FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
WASHINGTON DC 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Period Ended June 30, 1996.
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Commission file number 33-12519
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REDWOOD MORTGAGE INVESTORS VI
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(exact name of registrant as specified in its charter)
California 94-3031211
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
650 El Camino Real, Suite G, Redwood City, CA. 94063
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(address of principal executive office)
(415) 365-5341
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(Registrants telephone number, including area code)
NOT APPLICABLE
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(Former name,former address and former fiscal year,if changed since last report)
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 reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES XX__________ NO___________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES________ NO________ NOT APPLICABLE ____XX___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuers class of
common stock, as of the latest date.
NOT APPLICABLE
<PAGE>
<TABLE>
Part I
Item 1
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
Balance Sheets
December 31, 1995 (audited) and
June 30, 1996 (unaudited)
<CAPTION>
ASSETS
06/30/96 12/31/95
(unaudited) (audited)
========== ==========
<S> <C> <C>
Cash ............................................... $ 237,571 $ 283,976
Accounts receivable:
Mortgage loans, secured by deeds of trust ......... 9,879,968 10,402,491
Accrued interest on mortgage loans ................ 479,033 445,816
Advances on mortgage loans ........................ 179,348 131,936
Accounts receivable-unsecured ..................... 251,531 322,913
----------- -----------
10,789,880 11,303,156
Less allowance for doubtful accounts .............. 204,000 283,284
----------- -----------
$10,585,880 $11,019,872
----------- -----------
Real Estate Owned, acquired through
foreclosure, at estimated net realizable value .... 1,322,621 1,501,712
Partnership Interest ............................... 456,821 456,821
Formation loan due from Redwood Home Loan Co. ...... 153,013 184,177
Prepaid expenses and other assets .................. -0- 935
----------- -----------
$12,755,906 $13,447,493
=========== ===========
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
Notes payable - Bank line of credit ............... $ 1,715,011 $ 2,041,011
----------- -----------
1,715,011 2,041,011
Partners Capital ................................... 11,040,895 11,406,482
----------- -----------
$12,755,906 $13,447,493
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (unaudited)
<CAPTION>
6 mos.ended 6 mos. ended 3 mos. ended 3 mos. ended
June 30,1996 June 30, 1995 June 30,1996 June 30, 1995
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Interest on mortgage loans ............................. $ 556,060 $ 647,568 $ 286,158 $ 323,493
Interest on bank deposits .............................. 1,327 3,508 252 1,797
Late charges & other ................................... 9,295 4,547 3,294 3,531
Miscellaneous .......................................... 1,460 2,169 560 610
--------- --------- --------- ---------
568,142 657,792 290,264 329,431
--------- --------- --------- ---------
Expenses:
Interest on bank loan ................................... 90,206 107,822 44,763 51,553
General Partner management fees ......................... -0- -0- -0- -0-
Clerical costs through Redwood Home ..................... 16,101 9,280 8,263 4,625
Loan Co. .................................................
