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, 1999
- --------------------------------------------------------------------------------
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)
(650) 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>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
ASSETS
Mar 31, 1999 Dec 31, 1998
(unaudited) (audited)
------------------ ----------------
<S> <C> <C>
Cash $290,449 $299,775
------------------ ----------------
Accounts receivable:
Mortgage Investments, secured by deeds of trust 7,873,133 7,969,735
Accrued Interest on Mortgage Investments 734,985 717,719
Advances on Mortgage Investments 174,105 162,083
Accounts receivables, unsecured 23,776 23,775
------------------ ----------------
8,805,999 8,873,312
Less allowance for doubtful accounts 133,293 202,344
------------------ ----------------
8,672,706 8,670,968
------------------ ----------------
Real estate owned, held for sale, acquired through foreclosure 12,502 169,922
------------------ ----------------
Total Assets $8,975,657 $9,140,665
================== ================
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
Accounts Payable $23,379 $22,668
Deferred Interest 0 20,463
Note payable - bank line of credit 400,000 390,000
--------------- ---------------
Total Liabilities 423,379 433,131
--------------- ---------------
Partners Capital:
Limited Partners capital, subject to redemption, (note 4D) 8,542,512 8,697,768
General Partners Capital 9,766 9,766
--------------- ---------------
Total Partners capital 8,552,278 8,707,534
--------------- ---------------
Total Liabilities and Partners capital $8,975,657 $9,140,665
=============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (unaudited)
3 mos. ended 3 mos. ended
Mar 31, 1999 Mar 31, 1998
(unaudited) (unaudited)
Revenues:
Interest on Mortgage Investments $206,357 $198,443
Interest on Bank Deposits 627 2,657
Late charges, prepayment penalties and 2,373 1,953
fees
----------- -----------
209,357 203,053
----------- -----------
Expenses:
Mortgage Servicing fees 16,795 8,325
Asset management fees 2,729 0
Clerical costs through Redwood Mortgage 5,673 6,319
Corp.
Interest and line of credit cost 3,284 20,296
Provision for losses on real estate
acquired
through foreclosure and doubtful 30,584 21,811
accounts
Professional Services 15,090 11,288
Other 4,283 6,024
----------- -----------
78,438 74,063
----------- -----------
Net Income $130,919 $128,990
=========== ===========
Net Income: to General Partners (1%) $1,309 $1,290
to Limited Partners $129,610 $127,700
(99%)
=========== ===========
$130,919 $128,990
=========== ===========
Net income for $1,000 invested by
Limited
Partners for entire period
- where income is reinvested and $14.92 $13.48
compounded
=========== ===========
- where Partner received income in
monthly
distributions $14.84 $13.42
=========== ===========
See accompanying notes to Financial Statements
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1998 (audited) AND
THE THREE MONTHS ENDED MARCH 31, 1999 (unaudited)
PARTNERS CAPITAL
-------------------------------------------------------------------------------------
LIMITED PARTNERS CAPITAL
--------------------------------------------------
Capital
Account Formation General
Limited Loan Partners
Partners Receivable Total Capital Total
-------------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995 $11,396,716 $ (184,177) $11,212,539 $9,766 $11,222,305
Formation Loan collections 0 56,803 56,803 0 56,803
Net income 582,280 0 582,280 5,882 588,162
Early withdrawal penalties (8,721) 5,525 (3,196) 0 (3,196)
Partners withdrawals (1,463,174) 0 (1,463,174) (5,882) (1,469,056)
-------------- ------------- --------------- ------------ --------------
Balances at December 31, 1996 $10,507,101 $(121,849) $10,385,252 $9,766 $10,395,018
Formation Loan collections 0 53,833 53,833 0 53,833
Net Income 523,895 0 523,895 5,292 529,187
Early withdrawal penalties (13,409) 8,495 (4,914) 0 (4,914)
Partners withdrawals (1,536,379) 0 (1,536,379) (5,292) (1,541,671)
-------------- ------------- -------------- ------------- --------------
Balances at December 31, 1997 $9,481,208 ($59,521) $9,421,687 $9,766 $9,431,453
Formation Loan collections 0 53,291 53,291 0 53,291
Net Income 507,380 0 507,380 5,125 512,505
Early withdrawal penalties (9,834) 6,230 (3,604) 0 (3,604)
Partners withdrawals (1,280,986) 0 (1,280,986) (5,125) (1,286,111)
-------------- ------------- -------------- ------------- --------------
Balances at December 31, 1998 $8,697,768 0 $8,697,768 $9,766 $8,707,534
Net Income 129,610 0 129,610 1,309 130,919
Partners withdrawals (284,866) 0 (284,866) (1,309) (286,175)
-------------- ------------- -------------- ------------- --------------
Balances at March 31, 1999 $8,542,512 $0 $8,542,512 $9,766 $8,552,278
============== ============= ============== ============= ==============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 and MARCH 31, 1998 (unaudited)
Mar 31, 1999 Mar 31, 1998
(unaudited) (unaudited)
------------------ -----------------
Cash flows from operating activities:
<S> <C> <C>
Net income $130,919 $128,990
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for doubtful accounts 30,584 21,625
