UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-13261
SHELTER PROPERTIES VI
(Exact Name of Registrant as Specified in Its Charter)
South Carolina 57-0755618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
SHELTER PROPERTIES VI
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2003
Assets
Cash and cash equivalents $ 1,503
Receivables and deposits 161
Restricted escrows 285
Other assets 712
Investment properties:
Land $ 2,613
Buildings and related personal property 28,175
30,788
Less accumulated depreciation (18,726) 12,062
$ 14,723
Liabilities and Partners' Capital (Deficiency)
Liabilities
Accounts payable $ 67
Tenant security deposit liabilities 89
Accrued property taxes 186
Other liabilities 219
Due to affiliates 341
Mortgage notes payable 18,852
Partners' Capital (Deficiency)
General partners $ 1
Limited partners (42,324 units issued and
outstanding) (5,032) (5,031)
$ 14,723
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
(Restated) (Restated)
Revenues:
Rental income $ 1,212 $ 1,311 $ 2,440 $ 2,603
Other income 112 88 209 206
Casualty gain (Note C) 19 -- 19 --
Total revenues 1,343 1,399 2,668 2,809
Expenses:
Operating 563 530 1,054 1,090
General and administrative 77 96 183 227
Depreciation 327 318 648 634
Interest 303 377 593 687
Property taxes 94 86 187 174
Total expenses 1,364 1,407 2,665 2,812
Net (loss) income from continuing
operations (21) (8) 3 (3)
Income from discontinued operations 81 189 267 410
Net income $ 60 $ 181 $ 270 $ 407
Net income allocated
to general partners (1%) $ 1 $ 2 $ 3 $ 4
Net income allocated
to limited partners (99%) 59 179 267 403
$ 60 $ 181 $ 270 $ 407
Per Limited Partnership Unit:
(Loss) income from continuing
operations $ (0.50) $ (0.19) $ 0.07 $ (0.07)
Income from discontinued
operations 1.89 4.42 6.24 9.59
Net income $ 1.39 $ 4.23 $ 6.31 $ 9.52
Distributions per limited
partnership unit $ -- $ 89.71 $ 34.33 $ 89.71
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 42,324 $ 2 $42,324 $42,326
Partners' deficit at
December 31, 2002 42,324 $ (1) $(3,846) $(3,847)
Distributions to partners -- (1) (1,453) (1,454)
Net income for the six months
ended June 30, 2003 -- 3 267 270
Partners' capital (deficiency)
at June 30, 2003 42,324 $ 1 $(5,032) $(5,031)
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2003 2002
Cash flows from operating activities:
Net income $ 270 $ 407
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 648 938
Amortization of discounts and loan costs 33 125
Loss on early extinguishment of debt -- 48
Casualty gain (19) --
Change in accounts:
Receivables and deposits 104 (319)
Other assets (100) (122)
Accounts payable (119) (72)
Tenant security deposit liabilities 2 15
Accrued property taxes 124 72
Other liabilities (2) 144
Due to affiliates (1) --
Net cash provided by operating activities 940 1,236
Cash flows from investing activities:
Property improvements and replacements (288) (725)
Net withdrawals from restricted escrows 467 114
Insurance proceeds received 25 --
Net cash provided by (used in) investing
activities 204 (611)
Cash flows from financing activities:
Repayment of mortgage notes payable -- (6,300)
Proceeds from mortgage notes payable -- 10,654
Loan costs paid -- (292)
Payments on mortgage notes payable (228) (407)
Distributions to partners (1,454) (3,797)
Advances from affiliates -- 320
Repayment of advances from affiliates -- (320)
Net cash used in financing activities (1,682) (142)
Net (decrease) increase in cash and cash equivalents (538) 483
Cash and cash equivalents at beginning of period 2,041 565
Cash and cash equivalents at end of period $ 1,503 $ 1,048
Supplemental disclosure of cash flow information:
Cash paid for interest $ 562 $ 789
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Shelter Properties VI (the
"Partnership" or "Registrant") 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. The general
partner responsible for management of the Partnership's business is Shelter
Realty VI Corporation ("the Corporate General Partner"). The Corporate General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The non-corporate
general partner, AIMCO Properties, L.P., is also an affiliate of AIMCO. In the
opinion of the Corporate General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended June 30,
2003, are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2003. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2002.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
business enterprises report information about long-lived assets that are either
being held for sale or have already been disposed of by sale or other means. The
standard requires that results of operations for a long-lived asset that is
being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. As a result, the
accompanying statement of operations for the three and six months ended June 30,
2002 has been restated as of January 1, 2002 to reflect the operations of
Nottingham Square Apartments as income from discontinued operations due to the
sale of Nottingham Square in December 2002.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64". SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt,"
required that all gains and losses from extinguishment of debt be aggregated
and, if material, classified as an extraordinary item. SFAS No. 145 rescinds
SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should
only be classified as extraordinary if they are unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying consolidated statements of operations for 2002 reflect the loss
on early extinguishment of debt at River Reach Apartments (see "Note D") in
interest expenses rather than as an extraordinary item.
