-----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, FnQsDMpDENikm0uYhquaMWYUXwSA6HkjtsR8bC0izqYIjeDaRC6JF8/adHv+Hxhg MkWlXvoRlEls5Mb4nbfirA== 0000730013-97-000003.txt : 19970317 0000730013-97-000003.hdr.sgml : 19970317 ACCESSION NUMBER: 0000730013-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970314 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHELTER PROPERTIES VI LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000730013 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 570755618 STATE OF INCORPORATION: SC FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13261 FILM NUMBER: 97556636 BUSINESS ADDRESS: STREET 1: ONE SINSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT (As last amended by 34-32231, eff. 6/3/93.) U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 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 0-13261 SHELTER PROPERTIES VI LIMITED PARTNERSHIP (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.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) 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 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 LIMITED PARTNERSHIP BALANCE SHEET (Unaudited) (in thousands, except unit data) January 31, 1997 Assets Cash and cash equivalents: Unrestricted $ 3,223 Restricted--tenant security deposits 192 Accounts receivable 16 Escrows for taxes 403 Restricted escrows 1,525 Other assets 671 Investment properties: Land $ 4,950 Buildings and related personal property 46,291 51,241 Less accumulated depreciation (23,287) 27,954 $33,984 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 192 Tenant security deposits 192 Accrued taxes 537 Other liabilities 221 Mortgage notes payable 27,231 Partners' Capital (Deficit) General partners $ (302) Limited partners (42,324 units issued and outstanding) 5,913 5,611 $33,984 See Accompanying Notes to Financial Statements b) SHELTER PROPERTIES VI LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended January 31, 1997 1996 Revenues: Rental income $2,386 $2,312 Other income 167 156 Total revenues 2,553 2,468 Expenses: Operating 695 686 General and administrative 63 54 Maintenance 280 339 Depreciation 487 481 Interest 622 634 Property taxes 221 220 Total expenses 2,368 2,414 Net income $ 185 $ 54 Net income allocated to general partners (1%) $ 2 $ 1 Net income allocated to limited partners (99%) 183 53 $ 185 $ 54 Net income per limited partnership unit $ 4.32 $ 1.26 See Accompanying Notes to Financial Statements c) SHELTER PROPERTIES VI LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (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' capital (deficit) at October 31, 1996 42,324 $ (304) $ 5,730 $ 5,426 Net income for the three months ended January 31, 1997 2 183 185 Partners' capital (deficit) at January 31, 1997 42,324 $ (302) $ 5,913 $ 5,611 See Accompanying Notes to Financial Statements
d) SHELTER PROPERTIES VI LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended January 31, 1997 1996 Cash flows from operating activities: Net income $ 185 $ 54 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 487 481 Amortization of discounts and loan costs 76 73 Loss on disposal of property -- 4 Casualty loss -- 1 Change in accounts: Restricted cash 7 1 Accounts receivable 4 (1) Escrows for taxes 35 33 Other assets 25 31 Accounts payable (61) (79) Tenant security deposit liabilities (5) -- Accrued taxes (73) (77) Other liabilities (132) (43) Net cash provided by operating activities 548 478 Cash flows from investing activities: Property improvements and replacements (222) (282) Deposits to restricted escrows (16) (13) Receipts from restricted escrows -- 14 Net insurance proceeds from property damages -- 36 Net cash used in investing activities (238) (245) Cash flows from financing activities: Payments on mortgage notes payable (193) (179) Partners' distributions -- (1,000) Net cash used in financing activities (193) (1,179) Net increase (decrease) in cash 117 (946) Cash and cash equivalents at beginning of period 3,106 3,710 Cash and cash equivalents at end of period $3,223 $ 2,764 Supplemental disclosure of cash flow information: Cash paid for interest $ 546 $ 560 See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Shelter Properties VI Limited Partnership (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" or "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended January 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 1997. 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, 1996. Cash and Cash Equivalents: Unrestricted Cash: Unrestricted cash includes cash on hand and in banks, demand deposits, money market funds, and certificates of deposits with original maturities of less than ninety days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Restricted Cash - Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are considered restricted cash. Deposits are refunded when the tenant vacates the apartment, provided the tenant has not damaged the unit and is current on its rental payments. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - 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 used in operations", as defined in the partnership agreement. However, "net cash used in 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. NOTE B - RECONCILIATION OF CASH FLOWS - CONTINUED
Three Months Ended January 31, (in thousands) 1997 1996 Net cash provided by operating activities $ 548 $ 478 Payments on mortgage notes payable (193) (179) Property improvements and replacements (222) (282) Change in restricted escrows, net (16) 1 Changes in reserves for net operating liabilities 200 135 Additional reserves (315) (155) Net cash provided by (used in) operations $ 2 $ (2)
