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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000
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: 333-76435
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 7
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 8
California 33-0761517-Series 7
33-0761519-Series 8
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
1
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
2
PART 1.
Item 1. Business
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 7 (the "Partnership") was formed
under the California Revised Limited Partnership Act on June 16, 1997 and
commenced operations on September 3, 1999, the effective date of its public
offering pursuant to the Securities and Exchange Commission's approval of the
Partnership's Pre-Effective Amendment No. 3 to Form S-11 filed on July 16, 1999.
The Partnership was formed to invest primarily in other limited partnerships or
limited liability companies which will own and operate multifamily housing
complexes that are eligible for low-income housing federal and, in certain
cases, California income tax credits ("Low Income Housing Credit").
WNC Housing Tax Credit Fund VI, L.P., Series 8("Series 8") currently has no
assets or liabilities and has had no operations. Accordingly, no financial
information is included herein for Series 8.
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner".) Wilfred N. Cooper, Sr., through the Cooper Revocable
Trust, owns 66.8% of the outstanding stock of Associates. John B. Lester, Jr.
was the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of Associates. Wilfred N. Cooper,
Jr., President of Associates, owns 2.1% of the outstanding stock of Associates.
The business of the Partnership is conducted primarily through Associates, as
the Partnership has no employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on April 16, 1999, the Partnership commenced a public offering of
25,000 units of Limited Partnership Interest ("Units"), at a price of $1,000 per
Unit. As of March 31, 2000, the Partnership had received and accepted
subscriptions for 7,147 Units in the amount of $7,139,775 net of volume and
dealer discounts of $7,225, of which $434,000 was represented by promissory
notes of the subscribers. Holders of Units are referred to herein as "Limited
Partners."
From April 1, 2000 to June 21, 2000, the Partnership received subscriptions for
an additional 2,637 Units, for which it has received $2,611,285 in cash, net of
dealer and volume discounts of $715, and $25,000 in notes receivable.
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended "by Supplements thereto" (the "Partnership Agreement"),
will be able to be accomplished promptly at the end of the 15-year period. If a
Local Limited Partnership is unable to sell its Housing Complex, it is
anticipated that the local general partner ("Local General Partner") will either
continue to operate such Housing Complex or take such other actions as the Local
General Partner believes to be in the best interest of the Local Limited
Partnership. Notwithstanding the preceding, circumstances beyond the control of
the General Partner or the Local General Partners may occur during the
Compliance Period, which would require the Partnership to approve the
disposition of a Housing Complex prior to the end thereof, possibly resulting in
recapture of Low Income Housing Credits.
3
As of March 31, 2000, the Partnership had invested in two Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is or is expected to be eligible for the federal Low Income Housing Credit.
Certain Local Limited Partnerships may also benefit from government programs
promoting low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not make its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's operations will depend on these
and other factors beyond the control of the General Partner and the Local
General Partners, there can be no assurance that the anticipated Low Income
Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As of March 31, 2000, one of the Housing Complexes was still under construction.
The Housing Complex under construction was being developed by a Local General
Partner who acquired the sites and applied for applicable mortgages and
subsidies. The Partnership became the principal limited partner or non-managing
member in the Local Limited Partnerships pursuant to arm's-length negotiations
with the respective Local General Partners. As a limited partner or non-managing
member, the Partnership's liability for obligations of each Local Limited
Partnership is limited to its investment. The Local General Partners of each
Local Limited Partnership retain responsibility for developing, constructing,
maintaining, operating and managing the Housing Complexes.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the two Housing Complexes as of the dates and for the
periods indicated:
4
------------------------------ ---------------------------------------------
As of March 31, 2000 As of December 31, 1999
------------------------------ ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Estimated Low of Local
Partnership General Partner in Local Limited Investment Number Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC Federalsburg, Larry C. Porter
Maryland and
Carter Chinniss $ 360,000 $ - (1) (1) (1) (1)
School Square, Ltd. Albany, Bradley V. Larson 285,000 142,000 (1) (1) (1) (1)
Partnership Minnesota ---------- ----------
$ 645,000 $ 142,000
========== ==========
--------------------------------------------------------------------------------------
For the year ended December 31, 1999 Low Income Housing Credits
------------------------------------------ ------------------------------------------
Net Income Credits Allocated to Year to be First
Partnership Name Rental Income (Loss) Partnership Available
- ---------------------------------------------------------------------------- ------------------------------------------
2nd Fairhaven, LLC (1) (1) 99.98% 2000
School Square Ltd. Partnership (1) (1) 99.98% 2000
(1) The Local Limited Partnership Interests were acquired subsequent to December
31, 1999. Accordingly, no information as of December 31, 1999 is presented.