Provision for Losses on real estate held for sale 0 186
Early withdrawal penalty credited to income (1,565) (1,002)
(Increase) decrease in assets:
Accrued interest & advances (29,289) (51,068)
Prepaid expenses and other assets 0 0
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 711 0
Deferred Interest on Mortgage Investments (20,463) (898)
------------------ -----------------
Net cash provided by operating activities 110,897 97,833
------------------ -----------------
Cash flows from investing activities:
Principal collected on Mortgage Investments 482,542 146,395
Mortgage Investments made (385,940) (493,793)
Additions to real estate held for sale (740) (4,346)
Dispositions of real estate held for sale 58,525 223,124
Investment in Partnership 0 (14,610)
------------------ -----------------
Net cash provided by (used in) investing activities 154,387 (143,230)
------------------ -----------------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank 10,000 168,989
Partners withdrawals (284,610) (301,397)
Formation Loan collections 0 15,582
------------------ -----------------
Net cash provided by (used in) financing activities (274,610) (116,826)
------------------ -----------------
Net increase (decrease) in cash (9,326) (162,223)
Cash - beginning of period 299,775 331,143
------------------ -----------------
Cash - end of period $290,449 $168,920
================== =================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (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 Mortgage Corp., 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 by Redwood
Mortgage Corp., an affiliate of the General Partners that arranges and services
the Mortgage Investments. To finance the sales commissions, the Partnership
loaned to Redwood Mortgage Corp. $623,255 (the Formation Loan) relating to
contributed capital of $9,781,366. The Formation Loan was unsecured, and was
repaid, without interest, over ten years, commencing December 31, 1989. The last
payment was made during 1998.
The following reflects transactions in the Formation Loan account through
December 31, 1998:
Amount loaned during 1987,1988 and 1989 $623,255
Less:
Cash repayments $566,586
Allocation of early withdrawal penalties 56,669 $623,255
============ -----------
Balance March 31, 1999 $0
===========
The Formation Loan, which was a receivable from Redwood Mortgage Corp., an
affiliate of the General Partners, was deducted from Limited Partners capital
in the balance sheet. As amounts were collected from Redwood Mortgage Corp., the
deduction from capital was reduced. As of March 31, 1999, there was no longer a
deduction.
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. Such costs have been fully amortized and allocated to the Partners.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Accrual Basis
Revenues and expenses are accounted for on the accrual basis of accounting
wherein income is recognized as earned and expenses are recognized as incurred.
Once a Mortgage Investment is categorized as impaired, interest is no longer
accrued thereon.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
B. Management Estimates
In preparing the financial statements, management is required to make
estimates based on the information available that affects 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, including the valuation of impaired
mortgage investments, and the valuation of real estate acquired through
foreclosure. Actual results could differ significantly from these estimates.
C. Mortgage Investments, Secured by Deeds of Trust
The Partnership has both the intent and ability to hold the Mortgage
Investments to maturity, i.e., held for long-term investment. They are therefore
valued at cost for financial statement purposes with interest thereon being
accrued by the simple interest method.
Financial Accounting Standards Board Statements (SFAS) 114 and 118
(effective January 1, 1995) provide that if the probable ultimate recovery of
the carrying amount of a Mortgage Investment, with due consideration for the
fair value of collateral, is less than the recorded investment and related
amounts due and the impairment is considered to be other than temporary, the
carrying amount of the investment (cost) shall be reduced to the present value
of future cash flows. The adoption of these statements did not have a material
effect on the financial statements of the Partnership because that was
essentially the valuation method previously used on impaired loans.
At March 31, 1999, December 31, 1998 and 1997, reductions in the cost of
Mortgage Investments categorized as impaired by the Partnership totalled
$84,736, $84,736 and $0, respectively. The reduction in stated value was
accomplished by increasing the allowance for doubtful accounts.
As presented in Note 10 to the financial statements as of March 31, 1999,
the average mortgage investment to appraised value of security at the time the
loans were consummated was 66.89%. When a loan is valued for impairment
purposes, an updating is made in the valuation of collateral security. However,
a low loan to value ratio tends to minimize reductions for impairment.
D. Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents
include interest bearing and non-interest bearing bank deposits.
