-----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, ENReOCqOcvN/5BTPDs64FmHW5sNLPOFrPtvKoJHzfKz05jImHk6+cZuQ2UFsiJlh R8y06X64tEiweLAe3yFk6g== 0000730013-97-000005.txt : 19970617 0000730013-97-000005.hdr.sgml : 19970617 ACCESSION NUMBER: 0000730013-97-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970616 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: 97624387 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 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 April 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 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) April 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 3,508 Restricted--tenant security deposits 199 Accounts receivable 11 Escrows for taxes 385 Restricted escrows 1,526 Other assets 957 Investment properties: Land $ 4,950 Buildings and related personal property 46,514 51,464 Less accumulated depreciation (23,743) 27,721 $34,307 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 310 Tenant security deposits 199 Accrued taxes 548 Other liabilities 229 Mortgage notes payable 27,087 Partners' Capital (Deficit) General partners $ (299) Limited partners (42,324 units issued and outstanding) 6,233 5,934 $34,307 See Accompanying Notes to Financial Statements b) SHELTER PROPERTIES VI LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended April 30, April 30, 1997 1996 1997 1996 Revenues: Rental income $ 2,381 $ 2,336 $ 4,767 $ 4,648 Other income 166 172 333 328 Net casualty gain (loss) 268 -- 268 (1) Total revenues 2,815 2,508 5,368 4,975 Expenses: Operating 754 713 1,449 1,398 General and administrative 79 116 142 170 Maintenance 311 284 591 623 Depreciation 493 489 980 970 Interest 619 630 1,241 1,264 Property taxes 236 218 457 438 Total expenses 2,492 2,450 4,860 4,863 Net income $ 323 $ 58 $ 508 $ 112 Net income allocated to general partners (1%) $ 3 $ 1 $ 5 $ 1 Net income allocated to limited partners (99%) 320 57 503 111 Net income $ 323 $ 58 $ 508 $ 112 Net income per limited partnership unit $ 7.56 $ 1.36 $ 11.88 $ 2.62 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' (deficit) capital at October 31, 1996 42,324 $ (304) $ 5,730 $ 5,426 Net income for the six months ended April 30, 1997 -- 5 503 508 Partners' (deficit) capital at April 30, 1997 42,324 $ (299) $ 6,233 $ 5,934 See Accompanying Notes to Financial Statements
d) SHELTER PROPERTIES VI LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended April 30, 1997 1996 Cash flows from operating activities: Net income $ 508 $ 112 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 980 970 Amortization of discounts and loan costs 152 148 Casualty (gain) loss (268) 1 Change in accounts: Restricted cash -- (1) Accounts receivable 9 (7) Escrows for taxes 53 18 Other assets 24 (55) Accounts payable (75) (158) Tenant security deposit liabilities 2 4 Accrued taxes (62) (59) Other liabilities (124) (2) Net cash provided by operating activities 1,199 971 Cash flows from investing activities: Property improvements and replacements (426) (524) Deposits to restricted escrows (31) (31) Receipts from restricted escrows 14 68 Net insurance proceeds from property damages 36 35 Net cash used in investing activities (407) (452) Cash flows from financing activities: Payments on mortgage notes payable (390) (361) Partners' distributions -- (1,000) Net cash used in financing activities (390) (1,361) Net increase (decrease) in cash and cash equivalents 402 (842) Cash and cash equivalents at beginning of period 3,106 3,710 Cash and cash equivalents at end of period $3,508 $ 2,868 Supplemental disclosure of cash flow information: Cash paid for interest $1,089 $ 1,117 Supplemental disclosure of non-cash activity: Other assets and accounts payable were adjusted by approximately $308,000 and $132,000, respectively, for non-cash amounts in connection with the recording of the casualty items. 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 six months ended April 30, 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.