5
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but are being sold
through a public offering. It is not anticipated that any public market
will develop for the purchase and sale of any Unit. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At March 31, 2000, there were 384 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to
Limited Partners in circumstances other than refinancing or disposition
of its investments in Local Limited Partnerships.
(d) No unregistered securities were sold by the Partnership during the
period from September 3, 1999 (date operations commenced) to March 31,
2000.
Item 5b.
The Partnership conducted an offering pursuant to a registration statement
(Commission File No. 333-76435) which was declared effective on September 3,
1999. As of March 31, 2000, the Partnership had received subscriptions for 7,147
Units, for an aggregate amount of capital contributions of $7,139,775, net of
volume and dealer discounts of $7,225. At March 31, 2000, the above capital
contributions consisted of cash of $6,126,775, subscriptions receivable of
$579,000 and notes receivable of $434,000. At March 31, 2000, approximately
$921,885 was paid or due to Associates or WNC Capital Corporation, the
dealer-manager for the offering, for selling commissions, wholesaling activities
and in reimbursement of other organization and offering expenses. Included
therein are selling commissions of approximately $493,000 which were paid or
were to be paid to non-affiliates. At March 31, 2000, approximately $6,217,890
is invested or available to be invested in Local Limited Partnership Interests
or Reserves as follows:
Paid or to
be Paid to Paid or to be
Affiliates Paid to Others Total
--------------- ----------------- -------------
Acquisition Fees through 3/31/2000 $ 500,290 $ - $ 500,290
Acquisition Costs through 3/31/2000 142,940 - 142,940
Lower tier partnerships - 645,389 645,389
Reserves or available to be invested - 4,929,271 4,929,271
--------------- ----------------- -------------
Total $ 643,230 $ 5,574,660 $ 6,217,890
=============== ================= =============
6
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31, 2000
ASSETS
Cash and cash equivalents $ 4,295,471
Funds held in escrow disbursement account 142,815
Subscriptions and notes receivable 583,635
Investments in limited partnerships, net 1,284,221
Loans receivable 154,000
Other assets 810
----------------
$ 6,460,952
================
LIABILITIES
Due to limited partnerships $ 502,601
Accrued fees and expenses due to
general partner and affiliates 145,659
----------------
648,260
----------------
PARTNERS' EQUITY 5,812,692
----------------
$ 6,460,952
================
Selected results of operations, cash flows, and other information for the
Partnership are as follows:
For the period September 3, 1999 (Date Operations Commenced)
Through March 31, 2000
Income from operations $ 27,702
Equity in income (loss) of limited
partnerships -
--------------
Net income $ 27,702
==============
Net income allocated to:
General partner $ 28
==============
Limited partners $ 27,674
==============
Net income per limited partner
unit $ 5.73
==============
Outstanding weighted limited
partner units $ 4,831
==============
7
For the period September 3, 1999 (Date Operations Commenced)
Through March 31, 2000
Net cash provided by (used in):
Operating activities $ 27,424
Investing activities (1,037,023)
Financing activities 5,305,070
----------------
Net change in cash and cash 4,295,471
equivalents
Cash and cash equivalents, -
beginning of period ----------------
Cash and cash equivalents, end $ 4,295,471
of period ================
Low Income Housing Credit per Unit was as follows for the period ended December
31, 1999:
Federal $ -
State -
----------------
Total $ -
================
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at March 31, 2000 consisted primarily of $4,295,000 in
cash, $143,000 in cash in escrow, $584,000 in subscriptions receivable,
aggregate investments in the two Local Limited Partnerships of $1,284,000 and
$154,000 in loans receivable. Liabilities at March 31, 2000 primarily consisted
of $503,000 due to limited partnerships, and $145,000 in advances and other
payables due to the General Partner or affiliates.
The Partnership will offer Units for sale to the public until approximately
September 2000, at which time total limited partner capital is expected to be
between $15,000,000 and $20,000,000 ($7,139,775 raised at March 31, 2000).