E. Real Estate Owned, Held for Sale
Real estate owned, held for sale, includes real estate acquired through
foreclosure and is stated at the lower of the recorded investment in the
property, net of any senior indebtedness, or at the propertys estimated fair
value, less estimated costs to sell.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
The following schedule reflects the costs of real estate acquired through
foreclosure and the recorded reductions to estimated fair values, less estimated
costs to sell as of March 31, 1999 and December 31, 1998 and 1997:
March 31, December 31, December 31,
1999 1998 1997
------------ ---------------- ----------------
Costs of properties $146,586 $366,655 $449,319
Reduction in value 134,084 196,733 140,000
------------- ---------------- ----------------
Fair value reflected in
financial statements $12,502 $169,922 $309,319
============= ================ ================
Effective January 1, 1996, the Partnership adopted the provisions of
statement No 121 (SFAS 121) of the Financial Accounting Standards Board,
Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to
be disposed of. The adoption of SFAS 121 did not have a material impact on the
Partnerships financial position because the methods indicated were essentially
those previously used by the Partnership.
F. Investment in Partnership (see note 5)
G. Income Taxes
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.
H. Organization and Syndication Costs
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.
I. Allowance for Doubtful Accounts
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 with due consideration to
collateral value to provide for unrecoverable accounts receivable, including
impaired Mortgage Investments, unspecified mortgage investments, accrued
interest and advances on Mortgage Investments, and other accounts receivable
(unsecured). The composition of the allowance for doubtful accounts as of March
31, 1999, December 31, 1998 and 1997 was a follows:
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
March 31, December 31, December 31,
1999 1998 1997
------------ ------------- ------------
Impaired Mortgage Investments $84,736 $84,736 $0
Unspecified Mortgage Investments 24,781 93,833 13,432
Accounts receivable, unsecured 23,776 23,775 15,182
============ ============= ===========
$133,293 $202,344 $28,614
============ ============= ============
J. Net Income Per $1,000 Invested
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 income is allocated each
month based on the Limited partners pro rata share of Partners Capital. Because
the net income percentage varies from month to month, amounts per $1,000 will
vary for those individuals who made or withdrew 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.
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 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. For the three months ended March 31, 1999, the
commissions totalled $14,020 and for the years ended 1998 and 1997, the
commissions were $36,700 and $10,000, respectively.
B. Mortgage Servicing Fees
Monthly mortgage servicing fees are paid to Redwood Mortgage Corp. 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. Mortgage servicing fees of $16,795, $70,630, and
$39,918, were incurred for three months ended March 31, 1999, and for years 1998
and 1997.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
C. Asset Management Fee
The General Partners are authorized to receive monthly fees for managing
the Partnerships Mortgage Investment portfolio and operations of up to 1/32 of
1% (3/8 of 1% annually). Management fees incurred for the three months ended
March 31, 1999, and for years 1998 and 1997 were $2,729, $6,640 and $0,
respectively.
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 Corp.) 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, legal fees
and expenses, postage and preparation of reports to Limited Partners. In 1997,
1998, and three months period ended March 31, 1999, clerical costs totaling
$27,786 $24,440 and $5,673, respectively, were reimbursed to Redwood Mortgage
and are included in expenses in the Statements of Income.
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 were purchased, which in all instances had occurred by March 31, 1999.
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>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
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, and the
formation loan was paid in 1998, the early withdrawal penalties gained in the
future will be credited to income for the period received.
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 located in East Palo Alto, CA., was
acquired through foreclosure. The Partnership interest was invested with that of
two other Partnerships. The Partnerships had been attempting to develop the
property into single family residences. Significant community resistance, as
well as environmental, and fish and wildlife concerns affected efforts to obtain
the required approvals. The Partnership, in resolving disputes which arose
during the course of the Partnerships attempt to obtain entitlements to develop
the property, entered into agreements on May 8, 1998 with Rhone-Poulanc, Inc.
These agreements, among other things, restrict the property to non-residential
uses, provide for appropriate indemnifications, and include other consideration
including the payment of cash. The Partnership still retains liability for the
remediation of pesticide contamination affecting the property. Investigation of
remediation options are ongoing. At this time management does not believe that
remediation of the pesticide contaminants will have a material adverse effect on
the financial condition of the Partnership.
NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT
The Partnership had a bank line of credit secured by its Mortgage
Investment portfolio up to $2,000,000 at 1% over prime. The balances were
$899,011, $390,000 and $400,000 at December 31, 1997 and 1998, and March 31,
1999, respectively, and the interest rate at March 31, 1999 was 8.75% (7.75%
prime + 1%). Commencing January 1, 1999, the Partnership had reduced its
borrowing limit to $1,000,000 with same conditions as previously stipulated.
Balance at March 31, 1999, was $400,000 and the Partnership was current in its
interest payment. The line of credit expires December 31, 1999.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
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 $23,776.
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.
NOTE 8 - INCOME TAXES
The following reflects a reconciliation from net assets (Partners Capital)
reflected in the financial statements to the tax basis of
those net assets:
March 31, Dec. 31, Dec. 31,
1999 1998 1997
------------ ----------- -----------
Net assets Partners
Capital per financial statements $8,552,278 $8,707,534 $9,431,453
Formation Loan receivable 0 0 59,521
Allowance for doubtful accounts 133,293 202,344 28,614
============ =========== ===========
Net assets tax basis $8,685,571 $8,909,878 $9,519,588
============ =========== ===========
In 1998, approximately 71% of taxable income was allocated to tax exempt
organizations i.e., retirement plans. Such plans do not have to file income tax
returns unless their unrelated business income exceeds $1,000. Applicable
amounts become taxable when distribution is made to participants.
NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of financial instruments:
(a) Cash and Cash Equivalents - The carrying amount equals fair value. All
amounts, including interest bearing, are subject to immediate withdrawal.
(b) The Carrying Value of Mortgage Investments - (see note 2 (c)) is
$7,873,133. The March 31, 1999 fair value of these investments of $7,868,917 is
estimated based upon projected cash flows discounted at the estimated current
interest rates at which similar loans would be made. The applicable amount of
the allowance for doubtful accounts along with accrued interest and advances
related thereto should also be considered in evaluating the fair value versus
the carrying value.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At March
31, 1999, there were 55 Mortgage Investments outstanding with the following
characteristics:
Number of Mortgage Investments outstanding 55
Total Mortgage Investments outstanding $7,873,133
Average Mortgage Investment outstanding $143,148
Average Mortgage Investment as percent of total 1.82%
Average Mortgage Investment as percent of Partners Capital 1.67%
Largest Mortgage Investment outstanding $1,376,117
Largest Mortgage Investment as percent of total 17.48%
Largest Mortgage Investment as percent of Partners Capital 16.09%
Number of counties where security is located (all California) 14
Largest percentage of Mortgage Investments in one county 29.20%
Average Mortgage Investment to appraised value of security at time
Mortgage Investment was consummated 66.89%
Number of Mortgage Investments in foreclosure 4
The following categories of mortgage investments are pertinent at March 31,
1999, and December 31, 1998 and 1997:
<TABLE>
March 31 December 31 December 31
---------------- -----------------
1999 1998 1997
--------------- ---------------- -----------------
<S> <C> <C> <C>
First Trust Deeds $4,759,764 4,432,246 $4,588,169
Second Trust Deeds 2,468,862 2,892,870 2,869,543
Third Trust Deeds 394,508 394,620 397,273
Fourth Trust Deeds 249,999 249,999 249,999
--------------- ---------------- -----------------
Total mortgage investments 7,873,133 7,969,735 8,104,984
Prior liens due other lenders 10,649,133 12,348,933 11,075,429
--------------- ----------------- =================
Total debt $18,522,266 $20,318,668 $19,180,413
=============== ================ =================
Appraised property value at time of loan $27,689,183 $31,128,892 $28,422,684
=============== ================ =================
Total investments as a percent of appraisals 66.89% 65.27% 67.48%
=============== ================ =================
Investments by Type of Property
Owner occupied homes $889,054 944,491 $1,057,067
Non-Owner occupied homes 746,477 374,408 380,142
Apartments 816,944 817,819 791,755
Commercial 5,420,658 5,833,017 5,876,020
=============== ================ =================
$7,873,133 $7,969,735 $8,104,984
=============== ================ =================
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 (audited) AND
MARCH 31, 1999 (unaudited)
Scheduled maturity dates of mortgage investments as of March 31, 1999 are
as follows:
Year Ending
December 31,
-------------------
1999 $2,622,461
2000 2,445,732
2001 1,016,215
2002 422,544
2003 405,982
Thereafter 960,199
================
$7,873,133
================
The scheduled maturities for 1999 include $2,073,081 in Mortgage
Investments which are past maturity at March 31, 1999. $99,134 of those Mortgage
Investments were categorized as delinquent over 90 days.
Eight Mortgage Investments with principal outstanding of $1,168,972 had
interest payments overdue in excess of 90 days.
The cash balance at March 31, 1999 of $290,449 was in two banks with
interest bearing balances totalling $259,060. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $96,433. As and when deposits in
the Partnerships bank accounts increase significantly beyond the insured limit,
the funds are either placed in new Mortgage Investments or used to pay down on
the line of credit balance.
<PAGE>
Managements Discussion and Analysis of Financial Condition
and Results of Operations
On September 2, 1989, the Partnership had sold 97,725.94 Units and its
contributed capital totalled $9,772,594 of the approved $12,000,000 issue, in
Units of $100 each. As of that date the offering was formally closed. On March
31, 1999, the Partnerships net capital totalled $8,552,278.
The Partnership began funding Mortgage Investments in October 1987. The
Partnerships Mortgage Investments outstanding for the years ended December 31,
1996, 1997, 1998 and three months through March 31, 1999, were $9,313,924,
$8,104,984, $7,969,735 and $7,873,133, respectively. The decrease in Mortgage
Investments outstanding of $1,440,791 from December 31, 1996 to March 31, 1999,
was due primarily to the Partnership utilizing Mortgage Investment payoffs to
meet Limited Partner capital liquidations and line of credit pay-down to save
interest expense on the note. During the years 1996, 1997, 1998 and three months
through March 31, 1999, Mortgage Investment principal collections exceeded
Limited Partner liquidations.
