-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BktQC/8jkVrTTna6Jt6qRNCiu424XSZ2ByI4oF8vygB85OZw4dCEv1vuHMnZwhb/ SIoSl59mBVxSx+AiyAoE6A== 0000702313-96-000003.txt : 19960816 0000702313-96-000003.hdr.sgml : 19960816 ACCESSION NUMBER: 0000702313-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROPERTY RESOURCES FUND VI CENTRAL INDEX KEY: 0000702313 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942838890 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11798 FILM NUMBER: 96614548 BUSINESS ADDRESS: STREET 1: 1800 GATEWAY DR CITY: SAN MATEO STATE: CA ZIP: 94404 BUSINESS PHONE: 4153125824 MAIL ADDRESS: STREET 1: PO BOX 7777 CITY: SAN MATEO STATE: CA ZIP: 944047777 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1996 --------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ---------- to ---------------------- Commission file number 2-77330 --------------------------------------------- PROPERTY RESOURCES FUND VI - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-2838890 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (415) 312-2000 --------------------------- N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Limited Partnership Units Outstanding as of June 30, 1996: 21,585 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 ------------------------------------- (Unaudited) (Dollars in thousands, except per share amounts) 1996 1995 - --------------------------------------------------------------- ---------------- ASSETS: Rental property: Land $ 2,239 $ 2,239 Land improvements 748 748 Buildings and improvements 7,167 7,167 Furnishings and equipment 1,028 1,005 - --------------------------------------------------------------- ---------------- 11,182 11,159 Less: accumulated depreciation 4,274 4,128 - --------------------------------------------------------------- ---------------- 6,908 7,031 Cash and cash equivalents 128 251 Note receivable 355 382 Other assets 97 32 - --------------------------------------------------------------- ---------------- Total assets $7,488 $7,696 =============================================================== ================ LIABILITIES AND STOCKHOLDERS' EQUITY: Note payable $5,027 $5,231 Note payable to affiliate 1,704 1,711 Due to General Partner 368 506 Accrued interest due to General Partner 512 493 Tenants' deposits and other liabilities 177 214 - --------------------------------------------------------------- ---------------- Total liabilities 7,788 8,155 - --------------------------------------------------------------- ---------------- Partners' capital (deficit): Limited partners, 21,585 units issued and outstanding 172 21 General Partner (472) (480) - --------------------------------------------------------------- ---------------- Total partners' capital (deficit) (300) (459) - --------------------------------------------------------------- ---------------- Total liabilities and partners' capital (deficit) $7,488 $7,696 =============================================================== ================ The accompanying notes are an integral part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 JUNE 30 JUNE 30 (Dollars in thousands, except per share amounts) 1996 1995 1996 1995 - ------------------------------------- --------------- -------------- --------------- ------------- REVENUE: Rent $494 $569 $974 $1,168 Interest 9 12 19 22 Dividends 1 - 1 - - ------------------------------------- --------------- -------------- --------------- ------------- Total revenue 504 581 994 1,190 - ------------------------------------- --------------- -------------- --------------- ------------- EXPENSES: Depreciation and amortization 73 74 147 148 Operating 254 273 512 537 Related party 82 94 165 193 General and administrative 5 5 11 15 - ------------------------------------- --------------- -------------- --------------- ------------- Total expenses 414 446 835 893 - ------------------------------------- --------------- -------------- --------------- ------------- NET INCOME $90 $135 $159 $297 ===================================== =============== ============== =============== ============= Net income allocable to limited $86 $128 $151 $282 partners ===================================== =============== ============== =============== ============= Net income allocable to General $4 $7 $8 $15 Partner ===================================== =============== ============== =============== ============= Net income per $500 limited partnership unit- based on 21,585 units outstanding $3.98 $5.93 $7.00 $13.06 ===================================== =============== ============== =============== =============
The accompanying notes are an integral part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENT OF PARTNERS' CAPITAL (DEFICIT) FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996 -------------------------------------------- (Unaudited)
Limited Partners ----------------------------- General (Dollars in thousands) Units Amount Partner Total - -------------------------------- --------------- -------------- -------------- --------------- Balance, beginning of period 21,585 $21 $(480) $(459) Net income - 151 8 159 - -------------------------------- --------------- -------------- -------------- --------------- Balance, end of period 21,585 $172 $(472) $(300) ================================ =============== ============== ============== ===============
The accompanying notes are an integral part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 ------------------------------------------------------ (Unaudited)
(Dollars in thousands) 1996 1995 - -------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $159 $297 - -------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 147 148 Increase (decrease) in other assets (66) 65 Increase in accrued interest 19 32 Decrease in tenants' deposits and other liabilities (37) (84) - -------------------------------------------------------------------------------------- 63 161 - -------------------------------------------------------------------------------------- Net cash provided by operating activities 222 458 - -------------------------------------------------------------------------------------- Cash flow from investing activities: Improvements to rental property (23) (46) Principal received on note receivable 27 66 - -------------------------------------------------------------------------------------- Net cash provided by investing activities 4 20 - -------------------------------------------------------------------------------------- Cash flow from financing activities: Principal payments on notes payable (204) (210) Principal payments to General Partner (145) (161) - -------------------------------------------------------------------------------------- Net cash used in financing activities (349) (371) - -------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (123) 107 Cash and cash equivalents, beginning of period 251 131 - -------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $128 $238 ======================================================================================
