-----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, Mm4BLv+w3bga5sFyx8KNBftA6VOM5NFRxWX2M5Yj7CVPC4j26JYvAEeOkGc2m27T 5kyOGMgyN7/uaGAvrn/CSQ== /in/edgar/work/0000711642-00-000304/0000711642-00-000304.txt : 20001114 0000711642-00-000304.hdr.sgml : 20001114 ACCESSION NUMBER: 0000711642-00-000304 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES VI LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000730013 STANDARD INDUSTRIAL CLASSIFICATION: [6500 ] IRS NUMBER: 570755618 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13261 FILM NUMBER: 759445 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 0001.txt QUARTER ENDING SEPTEMBER 30, 2000 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (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, 2000 [ ] 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 0-13261 SHELTER PROPERTIES VI (Exact name of small business issuer as specified in its charter) South Carolina 57-0755618 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 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___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) SHELTER PROPERTIES VI BALANCE SHEET (Unaudited) (in thousands, except per unit data) September 30, 2000
Assets Cash and cash equivalents $ 1,333 Receivables and deposits 306 Restricted escrows 1,435 Other assets 319 Investment properties: Land $ 4,950 Buildings and related personal property 51,184 56,134 Less accumulated depreciation (30,961) 25,173 $ 28,566 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 106 Tenant security deposit liabilities 219 Accrued property taxes 742 Other liabilities 361 Mortgage notes payable 24,736 Partners' (Deficit) Capital General partners $ (320) Limited partners (42,324 units issued and outstanding) 2,722 2,402 $ 28,566 See Accompanying Notes to Financial Statements
b) SHELTER PROPERTIES VI STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 Revenues: Rental income $ 2,648 $ 2,563 $ 7,878 $ 7,513 Other income 230 228 621 571 Total revenues 2,878 2,791 8,499 8,084 Expenses: Operating 1,108 1,098 3,387 3,233 General and administrative 178 101 379 282 Depreciation 675 556 1,763 1,565 Interest 574 571 1,733 1,735 Property taxes 255 222 786 672 Total expenses 2,790 2,548 8,048 7,487 Net income $ 88 $ 243 $ 451 $ 597 Net income allocated to general partners (1%) $ 1 $ 2 $ 5 $ 6 Net income allocated to limited partners (99%) 87 241 446 591 $ 88 $ 243 $ 451 $ 597 Net income per limited partnership unit $ 2.06 $ 5.69 $ 10.54 $ 13.96 Distribution per limited partnership unit $ -- $ -- $ 44.91 $ -- See Accompanying Notes to Financial Statements
c) SHELTER PROPERTIES VI STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 42,324 $ 2 $42,324 $42,326 Partners' (deficit) capital at December 31, 1999 42,324 $ (306) $ 4,177 $ 3,871 Distributions to partners (19) (1,901) (1,920) Net income for the nine months ended September 30, 2000 -- 5 446 451 Partners' (deficit) capital at September 30, 2000 42,324 $ (320) $ 2,722 $ 2,402 See Accompanying Notes to Financial Statements
d) SHELTER PROPERTIES VI STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2000 1999 Cash flows from operating activities: Net income $ 451 $ 597 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,763 1,565 Amortization of discounts and loan costs 269 212 Change in accounts: Receivables and deposits 356 (269) Other assets (32) (86) Accounts payable (104) (72) Tenant security deposit liabilities 4 3 Accrued property taxes 87 215 Other liabilities 57 (19) Net cash provided by operating activities 2,851 2,146 Cash flows from investing activities: Property improvements and replacements (648) (1,251) Net (deposits to) withdrawals from restricted escrows (669) 807 Net cash used in investing activities (1,317) (444) Cash flows from financing activities: Payments on mortgage notes payable (754) (693) Distributions paid to partners (2,348) -- Net cash used in financing activities (3,102) (693) Net (decrease) increase in cash and cash equivalents (1,568) 1,009 Cash and cash equivalents at beginning of period 2,901 1,323 Cash and cash equivalents at end of period $ 1,333 $ 2,332 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,463 $ 1,525 Distributions paid to partners include $428,000 which was accrued at December 31, 1999 and paid during January 2000. See Accompanying Notes to Financial Statements
e) SHELTER PROPERTIES VI NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Shelter Properties VI (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Shelter Realty VI Corporation (the "Corporate General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the year ended October 31, 1999. Change in Fiscal Year End: The Partnership elected to change its fiscal year end from October 31 to December 31, as announced in its Form 8-K filed on January 12, 2000. This quarterly report presents the unaudited results of the Partnership's operations for the three and nine months ended September 30, 2000 and 1999. Reclassifications Certain reclassifications have been made to the 1999 information to conform to the 2000 presentation. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Corporate General Partner. The Corporate General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Reconciliation of Cash Flows The following is a reconciliation of the subtotal on the accompanying statements of cash flows captioned "net cash provided by operating activities" to "net cash provided by operations", as defined in the partnership agreement of the Partnership (the "Partnership Agreement"). However, "net cash provided by operations" should not be considered an alternative to net income as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity.
