Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 12, 2014 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'REAL ESTATE ASSOCIATES LTD VI | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0000715578 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 16,514 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Balance_Sheets_September_30_20
Balance Sheets (September 30, 2014 Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Investments in and advances to Local Limited Partnerships | ' | $1,416 |
Cash and cash equivalents | 1,472 | 1,062 |
Receivables - limited partners | 439 | 348 |
Total assets | 1,911 | 2,826 |
Liabilities: | ' | ' |
Accounts payable and accrued expenses | 38 | 26 |
Taxes payable | 65 | 63 |
Total liabilities | 103 | 89 |
Partners' capital (deficiency) | ' | ' |
General partners | -333 | -324 |
Limited partners | 2,141 | 3,061 |
Total partners' capital (deficiency) | 1,808 | 2,737 |
Total liabilities and partners' capital (deficiency) | $1,911 | $2,826 |
Statements_of_Operations_Unaud
Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Operating Expenses: | ' | ' | ' | ' |
Management fees - General Partner | $9 | $17 | $27 | $51 |
Legal and accounting | 26 | 12 | 94 | 53 |
Tax expense | 79 | 31 | 245 | 106 |
General and administrative | 9 | 8 | 31 | 17 |
Total operating expenses | 123 | 68 | 397 | 227 |
Loss from partnership operations | -123 | -68 | -397 | -227 |
Distributions (reduction of distributions) from Local Limited Partnerships recognized as income | ' | ' | ' | 4 |
Advances made to Local Limited Partnerships recognized as expense | ' | ' | -259 | ' |
Impairment loss of investments in Local Limited Partnership | ' | ' | -434 | ' |
Equity in income of Local Limited Partnership and amortization of acquisition costs | ' | 86 | 161 | 290 |
Gain on sale of interest in Local Limited Partnerships | ' | 13 | ' | 13 |
Net income | -123 | 31 | -929 | 80 |
Net income allocated to general partners (1%) | -1 | ' | -9 | 1 |
Net income allocated to limited partners (99%) | ($122) | $31 | ($920) | $79 |
Net Income per limited partnership interest | ($7.39) | $1.85 | ($55.71) | $4.78 |
Statement_of_Changes_in_Partne
Statement of Changes in Partners' Capital (Deficit) (Unaudited) (USD $) | General Partners | Limited Partners | Total |
In Thousands | |||
Partners' capital (deficiency), beginning balance at Dec. 31, 2013 | ($324) | $3,061 | $2,737 |
Net income (loss) | -9 | -920 | -929 |
Partners' capital (deficiency), ending balance at Sep. 30, 2014 | ($333) | $2,141 | $1,808 |
Statements_of_Cash_Flows_Unaud
Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | ($929) | $80 |
Adjustments to reconcile net income to net cash used in operating activities: | ' | ' |
Equity in income of Local Limited Partnership and amortization of acquisition costs | -161 | -290 |
Impairment loss | 434 | ' |
Advances made to Local Limited Partnerships recognized as expense | 259 | ' |
Gain on sale of interests in Local Limited Partnerships | ' | -13 |
Distributions from Local Limited Partnership properties recognized as income | ' | -4 |
Change in accounts: | ' | ' |
Change in Accounts Receivable | -91 | -37 |
Change in Taxes payable | 2 | -102 |
Change in Accounts payable and accrued expenses | -27 | -76 |
Net cash used in operating activities | -513 | -442 |
Cash flows from investing activities: | ' | ' |
Advances made to Local Limited Partnerships | ' | -237 |
Distributions from Local Limited Partnership properties | ' | 4 |
Proceeds from sale of interests in Local Limited Partnerships | 900 | 13 |
Net cash provided by (used in) investing activities | 900 | -220 |
Cash Flows From Financing Activities: | ' | ' |
Advances from affiliate | 23 | 12 |
Net cash provided by (used in) financing activities | 23 | 12 |
Net increase (decrease) in cash and cash equivalents | 410 | -650 |
Cash and cash equivalents, beginning of period | 1,062 | 1,473 |
Cash and cash equivalents, end of period | $1,472 | $823 |
Note_1_Organization_and_Summar
Note 1 - Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 1 - Organization and Summary of Significant Accounting Policies | ' |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
General | |
The information contained in the following notes to the unaudited financial statements is condensed from that which would appear in the audited annual financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the annual report for the fiscal year ended December 31, 2013 prepared by Real Estate Associates Limited VI (the "Partnership" or "Registrant"). Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. | |
In the opinion of the Partnership’s management, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring items) considered necessary for a fair presentation. The balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. | |
