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 March 31, 1997
- -------------------------------------------------------------------------------
Commission file number 33-12519
- -------------------------------------------------------------------------------
REDWOOD MORTGAGE INVESTORS VI
(exact name of registrant as specified in its charter)
California 94-3031211
- -------------------------------------------------------------------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
650 El Camino Real, Suite G, Redwood City, CA. 94063
- --------------------------------------------------------------------------------
(address of principal executive office)
(415) 365-5341
- ------------------------------------------------------------------------------
(Registrants telephone number, including area code)
NOT APPLICABLE
- -------------------------------------------------------------------------------
(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, 1996 (audited) and
March 31, 1997 (unaudited)
<CAPTION>
ASSETS
March 31, 1997 Dec. 31, 1996
(unaudited) (audited)
================= ================
<S> <C> <C>
Cash $119,481 $180,597
--------------- ---------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 9,249,045 9,313,924
Accrued interest on mortgage investments 498,904 405,783
Advances on mortgage investments 133,581 108,019
Accounts receivable-unsecured 251,531 251,531
--------------- ---------------
10,133,061 10,079,257
Less allowance for doubtful accounts 252,000 252,850
--------------- ---------------
9,881,061 9,826,407
--------------- ---------------
Real Estate Owned, acquired through foreclosure, at
estimated net realizable value 1,097,735 1,441,007
Investment in Partnership 540,735 496,040
Formation loan due from Redwood Mortgage 104,241 121,849
--------------- ---------------
$11,743,253 $12,065,900
=============== ===============
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
Deferred Interest $0 $18,522
Note payable - bank line of credit $1,475,011 $1,530,511
---------------- ---------------
Total liabilities $1,475,011 $1,549,033
Partners capital 10,268,242 10,516,867
--------------- ---------------
$11,743,253 $12,065,900
=============== ===============
<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 MONTHS ENDED MARCH 31, 1997 AND 1996 (unaudited)
<CAPTION>
3 mos. ended 3 mos. ended
March 31, 1997 March 31, 1996
(unaudited) (unaudited)
================= =================
Revenues:
<S> <C> <C>
Interest on mortgage investments $241,398 $269,902
Interest on bank deposits 1,939 1,075
Late charges, prepayment, penalties and fees 2,217 6,901
-------------- --------------
245,554 277,878
-------------- --------------
Expenses:
General partners asset management fees 0 0
Clerical costs through Redwood Mortgage 7,341 7,838
Interest and line of credit costs 34,860 45,443
Provision for loss on real estate acquired through
foreclosure and doubtful accounts 50,200 52,003
Professional services 11,067 15,474
Other 5,268 5,706
-------------- --------------
108,736 126,464
-------------- --------------
Net Income $136,818 $151,414
============== ==============
Net Income: to General Partners (1%) $1,368 $1,514
to Limited Partners (99%) $135,450 $149,900
============== ==============
$136,818 $151,414
============== ==============
Net income for $1,000 invested by Limited Partners for
entire period:
- where income is reinvested and compounded $12.90 $13.16
============== ==============
- where Partner receives income in monthly $12.85 $13.11
distributions
============== ==============
<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 THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996 (unaudited)
<CAPTION>
March 31, 1997 March 31, 1996
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income $136,818 $151,414
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase (decrease) in allowance for doubtful accts (850) (88,284)
(Increase) decrease in assets:
Accrued interest & advances (118,683) (64,105)
Prepaid expenses and other assets 0 935
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 0 4,100
Deferred Interest on Mortgage Investments (18,522) 0
--------------- ---------------
Net cash provided by operating activities (1,237) 4,060
--------------- ---------------
Cash flows from investing activities:
Net (increase) decrease in:
real estate acquired through foreclosure 343,272 (84,956)
Mortgage Investments 64,879 240,574
Decrease in formation loan 17,608 11,140
accounts receivable, unsecured 0 69,480
Investment in Partnership (44,695) 0
--------------- ---------------
Net cash provided by investing activities 381,064 236,238
--------------- ---------------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank (55,500) (126,000)
Partners withdrawals (383,418) (321,645)
Early withdrawal penalties, net (2,025) (752)
--------------- ---------------
Net cash provided by (used in) financing activities (440,943) (448,397)
--------------- ---------------
Net increase (decrease) in cash (61,116) (208,099)
Cash - beginning of period 180,597 283,976
--------------- ---------------
Cash - end of period $119,481 $75,877
=============== ===============
<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, 1996 (audited)