Nine Months Ended September 30, 2000 1999 (in thousands) Net cash provided by operating activities $ 2,851 $ 2,146 Payments on mortgage notes payable (754) (693) Property improvements and replacements (648) (1,251) Change in restricted escrows, net (669) 807 Changes in reserves for net operating liabilities (368) 228 Additional reserves (230) (1,237) Net cash provided by operations $ 182 $ --
The Corporate General Partner believed it to be in the best interest of the Partnership to reserve net cash from operations of approximately $230,000 and $1,237,000 at September 30, 2000 and 1999, respectively, to fund continuing capital improvements and repairs at the Partnership's six investment properties. Note D - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Corporate General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with the Corporate General Partner and/or its affiliates were incurred for each of the nine months ended September 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $439 $408 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) 245 151 During the nine months ended September 30, 2000 and 1999, affiliates of the Corporate General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties as compensation for providing property management services. The Registrant paid to such affiliates approximately $439,000 and $408,000 for the nine months ended September 30, 2000 and 1999, respectively. Affiliates of the Corporate General Partner received reimbursements of accountable administrative expenses amounting to approximately $245,000 and $151,000 for the nine months ended September 30, 2000 and 1999, respectively. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 25,828 limited partnership units in the Partnership representing approximately 61.02% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Corporate General Partner. As a result of its ownership of approximately 61.02% of the outstanding units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Corporate General Partner because of their affiliation with the Corporate General Partner. Note E - Distributions During the two months ended December 31, 1999, a distribution was approved and accrued for approximately $428,000 (approximately $424,000 to the limited partners, $10.02 per limited partnership unit) from operations. The distribution was paid during the nine months ended September 30, 2000. During the nine months ended September 30, 2000, the Partnership paid distributions of approximately $1,920,000 (approximately $1,901,000 paid to the limited partners or $44.91 per limited partnership unit) from operations. No distributions were declared or paid during the nine months ended September 30, 1999. Subsequent to September 30, 2000, the Corporate General Partner approved and paid a distribution of $182,000 from operations (approximately $180,000 of which was paid to limited partners, $4.25 per limited partnership unit). Note F - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties consisting of six apartment complexes located in five states throughout the United States as follows: one each in Georgia, Iowa, Florida, and Colorado, and two in North Carolina. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies in the Partnership's Annual Report on Form 10-KSB for the year ended October 31, 1999. Factors management used to identify the Partnership's reportable segment: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties are managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the three and nine month periods ended September 30, 2000 and 1999, is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segment. Three Months Ended September 30, 2000 Residential Other Totals Rental income $ 2,648 $ -- $ 2,648 Other income 228 2 230 Interest expense 574 -- 574 Depreciation 675 -- 675 General and administrative expense -- 178 178 Segment profit (loss) 264 (176) 88 Nine months Ended September 30, 2000 Residential Other Totals Rental income $ 7,878 $ -- $ 7,878 Other income 602 19 621 Interest expense 1,733 -- 1,733 Depreciation 1,763 -- 1,763 General and administrative expense -- 379 379 Segment profit (loss) 811 (360) 451 Total assets 28,446 120 28,566 Capital expenditures for investment properties 648 -- 648 Three Months Ended September 30, 1999 Residential Other Totals Rental income $ 2,563 $ -- $ 2,563 Other income 221 7 228 Interest expense 571 -- 571 Depreciation 556 -- 556 General and administrative expense -- 101 101 Segment profit (loss) 337 (94) 243 Nine Months Ended September 30, 1999 Residential Other Totals Rental income $ 7,513 $ -- $ 7,513 Other income 544 27 571 Interest expense 1,735 -- 1,735 Depreciation 1,565 -- 1,565 General and administrative expense -- 282 282 Segment profit (loss) 852 (255) 597 Total assets 30,147 1,014 31,161 Capital expenditures for investment properties 1,251 -- 1,251 Note G - 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. 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 Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 2. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of six apartment complexes. The following table sets forth the average occupancy of the properties for each of the nine months ended September 30, 2000 and 1999: Average Occupancy Property 2000 1999 Rocky Creek Apartments Augusta, Georgia 93% 92% Carriage House Apartments Gastonia, North Carolina 95% 93% Nottingham Square Apartments Des Moines, Iowa 97% 95% Foxfire/Barcelona Apartments Durham, North Carolina 92% 96% River Reach Apartments Jacksonville, Florida 96% 95% Village Gardens Apartments Fort Collins, Colorado 96% 97% The decrease in average occupancy at Foxfire/Barcelona Apartments is due to the renting, during the nine months ended September 30, 1999, of corporate units to a construction company that was building a hospital in the area. The construction company is no longer renting such units. Results of Operations The Partnership recorded net income of approximately $88,000 for the three months ended September 30, 2000 compared to a net income of approximately $243,000 for the three months ended September 30, 1999. The Partnership's net income for the nine months ended September 30, 2000 was approximately $451,000 compared to a net income of approximately $597,000 for the nine months ended September 30, 1999. The decrease in net income for the three and nine months ended September 30, 2000 compared to the three and nine months ended September 30, 1999 was primarily due to an increase in total expenses offset by an increase in total revenues. The increase in total expenses for the three and nine months ended September 30, 2000 is primarily attributable to an increase in operating, general and administrative, depreciation, and property tax expenses. Operating expense increased as a result of an increase in property expenses due to an increase in commissions and bonuses, and increases in employee salaries and related employee benefits at the Partnership's investment properties. Depreciation expense increased as a result of property additions during the past twelve months at the Partnership's investment properties. The increase in property tax expense is due to the timing of the receipt of tax bills, which affected the tax accruals recorded for the respective periods. General and administrative expenses increased for the three and nine months ended September 30, 2000 as a result of an increase in costs associated with professional fees necessary to operate the Partnership and an increase in the costs of services included in the management reimbursements to the Corporate General Partner as allowed under the Partnership Agreement. Included in general and administrative expenses at both September 30, 2000 and 1999, are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit and appraisals required by the Partnership Agreement. Total revenues increased for the three and nine month periods ended September 30, 2000 primarily due to an increase in rental income. Rental income increased due to an increase in average rental rates at all six of the Registrant's properties and an increase in occupancy at four of the investment properties. As part of the ongoing business plan of the Partnership, the Corporate General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Corporate General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Corporate General Partner will be able to sustain such a plan. Liquidity and Capital Resources At September 30, 2000, the Partnership had cash and cash equivalents of approximately $1,333,000 as compared to approximately $2,332,000 at September 30, 1999. Cash and cash equivalents decreased approximately $1,568,000 for the nine months ended September 30, 2000 from the Partnership's year end of December 31, 1999. The decrease was due to approximately $3,102,000 of cash used in financing activities and approximately $1,317,000 of cash used in investing activities which was partially offset by approximately $2,851,000 of cash provided by operating activities. Cash used in investing activities consisted primarily of net deposits to restricted escrows maintained by the mortgage lender and property improvements and replacements. Cash used in financing activities consisted primarily of distributions paid to partners and, to a lesser extent, payments of principal made on the mortgages encumbering the Registrant's properties. The Registrant invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the investment properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, local, legal, and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Rocky Creek Apartments Approximately $92,000 has been budgeted for capital improvements at Rocky Creek Apartments for the year 2000 consisting primarily of flooring covering replacement, air conditioning unit replacements, major landscaping, and appliance replacements. During the nine months ended September 30, 2000, the Partnership expended approximately $72,000 for capital improvements at Rocky Creek Apartments primarily consisting of floor covering replacement, major landscaping, other building enhancements, and roof replacement. The improvements were funded from Partnership operating cash flow. Carriage House Apartments Approximately $71,000 has been budgeted for capital improvement at Carriage House Apartments for the year 2000 consisting primarily of floor covering replacement, air conditioning unit replacements and appliance replacements. During the nine months ended September 30, 2000, the Partnership expended approximately $49,000 for capital improvements at Carriage House Apartments primarily consisting of floor covering, air conditioning unit replacement, and appliance replacements. These improvements were funded from Partnership operating cash flow. Nottingham Square Apartments Approximately $159,000 has been budgeted for capital improvements at Nottingham Square Apartments for