments are of a normal
recurring nature.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Partnership's 1998 Annual Report on Form
10-KSB.
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION AS OF
SEPTEMBER 30, 1999 AND BALANCE SHEET AT DECEMBER 31, 1998
(Liquidation (Going Concern
Basis) Basis)
September 30, December 31,
1999 1998
(Unaudited)
ASSETS
Land -- $ 2,756,651
Buildings and improvements -- 10,736,901
-- 13,493,552
Less: Accumulated depreciation -- (3,806,865)
Net investment in real estate -- 9,686,687
Real estate held for sale $ 16,958,250 --
Cash and cash equivalents 747,653 776,207
Rent receivable 118,447 198,527
Escrow and other deposits 666,178 579,082
Other assets 30,916 123,637
Total Assets $ 18,521,444 $11,364,140
LIABILITIES AND PARTNERS' CAPITAL
Mortgage notes payable (Note 4) $ 8,626,223 $ 8,716,089
Accounts payable and accrued expenses 224,535 248,020
Deferred gain on sale of real estate 7,479,029 --
Reserve for estimated costs during
the liquidation period 595,470 --
Tenant security deposits 13,549 13,549
Due to affiliates 11,472 9,803
Total Liabilities 16,950,278 8,987,461
Net Assets in Liquidation $ 1,571,166
PARTNERS' CAPITAL
General Partners 16,128
Limited Partners 2,360,551
Total Partners Capital 2,376,679
Total Liabilities and Partners' Capital $11,364,140
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE PERIOD
JULY 12, 1999 TO SEPTEMBER 30, 1999
(Unaudited)
Net assets at July 12, 1999
(Going Concern Basis) $ 2,323,288
Income from operations 106,667
Distributions (136,476)
Adjustments to liquidation basis (722,313)
Net assets in liquidation at September 30, 1999 $ 1,571,166
See accompanying notes to consolidated financial statements
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Going Concern Basis)
(Unaudited)
January 1, 1999 Nine Months
to ended
July 12, 1999 September 30, 1998
INCOME:
Rental $ 1,061,922 $ 1,300,682
Interest 19,438 40,062
Other 236,479 330,201
Total income 1,317,839 1,670,945
EXPENSES:
Interest 498,998 649,495
Depreciation 207,466 271,865
Real estate taxes 66,613 98,316
Repairs and maintenance 14,780 16,362
Management fees (Note 5) 86,262 111,529
Other property operating 91,606 143,274
General and administrative 132,554 200,462
Total expenses 1,098,279 1,491,303
Net income $ 219,560 $ 179,642
Net income allocated to the
General Partners $ 2,196 $ 1,796
Net income allocated to the
Limited Partners $ 217,364 $ 177,846
Net income per Limited Partnership
interest (7,842.5 Units) $ 27.72 $ 22.68
See accompanying notes to consolidated financial statements
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Going Concern Basis)
(Unaudited)
July 1, 1999 Three Months
to ended
July 12, 1999 September 30, 1998
INCOME:
Rental $ 148,586 $ 279,099
Interest 2,550 13,223
Other 34,946 107,541
Total income 186,082 399,863
EXPENSES:
Interest 70,894 216,576
Depreciation 29,638 88,961
Real estate taxes 9,516 32,772
Repairs and maintenance 1,638 4,481
Management fees 9,843 36,421
Other property operating 11,768 51,325
General and administrative 17,325 62,879
Total expenses 150,622 493,415
Net income (loss) $ 35,460 $ (93,552)
Net income (loss) allocated to the
General Partners $ 355 $ (936)
Net income (loss) allocated to the
Limited Partners $ 35,105 $ (92,616)
Net income (loss) per Limited Partnership
interest (7,842.5 Units) $ 4.48 $ (11.81)
See accompanying notes to consolidated financial statements
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
For the Period January 1, 1998 to July 12, 1999
(Going Concern Basis)
(Unaudited)
General Limited
Partners Partners* Total
Balance, January 1, 1998 $13,716 $2,670,170 $2,683,886
Net income 2,412 238,761 241,173
Cash distributions -- (548,380) (548,380)
Balance, December 31, 1998 16,128 2,360,551 2,376,679
Net income 2,196 217,364 219,560
Cash distributions -- (272,951) (272,951)
Balance, July 12, 1999 $18,324 $2,304,964 $2,323,288
* Total Units outstanding at September 30, 1999 and December 31,
1998 were 7,842.50. Cash distributions to Limited Partners per
Unit were approximately $34.80 and $69.92, respectively, for the
period January 1, 1999 to July 12, 1999 and for the year ended
December 31, 1998. Cash distributions to Limited Partners per Unit
are based on the average Units outstanding during the year since
they were of varying dollar amounts and percentages based upon the
dates Limited Partners were admitted to the Partnership and
additional Units were purchased through the distribution
reinvestment plan.