AND THE THREE MONTHS ENDED MARCH 31, 1997, (unaudited)
<CAPTION>
PARTNERS CAPITAL
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------------- ---- --------------- ---- ---------------
<S> <C> <C> <C>
Balances at December 31, 1993 9,773 12,342,173 12,351,946
Net income 6,647 658,055 664,702
Early withdrawal penalties 0 (12,790) (12,790)
Partners withdrawals (6,654) (1,013,019) (1,019,673)
-------------- --------------- ---------------
Balances at December 31, 1994 $9,766 11,974,419 11,984,185
Net income 6,183 612,165 618,348
Early withdrawal penalties 0 (4,336) (4,336)
Partners withdrawals (6,183) (1,185,532) (1,191,715)
-------------- --------------- ---------------
Balances at December, 1995 $9,766 11,396,716 11,406,482
Net income 5,882 582,280 588,162
Early withdrawal penalties 0 (8,721) (8,721)
Partners withdrawals (5,882) (1,463,174) (1,469,056)
-------------- --------------- ---------------
Balances at December 31, 1996 $9,766 10,507,101 10,516,867
Net income 1,368 135,450 136,818
Early withdrawal penalties 0 (2,025) (2,025)
Partners withdrawals (1,368) (382,050) (383,418)
-------------- --------------- ---------------
Balances at March 31, 1997 $9,766 10,258,476 10,268,242
============== =============== ===============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
MARCH 31, 1997 (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 Mortgage Investments secured by Deeds of Trust on
California real estate. Mortgage Investments are being arranged and serviced by
Redwood Home Loan Co. (RHL Co.), dba Redwood Mortgage, an affiliate of the
General Partners. 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 Redwood
Mortgage., an affiliate of the General Partners that arranges and services the
Mortgage Investments. To finance the sales commissions, the Partnership loaned
to Redwood Mortgage $623,255 (the Formation Loan) 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
March 31, 1997:
Amount loaned during 1987,1988 and 1989 $623,255
Less:
Cash repayments $475,044
Allocation of early withdrawal penalties 43,970 519,014
=========== -----------
Balance December 31, 1996 $104,241
===========
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>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
MARCH 31, 1997 (unaudited)
Property acquired through foreclosure will be held for prompt sale to
return the funds to the Mortgage Investment portfolio. Such property is recorded
at cost which includes the principal balance of the former Mortgage Investment
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 Investments 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 Investment 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 March 31, 1997, are unaudited, but
in the opinion of the General Partners all adjustments (consisting solely of
normal adjustments) necessary to a fair presentation of the financial statements
at March 31, 1997 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. Mortgage Brokerage Commissions Mortgage brokerage commissions for
services in connection with the review, selection, evaluation, negotiation and
extension of the Mortgage Investments were limited up to 12% of the principal
amount of the Mortgage Investments 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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
MARCH 31, 1997 (unaudited)
B. Mortgage Servicing Fees Monthly mortgage servicing fees are paid to
Redwood Mortgage 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 Mortgage Investment is located (currently at 1/12 of 1% or
1% annual). The amount remitted to the partnership and recorded as interest on
Mortgage Investments is net of such fees. In 1994 $123,758 of the total mortgage
servicing fees of $123,758, in 1995 $50,741 of the total mortgage servicing fees
of $92,797, in 1996, $41,779 of the total mortgage servicing fees of $86,344 and
for the three months through March 31, 1997, $3,577 of the total mortgage
servicing fee of $12,824 were waived by Redwood Mortgage.
C. Asset Management Fee Pursuant to the partnership agreement, the General
Partners receive a monthly fee for managing the Partnerships Mortgage
Investment portfolio and operations equal to 1/32 of 1% (3/8 of 1% annual) of
the net asset value. Such fees were reduced from $45,974 to $8,942 in 1994,
$44,336 to $0 in 1995, $41,802 to $0 in 1996, and $9,893 to $0 for the three
months through March 31, 1997, with the difference being waived by the General
Partners.
D. Other Fees The Partnership Agreement provides for other fees such as
reconveyance, mortgage assumption and mortgage 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
Mortgage) 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 1994, 1995, 1996, and for the current quarter, clerical
costs totaling $0.00, $23,341, $31,838 and $7,341 respectively, were reimbursed
to Redwood Mortgage and are included in expenses in the Statements of Income.
The 1994 expenses were absorbed by the Redwood Mortgage.
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.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
MARCH 31, 1997 (unaudited)
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 had occurred by
March 31, 1997. 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.