Note B - Reconciliation of Cash Flows
The following is a reconciliation of "Net cash provided by operating activities"
on the accompanying statements of cash flows to "Net cash from operations", as
defined in the partnership agreement of the Partnership (the "Partnership
Agreement"). However, "Net cash from operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
Six Months Ended
June 30,
2003 2002
(in thousands)
Net cash provided by operating activities $ 940 $ 1,236
Payments on mortgage notes payable (228) (407)
Property improvements and replacements (288) (725)
Change in restricted escrows, net 467 114
Changes in reserves for net operating
liabilities (8) 282
Additions to operating reserves (883) (500)
Net cash provided by operations $ -- $ --
At June 30, 2003 and 2002, the Corporate General Partner reserved approximately
$883,000 and $500,000, respectively, to fund capital improvements at its
properties.
Note C - Casualty Event
In August 2002, Carriage House Apartments experienced an electrical fire,
causing damage to two units and an outside storage building. A casualty gain of
approximately $19,000 was recorded during the three and six months ended June
30, 2003, due to the receipt of insurance proceeds of approximately $25,000 net
of the write off of undepreciated damaged assets of approximately $6,000.
Note D - Refinancing of Mortgage Note Payable
On May 15, 2002, the Partnership refinanced the mortgage encumbering River Reach
Apartments. The refinancing replaced the first mortgage of approximately
$6,048,000 and the second mortgage of approximately $252,000 with a new mortgage
in the amount of $10,654,000. The new mortgage carries a stated interest rate of
7.16% compared to the 7.60% interest rate on the old mortgages. Payments on the
mortgage loan are due monthly until the loan matures on June 1, 2022, at which
time it is scheduled to be fully amortized. Total capitalized loan costs were
approximately $292,000 during the six months ended June 30, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $48,000 during the six months ended June 30, 2002 due to the write
off of unamortized loan costs and debt discounts. This amount has been included
in interest expense. In addition, the Partnership was required to deposit
approximately $100,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
Affiliates of the Corporate General Partner are entitled to receive 5% of gross
receipts from all of the Partnership's properties as compensation for providing
property management services. The Partnership paid to such affiliates
approximately $132,000 and $235,000 for the six months ended June 30, 2003 and
2002, respectively, which is included in operating expenses and income from
discontinued operations.
Affiliates of the Corporate General Partner received reimbursements of
accountable administrative expenses amounting to approximately $143,000 and
$224,000 for the six months ended June 30, 2003 and 2002, respectively, which
are included in general and administrative expenses and investment properties.
Included in these amounts are fees related to construction management services
provided by an affiliate of the Corporate General Partner of approximately
$13,000 and $41,000 for the six months ended June 30, 2003 and 2002,
respectively. The construction management service fees are calculated based on a
percentage of current additions to investment properties.
Pursuant to the Partnership Agreement and in connection with the sale of
Foxfire/Barcelona Village during 2000 and Nottingham Square Apartments in
December 2002, the Corporate General Partner is entitled to a commission of up
to 1% for its assistance in the sale. Payment of such commission is subordinate
to the limited partners receiving a cumulative 7% return on their investment.
