-----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, LFLbK6kj71ZqOD8KxSJW7rj2tLZpg+iQQevhRqUaW0pBO3Xv1wrRALFgYkSKhmO0 6OvYF5CLyxXnYleJKaYeNA== 0000711642-05-000629.txt : 20051114 0000711642-05-000629.hdr.sgml : 20051111 20051114140805 ACCESSION NUMBER: 0000711642-05-000629 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES VI CENTRAL INDEX KEY: 0000755908 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942940204 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14099 FILM NUMBER: 051199858 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 ccp6.txt CCP6 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _________to _________ Commission file number 0-14099 CONSOLIDATED CAPITAL PROPERTIES VI (Exact name of small business issuer as specified in its charter) California 94-2940204 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO 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 ___ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes __ No X_ PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 2005
Assets Cash and cash equivalents $ 11 Receivables and deposits 31 Other assets 48 Assets held for sale (Note A) 5,810 $ 5,900 Liabilities and Partners' Deficit Liabilities Accounts payable $ 111 Other liabilities 57 Due to affiliates (Note B) 1,020 Liabilities related to assets held for sale (Note A) 4,933 Partners' Deficit General partner $ (2) Special limited partners (79) Limited partners (181,300 units issued and outstanding) (140) (221) $ 5,900
See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Nine Months Ended September 30, Ended September 30, 2005 2004 2005 2004 Revenues: Rental income $ 409 $ 391 $ 1,232 $ 1,221 Other income 66 60 173 174 Casualty gain (Note C) -- 12 20 21 Total revenues 475 463 1,425 1,416 Expenses: Operating 291 249 751 637 General and administrative 34 39 111 139 Depreciation 87 113 331 347 Interest 114 100 327 298 Property taxes 32 30 96 89 Total expenses 558 531 1,616 1,510 Net loss from discontinued operations $ (83) $ (68) $ (191) $ (94) Net loss allocated to general partner (0.2%) $ -- $ -- $ -- $ -- Net loss allocated to limited partners (99.8%) (83) (68) (191) (94) $ (83) $ (68) $ (191) $ (94) Net loss per limited partnership unit $ (0.46) $ (0.38) $ (1.05) $ (0.52) Distributions per limited partnership unit $ -- $ -- $ -- $ 0.57
See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Special Partnership General Limited Limited Units Partner Partners Partners Total Original capital contributions 181,808 $ 1 $ -- $45,452 $45,453 Partners' (deficiency) capital at December 31, 2004 181,300 $ (2) $ (79) $ 51 $ (30) Net loss for the nine months ended September 30, 2005 -- -- -- (191) (191) Partners' deficit at September 30, 2005 181,300 $ (2) $ (79) $ (140) $ (221)
See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net loss $ (191) $ (94) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 331 347 Amortization of loan costs 5 6 Casualty gain (20) (21) Change in accounts: Receivables and deposits (5) (1) Other assets (9) (17) Accounts payable 54 (47) Tenant security deposit liabilities (17) (1) Accrued property taxes (30) (35) Other liabilities (40) 52 Due to affiliates 114 (33) Net cash provided by operating activities 192 156 Cash flows from investing activities: Property improvements and replacements (620) (186) Insurance proceeds received 21 41 Net cash used in investing activities (599) (145) Cash flows from financing activities: Payments on mortgage note payable (134) (111) Advances from affiliates 492 -- Distributions paid to partners -- (107) Net cash provided by (used in) financing activities 358 (218) Net decrease in cash and cash equivalents (49) (207) Cash and cash equivalents at beginning of period 60 243 Cash and cash equivalents at end of period $ 11 $ 36 Supplemental disclosure of cash flow information: Cash paid for interest $ 281 $ 259 Supplemental disclosure of non-cash activity: Property improvements and replacements included in accounts payable $ 28 $ 294
Included in property improvements and replacements for the nine months ended September 30, 2005 are approximately $11,000 of improvements which were included in accounts payable at December 31, 2004. See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES VI NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Consolidated Capital 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 ConCap Equities, Inc. ("CEI" or the "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 months ended September 30, 2005, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004. The General Partner is an affiliate of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the accompanying consolidated statements of operations for the three and nine months ended September 30, 2005 and 2004 reflect the operations of Colony of Springdale Apartments as loss from discontinued operations due to its sale on October 28, 2005 (see Note D - Subsequent Event). In accordance with SFAS No. 144, the assets and liabilities of Colony of Springdale Apartments have been classified as held for sale at September 30, 2005. Note B - Related Party Transactions The Partnership has no employees and depends on the 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. Affiliates of the General Partner receive 5% of gross receipts from the Partnership's property as compensation for providing property management services. The Partnership paid to such affiliates approximately $69,000 and $68,000 for the nine months ended September 30, 2005 and 2004, respectively, which is included in operating expenses. Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $145,000 and $103,000 for the nine months ended September 30, 2005 and 2004, respectively, which is included in general and administrative expenses and assets held for sale. The portion of these reimbursements included in investment property for the nine months ended September 30, 2005 and 2004 are fees related to construction management services provided by an affiliate of the General Partner of approximately $67,000 and $7,000, respectively. The construction management service fees are calculated based on a percentage of additions to the investment property. Approximately $135,000 of the accountable administrative expenses remained unpaid as of September 30, 2005 and are included in due to affiliates. These expenses were paid subsequent to September 30, 2005. The Partnership Agreement also provides for a special management fee equal to 9% of the total distributions made from operations to the Limited Partners to be paid to the General Partner for executive and administrative management services. The General Partner earned approximately $9,000 during the nine months ended September 30, 2004 which is included in general and administrative expenses. No such fee was earned for the nine months ended September 30, 2005 as there were no operating distributions. During the nine months ended September 30, 2005, the General Partner advanced the Partnership approximately $492,000. Interest was charged at the prime rate plus 2% (8.75% at September 30, 2005) and amounted to approximately $37,000 for the nine months ended September 30, 2005. At September 30, 2005, the amount of outstanding loans and accrued interest was approximately $885,000 and is included in due to affiliates. These loans were repaid subsequent to September 30, 2005 out of proceeds from the sale of Colony of Springdale (see Note D - Subsequent Event). There were no loans from the General Partner or associated interest expense during the nine months ended September 30, 2004. The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the nine months ended September 30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $24,000 for both periods for insurance coverage and fees associated with policy claims administration. Note C - Casualty Events In January 2004 a pipe bomb explosion occurred at the property which damaged 16 electrical meters and exterior siding. No apartment units were damaged. A casualty gain of approximately $9,000 was recognized during the nine months ended September 30, 2004 due to the receipt of approximately $16,000 in insurance proceeds, net of the write off of undepreciated property and improvements of approximately $7,000. In April 2004 there was a fire at the property that damaged two apartment units. A casualty gain of approximately $12,000 was recognized during the nine months ended September 30, 2004 due to the receipt of approximately $25,000 in insurance proceeds, net of the write off of undepreciated property and improvements of approximately $13,000. During the nine months ended September 30, 2005, there was an additional casualty gain of approximately $20,000 recorded at the property. This gain was the result of the receipt of the remaining insurance proceeds of approximately $21,000, less the write off of additional undepreciated property and improvements of approximately $1,000. Note D - Subsequent Event On October 28, 2005, the Registrant sold its investment property, Colony of Springdale Apartments, a 261-unit apartment complex located in Springdale, Ohio to an unrelated third party for a gross sales price of $10,400,000. The sale of the property resulted in a gain on the sale during the fourth quarter of 2005 of approximately $4,215,000. In addition, a loss on early extinguishment of debt of approximately $1,248,000 was recorded due to the write off of unamortized loan costs and prepayment penalties. In accordance with SFAS No. 144, the assets and liabilities of Colony of Springdale Apartments have been classified as held for sale at September 30, 2005 and its operations have been shown as loss from discontinued operations for the three and nine months ended September 30, 2005 and 2004. Because Colony of Springdale Apartments was the only property held by the Partnership, the General Partner is considering liquidating the Partnership pending the resolution of the items discussed in "Note E - Contingencies." Note E - Contingencies 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. (the "Nuanes action") 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 General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business. Environmental Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property. Mold