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 Mortgage. 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 with costs totalling
$540,735 has been invested with that of two other Partnerships (total cost to
date, primarily land, of $1,113,870) in a partnership which is in the process of
constructing 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 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership has a bank line
of credit secured by its Mortgage Investment portfolio up to $2,500,000 at 1%
over prime. The balances were $1,530,511 and $1,475,011 at December 31, 1996 and
March 31, 1997, respectively, and the interest rate at March 31, 1997 was 9.50%
(8.50% 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>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (audited) and
MARCH 31, 1997 (unaudited)
NOTE 8 - ASSET CONCENTRATIONS AND CHARACTERISTICS The Mortgage Investments
are secured by recorded deeds of trust. At March 31, 1997, there were 64
Mortgage Investments outstanding with the following characteristics:
Number of Mortgage Investments outstanding 64
Total Mortgage Investments outstanding $9,249,045
Average Mortgage Investment outstanding 144,516
Average Mortgage Investment as percent of total 1.56%
Average Mortgage Investment as percent of Partners Capital 1.41%
Largest Mortgage Investment outstanding $1,376,117
Largest Mortgage Investment as percent of total 14.88%
Largest Mortgage Investment as percent of Partners Capital 13.40%
Number of counties where security is located (all California) 14
Largest percentage of Mortgage Investments in one county 30.71%
Average Mortgage Investment to appraised value of security at time 66.22%
Mortgage Investment was consummated
Number of Mortgage Investments in foreclosure 3
The cash balance at March 31, 1997 of $119,481 was in two banks with
interest bearing balances totalling $94,288. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $15,460.
<PAGE>
Item 7 - Managements Discussion and Analysis of Financial Condition and
Results of Operations
On March 31, 1997, the Partnerships net capital totalled $10,268,242.
The Partnership began funding Mortgage Investments in October 1987, and as
of March 31, 1997 had distributed income at an average annualized (compounded)
yield of 7.89%. 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, to increase slightly in 1997.
Currently, mortgage interest rates are lower than those prevalent at the
inception of the Partnership. New Mortgage Investments are being originated at
these lower interest rates. The result is a reduction of the average return
across the entire Mortgage Investment portfolio held by the Partnership. 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 Mortgage Investments, the
current and anticipated interest rates to be charged by the Partnerships, and
current reserve requirements, the General Partners anticipate that the
annualized yield this 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 Investment portfolio. Currently, it has
the capacity to borrow up to $2,500,000 at Prime plus 1%, (9.50%). Current
borrowings of $1,475,011 have the effect of leveraging the portfolio about 15%.
This added source of funds will help in maximizing the Partnership yield by
allowing the Partnership to minimize the amount of funds in lower yield
investment accounts when appropriate Mortgage Investments are not currently
available and because the Mortgage Investments made by the Partnership bear
interest at a rate in excess of the rate payable to the bank which extended the
line of credit, allows the Partnership to make the spread between the Mortgage
Investment interest rate and the line of credit interest rate.
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 twenty 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 March 31, 1997, there
were three 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 and principal payout requirements. As Mortgage Investment opportunities
become available, excess cash and available funds are invested in new Mortgage
Investments.
The General Partners regularly review the Mortgage Investment portfolio,
examining the status of delinquencies, the underlying collateral securing these
Mortgage Investments, REO expenses, sales activities, and borrowers payment
records and other data relating to the Mortgage Investment portfolio. Data on
the local real estate market, and on the national and local economy are studied.
Based upon this information and more, Mortgage Investment 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.
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 1996, and the State is well - positioned for fast growth. This
improvement is reflective in increasing property values, in job growth, personal
income growth, etc., which should translate 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 three months ending March 31, 1997.
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
========================= ======================================================
Redwood Mortgage Mortgage Servicing Fee for $9,247
servicing Mortgage Investments
($3,577 waived by RHL Co.)
- ------------------------- ------------------------------------------------------
General Partners Asset Management Fee for managing
&/or Affiliates assets ($9,893 waived by the
General Partners) $ 0.00
- ------------------------- ------------------------------------------------------
General Partners 1% interest in profits, losses
and distributions of cash available
for distribution $ 1,368
- ------------------------- ------------------------------------------------------
II.