From April 1, 2000 to June 21, 2000, the Partnership received subscriptions for
an additional 2,637 Units, for which it has received $2,611,285 in cash, net of
dealer and volume discounts of $715, and $25,000 in notes receivable.
Results of Operations
The Partnership commenced operations on September 3, 1999. As a result, there
are no comparative results of operations or financial condition from prior
periods to report. Net income for the period ended March 31, 2000 was
principally composed of interest income, offset by amortization and other
operating expenses. One of the two Local Limited Partnerships was under
construction at March 31, 2000 and the other was not acquired until March 31,
2000; accordingly, there were no Low Income Housing Credits available for
allocation to the partners.
8
Cash Flows
Cash flows provided by operating activities for the period ended March 31, 2000
included interest income from cash investments less miscellaneous costs of
operations. Cash flows provided by financing activities for the period ended
March 31, 2000, primarily consisted of proceeds from the sale of Units of
$6,128,000, net of promissory notes of $434,000, subscriptions receivable of
$579,000 and dealer and volume discounts of $7,000, less offering expenses paid
of $823,000.
Cash flows used in investing activities consisted of capital contributions paid
to Local Limited Partnerships of $143,000, capitalized acquisition fees and
costs totaling $597,000 and advances to developers of $154,000. In addition,
$143,000 was deposited in an escrow account in connection with the acquisition
of a Local Limited Partnership.
Since March 31, 2000, the Partnership has raised equity capital sufficient to
satisfy all of its identified obligations. In this regard, the Partnership
expects its future cash flows, together with its net available assets at March
31, 2000, to be sufficient to meet all currently foreseeable future cash
requirements.
Impact of Year 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its general partner. IT systems include computer hardware and software used
to produce financial reports and tax return information. This information is
then used to generate reports to investors and regulatory agencies, including
the Internal Revenue Service and the Securities and Exchange Commission. The IT
systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. The non-IT systems of WNC are year 2000 compliant.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. To date, WNC has not encountered
significant year 2000 issues or business disruptions from its service providers.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $25,000.
9
Risk of Year 2000 Issues
Although WNC has encountered no significant year 2000 issue to date, the most
reasonable and likely result from non-year 2000 compliance of systems of the
service providers noted above would be the disruption of normal business
operations for WNC. This disruption could, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Local Limited Partnerships
Status of Readiness
To date, WNC and the Partnership have encountered no significant year 2000
issues with respect to the Local Limited Partnerships.
Costs to Address Year 2000 Issues
There has been and will be no cost to the Partnership as a result of assessing
year 2000 issues for the Local Limited Partnerships. Although no significant
year 2000 issues have been encountered to date, the cost to deal with potential
year 2000 issues of the Local Limited Partnerships cannot be estimated at this
time.
Risk of Year 2000 Issues
Although no significant year 2000 issues have been encountered to date, there
can be no assurance that the Partnership will be unaffected by year 2000 issues.
The most reasonable and likely result from non-year 2000 compliance will be the
disruption of normal business operations for the Local Limited Partnerships,
including but not limited to the possible failure to properly collect rents and
meet their obligations in a timely manner. This disruption would, in turn, lead
to delays by the Local Limited Partnerships in performing reporting and
fiduciary responsibilities on behalf of the Partnership. The worst-case scenario
would include the initiation of foreclosure proceedings on the property by
mortgage debt holders. Under these circumstances, WNC or its affiliates will
take actions necessary to minimize the risk of foreclosure, including the
removal and replacement of a Local General Partner by the Partnership. These
delays would likely be temporary and would likely not have a material effect on
the Partnership or WNC.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NONE.