Professional fees ....................................... 16,279 16,746 805 3,774
Other ................................................... 9,837 11,023 4,131 6,706
Provision for loss on real estate
acquired
through foreclosure and doubtful ....................... 135,588 202,426 83,585 107,783
accounts
--------- --------- --------- ---------
268,011 347,297 141,547 174,441
--------- --------- --------- ---------
Net Income ............................................... $ 300,131 $ 310,495 $ 148,717 $ 154,990
========= ========= ========= =========
Net Income: to General Partners (1%) ..................... $ 3,001 $ 3,105 $ 1,487 $ 1,550
to Limited Partners(99%) ... ................. 297,130 307,390 147,230 153,440
---------- --------- --------- ----------
$ 300,131 $ 310,495 $ 148,717 $ 154,990
========= ========= ========= =========
Net income for $1,000 invested by
Limited
Partner for entire period
- where income is reinvested and compounded............. $ 26.46 $ 25.99 $ 13.13 $ 12.95
========= ========= ========= =========
- where Partner received income in monthly
distributions ..................................... $ 26.18 $ 25.71 $ 13.07 $ 12.89
========= ========= ========= =========
<FN>
See accompanying notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND 1995 (unaudited)
<CAPTION>
June 30, 1996 June 30, 1995
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net Income .................................... $ 300,131 $ 310,495
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase (decrease) in allowance for
doubtful accounts ........................ (79,284) 927
(Increase) decrease in accrued interest
and advances ............................. (80,629) (91,502)
Increase (decrease) in accounts payable,
accrued expenses and deferred interest .. -0- -0-
(Increase) decrease in prepaid expenses
and other assets ........................ 935 -0-
-------- --------
Net cash provided by operating activities ..... 141,153 219,920
--------- --------
Cash flows from investing activities:
Net (increase) decrease in:
Real estate acquired through foreclosure ..... 179,091 706,127
Mortgage loans ............................... 522,523 ( 10,051)
Formation loan ............................... 31,164 ( 13,331)
Partnership Interest ......................... -0- 28,523
Accounts receivable -unsecured ............... 71,382 (456,821)
------- ---------
Net cash provided by investing activities 804,160 254,447
------- -------
Cash flows from financing activities:
Net increase (decrease) in note payable - bank (326,000) (143,000)
Partners withdrawals .......................... (664,014) (556,855)
Early withdrawal penalties, net ............... ( 1,704) ( 4,029)
Net cash provided by or (used in)
financing activities ................... (991,718) (703,884)
------- ---------
Net increase (decrease) in cash and cash
equivalents .................................... $ (46,405) $(229,517)
Cash and cash equivalents at the beginning
of period ..................................... 283,976 447,804
-------- --------
Cash and cash equivalents at the end of period .. $ 237,571 $ 218,287
========= =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1995 (audited)
AND SIX MONTHS ENDED JUNE 30, 1996 (unaudited)
<CAPTION>
--------------------------------------------PARTNERS CAPITAL-------------------------------------------
UNALLOCATED
GENERAL LIMITED SYNDICATION
PARTNERS PARTNERS COSTS TOTAL
<S> <C> <C> <C> <C>
Balances at December 31, 1992 ................ $ 9,773 $12,374,013 $(26,879) $12,356,907
Net Income ................................... 8,978 888,810 -0- 897,788
Allocation of Syndication Costs .............. (232) (22,947) 23,179 -0-
Early withdrawal penalties ................... -0- (10,365) 3,700 (6,665)
Partners withdrawals ......................... (8,746) (887,338) -0- (896,084)
----------- --------- -------- --------
Balances at December 31, 1993 ................ 9,773 12,342,173 -0- 12,351,946
Net Income ................................... 6,647 658,055 -0- 664,702
Early withdrawal penalties ................... -0- (12,790) -0- (12,790)
Partners withdrawals ......................... (6,654) (1,013,019) -0- (1,019,673)
----------- ---------- ------- -----------
Balances at December 31, 1994 ................ 9,766 11,974,419 -0- 11,984,185
Net Income ................................... 6,183 612,165 -0- 618,348
Early withdrawal penalties ................... -0- (4,336) -0- (4,336)
Partners withdrawals ......................... (6,183) (1,185,532) -0- (1,191,715)
----------- ----------- ------- -----------
Balances at December 31, 1995 ................ 9,766 11,396,716 -0- 11,406,482
Net Income ................................... 3,001 297,130 -0- 300,131
Early withdrawal penalties ................... -0- (1,704) -0- (1,704)
Partners withdrawals ......................... (3,001) (661,013) -0- (664,014)
------------ ----------- ------- ------------
Balances at June 30, 1996 .................... $ 9,766 $11,031,129 -0- $ 11,040,895
=========== =========== ======= ============
<FN>
See accompanying notes to Financial Statements
</FN>
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 (audited) and
June 30, 1996 (unaudited)
NOTE 1 ORGANIZATION AND GENERAL
Redwood Mortgage Investors VI, (the partnership) is a California Limited
partnership, of which the General Partners are D. Russell Burwell, Michael R.
