UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] 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): $3,500,000, based on contract price
for property being sold.
(4) Proposed maximum aggregate value of transaction: $3,500,000, based on
contract price for property being sold.
(5) Total fee paid: $411.95
[X] 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 Carriage House, located in
Gastonia, North Carolina ("Carriage House" or the "Property"). Carriage House
will be sold to Juniper Investment Group, Ltd., a Texas limited partnership (the
"Buyer"), an unaffiliated third party, for $3,500,000 cash. The General Partner
has conflicts of interest in the sale of the Property as described in greater
detail herein. We estimate that there will be approximately a total of
$1,283,399, or $30 per limited partnership unit, to distribute to the limited
partners assuming the sale of Carriage House occurred on July 31, 2005. 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 AUGUST 29, 2005.
This information statement is being mailed on or about August 31, 2005 to all
holders at the close of business on August 9, 2005 of the limited partnership
units of Shelter Properties VI Limited Partnership, a South Carolina limited
partnership.
SUMMARY OF THE TRANSACTION
The following is a summary of the sale transaction for the Property:
- The Buyer or an affiliate of the Buyer will acquire Carriage House
for $3,500,000 cash pursuant to a purchase and sale agreement dated
as of May 19, 2005, as amended by the First Amendment to Purchase
and Sale Contract executed as of June 7, 2005, as further amended by
the Second Amendment to Purchase and Sale Contract executed as of
July 7, 2005, as further amended by the Third Amendment to Purchase
and Sale Contract executed as of July 26, 2005 between the Buyer and
the Seller and as further amended by the Partnership's written
notice to Buyer in its letter dated August 25, 2005, exercising the
Partnership's unilateral right to extend the date of closing (the
"Purchase and Sale Agreement").
- The completion of the sale is scheduled to occur on or before
September 26, 2005, subject to certain extension options.
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A more detailed summary of the sale transaction for the Property can be found on
page 14 of this information statement under the heading entitled "Summary of the
Carriage House Purchase and Sale Agreement".
Upon the completion of the sale of Carriage House, the Partnership will
calculate the net distribution per partnership unit in the following manner:
SOURCES AND USES INCLUDE:
Gross purchase price: $ 3,500,000
Plus: Cash and cash equivalents 13,110
Plus: Other Partnership assets 245,207
Less: Mortgage debt, including accrued interest (1,782,262)
Less: Loans from Partners (53,806)
Less: Accounts payable, accrued expenses and other liabilities (163,165)
Less: Reserves for Contingencies (105,000)
Less: Non-resident withholding taxes (251,684)
Less: Closing costs/sales commissions, including transfer taxes (119,000)
-----------
TOTAL $ 1,283,399
Net proceeds distributable to all Partners $ 1,283,399
Percentage of proceeds allocable to Limited Partners 100%
-----------
Net proceeds distributable to Limited Partners $ 1,283,399
Total number of Units 42,324
Distributable net proceeds per Unit $ 30
Upon the completion of the sale of Carriage House, the Partnership will continue
to hold and operate its remaining apartment complexes known as Rocky Creek
Apartments, located in Richmond County, Georgia, and Village Gardens apartments,
located in Larimer County, Colorado. The General Partner has listed Rocky Creek
Apartments for sale (with no specified price) and it is possible that the
property may sell within one year, although no assurance can be given that the
property will actually sell within that time frame or at all.
REASONS FOR THE SALES OF THE PROPERTIES
The General Partner has determined that the sale of the Property, and the
potential sale of the Rocky Creek Apartments later in 2005, are in the best
interest of the limited partners after considering the following:
- The Property was completed in 1971 and the Rocky Creek Apartments
was completed in 1979, and given their age, the Property and the
Rocky Creek Apartments probably will require substantial capital
expenditures in the future for which existing reserves will not be
adequate.
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- 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. Affiliates of the General Partner
have sold other properties to the Buyer or its affiliates in the past two years.
