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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-20057
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
California 33-0391979
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 No X
- ---- -------
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).
2
PART 1.
Item 1. Business
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 5 (the "Partnership") was formed
under the California Revised Limited Partnership Act on March 3, 1997 and
commenced operations on August 29, 1997. 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").
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 June 23, 1997, 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 the close of the public offering on July 9, 1998, the Partnership
had received and accepted subscriptions for 25,000 Units in the amount of
$24,918,175 net of volume and dealer discounts of $81,825. Holders of Units are
referred to herein as "Limited Partners."
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, 2001, the Partnership had invested in fifteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is 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 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 fifteen Housing Complexes as of the dates and for the
periods indicated:
4
-------------------------- ----------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ---------------------------------------------------------------------------------------------- ---------------------------------
Apartment Housing Theodore, Apartment
of Theodore Alabama Developers, Inc. and
Thomas H Cooksey $ 1,188,000 $ 1,188,000 40 97% $ 2,015,000 $ 1,148,000
Austin Gateway, Austin,
Ltd. Texas Gary L. K 131,000 131,000 10 100% 157,000 278,000
Bradley Villas Bradley,
Limited Partnership Arkansas Horizon Bank 501,000 501,000 20 86% 628,000 526,000
Chillicothe Plaza Chillicothe, MBL Development
Apts.L.P. Missouri Co. 972,000 972,000 28 96% 1,555,000 746,000
Concord Apartment Orlando, New Communities, LLC,
Partners, L.P. Florida a Colorado limited
liability Company 470,000 470,000 26 96% 782,000 286,000
El Reno Housing El Reno, Cowen Properties,
Associates Limited Oklahoma Inc.,an Oklahoma
Partnership Corporation 3,040,000 2,836,000 100 80% 4,407,000 2,367,000
Enhance, Baton Rouge, Olsen Securities
L.P. Louisiana Corp. 620,000 620,000 23 83% 867,000 644,000
Hillcrest Heights, Marshalltown, WNC &
L.P. Iowa Associates 609,000 609,000 32 94% 681,000 583,000
Hughes Villas Limited Hughes, Billy Wayne
Partnership Arkansas Bunn 182,000 182,000 20 100% 337,000 761,000
Mansur Wood Living Carbon Cliff, Elderly Living
Center, L.P. IIlinois Development, Inc. 6,446,000 6,446,000 115 96% 8,956,000 3,903,000
5
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ---------------------------------------------------------------------------------------------- ---------------------------------
Mark Twain Senior Oakland, Thomas P. Lam and
Community Limited California Marilyn S. Lam
Partnership Murfreesboro 740,000 715,000 106 76% 1,145,000 1,447,000
Industrial
Murfreesboro Villas Murfreesboro, Development
Limited Partnership Arkansas Corporation 685,000 685,000 24 75% 130,000 640,000
Spring Valley Terrace Mayer, Spring Valley
Apartments, LLC Arizona Terrace,Inc. 716,000 716,000 20 95% 590,000 722,000
United Development Co., Memphis, Harold E. Buehler, Sr.
L.P. - 97.1 Tennessee and Jo Ellen Buehler 1,845,000 1,845,000 40 100% 2,693,000 898,000
United Development Co., Memphis, Harold E. Buehler, Sr.
L.P. - 97.2 Tennessee and Jo Ellen Buehler 743,000 743,000 20 100% 1,061,000 374,000
-------- ----------- ---- ------ ----------- --------
$ 18,888,000 $ 18,659,000 624 89% $ 26,004,000 $ 15,323,000
============ ============ ==== === ============== ==========
6
--------------------------------------------------------------------
For the year ended December 31, 2000
--------------------------------------------------------------------
Net Income (loss) Low Income Housing
Partnership Name Rental Income Credits Allocated
- --------------------------------------------------------------------------------------------------------------------
Apartment Housing of Theodore $ 136,000 $ (98,000) 98.99%
Austin Gateway, Ltd. 58,000 1,000 99.98%
Bradley Villas
Limited Partnership 60,000 (28,000) 99.00%
Chillicothe Plaza Apts. L.P. 93,000 (21,000) 99.97%
Concord Apartment Partners, L.P. 98,000 (21,000) 99.98%
El Reno Housing
Associates Limited Partnership 191,000 (582,000) 99.98%
Enhance, L.P. 67,000 (47,000) 99.98%
Hillcrest Heights, L.P. 142,000 (29,000) 99.99%
Hughes Villas
Limited Partnership 91,000 (18,000) 99.00%
Mansur Wood Living Center, L.P. 260,000 (448,000) 99.98%
Mark Twain Senior
Community Limited Partnership 469,000 (108,000) 98.99%
Murfreesboro Villas
Limited Partnership 53,000 (44,000) 99.00%
Spring Valley
Terrace Apartments, LLC 54,000 (36,000) 99.98%
United Development Co., L.P. - 97.1 258,000 (129,000) 99.98%
United Development Co., L.P. - 97.2 119,000 (36,000) 99.98%
-------- --------
$ 2,149,000 $(1,644,000)
=========== ============
7
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, 2001, there were 1,388 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 year
ended March 31, 2001.
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31 December 31
------------------------------------------------------ ----------------------------------
2001 2000 1999 1998 1997
--------------- ------------- ------------------ --------------- ---------------
ASSETS
Cash and cash equivalents $ 90,481 $ 574,137 $ 3,103,129 $ 3,521,888 $ 4,889,574
Funds held in escrow
disbursement account 256,649 243,595 4,834,997 5,505,543 608,850
Marketable securities - 50,073 - - -
Subscriptions and notes
receivable - - 38,600 879,800 631,885
Investments in limited
partnerships, net 17,555,917 19,293,654 19,968,445 19,927,953 2,398,460
- - - - 878,894
Other assets 18,822 23,798 30,814 68,482 5,042
--------------- ------------- ------------------ --------------- ----------------
$ 17,921,869 $ 20,185,257 $ 27,975,985 $ 29,903,666 $ 9,412,705
=============== ============= ================== =============== ================
LIABILITIES
Payables to limited
partnerships $ 229,030 $ 272,207 $ 6,131,391 $ 8,051,777 $ 860,671
Accrued fees and expenses
due to general partner
and affiliates 66,298 123,718 159,973 97,387 361,900
--------------- ------------- ------------------ --------------- ----------------
295,328 395,925 6,291,364 8,149,164 1,222,571
--------------- ------------- ------------------ --------------- ----------------
PARTNERS' EQUITY 17,626,541 19,789,332 21,684,621 21,754,502 8,190,134
--------------- ------------- ------------------ --------------- ----------------
---------------
$ 17,921,869 $ 20,185,257 $ 27,975,985 $ 29,903,666 $ 9,412,705
=============== ============= ================== =============== ================
8
Selected results of operations, cash flows, and other information for the
Partnership is as follows for the periods indicated:
For the Years Ended For the Three For the Year For the Period
August 29, 1997
(date
operations
commenced)
Months Ended Ended December through
March 31 March 31 31 December 31,
----------------------------- ---------------- ---------------- -----------------
2001 2000 1999 1998 1997
------------ ------------- ---------------- ---------------- -----------------
(Loss) income from operations $ (358,909) $ (458,580)$ (21,156) $ 164,828 $ (87)
Realized loss - marketable
securities - (188,483) - - -
Equity in (losses) income of
limited partnerships (1,803,882) (1,139,225) (22,000) (110,194) 2,395
------------ ------------- ---------------- ---------------- -----------------
Net (loss) income $ (2,162,791) $ (1,786,288)$ (43,156) $ 54,634 $ 2,308
============ ============= ================ ================ =================
Net (loss) income allocated
to:
General Partner $ (21,628) $ (17,863)$ (431) $ 546 $ 23
============ ============= ================ ================ =================
Limited Partners $ (2,141,163) $ (1,768,425)$ (42,725) $ 54,088 $ 2,285
============ ============= ================ ================ ================
Net (loss) income per
limited partner unit $ (85.65) $ (70.74)$ (1.71) $ 2.57 $ 1.13
============ ============= ================ ================ ================
Outstanding weighted limited
partner units 25,000 25,000 25,000 21,008 2,029
============ ============= ================ ================ =================
For the Years Ended For the Three For the Year For the Period
August 29,
1997(date
operations
commenced)
Months Ended Ended December through
March 31 March 31 31 December 31,
------------------------------ ----------------- ---------------- -----------------
2001 2000 1999 1998 1997
-------------- ------------ ----------------- ---------------- -----------------
Net cash provided by
(used in):
Operating activities $ (59,867) $ (209,600) $ 15,016 $ (115,775) $ 1,839
Investing activities (423,789) (2,248,991) (1,248,250) (14,513,730) (2,962,516)
Financing activities - (70,401) 814,475 13,261,819 7,850,251
-------------- ------------ ----------------- ---------------- -----------------
Net change in cash and cash
equivalents (483,656) (2,528,992) (418,759) (1,367,686) 4,889,574
Cash and cash equivalents,
beginning of period 574,137 3,103,129 3,521,888 4,889,574 -
-------------- ------------ ----------------- ---------------- ------------
Cash and cash equivalents,
end of period $ 90,481 $ 574,137 $ 3,103,129 $ 3,521,888 $ 4,889,574
============== ============ ================= ================ =================
9
Low Income Housing Credit per Unit was as follows for the years ended December
31:
2000 1999 1998 1997
----------------- -------------- --------------- ---------------
Federal $ 84 $ 48 $ 21 $ -
State - - - -
----------------- -------------- --------------- ---------------
Total $ 84 $ 48 $ 21 $ -
================= ============== =============== ===============
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown risks that
could cause actual results of operations to differ materially from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.
