-----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, Nks9qraiyZDO5D2svHLOuOdn4wv4OlEj0MF3OfdlejxVY1aMEaDywwLDPzldRw/o bGaHSVOkAsjGpLNOfZ8TYA== 0000702313-97-000004.txt : 19971117 0000702313-97-000004.hdr.sgml : 19971117 ACCESSION NUMBER: 0000702313-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-11798 FILM NUMBER: 97721940 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 SEPTEMBER 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 (I.R.S. Employer of 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 September 30, 1997: 21,585 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS SEPTEMBER 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 7,328 7,174 Furnishings and equipment 1,050 1,041 - -------------------------------------------------------------------------------- 11,398 11,217 Less: accumulated depreciation 4,636 4,420 - -------------------------------------------------------------------------------- 6,762 6,797 Cash and cash equivalents 305 279 Note receivable 261 320 Other assets 337 413 - -------------------------------------------------------------------------------- Total assets $7,665 $7,809 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY: Note payable $6,666 $6,986 Advances from General Partner - 153 Accrued interest due to General Partner 527 524 Deposits and other liabilities 244 275 - -------------------------------------------------------------------------------- Total liabilities 7,437 7,938 - -------------------------------------------------------------------------------- Partners' capital (deficit): Limited partners, 21,585 units issued and outstanding 673 334 General Partner (445) (463) - -------------------------------------------------------------------------------- Total partners' capital (deficit) 228 (129) - -------------------------------------------------------------------------------- Total liabilities and partners' capital (deficit) $7,665 $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 NINE MONTHS ENDED SEPTEMBER September SEPTEMBER September 30 30 30 30 (Dollars in thousands, except per unit amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------- REVENUE: Rent $528 $513 $1,564 $1,487 Interest and dividends 5 8 23 28 - ------------------------------------------------------------------------------- Total revenue 533 521 1,587 1,515 - ------------------------------------------------------------------------------- EXPENSES: Interest, other than related party 55 35 157 36 Depreciation 72 73 217 219 Operating 253 274 744 786 Related party 30 57 95 222 General and administrative 4 1 17 12 - ------------------------------------------------------------------------------- Total expenses 414 440 1,230 1,275 - ------------------------------------------------------------------------------- NET INCOME $119 $81 $357 $240 =============================================================================== Net income allocable to limited partners $113 $77 $339 $228 =============================================================================== Net income allocable to General Partner $6 $4 $18 $12 =============================================================================== Net income per $500 limited partnership unit- based on 21,585 units outstanding $5.24 $3.57 $15.71 $10.56 =============================================================================== 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 NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited) (Dollars in thousands) 1997 1996 - ------------------------------------------------------------------------------- Cash flows from operating activities: Net income $357 $240 - ------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 226 228 (Increase) decrease in other assets 66 (325) Increase in accrued interest 3 26 Decrease in deposits and other liabilities (31) 21 - ------------------------------------------------------------------------------- 264 (50) - ------------------------------------------------------------------------------- Net cash provided by operating activities 621 190 - ------------------------------------------------------------------------------- Cash flow from investing activities: Improvements to rental property (181) (30) Principal received on note receivable 59 48 - ------------------------------------------------------------------------------- Net cash (used in) provided by investing activities (122) 18 - ------------------------------------------------------------------------------- Origination of note payable - 2,167 Principal payments on notes payable (320) (307) Principal payments to General Partner (153) (1,918) - ------------------------------------------------------------------------------- Net cash used in financing activities (473) (58) - ------------------------------------------------------------------------------- Net increase in cash and cash equivalents 26 150 Cash and cash equivalents, beginning of period 279 251 - ------------------------------------------------------------------------------- Cash and cash equivalents, end of period $305 $401 =============================================================================== The accompanying notes are an intregal part of these financial statements. PROPERTY RESOURCES FUND VI (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim financial statements of Property Resources Fund VI (the "Partnership") have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. 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. In the opinion of management, all appropriate adjustments necessary to a fair presentation of the results of operations have been made for the periods shown. All adjustments are of a normal recurring nature. Certain prior year amounts have been reclassified to conform to current year presentations. These financial statements should be read in conjunction with the Partnership's audited financial statements for the year ended December 31, 1996. 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 THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 Net income for the three- and nine-month periods ended September 30, 1997 increased $38,000, or 47%, and $117,000, or 49%, respectively, when compared to 1996 primarily as a result of the increase in rental revenue and a decrease in operating expense and related party expense. Total revenue for the three- and nine-month periods ended September 30, 1997 increased $12,000, or 2% and $72,000, or 5%, respectively, when compared to 1996 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 nine-month periods ended September 30, 1997 and 1996 the average occupancy rate at Grouse Run Apartments was 94% and 92%, respectively. Total expenses for the three- and nine-month periods ended September 30, 1997 decreased $26,000, or 6%, and $45,000, or 4%, respectively, when compared to 1996 as a result of decreases in operating expense of $21,000, and $42,000, respectively, by the Partnership's two remaining properties reflecting decreases in utilities and repairs and maintenance expenses. The decrease in related party expense of $27,000 and $127,000 and increase in interest expense of $20,000 and $121,000 for the three- and nine-months periods ended September 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 September 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 September 30, 1997, cash and cash equivalents totaled $305,000. As of September 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 nine month period ended September 30, 1997 was $621,000, or $431,000 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 nine month period ended September 30, 1997, decreased $140,000 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 September 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: NOVEMBER 13, 1997 EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 SEP-30-1997 305 0 261 0 0 0 11,398 4,636 7,665 0 0 0 0 0 0 7,665 0 1,587 0 1,230 0 0 0 0 0 0 0 0 0 357 0 0
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