Item 8. Financial Statements and Supplementary Data
10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 7
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
VI, L.P., Series 7 (a California Limited Partnership) (the "Partnership") as of
March 31, 2000, and the related statements of operations, partners' equity
(deficit) and cash flows for the period from September 3, 1999 (date operations
commenced) through March 31, 2000. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above
present fairly in all material respects, the financial position of WNC Housing
Tax Credit Fund VI, L.P., Series 7 (a California Limited Partnership) as of
March 31, 2000, and the results of its operations and its cash flows for the
period from September 3, 1999 (date operatons commenced) through March 31, 2000
in conformity with generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
June 21, 2000
11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
BALANCE SHEET
March 31, 2000
2000
-------------
ASSETS
Cash and cash equivalents $ 4,295,471
Funds held in escrow disbursement account 142,815
Subscriptions and notes receivable (Note 7) 583,635
Investments in limited partnerships (Note 3) 1,284,221
Loans receivable (Note 2) 154,000
Other assets 810
-------------
$ 6,460,952
=============
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Due to limited partnerships (Note 5) $ 502,601
Accrued fees and expenses due to General 145,659
Partner and affiliates (Note 4) -------------
Total liabilities 648,260
-------------
Commitments and contingencies (Note 8)
Partners' equity (deficit) (Notes 7 and 9)
General partner (301)
Limited partners (25,000 units authorized,
7,147 units outstanding at March 31, 2000) 5,812,993
-------------
Total partners' equity 5,812,692
-------------
$ 6,460,952
=============
See accompanying notes to financial statements
12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENT OF OPERATIONS
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
2000
------------------
Interest income $ 36,456
------------------
Operating expenses:
Amortization (Notes 3 and 4) 4,398
Asset management fees (Note 4) 424
Other 3,932
------------------
Total operating expenses 8,754
------------------
Income from operations 27,702
Equity in income of limited partnerships (Note 3) -
------------------
Net income $ 27,702
==================
Net income allocated to:
General partner $ 28
==================
Limited partners $ 27,674
==================
Net income per limited partner unit $ 5.73
==================
Outstanding weighted average limited partner units 4,831
==================
See accompanying notes to financial statements
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
General Limited
Partner Partners Total
-------------- --------------- ---------------
Contribution from General Partner and initial limited
partner on September 3, 1999 $ 100 $ 1,000 $ 1,100
Sale of limited partnership units, net of discounts
of $7,225 - 7,139,775 7,139,775
Sale of limited partnership units issued for
promissory notes receivable (Note 7) - (434,000) (434,000)
Offering expenses (429) (921,456) (921,885)
Net income 28 27,674 27,702
-------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 $ (301) $ 5,812,993 $ 5,812,692
============== =============== ===============
See accompanying notes to financial statements
14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
2000
--------------
Cash flows from operating activities:
Net income $ 27,702
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization 4,398
Change in interest receivable (4,635)
Change in other assets (810)
Change in accrued fees and expenses due
to general partner and affiliates 769
--------------
Net cash provided by operating activities 27,424
--------------
Cash flows from investing activities:
Investments in limited partnerships, net (142,788)
Funds held in escrow disbursement account (142,815)
Loans receivable (154,000)
Capitalized acquisition costs and fees (597,420)
--------------
Net cash used in investing activities (1,037,023)
--------------
Cash flows from financing activities:
Capital contributions 6,127,875
Offering expenses (822,805)
--------------
Net cash provided by financing activities 5,305,070
--------------
Net increase in cash and cash
Equivalents 4,295,471
Cash and cash equivalents, beginning of period -
--------------
Cash and cash equivalents, end of period $ 4,295,471
==============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Taxes paid $ 800
==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITY:
During the period September 3, 1999 (Date Operations Commenced) through March
31, 2000, The Partnership sold limited partnership units for promissory notes
receivable of $434,000.
See accompanying notes to financial statements
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 7, a California Limited Partnership
(the "Partnership"), was formed on June 16, 1997 under the laws of the state of
California, and commenced operations on September 3, 1999, the effective date of
its public offering pursuant to the Securities and Exchange Commission's
approval of the Partnership's Pre-Effective Amendment No. 3 to Form S-11 filed
on July 16, 1999. Prior to September 3, 1999, the Partnership was considered a
development stage enterprise. The Partnership was formed to invest primarily in
other limited partnerships and limited liability companies (the "Local Limited
Partnerships") which own and operate multi-family housing complexes (the
"Housing Complex") that are eligible for low income housing credits. The local
general partners (the "Local General Partners") of each Local Limited
Partnership retain responsibility for maintaining, operating and managing the
Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. Wilfred N. Cooper, Sr., through the Cooper
Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B. Lester was
the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of WNC. Wilfred N. Cooper, Jr.,
President of WNC, owns 2.1% of the outstanding stock of WNC.