Risks and uncertainties inherent in forward looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-K and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this filing.
Financial Condition
The Partnership's assets at March 31, 2001 consisted primarily of $90,481 in
cash, $256,649 in cash in escrow, $18,822 in amounts due from affiliate, and
aggregate investments in the fifteen Local Limited Partnerships of $17,555,917.
Liabilities at March 31, 2001 primarily consisted of $229,030 due to limited
partnerships, $24,164 in annual asset management fees and $42,134 in advances
and other payables due to the General Partner or affiliates.
Results of Operations
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. The
Partnership's net loss for the year ended March 31, 2001 was $(2,163,000),
reflecting an increase of $(377,000) from the $(1,786,000) of net loss
experienced for the year ended March 31, 2000. The change is primarily due to an
increase in equity in losses of limited partnerships of $(665,000) to
$(1,804,000) for the year ended March 31, 2001 from $(1,139,000) for the year
ended March 31, 2000. In addition, the change is due to a decrease in advances
to a Local Limited Partnership written off totaling $229,015 during the year
ended March 31, 2001, compared with advances of $402,243 to the same partnership
in 2000 which were also written off in full. Furthermore, interest income
decreased by $102,943 due to significant aggregate capital contributions paid to
certain Local Limited Partnerships during the year ended March 31, 2000
resulting in a significantly lower average cash balance for the year ended March
31, 2001.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The
Partnership's net loss for the year ended March 31, 2000 was $(1,786,000),
reflecting an increase of $1,841,000 from the $55,000 of net income experienced
for the year ended December 31, 1998. The change is primarily due to an increase
in equity in losses of limited partnerships of $1,029,000 to $(1,139,000) for
the year ended March 31, 2000 from $(110,000) for the year ended December 31,
1998. In addition, during the year ended March 31, 2000, the Partnership wrote
off advances of $402,000 to a Local Limited Partnership, realized loss increased
by $188,000, interest income decreased by $156,000, amortization increased by
$17,000 and other operating expenses increased by $48,000.
10
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(43,000), reflecting a decrease of $75,000 from the net income experienced for
the three months ended March 31, 1998. The change is primarily due to a decrease
in interest income of $39,000 to $14,000 for the three months ended March 31,
1999 from $53,000 for the three months ended March 31, 1998 and an increase in
equity in losses of limited partnerships of $8,000 to $(22,000) for the three
months ended March 31, 1999 from $(14,000) for the three months ended March 31,
1998. In addition, amortization expense increased by $8,000, asset management
fees increased by $16,000 and other operating expenses increased by $3,000.
Cash Flows
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. The net
decrease in cash during the year ended March 31, 2001 was $(484,000), compared
to a net decrease in cash for the year ended March 31, 2000 of $(2,529,000). The
change was primarily due to a decrease in cash used in investing activities
related to purchase of Limited Partnership interests of approximately $1,593,000
together with a decrease in cash paid to a Local Limited Partnership of
$115,000.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The net
decrease in cash during the year ended March 31, 2000 was $(2,529,000), compared
to a net decrease in cash for the year ended December 31, 1998 of $(1,368,000).
The change was primarily due to a decrease in cash provided by financing
activities of $13,332,000. The decrease in cash provided by financing activities
was due to a decrease in capital contributions of $14,517,000, a decrease in the
collection of notes receivable of $632,000, offset by a decrease in offering
expenses paid of $1,817,000. Net cash used in operating activities increased by
$93,825. The increase in cash used in operating activities was due primarily to
an increase in other expenses. The decrease in cash from financing activities
and operating activities was offset by a decrease in cash used in investing
activities of $12,667,000. The decrease in investing activities was primarily
due to decrease in funds placed in escrow of $9,488,000, a decrease in
investments in limited partnerships of $2,987,000, a decrease in capitalized
acquisition costs and fees of $1,121,000, offset by a decrease in cash collected
on loans receivable of $879,000, an increase in advances to Local Limited
Partnership of $402,000 and an increase in marketable securities of $50,000.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net decrease in cash during the three months ended March 31, 1999 was
$(419,000), compared to a net increase in cash for the three months ended March
31, 1998 of $2,723,000. The change was due primarily to a decrease in capital
contributions of $5,411,000 and an increase in cash paid to the General Partner
or affiliates of $18,000, offset by an increase in collections of notes
receivable due from limited partners of $880,000, a decrease in offering
expenses paid of $533,000, a decrease in investments in limited partnerships of
$608,000 and a decrease in acquisition fees and costs of $266,000.
During the years ended March 31, 2001 and 2000, the three months ended March 31,
1999 and the year ended December 31, 1998, accrued payables, which consist of
related party management fees and advances due to the General Partner, decreased
by $58,000, decreased by $36,000, increased by $63,000 and decreased by
$265,000, respectively.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2001, to be sufficient to meet all currently foreseeable
future cash requirements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 5
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
VI, L.P., Series 5 (a California Limited Partnership) (the "Partnership") as of
March 31, 2001 and 2000, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended March 31, 2001 and 2000, the
three months ended March 31, 1999, and the year ended December 31, 1998. 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 audits. A significant portion of the financial statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors whose reports have been furnished to us. As discussed in Note 3 to the
financial statements, the Partnership accounts for its investments in limited
partnerships using the equity method. The portion of the Partnership's
investment in limited partnerships audited by other auditors represented 84% and
83% of the total assets of the Partnership at March 31, 2001 and 2000,
respectively. Our opinion, insofar as it relates to the amounts included in the
financial statements for the limited partnerships which were audited by others,
is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, 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 5 (a
California Limited Partnership) as of March 31, 2001 and 2000, and the results
of its operations and its cash flows for the years ended March 31, 2001 and
2000, the three months ended March 31, 1999, and the year ended December 31,
1998, in conformity with accounting principles generally accepted in the United
States of America.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
June 21, 2001
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
BALANCE SHEETS
March 31
--------------------------------
2001 2000
-------------- ---------------
ASSETS
Cash and cash equivalents $ 90,481 $ 574,137
Funds held in escrow disbursement account 256,649 243,595
Marketable securities (Note 2) - 50,073
Subscriptions and notes receivable (Note 8) - -
Investments in limited partnerships (Notes 3 and 4) 17,555,917 19,293,654
Other assets 18,822 23,798
-------------- ---------------
$ 17,921,869 $ 20,185,257
============== ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 6) $ 229,030 $ 272,207
Accrued fees and expenses due to General
Partner and affiliates (Note 4) 66,298 123,718
-------------- ---------------
Total liabilities 295,328 395,925
-------------- ---------------
Commitments and contingencies
Partners' equity (deficit) (Note 8)
General Partner (72,827) (51,199)
Limited Partners (25,000 units authorized,
25,000 units issued and outstanding) 17,699,368 19,840,531
-------------- ---------------
Total partners' equity 17,626,541 19,789,332
-------------- ---------------
$ 17,921,869 $ 20,185,257
=============== =================
See accompanying notes to financial statements
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the
Three For the Year
Months Ended
For the Years Ended December 31
Ended March 31 March 31
------------------------------- -------------- ----------------
2001 2000 1999 1998
------------- -------------- -------------- ----------------
Interest income $ 27,074 $ 130,017 $ 14,427 $ 286,005
Reporting fees 26,000 - - -
------------- -------------- -------------- ----------------
Total income 53,074 130,017 14,427 286,005
------------- -------------- -------------- ----------------
Operating expenses:
Amortization (Notes 3 and 4) 64,536 64,459 15,334 47,350
Asset management fees (Note 4) 69,869 67,180 16,795 66,382
Write off of advances to a Local Limited
Partnership (Note 9) 229,015 402,243 - -
Other 48,563 54,715 3,454 7,445
------------- -------------- -------------- ----------------
Total operating expenses 411,983 588,597 35,583 121,177
------------- -------------- -------------- ----------------
(Loss) income from operations (358,909) (458,580) (21,156) 164,828
Realized loss - marketable securities - (188,483) - -
Equity in losses of limited
partnerships (Note 3) (1,803,882) (1,139,225) (22,000) (110,194)
------------- -------------- -------------- ----------------
Net (loss) income $ (2,162,791) $ (1,786,288 $ (43,156) $ 54,634
============= ============== ============== ================
Net (loss) income allocated to:
General Partner $ (21,628) $ (17,863) $ (431) $ 546
============= ============== ============== ================
Limited Partners $ (2,141,163) $ (1,768,425) $ (42,725) $ 54,088
============= ============== ============== ================
Net (loss) income per limited partner unit $ (85.65) $ (70.74) $ (1.71) $ 2.57
============= ============== ============== ================
Outstanding weighted limited partner units 25,000 25,000 25,000 21,008
============= ============== ============== ================
See accompanying notes to financial statements
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
General Limited
Partner Partners Total
--------------- --------------- ---------------
Partners' equity (deficit), January 1, 1998 $ (12,452) $ 8,202,586 $ 8,190,134
Sale of limited partnership units, net of discounts
of
$43,205 - 15,122,795 15,122,795
Sale of limited partnership units issued for
promissory
notes receivable (Note 8) - (38,600) (38,600)
Collection of notes receivable - 351,150 351,150
Offering expenses (19,256) (1,906,355) (1,925,611)
Net income 546 54,088 54,634
--------------- --------------- ---------------
Partners' equity (deficit), December 31, 1998 (31,162) 21,785,664 21,754,502
Collection of notes receivable - 38,600 38,600
Offering expenses (653) (64,672) (65,325)
Net loss (431) (42,725) (43,156)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 1999 (32,246) 21,716,867 21,684,621
Offering expenses (1,090) (107,911) (109,001)
Net loss (17,863) (1,768,425) (1,786,288)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 (51,199) 19,840,531 19,789,332