Burwell and Gymno Corporation, a California corporation owned and operated by
the individual General Partners. The partnership was organized to engage in
business as a mortgage lender for the primary purpose of making loans secured by
Deeds of Trust on California real estate. Partnership loans are being arranged
and serviced by Redwood Home Loan Co. (RHL Co.), dba Redwood Mortgage, an
affiliate of the General Partners. At December 31, 1989, the offering was closed
with contributed capital totaling $9,781,366.
Each months income is distributed to partners based upon their
proportionate share of partners capital. Some partners have elected to withdraw
income on a monthly, quarterly or annual basis.
A. Sales Commissions - Formation Loan
Sales commissions ranging from 0% (units sold by General Partners) to 10%
of gross proceeds were paid to RHL Co., an affiliate of the General Partners
that arranges and services the mortgage loans. To finance the sales commissions,
the Partnership loaned to RHL Co. $623,255 relating to contributed capital of
$9,781,366. The formation loan is unsecured, and is being repaid, without
interest, in ten annual installments of principal, commencing December 31, 1989
The following reflects transactions in the Formation Loan account through
June 30, 1996:
Amount loaned during 1987,1988 and 1989 $623,255
Less:
Cash repayments $432,319
Allocation of early withdrawal penalties 37,923 470,242
=========== ---------
Balance June 30, 1996 $153,013
===========
B. Other Organizational and Offering Expenses
Organizational and offering expenses, other than sales commissions,
(including printing costs, attorney and accountant fees, and other costs), paid
by the Partnership from the offering proceeds totaled $360,885 or 3.69% of the
gross proceeds contributed by the Partners.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues and expenses are accounted for on the accrual basis of accounting.
The Partnership bears its own organization and syndication costs (other
than certain sales commissions and fees described above) including legal and
accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage
fee and filing fees. Organizational costs of $14,750 were capitalized and were
amortized over a five year period. Syndication costs of $346,135 were charged
against partners capital and were allocated to individual partners consistent
with the partnership agreement over a five year period.
<PAGE>
Property acquired through foreclosure will be held for prompt sale to
return the funds to the loan portfolio. Such property is recorded at cost which
includes the principal balance of the former loan made by the Partnership plus
accrued interest, payments made to keep the senior loans current, costs of
obtaining title and possession, less rental income or at estimated net
realizable value, if less. The difference between such costs and estimated net
realizable value is deducted from cost in the Balance Sheet to arrive at the
carrying value of such property.
In preparing the financial statements, management is required to make
estimates based on the information available that affect the reported amounts of
assets and liabilities as of the balance sheet date and revenues and expenses
for the related periods. Such estimates relate principally to the determination
of the allowance for doubtful accounts and the valuation of real estate acquired
through foreclosure. Actual results could differ significantly from these
estimates.
Mortgage loans and the related accrued interest, fees and advances are
analyzed on a continuous basis for recoverability. Delinquencies are identified
and followed as part of the mortgage loan system. A provision is made for
doubtful accounts to adjust the allowance for doubtful accounts to an amount
considered by management to be adequate to provide for unrecoverable accounts
receivable.
Amounts reflected in the statements of income as net income per $1,000
invested by Limited Partners for the entire period are actual amounts allocated
to Limited Partners who have their investment throughout the period and have
elected to either leave their earnings to compound or have elected to receive
monthly distributions of their net income. Individual limited partner income is
allocated each month based on the limited partners pro rata share of partnership
capital. Because the net income percentage varies from month to month, amounts
per $1,000 will vary for those individuals who make or withdraw investments
during the period, or select other options. However, the net income per $1,000
average invested has approximated those reflected for those whose investments
and options have remained constant.
No provision for Federal and State income taxes is made in the financial
statements since income taxes are the obligation of the partners if and when
income taxes apply.
The interim financial statements dated June 30, 1996 are unaudited, but in
the opinion of the General Partners all adjustments (consisting solely of normal
recurring adjustments) necessary to a fair presentation of the financial
statements at June 30, 1996 have been made.
NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES
The following are commissions and/or fees which are paid to the General
Partners and/or related parties.
A. Loan Brokerage Commissions
Loan brokerage commissions for services in connection with the review,
selection, evaluation, negotiation and extension of the mortgage loans were
limited up to 12% of the principal amount of the loans through the period ending
6 months after the termination date of the offering. Thereafter, commissions are
limited to an amount not to exceed 4% of the total Partnership assets per year.