The accompanying notes are an integral part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 -------------------------------------------- NOTE 1 - BASIS OF PRESENTATION - ------------------------------ The accompanying unaudited financial statements contain all adjustments (consisting of normal recurring accruals) which are necessary, in the opinion of management, for a fair presentation. The statements, which do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, should be read in conjunction with the Partnership's financial statements for the year ended December 31, 1995. NOTE 2 - TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES - --------------------------------------------------------- Under the partnership agreement, the General Partner and its affiliates may receive compensation for services rendered to the Partnership and may receive reimbursement for certain expenses incurred on behalf of the Partnership. During the six month period ended June 30, 1996, the Partnership made or accrued the following payments to the General Partner or affiliates: Property management fees, charged to related party expense $49,000 Reimbursement of data processing expenses, charged to related party expense 8,000 Interest on advances from the General Partner, based on the prime rate, charged to related party expense 18,000 Interest on Promissory note, collateralized by the property Clearlake Village Apartments, charged to related party expense 90,000 ------------- $165,000 ============= NOTE 3 - NOTE RECEIVABLE - ------------------------ On November 15, 1994, the promissory note receivable in the amount of $515,000, collateralized by a second deed of trust against 1600 Dell Avenue Office complex, was amended for a principal paydown of $15,000 and an agreement to pay an additional $35,000 on or before January 31, 1995. Fully amortized principal and interest payments are due monthly in the amount of $9,863 commencing on December 15, 1994 until maturity on November 15, 1999. As of June 30, 1996, the outstanding balance of the note was $355,000. NOTE 4 - GROUSE RUN APARTMENTS - ------------------------------ On October 1, 1994, the Grouse Run note payable was amended. The amendment provides for fixed interest at 9.96%, amortized on a 30-year schedule. A principal payment of $800,000 was made by the Partnership concurrent with the effective date of the amendment. The note's maturity date was extended to October 1, 1999. As of June 30, 1996, the amended note's face value principal balance was $3,834,000. The amended note payable is classified as a troubled debt restructuring and, in accordance with Statement of Financial Accounting Standards No. 15, the Partnership is carrying the amended note equal to the total future cash payments payable and is not recognizing interest expense between the restructuring and the maturity of the amended note. NOTE 5 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - --------------------------------------------------------- For the six month period ended June 30, 1996, the Partnership paid interest on the note payable to affiliate of $90,000. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 ------------------------------------------ NOTE 6 - SUBSEQUENT EVENT - ------------------------- On August 12, 1996, the loan collateralized by the property Clearlake Village Apartments and payable to Franklin Resources, Inc. an affiliate of the General Partner (the "Previous Loan") was refinanced and replaced with a new loan (the "Replacement Loan") from an unaffiliated third party, First Union National Bank of North Carolina ( the "Lender"). As a condition for the refinance, the Lender required that the Property be held in an entity which owns only one substantial asset. To meet this condition, the Property was contributed to a new entity, Property Resources Fund VI Subsidiary, L.P. (the "Subsidiary"). The sole limited partner of the Subsidiary is the Partnership and the general partner is Property Resources, Inc. The formation of the Subsidiary should have no material effect in cash or profit and loss allocations between the Partnership and the General Partner, nor is the amount of any fees payable to the General Partner increased thereby. The amount of the Replacement Loan is $2,167,000, the term is 10 years and the interest rate is 8.875%. Principal and interest payments of $17,571 are due monthly until maturity of the loan when the remaining unpaid principal and accrued interest balances will become due. The Replacement Loan which is collateralized by the property Clearlake Village Apartments is non-recourse to the Partnership, but is recourse to the General Partner, but only under certain conditions including losses resulting from the presence of hazardous substances and from fraud. The cash proceeds from the loan were used to pay off the Previous Loan, to fund escrow accounts for property taxes, insurance and capital improvements, and to pay Lender fees and costs as well as unaffiliated mortgage broker commissions. The remaining funds were added to the reserves of the Partnership. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION - ------------ Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the Financial Statements and Notes thereto. RESULTS OF OPERATIONS - --------------------- COMPARISON OF THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 Net income for the six month period ended June 30, 1996 decreased $138,000, or 46%, compared to 1995 primarily as a result of the discontinuance of operations at Space Savers One and Three. Total revenue for the six month period ended June 30, 1996 decreased $196,000, or 16%, primarily as a result of a decrease in rental revenue. Rental revenue decreased $194,000, or 17%, primarily due to the end of the leaseback period of Space Savers One and Three in June, 1995. The decrease in rental revenue from Space Savers One and Three was partially offset by an increase in rental revenue of $52,000 by the Partnership's two remaining properties. The increase in rental revenue for the two remaining Partnership properties was attributable to an increase in the average occupancy and rental rates at Clearlake Village Apartments and at Grouse Run Apartments. For the six month periods ended June 30, 1996 and 1995 the average occupancy rate at Grouse Run Apartments was 92% and 87%, respectively. The occupancy rate at the Clearlake Village Apartments was 94% for both periods. Total expenses decreased $58,000, or 6%, from $893,000 in 1995 to $835,000. The decrease in total expenses was primarily due to a decrease in related party expense, as a result of a decrease in data processing expenses and interest expense on advances from the General Partner and to a decrease in operating expenses of $25,000 primarily due to the end of the leaseback period of Space Savers One and Three in June, 1995. The decrease in operating expense from Space Savers One and Three of $76,000 was partially offset by an increase in operating expense of $51,000 by the Partnership's two remaining properties reflecting increases in maintenance and administrative property expenses. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- In July, 1983, the Partnership completed a public offering of its limited partnership units with total proceeds of $10,795,500 from the sale of 21,585 limited partnership units. The Partnership acquired five properties with an aggregate cost of $23,526,000. As of June 30, 1996, the Partnership had two operating properties: Clearlake Village Apartments and Grouse Run Apartments. The buildings and the land upon which the buildings are located are owned directly by the Partnership in fee. All Partnership properties are subject to mortgages. As of June 30, 1996, cash and cash equivalents totaled $128,000. As of June 30, 1996, the General Partner had advanced, $368,000 plus accrued interest of $512,000, to the Partnership to pay for various capital improvements and to support operating cash flow deficits. The General Partner presently intends to continue to make such advances to the Partnership as necessary. Consequently, management believes that the Partnership's current sources of funds will be adequate to meet both its short-term and long-term capital commitments and operating requirements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) - ------------------------------- On August 12, 1996, the loan collateralized by the property Clearlake Village Apartments and payable to Franklin Resources, Inc. an affiliate of the General Partner (the "Previous Loan") was refinanced and replaced with a new loan (the "Replacement Loan") from an unaffiliated third party, First Union National Bank of North Carolina ( the "Lender"). As a condition for the refinance, the Lender required that the Property be held in an entity which owns only one substantial asset. To meet this condition, the Property was contributed to a new entity, Property Resources Fund VI Subsidiary, L.P. (the "Subsidiary"). The sole limited partner of the Subsidiary is the Partnership and the general partner is Property Resources, Inc. The formation of the Subsidiary should have no material effect in cash or profit and loss allocations between the Partnership and the General Partner, nor is the amount of any fees payable to the General Partner increased thereby. The amount of the Replacement Loan is $2,167,000, the term is 10 years and the interest rate is 8.875%. Principal and interest payments of $17,571 are due monthly until maturity of the loan when the remaining unpaid principal and accrued interest balances will become due. The Replacement Loan which is collateralized by the property Clearlake Village Apartments is non-recourse to the Partnership, but is recourse to the General Partner, but only under certain conditions including losses resulting from the presence of hazardous substances and from fraud. The cash proceeds from the loan were used to pay off the Previous Loan, to fund escrow accounts for property taxes, insurance and capital improvements, and to pay Lender fees and costs as well as unaffiliated mortgage broker commissions. The remaining funds were added to the reserves of the Partnership. The Partnership presently believes that funds available from improved operations and from its note receivable due in 1999 will permit it to repay advances owed to the General Partner. The Partnership also believes that the present trend toward improved operations at its properties will permit it to repay the Grouse Run note payable due in 1999 either from the sale of a property or a loan refinancing. Net cash provided by operating activities for the six month period ended June 30, 1996 was $222,000, or $236,000 less than the same period in 1995. The decrease in cash flow is primarily attributable to the decrease in net income as described under "Results of Operations". Net cash provided by investing activities for the six month period ended June 30, 1996, decreased $16,000 when compared to the same period in 1995. The decrease was due to a decrease in principal payments received from note receivable which was partially offset by a decrease in improvements to rental property. Net cash used in financing activities for the six month period ended June 30, 1996, decreased $22,000 when compared to the same period in 1995. The decrease was primarily due to a decrease in principal payments paid to the General Partner. IMPACT OF INFLATION - ------------------- The Partnership's management believes that inflation may have a positive effect on the Partnership's property portfolio, but this effect generally will not be fully realized until such properties are sold or exchanged. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Not applicable (b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter ended June 30, 1996. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROPERTY RESOURCES FUND VI By: /S/ DAVID P. GOSS David P. Goss Chief Executive Officer Date: AUGUST 8, 1996 EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JUN-30-1996 128 0 355 0 0 0 11,182 4,274 7,488 0 0 0 0 0 0 7,488 0 994 0 835 0 0 0 0 0 0 0 0 0 159 0 0
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