Net loss (21,628) (2,141,163) (2,162,791)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2001 $ (72,827) $ 17,699,368 $ 17,626,541
=============== =============== ===============
See accompanying notes to financial statements
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the
Three For the Year
Months Ended
For the Years Ended December 31
Ended March 31 March 31
------------------------------- -------------- ----------------
2001 2000 1999 1998
------------- -------------
Cash flows from operating activities:
Net (loss) income $ (2,162,791) $ (1,786,288)$ (43,156) $ 54,634
Adjustments to reconcile net (loss) income
to
net cash (used in) provided by operating
activities:
Amortization 64,536 64,459 15,334 47,350
Equity in losses of limited
partnerships 1,803,882 1,139,225 22,000 110,194
Write off of advances to Local Limited
Partnership 229,015 402,243 - -
Change in amounts due from affiliates 4,976 (23,798) - -
Change in other assets - 30,814 37,668 (63,440)
Change in accrued fees and expenses due
to general partner and affiliates 515 (36,255) (16,830) (264,513)
-------------- ------------- ------------- ---------------
Net cash (used in) provided by operating
activities (59,867) (209,600) 15,016 (115,775)
-------------- ------------- ------------- ---------------
Cash flows from investing activities:
Investments in limited partnerships (173,858) (6,370,474) (1,920,386) (9,357,460)
Funds held in escrow disbursement account (13,054) 4,591,402 670,546 (4,896,693)
Sale (purchase) of marketable securities 50,073 (50,073) - -
Loans receivable - - - 878,894
Capitalized acquisition costs and fees - (18,103) 1,590 (1,138,786)
Distributions from limited partnerships - 500 - 315
Advances to a Local Limited Partnership (286,950) (402,243) - -
-------------- ------------- ------------- ---------------
Net cash used in investing activities (423,789) (2,248,991) (1,248,250) (14,513,730)
-------------- ------------- ------------- ---------------
Cash flows from financing activities:
Capital contributions - 38,600 - 14,555,545
Offering expenses - (109,001) (65,325) (1,925,611)
Collection on notes receivable - - 879,800 631,885
-------------- ------------- ------------- ---------------
Net cash (used in) provided by financing
activities - (70,401) 814,475 13,261,819
-------------- ------------- ------------- ---------------
Net decrease in cash and cash
equivalents (483,656) (2,528,992) (418,759) (1,367,686)
Cash and cash equivalents, beginning of period 574,137 3,103,129 3,521,888 4,889,574
-------------- ------------- ------------- ---------------
Cash and cash equivalents, end of period $ 90,481 $ 574,137 $ 3,103,129 $ 3,521,888
============== ============= ============= ===============
See accompanying notes to financial statements
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the
Three For the Year
Months Ended
For the Years Ended December 31
Ended March 31 March 31
------------------------------- -------------- ----------------
2001 2000 1999 1998
------------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Taxes paid $ 800 $ 800 $ - $ 800
============== ============= ============= ===============
See accompanying notes to financial statements
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
65
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 5, a California Limited Partnership
(the "Partnership"), was formed on March 3, 1997 under the laws of the State of
California, and commenced operations on August 29, 1997. 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 corporation. 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, 2052,
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"). The offering of Units concluded on July 9, 1998 at which
time 25,000 Units representing subscriptions in the amount of $24,918,175, net
of discount of $54,595 for volume purchases and $27,230 for dealer discounts,
had been accepted. The General Partner has a 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% 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.
Change in Reporting Year End
- ----------------------------
In 1999, the Partnership elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 3.
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
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 Partnerships' results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships' 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 30 years (see Note 3).
Losses from Local Limited Partnerships for the year ended December 31, 1998 have
been recorded by the Partnership based on reported results provided by the Local
Limited Partnerships. Losses from Local Limited Partnerships for the three
months ended March 31, 1999 have been estimated by management of the
Partnership. Losses from limited partnerships for the years ended March 31, 2001
and 2000 have been recorded by the Partnership based on nine months of reported
results provided by the Local Limited Partnerships and on three months of
results estimated by management of the Partnership. Losses from the limited
partnerships allocated to the Partnership will not be recognized to the extent
that the investment balance would be adjusted below zero.
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 14.5%
(including sales commissions) of the total offering proceeds. Offering expenses
are reflected as a reduction of limited partners' capital and amounted to
$3,557,441, $3,357,441, $3,248,440, and $3,183,115 as of March 31, 2001, 2000
and 1999 and December 31, 1998, respectively.
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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.
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, 2001 and 2000, the Partnership had cash equivalents of $50,000 and
$393,648, respectively. Of this amount, $50,000 and $375,000, respectively,
consist 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, 2001, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.
Net (Loss) Income Per Limited Partner Unit
- ------------------------------------------
Net (loss) income per limited partner unit is calculated pursuant to Statement
of Financial Accounting Standards No. 128, Earnings Per Share. Net (loss) income
per unit includes no dilution and is computed by dividing loss available to
limited partners by the weighted average number of units outstanding during the
period. Calculation of diluted net (loss) 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. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
NOTE 2 - MARKETABLE SECURITIES
- ------------------------------
Marketable securities are categorized as available-for-sale securities and
summarized as follows:
Gross Unrealized
----------------------------------
As of March 31, 2000 Cost Gain Loss Fair Value
--------------- --------------- --------------- ---------------
Debt securities $ 50,073 $ - $ - $ 50,073
=============== =============== =============== ===============
Debt securities are those issued by a state agency which matured on July 1,
2000. Those securities were sold during the year ended March 31, 2001 at cost.
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of March 31, 2001 and 2000 the Partnership had acquired limited partnership
interests in 15 and 14 Local Limited Partnerships, respectively, each of which
owns one Housing Complex consisting of an aggregate of 624 and 614 apartment
units, respectively. 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%, 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.
The Partnership's investments in limited partnerships as reflected in the
balance sheets at March 31, 2001 and 2000, are approximately $1,653,000 and
$2,134,000, respectively, greater than the Partnership's combined equity at the
preceding December 31 as shown in the Local Limited Partnerships' combined
financial statements presented below. This difference is primarily due to
acquisition, selection, and other costs related to the acquisition of the
investments which have been capitalized in the Partnership's investment account
and to capital contributions payable to the limited partnerships which were
netted against partner capital in the Local Limited Partnerships' financial
statements (see Note 5). The Partnership's investment is also lower than the
Partnership's equity as shown in the Local Limited Partnership's combined
financial statements due to the losses recorded by the Partnership for the three
month period ended March 31.
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.
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, 2001, 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 periods presented:
For the Years Ended For the For the Year
March 31 Months Ended Ended
March 31 December 31
2001 2000 1999 1998
--------------- ------------- ------------ ------------
Investments per balance sheet, beginning of period $ 19,293,654 $ 19,968,445 $ 19,927,953 $ 2,398,460
Capital contributions paid 130,681 511,290 - 9,357,460
Capital contributions payable - - - 7,191,106
Capitalized acquisition fees and costs - 18,103 77,826 1,138,786
Distributions received - (500) - (315)
Equity in losses of limited partnerships (1,803,882) (1,139,225) (22,000) (110,194)
Amortization of capitalized acquisition fees and costs (64,536) (64,459) (15,334) (47,350)
--------------- ----------------- --------------- ------------
Investments in limited partnerships, end of period $ 17,555,917 $ 19,293,654 $ 19,968,445 $ 19,927,953
================= ================= =============== =============
21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted against
interest expense. Approximate combined condensed financial information from the
individual financial statements of the individual financial statements of the
Local Limited Partnerships as of December 31 and for the years then ended is as
follows:
COMBINED CONDENSED BALANCE SHEETS
2000 1999
--------------- ---------------
ASSETS
Land $ 2,251,000 $ 804,000
Buildings and improvements, net of accumulated
depreciation for 2000 and 1999 of $2,772,000 and
$1,593,000, respectively 31,014,000 22,366,000
Construction in progress - 7,823,000
Other assets 1,074,000 1,524,000
--------------- ---------------
$ 34,339,000 $ 32,517,000
=============== ===============
LIABILITIES
Mortgage and construction loans payable $ 15,323,000 $ 12,109,000
Due to related parties 2,569,000 1,630,000
Other liabilities 605,000 1,600,000
--------------- ---------------
18,497,000 15,339,000
--------------- ---------------
PARTNERS' CAPITAL
WNC Housing Tax Credit Fund VI, L.P., Series 5 15,903,000 17,160,000
Other partners (61,000) 18,000
--------------- ---------------
15,842,000 17,178,000
--------------- ---------------
$ 34,339,000 $ 32,517,000
=============== ===============
22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2000 1999 1998
--------------- --------------- ---------------
Revenues $ 2,216,000 $ 1,733,000 $ 1,088,000
--------------- --------------- ---------------
Expenses:
Operating expenses 1,857,000 1,221,000 644,000
Interest expense 782,000 510,000 268,000
Depreciation and amortization 1,221,000 752,000 286,000
--------------- --------------- ---------------
Total expenses 3,860,000 2,483,000 1,198,000
--------------- --------------- ---------------
Net loss $ (1,644,000) $ (750,000)$ (110,000)
=============== =============== ===============
Net loss allocable to the Partnership $ (1,636,000) $ (861,000)$ (110,000)
=============== =============== ===============
Net loss recorded by the Partnership $ (1,804,000) $ (1,139,000)$ (110,000)
=============== =============== ===============
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.