the year 2000 consisting primarily of floor covering replacement, plumbing enhancements and appliance replacements. During the nine months ended September 30, 2000, the Partnership expended approximately $141,000 for capital improvements at Nottingham Square Apartments primarily consisting of floor covering and appliance replacements and other building improvements. These improvements were funded from Partnership operating cash flow. Foxfire/Barcelona Apartments Approximately $149,000 has been budgeted for capital improvements at Foxfire/Barcelona Apartments for the year 2000 consisting primarily of floor covering replacements, cabinet replacements, air conditioning units replacements and appliance replacements. During the nine months ended September 30, 2000, the Partnership expended approximately $75,000 for capital improvements at Foxfire/Barcelona Apartments primarily consisting of floor covering replacement, appliance replacement, cabinet replacements, and other structural improvements. These improvements were funded from operating cash flows. River Reach Apartments Approximately $519,000 has been budgeted for capital improvements at River Reach Apartments for the year 2000 consisting primarily of floor covering replacement, plumbing enhancements, air conditioning unit replacements, appliance replacements and other structural enhancements. During the nine months ended September 30, 2000, the Partnership expended approximately $254,000 for capital improvements at River Reach Apartments primarily consisting of floor covering replacement, air conditioning unit replacements, plumbing fixtures, appliance replacements, and interior decoration. These improvements were funded from Partnership operating cash flow. Village Gardens Apartments Approximately $112,000 has been budgeted for capital improvements at Village Gardens Apartments for the year 2000 consisting primarily of plumbing enhancements, floor covering replacements and appliance replacements. During the nine months ended September 30, 2000, the Partnership expended approximately $57,000 for capital improvements at Village Gardens Apartments primarily consisting of floor covering replacements, plumbing enhancements, electrical enhancements, and appliance replacements. These improvements were funded from Partnership operating cash flow. The additional capital expenditures will be incurred only if cash is available from operations and Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's current assets are thought to be sufficient for any near term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $24,736,000, net of discounts, is being amortized over 257 months with a balloon payment of approximately $23,008,000 due on November 15, 2002. The Corporate General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. During the two months ended December 31, 1999, a distribution was approved and accrued for approximately $428,000 (approximately $424,000 to the limited partners, $10.02 per limited partnership unit) from operations. The distribution was paid during the nine months ended September 30, 2000. During the nine months ended September 30, 2000, the Partnership paid distributions of approximately $1,920,000 ($1,901,000 to the limited partners or $44.91 per limited partnership unit) from operations. Subsequent to September 30, 2000, the Corporate General Partner approved and paid a distribution of approximately $182,000 from operations (approximately $180,000 of which was paid to limited partners, $4.25 per limited partnership unit). No distributions were declared or paid during the nine months ended September 30, 1999. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings, and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. In addition, the Partnership is restricted from making distributions if the amount in the reserve account for each property maintained by the mortgage lender is less than $400 per apartment unit at all six of the Partnership's investment properties. At September 30, 2000, the reserve account was adequately funded with a balance of approximately $1,435,000. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital improvements, to permit further distributions to its partners during the remainder of 2000 or subsequent periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEDINGS 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. 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 Corporate General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Corporate General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Corporate General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The Corporate General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K filed during the quarter ended September 30, 2000: None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHELTER PROPERTIES VI By: Shelter Realty VI Corporation Corporate General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: November 13, 2000 EX-27 2 0002.txt THIRD QUARTER 10-QSB
5 This schedule contains summary financial information extracted from Shelter Properties VI 2000 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000730013 Shelter Properties VI 1,000 9-MOS DEC-31-2000 JUL-01-2000 SEP-30-2000 1,333 0 306 0 0 0 56,134 30,961 28,566 0 24,736 0 0 0 2,402 0 0 8,499 0 0 8,048 0 1,733 0 0 0 0 0 0 451 10.54 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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