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
A SOUTH CAROLINA 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: 42,324 Limited
Partnership Units
(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): $4,450,000, based on the contract
price for the property being sold
(4) Proposed maximum aggregate value of transaction: $4,450,000
(5) Total fee paid: $476.15
[ ] 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
A SOUTH CAROLINA 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"), has agreed to sell the
Partnership's apartment complex known as Rocky Creek Apartments, located in
Augusta, Georgia (the "Property") to Chartwell Augusta, LLC, a Delaware limited
liability company (the "Buyer"), an unaffiliated third party, for $4,450,000
(less lender fees and penalties required to prepay the existing loan encumbering
the Property). The transaction will involve the payment in full, out of the
purchase price, of approximately $2,177,664 (estimated balance as of October 31,
2005) outstanding principal balance and accrued interest of the loan encumbering
the Property. As more fully described below, the General Partner and affiliates
of the General Partner holding greater than 50% of the limited partnership units
have consented to the sale. After the sale closes, we estimate that there
will be approximately a total of $1,915,351, or $45 per limited partnership unit
in distributions (net of estimated nonresident withholding tax) to distribute to
the limited partners. This estimate assumes that the sale of the Property is
consummated as of October 31, 2005. This is an estimate, and as explained below,
it is based upon a number of assumptions.
We expect the distribution to the limited partners will occur within
approximately 90 days after the sale closes. This information statement contains
information about the sale and the reasons the General Partner has decided that
the sale is in the best interests of the limited partners. The General Partner
has conflicts of interest in the sale as described in greater detail herein.
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 [_______, 200_].
This information statement is being mailed on or about the date hereof
to all holders of the limited partnership units of the Partnership at the close
of business on [_______, 200_].
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SUMMARY OF THE TRANSACTION
The following is a brief summary of certain terms of the Partnership's
proposed sale of the Property pursuant to the terms of the Purchase and Sale
Contract, dated as of October 20, 2005 (the "Effective Date"), among the Buyer,
the Partnership, and two affiliates of the General Partner (the "Agreement").
For a more complete description of the terms of the Agreement, see "Summary of
the Purchase and Sale Contract" in this information statement.
<Table>
Buyer.............................. Chartwell Augusta, LLC, a Delaware
limited liability company.
Property to Be Sold by the
Partnership........................ Rocky Creek Apartments, located in
Augusta, Georgia, together with all the
improvements located on the Property
and certain associated property. See
"Summary of the Purchase and Sale
Contract -- The Purchased Assets."
Additional Properties to Be Sold
Pursuant to the Agreement by
Affiliates of the Partnership...... The Agreement also provides for the
sale to the Buyer by affiliates of the
General Partner of the following two
additional properties: (i) Rivercreek
Apartments and (ii) Springhouse
Apartments. See "Summary of the
Purchase and Sale Contract -- The
Purchased Assets."
Purchase Price and Deposit......... $4,450,000 (less lender fees and
penalties required to prepay the
existing loan encumbering the
Property), subject to certain
adjustments as provided in the
Agreement. The purchase price for the
Property is payable as follows: (i)
approximately $38,860 was paid by the
Buyer as an initial deposit upon the
execution of the Agreement, (ii)
approximately $29,145 will be paid by
Buyer as an additional deposit on
December 19, 2005, and (iii) the
balance of the purchase price is to be
paid in cash at the closing. See
"Summary of the Purchase and Sale
Contract -- Purchase Price and Deposit"
and "-- Payoff of Existing Loan on the
Property."
Each property in the disposition pool
was allocated a portion of the initial
deposit and the additional deposit based
upon the ratio that such property's
respective purchase price bears to the
aggregate $22,900,000 purchase price for
all three properties. See "Summary of
the Purchase and Sale Contract --
Purchase Price and Deposit."
Closing............................ The closing of the Agreement, including
the sale of the Property, is scheduled
to occur on January 31, 2006. The
closing date is subject to extension
pursuant to the terms of the Agreement.
See "Summary of the Purchase and Sale
Contract -- Closing."
Closing Conditions................. Each seller's, including the
Partnership's, obligation to complete
the sale of its respective property is
subject to certain customary
conditions, including (i) obtaining all
consents necessary to consummate the
transactions described in the
Agreement, including a tax-free
exchange and any necessary amendments
to organizational documents in
connection therewith and (ii)
affiliates of the general partner must
own, directly or indirectly, more than
50% of the voting interests of each
seller, including the Partnership, at
the time of the closing. The Buyer's
obligation to close the sale of the
properties is also subject to certain
customary conditions. See "Summary of
the Purchase and Sale Contract
</Table>
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<Table>
-- Conditions to the Parties' Obligation
to Close."