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 up to 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, 2001 and 2000, the Partnership
incurred acquisition fees of $1,750,000 and $1,750,000, respectively.
Accumulated amortization of these capitalized costs were $176,494 and
$118,154 as of March 31, 2001 and 2000, respectively.
Reimbursement of costs incurred by the General Partner in connection with
the acquisition of Local Limited Partnerships. These reimbursements have
not exceeded 1.5% of the gross proceeds. As of March 31, 2001 and 2000, the
Partnership incurred acquisition costs of $185,734 and $185,734,
respectively, which have been included in investments in limited
partnerships. Accumulated amortization of these capitalized costs were
$17,441 and $11,245, as of March 31, 2001 and 2000, respectively.
23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
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 $69,869, $67,180, $16,795 and $66,382 were
incurred during the years ended March 31, 2001 and 2000, the three months
ended March 31, 1999, and the year ended December 31, 1998, respectively,
of which $67,180, $92,882 were paid during the years ended March 31, 2001
and 2000, the three months ended March 31, 1999, and the year ended
December 31, 1998, respectively.
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 preferred return of 12% through December 31, 2008 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services in the sales
effort.
The accrued fees and expenses due to General Partner and affiliates consisted of
the following as of:
March 31
--------------------------------------
2001 2000
----------------- ----------------
Asset management fee payable $ 24,164 $ 21,475
Advances from WNC 42,134 95,171
Other - 7,072
----------------- ----------------
Total $ 66,298 $ 123,718
================= ================
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000 (in thousands, except for per unit data).
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2001
----
Income $ 4,000 $ 6,000 $ 3,000 $ 40,000
Operating expenses (45,000) (70,000) (147,000) (150,000)
Equity in losses of limited
partnerships (350,000) (370,000) (311,000) (773,000)
--------------- --------------- --------------- ---------------
Net loss $ (391,000) $ (434,000) $ (455,000) $ (883,000)
=============== =============== =============== ===============
Loss available to limited partners $ (387,000) $ (430,000) $ (451,000) $ (873,000)
=============== =============== =============== ===============
Loss per limited partner unit (15) (17) (18) (35)
=============== =============== =============== ===============
24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued
- ---------------------------------------------------------------
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2000
----
Income $ 47,000 $ 23,000 $ 22,000 $ 38,000
Operating expenses (57,000) (106,000) (81,000) (345,000)
Realized loss - marketable securities (109,000) - - (79,000)
Equity in losses of limited
partnerships (159,000) (202,000) (260,000) (518,000)
--------------- --------------- --------------- ---------------
Net loss $ (278,000) $ (285,000) $ (319,000) $ (904,000)
=============== =============== =============== ===============
Loss available to limited partners $ (275,000) $ (282,000) $ (316,000) $ (895,000)
=============== =============== =============== ===============
Loss per limited partner unit (11) (11) (13) (36)
=============== =============== =============== ===============
NOTE 6 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables 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 7 - 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 8 - SUBSCRIPTIONS AND NOTES RECEIVABLE
- -------------------------------------------
During 1998, the Partnership received subscriptions for 15,166 Units which
included promissory notes of $615,250, of which $576,650 was collected in 1999
prior to the issuance of the December 31, 1998 financial statements, leaving an
unpaid balance of $38,600. As this balance was paid in 1999 prior to issuance of
the March 31, 1999 financial statements it is reflected as capital contributed
during the three months ended March 31, 1999.
In 1997, the Partnership had received promissory notes of $351,150 related to
the sale of Units, of which the balance of $303,150 was collected in full in
1999. Promissory notes collected subsequent to year end and prior to the
issuance of the financial statements are recorded as a capital contribution and
an asset in the financial statements. Any unpaid balance as of the issuance of
the 1998 financial statements was reflected as a reduction of partners' equity
in the financial statements.
25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 9 - WRITE OFF OF ADVANCES TO A LOCAL LIMITED PARTNERSHIP
- -------------------------------------------------------------
During the years ended March 31, 2001 and 2000 and subsequent to March 31,2001
and through the date of this report, the Partnership advanced cash in the amount
of $631,258 to one of the Local Limited Partnerships in which it has a Limited
Partnership interest. Of the $631,258 of advances, $402,243 was written off
during the year ended March 31, 2000 and $229,015 was written during the year
ended March 31, 2001. Advances were made to augment the Local Limited
Partnership's cash flows which were not sufficient to support the operating
costs of the property. Such advances have been expensed in full in the
accompanying financial statements. Subsequent to year end, the respective
property has continued to rent up and Section 8 certifications have been
obtained for approximately 100% of the units. Such certifications should enable
the property to charge market rents applicable to multi-family housing complexes
and attain a positive cash flow.
26
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 70, 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 67, is Vice-Chairman, a Director, 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 38, 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 49, 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.
27
Thomas J. Riha, age 46, became Chief Financial Officer effective January 2001.
Prior to his appointment as Chief Financial Officer he was 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 55, 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 38, 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 46, 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 64, 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, 2001, 2000 and 1999 and
December 31, 1998 approximately $3,357,000, $3,357,000, $3,248,000 and
$3,183,000, respectively, for selling commissions and other fees and
expenses of the Partnership's offering of Units. Of the total accrued or
paid, approximately $2,607,000, $2,607,000, $2,498,000 and $2,433,000,
respectively, was paid or to be paid to unaffiliated persons participating
in the Partnership's offering or rendering other services in connection
with the Partnership's offering.
(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,
2001, 2000 and 1999 and December 31, 1998, the aggregate amount of
acquisition fees paid or accrued was approximately $1,750,000, $1,750,000,
$1,747,300 and $1,670,800, respectively.
(c) Acquisition Expense. The Partnership reimbursed the General Partner or its
affiliates as of March 31, 2001, 2000 and 1999 and December 31, 1998 for
acquisition expense, not to exceed 1.5% of the Gross Proceeds, expended by
such persons on behalf of the Partnership in the amounts $186,000,
$186,000, $170,000 and $169,000, respectively.
28
(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 on and other debts related to the Housing Complexes owned by
such Local Limited Partnerships. Fees of $70,000, $67,000, $17,000 and
$66,000 were incurred for the years ended March 31, 2001 and 2000, the
three months ended March 31, 1999 and the year ended December 31, 1998. The
Partnership paid the General Partner or its affiliates $67,000, $93,000,
$36,000 and $0 of those fees during the years ended March 31, 2001 and
2000, the three months ended March 31, 1999 and the year ended December 31,
1998, respectively.
(e) Operating Expenses. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $55,000, $83,000, $0 and
$4,500 during the years ended March 31, 2001 and 2000, the three months
ended March 31, 1999 and the year ended December 31, 1998, respectively,
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) 12%
through December 31, 2008, 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 1% of the Low
Income Housing Credits. The General Partner was allocated Low Income
Housing Credits of $21,257, $1,190 and $441 for the years ended December
31, 2000, 1999 and 1998, respectively. The General Partners are also
entitled to receive 1% of cash distributions. There were no distributions
of cash to the General Partner during the years ended March 31, 2001 and
2000, the three months ended March 31, 1999 or the year ended December 31,
1998.
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.
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
29
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.
30
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
Balance Sheets, March 31, 2001 and 2000
Statements of Operations for the years ended March 31, 2001 and 2000,
the three months ended March 31, 1999 and the year ended
December 31, 1998
Statements of Partners' Equity for the years ended
March 31, 2001 and 2000, the three months ended March 31, 1999 and the
year ended December 31, 1998
Statements of Cash Flows for the years ended
March 31, 2001 and 2000, the three months ended March 31, 1999 and the
year ended December 31, 1998
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
--------------------------------------------------------
Report of Independent Certified Public Accountants on Financial Statement
Schedules Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
-------------------
1. None
(c) Exhibits.
--------
3.1 Agreement of Limited Partnership dated as of March 3, 1997 included as
Exhibit 3.1 to the Form 10-K filed for the year ended December 31, 1997,
is hereby incorporated herein as Exhibit 3.1.
3.2 First Amendment to Agreement of Limited Partnership dated August 29, 1997
included as Exhibit 3.2 to the Form 10-K filed for the year ended
December 31, 1997, is hereby incorporated as Exhibit 3.2.
10.1 Amended and Restated Agreement of Limited Partnership of Chillicothe
Plaza Apts., L.P. filed as exhibit 10.1 to the current report on Form 8-K
dated November 11, 1997, is herein incorporated by reference as Exhibit
10.1.