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the period January 1, 1999 to July 12, 1999
and for the nine months ended September 30, 1998
(Going Concern Basis)
(Unaudited)
1999 1998
Cash Flows From Operating Activities:
Net income $ 219,560 $ 179,642
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 207,466 271,865
Provision for doubtful accounts (8,511) 10,956
Changes in:
Rent receivable 84,217 70,168
Escrow and other deposits (50,264) (22,425)
Other assets (15,971) 5,990
Accounts payable and accrued expenses (71,520) 50,029
Due to affiliates (10,078) (1,995)
Net cash provided by operating activities 354,899 564,230
Cash Flows From Investing Activities:
Capital expenditures -- (30,229)
Cash used in investing activities -- (30,229)
Cash Flows From Financing Activities:
Repayment of mortgage notes payable (70,135) (81,785)
Cash distributions to Limited
Partners (272,951) (410,404)
Net cash used in financing activities (343,086) (492,189)
Net increase in cash and cash
equivalents 11,813 41,812
Cash and cash equivalents at
beginning of period 776,207 749,946
Cash and cash equivalents at end
of period $ 788,020 $ 791,758
Supplemental disclosure of
cash flow information:
Cash paid for interest $ 476,665 $ 621,244
See accompanying notes to consolidated financial statements
<PAGE>
BRAUVIN INCOME PROPERTIES L.P. 6
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Brauvin Income Properties L.P. 6 (the "Partnership") is a
Delaware limited partnership organized for the purpose of
acquiring, operating, holding for investment and disposing of
commercial properties consisting principally of existing shopping
centers and, to a lesser extent, office and industrial buildings.
The General Partners of the Partnership are Brauvin 6, Inc. and
Jerome J. Brault. On August 8, 1997, Mr. Cezar M. Froelich
resigned as a Individual General Partner effective 90 days from
August 14, 1997. Brauvin 6, Inc. is owned by the A.G.E. Realty
Corporation Inc.(50%) and by Messrs. Brault (beneficially) (25%)
and Froelich (25%). A.G. Edwards & Sons, Inc. and Brauvin
Securities, Inc., affiliates of the General Partners, were the
selling agents of the Partnership. The Partnership is managed by
an affiliate of the General Partners.
The Partnership was formed in April 1986. The Partnership filed
a Registration Statement on Form S-11 with the Securities and
Exchange Commission which became effective on May 30, 1986. The
offering was terminated on August 31, 1987 having sold $7,842,500
in limited partnership interests.
The Partnership has acquired the land and buildings underlying
Delchamps Shopping Center ("Delchamps"), Shoppes on the Parkway
("Shoppes") and a Ponderosa Restaurant ("Ponderosa").
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Basis of Presentation
As a result of the July 12, 1999 authorization by a majority of
the Limited Partners to sell all of the Partnership's existing
properties the Partnership has begun the liquidation process and,
in accordance with generally accepted accounting principles, the
Partnership's financial statements for periods subsequent to July
12, 1999 have been prepared on a liquidation basis. Accordingly,
the carrying value of the assets is presented at net realizable
amounts and all liabilities are presented at estimated settlement
amounts, including estimated costs associated with carrying out the
liquidation. Preparation of the financial statements on a
liquidation basis requires significant assumptions by management,
including the estimate of liquidation costs and the resolution of
any contingent liabilities. There may be differences between the
assumptions and the actual results because events and circumstances
frequently do not occur as expected. Those differences, if any,
could result in a change in the net assets recorded in the
statement of net assets as of September 30, 1999.
Accounting Method
The accompanying consolidated financial statements have been
prepared using the accrual method of accounting.