Currently, general mortgage interest rates are lower than those prevalent
at the inception of the Partnership. New Mortgage Investments will be originated
at these lower interest rates. The result is to reduce 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. Although the rates charged by the Partnership are influenced by the
level of interest rates in the market, the General Partners do not anticipate
that rates charged by the Partnership to its borrowers will change significantly
from the beginning of 1999 over the next 12 months. As of March 31, 1999 the
Partnerships Real Estate Owned account and the Investment in Partnership account
have been reduced to a $12,502 balance. These accounts had balances of $169,922,
$1,017,460 and $ 1,937,047 as of December 31, 1998, 1997 and 1996, respectively.
The conversion of these non-earning assets will allow the Partnership to produce
current income from previously non earning assets. The overall effect of these
developments will allow the Partnerships yield to rise. The General Partners
anticipate that the annualized yield for the forthcoming year 1999, will be
higher than the last years performance level.
Each year, the Partnership negotiates a line of credit with a commercial
bank which is secured by its Mortgage Investment portfolio. The outstanding
balance of the bank line of credit was $1,530,511, $899,011, $390,000 and
$400,000 for the years ended December 1996, 1997, 1998 and three months through
March 31, 1999, respectively. The interest rate on the bank line of credit has
remained at Prime plus one percent since inception. For the three months ended
March 31, 1999 and years ended December 31, 1998, 1997 and 1996 , interest on
Note Payable-Bank was $3,284, $43,170, $133,577and $158,175 respectively. The
primary reason for this decrease was that the Partnership had a lower overall
credit facility utilization from 1995 to 1996 and from 1996 to March 31, 1999.
As of March 31, 1999, the Partnership has borrowed $400,000 at an interest rate
of Prime plus one percent. 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 usually bear interest at a rate in excess of the rate payable to the
bank which extended the line of credit, the amount to be retained by the
Partnership, after payment of the line of credit cost, will be greater than
without the use of the line of credit.
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- two 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, 1999,
there were four 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.
<PAGE>
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.
Management provided $312,684, $268,101, $180,054 and $30,584, as provision for
doubtful accounts for the years ended December 31, 1996, December 31, 1997, and
December 31, 1998 and three months through March 31, 1999, respectively. The
decrease in the provision reflects the decrease in the amount of REO, unsecured
receivables and the decreasing levels of delinquency within the portfolio.
Additionally, the General Partners felt that the bottom of the real estate cycle
had been reached, reflecting a decreasing need to set aside reserves for the
continuously declining real estate values as had been the case in the early
1990s in the California real estate market. As of March 31, 1999, the
Partnership reduced the REO balance from $1,501,712 as of December 31, 1995, to
$12,502 through March 31, 1999. This reduction assisted the Partnership in
increasing yields in 1999, as assets previously lying idle, now produced current
income.
The December 1998 issue of Western Economic Developments, published by the
Federal Reserve Bank of San Francisco, said the following about the California
economy:
The pace of economic growth in California was solid in recent months,
despite continued contraction in some major industries. Total payroll employment
rose 3.2 percent on an annual basis in October and November. This is above the
average growth rate for the first eleven months of 1998, but it is below the 3.8
percent pace from last year. Faced by declining export demand and rising import
competition, durable goods manufacturers cut employment in November.
Manufacturers of computers and electronic components have been particularly hard
hit this year, and aerospace employment has contracted. However, the pace of job
creation has remained strong in sectors other than manufacturing, and this has
helped to lower the state unemployment rate to 5.7 percent in November.
Californias state and local governments have created new jobs at about a
2.5 percent annual pace this year, a pickup from prior years that is due in part
to improved fiscal capacity. About 21,000 of the 29,000 jobs created this year
were for educators at local schools.
To the Partnership, the above evaluation of the California economy means an
increase in property values, job growth, personal income growth, etc., which all
translates into more loan activity, which of course, is healthy for the
Partnerships lending activity.