10.2 Amended and Restated Agreement of Spring Valley Terrace Apartments,
L.L.C. filed as Exhibit 10.3 to Post-effective Amendment No. 1 to
Registration statement, is herein incorporated by reference as Exhibit
10.2.
10.3 Amended and Restated Agreement of Limited Partnership of El Reno Housing
Associates Limited Partnership filed as Exhibit 10.1 to the current
report on Form 8-K dated January 15, 1998, is herein incorporated by
reference as Exhibit 10.3.
10.4 Second Amended and Restated Agreement of Limited Partnership of Hughes
Villas Limited Partnership filed as Exhibit 10.2 to the current report on
Form 8-K dated January 15, 1998, is herein incorporated by reference as
Exhibit 10.4.
10.5 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.3 to
the current report on Form 8-K dated January 15, 1998, is herein
incorporated by reference as Exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Mark Twain
Senior Community Limited Partnership filed as Exhibit 10.3 to the current
report on Form 8-K dated January 15, 1998, is herein incorporated by
reference as Exhibit 10.6.
31
10.7 Amended and Restated Agreement of Limited Partnership of Bradley Villas,
L.P. filed as Exhibit 10.1 to Form 8-K dated April 1, 1998 is herein
incorporated as Exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Murfreeburo
Villas filed as Exhibit 10.5 to Form 8-K dated April 1, 1998 is herein
incorporated as Exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of United
Development Co., L.P. - 97-2 filed as Exhibit 10.3 to Form 8-K dated
April 30, 1998 is herein incorporated as Exhibit 10.9.
10.10 Second Amended and Restated Agreement of Limited Partnership of United
Development Co., L.P. - 97-2 filed as Exhibit 10.2 to Form 8-K dated
April 30, 1998 is herein incorporated as Exhibit 10.10.
10.11 Second Amended and Restated Agreement of Limited Partnership of United
Development Co., L.P. - 97-1 filed as Exhibit 10.3 to Form 8-K dated
April 30, 1998 is herein incorporated as Exhibit 10.11.
10.12 Second Amended and Restated Agreement of Limited Partnership of Concord
Apartment Partners, L.P. filed as Exhibit 10.1 to Form 8-K dated May 31,
1998 is herein incorporated as Exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Mansur Wood
Living Center, L.P. filed as Exhibit 10.1 to Form 8-K dated September 19,
1998 is herein incorporated as Exhibit 10.13.
10.14 Amended and Restated Agreement of Apartment Housing of Theodore, LTD
filed as Exhibit 10.23 to Post-Effective Amendment No 3 to Registration
Statement dated May 1, 1998 is herein incorporated as Exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Enhance, L.P.
filed as Exhibit 10.15 to Form 10-K dated November 13, 2000 is herein
incorporated as Exhibit 10.15.
10.16 Second Amended and Restated Agreement of Limited Partnership of Austin
Gateway, Ltd.
21.1 Financial Statements of Mansur Wood Elderly Living Center, L.P., for the
year ended December 31, 1998 together with auditor's report thereon; a
significant subsidiary of the Partnership, filed as exhibit 21.1 to Form
10-K dated August 5, 1999 is herein incorporated by reference as Exhibit
21.1.
21.2 Financial Statements for Mansur Wood Elderly Living Center, L.P., for the
year ended December 31, 1999 together with auditor's report thereon; a
significant subsidiary of the Partnership, filed as exhibit 21.2 to Form
10-K dated November 13, 2000 is herein incorporated by reference as
exhibit 21.2.
21.3 Financial Statements for Mansur Wood Elderly Living Center, L.P., for the
year ended December 31, 2000 together with auditor's report thereon; a
significant subsidiary of the Partnership.
(d) Financial statement schedules follow, as set forth in subsection (a)(2)
hereof.
-------
32
Report of Independent Certified Public Accountants on
Financial Statement Schedules
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 5
The audits referred to in our report dated June 21, 2001, relating to the 2001,
2000, 1999 and 1998 financial statements of WNC Housing Tax Credit Fund VI,
L.P., Series 5 (the "Partnership"), which is contained in Item 8 of this Form
10-K, included the audit of the accompanying financial statement schedules. The
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
Orange County, California BDO SEIDMAN, LLP
June 21, 2001
33
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------------- --------------------------------------------
As of March 31, 2001 As of December 31, 2000
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Apartment Housing Theodore,
of Theodore Alabama $ 1,188,000 $ 1,188,000 $ 1,148,000 $ 2,345,000 $ 156,000 $ 2,189,000
Austin Austin,
Gateway, Ltd. Texas 131,000 131,000 278,000 429,000 49,000 380,000
Bradley Villas Bradley,
Limited Partnership Arkansas 501,000 501,000 526,000 1,000,000 84,000 916,000
Chillicothe Chillicothe,
Plaza Apts. L.P. Missouri 972,000 972,000 746,000 1,899,000 73,000 1,826,000
Concord Apartment Orlando,
Partners, L.P. Florida 470,000 470,000 286,000 442,000 73,000 369,000
El Reno Housing Associates El Reno,
Limited Partnership Oklahoma 3,040,000 2,836,000 2,367,000 5,984,000 420,000 5,564,000
Enhance, Baton Rouge,
L.P. Louisiana 620,000 620,000 644,000 1,416,000 141,000 1,275,000
Hillcrest Marshalltown,
Heights, L.P. Iowa 609,000 609,000 583,000 1,210,000 83,000 1,127,000
Hughes Villas Hughes,
Limited Partnership Arkansas 182,000 182,000 761,000 986,000 135,000 851,000
Mansur Wood Living Carbon Cliff,
Center, L.P. Illinois 6,446,000 6,446,000 3,903,000 10,904,000 270,000 10,634,000
Mark Twain Senior
Community Limited Oakland,
Partnership California 740,000 715,000 1,447,000 2,529,000 759,000 1,770,000
Murfreesboro Villas Murfreesboro,
Partnership Limited Arkansas 685,000 685,000 640,000 1,258,000 101,000 1,157,000
Spring Valley Terrace Mayer,
Apartments, LLC Arizona 716,000 716,000 722,000 1,449,000 93,000 1,356,000
34
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------------- --------------------------------------------
As of March 31, 2001 As of December 31, 2000
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
United Development Memphis,
Co., L.P. - 97.1 Tennessee 1,845,000 1,845,000 898,000 3,099,000 191,000 2,908,000
United Development Memphis,
Co., L.P. - 97.2 Tennessee 743,000 743,000 374,000 1,087,000 144,000 943,000
------------ ------------ ------------ ----------- ---------- -----------
$18,888,000 $18,659,000 $15,323,000 $36,037,000 $2,772,000 $33,265,000
=========== ============ ============ =========== ========== ===========
35
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
-------------------------------------------------------------------------------
For the year ended December 31, 2000
-------------------------------------------------------------------------------
Partnership Name Rental Income Net Income Year Status Estimated Useful Life
Investment
(Loss) Acquired (Years)
- --------------------------------------------------------------------------------------------------------------------
Apartment Housing of Theodore $ 136,000 $ (98,000) 1998 Completed 40.0
Austin Gateway, Ltd. 58,000 1,000 2000 Completed 40.0
Bradley Villas Limited Partnership 60,000 (28,000) 1998 Completed 40.0
Chillicothe Plaza Apts. L.P. 93,000 (21,000) 1997 Completed 50.0
Concord Apartment Partners, L.P. 98,000 (21,000) 1998 Completed 30.0
El Reno Housing Associates Limited
Partnership 191,000 (582,000) 1998 Completed 40.0
Enhance, L.P. 67,000 (47,000) 2000 Completed 27.5
Hillcrest Heights, L.P. 142,000 (29,000) 1998 Completed 27.0
Hughes Villas Limited Partnership 91,000 (18,000) 1998 Completed 40.0
Mansur Wood Living Center, L.P. 260,000 (448,000) 1998 Completed 27.5
Mark Twain Senior Community Limited
Partnership 469,000 (108,000) 1998 Completed 27.5
Murfreesboro Villas Limited
Partnership 53,000 (44,000) 1998 Completed 40.0
Spring Valley Terrace Apartments,
LLC 54,000 (36,000) 1997 Completed 40.0
United Development Co., L.P. - 97.1
258,000 (129,000) 1998 Completed 27.5
United Development Co., L.P. - 97.2 119,000 (36,000) 1998 Completed 27.5
------------ ------------
$2,149,000 $(1,644,000)
============= ============
36
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
---------------------------------- ----------------------------------------------
As of March 31, 2000 As of December 31,1999
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Apartment Housing Theodore,
of Theodore Alabama $ 1,188,000 $ 1,188,000 $ 1,155,000 $ 2,345,000 $ 55,000 $ 2,290,000
Bradley Villas Bradley,
Limited Partnership Arkansas 501,000 501,000 533,000 1,000,000 54,000 946,000
Chillicothe Chillicothe,
Plaza Apts. L.P. Missouri 972,000 972,000 746,000 1,899,000 27,000 1,872,000
Concord Apartment Orlando,
Partners, L.P. Florida 470,000 470,000 290,000 442,000 50,000 392,000
El Reno Housing Associates El Reno,
Limited Partnership Oklahoma 3,040,000 2,836,000 2,367,000 5,984,000 185,000 5,799,000
Enhance, Baton Rouge,
L.P. Louisiana 620,000 620,000 545,000 1,366,000 87,000 1,279,000
Hillcrest Marshalltown,
Heights, L.P. Iowa 609,000 609,000 592,000 1,210,000 49,000 1,161,000