This return has not yet been met, and accordingly, the combined fees of
approximately $341,000 have been accrued and are included in due to affiliates
on the accompanying balance sheet at June 30, 2003.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the
Corporate General Partner. During the six months ended June 30, 2003 and 2002,
the Partnership was charged by AIMCO and its affiliates approximately $75,000
and $142,000, respectively, for insurance coverage and fees associated with
policy claims and administration.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint, which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court dismissed without leave to amend certain of the plaintiffs' claims. On
February 11, 2002, plaintiffs filed a motion seeking to certify a putative class
comprised of all non-affiliated persons who own or have owned units in the
partnerships. The Corporate General Partner and affiliated defendants opposed
the motion. On April 29, 2002, the Court held a hearing on plaintiffs' motion
for class certification and took the matter under submission after further
briefing, as ordered by the court, was submitted by the parties. On July 10,
2002, the Court entered an order vacating the trial date of January 13, 2003 (as
well as the pre-trial and discovery cut-off dates) and stayed the case in its
entirety through November 7, 2002 so that the parties could have an opportunity
to discuss settlement. On October 30, 2002, the court entered an order extending
the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The Heller action was brought as a purported
derivative action, and asserted claims for, among other things, breach of
fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial
dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the
Heller action with the Nuanes action and stated that the Heller action was filed
in order to preserve the derivative claims that were dismissed without leave to
amend in the Nuanes action by the Court order dated July 10, 2001. On October 5,
2001, the Corporate General Partner and affiliated defendants moved to strike
the first amended complaint in its entirety for violating the Court's July 10,
2001 order granting in part and denying in part defendants' demurrer in the
Nuanes action, or alternatively, to strike certain portions of the complaint
based on the statute of limitations. Other defendants in the action demurred to
the fourth amended complaint, and, alternatively, moved to strike the complaint.
On December 11, 2001, the court heard argument on the motions and took the
matters under submission. On February 4, 2002, the Court served notice of its
order granting defendants' motion to strike the Heller complaint as a violation
of its July 10, 2001 order in the Nuanes action. On March 27, 2002, the
plaintiffs filed a notice appealing the order striking the complaint. Before
completing briefing on the appeal, the parties stayed further proceedings in the
appeal in light of a settlement.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the Corporate General Partner has also agreed to make
a tender offer to purchase all of the partnership interests in the Partnerships
within one year of final approval, if it is granted, and to provide partners
with the independent appraisals at the time of these tenders. The proposed
settlement also provided for the limitation of the allowable costs which the
Corporate General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.
The Corporate General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the six months ended June 30, 2003 and 2002:
Average
Occupancy
Property 2003 2002
Rocky Creek Apartments
Augusta, Georgia 93% 91%
Carriage House Apartments
Gastonia, North Carolina 86% 92%
River Reach Apartments
Jacksonville, Florida 96% 96%
Village Gardens Apartments
Fort Collins, Colorado 74% 91%
The Corporate General Partner attributes the decrease in average occupancy at
Carriage House Apartments to difficult market conditions due to the sluggish
economy. The decrease in occupancy at Village Gardens Apartments is due to
military deployments, low mortgage interest rates and a slow economy in Fort
Collins, Colorado.
Results of Operations
The Partnership realized net income of approximately $60,000 and $270,000 for
the three and six months ended June 30, 2003, compared to net income of
approximately $181,000 and $407,000 for the three and six months ended June 30,
2002. The decrease in net income for both periods is due to a decrease in total
revenues, partially offset by a decrease in total expenses. Effective January 1,
2002, the Partnership adopted Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which
established standards for the way that public business enterprises report
information about long-lived assets that are either being held for sale or have
already been disposed of by sale or other means. The standard requires that
results of operations for a long-lived asset that is being held for sale or has
already been disposed of be reported as a discontinued operation on the
statement of operations. As a result, the accompanying statement of operations
for the three and six months ended June 30, 2002 has been restated as of January
1, 2002 to reflect the operations of Nottingham Square Apartments as income from
discontinued operations due to the property's sale in December 2002.
The income from discontinued operations for the six months ended June 30, 2003
includes a refund of property tax of approximately $193,000 and additional gain
on disposal of property due to the write off of expense reserves of
approximately $74,000 at Nottingham Square.
