SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
SHELTER PROPERTIES VI LIMITED PARTNERSHIP
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies: Limited
Partnership Units
(2) Aggregate number of securities to which transaction applies: _________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): $31,700,000.00, based on contract
price for property being sold.
(4) Proposed maximum aggregate value of transaction: $31,700,000.00, based on
contract price for property being sold.
(5) Total fee paid: $4,016.39
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
INFORMATION STATEMENT
FOR
SHELTER PROPERTIES VI LIMITED PARTNERSHIP
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
Dear Limited Partner:
We are sending you this information statement to inform you that Shelter Realty
VI Corporation, a South Carolina corporation (the "General Partner"), the
general partner of Shelter Properties VI Limited Partnership, a South Carolina
limited partnership (the "Partnership" or the "Seller"), has agreed to cause the
Partnership to sell the apartment complex known as River Reach, located in Duval
County, Florida ("River Reach" or the "Property"). River Reach will be sold to
Neighborhood Realty, Inc., a Florida corporation (the "Buyer"), an unaffiliated
third party, for $31,700,000 cash. The General Partner has conflicts of interest
in the sale of the Property as described in greater detail herein, including the
receipt of certain fees to be paid in connection with the completion of the
sale. After the sale closes, we estimate that there will be approximately
$17,652,217 and $417 per limited partnership unit to distribute to the limited
partners as a result of the sale of River Reach. This amount is an estimate, and
as explained below, it is based on a number of assumptions. We expect the
distribution will occur within 90 days after the sale closes. This information
statement contains information about the sale and the reason that the General
Partner has decided that the sale is in the best interests of the limited
partners.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
The date of this information statement is July 27, 2004.
This information statement is being mailed on or about July 29, 2004 to all
holders at the close of business on July 27, 2004 of the limited partnership
units of Shelter Properties VI Limited Partnership, a South Carolina limited
partnership.
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SUMMARY OF THE TRANSACTION
The following is a summary of the sale transaction for the Property:
o The Buyer or an affiliate of the Buyer will acquire River
Reach for $31,700,000 cash pursuant to a purchase and sale
agreement dated as of June 23, 2004 between the Buyer and the
Seller (the "Purchase and Sale Agreement").
o The completion of the sale is scheduled to occur on or before
August 23, 2004, subject to certain extension options.
A more detailed summary of the sale transaction for the Property can be found on
page 12 of this information statement under the heading entitled "Summary of the
River Reach Purchase and Sale Agreement".
Upon the completion of the sale of River Reach, the Partnership will calculate
the net distribution per partnership unit in the following manner:
<Table>
SOURCES AND USES INCLUDE:
Gross purchase price: $ 31,700,000
Plus: Cash and cash equivalents 124,083
Plus: Other Partnership assets 258,995
Less: Mortgage debt, including accrued interest (10,198,511)
Less: Prepayment Penalty (2,000,000)
Less: Accounts payable, accrued expenses and other liabilities (330,350)
Less: Reserves for Contingencies (951,000)
Less: Closing costs/sales commissions (951,000)
TOTAL $ 17,652,217
Net proceeds distributable to all Partners $ 17,652,217
Percentage of proceeds allocable to Limited Partners 100%
------------
Net proceeds distributable to Limited Partners $ 17,652,217
Total number of Units 42,324
Distributable net proceeds per Unit $ 417
</Table>
Upon the completion of the sale of River Reach, the Partnership will continue to
hold and operate its remaining apartment complexes known as Carriage House
Apartments, located in Gaston County, North Carolina, Rocky Creek Apartments,
located in Richmond County, Georgia, and Village Gardens apartments, located in
Larimer County, Colorado. The General Partner is currently planning to sell the
Carriage House Apartments in the fourth quarter of 2004, and the Rocky Creek
Apartments in the fourth quarter of 2004, upon terms and conditions subsequently
to be approved by the General Partner. Nevertheless, the plans to sell the
Carriage
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House Apartments and the Rocky Creek Apartments are only plans and such plans
may change or be delayed based on any number of factors.
