FORM 10-QSB.--QUARTERLY OR TRANSITIONAL 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 September 30, 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)
(864) 239-1000
(Issuer's telephone number)
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)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 1,210
Restricted -- tenant security deposits 79
Investments 302
Accounts receivable 20
Escrows for taxes and insurance 205
Restricted escrows 136
Other assets 120
Investment properties:
Land $ 1,652
Buildings and personal property 15,124
16,776
Less accumulated depreciation (7,701) 9,075
$ 11,147
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 110
Tenant security deposits 78
Accrued taxes 221
Other liabilities 210
Mortgage notes payable 9,900
Partners' (Deficit) Capital
General partner $ (6)
Special limited partner (56)
Limited partners (181,808 units issued
and 181,288 units outstanding) 690 628
$ 11,147
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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Rental income $ 752 $ 780 $ 2,246 $ 2,319
Other income 46 59 188 193
Total revenues 798 839 2,434 2,512
Expenses:
Operating 369 294 967 898
General and administrative 42 40 122 136
Maintenance 122 175 272 397
Depreciation 187 179 552 528
Interest 137 228 623 670
Property tax 74 71 220 206
Total expenses 931 987 2,756 2,835
Net loss $ (133) $ (148) $ (322) $ (323)
Net loss allocated to
general partner (.2%) $ -- $ -- $ 1 $ 1
Net loss allocated to limited
partners (99.8%) (133) (148) (321) (322)
Net loss $ (133) $ (148) $ (322) $ (323)
Net loss per limited
partnership unit: $ (.73) $ (.82) $ (1.77) $(1.78)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited Special
Partnership General Limited Limited
Units Partner Partner Partners Total
Original capital contributions
contributions 181,808 $ 1 $ -- $45,452 $45,453
Partners' (deficit) capital
at December 31, 1996 181,288 $ (6) $ (61) $ 1,017 $ 950
Amortization of
timing difference (Note D) -- -- 6 (6) --
Net loss for the nine months
ended September 30, 1997 -- -- (1) (321) (322)
Partners' (deficit) capital
at September 30, 1997 181,288 $ (6) $ (56) $ 690 $ 628
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
d) CONSOLIDATED CAPITAL PROPERTIES VI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Net loss $ (322) $ (323)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation 552 528
Amortization of loan costs and discounts 120 172
Change in accounts:
Restricted cash 9 1
Accounts receivable 9 (5)
Escrows for taxes and insurance (97) (59)
Other assets (8) 190
Accounts payable (93) (98)
Tenant security deposit liabilities (10) (1)
Accrued taxes 108 97
Other liabilities (19) (68)
Net cash provided by operating activities 249 434
Cash flows from investing activities:
Property improvements and replacements (112) (278)
Proceeds from sale of investments -- 84
Dividends received from investments 3 --
Deposits to restricted escrows (68) (72)
Receipts from restricted escrows -- 163
Net cash used in investing activities (177) (103)
Cash flows used in financing activities:
Payments on mortgage notes payable (340) (157)
Net (decrease) increase in unrestricted cash
and cash equivalents (268) 174
Unrestricted cash and cash equivalents at
beginning of period 1,478 1,311
Unrestricted cash and cash equivalents at
end of period $1,210 $1,485
Supplemental disclosure of cash flow information:
Cash paid for interest $ 531 $ 514
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 or the "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. 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 and nine months ended September 30, 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.
Certain reclassifications have been made to the 1996 balances to conform to the
1997 presentation.
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 for 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 nine months
ended September 30, 1997 and 1996. Property management fees of approximately
$118,000 and $121,000 were paid to affiliates of the General Partner for the
nine months ended September 30, 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 $78,000 and $88,000 were paid to the General Partner and its
affiliates for the nine months ended September 30, 1997 and 1996, respectively.
Included in these reimbursements is approximately $1,000 and $5,000 in
construction oversight costs for the nine months ended September 30, 1997 and
1996, respectively.
For the period from January 1, 1996, to August 31, 1997, the Partnership insured
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 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 that accrued to the benefit of the
affiliate of the General Partner by virtue of the agent's obligations was 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 $1,591,000 are less than the
reserve requirement of approximately $2,226,000 at September 30, 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.
NOTE E - SALE OF PROPERTY
On October 20, 1997, the Partnership sold Celina Plaza Apartments, located in El
Paso, Texas, to an unaffiliated party, The Vandenburg Organization, a Texas
corporation. The sales price of the property was $6,600,000 and the sale
resulted in net proceeds of approximately $6,456,000, after payment of closing
costs. The net proceeds were used to pay accrued taxes and to pay-off the
mortgage debt secured by this property. Excess proceeds after such payments
amounted to approximately $779,000 to the Partnership.
The following unaudited pro-forma information reflects the operations of the
Partnership for the three and nine months ended September 30, 1997 and 1996, as
if Celina Plaza Apartments had been sold January 1, 1996.
