FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-14099
CONSOLIDATED CAPITAL PROPERTIES VI
(Exact name of small business issuer as specified in its charter)
California 94-2940204
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 1,491
Restricted - tenant security deposits 85
Investments 305
Accounts receivable 33
Escrows for taxes and insurance 130
Restricted escrows 90
Other assets 115
Investment properties:
Land $ 1,652
Buildings and personal property 15,054
16,706
Less accumulated depreciation (7,332) 9,374
$11,623
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 224
Tenant security deposits 85
Accrued taxes 130
Other liabilities 224
Mortgage notes payable 10,134
Partners' Capital (Deficit)
General partner $ (6)
Special limited partners (59)
Limited partners (181,288 units issued
and outstanding) 891 826
$11,623
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income 763 $ 746
Other income 67 70
Total revenues 830 816
Expenses:
Operating 332 307
General and administrative 38 38
Maintenance 94 114
Depreciation 182 173
Interest 235 210
Property taxes 73 66
Total expenses 954 908
Net loss (124) $ (92)
Net loss allocated to general
partner (.2%) -- $ --
Net loss allocated to limited
partners (99.8%) (124) (92)
(124) $ (92)
Net loss per limited partnership unit: (.68) $ (.51)
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 1997
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partners Partners Total
Original capital contributions 181,808 $ 1 $ -- $ 45,452 $45,453
Partners' capital (deficit)
at December 31, 1996 181,288 $ (6) $ (61) $ 1,017 $ 950
Amortization of
timing difference (Note D) -- -- 2 (2) --
Net loss for the three months
ended March 31, 1997 -- -- -- (124) (124)
Partners' capital (deficit)
at March 31, 1997 181,288 $ (6) $ (59) $ 891 $ 826
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss $ (124) $ (92)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation 182 173
Amortization of loan costs and discounts 57 57
Change in accounts:
Restricted cash 3 (5)
Accounts receivable (3) 6
Escrows for taxes and insurance (22) (21)
Other assets 9 192
Accounts payable 21 (134)
Tenant security deposit liabilities (3) 2
Accrued taxes 16 12
Other liabilities (4) (46)
Net cash provided by operating activities 132 144
Cash flows from investing activities:
Property improvements and replacements (42) (74)
Deposits to restricted escrows (22) (24)
Receipts from restricted escrows -- 120
Net cash (used in) provided by
investing activities (64) 22
Cash flows from financing activities:
Payments on mortgage notes payable (55) (51)
Net cash used in financing activities (55) (51)
Net increase in cash and cash equivalents 13 115
Cash and cash equivalents at beginning of period 1,478 1,311
Cash and cash equivalents at end of period $1,491 $1,426
Supplemental disclosure of cash flow information:
Cash paid for interest $ 173 $ 191
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL PROPERTIES VI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties VI ("the Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1996.
Investments
Investments consisting primarily of U.S. Treasury Notes with original maturities
of more than ninety days, are considered to be held-to-maturity securities.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities, as provided in the Partnership agreement.
The Partnership has paid property management fees based upon collected gross
rental revenues for property management services in each of the three months
ended March 31, 1997 and 1996. Property management fees of approximately
$40,000 and $39,000 were paid to affiliates of the General Partner for the three
months ended March 31, 1997 and 1996, respectively. These property management
fees are included in operating expenses.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $26,000 and $25,000 were paid to the General Partner and its
affiliates for the three months ended March 31, 1997 and 1996, respectively.
These reimbursements are primarily included in general and administrative
expenses.
In July 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner who
receives payment on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations is not significant.
NOTE C - COMMITMENT
The Partnership is required to maintain working capital reserves for
contingencies of not less than 5% of Net Invested Capital as defined in the
Partnership Agreement. In the event expenditures are made from these reserves,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Cash and cash equivalents, tenant security
deposits and investments, totaling approximately $1,881,000, are less than the
reserve requirement of approximately $2,266,000 at March 31, 1997. The
Partnership intends to replenish working capital reserves from cash flow from
operations after consideration of any capital improvement needs of the
properties. The working capital requirement must be met prior to any
consideration for distributions to the partners.
NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER
During the year ended December 31, 1991, the Partnership Agreement was amended
to convert the General Partner interests held by the non-corporate General
Partner, Consolidated Capital Group II ("CCG"), to that of a special Limited
Partner ("Special Limited Partner"). The Special Limited Partner does not have
a vote and does not have any of the other rights of a Limited Partner except the
right to inspect the Partnership's books and records; however, the Special
Limited Partner will retain the economic interest in the Partnership which it
previously owned as general partner.
ConCap Equities, Inc. ("CEI") became the sole general partner of the Partnership
effective December 31, 1991. In connection with CCG's conversion, a special
allocation of gross income was made to the Special Limited Partner in order to
eliminate its tax basis negative capital account.
After the conversion, the various Special Limited Partners transferred portions
of their interests to CEI so that CEI now holds a .2% interest in all allocable
items of income, loss and distribution. The difference between the Special
Limited Partner's capital accounts for financial statement and tax reporting
purposes is being amortized to the Limited Partners' capital account as the
components of the timing differences which created the balance reverse.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended March 31, 1997 and 1996:
Occupancy for the Six Months Ended
March 31,
1997 1996
Celina Plaza Apartments
El Paso, Texas 89% 88%
Colony of Springdale Apartments
Springdale, Ohio 90% 88%
The Partnership realized a net loss of approximately $124,000 for the three
months ended March 31, 1997, compared to a net loss of approximately $92,000 for
the three months ended March 31, 1996. The increased net loss is due primarily
to increased operating and interest expenses, partially offset by decreased
maintenance expenses and increased rental revenues.
Rental revenues increased slightly due to rental rate increases and an increase
in occupancy resulting from ongoing property improvements at both Celina Plaza
Apartments and Colony of Springdale Apartments. Operating expenses increased
primarily due to higher utility costs at Colony of Springdale. The increase in
interest expense resulted from increased cash flow payments on the third
mortgage wrap note secured by Celina Plaza. Maintenance expenses were higher
during the three months ended March 31, 1996 due to extensive painting being
done at Celina Plaza.
Included in maintenance expenses is approximately $5,000 of repairs and
maintenance comprised primarily of repairs to one unit at Celina Plaza due to
minor fire damage, which was not covered by insurance, for the three months
ended March 31, 1997. For the three months ended March 31, 1996, approximately
$10,000 of repairs and maintenance comprised primarily of exterior building
improvements are included in maintenance expenses.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
At March 31, 1997, the Partnership held unrestricted cash and cash equivalents
of approximately $1,491,000 compared to approximately $1,426,000 at March 31,
1996. Net cash provided by operating activities decreased slightly due to
increased operating expenses and interest expense. Net cash used in investing
activities decreased due to non-recurring receipts received in 1996 from the
replacement reserve for improvements made at the Colony of Springdale Apartments
favorably impacting 1996 cash flows.
The Partnership is required to maintain working capital reserves for
contingencies of not less than 5% of Net Invested Capital as defined in the
Partnership Agreement. In the event expenditures are made from these reserves,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Cash and cash equivalents, tenant security
deposits and investments, totaling approximately $1,881,000, are less than the
reserve requirement of approximately $2,266,000 at March 31, 1997. The
Partnership intends to replenish working capital reserves from cash flow from
operations after consideration of any capital improvement needs of the
properties. The working capital requirement must be met prior to any
consideration for distributions to the partners.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $10,134,000, net of discounts, matures at various
times with balloon payments due at maturity, at which time the properties will
either be sold or the mortgages refinanced. Future cash distributions will
depend on the levels of cash generated from operations, capital expenditure
requirements, property sales and the availability of cash reserves. The
mortgage indebtedness of approximately $5,681,000, net of discount, secured by
Celina Plaza, matures in July of 1997. The General Partner is currently in
negotiations with the existing lender to obtain a workout on these mortgages and
is also exploring the possibility of refinancing this debt. There can be no
assurance, however that these negotiations will be successful. No cash
distributions were declared or paid during the first three months of 1997 or
1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27, Financial Data Schedule is filed as an exhibit to this report.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Partnership
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES VI
By: CONCAP EQUITIES, INC.
General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: May 9, 1997