Hughes Villas Hughes,
Limited Partnership Arkansas 182,000 182,000 763,000 986,000 105,000 881,000
Mansur Wood Living Carbon Cliff,
Center, L.P. Illinois 6,446,000 6,446,000 1,000,000 7,873,000 - 7,873,000
Mark Twain Senior
Community Limited Oakland,
Partnership California 740,000 715,000 1,459,000 2,518,000 670,000 1,848,000
Murfreesboro Villas Murfreesboro,
Partnership Limited Arkansas 685,000 685,000 640,000 1,258,000 61,000 1,197,000
Spring Valley Terrace Mayer,
Apartments, LLC Arizona 696,000 676,000 725,000 1,428,000 54,000 1,374,000
37
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
----------------------------- -------------------------------------------------
As of March 31, 2000 As of December 31, 1999
------------------------------ --------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
United Development Memphis,
Co., L.P. - 97.1 Tennessee 1,845,000 1,821,000 898,000 3,166,000 91,000 3,075,000
United Development Memphis,
Co., L.P. - 97.2 Tennessee 743,000 743,000 378,000 1,111,000 105,000 1,006,000
------------ ------------ ------------ ----------- ---------- -----------
$18,737,000 $18,464,000 $12,109,000 $32,586,000 $1,593,000 $30,993,000
=========== ============ ============ =========== ========== ===========
38
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
-------------------------------------------------------------------------------
For the year ended December 31, 1999
-------------------------------------------------------------------------------
Partnership Name Rental Income Net Income Year Status Estimated Useful Life
Investment
(Loss) Acquired (Years)
- --------------------------------------------------------------------------------------------------------------------
Apartment Housing of Theodore $ 57,000 $ (54,000) 1998 Completed 40.0
Bradley Villas Limited Partnership 64,000 (21,000) 1998 Completed 40.0
Chillicothe Plaza Apts. L.P. 44,000 (23,000) 1997 Completed 50.0
Concord Apartment Partners, L.P. 94,000 (30,000) 1998 Completed 30.0
El Reno Housing Associates Limited
Partnership 59,000 (390,000) 1998 Completed 40.0
Enhance, L.P. 83,000 (81,000) 2000 Completed 27.5
Hillcrest Heights, L.P. 138,000 (31,000) 1998 Completed 27.0
Hughes Villas Limited Partnership 90,000 (18,000) 1998 Completed 40.0
Mansur Wood Living Center, L.P. - 112,000 1998 2000 27.5
Mark Twain Senior Community Limited
Partnership 500,000 (113,000) 1998 Completed 27.5
Murfreesboro Villas Limited
Partnership 43,000 (48,000) 1998 Completed 40.0
Spring Valley Terrace Apartments,
LLC 32,000 (59,000) 1997 Completed 40.0
United Development Co., L.P. - 97.1 249,000 47,000 1998 Completed 27.5
United Development Co., L.P. - 97.2 103,000 (41,000) 1998 Completed 27.5
----------- -----------
$1,556,000 $ (750,000)
=========== ===========
39
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
---------------------------------- ----------------------------------------------
As of March 31, 1999 As of December 31,1998
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Apartment Housing Theodore,
of Theodore Alabama $ 1,277,000 $ 839,000 $ 898,000 $ 1,651,000 $ - $ 1,651,000
Bradley Villas Bradley,
Limited Partnership Arkansas 501,000 501,000 538,000 1,000,000 23,000 977,000
Chillicothe Chillicothe,
Plaza Apts. L.P. Missouri 991,000 697,000 246,000 1,008,000 - 1,008,000
Concord Apartment Orlando,
Partners, L.P. Florida 470,000 470,000 293,000 442,000 26,000 416,000
El Reno Housing Associates El Reno,
Limited Partnership Oklahoma 3,040,000 3,040,000 2,187,000 4,032,000 - 4,032,000
Hillcrest Marshalltown,
Heights, L.P. Iowa 609,000 609,000 598,000 1,209,000 14,000 1,195,000
Hughes Villas Hughes,
Limited Partnership Arkansas 182,000 182,000 765,000 986,000 76,000 910,000
Mansur Wood Living Carbon Cliff,
Center, L.P. Illinois 6,446,000 1,611,000 1,420,000 2,060,000 - 2,060,000
Mark Twain Senior
Community Limited Oakland,
Partnership California 740,000 715,000 1,470,000 2,509,000 575,000 1,934,000
Murfreesboro Villas Murfreesboro,
Partnership Limited Arkansas 686,000 686,000 643,000 1,258,000 20,000 1,238,000
Spring Valley Terrace Mayer,
Apartments, LLC Arizona 716,000 648,000 997,000 1,428,000 14,000 1,414,000
40
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------ -------------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ --------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
United Development Memphis,
Co., L.P. - 97.1 Tennessee 1,845,000 1,384,000 876,000 1,922,000 1,000 1,921,000
United Development Memphis,
Co., L.P. - 97.2 Tennessee 743,000 733,000 378,000 1,094,000 48,000 1,046,000
------------ ------------ ------------ ----------- ---------- -----------
$18,246,000 $12,115,000 $11,309,000 $20,599,000 $ 797,000 $19,802,000
=========== ============ ============ =========== ========== ===========
41
WNC Housing Tax Credit Fund VI, L.P., Series 5
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
-------------------------------------------------------------------------------
For the year ended December 31,1998
-------------------------------------------------------------------------------
Partnership Name Rental Year Estimated Useful Life
Income Net Income Investment
(Loss) Acquired Status (Years)
- --------------------------------------------------------------------------------------------------------------------
Apartment Housing of Theodore $ - $ - 1998 1999 Under Construction
Bradley Villas Limited Partnership 47,000 (16,000) 1998 Completed 40.0
Chillicothe Plaza Apts. L.P. - 18,000 1997 1999 Under Construction
Concord Apartment Partners, L.P. 87,000 (51,000) 1998 Completed 30.0
El Reno Housing Associates Limited
Partnership - 8,000 1998 1999 40.0
Hillcrest Heights, L.P. 41,000 (22,000) 1998 Completed 27.0
Hughes Villas Limited Partnership 93,000 (3,000) 1998 Completed 40.0
Mansur Wood Living Center, L.P. - 83,000 1998 2000 27.5
Mark Twain Senior Community Limited
Partnership 592,000 (11,000) 1998 Completed 27.5
Murfreesboro Villas Limited
Partnership 11,000 (31,000) 1998 Completed 40.0
Spring Valley Terrace Apartments,
LLC 7,000 (29,000) 1997 Completed 40.0
United Development Co., L.P. - 97.1 7,000 5,000 1998 1999 27.5
United Development Co., L.P. - 97.2
53,000 (61,000) 1998 Completed 27.5
------- --------
$ 938,000 $ (110,000)
========== ===========
42
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 5
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: July 12, 2001
By: /s/ Thomas J. Riha
-------------------
Thomas J. Riha Vice-President
Chief Financial Officer of WNC & Associates, Inc.
Date: July 12, 2001
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: July 12, 2001
By: /s/ John B. Lester, Jr.
-----------------------
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: July 12, 2001
By: /s/ David N. Shafer
- ------------------------
David N Shafer Director of WNC & Associates, Inc.
Date: July 12, 2001
43
MANSUR WOOD LIVING CENTER, L.P.
(An Illinois Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(TOGETHER WITH independent AUDITOR'S REPORT)
44
MANSUR WOOD LIVING CENTER, L.P.
(An Illinois Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
T A B L E O F C O N T E N T S
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
Balance Sheets Exhibit A
Statements of Operations Exhibit B
Statements of Partners' Equity Exhibit C
Statements of Cash Flows Exhibit D
NOTES TO THE FINANCIAL STATEMENTS
- ---------------------------------
Schedules of Project Operating Expenses Schedule I
45
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Partners
MANSUR WOOD LIVING CENTER, L.P.
(An Illinois Limited Partnership)
We have audited the accompanying balance sheets of MANSUR WOOD LIVING CENTER,
L.P. (An Illinois Limited Partnership) as of December 31, 2000 and 1999, and the
related statements of operations, partners' equity and cash flows for the years
then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MANSUR WOOD LIVING CENTER, L.P.
as of December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
/s/ FRIDUSS, LUKEE, SCHIFF & CO., P.C.
Certified Public Accountants
Chicago, Illinois
February 16, 2001
46
MANSUR WOOD LIVING CENTER, L.P.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999 EXHIBIT A
-------------------------- ---------
A S S E T S
2000 1999
------------ -------------
INVESTMENT IN REAL ESTATE HELD FOR LEASE
(Notes 2 and 5)
Land $ 51,500 $ 50,000
Buildings and Improvements 10,842,382 -
Furniture and Equipment 9,925 -
Construction in Progress - 7,852,523
Less: Accumulated Depreciation (269,724) -
------------ -------------
NET INVESTMENT IN REAL ESTATE
HELD FOR LEASE $ 10,634,083 $ 7,902,523
-------------- ------------ ------------
OTHER ASSETS
Cash (Note 3) $ 1,847 $ 8,985
Tenant Security Deposits 57,739 -
Other Receivables 13,432 -
Prepaid Expenses 8,355 -
Escrow Deposits (Note 10) 129 1,026
Capitalized Costs (Net) (Note 8) 69,472 123,940
------------ ------------
TOTAL OTHER ASSETS $ 150,974 $ 133,951
------------------ ------------ ------------
TOTAL ASSETS $ 10,785,057 $ 8,036,474
- ------------ ============ ============
See notes to the financial statements.