Rental Income
Prior to the preparation of the financial statements on a
liquidation basis, rental income was recognized on a straight line
basis over the life of the related leases. Differences between
rental income earned and amounts due per the respective lease
agreements are credited or charged, as applicable, to deferred rent
receivable.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the consolidated financial
statements.
Consolidation of Special Purpose Entities
The Partnership has two special purpose entities ("SPE"),
Brauvin/Shoppes on the Parkway L.P. and Brauvin/Delchamps L.P.,
which are each owned 99% by the Partnership and 1% by an affiliate
of the General Partners. Distributions from each of the SPE's are
subordinated to the Partnership which effectively precludes any
distributions from an SPE to affiliates of the General Partners.
The creation of each SPE did not affect the Partnership's economic
ownership of the properties. Furthermore, this change in ownership
structure had no material effect on the consolidated financial
statements of the Partnership.
Investment in Real Estate
Prior to the conversion from the going concern basis to the
liquidation basis of accounting, the Partnership's rental
properties were stated at cost including acquisition costs.
Depreciation was recorded on a straight-line basis over the
estimated economic lives of the properties which approximate 31.5
years.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months of
purchase.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments". The estimated fair value amounts
have been determined by using available market information and
appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on
information available to management as of December 31, 1998, but
may not necessarily be indicative of the amounts that the
Partnership could realize in a current market exchange. The use of
different assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
The carrying amounts of the following items are reasonable
estimates of fair value: cash and cash equivalents; rent
receivable; escrow and other deposits; accounts payable and accrued
expenses and due to affiliate.
(2) ADJUSTMENT TO LIQUIDATION BASIS
On July 12, 1999, in accordance with the liquidation basis of
accounting, assets were adjusted to estimated net realizable value
and liabilities were adjusted to estimated settlement amounts,
including estimated costs associated with carrying out the
liquidation. The net adjustment required to convert from the going
concern (historical cost) basis to the liquidation basis of
accounting was a decrease in assets of $722,313 which is included
in the September 30, 1999 statement of changes in net assets in
liquidation. Significant changes in the carrying value of assets
and liabilities are summarized as follows:
Increase in real estate held for sale (a) $7,479,029
Write-off of deferred rent receivable (25,878)
Write-off of mortgage points (100,965)
Increase in deferred gain on sale
of real estate (7,479,029)
Estimated liquidation costs (595,470)
Total adjustment to liquidation basis $ (722,313)
(a) Net of estimated closing costs.
(3) PARTNERSHIP AGREEMENT
The restated Limited Partnership Agreement (the "Agreement")
provides that 99% of the net profits and losses from operations of
the Partnership for each fiscal year of the Partnership shall be
allocated to the Limited Partners and 1% of the net profits and
losses from operations during each of said fiscal years shall be
allocated to the General Partners.
All Operating Cash Flow, as such term is defined in the
Agreement, during any calendar year shall be distributed 99% to the
Limited Partners and 1% to the General Partners. The receipt by
the General Partners of such 1% of Operating Cash Flow shall be
subordinated to the receipt by the Limited Partners of Operating
Cash Flow equal to a 10% per annum, cumulative, non-compounded
return on Adjusted Investment, as such term is defined in the
Agreement (the "Preferential Distribution"). In the event the full
Preferential Distribution is not made in any year (herein referred
to as a "Preferential Distribution Deficiency") and Operating Cash
Flow is available in following years in excess of the Preferential
Distribution for said years, then the Limited Partners shall be
paid such excess Operating Cash Flow until they have been paid any
unpaid Preferential Distribution Deficiency from prior years. For
subscribers who were admitted as Limited Partners during 1986, the
term "Preferential Distribution" shall mean a 12% per annum,
cumulative, non-compounded return on Adjusted Investment.
A cash distribution for the third quarter of 1999 was made to
the Limited Partners on November 15, 1999 in the amount of
$137,976. The Preferential Distribution Deficiency equaled
$4,171,656 after this last distribution.