Representations and Warranties..... The Agreement contains certain
customary representations and
warranties by the Buyer and each seller
under the Agreement, including the
Partnership. The Partnership's
representations and warranties survive
for a period of six months after the
closing. See "Summary of the Purchase
and Sale Contract -- Representations
and Warranties."
Covenants.......................... The Agreement contains certain
customary covenants by each seller
under the Agreement, including the
Partnership. See "Summary of the
Purchase and Sale Contract --
Covenants."
Termination........................ The Agreement contains certain
customary termination rights on behalf
of the Buyer and the Partnership and
the other sellers, including the
failure of certain closing conditions,
events of default, and certain other
material matters with respect to a
property. The Agreement may only be
terminated as to all, but not less than
all, of the properties to be sold
pursuant to the Agreement. See "Summary
of the Purchase and Sale Contract --
Closing," "- Feasibility Period," "-
Pre-closing Deliveries and
Obligations," "- Conditions to the
Parties' Obligation to Close," "-
Default," and "- Certain Other
Termination Rights."
Damages for Breach of
Representations and Warranties...... The liability of each seller (including
the Partnership) for a breach of such
seller's representations and warranties
is capped at $100,000 per property. See
"Summary of the Purchase and Sale
Agreement -- Representations and
Warranties."
Use of Proceeds..................... The Partnership intends to use the
gross proceeds from the sale of the
Property to pay the outstanding
indebtedness and other liabilities of
the Partnership. See "Use of Proceeds"
and "Interests of Certain Persons in
the Sale."
Plans After the Sale................ Upon the completion of the sale of the
Property and after the payment of the
transaction related costs and other
outstanding obligations of the
Partnership. the Partnership will
continue to hold and operate its
remaining apartment complex known as
Village Gardens apartments, located in
Fort Collins, Colorado. See "Plans
After the Sale," "Legal Proceedings"
and "Federal Income Tax Consequences."
</Table>
REASONS FOR THE SALE
The General Partner has determined that the sale of the Property is in
the best interests of the limited partners after considering a number of
factors, including the following:
o The Property was completed in 1979, and given its age, the
Property probably will require substantial capital
expenditures in the future (including with respect to the sub
floors which are likely to require substantial work in the
near future at significant cost), 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 general withdrawal of
capital from the stock markets and into alternative
investments such as real estate.
o Any future economic downturn or increase in interest rates may
make it difficult to find a buyer for the Property at as
favorable a price in the future
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o The tax benefits of continued investment in the Property have
been substantially eliminated for most limited partners due
principally to declining depreciation deductions from the
property.
o For the foreseeable future, the partnership may generate
taxable income but may not distribute sufficient cash to
limited partners to pay resulting tax liabilities.
o The Partnership has not made any distributions from operations
to limited partners since 2004.
o The Augusta, Georgia rental market is stagnant, resulting in
unchanged rental rates while expenses related to the Property,
including maintenance and repair, continue to increase.
For these reasons and others that were considered by the General
Partner in arriving at its decision, the General Partner has approved the sale
and the Agreement, and, as described more fully below, limited partners
affiliated with the General Partner holding a majority of the limited
partnership units also approved the sale and the Agreement.
THE SALES PROCESS
In June 2005, the sellers, including the Partnership, hired Apartment
Realty Advisors of Georgia, a national real estate brokerage firm, to market the
Property and the two other properties to be sold pursuant to the Agreement. They
marketed the Property nationally to prospective buyers known to be interested in
the acquisition of multifamily housing projects similar to the Property. The
broker received offers from 7 potential purchasers. We evaluated prospective
purchasers and offers in terms of price offered, feasibility of the proposed
transaction, credibility of the prospective purchaser and ability of the
prospective purchaser to close. We chose to accept the offer by the Buyer
described in this information statement based on these criteria. Neither the
General Partner nor its affiliates bid on the Property.