Such commissions are paid by the borrowers, thus, not an expense of the
Partnership.
B. Loan Servicing Fees
Monthly loan servicing fees are paid to Redwood Home Loan Co. up to 1/8 of
1% (1.5% annual) of the unpaid principal, or such lesser amount as is reasonable
and customary in the geographic area where the property securing the loan is
located (currently at 1/12 of 1% or 1% annual). The amount remitted to the
partnership and recorded as interest on mortgage loans is net of such fees. In
1993, $27,532 of the total loan servicing fee of $121,838; in 1994 $123,758 of
the total loan service fees of $123,758; in 1995 $50,741 of the total loan
service fees of $92,797 and for the six months through June 30, 1996, $8,650 of
the total loan servicing fee of $37,573, were waived by Redwood Home Loan Co.
<PAGE>
C. Asset Management Fee
Pursuant to the partnership agreement, the General Partners receive a
monthly fee for managing the Partnerships loan portfolio and operations equal
to 1/32 of 1% (3/8 of 1% annual) of the net asset value. Such fees were reduced
from $46,569 to $15,523 in 1993; $45,974 to $8,942 in 1994, and $44,336 to $-0-
in 1995 with the difference being waived by the General Partners. For the six
months through June 30 1996, all of the management fee totalling $21,282 was
also waived by the General Partners.
D. Other Fees
The Partnership Agreement provides for other fees such as reconveyance,
loan assumption and loan extension fees. These fees are paid by the borrowers to
parties related to the General Partners.
E. Income and Losses
All income is credited or charged to partners in relation to their
respective partnership interests. The partnership interest of the General
Partners (combined) is a total of 1%.
F. Operating Expenses
The General Partners or their affiliate (Redwood Home Loan Co.) are
reimbursed by the Partnership for all operating expenses actually incurred by
them on behalf of the Partnership, including without limitation, out-of-pocket
general and administration expenses of the Partnership, accounting and audit
fees, legal fees and expenses, postage and preparation of reports to Limited
Partners. In 1993, 1994 and 1995 clerical costs totaling $31,642, $-0- and
$23,341, respectively, were reimbursed to RHL and are included in expenses in
the Statements of Income. The 1994 expenses were absorbed by the Redwood Home
Loan Co. For the six months through June 30, 1996, $16,101 was reimbursed to RHL
Co.
NOTE 4 OTHER PARTNERSHIP PROVISIONS
A. Term of the Partnership
The term of the Partnership is approximately 40 years, unless sooner
terminated as provided. The provisions provided for no capital withdrawal for
the first five years, subject to the penalty provision set forth in (D) below.
Thereafter, investors have the right to withdraw over a five-year period, or
longer.
B. Election to Receive Monthly, Quarterly or Annual Distributions
Upon subscriptions, investors elected either to receive monthly, quarterly
or annual distributions of earnings allocations, or to allow earnings to
compound for at least a period of 5 years.
C. Profits and Losses
Profits and losses are allocated monthly among the Limited Partners
according to their respective capital accounts after 1% is allocated to the
General Partners.
D. Withdrawal From Partnership
A Limited Partner had no right to withdraw from the Partnership or to
obtain the return of his capital account for at least five years after such
units are purchased which in all instances has occurred by June 30, 1996. After
that time, at the election of the Partner, capital accounts can be returned over
a five year period in 20 equal quarterly installments or such longer period as
is requested.
<PAGE>
Notwithstanding the above, in order to provide a certain degree of
liquidity to the Limited Partners, the General Partners will liquidate a Limited
Partners entire capital account in four quarterly installments beginning on the
last day of the calendar quarter following the quarter in which the notice of
withdrawal is given. Such liquidations shall, however, be subject to a 10% early
withdrawal penalty applicable to any sums withdrawn prior to the time when such
sums otherwise could have been withdrawn pursuant to the liquidation procedure
set forth above. The 10% early withdrawal penalty will be received by the
Partnership, and a portion of the sums collected as such penalty will be applied
toward the next installment(s) of principal under the Formation Loan owed to the
Partnership by Redwood Home Loan Co. Such portion shall be determined by the
ratio between the initial amount of Formation Loan and the total amount of other
organization and syndication costs incurred by the Partnership in this offering.