(4) MORTGAGE NOTES PAYABLE
Mortgage notes payable at September 30, 1999, consisted of the
following:
Interest Date
1999 Rate Due
Shoppes on the Parkway(a) $5,781,947 9.55% 5/01/02
Delchamps Plaza
North Shopping Center(b) 2,844,276 9.03% 2/01/02
$8,626,223
The net carrying value of the Delchamps property and the Shoppes
property approximated $2,947,600 and $5,628,400, respectively, at
July 12, 1999. Delchamps and Shoppes serve as collateral under the
respective nonrecourse debt obligations.
Maturities of the mortgages payable are as follows:
1999 31,624
2000 132,707
2001 146,554
2002 8,315,338
$8,626,223
(a) On April 6, 1995, the Partnership obtained a first mortgage
loan in the amount of $6,100,000 (the "First Mortgage Loan")
secured by Shoppes from Morgan Stanley Mortgage Capital, Inc. (the
"Successor Lender"). The First Mortgage Loan bears interest at the
rate of 9.55% per annum, amortizes over a 25-year period, requires
monthly payments of principal and interest of approximately $53,500
and matures on May 1, 2002. A portion of the proceeds of the First
Mortgage Loan, approximately $4,675,000, were used to retire the
existing mortgage secured by Shoppes from Crown Life Insurance
Company. The remaining proceeds were used to pay loan closing
costs and a $999,919 return of capital distribution to the Limited
Partners.
As a precondition to the new financing, the Successor Lender
required that ownership of the property reside in a special purpose
entity ("SPE"). To accommodate the lender's requirements,
ownership of the property was transferred to the SPE,
Brauvin/Shoppes on the Parkway L.P., which is owned 99% by the
Partnership and 1% by an affiliate of the General Partners.
Distributions of Brauvin/Shoppes on the Parkway L.P. are
subordinated to a cumulative return to the Partnership. This
subordination will effectively preclude any distributions from the
SPE to affiliates of the General Partners. The creation of
Brauvin/Shoppes on the Parkway L.P. did not affect the
Partnership's economic ownership of the Shoppes property.
Furthermore, this change in ownership structure had no material
effect on the consolidated financial statements of the Partnership.
(b) The Partnership was required to make a balloon mortgage
payment for Delchamps in the amount of $2,823,249 in December 1996.
Prior to the scheduled maturity of the first mortgage loan, the
Lender granted the Partnership an extension until February 1, 1997.
On January 14, 1997, the Partnership obtained a first mortgage loan
in the amount of $2,925,000(the "First Mortgage Loan") secured by
Delchamps from NationsBanc Mortgage Capital Corporation. The First
Mortgage Loan bears interest at the rate of 9.03% per annum, is
amortized over a 25-year period, requires monthly payments of
principal and interest of approximately $24,600 and matures on
February 1, 2002. A portion of the proceeds of the First Mortgage
Loan, approximately $2,809,000, was used to retire the existing
mortgage secured by Delchamps from Lincoln National Life Insurance
Company.
As a precondition to the new financing on Delchamps, the lender
required that ownership of the property reside in a SPE. To
accommodate the lender's requirements, ownership of the property
was transferred to the SPE, Brauvin/Delchamps L.P., which is owned
99% by the Partnership and 1% by an affiliate of the General
Partners. Distributions of Brauvin/Delchamps L.P. are subordinated
to the Partnership which effectively precludes any distributions
from the SPE to affiliates of the General Partners. The creation
of Brauvin/Delchamps L.P. did not affect the Partnership's economic
ownership of the Delchamps property. Furthermore, this change in
ownership structure had no material effect on the consolidated
financial statements of the Partnership.
(5) TRANSACTIONS WITH AFFILIATES
Fees and other expenses paid or payable to the General Partners
or their affiliates for the nine months ended September 30, 1999
and 1998 were as follows:
1999 1998
Management fees $109,590 $111,529
Reimbursable office expenses 99,114 115,875
The Partnership believes the amounts paid to affiliates are
representative of amounts which would have been paid to independent
parties for similar services. The Partnership had made all
payments to affiliates, except for $11,472 for management fees, as
of September 30, 1999.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
General
Certain statements in this Quarterly Report that are not
historical fact constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Without limiting the foregoing, words such as "anticipates",
"expects", "intends", "plans" and similar expressions are intended
to identify forward-looking statements. These statements are
subject to a number of risks and uncertainties. Actual results
could differ materially from those projected in the forward-looking
statements. The Partnership undertakes no obligation to update
these forward-looking statements to reflect future events or
circumstances.