The General Partner or its affiliates have negotiated with the Buyer or its
affiliates in the past two years to sell other properties, including the
properties described on page 21 of this information statement under the heading
"Links to Other Property Sales." In addition to those properties, an affiliate
of the General Partner has agreed to sell to Buyer a property in Texas known as
Apple Creek for $4,500,000. The sale of Apple Creek is expected to occur in
2005. The Buyer is in the business of developing, operating, marketing and
selling residential communities. The Buyer or its affiliates have informed us
that they plan to operate the Property following the sale. The Buyer has an
office located at 6750 West Loop South, Suite 850, Bellaire, Texas 77401. The
phone number for the Buyer is 713-972-9302.
THE PROPERTY
The Partnership has owned and operated Carriage House, a 102-unit apartment
complex located in Gastonia, North Carolina, since June 29, 1984. There is a
first mortgage loan on the Property with an unpaid principal balance of
approximately $1,782,262.00 at July 31, 2005. The loan encumbering the Property
is subject to a prepayment penalty that will be paid out of the sale proceeds.
Litigation
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
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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 captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. 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 28, 2002, the trial
court granted defendants motion to strike the complaint. Plaintiffs took an
appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. 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 (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.
The 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.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the General Partner, are defendants in a lawsuit alleging that
they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay
maintenance workers overtime for all hours worked in excess of forty per week.
The complaint attempts to bring a collective action
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under the FLSA and seeks to certify state subclasses in California, Maryland,
and the District of Columbia. Specifically, the plaintiffs contend that AIMCO
Properties L.P. and NHP Management Company failed to compensate maintenance
workers for time that they were required to be "on-call." Additionally, the
complaint alleges AIMCO Properties L.P. and NHP Management Company failed to
comply with the FLSA in compensating maintenance workers for time that they
worked in excess of 40 hours in a week. On June 23, 2005 the Court conditionally
certified the collective action on both the on-call and overtime issues. The
Court ruling allows plaintiffs to provide notice of the collective action to all
non-exempt maintenance workers from August 7, 2000 through the present. Those
employees will have the opportunity to opt-in to the collective action.
Defendants have asked the Court to reconsider its ruling or in the alternative
certify the ruling for appeal on that issue. After the notice goes out,
defendants will have the opportunity to move to decertify the collective action.
The Court further denied plaintiffs' Motion for Certification of the state
subclass. Although the outcome of any litigation is uncertain, AIMCO Properties,
L.P. does not believe that the ultimate outcome will have a material adverse
effect on its consolidated financial condition or results of operations.
Similarly, the General Partner does not believe that the ultimate outcome will
have a material adverse effect on the Partnership's consolidated financial
condition or results of operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in connection therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its properties,
the Partnership could potentially be liable for environmental liabilities or
costs associated with its properties.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold
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and for personal injury claims related to mold exposure. Affiliates of the
General Partner have implemented a national policy and procedures to prevent or
eliminate mold from its properties and the General Partner believes that these
measures will minimize the effects that mold could have on residents. To date,
the Partnership has not incurred any material costs or liabilities relating to
claims of mold exposure or to abate mold conditions. Because the law regarding
mold is unsettled and subject to change the General Partner can make no
assurance that liabilities resulting from the presence of or exposure to mold
will not have a material adverse effect on the Partnership's consolidated
financial condition or results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions, and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
General Partner does not believe that the ultimate outcome will have a material
adverse effect on the Partnership's consolidated financial condition or results
of operations.
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 August 9, 2005, the Partnership had approximately 1,472 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 28,435 limited
partnership units or 67.18% of the outstanding limited partnership units at
August 1, 2005. On August 10, 2005, the holders of these 67.18% of the
outstanding limited partnership units gave their written consent approving and
adopting the sale. The following limited partners executed a written consent:
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NAME AND ADDRESS NUMBER OF LIMITED
OF BENEFICIAL OWNER PARTNERSHIP UNITS PERCENT OF CLASS
AIMCO IPLP, L.P.
55 Beattie Place, Greenville, SC 29602 11,547 27.28%
Cooper River Properties, L.L.C.
55 Beattie Place, Greenville, SC 29602 3,364 7.95%
AIMCO Properties, L.P.