The Partnerships interest in land located in East Palo Alto, Ca, was
acquired through foreclosure. The Partnerships interest was invested with that
of two other Partnerships. The Partnerships basis of $0, $0, $708,141 and
$496,040 for the three months through March 31, 1999 and for the years ended
December 31, 1998, December 31, 1997 and 1996 respectively, has been invested
with that of two other Partnerships. The Partnership had been attempting to
develop property into an approximately 63 units residential subdivision, (the
Development). The proposed Development had gained significant public awareness
as a result of certain environmental, fish and wildlife density, and other
concerns. Incorporated into the proposed Development were various mitigation
measures included remediation of hazardous material existing on the property and
protection of potentially affected species due to the proximity to the San
Francisco Baylands. These issues and others sparked significant public
controversy. Opposition against and support for the proposed Development
existed. Among those in opposition to the project was Rhone Poulanc, Inc., which
is responsible for a nearby hazardous waste site. Rhone Poulanc, Inc. has been
identified as the Responsible Party for the Arsenic Contamination which
affected a portion of the property. On May 8, 1998, the Partnership, in order to
resolve disputes which arose during the course of
<PAGE>
attempts to obtain entitlements for this Development, entered into
agreements with Rhone-Poulanc, Inc., which among other things, restricted the
property to non residential uses, provided for appropriate indemnification and
included other consideration including a cash payment to the Partnership. The
Partnership has retained ownership of the property, which is subject to various
deed restrictions, options and or first rights of refusal. The General Partners
are pleased with this outcome to the residential development attempt. The
General Partners may now explore other available options with respect to
alternative uses for the property. In order to pursue these options, rezoning of
the propertys existing residential zoning classification will be required. The
Partnership is continuing to explore remediation options available to mitigate
the pesticide contamination, which affects the property. This pesticide
contamination appears to be the result of agricultural operations by prior
owners, and is unrelated to the Arsenic Contamination for which Rhone Poulanc,
Inc. remains responsible. The General Partners do not believe at this time that
remediation of the pesticide contaminants will have a material adverse effect on
the financial condition of the Partnership.
At the time of subscription to the Partnership, Limited Partners made an
irrevocable decision to either take distributions of earnings monthly, quarterly
or annually or to compound earnings in their capital account. For the years
ended December 31, 1996, 1997, and 1998 and three months through March 31, 1999,
the Partnership made distributions of earnings to Limited Partners after
allocation of syndication costs of, $288,796, $252,378, $230,712 and $54,298,
respectively. Distribution of Earnings to Limited Partners after allocation of
syndication costs for the years ended December 31, 1996, December 31, 1997, and
December 31, 1998, and three months through March 31, 1999 to Limited Partners
capital accounts and not withdrawn was $293,484, $271,517, $276,668 and $75,312,
respectively. As of December 31, 1996, December 31, 1997, and December 31, 1998
and three months through March 31, 1999, Limited Partners electing to withdraw
earnings represented 49 %, 46%, 43% and 43% respectively of the Limited Partners
outstanding capital accounts.
The Partnership also allows the Limited Partners to withdraw their capital
account subject to certain limitations (see liquidation provisions of
Partnership Agreement). For the years ended December 31, 1996, December 31,
1997, December 31, 1998, and three months through March 31, 1999, $96,362,
$159,732, $122,069 and $19,567, respectively, were liquidated subject to the 10%
and/or 8% penalty for early withdrawal. These withdrawals are within the
normally anticipated range that the General Partners would expect in their
experience in this and other Partnerships. The General Partners expect that a
small percentage of Limited Partners will elect to liquidate their capital
accounts over one year with a 10% and/or 8% early withdrawal penalty. In
originally conceiving the Partnership, the General Partners wanted to provide
Limited Partners needing their capital returned a degree of liquidity.
Generally, Limited Partners electing to withdraw over one year need to liquidate
investments to raise cash. The trend the Partnership is experiencing in
withdrawals by Limited Partners electing a one year liquidation program
represents a small percentage of Limited Partner capital as of December 31,
1996, December 31, 1997, December 31, 1998 and March 31, 1999, respectively and
is expected by the General Partners to commonly occur at these levels.
Additionally, for the years ended December 31, 1996, December 31, 1997,
December 31, 1998 and three months through March 31, 1999, $1,086,737,
$1,137,677, $938,040 and $207,662, respectively, were liquidated by Limited
Partners who have elected a liquidation program over a period of five years or
longer. Once the initial five year hold period has passed, the General Partners
expect to see an increase in liquidations due to the ability of Limited Partners
to withdraw without penalty. This ability to withdraw after five years by
Limited Partners has the effect of providing Limited Partner liquidity which the
General Partners then expect a portion of the Limited Partners to avail
themselves of. This has the anticipated effect of the partnership growing,
primarily through reinvestment of earnings in years one through five. The
General Partners expect to see increasing numbers of Limited Partner withdrawals
in years five through eleven, at which time the bulk of those Limited Partners
who have sought withdrawal will have been liquidated. After year eleven,
liquidation generally subsides and the Partnership capital again tends to
increase.
<PAGE>
Actual liquidation of both capital and earnings from year five (1992)
through March 31, 1999 is shown hereunder:
Years ended December 31,
1992 1993 1994 1995
------------ ------------ ------------ --------------
Earnings $323,037 377,712 303,014 303,098
Capital* $232,370 528,737 729,449 892,953
============ ============ ============ ==============
Total $555,407 $906,449 $1,032,463 $1,196,051
============ ============ ============ ==============
March 31,
1996 1997 1998 1999
------------ ------------- ------------ ------------
Earnings 294,678 257,670 235,837 54,298
Capital* 1,183,099 1,297,410 1,060,109 230,568
------------ ------------ ------------ --------------
Total $1,477,777 $1,555,080 $1,295,946 $284,866
============ ============ ============ ==============
*These amounts represent gross of early withdrawal penalties.