The Partnership shall continue in full force and effect until December 31, 2060,
unless terminated prior to that date, pursuant to the partnership agreement or
law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of March 31, 2000, 7,147 Units, representing
subscriptions in the net amount of $7,139,775, net of discount of $15 for volume
purchases and $7,210 for dealer discounts, had been accepted. The General
Partner has a 0.1% interest in operating profits and losses, taxable income and
losses, in cash available for distribution from the Partnership and tax credits.
The limited partners will be allocated the remaining 99.9% interest in
proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 4) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters, which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting for Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership's are consistent with those of the Partnership. Costs incurred by
the Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 15 years (see Note 3).
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with selling
limited partnership interests in the Partnership. The General Partner is
obligated to pay all offering and organization costs in excess of 4% (excluding
sales commissions and the dealer manager fee) of the total offering proceeds.
Offering expenses are reflected as a reduction of partners' capital and amounted
to $921,885 as of March 31, 2000.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
March 31, 2000, the Partnership had cash equivalents of $3,866,941. Of this
amount, $3,800,000 consists of tax exempt instruments collateralized by tax
exempt municipal bonds from various municipalities throughout the United States.
These instruments generate tax exempt yields and generally have 35 day or less
maturities.
Concentration of Credit Risk
At March 31, 2000, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.
Net Income Per Limited Partner Unit
Net income per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of partners' equity and bypass net income. For the
periods presented, the Partnership has no elements of other comprehensive
income, as defined by SFAS No. 130.
NOTE 2 - LOANS RECEIVABLE
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. These loans are
generally applied against the first capital contribution due if the Partnership
ultimately invests in such entities. In the event that the Partnership does not
invest in such entities, the loans are to be repaid with interest at a rate
which is equal to the rate charged to the holder.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of March 31, 2000, the Partnership has acquired limited partnership interests
in two Local Limited Partnerships, each of which owns one Housing Complex
consisting of an aggregate of 35 apartment units. As of March 31, 2000
construction of one of the Housing Complexes was still in process. The
respective general partners of the Local Limited Partnerships manage the
day-to-day operations of the entities. Significant Local Limited Partnership
business decisions require approval from the Partnership. The Partnership, as a
limited partner, is generally entitled to 99.98%, as specified in the Local
Limited Partnership agreements, of the operating profits and losses, taxable
income and losses and tax credits of the Local Limited Partnerships.
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income. As of March 31, 2000, no investment accounts in
Local Limited Partnerships reached a zero balance.
The following is a summary of the equity method activity of the investments in
limited partnerships for the period September 3, 1999, date operations
commenced, through March 31, 2000:
2000
--------------
Capital contributions paid, net $ 142,788
Capital contributions payable 502,601
Capitalized acquisition fees and costs 643,230
Amortization of paid acquisition fees and costs (4,398)
--------------
Investments in limited partnerships, end of period $ 1,284,221
==============
The financial information from the individual financial statements of the Local
Limited Partnerships are generally presented in a combined condensed format
herein as of the preceding December 31. As no Local Limited Partnerships were
acquired as of December 31, 1999, no combined condensed information is
presented.
NOTE 4 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or their affiliates for the following items:
Acquisition fees of 7% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition
of Local Limited Partnerships. As of March 31, 2000, the Partnership
incurred acquisition fees of $500,290. Accumulated amortization of
these capitalized costs was $3,420, as of March 31, 2000.
Acquisition costs of 2% of the gross proceeds from the sale of Units as
full reimbursement of costs incurred by the General Partner in
connection with the acquisition of Local Limited Partnerships. As of
March 31, 2000, the Partnership incurred acquisition costs of $142,940,
which have been included in investments in limited partnerships.
Accumulated amortization was $978 as of March 31, 2000.
An annual asset management fee not to exceed 0.2% of the invested
assets (defined as the Partnership's capital contributions plus
reserves of the Partnership of up to 5% of gross proceeds plus its
allocable percentage of the mortgage debt encumbering the housing
complexes) of the Local Limited Partnerships. Management fees of $424
were incurred during the period September 3, 1999 (Date Operations
Commenced) through March 31, 2000.
A subordinated disposition fee in an amount equal to 1% of the sales
price of real estate sold. Payment of this fee is subordinated to the
limited partners receiving a return on investment (as defined in the
Partnership Agreement) and is payable only if the General Partner or
its affiliates render services in the sales effort.