REASONS FOR THE SALES OF THE PROPERTIES
The General Partner has determined that the sale of the Property, the potential
sale of the Carriage House Apartments later in 2004, and the potential sale of
the Rocky Creek Apartments later in 2004, are in the best interest of the
limited partners after considering the following:
o The Property was completed in 1972, the Carriage House
Apartments was completed in 1971 and the Rocky Creek
Apartments was completed in 1979, and given their age, the
Property, the Carriage House Apartments and the Rocky Creek
Apartments probably will require substantial capital
expenditures in the future for which existing reserves will
not be adequate.
o Market conditions are currently favorable for selling
properties of this type because of the availability of
favorable financing terms and the demand for the acquisition,
development and resale of properties of this type.
The factors described above were not the only factors considered by the General
Partner. The General Partner did not find it practicable to quantify or
otherwise assign relative weights to any of the factors considered. However,
after taking into account all of the factors, the General Partner concluded that
this offer would be preferred over any other alternative available and
recommended the transaction as the best way to secure value for the limited
partners. For these reasons, the General Partner has approved the sale and the
agreement, and limited partners holding a majority of the limited partnership
units also approved the sale and the agreement.
THE SELLER
The Property is owned by Shelter Properties VI Limited Partnership, a South
Carolina limited partnership (the "Partnership" or the "Seller"). The
Partnership is located at 55 Beattie Place, P.O. Box 1089, Greenville, South
Carolina 29602. The phone number for the Partnership is (864) 239-1000.
THE BUYER
The Buyer, which is not affiliated with the Partnership, agreed to acquire the
Property through an arms length negotiation. The General Partner or its
affiliates have not sold other properties to the Buyer or its affiliates in the
past. The Buyer is in the business of developing, marketing and selling
residential communities. The Buyer or its affiliates have informed us that they
plan to develop, market and resell the Property following the sale. The Buyer
has an office located at 432 Osceola Avenue, Jacksonville, Florida 32250. The
phone number for the Buyer is 904-247-9160.
THE PROPERTY
The Partnership has owned and operated River Reach, a 298-unit apartment complex
located in Duval County, Florida, since January 30, 1985. There is a first
mortgage loan on the Property
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with an unpaid principal balance of approximately $10,206,000 at March 31, 2004.
The Partnership has other secured indebtedness of approximately $8,269,000 at
March 31, 2004. The loan encumbering the Property is subject to a prepayment
penalty that will be paid out of the sale proceeds.
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 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 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. In addition, 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.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
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 General Partner has also agreed to make at least
one round of tender offers 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 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. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment
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thereto. On November 24, 2003, the Objector filed an application requesting the
Court order AIMCO to withdraw settlement tender offers it had commenced, refrain
from making further offers pending the appeal and auction any units tendered to
third parties, contending that the offers did not conform with the terms of the
Settlement. Counsel for the Objector (on behalf of another investor) had
alternatively requested the Court take certain action purportedly to enforce the
terms of the settlement agreement. On December 18, 2003, the Court heard oral
argument on the motions and denied them both in their entirety.
On January 28, 2004, Objector filed his opening brief in his pending appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. Plaintiffs have also filed a
brief in support of the settlement. On June 3, 2004, Objector filed a reply to
both briefs in support of the settlement and judgment entered thereto. No
hearing has been scheduled in the matter.
APPROVAL OF THE SALE
The General Partner approved the sale and determined that it is in the best
interests of the Partnership and the limited partners.
Section 8.2(h) of the Partnership's amended and restated certificate and
agreement of limited partnership, dated August 3, 1983, permits the General
Partner to cause the Partnership to sell at a single sale substantially all of
the properties originally acquired by the Partnership with the approval of the
limited partners holding a majority of the then outstanding units; provided,
however, the foregoing shall not be interpreted as requiring such approval of
the sale of the last property to be sold by the Partnership.
As of June 30, 2004, the Partnership has approximately 1,466 limited partners
who collectively own 42,324 outstanding limited partnership units. Each limited
partnership unit represents approximately 0.00236% of the outstanding limited
partnership units. Affiliates of the General Partner owned 28,425 limited
partnership units or 67.16% of the outstanding limited partnership units at June
30, 2004. On July 14, 2004, the holders of these 67.16% of the outstanding
limited partnership units gave their written consent approving and adopting the
sale. The following limited partners executed a written consent:
<Table>
<Caption>
NAME AND ADDRESS NUMBER OF LIMITED
OF BENEFICIAL OWNER PARTNERSHIP UNITS PERCENT OF CLASS
AIMCO IPLP, L.P. (formerly known as Insignia Properties, L.P.)