47
MANSUR WOOD LIVING CENTER, L.P.
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999 EXHIBIT A
-------------------------- ---------
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
2000 1999
------------ -------------
LIABILITIES APPLICABLE TO INVESTMENT
- ------------------------------------
IN REAL ESTATE HELD FOR LEASE
-----------------------------
Long-Term Debt (Note 5) $ 3,903,262 $ 1,000,326
Cash Overdraft 8,999 -
Accounts Payable - Trade 15,371 -
Accrued Interest Payable 16,188 -
Accrued Real Estate Tax Expense 79,000 -
Due to Related Parties (Note 6) 548,874 415,202
Security Deposits 55,882 -
Construction Costs Payable - 15,060
------------ ------------
TOTAL LIABILITIES APPLICABLE
----------------------------
TO INVESTMENT IN REAL ESTATE
----------------------------
HELD FOR LEASE $ 4,627,576 $ 1,430,588
-------------- ------------ ------------
PARTNERS' EQUITY (Exhibit C) $ 6,157,481 $ 6,605,886
- ---------------- ------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 10,785,057 $ 8,036,474
- -------------------------------------- ============ ============
See notes to the financial statements.
48
MANSUR WOOD LIVING CENTER, L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000 AND 1999 EXHIBIT B
-------------------------------------- ---------
2000 1999
------------ -------------
INCOME
Gross Potential Tenant Rent $ 433,890 $ -
Less: Vacancy Loss (174,061) -
------------ -------------
TOTAL RENT $ 259,829 $ -
----------
Miscellaneous Tenant Charges 3,910 -
Interest Income 6,814 117,357
------------ ------------
TOTAL INCOME $ 270,553 $ 117,357
------------ ------------ ------------
OPERATING EXPENSES (Schedule I)
Administrative $ 125,368 $ -
Utilities 23,905 -
Operating and Maintenance 11,306 -
Marketing and Leasing 42,176 -
Taxes and Insurance 84,949 -
------------ -------------
TOTAL OPERATING EXPENSES $ 287,704 $ -
------------------------ ------------ -------------
NET OPERATING (LOSS) INCOME BEFORE PARTNERSHIP
AND FINANCIAL EXPENSES $ (17,151) $ 117,357
---------------------- ------------ -------------
PARTNERSHIP AND FINANCIAL EXPENSES
Interest - Mortgage $ 88,723 $ -
Partnership Reporting Fee 5,000 5,000
------------ ------------
TOTAL PARTNERSHIP AND FINANCIAL EXPENSES $ 93,723 $ 5,000
---------------------------------------- ------------ -------------
NET (LOSS) INCOME BEFORE DEPRECIATION
AND AMORTIZATION $ (110,874) $ 112,357
----------------
DEPRECIATION 269,724 -
- -----------------
AMORTIZATION 53,914 -
- ------------ ------------ -------------
NET (LOSS) INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (Note 2) $ (434,512) $ 112,357
---------------------------------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE - AMORTIZATION (13,893) -
------------------------ ------------ -------------
NET (LOSS) INCOME $ (448,405) $ 112,357
- ----------------- ============ ============
See notes to the financial statements.
49
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
STATEMENTS OF PARTNERS' EQUITY
------------------------------
YEARS ENDED DECEMBER 31, 2000 AND 1999 EXHIBIT C
-------------------------------------- ---------
General Limited
Partner Partners Total
PARTNERS' EQUITY, JANUARY 1, 2000 $ 163,839 $6,442,047 $6,605,886
- ---------------------------------
DISTRIBUTIONS - - -
- -------------
NET (LOSS) INCOME FROM OPERATIONS
(Exhibit B) (4,484) (443,921) (448,405)
----------- ---------- ----------
PARTNERS' EQUITY, DECEMBER 31, 2000
(Exhibit A) $ 159,355 $5,998,126 $6,157,481
========== ========== ==========
General Limited
Partner Partners Total
PARTNERS' EQUITY, JANUARY 1, 1999 $ 83,031 $6,446,998 $6,530,029
- ---------------------------------
DISTRIBUTIONS (36,500) - (36,500)
- -------------
NET (LOSS) INCOME FROM OPERATIONS
(Exhibit B) 117,308 (4,951) 112,357
---------- ---------- ----------
PARTNERS' EQUITY, DECEMBER 31, 1999
(Exhibit A) $ 163,839 $6,442,047 $6,605,886
========== ========== ==========
See notes to the financial statements.
50
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
STATEMENTS OF CASH FLOWS
------------------------
YEARS ENDED DECEMBER 31, 2000 AND 1999 EXHIBIT D
-------------------------------------- ---------
2000 1999
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income $ (448,405) $ 112,357
------------ ------------
Adjustments to Reconcile Net Income (Loss) to
Net Cash (Used In) Provided By Operating
Activities:
Depreciation $ 269,724 $ -
Amortization 53,914 -
Cumulative Effect of Change in Accounting
Principle 13,893 -
Decrease (Increase) in Operating Assets:
Tenant Security Deposits (57,739) -
Prepaid Expenses (8,355) -
Other Receivables (13,432) -
Increase (Decrease) in Operating Liabilities:
Cash Overdraft 8,999 -
Accounts Payable - Trade 15,371 -
Accrued Real Estate Taxes 79,000 -
Accrued Interest Payable 16,188 -
Due to Related Parties (12,380) -
Security Deposits 55,882 -
------------ -------------
TOTAL ADJUSTMENTS $ 421,065 $ -
----------------- ------------ -------------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES $ (27,340) $ 112,357
-------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Land $ (1,500) $ -
Payments for Buildings and Improvements (2,466,118) -
Payments for Furniture and Equipment (9,925) -
Payments for Capitalized Costs (13,339) (123,940)
Construction in Progress - (5,445,356)
------------ ------------
NET CASH (USED IN) INVESTING ACTIVITIES $ (2,490,882) $ (5,569,296)
- --------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Construction Escrow $ - $ 5,541,788
Proceeds from Long-Term Debt 2,902,936 1,000,326
Due to Related Parties (377,689) 32,513
Construction Costs Payable (15,060) (1,419,951)
Decrease in Construction Escrow, Net 897 -
Capital Distributions - (36,500)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 2,511,084 $ 5,118,176
- ----------------------------------------- ------------ ------------
See notes to the financial statements.
51
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
STATEMENTS OF CASH FLOWS
------------------------
YEARS ENDED DECEMBER 31, 2000 AND 1999 EXHIBIT D
-------------------------------------- ---------
2000 1999
------------ -------------
NET (DECREASE) IN CASH $ (7,138) $ (338,763)
- ----------------------
CASH - BEGINNING OF YEAR 8,985 347,748
- ------------------------ ------------ ------------
CASH - END OF YEAR $ 1,847 $ 8,985
- ------------------ ============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
- ------------------------------------------------
Cash Paid During the Years for:
Interest (Net of Amount Capitalized) $ 72,535 $ -
============ =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Buildings and Improvements $ (8,376,264) $ -
Construction in Progress 7,852,523 (397,749)
Construction Costs Payable - 397,749
Due to Related Parties 9,010 -
Developer Fee 514,731 -
------------ -------------
Net Non-Cash Investing and Financing Activities $ - $ -
============ =============
See notes to the financial statements.
52
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 1 - ORGANIZATION
Mansur Wood Living Center, L.P. ("the Partnership") was formed as a
limited partnership under the laws of the State of Illinois on April 21,
1998, for the purpose of constructing and operating a rental housing
project. The project consists of 115 units located in Carbon Cliff,
Illinois, and will operate under the name of Mansur Wood Living Center.
The project is expected to qualify for the Low-Income Housing Tax Credit
established by the Tax Reform Act of 1986.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Partnership's significant accounting policies
consistently applied in the preparation of the accompanying financial
statements follows:
CAPITALIZATION AND DEPRECIATION
Land, building and improvements are recorded at cost. Improvements are
capitalized, while expenditures for maintenance and repairs are charged
to expense as incurred. Upon disposal of depreciable property, the
appropriate property accounts are reduced by the related costs and
accumulated depreciation. Interest expense capitalized in 2000 and 1999
amounts to $146,589 and $13,125, respectively.
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives. The
estimated service life of the assets for depreciation purposes may be
different than their actual economic useful lives.
Estimated Life Method
-------------- -------
Land - None
Building and Improvements 27.5 Years Straight-Line
Furniture and Equip Various MACRS
RENTAL INCOME AND PREPAID RENTS
- -------------------------------
Rental income is recognized for apartment rentals as it
accrues.
53
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 2000 AND 1999
--------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
- ------------------------------------------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
- ---------------------------------------------------
In April 1998, Statement of Position (SOP) No. 98-5 Reporting on the
Costs of Start-Up Activities was issued. This SOP provides guidance on
the financial reporting of start-up costs and organization costs, and
requires that these costs be expensed as incurred effective for fiscal
years beginning after December 15, 1998. As of January 1, 2000, the
unamortized organization costs were written off and accounted for as a
cumulative effect of a change in accounting principle. This change did
not have a material effect on prior periods. The effect of this change
was to increase the 2000 loss by $13,893.