Stanford Place 3, 4582 S. Ulster St. Parkway,
Suite 1100, Denver, CO 80237 13,524 31.95%
TOTAL: 28,435 67.18%
As a result, the holders of a majority of the limited partnership units have
approved the sale of the 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 one 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 the
Carriage House Purchase and Sale Agreement" on page 14.
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.
Pursuant to the Partnership Agreement and in connection with the sale of
Foxfire/Barcelona Village during 2000, Nottingham Square Apartments in December
2002 and River Reach Apartments in August 2004, the General Partner is entitled
to a commission of up to 1% for its assistance in the sales. 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 $658,000 have been accrued but have not been
paid. At this time, the General Partner believes that the cumulative 7% return
for the limited partners will not be met. Therefore, we do not anticipate the
accrual or payment of the commission on the sale of Carriage House.
Apartment Investment and Management Company ("AIMCO"), an affiliate of the
General Partner, has varying ownership interests in each of the nine properties
being sold to Buyer. See page 21 of this information statement under the heading
"Links to Other Property Sales." Two of the nine properties being sold are 100%
owned by AIMCO while AIMCO's ownership interest in Carriage House is
approximately 67.51%. For purposes of allocating the total disposition pool
purchase price being paid by Buyer to the various properties within the
disposition pool, AIMCO is relying on the Buyer's allocations, which AIMCO has
not influenced and which AIMCO and the General Partner believe to reflect fair
market value. The purchase price allocations may be changed by Buyer before
closing, based on third-party appraisals obtained by Buyer or Buyer's lenders or
as a result of further negotiations of the total purchase price to be paid by
the Buyer for the disposition pool. The allocation to the Carriage House
property set forth herein may be increased or decreased to reflect any variance
from appraisals obtained by Buyer or Buyer's lender, or as a result of a change
in the pool purchase price resulting from further negotiations.
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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):
Gross purchase price: $ 3,500,000
Plus: Cash and cash equivalents 13,110
Plus: Other Partnership assets 245,207
Less: Mortgage debt, including accrued interest (1,782,262)
Less: Prepayment penalty (53,806)
Less: Accounts payable, accrued expenses and other liabilities (163,165)
Less: Reserves for contingencies (105,000)
Less: Non-resident withholding taxes (251,684)
Less: Closing costs/sales commissions (119,000)
-----------
TOTAL $ 1,283,399
Net proceeds distributable to all Partners $ 1,283,399
Percentage of proceeds allocable to Limited Partners
100%
-----------
Net proceeds distributable to Limited Partners $ 1,283,399
Total number of Units 42,324
Distributable net proceeds per Unit $ 30
This estimate assumes the closing of the sale of the Property occurred as of
July 31, 2005 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
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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 $72 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 under "Use of Proceeds". We
estimate that the Partnership's aggregate gain should be approximately $72 and
that this gain should be comprised of approximately $72 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.
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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%.
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
11
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 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.
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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
Rocky Creek Apartments, located in Richmond County, Georgia, and Village Gardens
apartments, located in Larimer County, Colorado. The General Partner has listed
Rocky Creek for sale (with no specified price), which may sell within one year,
although no assurance can be given that the property will actually sell within
that time frame or at all.
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
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 three
apartment properties. See below for a description of the Partnership's
properties.
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.
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PARTNERSHIP PROPERTIES
The following table sets forth the Partnership's investments in properties:
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
-------- ---------------- ----------------- ---
Rocky Creek, Augusta, 6/29/1984 Fee ownership, subject Apartment - 120 units
Georgia to a first mortgage
Carriage House, Gastonia, 6/29/1984 Fee ownership, subject Apartment - 102 units
North Carolina to a first mortgage
Village Gardens, Fort 3/1/1985 Fee ownership, subject Apartment - 141 units
Collins, Colorado to a first mortgage
SUMMARY OF THE CARRIAGE HOUSE PURCHASE AND SALE AGREEMENT
Purchase and Sale
The Partnership agreed to sell the Property to the Purchaser on the terms
described below. The Property is being sold as part of a pool of nine properties
as is further described below under the heading "Link to Other Properties."