55 Beattie Place, Greenville, SC 29602 11,547 27.28%
Cooper River Properties, L.L.C.
Stanford Place 3, 4582 S. Ulster St. Parkway,
Suite 1100, Denver, CO 80237 3,364 7.95%
AIMCO Properties, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway,
Suite 1100, Denver, CO 80237 13,514 31.93%
TOTAL: 28,425 67.16%
</Table>
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As a result, the holders of a majority of the limited partnership units have
approved the sale of the Property, and the potential subsequent sales of the
Carriage House Apartments property and the Rocky Creek Apartments property upon
terms and conditions subsequently to be approved by the General Partner.
Accordingly, no vote of any other limited partnership unit holder is necessary
to approve the sales and, therefore, the Partnership is not soliciting any other
votes.
Subject to the terms and conditions of the Purchase and Sale Agreement, we
contemplate that the sale of the Property will be consummated within
approximately two to three months, but no sooner than 20 days after the mailing
of this information statement and following satisfaction or waiver of the
conditions contained in the Purchase and Sale Agreement. See "Summary of
Agreement."
INTEREST OF CERTAIN PERSONS IN THE SALE
The General Partner has conflicts of interest with respect to the sale. As a
general partner generally is liable for all recourse debts and other liabilities
of a partnership when the partnership's assets are insufficient, a sale of the
Property reduces the General Partner's liability for existing and future
partnership debt and liabilities.
USE OF PROCEEDS
We estimate that we will use the gross proceeds from the sale as follows
(subject, however, to such reductions in the purchase price and reallocations in
the proceeds as determined by the General Partner, in its reasonable discretion,
to address objections made by the Buyer to the condition of the Property):
<Table>
Gross purchase price $ 31,700,000
Plus: Cash and cash equivalents 124,083
Plus: Other Partnership assets 258,995
Less: Mortgage debt, including accrued interest (10,198,511)
Less: Prepayment Penalty (2,000,000)
Less: Accounts payable, accrued expenses and other liabilities (330,350)
Less: Reserves for Contingencies (951,000)
Less: Closing costs/sales commissions (951,000)
TOTAL 17,652,217
Net proceeds distributable to all Partners $ 17,652,217
Percentage of proceeds allocable to Limited Partners 100%
------------
Net proceeds distributable to Limited Partners $ 17,652,217
Total number of Units 42,324
Distributable net proceeds per Unit $ 417
</Table>
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This estimate assumes the closing of the sale of the Property occurs as of June
30, 2004 and is based on information known to the General Partner at this time.
Of course, many factors could cause the actual use of proceeds to vary from this
estimate, including delays or unforeseen complications with the closing or
contingent liabilities of the Partnership.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of the sale of the Property may be significant. The
following discussion briefly summarizes the typical material aspects of the
federal income tax consequences of the limited partners that should be
considered in connection with the sale; however, the tax consequences to you
could be materially different for a variety of reasons. The discussion is based
on current law, which is subject to change (possibly with retroactive effect),
and does not consider state, local and foreign income tax aspects of the sale.
For purposes of this tax discussion, references to "I.R.C. Section" are to
sections of the Internal Revenue Code of 1986, as amended. THIS DISCUSSION DOES
NOT ADDRESS SPECIAL CONSIDERATIONS AND RULES APPLICABLE TO LIMITED PARTNERS THAT
ARE TAX-EXEMPT OR FOREIGN ENTITIES.
No ruling will be requested from the Internal Revenue Service on any of the tax
matters discussed herein. The federal income tax consequences to the limited
partners from the sale cannot be predicted with absolute certainty. We cannot
assure that the Internal Revenue Service will not audit or question the
treatment of any item discussed herein.
EACH LIMITED PARTNER SHOULD CONSULT AND MUST RELY UPON HIS, HER, OR ITS OWN TAX
ADVISOR IN ORDER TO UNDERSTAND FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN
INCOME AND ESTATE AND GIFT TAX CONSEQUENCES TO HIM, HER, OR IT ARISING FROM THE
SALE.