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
The accrued fees and expenses due to General Partner and affiliates consist of
the following at March 31, 2000:
2000
---------------
Acquisition fees payable $ 35,630
Acquisition expenses payable 10,180
Organizational, offering and selling
costs payable 99,080
Asset management fee payable 424
Reimbursements for expenses paid by the
General Partner or an affiliate 345
---------------
Total $ 145,659
===============
NOTE 5 - DUE TO LIMITED PARTNERSHIPS
Due to limited partnerships represent amounts which are due at various times
based on conditions specified in the respective limited partnership agreements.
These contributions are payable in installments and are generally due upon the
limited partnerships achieving certain development and operating benchmarks
(generally within two years of the Partnership's initial investment).
NOTE 6 - INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
NOTE 7 - SUBSCRIPTIONS AND NOTES RECEIVABLE
As of March 31, 2000, the Partnership had received subscriptions for 7,147 units
which included subscriptions receivable of $579,000 and promissory notes of
$434,000, of which all of the subscription receivables were collected and $0 of
the promissory notes were collected after March 31, 2000 and prior to the
issuance of these financial statements, leaving an unpaid balance of $434,000.
Limited partners who subscribed for ten or more units of limited partnerships
interest ($10,000) could elect to pay 50% of the purchase price in cash upon
subscription and the remaining 50% by the delivery of a promissory note payable,
together with interest at a rate equal to the three month treasury bill rate as
of the date of execution of the promissory note, due no later than 13 months
after the subscription date.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Subsequent to March 31, 2000, the Partnership acquired one Local Limited
Partnership interest which required capital contributions of $245,205 of which
$0 had been advanced as of March 31, 2000. Of this amount, $122,602 has been
contributed subsequent to March 31, 2000, and prior to the issuance of these
financial statements.
NOTE 9 - SUBSEQUENT EVENT
From April 1, 2000 to June 21, 2000, the Partnership received subscriptions for
an additional 2,637 Units, for which it has received $2,611,285 in cash, net of
dealer and volume discounts of $715, and $25,000 in notes receivable under the
terms described in Note 7.
20
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves
as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N.
Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 69, is the founder, Chairman, Chief Executive
Officer and a Director of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the programs previously sponsored
by the Sponsor. Mr. Cooper has been involved in real estate investment and
acquisition activities since 1968. Previously, during 1970 and 1971, he was
founder and principal of Creative Equity Development Corporation, a predecessor
of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate
investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell
International Corporation, last serving as its manager of housing and urban
developments where he had responsibility for factory-built housing evaluation
and project management in urban planning and development. Mr. Cooper is a
Director of the National Association of Home Builders (NAHB) and a National
Trustee for NAHB's Political Action Committee, a Director of the National
Housing Conference (NHC) and a member of NHC's Executive Committee and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
John B. Lester, Jr., age 66, is Vice-Chairman, a Director, and a member of the
Acquisition Committee of WNC & Associates, Inc., and a Director of WNC Capital
Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates, Inc., a provider
of engineering and construction services to the oil refinery and petrochemical
industries, which he co-founded in 1973. Mr. Lester graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 37, is President, Chief Operating Officer, a
Director and a member of the Acquisition Committee of WNC & Associates, Inc. He
is President of, and a registered principal with, WNC Capital Corporation, a
member firm of the NASD, and is a Director of WNC Management, Inc. He has been
involved in investment and acquisition activities with respect to real estate
since he joined the Sponsor in 1988. Prior to this, he served as Government
Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a
member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an
Alternate Director of NAHB. He graduated from The American University in 1985
with a Bachelor of Arts degree.
David N. Shafer, age 48, is Executive Vice President, a Director, General
Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc.,
and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been
involved in real estate investment and acquisition activities since 1984. Prior
to joining the Sponsor in 1990, he was practicing law with a specialty in real
estate and taxation. Mr. Shafer is a Director and President of the California
Council of Affordable Housing and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree (cum laude) and from the University of San Diego in 1986
with a Master of Law degree in Taxation.
21
Michael L. Dickenson, age 43, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 45, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. Mr. Riha graduated from the California State University,
Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business
Administration with a concentration in Accounting and is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants.