Purchase Price and Deposit
The gross purchase price for the Property is $3,500,000.00 (the "Purchase
Price"), to be paid as follows:
(a) The Purchase Agreement was executed on May 19, 2005 (the "Effective
Date"), and on May 23, 2005, the Purchaser delivered to Stewart Title Guaranty
Company (the "Escrow Agent" or the "Title Insurer") a deposit (the "Initial
Deposit") of $21,067.00. The First Amendment to Purchase and Sale Contract was
executed as of June 7, 2005. The Second Amendment to the Purchase and Sale
Contract was executed as of July 7, 2005. The Third Amendment to Purchase and
Sale Contract was executed as of July 26, 2005 and the entire Initial Deposit
became nonrefundable. An additional deposit was made to the Initial Deposit in
the amount of $21,067.00 (together with the Initial Deposit referred to as the
"Deposit") on August 12, 2005. The Purchase Agreement was further amended by the
Partnership's written notice to Buyer in its letter dated August 25, 2005,
exercising its unilateral right to extend the date of closing.
(b) At the consummation of the sale of the Property (the "Closing"), the
balance of the Purchase Price must be paid by the Purchaser to the Escrow Agent
on the date of Closing (the "Closing Date"). The Escrow Agent will hold the
Deposit and deliver it to the party entitled to it under the Purchase Agreement.
The Escrow Agent will hold the Deposit until the earlier occurrence of (i) the
Closing Date, at which time the Deposit will be applied against the Purchase
Price, or (ii) the date on which Escrow Agent is otherwise authorized to
disburse the Deposit. If the Deposit has not been released earlier and either
party makes a written demand upon the Escrow Agent for payment of the Deposit,
the Escrow Agent must give written notice
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to the other party of such demand. If the Escrow Agent does not receive a
written objection from the other party to the proposed payment within 10
business days after the giving of such notice, the Escrow Agent is authorized to
make payment (subject to the Purchaser's obligation to return information
provided to the Purchaser). If the Escrow Agent does receive a written objection
within this 10 business day period, the Escrow Agent must continue to hold the
Deposit until otherwise directed by written instructions from the parties or a
final judgment or arbitrator's decision. However, the Escrow Agent has the right
at any time to deposit the Deposit with a court of competent jurisdiction in the
state in which the Property is located. Upon that deposit, the Escrow Agent will
be relieved and discharged of all further obligations and responsibilities. The
Escrow Agent is acting solely as a stakeholder, is not the agent of either of
the parties, and is not responsible for any act or omission on its part unless
taken or suffered in bad faith in willful disregard of the Purchase Agreement or
involving gross negligence.
Feasibility Period
During the 85 day period after the Effective Date (such period being referred to
as the "Feasibility Period"), Purchaser and its agents, contractors, engineers,
surveyors, attorneys, and employees (collectively, "Consultants") had the right
to enter the Property to, among other things, conduct customary studies, tests,
examinations, inquiries, and inspections, or investigations (collectively, the
"Inspections") concerning the Property, to confirm any and all matters which
Purchaser reasonably desired to confirm with respect to the Property, and to
confirm the suitability of the Property for Purchaser's intended use of the
Property. If the results appeared unsatisfactory to Purchaser for any reason or
if Purchaser elected not to proceed with the transaction for any other reason in
its sole and absolute discretion, then Purchaser has the right to terminate the
Purchase Agreement on or before the date the Feasibility Period expires by
notice to the Partnership and the Escrow Agent. If Purchaser so terminates, the
Escrow Agent will be required to deliver the $21,067.00 nonrefundable portion of
the Deposit to the Partnership and will be required to return the remainder of
the Deposit to Purchaser (subject to Purchaser's obligation to return all
information provided to Purchaser). If the Purchaser does not terminate, the
Purchaser is required to make an addition to the Deposit in the amount of
$21,067.00 and the entire Deposit becomes non-refundable except as otherwise
provided in the Purchase Agreement.