Apartment Investment and Management Company ("AIMCO"), an affiliate of
the General Partner, through AIMCO's affiliates, has varying ownership interests
in each of the three properties being sold to the Buyer pursuant to the
Agreement. AIMCO's ownership interest in Rocky Creek is approximately 67.18% as
to the Partnership's limited partnership units. In addition, AIMCO owns
approximately 47.20% of Rivercreek Apartments and 100% of Springhouse
Apartments. For purposes of allocating the total disposition pool purchase price
being paid by the 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, including that allocated to the Property, may be
changed by the Buyer before closing, based on third-party appraisals obtained by
the Buyer or the 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 BUYER
Chartwell Augusta, LLC, which is not affiliated with the Partnership or
any other seller, agreed to acquire all properties to be sold pursuant to the
Agreement, including the Property, through an arms-length negotiation. Chartwell
Augusta, LLC has an office located at 2284 Ashley River Road, Charleston, South
Carolina, 29414. The phone number for Chartwell
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Augusta, LLC is (843) 768-6615. The Buyer may assign its rights to acquire the
Property to (i) its affiliates, subject to the consent of AIMCO, not to be
unreasonably withheld, or (ii) if the transaction will be used for the purposes
of a "1031 exchange" under the Internal Revenue Code, to a deferred exchange
intermediary or an exchange accommodation titleholder. The Buyer and its
affiliates are in the business of operating residential rental housing. The
Buyer or its affiliates have informed us that they plan to operate the Property
following the sale.
THE PROPERTY
The Partnership has owned and operated the Property, a 120-unit
apartment complex located in Augusta, Georgia, since June 1984. The Property
constitutes 46% of the Partnership's outstanding assets. There is a first
mortgage loan on the Property with an unpaid principal balance and accrued
interest of approximately $2,177,664 as of October 31, 2005. The loan
encumbering the Property will be pre-paid in full at the closing, with the
penalties and premiums associated with such prepayment to be paid by Buyer and
deducted from the purchase price. The Partnership has other indebtedness of
approximately $142,286.
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 June 29, 1984 (the "Partnership
Agreement"), permits the General Partner to cause the Partnership to sell in 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 (except in the case of the sale of the last property to
be sold by the Partnership).
As of December 1, 2005, the Partnership has approximately 1,492 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. As of December 1, 2005, affiliates of the General
Partner owned 28,435 limited partnership units, or 67.18% of the outstanding
limited partnership units. On ________ __, 200_, the affiliates of the General
Partner holding 67.18% of the limited partnership units gave their written
consent approving and adopting the sale and the Agreement. The following limited
partners executed such written consent:
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<Table>
<Caption>
NAME AND ADDRESS NUMBER OF LIMITED PERCENT OF
OF BENEFICIAL OWNER PARTNERSHIP UNITS CLASS
- ------------------------------- ----------------- ----------
AIMCO Properties, L.P.
4582 S. Ulster St. Parkway
Suite 1100
Denver, CO 80237 13,524 31.95%
AIMCO IPLP, LP
55 Beattie Place 11,547 27.28%
Greenville, SC 29602
Cooper River Properties, L.L.C.
55 Beattie Place 3,364 7.95%
Greenville, SC 29602
TOTAL: 28,435 67.18%
</Table>
Upon the execution of such written consent, the holders of a majority
of the limited partnership units approved the sale and the Agreement, and, as a
result, no vote of any other limited partnership unit holder will be necessary
to approve the sale and the Agreement. Accordingly, the Partnership is not
soliciting any other votes. Such written consent authorizes the Partnership, in
its discretion, to reduce the gross purchase price for the Property up to 10%
and make any other amendments to the Agreement (including, without limitation,
the closing date, due diligence duties and closing conditions) which, in the
Partnership's opinion, are necessary, appropriate or desirable in connection
with the sale and that do not materially and adversely affect the Partnership.
Such written consent will have an effective date of ____________ __, 200_, which
is 20 days after the mailing of this information statement.
INTEREST OF CERTAIN PERSONS IN THE SALE
The General Partner has conflicts of interest with respect to the sale.
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. As noted above, AIMCO, an affiliate of
the General Partner, through AIMCO's affiliates, has varying ownership interests
in each of the three properties being sold to the Buyer pursuant to the
Agreement, including a 67.18% interest in the limited partnership units of the
Partnership.
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 fee of up to 1% in connection with the sales. Payment of such
fee 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 did not accrue or pay
the fee on the sale of Carriage House in August 2005 and we do not anticipate
the accrual or payment of the fee on the sale of Rocky Creek.