Sy P. Garban, age 54, is Vice President - Institutional Investments of WNC &
Associates, Inc. and has been employed by the Sponsor since 1989. Mr. Garban has
been involved in real estate investment activities since 1978. Prior to joining
the Sponsor he served as Executive Vice President of MRW, Inc., a real estate
development and management firm. Mr. Garban is a member of the International
Association of Financial Planners. He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.
N. Paul Buckland, age 37, is Vice President - Acquisitions and a member of the
Acquisition Committee of WNC & Associates, Inc. He has been involved in real
estate acquisitions and investments since 1986 and has been employed with WNC &
Associates, Inc. since 1994. Prior to that, he served on the development team of
the Bixby Ranch that constructed apartment units and Class A office space in
California and neighboring states, and as a land acquisition coordinator with
Lincoln Property Company where he identified and analyzed multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.
David Turek, age 45, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 63, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership accrued or paid the
General Partner or its affiliates as of March 31, 2000 approximately
$921,885 for selling commissions and other fees and expenses of the
Partnership's offering of Units. Of the total accrued or paid,
approximately $493,065 was paid or to be paid to unaffiliated persons
participating in the Partnership's offering.
22
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the
gross proceeds of the Partnership's Offering ("Gross Proceeds"). As of
March 31, 2000 the aggregate amount of acquisition fees paid or accrued
was approximately $500,000.
(c) Acquisition Expense. The Partnership reimbursed the General Partner for
acquisition expenses in an amount equal to 2% of the Gross Proceeds,
pursuant to the terms of the partnership agreement. As of March 31,
2000, the aggregate amount of acquisition fees paid or accrued was
approximately $143,000.
(d) Annual Asset Management Fee. An annual asset management fee in an
amount equal to 0.2% of the Invested Assets of the Partnership.
"Invested Assets" is defined as the sum of the Partnership's Investment
in Local Limited Partnerships and the Partnership's allocable share of
the amount of the mortgage loans and other debts related to the Housing
Complexes owned by such Local Limited Partnerships. Fees of
approximately $400 were incurred for the period September 3, 1999 (date
of operations commenced) through March 31, 2000, of which $0 was paid.
(e) Operating Expenses. The Partnership reimbursed the General Partner or
its affiliates for operating expenses of approximately $3,600 during
the period September 3, 1999 (date operations commenced) through March
31, 2000, expended by such persons on behalf of the Partnership.
(f) Subordinated Disposition Fee. A subordinated disposition fee in an
amount equal to 1% of the sale price received in connection with the
sale or disposition of an Apartment Complex or Local Limited
Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low Income
Housing Credits) as a class on their adjusted capital contributions
commencing for each Limited Partner on the last day of the calendar
quarter during which the Limited Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i) 11%
through December 31, 2010, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been paid.
(g) Interest in Partnership. The General Partner will receive 0.1% of the
Low Income Housing Credits. No Low Income Housing Credits were
allocated for the period ended December 31, 1999. The General Partners
are also entitled to receive 0.1% of cash distributions. There were no
distributions of cash to the General Partner during the period
September 3, 1999 (date operations commenced) through March 31, 2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the
outstanding Units.
(b) Security Ownership of Management
Neither the General Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(c) Changes in Control
The management and control of the General Partner may be changed at any
time in accordance with its organizational documents, without the
consent or approval of the Limited Partners. In addition, the
Partnership Agreement provides for the admission of one or more
additional and successor General Partners in certain circumstances.
23
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of
any other General Partner or the Limited Partners, (i) substitute in
its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets,
stock or other evidence of equity interest and continued its business,
or (ii) cause to be admitted to the Partnership an additional General
Partner or Partners if it deems such admission to be necessary or
desirable so that the Partnership will be classified a partnership for
Federal income tax purposes. Finally, a majority-in-interest of the
Limited Partners may at any time remove the General Partner of the
Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interest in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
24
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheet, March 31, 2000
Statement of Operations for the period September 3, 1999 (Date
Operations Commenced) through March 31, 2000
Statement of Partners' Equity (Deficit) for the period September 3,
1999 (Date Operations Commenced) through March 31, 2000
Statement of Cash Flows for the period September 3, 1999 (Date
Operations Commenced) through March 31, 2000
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial
Statement Schedule
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
1. A Form 8-K dated January 25, 2000 was filed on February 10, 2000
reporting the acquisition of a Local Limited Partnership Interest
under Item 2. No financial statements were included.