The General Partner believed it to be in the best interest of the Partnership to reserve net cash from operations of approximately $315,000 and $155,000 at January 31, 1997 and 1996, respectively, to fund continuing capital improvements at the Partnership's six properties. NOTE C - 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 payments to affiliates for services and the reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Property management fees of approximately $127,000 and $123,000 were paid to affiliates of the General Partner for the three months ended January 31, 1997 and 1996, respectively. These fees are included in operating expenses on the accompanying statements of operations. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of partnership activities. Reimbursements for services of affiliates of approximately $45,000 and $32,000 were paid to the General Partner and affiliates for the three months ended January 31, 1997 and 1996, respectively. The Partnership insures its properties under a master policy through an agency and insurer unaffiliated with the Corporate General Partner. An affiliate of the Corporate General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the Corporate General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Corporate General Partner by virtue of the agent's obligations is not significant. NOTE D - CASUALTY LOSS During the first quarter of 1996, the Partnership recorded a casualty loss resulting from a fire which destroyed three units at Nottingham Square. Although the damage was covered by insurance, the fire resulted in a loss of approximately $1,000. The loss resulted from gross proceeds received of approximately $43,000 which were less than the basis of the property plus expenses to replace the interiors damaged. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of six apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended January 31, 1997 and 1996: Average Occupancy Property 1997 1996 Rocky Creek Augusta, Georgia 87% 77% Carriage House Gastonia, North Carolina 92% 97% Nottingham Square Des Moines, Iowa 89% 95% Foxfire/Barcelona Durham, North Carolina 97% 98% River Reach Jacksonville, Florida 99% 98% Village Gardens Fort Collins, Colorado 96% 93% The Corporate General Partner attributes the increase in occupancy at Rocky Creek to the conversion of some of the two bedroom units to one bedroom units for which there is greater demand. The decrease in occupancy at Carriage House is the result of increased competition in the Gastonia market due to additional units being built. The decrease in occupancy at Nottingham Square was due primarily to additional units being built in the Des Moines market, as well as tenants vacating to purchase homes. The Partnership realized net income of approximately $185,000 and $54,000 for the three months ended January 31, 1997, and 1996, respectively. The increased net income is largely attributable to rental rate increases at all of the Partnership's properties. Other income increased primarily due to increased interest income as a result of the Partnership having higher cash balances available for investment for the three months ended January 31, 1997, compared to the three months ended January 31, 1996. Also contributing to the increase in net income was a decrease in maintenance expense. The decrease is primarily the result of gutter replacements and exterior painting at Foxfire/Barcelona during the three months ended January 31, 1996. Included in maintenance expense is approximately $25,000 of major repairs and maintenance comprised primarily of exterior building improvements for the three months ended January 31, 1997. For the three months ended January 31, 1996, approximately $66,000 of major repairs and maintenance comprised primarily of gutter replacements and exterior painting are included in maintenance expense. During the first quarter of 1996, the Partnership recorded a casualty loss resulting from a fire which destroyed three units at Nottingham Square. Although the damage was covered by insurance, the fire resulted in a loss of approximately $1,000, arising from gross proceeds received of approximately $43,000 which were less than the basis of the property plus expenses to replace the interiors damaged. 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 expense. 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. At January 31, 1997, the Partnership had unrestricted cash of approximately $3,223,000 compared to approximately $2,764,000 at January 31, 1996. Net cash provided by operations increased primarily as a result of increased rental and other income and decreased maintenance expenses as discussed above. Net cash used in financing activities decreased due to approximately $1,000,000 of accrued distributions to partners being paid in the first quarter of 1996. No distributions were made during the three months ended January 31, 1997. The Partnership has no material capital programs scheduled to be performed in fiscal year 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. 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 properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $27,231,000, net of discount, is being amortized over 257 months with balloon payments of approximately $23,008,000 due on November 15, 2002, at which time the properties are expected to either be refinanced or sold. No cash distributions were paid in the first quarter of 1997. Distributions of the proceeds from the sale of Marble Hills of $1,000,000 were paid in the first quarter of 1996. Future cash distributions will depend on the levels of net cash generated from operations, refinancing, property sales and cash reserves. 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 January 31, 1997: 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 LIMITED PARTNERSHIP By: Shelter Realty VI Corporation Corporate General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/ Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: March 14, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties VI 1997 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000730013 SHELTER PROPERTIES VI LIMITED PARTNERSHIP 1,000 3-MOS OCT-31-1997 JAN-31-1997 3,223 0 16 0 0 0 51,241 23,287 33,984 0 27,231 0 0 0 5,611 33,984 0 2,553 0 0 2,368 0 622 0 0 0 0 0 0 185 4.32 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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