TAX CONSEQUENCES IF THE PROPERTY IS SOLD. The Partnership will recognize gain
from the sale of the Property to the extent that the amount the Partnership
realizes from that sale exceeds its adjusted basis in the Property. The
Partnership's amount realized from the sale includes the sum of cash it receives
from the Buyer plus the fair market value of any property it receives other than
money. As the Buyer is paying off the liabilities which encumber the Property at
closing, the Partnership's amount realized includes the amount paid to discharge
these liabilities. Selling expenses of the Partnership, such as brokerage
commissions, legal fees, and title costs, reduce the Partnership's amount
realized. Any gain recognized by the Partnership will be allocated to the
partners, including the limited partners, in accordance with the Partnership
agreement. We estimate that approximately $600 gain will be allocated per unit
to the limited partners. This amount is an estimate based on a number of
assumptions with respect to closing costs discussed
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under "Use of Proceeds". We estimate that the Partnership's aggregate gain
should be approximately $24,506,198 and that this gain should be comprised of
approximately $24,506,198 of unrecaptured I.R.C. Section 1250 gain (see
discussion below).
NOTE: Any gain in excess of "depreciation recapture gain" (discussed below) and
"unrecaptured I.R.C. Section 1250 gain" (discussed below) generally will be
taxed as gain arising from the sale of property used in the partnership's trade
or business under I.R.C. Section 1231 ("I.R.C. Section 1231 gain"). Each limited
partner will be allocated its share of the Partnership's I.R.C. Section 1231
gain. In general, if the combination of all I.R.C. Section 1231 gains and losses
of a particular limited partner for a taxable year results in a net gain, all of
such gains and losses will be characterized as long-term capital gains and
losses. If the combination results in a net loss, all of such gains and losses
will be characterized as ordinary gains and losses. However, notwithstanding the
foregoing, gains from the sale or exchange of I.R.C. Section 1231 property will
be treated as ordinary gains to the extent of a limited partner's unrecaptured
net I.R.C. Section 1231 losses for the five most recent prior years. As a
result, all or a portion of any I.R.C. Section 1231 gain from the sale of the
Partnership's property allocated to a limited partner may be treated as ordinary
income, rather than long-term capital gain, if the limited partner has had net
I.R.C. Section 1231 losses in prior years.
Under I.R.C. Section 1245, gain recognized by the Partnership from the sale of
any of its depreciable or amortizable personal property and certain statutorily
designated real property, i.e., "depreciation recapture gain," is
re-characterized as ordinary income and will be allocated to the partners as
such. The amount of the Partnership's depreciation recapture gain equals the
amount by which the lower of the (i) amount realized or (ii) recomputed basis
(i.e., the property's basis plus all amounts allowed for depreciation) of the
transferred property exceeds that property's adjusted basis. The Partnership
does not anticipate that any amount of gain on the sale should be Section 1245
gain.
Under I.R.C. Section 1250, no portion of the gain recognized by the Partnership
upon the disposition of its residential rental real property generally is
re-characterized as ordinary income because such property is depreciated using
the straight-line method. However, under I.R.C. Section 291 (a)(1), a portion of
a corporation's capital gain from the disposition of residential rental real
property is re-characterized as ordinary income. The portion that is
re-characterized equals 20% of the amount that would have been treated as
ordinary income under I.R.C. Section 1245 if the transferred property were
I.R.C. Section 1245 property (which generally would be all depreciation
deductions previously claimed). Therefore, under I.R.C. Section 291(a)(1),
corporate limited partners of the Partnership may recognize ordinary income upon
a disposition of the Partnership's residential rental real property.
In the case of limited partners of the Partnership that are individuals,
estates, or trusts, the application of I.R.C. Section 1250 will not require
those taxpayers to recognize gain taxable as ordinary income; however, those
limited partners may be allocated gain from the Partnership's sale of the
property that is taxed as "unrecaptured I.R.C. Section 1250 gain." Unrecaptured
I.R.C. section 1250 gain generally is equal to the gain on the sale of real
property that is attributable to straight-line depreciation. The maximum federal
tax rate at which unrecaptured I.R.C. Section 1250 gain is taxed currently is
25%.
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In the case of limited partners that are individuals, trusts, or estates, gain
from the sale of the Partnership's property that is not taxed as ordinary income
or as unrecaptured I.R.C. Section 1250 gain generally is taxed at a current
maximum capital gains tax rate of 15%. Gain from the sale of the Partnership's
property that is allocated to limited partners that are corporations is not
subject to preferential capital gains tax rates.