The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the General Partner believes that these measures will minimize the effects that mold could have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership's consolidated financial condition or results of operations. SEC Investigation The Central Regional Office of the United States Securities and Exchange Commission (the "SEC") continues its formal investigation relating to certain matters. Although the staff of the SEC is not limited in the areas that it may investigate, AIMCO believes the areas of investigation have included AIMCO's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, capitalization of payroll and certain other costs, tax credit transactions and tender offers for limited partnership interests. AIMCO is cooperating fully. AIMCO is not able to predict when the investigation will be resolved. AIMCO does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 2. Management's Discussion and Analysis or Plan of Operation The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The Partnership's investment property consists of one apartment complex, Colony of Springdale Apartments, located in Springdale, Ohio, which was held for sale at September 30, 2005. The average occupancy for the nine month periods ended September 30, 2005 and 2004, was 89% and 90%, respectively. The property was sold to a third party on October 28, 2005. The Partnership's financial results depended upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. The General Partner monitored the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. The General Partner attempted to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the General Partner may have used rental concessions and rental rate reductions to offset softening market conditions. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership's financial results. Results of Operations The Partnership's net loss from discontinued operations for the three and nine months ended September 30, 2005 was approximately $83,000 and $191,000 compared to a net loss of approximately $68,000 and $94,000 for the corresponding periods in 2004. The increase in net loss for the three and nine months ended September 30, 2005 was primarily due to an increase in total expenses partially offset by a slight increase in total revenues. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the accompanying consolidated statements of operations for the three and nine months ended September 30, 2005 and 2004 reflect the operations of Colony of Springdale Apartments as loss from discontinued operations due to its sale on October 28, 2005. In accordance with SFAS No. 144, the assets and liabilities of Colony of Springdale Apartments have been classified as held for sale at September 30, 2005. On October 28, 2005, the Registrant sold its investment property, Colony of Springdale Apartments, a 261-unit apartment complex located in Springdale, Ohio to an unrelated third party for a gross sales price of $10,400,000. The sale of the property resulted in a gain on the sale during the fourth quarter of 2005 of approximately $4,215,000. In addition, a loss on early extinguishment of debt of approximately $1,248,000 was recorded due to the write off of unamortized loan costs and prepayment penalties. In accordance with SFAS No. 144, the assets and liabilities of Colony of Springdale Apartments have been classified as held for sale at September 30, 2005 and its operations have been shown as loss from discontinued operations for the three and nine months ended September 30, 2005 and 2004. Because Colony of Springdale Apartments was the only property held by the Partnership, the General Partner is considering liquidating the Partnership pending the resolution of the items discussed in "Note E - Contingencies." Total expenses increased for the three and nine months ended September 30, 2005 due to increases in operating and interest expenses partially offset by a decrease in general and administrative and depreciation expenses. Operating expenses increased primarily due to increases in property, administrative and maintenance expenses. The increase in property expenses for the three and nine months ended September 30, 2005 is primarily due to increased salaries and related benefits at the Partnership's property. The increase in property expenses for the nine months ended September 30, 2005 is also due to increased utility expenses at the Partnership's property. The increase in administrative expenses is due to an increase in phone sales. The increase in maintenance expenses is primarily due to an increase in contract services at the Partnership's property. The decrease in depreciation expense is due to fixed assets being held for sale at September 30, 2005 (as discussed above). The increase in interest expense is primarily due to increases in interest incurred on advances from affiliates. There were no advances during the nine months ended September 30, 2004. General and administrative expenses decreased for the three and nine months ended September 30, 2005 due to a decrease in the cost of services included in the management reimbursements to the General Partner as allowed under the Partnership Agreement partially offset by an increase in costs associated with the annual audit required by the Partnership Agreement. The decrease in general and administrative expenses for the nine months ended September 30, 2005 is also due to a decrease in the special management fees earned by the General Partner for executive and administration management services. The fee is equal to 9% of the total distributions made from operations to the Limited Partners and there were no operating distributions during the nine months ended September 30, 2004. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies. The increase in total revenues for the three and nine months ended September 30, 2005 is primarily due to an increase in rental income. The increase in total revenues for the three months ended September 30, 2005 is also due to an increase in other income partially offset by a decrease in casualty gain (as discussed below). The increase in rental income for the three months ended September 30, 2005 is primarily due to an increase in occupancy. The increase in rental income for the nine months ended September 30, 2005 is primarily due to an increase in average rental rates. The increase in rental income for the three and nine months ended September 30, 2005 is also due to a decrease in bad debt expense at the property. Other income increased during the three months ended September 30, 2005 primarily due to an increase in lease cancellation fees at the property. In January 2004 a pipe bomb explosion occurred at the property which damaged 16 electrical meters and exterior siding. No apartment units were damaged. A casualty gain of approximately $9,000 was recognized during the nine months ended September 30, 2004 due to the receipt of approximately $16,000 in insurance proceeds, net of the write off of undepreciated property and improvements of approximately $7,000. In April 2004 there was a fire at the property that damaged two apartment units. A casualty gain of approximately $12,000 was recognized during the nine months ended September 30, 2004 due to the receipt of approximately $25,000 in insurance proceeds, net of the write off of undepreciated property and improvements of approximately $13,000. During the nine months ended September 30, 2005, there was an additional casualty gain of approximately $20,000 recorded at the property. This gain was the result of the receipt of the remaining insurance proceeds of approximately $21,000, less the write off of additional undepreciated property and improvements of approximately $1,000. Liquidity and Capital Resources At September 30, 2005, the Partnership had cash and cash equivalents of approximately $11,000 compared to approximately $36,000 at September 30, 2004. Cash and cash equivalents decreased by approximately $49,000 since December 31, 2004 due to approximately $599,000 of cash used in investing activities, partially offset by approximately $358,000 and $192,000 of cash provided by financing and operating activities, respectively. Cash used in investing activities consisted of property improvements and replacements partially offset by insurance proceeds received. Cash provided by financing activities consisted of advances from affiliates partially offset by principal payments made on the mortgage encumbering the Partnership's property. The Partnership invests its working capital reserves in interest bearing accounts. During the nine months ended September 30, 2005, the Partnership completed approximately $637,000 of capital improvements at Colony of Springdale Apartments, consisting primarily of vinyl siding, floor covering and appliance replacements, balcony replacements, structural improvements, roof replacements and air conditioning unit replacements. These improvements were funded from operating cash flow, insurance proceeds and advances from affiliates. The Partnership sold Colony of Springdale Apartments on October 28, 2005. The Partnership's assets are thought to be sufficient for any near term needs of the Partnership. The mortgage indebtedness encumbering the Partnership's property of approximately $4,739,000 matured in November 2019 at which time the mortgage was scheduled to be fully amortized. This property was sold to a third party on October 28, 2005. The Partnership distributed the following amounts during the nine months ended September 30, 2005 and 2004 (in thousands, except per unit data):
Nine Months Per Nine Months Per Ended Limited Ended Limited September 30, Partnership September 30, Partnership 2005 Unit 2004 Unit Operations $ -- $ -- $ 107 $ 0.57