Conduct of Investigation
Purchaser could not permit any liens to attach to the Property by reason of the
performance of any work or the purchase of any materials by Purchaser or any
other party in connection with any Inspections conducted. Purchaser was required
to take all reasonable actions to ensure that all actions taken in connection
with the investigations and inspections of the Property, and all equipment,
materials and substances generated, used or brought onto the Property did not
pose a material threat to the safety of persons or the environment and did not
damage the Property. Purchaser was required to give notice to the Partnership a
reasonable time prior to entry onto the Property, deliver proof of insurance
coverage to the Partnership and permit the Partnership to have a representative
present during all Inspections. The Partnership had the right, without
limitation, to disapprove any and all Inspections that, in the Partnership's
reasonable judgment, could result in any injury to the Property or breach of any
agreement, or expose the Partnership
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to any liability, costs, liens or violations of applicable law, or otherwise
adversely affect the Property or the Partnership's interest therein.
Purchaser has indemnified and will defend the Partnership from and against any
and all claims, damages, costs and liability arising from or related to
Purchaser's or its Consultant's entry onto the Property, and any Inspections or
other matters performed by Purchaser with respect to the Property. Purchaser has
agreed to restore the Property, at its sole cost and expense, to the same
condition existing immediately prior to its Inspection. Purchaser must maintain
and cause its Consultants to maintain casualty insurance and comprehensive
public liability insurance with coverage of not less than $1,000,000.00 per
occurrence and $3,000,000.00 in the aggregate for bodily injury, death and
property damage.
Property Materials
Within 10 days after the Effective Date, and to the extent in the Partnership's
possession or reasonable control, the Partnership agreed to make certain
Property-related documents (the "Materials") available for review and copying
by Purchaser at Purchaser's sole cost and expense. If the Purchase Agreement is
terminated for any reason, Purchaser must, within 5 calendar days, return all
Materials to the Partnership.
Property Contracts
On or before the expiration of the Feasibility Period, Purchaser is permitted to
deliver written notice to the Partnership specifying any maintenance, service or
similar contract which relate to the ownership, maintenance, construction or
repair and or operation of the Property and are cancelable on 30 days' or
shorter notice without penalty which Purchaser does not desire to assume (the
"Terminated Contracts"). To the extent that as of Closing any of the Terminated
Contracts have not yet been terminated, Purchaser will assume the obligations of
such Terminated Contracts after Closing until the cancellation becomes
effective.
Title Documents
The Partnership must promptly secure a standard form commitment for title
insurance ("Title Commitment") for the Property in an amount equal to the
Purchase Price from Title Insurer for an owner's title insurance policy (the
"Title Policy") on the most recent standard American Land Title Association
form, together with copies of all instruments identified as exceptions (together
with the Title Commitment, the "Title Documents"). Purchaser is solely
responsible for payment of all costs relating to procurement of the Title
Commitment and any owner's title insurance policy.
Survey
The Partnership, at the Partnership's cost and expense, caused a survey for the
Property ("Survey") to be prepared. The Purchaser is responsible for any
additional costs related to the Survey including, without limitation, costs
related to any update of the Survey.
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Environmental Report
Purchaser, at Purchaser's sole cost and expense, may cause to be prepared an
environmental report for the Property ("Environmental Report").
Permitted Exceptions
The Deed delivered pursuant to the Purchase Agreement will be subject to
customary permitted exceptions.
Existing Mortgage Loan
Purchaser agreed that, at the Closing, all other amounts due and owing to the
Partnership's existing mortgage lender will be paid in full.
Closing Date
The Third Amendment to Purchase and Sale Contract amended the Closing Date to
occur on or before August 31, 2005. The Partnership has the option to extend the
Closing Date up to 30 days to satisfy any condition to Closing or resolve any
other issues precluding Closing or to such later date as is mutually acceptable
to the Partnership and Purchaser.
Closing Prorations and Adjustments
All normal and customarily proratable items will be prorated as of the Closing
Date.
Closing Costs
Purchaser must pay any sales, use and excise taxes and recording costs with
respect to Closing except the Partnership must any transfer taxes at Closing.