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USE OF PROCEEDS
We estimate that we will use the gross proceeds from the sale as
follows:
<Table>
Gross purchase price $ 4,450,000
Plus: Cash and cash equivalents 95,854
Plus: Other Partnership assets 101,135
Less: Mortgage debt, including accrued interest (2,177,664)
Less: Accounts payable, accrued expenses and other liabilities (142,286)
Less: Reserves for contingencies (133,500)
Less: Closing costs, including transfer taxes (137,950)
Less: Nonresident withholding taxes (140,239)
------------
TOTAL $ 1,915,351
============
Net proceeds $ 1,915,351
Percentage of proceeds allocable to limited partners 100%
Net proceeds distributable to limited partners $ 1,915,351
Number of limited partnership units outstanding 42,324
------------
Distributable net proceeds per limited partnership unit $ 45
============
</Table>
These estimates assume that the closing of the sale occurred as of
October 31, 2005, and are based on information known to the General Partner at
this time. These figures will adjust based upon the fact that closing will occur
after October 31, 2005. Of course, many factors could cause the actual use of
proceeds to vary from these estimates, including delays or unforeseen
complications with the closing or contingent liabilities of the Partnership.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences to you of a sale of the Property may be
significant. The following discussion briefly summarizes the typical material
aspects of the federal income tax consequences for 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.
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 General Partner believes
that a typical limited partner will recognize gain from the sale of the Property
of approximately $83 per limited partnership unit as "unrecaptured I.R.C.
Section 1250 gain" (discussed below) that will be taxed at a minimum 25% rate to
the individual limited partner. The General Partner believes
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that none of this gain will constitute "depreciation recapture gain" (discussed
below) or "I.R.C. Section 1231 gain" (discussed below).
The Partnership will recognize gain from a sale of the Property to the
extent that the amount the Partnership realizes from the sale exceeds its
adjusted basis in the Property. The Partnership's amount realized from the sale
includes the sum of cash it receives from Buyer plus the fair market value of
any property it receives other than money. If Buyer assumes or takes the
Property subject to liabilities which encumber the Property, the face amount of
those liabilities is also included in the Partnership's amount realized as
though Buyer had made a cash payment to the Partnership in the same amount.
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.
To the extent that a partnership is not a "dealer" with respect to a
property, any gain in excess of "depreciation recapture gain" and "unrecaptured
I.R.C. Section 1250 gain" 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, if any. 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, if any, 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, if any, 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, if any, 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.
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.
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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 applicable to unrecaptured I.R.C. Section 1250 gain currently is 25%.
Generally, the unrecaptured Section 1250 gain tax rate applies only to
individuals, trusts, and estates.
In the case of limited of limited partners that are individuals,
estates or trusts, 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.
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 will be taxable as ordinary income under I.R.C. Section 751.
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 depreciated for United States federal income tax purposes. As a
result, it is possible that continued operation of the Property will generate
taxable income to the limited partners, since it is unlikely that there will be
adequate depreciation and other deductions equal to or greater than the income
generated from the Property. Limited partners may be required to use funds from
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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 and it will continue to receive management fees. 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 of the
Property.
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 the completion of the sale of the Property and after the payment
of the transaction related costs and other outstanding obligations of the
Partnership, the Partnership will continue to hold and operate its remaining
apartment complex known as Village Gardens apartments, located in Fort Collins,
Colorado. See also "Federal Income Tax Consequences - Tax Consequences If The
Property Is Not Sold."
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 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, 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 0.2% 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 the Partnership's
property 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
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assets. The Partnership evaluates each of its holdings periodically to determine
the most appropriate strategy for each of the assets.
The Partnership originally acquired six apartment properties with the
funds obtained from proceeds of its public offering. The Partnership sold
Foxfire/Barcelona Village in November 2000, Nottingham Square Apartments in
December 2002, River Reach in August 2004, and Carriage House in August 2005.
The Partnership continues to hold, own and operate two properties, one of which
is the Property and the other is an apartment complex known as Village Gardens
located in Fort Collins, Colorado.
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.
For information on certain pending and ongoing litigation and
governmental investigations, please refer to the Partnership's most recent
report on Form 10-QSB (for the quarterly period ended September 30, 2005) filed
with the Securities and Exchange Commission.
PARTNERSHIP PROPERTIES
The following table sets forth the Partnership's current investment in real
property:
<Table>
<Caption>
PROPERTY DATE OF PURCHASE TYPE OF OWNERSHIP USE
- --------------------------------------- ------------------------ ----------------------------- -----------------------
Rocky Creek, Augusta, Georgia June 1984 Fee ownership, subject to Apartment -- 120 units
first mortgage
Village Gardens, Fort Collins, March 1985 Fee ownership, subject to Apartment -- 141 units
Colorado first mortgage
</Table>
LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership
units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v.
Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior
Court of the State of California for the County of San Mateo. The plaintiffs
named as defendants, among others, the Partnership, its 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 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
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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 with respect 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 with respect
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 Appeals' remand order. With respect to
the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the
trial court's order striking the first amended complaint.
On August 18, 2005, the Objector and his counsel filed a motion to
disqualify the trial court based on a peremptory challenge and filed a motion to
disqualify for cause on October 17, 2005. On or about October 13, 2005, Objector
filed a motion to intervene and on or about October 19, 2005, filed both a
motion to take discovery relating to the adequacy of plaintiffs as derivative
representatives and a motion to dissolve the anti-suit injunction in connection
with settlement. On October 27, 2005, the Court denied Objector's peremptory
challenge and struck Objector's motion to disqualify for cause. No hearing has
been set on Objector's remaining motions. On November 3, 2005, Objector and his
counsel filed a writ of mandate to the Court of Appeals challenging the court's
October 27, 2005 order.
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.
SUMMARY OF THE PURCHASE AND SALE CONTRACT
The following summarizes the material terms and conditions of the
Agreement. Nothing in this information statement is intended to modify the terms
of the written Agreement.
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THE PURCHASED ASSETS
The Partnership has agreed to sell all of the Partnership's interest in
and to the Property, together with all the improvements located on the Property
and certain associated property. The Agreement also provides for the sale of two
other properties that are owned by affiliates of the General Partner. Certain of
the Partnership's assets are excluded from the sale. Subject to the Buyer's
right to elect to exclude certain items pursuant to the terms and conditions of
the Agreement, the Buyer has agreed to assume the Partnership's liabilities and
obligations under the Property's contracts, equipment leases, purchase orders,
maintenance, service and utility contracts (to the extent assignable) and the
Property's tenant leases after the closing.
The two other properties being sold pursuant to the Agreement by
affiliates of the Partnership are as follows:
<Table>
<Caption>
PROPERTY BUYER SELLER PRICE
- ---------------------- ---------------------- --------------------------------- -----------
Rivercreek Apartments Chartwell Augusta, LLC Rivercreek Apartments Limited $ 6,350,000
Partnership
Springhouse Apartments Chartwell Augusta, LLC Augusta-Oxford Associates Limited 12,100,000
Partnership
</Table>
PURCHASE PRICE AND DEPOSIT
The purchase price for the Property is $4,450,000, payable as follows:
(i) the Property's pro rata allocation of the $200,000 initial deposit made upon
the execution of the Agreement (such pro rata allocation is approximately
$38,860), to be held in escrow until the closing, (ii) the Property's pro rata
allocation of an additional $150,000 deposit to be paid on December 19, 2005,
the date the Feasibility Period (discussed below) expires (such pro rata
allocation is approximately $29,145) to be held in escrow until the closing, and
(iii) the balance of the purchase price in cash at the closing. Each property in
the disposition pool has been allocated a portion of the initial deposit and the
additional deposit based upon the ratio that such property's respective purchase
price bears to the aggregate $22,900,000 purchase price for all three
properties.
The Buyer is entitled to receive a credit at the closing in the amount
of the received but unapplied balance of all security, damage or other
refundable deposits required to be paid by tenants under the leases, plus
interest thereon as may be required by the applicable lease or state law. In
addition, to the extent the sellers, including the Partnership, have received
any payments from tenants for operating expenses, taxes, utilities, retroactive
rental escalations, or other charges payable by tenants under the leases
allocable to periods after the closing, Buyer will receive a credit for such
amounts at the closing. These credits are available with respect to each of the
properties, including the Property, on a property-by-property basis.
After the expiration of the Feasibility Period, the initial deposit and
the additional deposit are non-refundable, subject to certain circumstances
under which the Agreement provides that the aggregate deposit, or a portion
thereof, is to be returned to the Buyer (subject to the return by Buyer of due
diligence materials provided by sellers, including the Partnership).
Even if the Buyer is entitled to a return of a portion or all of the
deposit, the Agreement provides that the deposit will be withheld pending the
Buyer's return of certain due diligence materials provided by the sellers.