If a limited partner possesses suspended tax losses, tax credits, or other items
of tax benefit, such items may be used to reduce any tax liability that arises
with respect to any gain resulting from the sale of the Partnership's property
and allocated to that limited partner. The determination of whether a limited
partner possesses suspended tax losses, tax credits, or other items of tax
benefit that may reduce any gain resulting from the sale will depend upon each
limited partner's individual circumstances. Limited partners are urged to
consult with their tax advisors in this regard.
DISTRIBUTIONS OF CASH. A distribution of cash by the Partnership to a limited
partner will be treated as an amount realized from a sale of the limited
partner's interest in the Partnership and will result in taxable gain only to
the extent that the distribution exceeds the limited partner's adjusted tax
basis in his, her, or its partnership interest. Otherwise, distributions will be
tax free, and the adjusted basis of the limited partner's partnership interest
will be decreased, but not below zero. As gain from the sale will increase the
limited partner's tax basis in the limited partner's units, distributions of
cash by the Partnership on account of the sale typically will not result in
taxable gain.
Generally, any gain recognized by a limited partner arising from a cash
distribution by the Partnership will be capital gain. Nevertheless, to the
extent that a portion of that gain is attributable to "unrealized receivables"
of the Partnership, including depreciation recapture, or to certain inventory
items described in I.R.C. Section 751, such gain will be taxed as ordinary
income. The General Partner does not believe that any portion of a limited
partner's gain on the distribution of cash from this sale will be taxed to the
limited partner as ordinary income.
PROCEEDS AVAILABLE FOR DISTRIBUTION TO THE LIMITED PARTNERS FROM THE SALE OF THE
PROPERTY AFTER REPAYMENT OF THE PARTNERSHIP'S DEBTS MAY BE LESS THAN THE GAIN
RECOGNIZED BY THE PARTNERSHIP (AS A RESULT OF THE SALE) THAT IS ALLOCABLE TO THE
PARTNERS, GAIN RECOGNIZED BY THE PARTNERS AS A RESULT OF ANY CASH DISTRIBUTIONS
FROM THE PARTNERSHIP, AND ANY TAX LIABILITY RESULTING FROM THE FOREGOING.
ACCORDINGLY, LIMITED PARTNERS MAY BE REQUIRED TO USE FUNDS FROM SOURCES OTHER
THAN THE PARTNERSHIP IN ORDER TO PAY ANY TAX LIABILITIES THAT MAY ARISE AS A
RESULT OF THE RECOGNITION OF GAIN.
TAX CONSEQUENCES IF THE PROPERTY IS NOT SOLD. THE PROPERTY HAS BEEN
SUBSTANTIALLY OR FULLY DEPRECIATED FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES. THE PARTNERSHIP DOES NOT HAVE RELIABLE ESTIMATES OF WHAT FUTURE
DISTRIBUTIONS FROM THE OPERATION OF THE PROPERTY MAY BE. AS A RESULT, IT IS
POSSIBLE THAT CONTINUED OPERATION OF THE PROPERTY WILL GENERATE TAXABLE INCOME
TO THE LIMITED PARTNERS, SINCE THERE MAY NOT BE ADEQUATE DEPRECIATION AND OTHER
DEDUCTIONS EQUAL TO OR GREATER THAN THE INCOME GENERATED FROM THE PROPERTY. THE
GENERAL PARTNER DOES NOT HAVE RELIABLE ESTIMATES OF FUTURE CASH FLOW FROM THE
PROPERTY. IT IS POSSIBLE THAT THERE WILL NOT BE ANY CASH AVAILABLE FOR
DISTRIBUTION SINCE ALL OR SUBSTANTIALLY ALL OF THE PROPERTY'S CASH FLOW MAY BE
USED TO SERVICE THE PARTNERSHIP'S LIABILITIES. TAX
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LIABILITIES RESULTING FROM ALLOCATION OF INCOME TO LIMITED PARTNERS FROM THE
PARTNERSHIP MAY EXCEED CASH DISTRIBUTIONS BY THE PARTNERSHIP. Accordingly,
limited partners may be required to use funds from sources other than the
Partnership in order to pay any tax liabilities that may arise as a result of
the Partnership's continued operation of the Property. The Partnership also will
continue to incur the administrative costs of operating the Partnership,
including the cost of preparing and filing a partnership tax return. If a
limited partner possesses suspended tax losses, tax credits, or other items of
tax benefit, such items may potentially be used to reduce any tax liability that
arises with respect to any taxable net income as a result of the continued
operation of the Property by the Partnership. Limited partners are urged to
consult their tax advisors in this regard.
