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, 2002
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 333-76435
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 7
California 33-0761517
(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 7 (the "Partnership") was formed
under the California Revised Limited Partnership Act on June 16, 1997 and
commenced operations on September 3, 1999, the effective date of its public
offering pursuant to the Securities and Exchange Commission's approval of the
Partnership's Pre-Effective Amendment No. 3 to Form S-11 filed on July 16, 1999.
The Partnership was formed to invest primarily in other limited partnerships or
limited liability companies which will own and operate multifamily housing
complexes that are eligible for low-income housing federal and, in certain
cases, California income tax credits ("Low Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner".) The chairman and president own substantially all of
the outstanding stock of Associates. The business of the Partnership is
conducted primarily through Associates, as the Partnership has no employees of
its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on April 16, 1999, the Partnership commenced a public offering of
25,000 units of Limited Partnership Interest ("Units"), at a price of $1,000 per
Unit. As of the close of the public offering on November 7, 2000 a total of
18,850,000 units representing 18,850 had been sold. 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, 2002, the Partnership had invested in thirteen Local Limited
Partnerships three of which were still under construction or undergoing
rehabilitation at that date. Each of these Local Limited Partnerships owns a
Housing Complex that is or is expected to be eligible for the federal Low Income
Housing Credit. Certain Local Limited Partnerships may also benefit from
government programs promoting low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not make its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's operations will depend on these
and other factors beyond the control of the General Partner and the Local
General Partners, there can be no assurance that the anticipated Low Income
Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As 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 eight Housing Complexes as of the dates and for the
periods indicated:
4
------------------------- -----------------------------------------------
As of March 31, 2002 As of December 31, 2001
------------------------- -----------------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
General Partner In Local Limited Investment Number Housing Limited
Partnership Name Location Name Partnerships Paid to Date Of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, Federalsburg, Larry C. Porter and
LLC Maryland Carter Chinniss $ 360,000 $ 360,000 18 100% $ 470,000 $ 998,000
ACN Southern Hills Oskaloosa,
Partners II, L.P. Iowa ACN Partnership 1,339,000 785,000 30 90% 1,792,000 1,100,000
Hickory Sioux Lewis F. Weinberg,
Lane City, Weinberg Investments,
Partners, L.P. Iowa Inc. and Sioux Falls
Environmental
Access, Inc. 633,000 472,000 40 95% 845,000 2,108,000
Lake Village Kewanee, Quad Cities
Apartments, L.P. Illinois Redevelopment
Resources, Inc. 2,978,000 2,978,000 50 - 3,972,000 *
Montrose County
Estates Limited Raymond T. Cato, Jr.,
Dividend Housing Montrose, Christopher R.
Association, L.P. Michigan Cato and
Kenneth Bradner 553,000 450,000 32 94% 747,000 688,000
Ozark Ozark, ERC Properties,
Properties III Arkansas Inc. 300,000 300,000 24 100% 393,000 844,000
Pierce Street Sioux City, Lewis F. Weinberg,
Partners, L.P. Iowa Weinberg Investments,
Inc. and Sioux Falls
Environmental
Access, Inc. 1,527,000 1,104,000 86 91% 1,729,000 2,656,000
Red Oaks Holly Springs, Parker and Douglas B.
Estates, L.P. Mississippi Billy D. Cobb 242,000 242,000 24 100% 337,000 730,000
School Albany, Bradley V.
Square, L.P. Minnesota Larson 286,000 286,000 17 100% 397,000 1,004,000
Stroud Housing NHS/ERC
Associates, Stroud, Housing Company,
L.P. Oklahoma LLC 891,000 847,000 36 67% 1,519,000 1,246,000
5
------------------------- -----------------------------------------------
As of March 31, 2002 As of December 31, 2001
------------------------- -----------------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
General Partner In Local Limited Investment Number Housing Limited
Partnership Name Location Name Partnerships Paid to Date Of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Tahlequah Tahlequah, ERC Properties,
Properties IV Oklahoma Inc. 375,000 338,000 24 - 491,000 850,000
Timberwolf Deer River, Curtis G. Carlson
Townhomes, L.P. Minnesota Co.,Inc.,
M.F. Carlson Co.,
Inc.,and Robert
Carlson 509,000 429,000 20 - 685,000 -(1)
United West Harold E.
Development, Memphis, Buehler, Sr. and
L.P. Arkansas Jo Ellen Buehler 2,250,000 2,100,000 51 - 3,000,0000 754,000
------------ ------------ --- --- ----------- -----------
$ 12,243,000 $ 10,691,000 452 N/A $15,667,000 $12,978,000
============ ============ === === =========== ===========
(1) The Housing Complex is under construction at December 31, 2001.
N/A - Not Applicable
* Results of Lake Village Apartments, L.P. have not been audited and thus have
been excluded. See Note 3 to the financial statements and report of independent
certified public accountants. The housing complex is under construction at
December 31, 2001.