AMORTIZATION
------------
Mortgage costs are amortized over the term of the mortgage loan using the
straight-line method.
INCOME TAXES
------------
No provision or benefit for income taxes has been included in these
financial statements since taxable income passes through to, and is
reportable by, the partners individually.
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 differ from those
estimates.
NOTE 3 - CASH
----
The Partnership maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Partnership has not
experienced any losses in such accounts. The Partnership believes it is
not exposed to any significant credit risk on cash.
54
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 4 - PARTNERS' CAPITAL CONTRIBUTIONS
-------------------------------
The Partnership has one General Partner, Elderly Living Development, Inc.
which has a 1% interest and one Limited Partner, WNC Housing Tax Credit
Fund VI, L.P. Series 5, which has a 98.99% interest and one Special
Limited Partner, WNC Housing, L.P., which has a .01% interest.
NOTE 5 - LONG-TERM DEBT
-------------- 2000 1999
------------ ----------
MORTGAGE PAYABLE
----------------
The construction loan dated December 9, 1998 is for the maximum amount of
$4,300,000. The note bears interest at 210 basis points over the Federal
Home Loan Bank CIP year note and is payable monthly. The interest rate at
December 31, 2000 was 8.41%. The construction loan matures on March 26,
2001. Collateralized by real estate and personal property. $ 3,903,262 $ 1,000,326
December 31, 2001
$ 3,903,262
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
- ---------------------------------------------------------
The General Partner will be entitled to a development fee in the amount of
$1,350,000, of which $560,731 and $789,269 has been earned, and $46,000 and
$789,269 had been paid in 2000 and 1999, respectively.
The apartment project is managed by Heartland Mgt., Inc., an affiliate of the
General Partner. Management fees earred in 2000 and 1999 amount to $12,690 and
$-0-, respectively. Mangement fees paid in 2000 and 1999 amount to $ 10,685 and
$-0-,respevtively. During 2000 and 1999, Heartland Mgt., Inc. had advanced
salaries and benefits for the project. The amounts due to Heartland Mgt., Inc.
for salaries and benefits at December 31, 2000 and 1999 amount to $11,100 and
$27,513, respectively.
55
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES - (Continued)
------------------------------------------------
The Partnership is to pay the Managing General Partner, Elderly Living
Development, Inc. an incentive management fee equal to 70% of the net
operating income remaining after reduction for the payments made for the
partnership reporting fee, developer fee, and operating loans. This fee
is payable 75 days after year-end. If the fee is not paid in any given
year it cannot be accrued in the subsequent year. Incentive management
fee earned for 2000 and 1999 amounts to $-0- and $-0-.
The Partnership is to pay a fee to the Limited Partner in the amount of
$5,000 a year for monitoring the operations of the Partnership and for
services in connection with the Partnership's accounting matters. The fee
is payable within 75 days after the year end from net operating income.
The balance due WNC Housing Tax Credit Fund VI, Series 5 at December 31,
2000 and 1999 amounts to $10,000 and $5,000.
The project's general contractor was Twin Rivers Construction Company, an
affiliate of the General Partner. Construction costs earned by Twin
Rivers Construction Company in 2000 and 1999 amount to $2,342,696 and
$6,516,654, respectively. Construction costs paid to Twin Rivers
Construction Company in 2000 and 1999 amount to $2,590,559 and
$6,259,781, respectively. The amount due to Twin Rivers Construction
Company at December 31, 2000 and 1999 amounts to $9,010 and $382,689,
respectively.
During 2000, Heartland Park Elderly Living Center, L.P., an affiliate of
the General Partner, had paid operating expenses on behalf of the
Partnership in the amount of $2,028. The amount due Heartland Park
Elderly Living Center, L.P. at December 31, 2000 amounts to $2,028.
The Partnership Agreement provides for various obligations of the General
Partner, including its obligation to provide funds for any development
and operating deficits.
Amounts due related parties at December 31, 2000 and 1999 is as follows:
2000 1999
----- ------
Salaries and Benefits $ 11,100 $ 27,513
Developer Fees 514,731 -
Management Fees 2,005 -
Construction Cost 9,010 382,689
Operating Advance 2,028 -
Partnership Reporting Fee 10,000 5,000
------------ ------------
$ 548,874 $ 415,202
============ ============
56
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 2000 AND 1999
--------------------------
NOTE 7 - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
- ---------------------------------------------------------
All profits and losses are allocated 1% to the General Partner, 98.99% to
the Limited Partner and .01% to the Special Limited Partner.
However, for 1999, the General Partner and Limited Partners have agreed,
in writing, to allocate 100% of the interest income earned on the
construction escrow (Note 10) to the General Partner. In conjunction with
this allocation, the General Partner is permitted to receive, as a
distribution, an amount sufficient to cover any tax liability incurred as
a result of this allocation.
Distributable cash flow, as defined by the Partnership Agreement, is
distributable 50% to the General Partner and 50% to the Limited Partners.
Gain, if any, from a sale or exchange or other disposition of the
property owned by the Partnership is allocable as follows:
1. To all partners having negative balances in their capital accounts
prior to the distribution of any sale or refinancing proceeds, an amount
of such gain to increase their negative balance to zero.
2. 98.99% to the Limited Partner and .01% to the Special Limited Partner
until the Limited Partners have received amounts equal to their gross
capital contributions.
3. To the General Partner until the General Partner has received amounts
equal to its gross capital contribution.
4. The remainder of such gain, if any, 50% to the Limited Partners and
50% to the General Partner.
NOTE 8 - CAPITALIZED COSTS
-----------------
The costs incurred to obtain financing and fees relating to organization,
as well as certain start-up costs, of the project partnership have been
capitalized and will be amortized as described below beginning in the
first year of operations:
57
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
DECEMBER 31, 2000 AND 1999
--------------------------
NOTE 8 - CAPITALIZED COSTS - (Continued)
-------------------------------
Amortization
Period 2000 1999
------------ ------------ ------------
Organization and
Start-Up Costs 1 Year $ 63,893 $ 50,554
Financing Costs
and Tax Credit
Fees 6.5-20 Years 73,386 73,386
------------ ------------
$ 137,279 $ 123,940
Less: Accumulated Amortization (67,807) -
------------ -------------
$ 69,472 $ 123,940
============ ============
NOTE 9 - RESTRICTED ESCROW DEPOSITS AND RESERVES
---------------------------------------
According to the partnership, loan and other regulatory agreements, the
Partnership is required to maintain the following escrow deposits and
reserves; real estate tax and insurance escrow, working capital escrow
and operating maintenance reserve. The escrow deposits and reserves will
be funded when construction is complete and apartment lease-up begins.
The project was completed during 2000. As of December 31, 2000, none of
these escrows were funded.
NOTE 10 - construction escrow
Releases from the construction escrow are restricted based on the
performance of certain events as described in the Partnership Agreement.
NOTE 11 -RECLASSIFICATIONS
Certain amounts at December 31, 1999 have been
reclassified to conform with the December 31, 2000 financial
statement presentation. Actual results are the same as last year.
58
MANSUR WOOD LIVING CENTER, L.P.
-------------------------------
SCHEDULES OF PROJECT OPERATING EXPENSES
---------------------------------------
YEARS ENDED DECEMBER 31, 2000 AND 1999 SCHEDULE I
-------------------------------------- ----------
2000 1999
------------ -------------
ADMINISTRATIVE EXPENSES
Office Supplies $ 13,369 $ -
Property Management Fees 12,690 -
Salaries and Related Payroll Taxes 70,903 -
Managers Unit 7,776 -
Consulting 8,830 -
Professional Fees - Other 2,326 -
Professional Fees - Legal 263 -
Professional Fees - Accounting 1,214 -
Telephone Expense 4,368 -
Other Administrative 3,290 -
Rental Charges 339 -
------------ ------------
TOTAL ADMINISTRATIVE EXPENSES $ 125,368 $ -
----------------------------- ============ ============
UTILITY EXPENSES
Utilities $ 23,905 $ -
------------ -------------
TOTAL UTILITY EXPENSES $ 23,905 $ -
---------------------- ============ =============
OPERATING AND MAINTENANCE EXPENSES
Repairs $ 1,584 $ -
Snow Removal 550 -
Exterminating 813 -
Maintenance Supplies and Material 8,065 -
Decorating and Painting 294 -
------------ -------------
TOTAL OPERATING AND MAINTENANCE
EXPENSES $ 11,306 $ -
-------- ============ ============
MARKETING AND LEASING EXPENSES
Advertising and Lease-Up Expenses $ 35,773 $ -
Leasing Commission 2,750 -
Travel Expenses (Travel to/from Units) 2,661 -
Signs 992 -
------------ -------------
TOTAL MARKETING AND LEASING EXPENSES $ 42,176 $ -
------------------------------------ ============ =============
TAX AND INSURANCE EXPENSES
Property and Liability Insurance $ 5,949 $ -
Real Estate Taxes 79,000 -
------------ -------------
TOTAL TAX AND INSURANCE EXPENSES $ 84,949 $ -
-------------------------------- ============ =============
See independent auditor's report.
59