NO APPRAISAL RIGHTS
Limited partners are not entitled to dissenters' appraisal rights under
applicable law or the partnership agreement in connection with the sale.
REGULATORY APPROVALS
Other than the filing and distribution of this information statement, no
regulatory approvals are required for the sale.
PLANS AFTER THE SALE
Upon completion of the sale of the Property and after the payment of the
transaction-related costs and other outstanding obligations, the Partnership
will continue to hold and operate its remaining apartment complexes known as
Carriage House Apartments, located in Gaston County, North Carolina, Rocky Creek
Apartments, located in Richmond County, Georgia, and Village Gardens apartments,
located in Larimer County, Colorado. The General Partner is currently planning
to sell the Carriage House Apartments in the fourth quarter of 2004, and will
begin soliciting offers in the third quarter of 2004. The General Partner is
also currently planning to sell the Rocky Creek Apartments in the fourth quarter
of 2004, and will begin soliciting offers in the third quarter of 2004.
Nevertheless, the plans to sell the Carriage House Apartments and the Rocky
Creek Apartments are only plans and such plans may change or be delayed based on
any number of factors.
PARTNERSHIP BUSINESS
The Partnership is a publicly held limited partnership organized under the South
Carolina Limited Partnership Act, as amended, on August 3, 1983. Shelter Realty
VI Corporation, a South Carolina corporation, is the general partner of the
Partnership (the "General Partner"). The General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The partnership agreement provides that the Partnership
is to terminate on December 31, 2023, unless terminated before such date.
The Partnership's primary business is to operate and hold real estate properties
for investment. The Partnership currently continues to own and operate four
apartment properties. See below for a description of the Partnership's
properties.
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The Partnership, through its public offering of limited partnership units, sold
42,324 limited partnership units aggregating $42,324,000. The General Partner
contributed capital in the amount of $100,000 for a .2% interest in the
Partnership. Since its initial offering, the General Partner has not received,
nor are the limited partners required to make, additional capital contributions.
The General Partner intends to maximize the operating results and, ultimately,
the net realizable value of each of the Partnership's properties in order to
achieve the best possible return for the limited partners. Such results may best
be achieved by holding and operating the properties or through property sales or
exchanges, refinancings, debt restructurings or relinquishment of the assets.
The Partnership evaluates each of its holdings periodically to determine the
most appropriate strategy for each of the assets.
The Partnership has no employees. Management and administrative services are
performed by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner provides such property management services.
PARTNERSHIP PROPERTIES
The following table sets forth the Partnership's investments in properties:
<Table>
<Caption>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
-------- ---------------- ----------------- ---
River Reach, Jacksonville, 01/30/1985 Fee ownership, subject to Apartment - 298 units
Florida a first mortgage
Rocky Creek, Augusta, Georgia 6/29/1984 Fee ownership, subject to Apartment - 120 units
a first mortgage
Carriage House, Gastonia, 6/29/1984 Fee ownership, subject to Apartment - 102 units
North Carolina a first mortgage
Village Gardens, Fort 3/1/1985 Fee ownership, subject to Apartment - 141 units
Collins, Colorado first mortgage
</Table>
SUMMARY OF THE RIVER REACH PURCHASE AND SALE AGREEMENT
The following summarizes the material terms and conditions of the Purchase and
Sale Agreement, for the Property.
THE PURCHASED ASSETS
The Seller has agreed to sell to the Buyer all of the Seller's interest in and
to the Property, together with all the buildings and improvements located
thereon and certain associated property.