On December 20, 2002, the Partnership sold Nottingham Square Apartments to an
unaffiliated third party for $20,000,000. After payment of closing costs of
approximately $327,000, the net proceeds received by the Partnership were
approximately $19,673,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $10,300,000. The
sale of the property resulted in a gain on the sale during the fourth quarter of
2002 of approximately $13,106,000. In addition, the Partnership recorded a loss
on early extinguishment of debt of approximately $247,000, as a result of the
write off of unamortized loan costs and debt discounts. Pursuant to the
Partnership Agreement and in connection with the sale, the Corporate General
Partner is entitled to a commission of up to 1% for its assistance with the
sale. Payment of such commission is subordinate to the limited partners
receiving a cumulative 7% return on their investment. This return has not yet
been met and accordingly, approximately $200,000 was accrued and unpaid at
December 31, 2002.
The Partnership recognized income from continuing operations of approximately
$3,000 for the six months ended June 30, 2003 and a loss of approximately
$21,000 for the three months ended June 30, 2003, compared to a loss from
continuing operations of approximately $8,000 and $3,000 for the three and six
months ended June 30, 2002. The increase in income from continuing operations
for the six months ended June 30, 2003 is due to a decrease in total expenses
partially offset by a decrease in total revenues. The decrease in income from
continuing operations for the three months ended June 30, 2003 was due to a
decrease in total revenues partially offset by a decrease in total expenses.
Total revenues decreased for both periods due to a decrease in rental income
partially offset by a casualty gain at Carriage House Apartments. Rental income
decreased primarily due to decreases in occupancy at Carriage House and Village
Gardens Apartments, reduced rental rates at Village Gardens Apartments and
increased concession costs at Rocky Creek and Village Gardens Apartments. For
the three months ended June 30, 2003 an increase in other income partially
offset the decrease in rental income. Other income increased due to increased
utility reimbursements and late charges at River Reach Apartments.
In August 2002, Carriage House Apartments experienced an electrical fire,
causing damage to two units and an outside storage building. A casualty gain of
approximately $19,000 was recorded during the three and six months ended June
30, 2003, due to the receipt of insurance proceeds of approximately $25,000 net
of the write off of undepreciated damaged assets of approximately $6,000.
Total expenses decreased for the six months ended June 30, 2003 due to decreases
in operating, general and administrative and interest expenses. Depreciation and
property tax expenses remained relatively constant for the comparable periods.
Operating expenses decreased due primarily to reduced property expenses and
management fees. Property expenses decreased due to reduced payroll and related
benefit costs at Rocky Creek and Carriage House Apartments and reduced utility
charges at River Reach Apartments partially offset by increased payroll and
related benefit expenses at River Reach Apartments. Management fees decreased at
most of the Partnership's properties due to reduced rental income. Interest
expense decreased primarily due to refinancing of several of the Partnership's
properties in 2002.
Total expenses for the three months ended June 30, 2003 decreased primarily due
to decreases in general and administrative expenses and interest expense as
discussed above, partially offset by increased operating expenses. Operating
expenses increased for the three month period due to increases in maintenance
expenses. Maintenance expense increased due primarily to increased painting and
floor covering repair costs at Village Gardens Apartments.
General and administrative expenses decreased for the three and six months ended
June 30, 2003 due to a decrease in the costs of services included in management
reimbursements to the Corporate General Partner allowed under the Partnership
Agreement. In addition to management reimbursements, costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audit required by the Partnership Agreement are also included in
general and administrative expenses.
As part of the ongoing business plan of the Partnership, the Corporate 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 Corporate 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 Corporate General Partner will be able to sustain
such a plan.
Liquidity and Capital Resources
At June 30, 2003, the Partnership held cash and cash equivalents of
approximately $1,503,000 compared to approximately $1,048,000 at June 30, 2002.
Cash and cash equivalents decreased approximately $538,000 since December 31,
2002 due to approximately $1,682,000 of cash used in financing activities
partially offset by approximately $204,000 and $940,000 of cash provided by
investing and operating activities, respectively. Cash used in financing
activities consisted of principal payments on the mortgages encumbering the
Partnership's properties and distributions paid to partners. Cash provided by
investing activities consisted of withdrawals from restricted escrows maintained
by the mortgage lenders and insurance proceeds received, partially offset by
property improvements and replacements. The Partnership invests its working
capital reserves in interest bearing accounts.