Because Colony of Springdale Apartments was the only property held by the Partnership, the General Partner is considering liquidating the Partnership pending the resolution of the items discussed in "Note E - Contingencies." The Partnership is currently reviewing what portion of the sale proceeds of Colony of Springdale Apartments will be distributed to the partners. Other In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 102,000 limited partnership units (the "Units") in the Partnership representing 56.26% of the outstanding Units at September 30, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 56.26% of the outstanding Units, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder. Critical Accounting Policies and Estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Impairment of Long-Lived Assets The investment property is recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property was impaired, the Partnership would make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeded the aggregate future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeded the fair value of the property. Revenue Recognition The Partnership generally leased apartment units for twelve-month terms or less. The Partnership offered rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, was recognized on a straight-line basis over the term of the lease. The Partnership evaluated all accounts receivable from residents and established an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants. ITEM 3. Controls and Procedures (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. 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. (the "Nuanes action") 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 General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS See Exhibit Index Attached. 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. CONSOLIDATED CAPITAL PROPERTIES VI By: CONCAP EQUITIES, INC. General Partner By: /s/Martha L. Long Martha L. Long Senior Vice President By: /s/Stephen B. Waters Stephen B. Waters Vice President Date: November 14, 2005 CONSOLIDATED CAPITAL PROPERTIES VI EXHIBIT INDEX Exhibit Number Description of Exhibit 3.1 Certificate of Limited Partnership, incorporated by reference to the Registration Statement of Registrant filed October 22, 1984, as amended to date. 3.2 Agreement of Limited Partnership, incorporated by reference to the Registration Statement of Registrant filed October 22, 1984, as amended to date. 10.22 Multi-family note between Colony of Springdale Associates, Ltd. and GMAC Commercial Mortgage Corporation dated October 25, 1999. (Incorporated by reference to the Annual Report on Form 10-K dated December 31, 1999.) 10.23 Purchase and Sale Contract between Colony of Springdale Associates, Ltd., a Texas limited partnership, and CNC Investments, Ltd., LLP, a Texas limited liability partnership dated August 19, 2005.* (Incorporated by reference to Current Form 8-K dated October 28, 2005 and filed November 3, 2005). 10.24 Amendment of Purchase and Sale Contract between Colony of Springdale Associates Ltd., a Texas limited partnership, and CNC Investments, Ltd., LLP, a Texas limited liability partnership dated September 12, 2005. (Incorporated by reference to Current Form 8-K dated October 28, 2005 and filed November 3, 2005). 10.25 Assignment and Assumption Agreement between CNC Investments, Ltd., LLP, a Texas limited liability partnership and Mayuri, LLC, a Delaware limited liability company dated October 7, 2005. (Incorporated by reference to Current Form 8-K dated October 28, 2005 and filed November 3, 2005). 10.26 Second Amendment of Purchase and Sale Contract between Colony of Springdale Associates Ltd., a Texas limited partnership, and CNC Investments, Ltd., LLP, a Texas limited liability partnership and Mayuri, LLC a Delaware limited liability company dated October 13, 2005. (Incorporated by reference to Current Form 8-K dated October 28, 2005 and filed November 3, 2005). 10.27 Third Amendment of Purchase and Sale Contract between Colony of Springdale Associates Ltd., a Texas limited partnership, and CNC Investments, Ltd., LLP, a Texas limited liability partnership and Mayuri, LLC a Delaware limited liability company dated October 27, 2005. (Incorporated by reference to Current Form 8-K dated October 28, 2005 and filed November 3, 2005). 31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *Schedules and supplemental materials to the exhibit have been omitted but will be provided to the Securities and Exchange Commission upon request. Exhibit 31.1 CERTIFICATION I, Martha L. Long, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Consolidated Capital Properties VI; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2005 /s/Martha L. Long Martha L. Long Senior Vice President of ConCap Equities, Inc., equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Stephen B. Waters, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Consolidated Capital Properties VI; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 14, 2005 /s/Stephen B. Waters Stephen B. Waters Vice President of ConCap Equities, Inc., equivalent of the chief financial officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Consolidated Capital Properties VI (the "Partnership"), for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Martha L. Long Name: Martha L. Long Date: November 14, 2005 /s/Stephen B. Waters Name: Stephen B. Waters Date: November 14, 2005 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----