Year 2000
The "Year 2000" problem concerns the inability of computer
technology systems to correctly identify and process date sensitive
information beyond December 31, 1999. Many computers
automatically add the "19" prefix to the last two digits the
computer reads for the year when date information is needed in
computer software programs. Thus when a date beginning on January
1, 2000 is entered into a computer, the computer may interpret this
date as the year "1900" rather than "2000".
The Partnership's computer information technology systems
consists of a network of personal computers linked to a server
built using hardware and software from mainstream suppliers. The
Partnership does not own any equipment that contains embedded
microprocessors, which may also pose a potential Year 2000 problem.
Additionally, the Partnership has no internally generated software
coding to correct as all of the Partnership's software is purchased
and licensed from external providers. These external providers
have assured management that their systems are, or will be, Year
2000 compliant.
The Partnership has two main software packages that contain date
sensitive information, (i) accounting and (ii) investor relations.
In 1997, the Partnership initiated and completed the conversion
from its existing accounting software to a new software program
that is Year 2000 compliant. In 1998, the investor relations
software was also updated to a new software program that is Year
2000 compliant. Management has determined that the Year 2000 issue
will not pose significant operational problems for its remaining
computer software systems. All costs associated with these
conversions are expensed as incurred, and are not material.
Management does not believe that any further expenditures will be
necessary for the Partnership to be Year 2000 compliant. However,
additional personal computers may be purchased from time to time to
replace existing machines.
Also in 1997, management of the Partnership initiated formal
communications with all of its significant third party vendors,
service providers and financial institutions to determine the
extent to which the Partnership is vulnerable to those third
parties failure to remedy their own Year 2000 issue. There can be
no guarantee that the systems of these third parties will be timely
converted and would not have an adverse effect on the Partnership.
The most reasonably likely worst case scenario for the
Partnership with respect to the Year 2000 issue would be the
inability of certain tenants to timely make their rental payments
beginning in January 2000. This could result in the Partnership
temporarily suffering a depletion of the Partnership's cash
reserves as expenses will need to be paid while the cash flows from
revenues are delayed. The Partnership has no formal Year 2000
contingency plan.
Liquidity and Capital Resources
The Partnership intends to satisfy its short-term liquidity needs
through cash reserves and cash flow from the properties. Long-term
needs are expected to be satisfied through property sales.
On April 6, 1995, the Partnership obtained a first mortgage loan
in the amount of $6,100,000 (the "First Mortgage Loan") secured by
Shoppes from Morgan Stanley Mortgage Capital, Inc. The First
Mortgage Loan bears interest at the rate of 9.55% per annum,
amortizes over a 25-year period, requires monthly payments of
principal and interest of approximately $53,000 and matures on May
1, 2002. A portion of the proceeds of the First Mortgage Loan,
approximately $4,675,000, were used to retire an existing mortgage
secured by Shoppes from Crown Life Insurance Company. The
remaining proceeds were used to pay loan closing costs and a
$999,919 return of capital distribution to the Limited Partners.
The Partnership was required to make a balloon mortgage payment
for Delchamps in December 1996 in the amount of $2,823,000. Prior
to the scheduled maturity of the first mortgage loan, the Lender
granted the Partnership an extension until February 1, 1997. On
January 14, 1997, the Partnership obtained a first mortgage loan in
the amount of $2,925,000 (the "First Mortgage Loan") secured by
Delchamps from NationsBanc Mortgage Capital Corporation. The First
Mortgage Loan bears interest at the rate of 9.03% per annum, is
amortized over a 25-year period, requires monthly payments of
principal and interest of approximately $24,600 and matures on
February 1, 2002. A portion of the proceeds of the First Mortgage
Loan, approximately $2,809,000, was used to retire the existing
mortgage secured by Delchamps from Lincoln National Life Insurance
Company.
The Partnership has paid annual cash distributions to Limited
Partners since 1986, as many of the Partnership's properties have
been operating in strong retail markets.