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EXCLUSIONS FROM THE SALE OF THE PROPERTY
The Property expressly excludes cash or other funds; refunds, rebates or other
claims, or any interest thereon, for periods or events occurring prior to the
closing; utility and similar deposits; insurance or other prepaid items; the
Seller's proprietary books and records; any right, title or interest in or to
the AIMCO Marks; any Buyer's Access computer and/or software; AIMCO Benchmark
Series Books; Connect: Remote Horizon Software; any other software installed on
any computer transferred as part of the sale; equipment leased by the Seller and
the interest of the Seller in any equipment provided to the Property for use,
but not owned or leased by the Seller; or property owned or leased by any tenant
or guest, employee or other person furnishing goods or services to the Property;
or property and equipment owned by the Seller, which in the ordinary course of
business of the Property is not used exclusively for the business, operation or
management of the Property.
ASSUMED LIABILITIES
The Buyer agreed to assume the Seller's liabilities and obligations under the
property contracts and the leases after the closing.
THE EXISTING LOAN
The outstanding principal balance of the existing loan from Federal Home Loan
Mortgage Corporation as of March 31, 2004 was approximately $10,206,000. The
outstanding principal balance of the loan at closing shall be paid out of the
balance of the purchase price due at the closing.
PURCHASE PRICE
The purchase price for the Property is $31,700,000, payable as follows: (a) a
$250,000 deposit upon the execution of the agreement to be held in escrow until
the closing, which $50,000 of such amount is immediately non-refundable except
in the event that (i) Seller is unable to provide clear, insurable title to the
Property, (ii) a Phase I environmental study of the Property indicates that a
Phase II environmental study is recommended, and either (A) Seller does not
permit Buyer to perform a Phase II environmental study, or (B) if a Phase II
environmental study is permitted and performed, the results of such Phase II
environmental study are of a type reasonably unacceptable to a conventional
lender, (iii) Buyer elects to terminate the agreement because of a Seller
default, or (iv) Buyer elects to terminate the agreement because any material
part of the Property is acquired by any governmental agency by the powers of
eminent domain, (b) an additional $500,000 deposit upon the expiration of the
Buyer's due diligence period for its examination of the Property to be held in
escrow until the closing, and (c) the balance of the purchase price at the
closing. The amount of the then-outstanding principal balance of the loan shall
be paid from the proceeds of the purchase price due at the closing and will
reduce the cash at closing payable to the Seller. The $250,000 initial deposit,
less the $50,000 non-refundable portion of the initial deposit, shall be
refundable in the event that the Buyer terminates the agreement during the
Buyer's due diligence period. If the Buyer does not terminate the agreement, all
of the initial deposit that is not already non-refundable, along with the second
$500,000 deposit, shall become non-refundable upon the expiration of the Buyer's
due diligence
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period; provided, however, that if the agreement is terminated due to a default
of or breach by the Seller of the agreement and the Buyer chooses to seek
damages in lieu of specific performance, then both deposits, including the
$50,000 non-refundable portion of the initial deposit shall be returned to the
Buyer.
CLOSING
The sale of the Property will take place on or before 30 days following the
expiration of the Buyer's due diligence period. The Seller may extend the
closing (i) for up to 30 days to satisfy a condition to be satisfied by the
Seller, (ii) such later date as is mutually acceptable to the Seller and the
Buyer, or (iii) for up to 60 days in connection with finalizing the mailing of
this information statement.
REPRESENTATIONS AND WARRANTIES
The agreement contains the customary seller representations and warranties by
the Seller, including, without limitation, representations regarding corporate
existence and qualification; corporate authority; non-contravention of existing
contracts; possessory interest in the Property; litigation; governmental
violations; defaults under property contracts; and accuracy of operating
reports.
The agreement also contains customary Buyer representations and warranties by
the Buyer, including, without limitation, representations and warranties
regarding corporate existence and qualification; corporate authority;
non-contravention of existing contracts; litigation; and non-reliance upon the
Seller's representations and warranties other than those in the agreement.
COVENANTS
The Seller has agreed that from the date of the agreement through the closing,
it will continue to operate the Property in the ordinary course of business and
subject to the following covenants:
o the Seller will not voluntarily create or cause any lien or
encumbrance to attach to the Property between the date of the
agreement and the closing date, without the prior consent of
the Buyer.
o The Seller may enter into new contracts or leases, renew
existing leases or modify, terminate or accept the surrender
or forfeiture of any of the leases, modify any contracts, or
institute and prosecute any available remedies for default
under any such leases or contracts without first obtaining the
written consent of the Buyer, as long as any such new or
modified contracts or any new or renewed leases are in the
ordinary course of business and do not have a term in excess
of one year, without the Buyer's prior written consent.