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PAYOFF OF THE EXISTING LOAN ON THE PROPERTY
The existing loan from Fannie Mae (with GMAC Commercial Mortgage
Corporation as servicer), in the original principal amount of $2,340,000, will
be paid in full from the proceeds of the purchase price upon the closing of the
sale of the Property. The balance due on the loan is $2,177,664 (principal and
accrued but unpaid interest) as of October 31, 2005. The fees, costs, and
penalties incurred in connection with this pay off will be paid by the Buyer and
the purchase price shall be reduced by the amount of such fees, costs and
penalties.
FEASIBILITY PERIOD
During the period from the date of the execution of the Agreement to
and including December 19, 2005 (the "Feasibility Period"), the Buyer and its
consultants have the right to enter the Property to, among other things, conduct
customary studies, tests, examinations, inquiries and inspections or
investigations concerning the Property; to confirm the suitability of the
Property for Purchaser's intended use and any other matters Buyer wishes to
confirm; and to review documents and records related to the Property. Buyer has
indemnified the Partnership from and against any and all claims, damages, costs
and liabilities arising from or related to Buyer's or its consultants' entry
onto the Property and their inspections and investigations.
If the results of such inspections and investigations are
unsatisfactory to Buyer for any reason, Buyer has the right to terminate the
Agreement in its entirety with respect to all of the properties, including the
Property, on or before the date the Feasibility Period expires and receive its
initial deposit of $200,000 ($38,860 of which is allocable to the Property) back
from the escrow agent (subject to Buyer's obligation to return due diligence
materials received from sellers, including the Partnership). If Buyer does not
elect to terminate the Agreement on or before the date the Feasibility Period
expires, Buyer is obligated to make an additional deposit of $150,000 ($29,145
of which is allocable to the Property) to be held in escrow pending the closing.
PRE-CLOSING DELIVERIES AND OBLIGATIONS
The Agreement required the Partnership to delivery certain documents to
the Buyer within certain deadlines after the Effective Date, including (i) all
documents relating to the Property (including a rent roll with all pertinent
information relating to the tenants and leases), (ii) a standard form commitment
for title insurance for the Property in an amount equal to the purchase price
for an owner's title insurance policy on the most recent ALTA form and (iii) a
survey of the Property. The Partnership is only responsible for payment of the
basic premium for the title policy. The Buyer is responsible for any costs in
excess of the basic premium, and for the cost of a current survey or any update
to the survey.
Within 30 days after the Effective Date, Buyer has the right to give
written notice to the Partnership (and other sellers) of any objection Buyer has
to any matter identified in the title documents or survey. If Buyer fails to
timely object, Buyer is deemed to have waived all such objections. If Buyer
timely objects and the Partnership (or other seller) fails to respond or elects
not to cure the underlying basis for the objection, the Buyer has the option of
either going forward with the Agreement, without any reduction in the purchase
price, or terminating the Agreement in its entirety with respect to all of the
properties, including the Property. If the
15
Buyer elects to terminate the Agreement, it is entitled to the return of the
initial deposit of $200,000 ($38,860 of which is allocable to the Property),
subject to its return of the due diligence materials received from the sellers,
including the Partnership.
On or before the expiration of the Feasibility Period, Buyer has the
right to deliver written notice to the Partnership identifying any contract
relating to the ownership, maintenance, construction, repair or operation of the
Property that Buyer wishes to have terminated. If any such contract cannot, by
its terms, be terminated, Buyer shall assume such contract; if a contract can be
terminated but the termination cannot be effective on or prior to the closing,
the Buyer will be deemed to have temporarily assumed such contract. Any contract
not identified by Buyer in such notice shall be assumed by Buyer. Buyer is
responsible for any penalties or fees associated with the termination of any
contracts it wishes to have terminated. If Buyer does not timely deliver a
notice to the Partnership identifying the contracts it wishes to have
terminated, Buyer is deemed to have assumed all contracts. Buyer is responsible
for obtaining any necessary consents with respect to any contracts it assumes,
and has indemnified the Partnership from and against any and all claims,
damages, costs and liabilities arising from or related to Buyer's failure to
obtain any such consent.
CLOSING
The sale of the Property is scheduled to occur on January 31, 2006. Any
seller, including the Partnership, has the option, by delivering written notice
to the Buyer, of extending the closing to a date in February 2006 in the event
such extension is desirable in connection with the payoff of any loan secured by
a property. Further, the Partnership, and any other seller under the Agreement,
may extend the closing (i) for up to 30 days to satisfy a condition to be
satisfied by the Partnership or any other seller, or (ii) such later date as is
mutually acceptable to the sellers and the Buyer. Any extension of the closing
will apply to all properties to be sold under the Agreement, including the
Property.