The Year 2000 will be a challenge for the entire world, with respect to the
conversion of existing computerized operations. The Partnership is completing an
assessment of Year 2000 hardware and software issues. This assessment is not yet
fully complete. The Partnership relies on Redwood Mortgage Corp., an affiliate
of the Partnership, and third parties to provide loan and investor services and
other computerized functions, effected by Year 2000 computerized operations.
Major services provided to the Partnership by these companies are loan
servicing, accounting and investor services. The vendors that supply the
software for loan servicing have already confirmed compliance with Year 2000
issues. Installation of accounting software that is Year 2000 compliant will
begin during the second quarter of 1999. The investor servicing software Year
2000 compliance is still under assessment. Existing investor servicing software
maintenance agreements provide for conversion to Year 2000 compliance to be
provided by the vendor. Additionally, the Partnership has contacted several
vendors that provide investor services as a possible alternative to continuing
to provide investors services in house. It would appear that these service
providers would be more expensive than the current in house systems but they do
provide a back-up alternative in the event of our own failure to fully convert.
Hardware utilized by Redwood Mortgage Corp., is currently being tested to insure
that modifications necessary to be made prior to Year 2000 can be accomplished.
At this juncture, existing hardware appears to be substantially compliant with
Year 2000 issues.
The costs of updating the various software systems will be borne by the
various companies that supply the Partnership with services. Therefore, no
significant capital outlays are anticipated and the Partnership expects only
incidental costs of conversion for Year 2000 issues.
The Partnership is in the business of making Mortgage Investments secured
by real estate. The most important factor in making the Mortgage Investments is
the value of the real estate security. Year 2000 issues have some potential to
effect industries and businesses located in the marketplaces in which the
Partnership places its Mortgage Investments. This would only have an affect on
the Partnership if Year 2000 issues cause a significant downturn in the northern
California economy. In fact, Silicon Valley is located in our marketplace. There
may be significant increased demand for Silicon Valley type services and goods
as companies make ready for the Year 2000 conversion.
Although not fully developed, if all or any accounting, loan servicing and
investor services conversions should fail, the size and scope of the
Partnerships activities are such that they could be handled at an equal or
higher cost on a manual basis or outsourced to other servicers existing in the
industry, while correcting the systems problems and are likely to be temporarily
in nature. While this would entail some initial set up costs, these costs would
likely not be so significant as to have a material effect upon the Partnership,
shifting portions of daily operations to manual or outsourced systems may result
in time delays. Time delays in providing accurate and pertinent information
could negatively affect customer relations and lead to the potential loss of new
loans and Limited Partner investments.
<PAGE>
The foregoing analysis of Year 2000 issues includes forward-looking
statements and predictions about possible or future events, results of
operations and financial condition. As such, this analysis may prove to be
inaccurate because of the assumptions made by the General Partner or the actual
development of future events. No assurance can be given that any of these
forward-looking statements and predictions will ultimately prove to be correct
or even substantially correct.
Various other risks and uncertainties could also affect the Year 2000
analysis causing the effect on the Partnership to be more severe than discussed
above. The General Partners Year 2000 compliance testing cannot guarantee that
all computer systems will function without error beyond the Year 2000. Risks
also exist with respect to Year 2000 compliance by external parties who may have
no relationship to the Partnership or the General Partner, but who have a
significant relationship with one or more third parties, and may have a system
failure that adversely affects the Partnerships ability to conduct business.
While the General Partner is attempting to identify such external parties, no
assurance can be given that it will be able to do so. Furthermore, third parties
with direct relationships with the Partnership, whose systems have been
identified as likely to be Year 2000 compliant, may suffer a breakdown due to
unforeseen circumstances. It is also possible that the information collected by
the General Partner for these third parties regarding their compliance with Year
2000 issues may be incorrect. Finally, it should be noted that the foregoing
discussion of Year 2000 issues assumes that to the extent the General Partners
systems fail, whether because of unforeseen complications or because of third
parties failure, switching to manual operations will allow the Partnership to
continue to conduct its business. While the General Partner believes this
assumption to be reasonable, if it is incorrect, the Partnerships results of
operations would likely be adversely affected.
<PAGE>
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
The Partnership has no officers or directors. The Partnership is managed by
the General Partners. There are certain fees and other items paid to management
and related parties. A more complete description of management compensation is
found in the Prospectus, pages 11-12, under the section Compensation of the
General Partners and the Affiliates, which is incorporated by reference. Such
compensation is summarized below.
The following compensation has been paid to the General Partners and
affiliates for services rendered during the three months ended March 31, 1999.
All such compensation is in compliance with the guidelines and limitations set
forth in the Prospectus.
Entity Receiving Description of Compensation and Services Rendered Amount
Compensation
- ------------------- ------------------------------------------------- ----------
I.