2. A Form 8-K dated February 9, 2000 was filed on February 16, 2000
reporting the acquisition of a Local Limited Partnership Interest
under Item 2. No financial statements were included.
3. A Form 8-K/A was filed on March 31, 2000 amending the Form 8-K dated
January 25, 2000. Financial statements for the real estate acquired
and pro forma financial information respecting the acquisition were
included.
4. A Form 8-K/A was filed on March 31, 2000 amending the Form 8-K dated
February 9, 2000. Pro forma financial information respecting the
acquisition was included.
5. A Form 8-K/A was filed on April 17, 2000 amending the Form 8-K dated
January 25, 2000. Financial statements for the real estate acquired
and revised pro forma financial information respecting the acquisition
were included.
6. A Form 8-K/A was filed on April 17, 2000 amending the Form 8-K dated
February 9, 2000. Revised pro forma financial information respecting
the acquisition was included.
(c) Exhibits.
3.1 First Amended and Restated Agreement of Limited Partnership dated as
of April 1, 1999 filed as Exhibit 3.1 to Post-Effective Amendment No.
2 to the Registration Statement on Form S-11 filed on April 17, 2000
is hereby incorporated herein by reference as Exhibit 3.1.
25
10.1 Escrow Agreement filed as Exhibit 10.1 to Pre-Effective Amendment No.
3 to the Registration Statement on Form S-11 filed on August 18, 1999
is hereby incorporated herein by reference as Exhibit 10.1.
10.2 Amended and Restated Operating Agreement of 2nd Fairhaven, LLC filed
as Exhibit 10.1 to the Current Report on Form 8-K dated January 25,
2000 is hereby incorporated herein by reference as Exhibit 10.2.
10.3 Second Amended and Restated Operating Agreement of 2nd Fairhaven, LLC
filed as Exhibit 10.2 to the Current Report on Form 8-K/A dated
January 25, 2000 is hereby incorporated herein by reference as Exhibit
10.3.
10.4 Amended and Restated Limited Partnership Agreement of School Square
Limited Partnership filed as exhibit 10.1 to the Current Report on
Form 8-K dated February 9, 2000 is hereby incorporated herein by
reference as Exhibit 10.4.
(d) Financial statement schedules follow, as set forth in subsection
(a)(2) hereof.
26
Report of Independent Certified Public Accountants on
Financial Statement Schedules
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 7
The audits referred to in our report dated June 21, 2000, relating to the 2000
financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 7 (the
"Partnership"), which is contained in Item 8 of this Form 10-K, included the
audit of the accompanying financial statement schedule. The financial statement
schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based upon our audit.
In our opinion, such financial statement schedule presents fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
June 21, 2000
27
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
----------------------------------- ------------------------------------------------------
As of March 31, 2000 As of December 31, 1999
----------------------------------- ------------------------------------------------------
Partnership's
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC Federalsburg,
Maryland $ 360,000 $ - (1) (1) (1) (1)
School Square Ltd. Albany,
Partnership Minnesota 285,000 142,000 (1) (1) (1) (1)
---------- ----------
$ 645,000 $ 142,000
========== ==========
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
------------------------------------------------------------------------------
For the year ended December 31, 1999
------------------------------------------------------------------------------
Estimated
Rental Net Year Investment Estimated Useful Completion
Partnership Name Income Income/(loss) Acquired Status Life (Years) Date
- --------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC (1) (1) 2000 Completed 40 -
School Square Ltd. Partnership (1) (1) 2000 Under - 2001
Construction
(1) The Local Limited Partnership Interests were acquired subsequent to December
31, 1999. Accordingly, no information as of December 31, 1999 is presented.
28
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 7
By: WNC & Associates, Inc. General Partner
By: /s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.
President - Chief Operating Officer of WNC & Associates, Inc.
Date: June 29, 2000
By: /s/ Michael L. Dickenson
Michael L. Dickenson
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: June 29, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr. Chairman of the Board of WNC & Associates, Inc.
Date: June 29, 2000
By: /s/ John B. Lester, Jr.
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: June 29, 2000
By: /s/ David N. Shafer
David N. Shafer Director of WNC & Associates, Inc.
Date: June 29, 2000
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