Additionally, in the case of new contracts, such contracts
must be terminable on thirty (30) days notice.
CONDITIONS
The Seller's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Seller:
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o All of the documents and funds required to be delivered by the
Buyer to the Seller at the closing shall have been delivered;
o Each of the representations, warranties and covenants of the
Buyer shall be true in all material respects as of the
closing;
o The Buyer shall have complied with, fulfilled and performed in
all material respects each of the covenants, terms and
conditions to be complied with, fulfilled or performed by the
Buyer; and
o The Seller shall have received all consents, documentation and
approvals necessary to consummate and facilitate the sale.
The Buyer's obligation to complete the sale of the Property is subject to
satisfaction of the following conditions on or before the closing unless waived
in whole or in part by the Buyer:
o All of the documents required to be delivered by the Seller to
the Buyer at the closing shall have been delivered;
o Each of the representations, warranties and covenants of the
Seller shall be true in all material respects as of the
closing;
o The Seller shall have complied with, fulfilled and performed
in all material respects each of the covenants, terms and
conditions to be complied with, fulfilled or performed by the
Seller; and
o Neither the Seller nor the Seller's general partner shall be a
debtor in any bankruptcy proceeding nor shall have been in the
last 6 months a debtor in any bankruptcy proceeding.
TERMINATION AND DEFAULT
During the Buyer's due diligence period for its examination of the Property, the
Buyer may terminate the agreement for any reason or no reason. If the Buyer
terminates the agreement during the Buyer's due diligence period, then the
initial $250,000 initial deposit, less the $50,000 non-refundable portion of the
initial deposit, shall be returned to the Buyer.
The agreement may be terminated at any time after the expiration of the Buyer's
due diligence period through the closing:
o By the Seller, if the Buyer defaults in its obligations
hereunder to (a) deliver any of the deposits, (b) deliver to
the Seller the required closing deliveries specified under the
agreement, or (c) deliver the purchase price at the time
required by the agreement and close on the purchase of the
Property on the closing. The Seller may also terminate the
agreement if the Buyer defaults in any of its representations,
warranties or obligations; and
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o By the Buyer, if the Seller defaults in its representations,
warranties, covenants, or obligations under the agreement,
including selling the Property.
If the Seller terminates the agreement due to a default of or breach by the
Buyer, then the Seller is entitled to keep all the Buyer's deposits as
liquidated damages. If the Buyer terminates the agreement due to a default or
breach of the Seller, then the Buyer may choose to either (i) recover the
Buyer's deposits and recover up to $100,000 as its sole recoverable damages, or
(ii) seek specific performance for the conveyance of the Property to the Buyer.
EXPENSES AND CLOSING COSTS
The Seller shall pay the base premium for the title policy and title search fee,
any transfer taxes, deed documentary stamps, the cost of recording any
instruments required to discharge any liens or encumbrances against the
Property, and one-half of the customary closing costs of the escrow agent for
the sale of the Property. The Buyer shall pay any sales, use, gross receipts,
mortgage, or similar taxes, any premiums or fees required to be paid by the
Buyer with respect to its title policy for the Property, and one-half of the
customary closing costs of the escrow agent for the sale of the Property.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
Only one information statement is being delivered to multiple limited partners
sharing an address unless the Partnership has received contrary instructions
from one or more of the limited partners.
The Partnership will undertake to deliver promptly upon written or oral request
a separate copy of this information statement to a limited partner at a shared
address to which the Partnership delivered a single copy of the information
statement. If a limited partner wishes to notify the Partnership that he or she
wishes to receive a separate copy of this information statement, the limited
partner may contact the Partnership as follows:
By mail: Shelter Properties VI Limited Partnership
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
By telephone: (864) 239-1000
A limited partner may also use the above telephone number or mailing address to
notify the Partnership that limited partners sharing an address request delivery
of a single copy of this information statement if they are receiving multiple
copies of information statements.
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THE INFORMATION AGENT IS:
THE ALTMAN GROUP, INC.
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By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071 Lyndhurst, New Jersey 07071
(800) 217-9608 (800) 217-9608 (800) 217-9608
By Facsimile: For Information please call:
(201) 460-0050 TOLL FREE (800) 217-9608
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