Redwood Mortgage Mortgage Servicing Fee for servicing Mortgage
Corp. Investments $16,795
General Partners
&/or Affiliates Asset Management Fee for managing assets $2,729
General Partners 1% interest in profits $1,309
II. FEES PAID BY BORROWERS ON MORTGAGE INVESTMENTS 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
Corp. in connection with the review, selection,
evaluation, negotiation, and extension of the
Mortgage Investments paid by the borrowers
and not by the Partnership $14,020
Redwood Mortgage Processing and Escrow Fees for services in
Corp. connection with notary, document preparation,
credit investigation, and escrow fees payable by
the borrowers and not by the Partnership $710
III. IN ADDITION, THE GENERAL PARTNER AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME.......................................................$5,673
<PAGE>
As of March 31, 1999, a summary of the Partnership's Mortgage Investment
portfolio is set forth below.
Mortgage Investments as a Percentage of Total Mortgage Investments
First Trust Deeds $4,759,763.65
Appraised Value of Properties 6,783,807.00
Total Investment as a % of Appraisal 70.16%
First Trust Deeds $4,759,763.65
Second Trust Deed Mortgage Investments 2,468,862.01
Third Trust Deed Mortgage Investments 394,508.36
Fourth Trust Deed Mortgage Investments* 249,999.40
--------------------
7,873,133.42
First Trust Deeds due other Lenders 9,480,498.00
Second Trust Deeds due other Lenders 990,064.00
Third Trust Deeds due other Lenders 178,571.00
Total Debt $18,522,266.42
Appraised Property Value $27,689,183.00
Total Investments as a % of Appraisal 66.89%
Number of Mortgage Investments Outstanding 55
Average Investment 143,147.88
Average Investment as a % of Net Assets 1.67%
Largest Investment Outstanding 1,376,117.03
Largest Investment as a % of Net Assets 16.09%
Mortgage Investments as a Percentage of Total Mortgage Investments
First Trust Deeds 60.46%
Second Trust Deeds 31.36%
Third Trust Deeds 5.01%
Fourth Trust Deeds 3.17%
--------------------
100.00%
Total
Mortgage Investments by Type Amount Percent
of Property
Owner Occupied Homes $889,053.99 11.29%
Non-Owner Occupied Homes 746,477.13 9.48%
Apartments 816,943.98 10.38%
Commercial 5,420,658.32 68.85%
----------------- -----------
Total $7,873,133.42 100.00%
*Footnote on following page
<PAGE>
The following is a distribution of Mortgage Investments outstanding as of
March 31, 1999 by Counties.
Santa Clara $2,299,319.87 29.20%
Alameda 1,166,812.60 14.82%
Contra Costa 1,084,865.08 13.78%
San Mateo 937,685.46 11.91%
Stanislaus 871,569.71 11.07%
Sacramento 595,002.46 7.56%
San Francisco 253,914.30 3.23%
Sonoma 252,980.90 3.21%
Ventura 91,000.00 1.15%
Shasta 80,843.72 1.03%
Marin 79,999.99 1.02%
Santa Cruz 71,536.94 0.91%
Monterey 70,409.19 0.89%
Solano 17,193.20 0.22%
------------------- -----------
Total $7,873,133.42 100.00%
* Redwood Mortgage Investors VI, together with other Redwood partnerships
hold 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%. In addition
to the borrower paying an interest rate of 12.25%, the Partnership and other
lenders will also participate in profits. The General Partners have had previous
loan activity with this borrower which had been concluded successfully, with
extra earnings earned for the other partnerships involved.
Statement of Condition of Mortgage Investments:
Number of Mortgage Investments in Foreclosure 4
<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 three month period ending March 31, 1999.
<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 12th day of May,
1999.
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 12th day of May, 1999.
Signature Title Date
/s/ D. Russell Burwell
- ---------------------------------
D. Russell Burwell General Partner May 12, 1999
/s/ Michael R. Burwell
- ---------------------------------
Michael R. Burwell General Partner May 12, 1999
/s/ D. Russell Burwell
- ---------------------------------
D. Russell Burwell President of Gymno Corporation, May 12, 1999
(Principal Executive Officer);
Director of Gymno Corporation
/s/ Michael R. Burwell
- ---------------------------------
Michael R. Burwell Secretary/Treasurer of Gymno May 12, 1999
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 290449
<SECURITIES> 0
<RECEIVABLES> 880599
<ALLOWANCES> 133293
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8975657
<CURRENT-LIABILITIES> 0
<BONDS> 0
423379
0
<COMMON> 0
<OTHER-SE> 8552278
<TOTAL-LIABILITY-AND-EQUITY> 8975657
<SALES> 0
<TOTAL-REVENUES> 209357
<CGS> 0
<TOTAL-COSTS> 44570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30584
<INTEREST-EXPENSE> 3284
<INCOME-PRETAX> 130919
<INCOME-TAX> 0
<INCOME-CONTINUING> 130919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 130919
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
