-----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, B4NcPwpnuKU6/xbCsh7PqVf7LD0aqcasykHtYb+Rs+n7Lh6Yzo8zPO/UfZektBMf 2TLNI8rmgu4rNKmy7XMBGg== 0000702313-97-000003.txt : 19970815 0000702313-97-000003.hdr.sgml : 19970815 ACCESSION NUMBER: 0000702313-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97660032 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, 1997 -------------------------------------------------- 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 (I.R.S. Employer incorporation or organization) 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 (650) 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, 1997: 21,585 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS JUNE 30, 1997 AND DECEMBER 31, 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------- ASSETS: Rental property: Land $2,239 $2,239 Land improvements 781 763 Buildings and improvements 7,231 7,174 Furnishings and equipment 1,043 1,041 - ------------------------------------------------------------------------------- 11,294 11,217 Less: accumulated depreciation 4,565 4,420 - ------------------------------------------------------------------------------- 6,729 6,797 Cash and cash equivalents 296 279 Note receivable 284 320 Other assets 318 413 - ------------------------------------------------------------------------------- Total assets $7,627 $7,809 =============================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY: Note payable $6,773 $6,986 Advances from General Partner - 153 Accrued interest due to General Partner 527 524 Deposits and other liabilities 218 275 - ------------------------------------------------------------------------------- Total liabilities 7,518 7,938 - ------------------------------------------------------------------------------- Partners' capital (deficit): Limited partners, 21,585 units issued and outstanding 560 334 General Partner (451) (463) - ------------------------------------------------------------------------------- Total partners' capital (deficit) 109 (129) - ------------------------------------------------------------------------------- Total liabilities and partners' capital (deficit) $7,627 $7,809 =============================================================================== The accompanying notes are an intregal 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 unit amounts) 1997 1996 1997 1996 - -------------------------------------------------------------------------------- REVENUE: Rent $529 $494 $1,036 $974 Interest and dividends 8 10 18 20 - -------------------------------------------------------------------------------- Total revenue 537 504 1,054 994 - -------------------------------------------------------------------------------- EXPENSES: Interest, other than related party 51 - 102 - Depreciation 73 73 145 147 Operating 250 254 491 512 Related party 32 82 65 165 General and administrative 5 5 13 11 - -------------------------------------------------------------------------------- Total expenses 411 414 816 835 - -------------------------------------------------------------------------------- NET INCOME $126 $90 $238 $159 ================================================================================ Net income allocable to limited partners $120 $86 $226 $151 ================================================================================ Net income allocable to General Partner $6 $4 $12 $8 ================================================================================ Net income per $500 limited partnership unit-based on 21,585 units outstanding $5.56 $3.98 $10.47 $7.00 ================================================================================ The accompanying notes are an intregal 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, 1997 AND 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------- Cash flows from operating activities: Net income $238 $159 - ------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 152 147 (Decrease) increase in other assets 88 (66) Increase in accrued interest 3 19 Decrease in deposits and other liabilities (57) (37) - ------------------------------------------------------------------------------- 186 63 - ------------------------------------------------------------------------------- Net cash provided by operating activities 424 222 - ------------------------------------------------------------------------------- Cash flow from investing activities: Improvements to rental property (77) (23) Principal received on note receivable 36 27 - ------------------------------------------------------------------------------- Net cash (used in) provided by investing activities (41) 4 - ------------------------------------------------------------------------------- Principal payments on notes payable (213) (204) Principal payments to General Partner (153) (145) - ------------------------------------------------------------------------------- Net cash used in financing activities (366) (349) - ------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 17 (123) Cash and cash equivalents, beginning of period 279 251 - ------------------------------------------------------------------------------- Cash and cash equivalents, end of period $296 $128 =============================================================================== The accompanying notes are an intregal part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 NOTE 1 - BASIS OF PRESENTATION The accompanying financial statements of Property Resources Fund VI (the `Partnership') have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation have been included. The Company presumes that users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure which would substantially duplicate the disclosure contained in the Partnership's 1996 10-K has been omitted NOTE 2 - CLEARLAKE VILLAGE APARTMENTS 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, which is collateralized by the property Clearlake Village Apartment, 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, 1997 AND 1996 Net income for the six month period ended June 30, 1997 increased $79,000, or 50%, compared to 1996 primarily as a result of the increase in rental revenue and a decrease in operating expense. Total revenue for the six month period ended June 30, 1997 increased $60,000, or 6%, primarily as a result of an increase in rental revenue at the Grouse Run Apartments. The increase in rental revenue was attributable to an increase in the average occupancy and rental rates at the Grouse Run Apartments. For the six month periods ended June 30, 1997 and 1996 the average occupancy rate at Grouse Run Apartments was 94% and 92%, respectively. Total expenses decreased $19,000, or 2%, from $835,000 in 1996 to $816,000. The decrease in total expenses was primarily attributable to a decrease in operating expense of $21,000 by the Partnership's two remaining properties reflecting decreases in utilities and repairs and maintenance expenses. The decrease in related party expense of $100,000 and increase in interest expense of $102,000 for the six months ended June 30, 1997, when compared to the period in 1996 is due to the loan payable to related party being replaced with a new loan from an unaffiliated third party in August, 1996. 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, 1997, 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 or the Subsidiary, as herein after defined, in fee. All Partnership properties are subject to mortgages. As of June 30, 1997, cash and cash equivalents totaled $296,000. As of June 30, 1997, accrued interest due to General Partner amounted to $527,000. 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, 1997 was $424,000, or $202,000 more than the same period in 1996. The increase was primarily due to an to an increase in net income as described under "Results of Operations" and to a decrease in other assets. Net cash provided by investing activities for the six month period ended June 30, 1997, decreased $45,000 when compared to the same period in 1996. The decrease was due to an increase in improvements to rental property. 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, 1997. 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 13, 1997 EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 296 0 284 0 0 0 11,294 4,565 7,627 0 0 0 0 0 0 7,627 0 1,054 0 714 0 0 102 0 0 0 0 0 0 238 0 0
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