Below is a table summarizing the historical data for distribution
per Limited Partnership Interest for the last two years:
Distribution
Date 1999 (A) 1998 1997
February 15 $17.59 $16.49 $15.39
May 15 17.21 17.21 16.14
August 15 17.40 17.40 16.31
November 15 17.59 17.59 17.63
(A) The May 1999 distribution was made on May 17, 1999.
A distribution of Operating Cash Flow for the third quarter of
1999 was made to the Limited Partners on November 15, 1999 in the
amount of $137,976. The Preferential Distribution Deficiency
equaled $4,171,656 after this last distribution, a $113,751
increase over 1998.
On October 15, 1998, the Partnership received notice that an
unsolicited tender offer to purchase up to 10% of the outstanding
Units was to commence with a tender price of $475 per Unit. The
offer was being made, in part, by an entity that owned a nominal
economic interest in the Partnership and was scheduled to terminate
on November 13, 1998. As a result of this tender offer 115
economic interests in the Partnership were transferred.
On October 22, 1998, Limited Partners were mailed, without the
consent or knowledge of the General Partners, an additional tender
offer to purchase up to 4.9% of the outstanding Units of the fund
for $500 per Unit, less any transfer fees. This offer was being
made by an entity that did not own any interests in the Partnership
and was scheduled to expire on December 2, 1998. As a result of
this tender offer 382 economic interests in the Partnership were
transferred.
On May 12, 1999, the Partnership received notice that an
unsolicited tender offer to purchase up to approximately 10% of the
outstanding Units was to commence with a tender price of $650 per
Unit. The offer was made, in part, by an entity that owned a
nominal economic interest in the Partnership and was scheduled to
expire on June 25, 1999.
The General Partners remained neutral as to the particular merits
or risks associated with all of the tender offers to the Limited
Partners. However, the General Partners did notify the Limited
Partners that they are exploring various alternatives to sell the
Partnership's assets. In this regard, the Partnership has engaged
nationally known appraisal firms to value the Partnership's assets.
Additionally, these firms will assist the General Partners in
determining the appropriate method and timing for the disposition
of the Partnership's assets. The General Partners believe an
informed determination of the true value of the Units can be made
at that time. The value of the Units after the receipt of the
appraisals may be more or less than the tender offers.
The General Partners further informed the Limited Partners that,
for those investors who are primarily interested in liquidating
their Units immediately, the tender offers provided such an
opportunity.
In 1998, the General Partners notified the Limited Partners that
they were exploring various alternatives to sell the Partnership's
assets. In this regard, the Partnership engaged a nationally known
appraisal firm to value the Partnership's assets. Additionally,
this firm will assist the General Partners in determining the
appropriate method and timing for the disposition of the
Partnership's assets.
The General Partners determined to pursue disposition of the
Partnership's assets, and began the registration and solicitation
process for the authorization of the Limited Partners for the sale
of all or substantially all of the Partnership's properties. That
solicitation was accomplished by written notice directed by U.S.
mail to each Limited Partner at the address shown on the
Partnership's records, in accordance with the rules of the
Securities and Exchange Commission and the requirements of the
Partnership Agreement.
As a result of the July 12, 1999 authorization by a majority of
the Limited Partners to sell all of the Partnership's existing
properties the Partnership has begun the liquidation process and,
in accordance with generally accepted accounting principles, the
Partnership's financial statements for periods subsequent to July
12, 1999 have been prepared on a liquidation basis. Accordingly,
the carrying value of the assets is presented at net realizable
amounts and all liabilities are presented at estimated settlement
amounts, including estimated costs associated with carrying out the
liquidation. Preparation of the financial statements on a
liquidation basis requires significant assumptions by management,
including the estimate of liquidation costs and the resolution of
any contingent liabilities. There may be differences between the
assumptions and the actual results because events and circumstances
frequently do not occur as expected. Those differences, if any,
could result in a change in the net assets recorded in the
statement of net assets as of September 30, 1999. The Partnership
has begun the liquidation process and is actively marketing the
properties for sale.
The General Partners expect to distribute proceeds from operating
cash flow, if any, and from the sale of real estate to Limited
Partners in a manner that is consistent with the investment
objectives of the Partnership. Management of the Partnership
believes that cash needs may arise from time to time which will
have the effect of reducing distributions to Limited Partners to
amounts less than would be available from refinancing or sale
proceeds. These cash needs include, among other things,
maintenance of working capital reserves in compliance with the
Agreement as well as payments for major repairs, tenant
improvements and leasing commissions in support of real estate
operations.