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 investment properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. The Corporate
General Partner monitors developments in the area of legal and regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance
measures with regard to governance, disclosure, audit and other areas. In light
of these changes, the Partnership expects that it will incur higher expenses
related to compliance, including increased legal and audit fees. Capital
improvements planned for each of the Registrant's properties are detailed below.
Rocky Creek Apartments
During the six months ended June 30, 2003, the Partnership completed
approximately $26,000 in capital improvements at Rocky Creek Apartments
primarily consisting of floor covering replacements. The improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $17,000 in capital improvements during the remainder of
2003. The additional capital improvements will consist primarily of floor
covering replacements, appliance replacements, pool upgrades and interior
redecorating. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Carriage House Apartments
During the six months ended June 30, 2003, the Partnership completed
approximately $134,000 in capital improvements at Carriage House Apartments
primarily consisting of floor covering replacements, electrical upgrades and
reconstruction costs related to a fire at the property. These improvements were
funded from operating cash flow and insurance proceeds. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $20,000 in capital improvements
during the remainder of 2003. The additional capital improvements will consist
primarily of floor covering and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
River Reach Apartments
During the six months ended June 30, 2003, the Partnership completed
approximately $74,000 in capital improvements at River Reach Apartments
primarily consisting of floor covering and air conditioning unit replacements,
and water/sewer upgrades. These improvements were funded from operating cash
flow. The Partnership evaluates the capital improvement needs of the property
during the year and currently expects to complete an additional $42,000 in
capital improvements during the remainder of 2003. The additional capital
improvements will consist primarily of plumbing enhancement projects, floor
covering replacements, roof replacements, pool furniture and office upgrades.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Village Gardens Apartments
During the six months ended June 30, 2003, the Partnership completed
approximately $54,000 in capital improvements at Village Gardens Apartments
primarily consisting of floor covering replacements, painting, interior
decoration, and lighting upgrades. These improvements were funded from operating
cash flow and replacement reserves. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $27,000 in capital improvements during the remainder of
2003. The additional capital improvements will consist primarily of exterior
painting, interior improvements, and floor covering replacements. Additional
capital improvements may be considered and will depend on the physical condition
of the property as well as replacement reserves and anticipated cash flow
generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
On May 15, 2002, the Partnership refinanced the mortgages encumbering River
Reach Apartments. The refinancing replaced the first mortgage of approximately
$6,048,000 and the second mortgage of approximately $252,000 with a new mortgage
in the amount of $10,654,000. The new mortgage carries a stated interest rate of
7.16% compared to the 7.60% interest rate on the old mortgages. Payments on the
mortgage loan are due monthly until the loan matures on June 1, 2022, at which
time it is scheduled to be fully amortized. Total capitalized loan costs were
approximately $292,000 during the year ended December 31, 2002. The Partnership
recognized a loss on the early extinguishment of debt of approximately $48,000
during the year ended December 31, 2002 due to the write off of unamortized loan
costs and debt discounts. In addition, the Partnership was required to deposit
approximately $100,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
On September 16, 2002, the Partnership refinanced the mortgages encumbering
Rocky Creek and Carriage House Apartments. These loans were initially refinanced
under an interim credit facility ("Interim Credit Facility") which had a term of
three months. The Interim Credit Facility included properties in other
partnerships that are affiliated with the Partnership. However, the Interim
Credit Facility created separate loans for each property that were not
cross-collateralized or cross-defaulted with the other property loans. During
the three month term of the Interim Credit Facility, the properties were
required to make interest-only payments. The first month's interest, which was
paid at the date of the refinancing, was calculated at LIBOR plus 70 basis
points. Interest for the following two months was calculated at LIBOR plus 150
basis points and was due monthly.