The Partnership and Purchaser will share equally in the costs of the escrow fees
of the Title Insurer, but not any other of Title Insurer's fees and charges. All
closing costs and fees other than those allocated in the Purchase Agreement will
be paid by Purchaser and/or the Partnership in accordance with the custom of the
city and state in which the Property is located. As disclosed more fully under
"Interest of Certain Persons in the Sale," the General Partner does not expect
to earn a commission on the sale of the Property.
Post Closing Adjustments
In general, and except as provided in the Purchase Agreement, the Partnership
will be entitled to all income, and will pay all expenses, relating to the
operation of the Property for the period prior to the Closing Date and Purchaser
will be entitled to all income, and will pay all expenses, relating to the
operation of the Property for the period commencing on and after the Closing
Date. Purchaser or the Partnership may request that Purchaser and the
Partnership undertake to re-adjust any prorated item, but neither party has any
obligation to re-adjust any items after the expiration of sixty days after
Closing.
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Closing Documents
Each of the Partnership and the Purchaser must deliver closing documents
customary for transactions of this kind at Closing.
Partnership Representations and Warranties
The Partnership has made customary representations and warranties, and they
survive Closing for a period of 6 months (the "Survival Period"). The
Partnership has no liability after the Survival Period except to the extent that
Purchaser has requested arbitration against the Partnership during the Survival
Period for a misrepresentation. The Partnership's liability for
misrepresentations is capped at $50,000.00.
Purchaser Representations and Warranties
The Partnership has made customary representations and warranties, and they
survive Closing until the expiration of the applicable statute of limitations.
Pre-Closing Operations
During the period of time from the Effective Date to the Closing Date, any new
property contracts or new or renewed tenant leases cannot have a term in excess
of 1 year and which are not cancelable on 30 days' or shorter notice without
penalty without the prior written consent of Purchaser, which consent cannot be
unreasonably withheld, conditioned or delayed. In addition, the Partnership must
operate the Property after the Effective Date in the ordinary course of
business, and except as necessary in the Partnership's sole discretion to
address any life or safety issue at the Property. The Partnership cannot make
any material alterations to the Property or remove any material fixtures or
tangible personal property without the prior written consent of Purchaser which
consent cannot be unreasonably withheld, denied or delayed.
Purchaser's Conditions to Closing
Purchaser's obligation to close is subject to the fulfillment of the following
conditions precedent:
(a) All of the documents required to be delivered by the Partnership to
Purchaser at the Closing have been delivered.
(b) Each of the Partnership's representations and warranties must be true
in all material respects as of the Closing Date.
(c) The Partnership must 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 Partnership under the Purchase Agreement.
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(d) Neither the Partnership nor any of the Partnership's general partners
shall be a debtor in any bankruptcy proceeding nor shall have been in the last
six months a debtor in any bankruptcy proceeding.
The Partnership's Conditions to Closing
The Partnership's obligation to close is subject to the following conditions
precedent:
(a) All of the documents and funds required to be delivered by Purchaser
to the Partnership at the Closing pursuant to the terms and conditions of the
Purchaser Agreement have been delivered.
(b) Each of the representations, warranties and covenants of Purchaser are
true in all material respects as of the Closing Date.
(c) Purchaser has complied with, fulfilled and performed in all material
respects each of the covenants, terms and conditions to be complied with,
fulfilled or performed by Purchaser.
(d) The Partnership has received all consents and approvals to the
consummation of the transactions contemplated by the Purchase Agreement (i) of
the Partnership's partners, (ii) that are required by law, or (iii) that are
required by the partnership agreement, as amended, governing the Partnership.
Brokers
The Partnership disclosed to Purchaser that it used Holliday Fenoglio Fowler,
L.P. as its real estate broker in connection with the Purchase Agreement.
Purchaser represented and warranted to the Partnership that it has not utilized
the services of any real estate broker, sales person or finder in connection
with the Purchase Agreement. The Partnership and Purchaser each agreed to
indemnify, hold harmless, and, if requested in the sole and absolute discretion
of the indemnitee, defend (with counsel approved by the indemnitee) the other
party from and against all losses relating to brokerage commissions and finder's
fees arising from or attributable to the acts or omissions of the indemnifying
party.