CLOSING PRORATIONS AND POST CLOSING ADJUSTMENTS
All normal and customarily proratable items will be prorated as of the
closing date on a property-by-property basis.
Unless otherwise provided in the Agreement, each seller, including the
Partnership, is entitled to receive all income, and is liable for all expenses,
relating to the operation of its respective property for the period prior to the
closing date, and the Buyer is entitled to receive all income, and is liable for
all expenses, for the period commencing on the closing date for all properties.
Any seller, including the Partnership, or the Buyer, may request an adjustment
of any pro rated item, provided that no party has any obligation to make any
adjustment after the expiration of 60 days after the closing, and unless the
adjustment exceeds $5,000 (individually or in the aggregate) with respect to any
property.
REPRESENTATIONS AND WARRANTIES
The Agreement contains certain customary representations and warranties
by each seller under the Agreement, including the Partnership. These
representations and warranties include, without limitation, representations and
warranties regarding existence and qualification; authority; non-contravention
of existing contracts; validity and enforceability of the Agreement;
16
possessory interest in the applicable property; "non-foreign person" status;
litigation; governmental violations; material defaults under property contracts;
and accuracy of each property's rent roll. The Partnership's (and each other
seller's) representations and warranties survive for a period of six months
after the closing. The Partnership's liability for any breach of a
representation or warranty by the Partnership is capped at $100,000. The
liability of the other sellers under the Agreement is similarly capped.
The Agreement also contains certain customary representations and
warranties by the Buyer.
COVENANTS
Each seller under the Agreement, including the Partnership, has agreed
that from the Effective Date through the closing of the Agreement, it will
continue to operate its respective property in the ordinary course of business.
Each seller under the Agreement, including the Partnership, has also agreed to
certain additional covenants which may affect the operation of the Partnership
prior to closing, including: restrictions on entering into new property
contracts and leases, a commitment to provide the Buyer with an updated rent
roll at the closing, restrictions on making material alterations to the property
or removing any material fixtures or tangible personal property, and
restrictions on the creation of liens and encumbrances.
CONDITIONS TO THE PARTIES' OBLIGATION TO CLOSE
Sellers' Conditions to Closing
Each seller's, including the Partnership's, obligation to complete the
sale of its respective property is subject to certain customary conditions. Such
conditions include, among other things, the following:
o Each seller shall have received all consents, documentation
and approvals necessary to consummate and facilitate the
transactions contemplated by the Agreement, including, without
limitation, a tax free exchange (and the amendment of any such
seller's (or such seller's affiliates' partnership or other
organizational documents in connection therewith) (i) from
such seller's unaffiliated partners, members, managers,
shareholders or directors to the extent required by such
seller's (or such seller's affiliates') organizational
documents, and (ii) as required by law;
o AIMCO shall, directly or indirectly, own more than 50% of the
voting interests of each seller, at the time of the closing;
and
o There shall not be any pending, or to the knowledge of the
Buyer or each seller, any litigation or threatened litigation
which, if determined adversely, would restrain the
consummation of the transactions contemplated by the Agreement
or declare any covenants of the Buyer to be illegal, void or
nonbinding.
If the conditions to closing fail with respect to a particular
property, then the applicable seller of such property may elect to either waive
such condition or terminate the Agreement in its entirety with respect to all
properties. If a seller elects to terminate the Agreement, the other sellers
have agreed to consent to such termination. In such instance, the deposit may or
may not
17
be returned to the Buyer, depending on the circumstances surrounding the failure
of the specific condition.
If a seller fails to obtain any consents from such seller's
unaffiliated partners, members, managers, shareholders or directors to the
extent required by such seller's (or such seller's affiliates') organizational
documents, or AIMCO fails to own, directly or indirectly, more than 50% of the
voting interests of each Seller, and the Agreement is terminated because of any
such failure, then each seller is required to pay the Buyer its direct and
actual out-of-pocket expenses and costs (documented by paid invoices to third
parties) in connection with such seller's property, which damages shall not
exceed $25,000 (individually) for each such property so terminated.
Buyer's Conditions to Closing
The Buyer's obligation to complete the sale of all properties,
including the Property, also is subject to certain customary conditions. If such
conditions fail with respect to a particular property, then, subject to the
terms of the Agreement, Buyer has the option of either waiving such condition or
terminating the Agreement in its entirety with respect to all properties and
receiving the deposit back, subject to Buyer's obligation to return due
diligence materials provided to Buyer.