Results of Operations - For the period January 1, 1999 to July 12,
1999 and the nine months ended September 30, 1998
(Amounts rounded to nearest $000's)
The Partnership generated net income of $220,000 for the period
January 1, 1999 to July 12, 1999 as compared to net income of
$180,000 for the nine months ended September 30, 1998. The
increase of $40,000 in net income resulted primarily from a
decrease of $353,000 in total income which was partially offset by
a decrease of approximately $393,000 in total expense.
Total income for the period January 1, 1999 to July 12, 1999 was
$1,318,000 as compared to $1,671,000 for the nine months ended
September 30, 1998, a decrease of $353,000. The $353,000 decrease
resulted primarily from the Partnership's July 12, 1999 adoption of
the liquidation basis of accounting, therefore seven months of
operating income were included in the 1999 period compared to nine
months in the 1998 period.
Total expenses for the period January 1, 1999 to July 12, 1999
was $1,098,000 compared to $1,491,000 for the nine months ended
September 30, 1998, a decrease of $393,000. The decrease of
$393,000 in expenses resulted primarily from the Partnership's July
12, 1999 adoption of the liquidation basis of accounting, therefore
seven months of operating expenses were included in the 1999 period
compared to nine months in the 1998 period.
On October 12, 1999, the Partnership was informed that Jitney
Jungle, the parent of Delchamps (which is the anchor at the
Delchamps Plaza Shopping Center), filed for Chapter 11 bankruptcy
protection.
Results of Operations - For the period July 1, 1999 to July 12,
1999 and the three months ended September 30, 1998
(Amounts rounded to nearest $000's)
The Partnership generated net income of $35,000 for the period
July 1, 1999 to July 12, 1999 as compared to net loss of $94,000
for the three month period ended on September 30 ,1998. The
$129,000 increase in net income resulted primarily from a $214,000
decrease in total income and a $342,000 decrease in total expense.
Total income for the period July 1, 1999 to July 12, 1999 was
$186,000 as compared to $400,000 for the three months ended
September 30, 1998, a decrease of $214,000. The $214,000 decrease
resulted primarily from the Partnership's July 12, 1999 adoption of
the liquidation basis of accounting, therefore one month of
operating income was included in the 1999 period compared to nine
months in the 1998 period.
Total expenses for the period July 1, 1999 to July 12, 1999 was
$151,000 compared to $493,000 for the three months ended September
30, 1998, a decrease of $342,000. The decrease of $342,000 in
expenses resulted primarily from the Partnership's July 12, 1999
adoption of the liquidation basis of accounting, therefore one
month of operating expenses were included in the 1999 period
compared to nine months in the 1998 period.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
ITEM 2. Changes in Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters To a Vote of Security
Holders.
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibit 27. Financial Data Schedule
Form 8-K.
On July 15, 1999, the Partnership filed a Form 8-K to
report the results of the solicitation of the Limited
Partnership for the sale of the Partnership's assets.
The Limited Partners, by a majority vote, have approved
the plan to sell the Partnership's assets.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: Brauvin 6, Inc.
Corporate General Partner of
Brauvin Income Properties L.P. 6
BY: /s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of
Directors and President
DATE: November 15, 1999
BY: /s/ Thomas E. Murphy
Thomas E. Murphy
Chief Financial Officer and
Treasurer
DATE: November 15, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<CASH> 747,653
<SECURITIES> 0
<RECEIVABLES> 118,447
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 16,958,250 <F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,521,444
<CURRENT-LIABILITIES> 0
<BONDS> 8,626,223 <F2>
0
0
<COMMON> 1,571,166 <F3>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 1,317,839 <F4>
<CGS> 0
<TOTAL-COSTS> 599,281 <F5>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 498,998
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219,560
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1> "PP&E" REPRESENTS REAL ESTATE HELD FOR SALE
<F2> "BONDS" REPRESENTS MORTGAGE PAYABLE
<F3> "COMMON" REPRESENTS NET ASSETS IN LIQUIDATION
<F4> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F5> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES LESS INTEREST
EXPENSE
</FN>
</TABLE>