The balance of any such early withdrawal penalties shall be retained by the
Partnership for its own account and applied against syndication costs. Since the
syndication costs have been fully amortized as of December 31, 1993, the early
withdrawal penalties gained in the future will be applied on the same basis as
before with the amount otherwise being credited to the syndication costs being
credited to income for the period.
The Partnership will not establish a reserve from which to fund withdrawals
and, accordingly, the Partnership's capacity to return a Limited Partners
capital account is restricted to the availability of Partnership cash flow.
Furthermore, no more than 20% of the total Limited Partners capital accounts
outstanding at the beginning of any year shall be liquidated during any calendar
year.
NOTE 5 - INVESTMENT IN PARTNERSHIP.
The Partnerships interest in land acquired through foreclosure, located in
East Palo Alto, California with costs totalling $456,821 has been invested with
that of two other Partnerships (total cost $941,050) in a partnership which is
in the preliminary process of getting approval to construct approximately 72
single family homes for sale. Redwood Mortgage Investors V, VI, and VII have
first priority on return of investment plus interest thereon, in addition to a
share of profits realized.
NOTE 6 - NOTES PAYABLE - BANK LINE OF CREDIT
The Partnership has a bank line of credit secured by its mortgage loan
portfolio up to $2,500,000 at 1% over prime. The balances were $2,041,011 and
$1,715,011 at December 31, 1995 and June 30, 1996, respectively, and the
interest rate at June 30, 1996 was 9.25% (8.25% prime + 1%).
NOTE 7 - LEGAL PROCEEDINGS
The Partnership is not a defendant in any legal actions. However, legal
actions against borrowers and other involved parties have been initiated by the
Partnership to help assure payments against unsecured accounts receivable
totaling $251,531.
Management anticipates that the ultimate outcome of the legal matters will
not have a material adverse effect on the net assets of the Partnership, with
due consideration having been given in arriving at the allowance for doubtful
accounts.
<PAGE>
NOTE 8 - ASSET CONCENTRATIONS AND CHARACTERISTICS The mortgage loans are
secured by recorded deeds of trust. At June 30, 1996, there were 66 loans
outstanding with the following characteristics:
Number of loans outstanding 66
Total loans outstanding $9,879,968
Average loan outstanding $ 149,696
Average loan as percent of total 1.52%
Average loan as percent of Partners Capital 1.36%
Largest loan outstanding $1,376,117
Largest loan as percent of total 13.93%
Largest loan as percent of Partners Capital 12.46%
Number of counties where security is located
(all California) 13
Largest percentage of loans in one county 26.47%
Average loan to appraised value of security
at time loan was consummated 64.84%
Number of loans in foreclosure status 6
Amount of loan in foreclosure $ 670,240
The cash balance at June 30, 1996 of $237,571 was in two banks with
interest bearing balances totalling $172,901. The balance exceeded the FDIC
insurance limit (up to $100,000 per bank) by $72,901.
<PAGE>
Item 7 - Managements Discussion and Analysis of Financial Condition and
Results of Operations
On June 30, 1996, the Partnerships net capital totalled $11,040,895.
The Partnership began funding mortgage investments in October 1987, and as
of June 30, 1996 had distributed income at an average annualized (compounded)
yield of 8.09%. Current earnings are lower than those prevalent at the outset,
primarily because interest rates generally have dropped dramatically since 1988.
The Partnership does not anticipate a significant increase or decrease in
mortgage rates in the foreseeable future and expects the prevailing interest
rates to fluctuate in a narrow range in the near future. Management expects the
yield, net of provision for losses on loans, to increase slightly in 1996.