Six Months Ended April 30, (in thousands) 1997 1996 Net cash provided by operating activities $1,199 $ 971 Payments on mortgage notes payable (390) (361) Property improvements and replacements (426) (524) Change in restricted escrows, net (17) 37 Changes in reserves for net operating liabilities 173 260 Additional reserves (540) (385) Net cash used in operations $ (1) $ (2)
The General Partner believed it to be in the best interest of the Partnership to reserve net cash from operations of approximately $540,000 and $385,000 at April 30, 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 $251,000 and $246,000 were paid to affiliates of the Corporate General Partner for the six months ended April 30, 1997 and 1996, respectively. These fees are included in operating expenses in the accompanying statements of operations. The Partnership Agreement also provides for reimbursement to the Corporate General Partner and its affiliates for costs incurred in connection with the administration of partnership activities. Reimbursements for services of affiliates of approximately $101,000 and $95,000 were paid to the Corporate General Partner and affiliates for the six months ended April 30, 1997 and 1996, respectively. Included in these reimbursements for the six months ended April 30, 1997, was approximately $7,000 which was paid to affiliates of the Corporate General Partner for construction oversight costs incurred in conjunction with improvements made primarily at River Reach. These amounts are included maintenance expense in the accompanying statements of operations. 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 GAINS AND LOSSES During the second quarter of 1997, the Partnership recorded the following casualty gains and losses. A casualty gain of approximately $232,000 resulted from the insurance proceeds from hail and wind storm damage at Nottingham Square that occurred in the second quarter of 1996. Approximately $27,000 of these proceeds were received during the second quarter of 1997 and the remaining $205,000 was received subsequent to quarter end. In November 1996, a fire occurred at Carriage House which damaged one unit and caused smoke damage to two additional units and the common area. The estimated costs to repair the units exceeded the insurance proceeds expected to be received and thus resulted in a casualty loss of approximately $7,000. In March 1997, a fire occurred at Village Gardens which destroyed one unit and caused smoke and water damage to additional units. The estimated costs to repair the units exceeded the insurance proceeds expected to be received and thus resulted in a casualty loss of approximately $10,000. In April 1997, a fire occurred at Foxfire/Barcelona which destroyed an entire building consisting of eight units. A casualty gain of approximately $53,000 resulted from the expected insurance proceeds of $113,000 exceeding the basis of the units destroyed plus the total estimated costs to replace the assets. The combination of these casualty events resulted in a casualty gain of approximately $268,000 for the six months ended April 30, 1997. 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 damage 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 damaged interiors. 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 six months ended April 30, 1997 and 1996: Average Occupancy Property 1997 1996 Rocky Creek Augusta, Georgia 87% 80% Carriage House Gastonia, North Carolina 91% 97% Nottingham Square Des Moines, Iowa 90% 95% Foxfire/Barcelona Durham, North Carolina 96% 98% River Reach Jacksonville, Florida 98% 98% Village Gardens Fort Collins, Colorado 95% 93% The Corporate General Partner attributes the increase in occupancy at Rocky Creek to the conversion of some of the two bedroom units to the more popular one bedroom units. The decrease in occupancy at Carriage House is the result of increased competition in the Gastonia market due to new complexes. The decrease in occupancy at Nottingham Square is 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 $508,000 and $112,000 for the six months ended April 30, 1997 and 1996, respectively. During the three months ended April 30, 1997 and 1996, the Partnership realized net income of approximately $323,000 and $58,000, respectively. The increased net income for the three and six months ended April 30, 1997, is largely attributable to the net casualty gains, as discussed below, and rental rate increases at all of the Partnership's investment properties. Also contributing to the increase in net income for the six months ended April 30, 1997, was a decrease in general and administrative and maintenance expenses. The decrease in general and administrative expenses for the three and six months ended April 30, 1997, is due to decreased printing and mailing costs and due to decreased audit and appraisal fees. The decrease in maintenance expense is primarily the result of gutter replacements and exterior painting at Foxfire/Barcelona during the six months ended April 30, 1996. Included in maintenance expense is approximately $98,000 of major repairs and maintenance comprised primarily of exterior building improvements and major landscaping for the six months ended April 30, 1997. For the six months ended April 30, 1996, approximately $122,000 of major repairs and maintenance comprised primarily of gutter replacements, exterior building improvements, swimming pool repairs, major landscaping and exterior painting are included in maintenance expense. During the second quarter of 1997, the Partnership recorded the following casualty gains and losses. A casualty gain of approximately $232,000 resulted from the insurance proceeds from hail and wind storm damage at Nottingham Square that occurred in the second quarter of 1996. Approximately $27,000 of these proceeds were received during the second quarter of 1997 and the remaining $205,000 was received subsequent to quarter end. In November 1996, a fire occurred at Carriage House which damaged one unit and caused smoke damage to two additional units and the common area. The estimated costs to repair the units exceeded the insurance proceeds expected to be received and thus resulted in a casualty loss of approximately $7,000. In March 1997, a fire occurred at Village Gardens which destroyed one unit and caused smoke and water damage to additional units. The estimated costs to repair the units exceeded the insurance proceeds expected to be received and resulted in a casualty loss of approximately $10,000. In April 1997, a fire occurred at Foxfire/Barcelona which destroyed an entire building consisting of eight units. A casualty gain of approximately $53,000 resulted from the expected insurance proceeds of $113,000 exceeding the basis of the units destroyed plus the total estimated costs to replace the assets. The combination of these casualty events resulted in a casualty gain of approximately $268,000 for the six months ended April 30, 1997. 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 damage 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 damaged interiors. 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 April 30, 1997, the Partnership had unrestricted cash and cash equivalents of approximately $3,508,000, compared to approximately $2,868,000 at April 30, 1996. Net cash provided by operating activities increased primarily as a result of increased rental income and decreased maintenance expenses, as discussed above. The increase is also attributable to a decrease in other assets and the timing of payments of accounts payable, partially offset by a decrease in other liabilities. Net cash used in investing activities decreased slightly due to reduced property improvements and replacements, partially offset by reduced receipts from restricted escrows and reduced net insurance proceeds from property damages. 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 six months ended April 30, 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 $27,087,000, 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 during the first two quarters 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 April 30, 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: June 13, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Shelter Properties VI Limited Partnership 1997 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000730013 SHELTER PROPERTIES VI LIMITED PARTNERSHIP 1,000 6-MOS OCT-31-1997 APR-30-1997 3,508 0 11 0 0 0 51,464 23,743 34,307 0 27,087 0 0 0 5,934 34,307 0 5,365 0 0 4,860 0 1,241 0 0 0 0 0 0 508 11.88 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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