The general partners have a one percent interest in profits and losses of the Partnership. The limited partners have the remaining 99 percent interest which is allocated in proportion to their respective investments. The general partners of the Partnership are National Partnership Investments, LLC, a California limited liability company ("NAPICO" or the "General Partner"), and National Partnership Investments Associates, a California limited partnership. The General Partner is a subsidiary of Bethesda Holdings II, LLC, a privately held real estate asset management company (“Bethesda”). | |
At September 30, 2014 and December 31, 2013, there were 16,514 limited partnership interests outstanding. | |
Basis of Presentation | |
The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. | |
Method of Accounting for Investments in Local Limited Partnerships | |
The investments in local limited partnerships (the “Local Limited Partnerships”) are accounted for using the equity method. Acquisition, selection fees and other costs related to the acquisition of the Local Limited Partnerships have been capitalized as part of the investment account and are being amortized by the straight line method over the estimated lives of the underlying assets, which is generally 30 years. | |
Net Income Per Limited Partnership Interest | |
Net income per limited partnership interest was computed by dividing the limited partners’ share of net income by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 16,514 and 16,568 for the nine months ended September 30, 2014 and 2013, respectively. | |
Variable Interest Entities | |
The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions. | |
At September 30, 2014 and December 31, 2013, the Partnership held variable interests in zero and one VIE, for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: | |
· the general partner conducts and manages the business of the Local Limited Partnership; | |
· the general partner has the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnership's underlying real estate properties; | |
· the general partner is responsible for approving operating and capital budgets for the properties owned by the Local Limited Partnership; | |
· the general partner is obligated to fund any recourse obligations of the Local Limited Partnership; | |
· the general partner is authorized to borrow funds on behalf of the Local Limited Partnership; and | |
· the Partnership, as a limited partner in the Local Limited Partnership, does not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnership that most significantly impact such entity's economic performance. | |
The VIE at December 31, 2013 consisted of a Local Limited Partnership that was directly engaged in the ownership and management of one apartment property with a total of 126 units. The Partnership is involved with the VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnership’s recorded investments in and receivables from the VIE, which were approximately $0 and $1,416,000 at September 30, 2014 and December 31, 2013, respectively. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future. |
Note_2_Investments_in_and_Adva
Note 2 - Investments in and Advances To Local Limited Partnerships | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 2 - Investments in and Advances To Local Limited Partnerships | ' |
NOTE 2 - INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIP | |
As of September 30, 2014 and December 31, 2013, the Partnership held limited partnership interests in zero and one Local Limited Partnership. As of December 31, 2013, the Local Limited Partnership owned a residential low-income rental project consisting of 126 apartment units. The Local Limited Partnership may be encumbered by mortgage notes payable to or insured by various governmental agencies. | |
The Partnership, as a limited partner, does not have a contractual relationship with the Local Limited Partnership or exercise control over the activities and operations, including refinancing or selling decisions, of the Local Limited Partnership that would require or allow for consolidation. Accordingly, the Partnership accounts for its investment in the Local Limited Partnership using the equity method. The Partnership is allocated profits and losses of the Local Limited Partnership based upon its respective ownership percentages (90%). Distributions of surplus cash from operations from the Local Limited Partnership is restricted by the Local Limited Partnership's Regulatory Agreement with the United States Department of Housing and Urban Development (“HUD”). These restrictions limit the distribution to a portion, generally less than 10% of the initial invested capital. The excess surplus cash is deposited into a residual receipts reserve, of which the ultimate realization by the Partnership is uncertain as HUD frequently retains it upon sale or dissolution of the Local Limited Partnership. The Partnership is allocated profits and losses and receives distributions from refinancings and sales in accordance with the Local Limited Partnership's partnership agreement. The agreement limits the Partnership’s distributions to an amount substantially less than its ownership percentage in the Local Limited Partnership. | |