During December 2002 the loans encumbering Rocky Creek and Carriage House were
sold to Fannie Mae under a permanent credit facility ("Permanent Credit
Facility"). The Permanent Credit Facility has a maturity of five years, with one
five-year extension option. This Permanent Credit Facility also creates separate
loans for each property that are not cross-collateralized or cross-defaulted
with the other property loans. Each note under this Permanent Credit Facility
will begin as a variable rate loan with the option of converting to a fixed rate
loan after three years. The interest rate on the variable rate loans is the
Fannie Mae discounted mortgage-backed security index plus 85 basis points. The
rate was 1.80% at June 30, 2003 and will reset monthly. In addition, monthly
principal payments are required based on a 30-year amortization schedule, using
the interest rate in effect during the first month that any property is in the
Permanent Credit Facility. The loans are prepayable without penalty.
The refinancing of the Rocky Creek Apartments loans replaced the first mortgage
of approximately $1,753,000 and second mortgage of approximately $74,000 with a
new mortgage in the amount of $2,340,000. Total capitalized loan costs were
approximately $105,000 during the year ended December 31, 2002. The Partnership
recognized a loss on the early extinguishment of debt of approximately $5,000
during the year ended December 31, 2002 due to the write off of unamortized loan
costs and debt discounts.
The refinancing of the Carriage House Apartments loans replaced the first
mortgage of approximately $1,616,000 and second mortgage of approximately
$68,000 with a new mortgage in the amount of $1,898,000. Total capitalized loan
costs were approximately $88,000 during the year ended December 31, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $5,000 during the year ended December 31, 2002 due to the write
off of unamortized loan costs and debt discounts. In addition, the Partnership
was required to deposit approximately $198,000 in a repair escrow account with
the lender in order to complete required repairs at the property.
On November 15, 2002, the Partnership refinanced the mortgages encumbering
Nottingham Square Apartments. The refinancing replaced the first mortgage of
approximately $6,296,000 and the second mortgage of approximately $268,000 with
a new mortgage of approximately $10,300,000 under the Initial Credit Facility as
discussed above. The Partnership recognized a loss on the early extinguishment
of debt of approximately $247,000 during the year ended December 31, 2002 due to
the write off of unamortized loan costs and debt discounts. In addition, the
Partnership was required to deposit approximately $456,000 in a repair escrow
account with the lender in order to complete required repairs at the property.
During the six months ended June 30, 2003, these funds were returned to the
Partnership as a result of the sale of the property in December 2002.
The Partnership's assets are thought to be sufficient for any near term needs
(exclusive of capital improvements) of the Partnership. The mortgages
encumbering River Reach and Village Gardens Apartments aggregating approximately
$14,656,000 mature in June 2022 and January 2021, respectively, at which time
the mortgages are scheduled to be fully amortized. The mortgages encumbering
Rocky Creek and Carriage House Apartments aggregating approximately $4,196,000
mature on September 16, 2007 at which time balloon payments totaling
approximately $3,736,000 are due. The Corporate General Partner has the option
to extend the maturity date on the Rocky Creek and Carriage House Apartments
loans for another five years. After that period the Corporate General Partner
will attempt to refinance such indebtedness and/or sell the properties prior to
the optional extended maturity date. If the properties cannot be refinanced or
sold, the Partnership will risk losing such properties through foreclosure.
The Partnership distributed the following amounts during the six months ended
June 30, 2003 and 2002 (in thousands, except per unit data):
Six Months Per Limited Six Months Per Limited
Ended Partnership Ended Partnership
June 30, 2003 Unit June 30, 2002 Unit
Operations $ 126 $ 2.95 $ -- $ --
Refinance (1) -- -- 3,797 89.71
Sale (2) 1,328 31.38 -- --
$1,454 $34.33 $3,797 $89.71
(1) From the refinance of River Reach Apartments in 2002.