FEES PAID BY BORROWERS ON MORTGAGE LOANS PLACED BY COMPANIES RELATED TO THE
GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE
PARTNERSHIP)
Redwood Mortgage Mortgage Brokerage Commissions
for services in connection with the
review, selection, evaluation, negotiation,
and extension of the Mortgage Investments
paid by the borrowers and not by
the Partnership $ 0.00
- ------------------------- ------------------------------------------------------
Redwood Mortgage 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 $ 0.00
- ------------------------- ------------------------------------------------------
<PAGE>
MORTGAGE INVESTMENT SUMMARY AS OF MARCH 31, 1997
Partnership Highlights
Mortgage Investment to Value ratio
First Trust Deed Mortgage Investments $4,901,029.03
Appraised Value of Properties * 7,524,496.00
Total Investment as a % of Appraisal 65.13%
First Trust Deed Mortgage Investments $4,901,029.03
Second Trust Deed Mortgage Investments 3,692,847.64
Third Trust Deed Mortgage Investments 405,186.08
Fourth Trust Deed Mortgage Investments ** 249,982.09
-------------------
$9,249,044.84
First Trust Deeds due other Lenders $15,738,399.00
Second Trust Deeds due other Lenders 1,174,343.00
Third Trust Deeds due other Lenders 178,571.00
-------------------
Total Debt $26,340,357.84
Appraised Property Value $39,779,892.00
Total Investment as a % of Appraisal 66.22%
Number of Mortgage Investments Outstanding 64
Average Investment $144,516.33
Average Investment as a % of Net Partners Capital 1.41%
Largest Investment Outstanding $1,376,117.03
Largest Investment as a % of Net Partners Capital 13.40%
* Amounts shown reflect the aggregate appraisal values utilized at the time
the mortgage investments were consummated.
** This consists of a mortgage investment 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>
<TABLE>
Mortgage Investments as a Percentage of Total Mortgage Investments
<CAPTION>
<S> <C>
First Trust Deed Mortgage Investments 52.99%
Second Trust Deed Mortgage Investments 39.93%
Third Trust Deed Mortgage Investments 4.38%
Fourth Trust Deed Mortgage Investments 2.70%
-----------
Total 100.00%
Mortgage Investments by Type of Property
<S> <C> <C>
Owner Occupied Homes $1,395,177.34 15.09%
Non Owner Occupied Homes 972,339.18 10.51%
Apartments 760,657.64 8.22%
Commercial 6,120,870.68 66.18%
----------------- -----------
Total $9,249,044.84 100.00%
Statement of Conditions of Mortgage Investments
Number of Mortgage Investments in Foreclosure 3
Diversification by County
County
<S> <C> <C>
Santa Clara $2,840,426.80 30.71%
Alameda 1,702,697.68 18.41%
San Mateo 1,395,336.19 15.09%
Contra Costa 769,837.13 8.32%
Stanislaus 679,802.62 7.35%
Sacramento 442,696.90 4.79%
San Francisco 417,483.72 4.51%
Sonoma 375,752.00 4.06%
El Dorado 214,773.21 2.32%
Ventura 195,000.00 2.11%
Shasta 82,248.87 0.89%
Monterey 72,380.95 0.78%
Santa Cruz 37,681.30 0.41%
Solano 22,927.47 0.25%
----------------- -----------
Total $9,249,044.84 100.00%
</TABLE>
<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 borrowers, 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 nine month period ending March 31, 1997.
<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 7th day of May,
1997.
REDWOOD MORTGAGE INVESTORS VI
By: /s/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, General Partner
By: /s/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, General Partner
By: Gymno Corporation, General Partner
By: /s/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, President
By: /s/ Michael R. Burwell
---------------------------------------------
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 7th day of May, 1997.
Signature Title Date
/s/ D. Russell Burwell
- ----------------------
D. Russell Burwell General Partner May 7, 1997
/s/ Michael R. Burwell
- -----------------------
Michael R. Burwell General Partner May 7, 1997
/s/ D. Russell Burwell
- ----------------------
D. Russell Burwell President of Gymno Corporation, May 7, 1997
(Principal Executive Officer);
Director of Gymno Corporation
/s/ Michael R. Burwell
- ----------------------
Michael R. Burwell Secretary/Treasurer of Gymno May 7, 1997
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 119481
<SECURITIES> 0
<RECEIVABLES> 10133061
<ALLOWANCES> 252000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11743253
<CURRENT-LIABILITIES> 0
<BONDS> 0
1475011
0
<COMMON> 0
<OTHER-SE> 10268242
<TOTAL-LIABILITY-AND-EQUITY> 1174325
<SALES> 0
<TOTAL-REVENUES> 245554
<CGS> 0
<TOTAL-COSTS> 23676
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 50200
<INTEREST-EXPENSE> 34860
<INCOME-PRETAX> 136818
<INCOME-TAX> 0
<INCOME-CONTINUING> 136818
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136818
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