Purchaser Default
If Purchaser terminates the Purchase Agreement or materially defaults in its
obligations under the Purchase Agreement on or prior to the Closing Date, and
such default is not cured by the Closing Date, and consummation of the Closing
does not occur by reason of such termination or material default by Purchaser,
the Partnership and Purchaser agree that the reasonable estimate of the total
net detriment that the Partnership would suffer in the event that Purchaser
terminates the Purchase Agreement or materially defaults under the Purchase
Agreement is and will be, and the Partnership's sole remedy will be, the right
to receive from the Title Insurer and retain the full amount of the Deposit.
Notwithstanding the foregoing, upon the occurrence of an event of default other
than the failure of Purchaser to deliver the Deposit or to close in a timely
basis in accordance with the Purchase Agreement, the Partnership will provide
Purchaser with notice
19
specifying the default and Purchaser will have 10 days from its receipt of such
notice to cure such default.
Partnership Default
If the Partnership, prior to the Closing, defaults in its representations,
warranties, covenants, or obligations under the Purchase Agreement, including to
sell the Property as required by the Purchase Agreement and such default
continues for more than 10 days after written notice from Purchaser, then, at
Purchaser's election and as Purchaser's sole and exclusive remedy, the Purchase
Agreement will terminate, and all payments and things of value, including the
Deposit, provided by Purchaser will be returned to Purchaser (subject to
Purchaser's obligation to return all information provided to Purchaser) and
Purchaser may recover, as its sole recoverable damages (but without limiting its
right to receive a refund of the Deposit), its direct and actual out-of-pocket
expenses and costs (documented by paid invoices to third parties) in connection
with this transaction, not to exceed $25,000.00 in aggregate.
Casualty
The risk of loss of damage to the Property by reason of any insured or uninsured
casualty during the period through and including the Closing Date will be borne
by the Partnership. In the event of any "material damage" to or destruction of
the Property or any portion thereof, Purchaser may, at is option, by written
notice to the Partnership within three Business Days after Purchaser is notified
of such material damage or destruction: (i) unilaterally terminate the Purchase
Agreement except the surviving obligations will survive and the Deposit will be
immediately returned to Purchaser; or (ii) proceed under the Purchase Agreement
with no reduction in Purchase Price, receive any insurance proceeds due the
Partnership as a result of such damage or destruction, together with the amount
of any deductible with respect to such insurance proceeds, and assume
responsibility for repair of the Property. If the Property is not materially
damaged, then Purchaser will not have the right to terminate the Purchase
Agreement, but all insurance proceeds, together with the amount of any
deductible with respect to such insurance proceeds, will be paid or assigned to
Purchaser and Purchaser will assume responsibility for such repair. "Material
damage" means damages reasonably estimated to exceed $250,000.00 to repair.
Condemnation
If all or any part of the Property is (or previously has been) acquired at, or
is about to be acquired, by any governmental agency by the powers of eminent
domain or transfer in lieu thereof, in each case as of Closing (or if at such
time there is any notice of any such acquisition or intent to acquire by any
such governmental agency), Purchaser has the right, at Purchaser's option, to
terminate the Purchase Agreement by giving written notice to the Partnership
with three Business Days of Purchaser's receipt from the Partnership of written
notice of the occurrence of such event and recover the Deposit, or to settle in
accordance with the terms of the Purchase Agreement for the full Purchase Price
and receive the full benefit of any condemnation award.
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Assignability
The Purchaser cannot assign the Purchase Agreement any party without first
obtaining the prior written approval of the Partnership; provided, however,
Purchaser may assign the Purchase Agreement prior to Closing to a partnership or
limited liability company affiliated with Purchaser and Purchaser is not
released from its liability under the Purchase Agreement. There is no limitation
upon the Partnership's right to assign the Purchase Agreement.
Governing Law and Venue
The laws of North Carolina govern the validity, construction, enforcement, and
interpretation of the Purchase Agreement. All claims, disputes and other matters
in question arising out of or relating to the Purchase Agreement must be decided
by proceedings instituted and litigated in a court of competent jurisdiction in
that state, and the parties expressly consented to the venue and jurisdiction of
such court.