(2) From the sale of Nottingham Square Apartments in 2002.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. The Partnership's cash
available for distribution is reviewed on a monthly basis. There can be no
assurance that the Partnership will generate sufficient funds from operations,
after required capital improvements, to permit additional distributions to its
partners during the remainder of 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 27,773 limited partnership units
(the "Units") in the Partnership representing 65.62% of the outstanding Units at
June 30, 2003. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional Units in exchange for cash or a combination of cash and
units in the operating partnership of AIMCO either through private purchases or
tender offers. Pursuant to the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters that include, but are limited to, voting on certain amendments to the
Partnership Agreement and voting to remove the Corporate General Partner. As a
result of its ownership of 65.62% of the outstanding Units, AIMCO and its
affiliates are in a position to control all voting decisions with respect to the
Partnership. Although the Corporate General Partner owes fiduciary duties to the
limited partners of the Partnership, the Corporate General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the Corporate General Partner, as managing general partner, to the Partnership
and its limited partners may come into conflict with the duties of the Corporate
General Partner to AIMCO, as its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include changes in the
national, regional and local economic climate; local conditions, such as an
oversupply of multifamily properties; competition from other available
multifamily property owners and changes in market rental rates. Any adverse
changes in these factors could cause an impairment in the Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned and
the Partnership fully reserves all balances outstanding over thirty days. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
Item 3. Controls and Procedures
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Corporate General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Corporate General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint, which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court dismissed without leave to amend certain of the plaintiffs' claims. On
February 11, 2002, plaintiffs filed a motion seeking to certify a putative class
comprised of all non-affiliated persons who own or have owned units in the
partnerships. The Corporate General Partner and affiliated defendants opposed
the motion. On April 29, 2002, the Court held a hearing on plaintiffs' motion
for class certification and took the matter under submission after further
briefing, as ordered by the court, was submitted by the parties. On July 10,
2002, the Court entered an order vacating the trial date of January 13, 2003 (as
well as the pre-trial and discovery cut-off dates) and stayed the case in its
entirety through November 7, 2002 so that the parties could have an opportunity
to discuss settlement. On October 30, 2002, the court entered an order extending
the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The Heller action was brought as a purported
derivative action, and asserted claims for, among other things, breach of
fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial
dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the
Heller action with the Nuanes action and stated that the Heller action was filed
in order to preserve the derivative claims that were dismissed without leave to
amend in the Nuanes action by the Court order dated July 10, 2001. On October 5,
2001, the Corporate General Partner and affiliated defendants moved to strike
the first amended complaint in its entirety for violating the Court's July 10,
2001 order granting in part and denying in part defendants' demurrer in the
Nuanes action, or alternatively, to strike certain portions of the complaint
based on the statute of limitations. Other defendants in the action demurred to
the fourth amended complaint, and, alternatively, moved to strike the complaint.
On December 11, 2001, the court heard argument on the motions and took the
matters under submission. On February 4, 2002, the Court served notice of its
order granting defendants' motion to strike the Heller complaint as a violation
of its July 10, 2001 order in the Nuanes action. On March 27, 2002, the
plaintiffs filed a notice appealing the order striking the complaint. Before
completing briefing on the appeal, the parties stayed further proceedings in the
appeal in light of a settlement.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the Corporate General Partner has also agreed to make
a tender offer to purchase all of the partnership interests in the Partnerships
within one year of final approval, if it is granted, and to provide partners
with the independent appraisals at the time of these tenders. The proposed
settlement also provided for the limitation of the allowable costs which the
Corporate General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.
The Corporate General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
4(a), Amended and Restated Certificate and Agreement of
Limited Partnership (included as Exhibit A to the Prospectus
of Registrant dated March 22, 1984 contained in Amendment No.
1 to Registration Statement No. 2-86995, of Registrant filed
March 21, 1984 (the "Prospectus") and incorporated herein by
reference).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1, Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
b) Reports on Form 8-K filed for the quarter ended June 30, 2003:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES VI
By: Shelter Realty VI Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President
and Chief Accounting Officer
Date: August 13, 2003
Exhibit 31.1
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/Patrick J. Foye
Patrick J. Foye
Executive Vice President of Shelter Realty
VI Corporation, equivalent of the chief
executive officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President and Chief Financial
Officer of Shelter Realty VI Corporation,
equivalent of the chief financial officer of
the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Shelter Properties VI
Limited Partnership (the "Partnership"), for the quarterly period ended June 30,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Patrick J. Foye, as the equivalent of the chief executive
officer of the Partnership, and Paul J. McAuliffe, as the equivalent of the
chief financial officer of the Partnership, each hereby certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: August 13, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: August 13, 2003
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.