Currently, mortgage interest rates are lower than those prevalent at the
inception of the Partnership. New loans are being originated at these lower
interest rates. The result is a reduction of the average return across the
entire portfolio held by the Partnership. This of course is for most other
saving alternative. In the future, interest rates likely will change from their
current levels. The General Partners cannot at this time predict at what levels
interest rates will be in the future. The General Partners believe the rates
charged by the Partnership to its borrowers will not change significantly in the
immediate future. Based upon the rates payable in connection with the existing
loans, the current and anticipated interest rates to be charged by the
Partnerships, and current reserve requirements, the General Partners anticipate
that the annualized yield next year will range only slightly higher from its
current rate.
Each year, the Partnership negotiates a line of credit with a commercial
bank which is secured by its mortgage loan portfolio. Currently, it has the
capacity to borrow up to $2,500,000 at Prime plus 1%, (9.25%). Current
borrowings of $1,715,011 have the effect of leveraging the portfolio about 20%.
The Partnership relies upon the line of credit, amortization of notes, pay-off
of notes, and the re-investment of earnings, after paying Partnership
distributions and operating costs, for the creation of new capital for mortgage
(loan) investments.
The Partnership's operating results and delinquencies are within the normal
range of the General Partners expectations, based upon their experience in
managing similar Partnerships over the last nineteen years. Foreclosures are a
normal aspect of partnership operations and the General Partners anticipate that
they will not have a material effect on liquidity. As of June 30, 1996, there
were six properties in foreclosure. Cash is continually being generated from
interest earnings, late charges, prepayment penalties, amortization of notes and
pay-off of notes. Currently, this amount exceeds Partnership expenses and
earnings payout requirements. As loan opportunities become available, excess
cash and available funds are invested in new loans.
The General Partners are continuously reviewing the loan portfolio,
examining the status of delinquencies, the underlying collateral securing these
properties, REO expenses, sales activities, and borrowers payment records and
other data relating to the loan portfolio. Data on the local real estate market,
and on the national and local economy are studied. Based upon this information
and more, loan loss reserves and allowance for doubtful accounts are increased
or decreased. Because of the number of variables involved, the magnitude of
possible swings and the General Partners inability to control many of these
factors, actual results may and do sometimes differ significantly from estimates
made by the General Partners.
Its now clear the Northern California recession reached bottom in 1993.
Since then, the California economy has been improving, slowly at first, but now,
more vigorously. A wide variety of indicators suggest that the economy in
California was strong in the first half of 1996, and the State is well -
positioned for fast growth in the second half of the year. This improvement is
reflective in increasing property values, in job growth, personal income growth,
etc., which all translates into more loan activity. Which of course, is healthy
for our lending activity.
<PAGE>
I.
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
The following compensation has been paid to the General Partners and
Affiliates for services rendered during the six months ending June 30, 1996. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus and Partnership Agreement. In addition, the General Partners
and/or related companies pay certain expenses on behalf of the Partnership for
which it is reimbursed as noted in the Statement of Income.
Entity Receiving Description of Compensation Amount
Compensation and Services Rendered
===============================================================================
RHL Co. Loan Servicing Fee for servicing loans
($8,650 waived by RHL Co.) $28,923
- ------------------- ----------------------------------------- -----------------
General Partners &/or Asset Management Fee for managing assets
Affiliates ($21,282 waived by the General Partners
$ 0
- ---------------------------- --------------------------------------------------
General Partners 1% interest in profits, losses and
distributions of cash available for
distribution $ 3,001
- ---------------------------- ---------------------------------------------------
II. FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED BY COMPANIES RELATED TO
THE GENERAL PARTNERS THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE
PARTNERSHIP)
RHL Co. Loan Brokerage Commissions for services in
connection with the review, selection, evaluation
negotiation, and extension of the Partnership
Loans paid by the borrowers and not by the
Partnership $ 20,150
- -------------------------------------------------------------------------------
RHL Co. Processing and Escrow Fees for services in
connection with notary, document preparation,
credit investigation, and escrow fees payable
by the borrower and not by the Partnership $ 229
- ---------------------------- --------------------------------------------------
<PAGE>
LOAN PORTFOLIO SUMMARY AS OF JUNE 30, 1996
Parthership Highlingts
Loan to Value ratio
First Trust Deed Loans $ 4,565,455.88
Appraised Value of Properties * 7,112,225.00
Total Investment as a % of Appraisal 64.19%
First Trust Deed Loans $ 4,565,455.88
Second Trust Deed Loans 4,635,355.43
Third Trust Deed Loans 432,225.52
Fourth Trust Deed Loans ** 246,931.03
-------------------
$ 9,879,967.86
First Trust Deeds due other Lenders $18,861,022.00
Second Trust Deeds due other Lenders 1,186,142.00
Third Trust Deeds due other Lenders 178,571.00
--------------------
Total Debt $30,105,702.86
Appraised Property Value $46,431,389.00
Total Investment as a % of Appraisal 64.84%
Number of Loans Outstanding 66
Average Investment $149,696.48
Average Investment as a % of Net Partners Capital 1.36%
Largest Investment Outstanding $1,376,117.03
Largest Investment as a % of Net Partners Capital 12.46%
* Amounts shown reflect the aggregate appraisal values utilized at the time
the loans were consummated.