DEFAULT
If the Buyer defaults in its obligations under the Agreement and does
not cure the same within the cure period, if any, provided therein, then the
Agreement will be automatically terminated and the Buyer will forfeit the
deposit, and each seller will retain its pro rata share thereof. Each seller,
including the Partnership, has waived the remedies of specific performance and
additional damages from the Buyer (other than with respect to certain
indemnification obligations on the part of the Buyer as set forth in the
Agreement).
If a seller, including the Partnership, defaults in its obligations
under the Agreement and does not cure the same within the cure period, if any,
provided therein, then Buyer may either seek specific performance of such
seller's obligations under the Agreement (but not damages), or terminate the
Agreement in its entirety with respect to all properties. If the Buyer elects to
terminate the Agreement, the deposit is to be returned to the Buyer, subject to
the Buyer's obligation to return due diligence materials provided to Buyer.
Additionally, if Buyer elects to terminate the Agreement, Buyer may recover (as
its sole recoverable damages) direct and actual out-of-pocket expenses and costs
(documented by paid invoices to third parties) in connection with the properties
for which the Agreement has been terminated, not to exceed $25,000 per
terminated property.
CERTAIN OTHER TERMINATION RIGHTS
The Buyer has the right to terminate the Agreement in its entirety with
respect to all properties upon major property damage to any of the properties
(cost of repairs exceed $250,000) or condemnation of a material portion of any
of the properties. In such instance, the deposit is to be returned to the Buyer,
subject to Buyer's obligation to return due diligence materials provided to
Buyer. In the event Buyer elects not to terminate the Agreement, Buyer will
receive all insurance proceeds pertaining to any such damage (or the proceeds of
any condemnation award)
18
and a credit against the purchase price allocable to the damaged property in the
amount of any deductible payable by the applicable seller in connection
therewith.
EXPENSES AND CLOSING COSTS
Buyer is responsible for paying any transfer, sales, use, gross
receipts or similar taxes, the cost of recording any instruments necessary to
discharge any liens against the properties, including the Property, any premiums
or fees required to be paid by Buyer for the title policy as described above,
and one-half of the customary closing costs of the escrow agent. Each seller,
including the Partnership, will pay the base premium for the title policy with
respect to its respective property, and its pro rata portion of the other
one-half of the closings costs of the escrow agent.
In addition, the sellers shall pay any fees, commissions, and expenses
due and owing to the sellers' broker, Apartment Realty Advisors of Georgia,
pursuant to a separate agreement.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act
and are required to file annual and quarterly reports, proxy statements and
other information with the SEC. You can inspect and copy reports and other
information filed by us with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may also obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0300.
The SEC also maintains an Internet site at http:\\www.sec.gov that contains
reports, proxy and information statements regarding issuers, including us, that
file electronically with the SEC.
You should only rely on the information incorporated by reference or
provided in this information statement or any supplement. We have not authorized
anyone else to provide you with information. You should not assume that the
information in this information statement or any supplement is accurate as of
any date other than the date on the front of this information statement or the
supplement.
We are "incorporating by reference" into this information statement
certain information we have filed with the SEC, which means that we are
disclosing important information to you by referring you to those documents. The
information incorporated by reference is deemed to be part of this information
statement, except for any information superseded by information contained
directly in this information statement. These documents contain important
information about us and our finances. This information statement incorporates
by reference:
o Our annual report on Form 10-KSB for the year ended December 31, 2004.
o Our quarterly report on Form 10-QSB for the period ended March 31,
2005.
o Our quarterly report on Form 10-QSB for the period ended June 30, 2005.
o Our quarterly report on Form 10-QSB for the period ended September 30,
2005.
All documents we file with the SEC pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act from the date of this information
statement shall also be deemed to be incorporated herein by reference and will
automatically update information in this information statement.
19
You may request a copy of these filings, at no cost, by writing or
calling us at the following address or telephone number:
c/o THE ALTMAN GROUP, INC.
1200 Wall Street
3rd Floor
Lyndhurst, NJ 07071
Telephone: (800) 217-9608
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: c/o THE ALTMAN GROUP, INC.
1200 Wall Street
3rd Floor
Lyndhurst, NJ 07071
By telephone: (800) 217-9608
By facsimile: (201) 460-0050
A limited partner may also use the above telephone number, facsimile
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.
20