The investment is carried at cost plus the Partnership’s share of the Local Limited Partnership’s profits less the Partnership’s share of the Local Limited Partnership’s losses, distributions and impairment charges. The Partnership is not legally liable for the obligations of the Local Limited Partnership and is not otherwise committed to provide additional support to it. Therefore, it does not recognize losses once its investment in the Local Limited Partnership reaches zero. Distributions from the Local Limited Partnership is accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying statements of operations. An operating distribution of approximately $4,000 was received from one Local Limited Partnership, Oakridge Park II, during the nine months ended September 30, 2013. | |
In September 2013, the Partnership assigned its limited partnership interest in Oakridge Park II to an affiliate of the Operating General Partner for a total of $13,200. This amount was recognized as a gain on sale of Local Limited Partnerships as the partnership had no investment balance remaining in Oakridge Park II at the date of the assignment. | |
In November 2013, Crockett Manor sold its investment property for net proceeds of approximately $40,000. | |
In December 2013, the Partnership assigned its limited partnership interest in Hummelstown for approximately $190,000 and Kentucky Manor for approximately $25,000. | |
On September 29, 2014, the Partnership assigned 100% of its interests in Park Place Associates to the local general partner in exchange for a payment of $900,000. In addition, the Partnership received repayment of advances of approximately $139,000. Based on the assignment agreement, the Partnership expensed approximately $100,000 in advances which were included in the investment balance that will not be repaid and recognized an impairment charge of approximately $434,000 during the nine months ended September 30, 2014. | |
The Partnership reviews its investment in Local Limited Partnerships to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the assets, the Partnership recognizes an impairment loss. During the nine months ended September 30, 2014, the Partnership recognized impairment charges of approximately $434,000 with respect to its investment in the Local Limited Partnership. | |
For those investments where the Partnership has determined that the carrying value of its investments approximates the estimated fair value of those investments, the Partnership’s policy is to recognize equity in income of the Local Limited Partnerships only to the extent of distributions received and amortization of acquisition costs from those Local Limited Partnerships. Therefore, the Partnership limits its recognition of equity earnings to the amount it expects to ultimately realize. | |
At times, advances are made to the Local Limited Partnerships. Advances made by the Partnership to the individual Local Limited Partnerships are considered part of the Partnership’s investment in the Local Limited Partnership. Advances made to Local Limited Partnerships for which the investment has been reduced to zero are charged to expense. Advances from the Partnership to the Local Limited Partnership during the nine months ended September 30, 2014, was approximately $155,000 of which $71,000 was advanced to Crockett Manor for wind up expenses and $84,000 to Park Place for non-resident withholding taxes and repairs. During the nine months ended September 30, 2013, the Partnership advanced approximately $237,000 to Park Place Limited Partnership of which $139,000 was to restore a letter of credit, $58,000 was for non-resident withholding taxes and $40,000 was for REAC inspection related cost and $88,000 which was utilized to make repairs and make state withholding payments. The advances were recorded as expense. While not obligated to make advances to the Local Limited Partnerships, the Partnership made this advance to protect its economic investment in the Local Limited Partnership. |
Note_3_Transactions_With_Affil
Note 3 - Transactions With Affiliated Parties | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 3 - Transactions With Affiliated Parties | ' |
NOTE 3 - TRANSACTIONS WITH AFFILIATED PARTIES | |
Under the terms of the Restated Certificate and Agreement of Limited Partnership, the Partnership is obligated to NAPICO for an annual management fee equal to 0.5 percent of the original invested assets of the Local Limited Partnerships at the beginning of the year. Invested assets are defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interests in the capital accounts of the respective Local Limited Partnerships. The fee was approximately $27,000 and $51,000 for the nine months ended September 30, 2014 and 2013, respectively. | |
In addition to being the General Partner, an affiliate of NAPICO is the general partner for the remaining Local Limited Partnership. |
Note_4_Fair_Value_of_Financial
Note 4 - Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 4 - Fair Value of Financial Instruments | ' |
NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Financial Accounting Standards Board Accounting Standards Codification Topic 825, “Financial Instruments”, requires disclosure of fair value information about financial instruments, when it is practicable to estimate that value. At September 30, 2014, the carrying amounts of other assets and liabilities reported on the balance sheets that require such disclosure approximated their fair value due to the short-term maturity of these instruments. |
Note_5_Contingencies
Note 5 - Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 5 - Contingencies | ' |
NOTE 5 - CONTINGENCIES | |
The General Partner is involved in various lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the General Partner, the claims will not result in any material liability to the Partnership. |
Note_6_Subsequent_Event
Note 6 - Subsequent Event | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 6 - Subsequent Event | ' |
NOTE 6 - SUBSEQUENT EVENT | |
The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed. |
Note_1_Organization_and_Summar1
Note 1 - Organization and Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. |
Note_1_Organization_and_Summar2
Note 1 - Organization and Summary of Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Note_1_Organization_and_Summar3
Note 1 - Organization and Summary of Significant Accounting Policies: Method of Accounting For Investment in Local Limited Partnerships (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Method of Accounting For Investment in Local Limited Partnerships | ' |
Method of Accounting for Investments in Local Limited Partnerships | |
The investments in local limited partnerships (the “Local Limited Partnerships”) are accounted for using the equity method. Acquisition, selection fees and other costs related to the acquisition of the Local Limited Partnerships have been capitalized as part of the investment account and are being amortized by the straight line method over the estimated lives of the underlying assets, which is generally 30 years. |
Note_1_Organization_and_Summar4
Note 1 - Organization and Summary of Significant Accounting Policies: Net Income Per Limited Partnership Interest (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Net Income Per Limited Partnership Interest | ' |
Net Income Per Limited Partnership Interest | |
Net income per limited partnership interest was computed by dividing the limited partners’ share of net income by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 16,514 and 16,568 for the nine months ended September 30, 2014 and 2013, respectively. |
Note_1_Organization_and_Summar5
Note 1 - Organization and Summary of Significant Accounting Policies: Variable Interest Entities (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Variable Interest Entities | ' |
Variable Interest Entities | |
The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions. | |
At September 30, 2014 and December 31, 2013, the Partnership held variable interests in zero and one VIE, for which the Partnership was not the primary beneficiary. The Partnership has concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership is the primary beneficiary of the respective Local Limited Partnership. In making this determination, the Partnership considered the following factors: | |
· the general partner conducts and manages the business of the Local Limited Partnership; | |
· the general partner has the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnership's underlying real estate properties; | |
· the general partner is responsible for approving operating and capital budgets for the properties owned by the Local Limited Partnership; | |
· the general partner is obligated to fund any recourse obligations of the Local Limited Partnership; | |
· the general partner is authorized to borrow funds on behalf of the Local Limited Partnership; and | |
· the Partnership, as a limited partner in the Local Limited Partnership, does not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnership that most significantly impact such entity's economic performance. | |
The VIE at December 31, 2013 consisted of a Local Limited Partnership that was directly engaged in the ownership and management of one apartment property with a total of 126 units. The Partnership is involved with the VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with the unconsolidated VIE is limited to the Partnership’s recorded investments in and receivables from the VIE, which were approximately $0 and $1,416,000 at September 30, 2014 and December 31, 2013, respectively. The Partnership may be subject to additional losses to the extent of any financial support that the Partnership voluntarily provides in the future. |
Note_1_Organization_and_Summar6
Note 1 - Organization and Summary of Significant Accounting Policies (Details) | Sep. 30, 2014 | Dec. 31, 2013 |
Details | ' | ' |
OutstandingLimitedPartnershipInterests | 16,514 | 16,514 |
Note_1_Organization_and_Summar7
Note 1 - Organization and Summary of Significant Accounting Policies: Net Income Per Limited Partnership Interest (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Details | ' | ' |
Number of limited partnership interests in EPS calculation | 16,514 | 16,568 |