Amendments
The Purchase Agreement cannot be amended, altered, changed, modified,
supplemented or rescinded in any manner except by a written contract executed by
the party against whom enforcement is sought.
No Personal Liability of Officers, Trustees or Directors of the Partnership's
General Partners
Purchaser agreed that no individual officer, trustee, director or representative
of the general partners of the Partnership will have any personal liability
under the Purchase Agreement or any document executed in connection with the
transactions contemplated by the Purchase Agreement.
Consent Agreement
Testing has been performed at the Property with respect to lead-based paint. Law
Engineering and Environmental Services, Inc. performed the Testing by surveys
conducted July 11, 2000 to July 21, 2000 and by Certificate dated November 22,
2002 have determined the Property to be "lead-based paint free" housing. The
Property has been certified as free of (a) lead based hazards, (b) dust lead
hazards and (c) soil lead hazards. Because the Property has been certified as
free of (x) lead based hazards, (y) dust lead hazards and (z) soil lead hazards,
the Partnership is not required under the Consent Agreement by and among the
United States Environmental Protection Agency (executed December 19, 2001), the
United States Department of Housing and Urban Development (executed January 2,
2002), and Apartment Investment and Management Company (executed December 18,
2001) to remediate or abate any lead-based paint condition at the Property prior
to the Closing.
Links to Other Property Sales
Under the terms of the Purchase Agreement, the Purchaser's obligation to
purchase the Property is conditioned upon, among other things, the closings of
the sale of certain other properties that
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are owned by affiliates of the General Partner of the Partnership. These other
property sales are similarly conditioned upon the closing of the Sale. These
other property sales including the proposed sale are summarized in the table
below. There can be no assurance that any of these other property sales can be
simultaneously closed with the Sale or that we will close the Sale if any of
these other property sales cannot close simultaneously with the Sale.
Base
Property Buyer Seller Purchase Price
-------- ----- ------ --------------
Carriage House, Gastonia, In all cases, Juniper Shelter Properties VI $3,500,000.00
NC Investment Group, Ltd., Limited Partnership, a
a Texas limited South Carolina limited
partnership partnership
Glen Hollow, Charlotte, Glen Hollow Limited $ 8,900,000.00
NC Partnership, an Illinois
limited partnership
Misty Woods, Charlotte, Misty Woods CPF 19 $ 6,550,000.00
NC Limited Partnership, a
Delaware limited
partnership
Oaks at Edgemont, Trianon, Ltd., a North $ 4,130,000.00
Gastonia, NC Carolina limited
partnership
Pine Tree (NC), Charlotte, National Pinetree $ 5,800,000.00
NC Limited Partnership, a
North Carolina limited
partnership
Quail Woods, Gastonia, Quail Woods $ 5,530,000.00
NC Apartments Partners,
L.P., a Delaware limited
partnership
Reddman's Pier, Reddman-Oxford $ 4,850,000.00
Charlotte, NC Associates Limited
Partnership, a Maryland
limited partnership
Snowden Village I, New Snowden Village I, $ 11,000,000.00
Fredericksburg, VA L.P., a Delaware limited
partnership
Snowden Village II, Snowden Village $ 12,000,000.00
Fredericksburg, VA Associates, L.P., a
Delaware limited
partnership
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WHERE YOU CAN FIND MORE INFORMATION
The Partnership files annual, quarterly and special reports, and other
information with the SEC. You can read and copy any materials that the
Partnership files with the SEC at the SEC's Public Reference Room at 100 F
Street, N.E., Washington, D.C., 20549. You can also obtain information about the
operation of the SEC's Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a Website that contains information we
file electronically with the SEC, which you can access over the Internet at
http://www.sec.gov.
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
C/O The Altman Group, Inc.
1200 Wall Street, 3rd Floor
Lyndhurst, New Jersey 07071
By telephone: (800) 217-9608
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.
THE INFORMATION AGENT IS:
THE ALTMAN GROUP, INC.
By Mail By Overnight Courier: By Hand:
1200 Wall Street, 3rd Floor 1200 Wall Street, 3rd Floor 1200 Wall Street, 3rd Floor
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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