** This consists of a loan in which Redwood Mortgage Investors VI, together
with other Redwood partnerships, holds a second and a fourth trust deed against
the secured property. In addition, the principals behind the borrower
corporation have given personal guarantees as collateral. The overall loan to
value ratio on this loan is 76.52%. Besides the borrower paying an interest rate
of 12.25%, the partnership and other lenders will participate in profits. The
General Partners and its affiliates have previously entered into loan
transactions with this borrower, all of which have been concluded successfully,
with extra earnings earned for the other lenders.
<PAGE>
Loans as a Percentage of Total Loans
First Trust Deed Loans 46.17%
Second Trust Deed Loans 46.96%
Third Trust Deed Loans 4.37%
Fourth Trust Deed Loans 2.50%
------------
Total 100.00%
Loans by Type of Property
Owner Occupied Homes $1,834,111.07 18.56%
Non Owner Occupied Homes 755,213.03 7.64%
Apartments 813,011.38 8.23%
Commercial 6,477,632.38 65.57%
---------------- ------------
Total $9,879,967.86 100.00%
Statement of Conditions of Loans
Number of Loans in Foreclosure 6
Diversification by County
County
Santa Clara $2,614,868.07 26.47%
San Mateo 1,953,947.92 19.78%
Alameda 1,879,445.89 19.02%
Contra Costa 767,064.17 7.76%
Stanislaus 765,516.84 7.75%
San Francisco 625,728.58 6.33%
Sacramento 477,882.89 4.84%
Sonoma 334,127.39 3.38%
El Dorado 216,586.51 2.19%
Shasta 82.714.15 0.84%
Monterey 72,380.95 0.73%
Santa Cruz 64,993.74 0.66%
Solano 24,710.76 0.25%
------------------ ------------
Total $9,879,967.86 100.00%
<PAGE>
PART 2
OTHER INFORMATION
Item 1. Legal Proceedings
No legal action has been initiated against the Partnership.
The Partnership had filed a legal action for collection
against a borrower, which is routine litigation incidental
to its business. Please refer to note (7) of financial
statements.
Item 2. Changes in the Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Not Applicable
(b) Form 8-K
The registrant has not filed any
reports on Form 8-K during the six
month period ending June 30, 1996.
<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, thereto duly authorized
on the 25th day of July, 1996.
REDWOOD MORTGAGE INVESTORS VI
By:
---------------------------------------------
D. Russell Burwell, General Partner
By:
---------------------------------------------
Michael R. Burwell, General Partner
By: Gymno Corporation, General Partner
By:
---------------------------------------------
D. Russell Burwell, President
By:
---------------------------------------------
Michael R. Burwell, Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf
of the registrant and in the capacity indicated on the 25th day of July 1996.
Signature Title Date
- -------------------
D. Russell Burwell General Partner July 25, 1996
- --------------------
Michael R. Burwell General Partner July 25, 1996
- --------------------
D. Russell Burwell President of Gymno Corporation, July 25, 1996
(Principal Executive Officer);
Director of Gymno Corporation
- -------------------
Michael R. Burwell Secretary/Treasurer of Gymno July 25, 1996
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
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