Proforma Results of Operations for the
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues 389 423 1,213 1,249
Net income (108) (84) (166) (146)
Net income per Unit of
Depository Receipt (.59) (.46) (.91) (.80)
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 nine
months ended September 30, 1997 and 1996:
1997 1996
Celina Plaza Apartments
El Paso, Texas (1) 88% 91%
Colony of Springdale Apartments
Springdale, Ohio (2) 89% 92%
(1) The General Partner attributes the decrease in occupancy to the heavily
competitive market in El Paso. Subsequent to September 30, 1997, Celina
Plaza Apartments was sold (See "Note E").
(2) The decline in occupancy at the Colony of Springdale Apartments property is
attributable to increasing qualifying standards for residents.
The Partnership realized a net loss of approximately $133,000 and $322,000 for
the three and nine months ended September 30, 1997, respectively, compared to
net losses of approximately $148,000 and approximately $323,000 for the three
and nine months ended September 30, 1996, respectively.
Although the net loss remained relatively stable for the nine months ended
September 30, 1997, compared to the corresponding period of 1996, both total
revenues and total expenses decreased in the three and nine months ended
September 30, 1997, compared to the same periods in 1996. The decrease in
revenues primarily resulted from decreased rental income due to decreased
occupancy at the investment properties, as discussed above. Maintenance expense
decreased due to various interior and exterior projects being completed at both
investment properties in 1996. Also, increased cleaning, interior painting and
contract repair costs were incurred in 1996 due to increased move-outs.
Partially offsetting the decreased maintenance expenses for the three and nine
months ended September 30, 1997, were increased operating costs primarily at the
Colony of Springdale Apartments due to higher concessions being offered in an
effort to increase occupancy. Also, maintenance salaries increased, which are
included in operating expenses, due to additional personnel. Interest expense
decreased as a result of reduced interest requirements on the wrap note secured
by Celina Plaza Apartments. Interest payments are based on cash flow, which
decreased in the first nine months of 1997, compared to the corresponding period
in 1996.
Included in maintenance expenses for the nine months ended September 30, 1997,
is approximately $14,000 of major repairs and maintenance comprised primarily of
window coverings and repairs to one unit at Celina Plaza Apartments due to minor
fire damage, which was not covered by insurance. For the nine months ended
September 30, 1996, approximately $47,000 of repairs and maintenance comprised
primarily of major landscaping, swimming pool repairs, window coverings and
exterior building improvements are included in maintenance expense.
At September 30, 1997, the Partnership held unrestricted cash and cash
equivalents of approximately $1,210,000 compared to approximately $1,485,000 at
September 30, 1996. Net cash provided by operating activities decreased
primarily due to an increase in other assets, which resulted from increases in
prepaid insurance due to the down-payment that was required at the policy
renewal in May 1997. This decrease was partially offset by a lesser decrease in
other liabilities due to the timing of payments. Net cash used in investing
activities increased due primarily to decreases in receipts from restricted
escrows and due to no investment sales in 1997. These decreases in cash
proceeds were partially offset by a decrease in property improvements and
replacements. Net cash used in financing activities increased primarily due to
an increase in payments of principal on mortgage notes. Additional principal
payments totaling approximately $170,000 were paid on the mortgage note secured
by Celina Plaza Apartments in order to obtain extensions on the indebtedness,
which matured on July 1997 (See discussion below).
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.
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 properties 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 $9,900,000, net of discount, has maturity
dates ranging from July 1997 to May 2001, at which time the properties will
either be sold or the mortgages refinanced. The mortgage indebtedness of
approximately $5,476,000, net of discount, secured by Celina Plaza Apartments,
matured in July 1997. The General Partner initially obtained a sixty day
extension, with the Partnership making a required payment of $113,000 towards
the principal balance on this note. In addition to the sixty day extension
which expired September 30, 1997, the Partnership exercised the first of two
thirty day options offered, extending the note until October 30, 1997. Pursuant
to the requirement of the thirty day option, the Partnership paid an additional
principal payment of $57,000. Subsequent to September 30, 1997, the Partnership
successfully closed on the sale of Celina Plaza Apartments. The property was
sold for $6,600,000 and the sale resulted in net proceeds of approximately
$6,456,000, after payment of closing costs (See "Note E"). No cash
distributions were declared or paid during the first nine months of 1997 or
1996. Future cash distributions will depend on the levels of cash generated from
operations, capital expenditure requirements, property sales and the
availability of cash reserves.
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 filed during the three months ended September 30, 1997.
Exhibit 10.19 Contract to Purchase and Sell Property made
and entered into as of August 13, 1997, but
effective October 20, 1997, by and between
Consolidated Capital Properties VI, a
California limited partnership, and The
Vandenburg Organization, a Texas corporation
regarding Celina Plaza Apartments.
Exhibit 10.20 Assignment and assumption of Leases dated
October 13, 1997, by and between Consolidated
Capital Properties VI, a California limited
partnership and The Vandenburg Organization, a
Texas corporation, regarding Celina Plaza
Apartments.
Exhibit 10.21 Blanket Conveyance, Bill of Sale and
Assignment dated October 13, 1997, by and
between Consolidated Capital Properties VI, a
California limited partnership and The
Vandenburg Organization, a Texas corporation,
regarding Celina Plaza Apartments.
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.
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: November 3, 1997