6
------------------------------------ ----------------------------------------------------
For the year ended December 31, 2001 Low Income Housing Credits
- ------------------------------------------------------------------------- ----------------------------------------------------
Net Income Credits Allocated to Year to be
Partnership Name Rental Income (Loss) Partnership First Available
- ------------------------------------------------------------------------- ----------------------------------------------------
2nd Fairhaven, LLC $ 106,000 $(32,000) 99.98% 2000
ACN Southern Hills
Partners II, L.P. 78,000 (102,000) 99.98% 2001
Hickory Lane
Partners, L.P. 262,000 (31,000) 99.98% 2001
Lake Village
Apartments, L.P. * * 99.98% 2002
Montrose County Estates Limited
Dividend Housing Association, L.P. 115,000 (11,000) 99.98% 2001
Ozark Properties III 73,000 (26,000) 99.98% 2001
Pierce Street
Partners, L.P. 625,000 88,000 99.98% 2001
Red Oaks
Estates, L.P. 101,000 (47,000) 99.98% 2000
School Square, L.P. 100,000 (50,000) 99.98% 2000
Stroud Housing Associates, L.P. 115,000 (160,000) 99.98% 2001
Tahlequah Properties IV - (19,000) 99.98% 2001
Timberwolf Townhomes, L.P. -(1) 9,000 99.98% 2002
United Development, L.P. -(1) 12,000 99.98% 2002
----------- -----------
$ 1,575,000 $ (369,000)
=========== ===========
- --------------------------------------------------------------------------------
(1) The Housing Complex is under construction and has not yet begun operations.
* Results of Lake Village Apartments, L.P. have not been audited and thus
have been excluded. See Note 3 to the financial statements and report of
independent certified public accountants. The housing complex is under
construction and has not yet begun operations.
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, 2002, there were 963 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, 2002.
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31
--------------------------------------------------------
2002 2001 2000
--------------- --------------- ----------------
ASSETS
Cash and cash equivalents $ 2,886,305 $ 5,103,916 $ 4,295,471
Funds held in escrow
disbursement account 591,512 5,664,138 142,815
Subscriptions and notes
Receivable - 398,750 579,000
Investments in limited
partnerships, net 13,125,199 9,482,570 1,284,221
Loans receivable 953,241 1,080,974 154,000
Accrued interest receivable - 65,377 4,635
Other assets - 188 810
--------------- --------------- ----------------
$ 17,556,257 $ 21,795,913 $ 6,460,952
=============== =============== ================
LIABILITIES
Payables to limited partnerships $ 1,552,985 $ 5,142,481 $ 502,601
Accrued fees and expenses due to
general partner and affiliates 132,577 112,886 145,659
--------------- --------------- ----------------
1,685,562 5,255,367 648,260
PARTNERS' EQUITY 15,870,695 16,540,546 5,812,692
--------------- --------------- ----------------
$ 17,556,257 $ 21,795,913 $ 6,460,952
=============== =============== ================
8
Selected results of operations, cash flows, and other information for the
Partnership is as follows for the years ended March 31, 2002, 2001 and for the
period from September 3, 1999 (date operations commenced) to March 31, 2000:
For The
For The Period From
Years Ended September 13, 1999
March 31 to March 31
---------------------------------------- -----------------------
2002 2001 2000
------------------ ------------------ -----------------------
Income (loss) from operations $ (77,462) $ 233,508 $ 27,702
Equity in losses of limited
Partnerships (622,249) (90,404) -
------------------ ------------------ -----------------------
Net income (loss) $ (699,711) $ 143,104 $ 27,702
================== ================== =======================
Net income (loss) allocated to:
General partner $ (700) $ 143 $ 28
================== ================== =======================
Limited partners $ (699,011) $ 142,961 $ 27,674
================== ================== =======================
Net income (loss) per limited partner
unit $ (37.08) $ 10.13 $ 5.73
================== ================== =======================
Outstanding weighted limited
partner units 18,850 14,110 4,831
================== ================== =======================
For The
For The Period From
Years Ended September 13, 1999
March 31 to March 31
---------------------------------------- -----------------------
2002 2001 2000
------------------ ------------------ -----------------------
Net cash provided by (used in):
Operating activities $ 83,855 $ 304,387 $ 27,424
Investing activities (2,710,931) (10,183,597) (1,037,023)
Financing activities 409,465 10,687,655 5,305,070
------------------ ------------------ -----------------------
Net change in cash and cash
equivalents (2,217,611) 808,445 4,295,471
Cash and cash equivalents,
beginning of period 5,103,916 4,295,471 -
------------------ ------------------ -----------------------
Cash and cash equivalents, end
of period $ 2,886,305 $ 5,103,916 $ 4,295,471
================== ================== =======================
Low Income Housing Credit per Unit was as follows for the period ended December 31:
2001 2000 1999
--------------- --------------- -----------------
Federal $ 35 $ 5 $ -
State - - -
--------------- --------------- -----------------
Total $ 35 $ 5 $ -
=============== =============== =================
9
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, 2002 consisted primarily of $2,886,000 in
cash, $592,000 in cash in escrow, aggregate investments in the thirteen Local
Limited Partnerships of $13,125,000 and $953,000 in loans receivable.
Liabilities at March 31, 2002 primarily consisted of $1,553,000 due to limited
partnerships, and $133,000 in advances and other payables due to the General
Partner or affiliates.
As of March 31, 2002 and March 31, 2001, three and five of the Local Limited
Partnerships were under construction or undergoing rehabilitation. During the
year ended March 31, 2002, five Housing Complexes owned by five Local Limited
Partnerships were acquired. During the year ended March 31, 2001, six Housing
Complexes owned by six Local Limited Partnerships were acquired, two of which
were operating at the time of acquisition.
Results of Operations
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001.
The Partnership's net loss for the year ended March 31, 2002 was $(700,000),
reflecting a change of $(843,000) from the net income of $143,000 experienced
for the year ended March 31, 2001. The change in net income(loss) is primarily
due to equity in losses of limited partnerships which increased by $(532,000) to
$(622,000) for the year ended March 31, 2002 from $(90,000) for the year ended
March 31, 2001, along with a change in income(loss) from operations of $311,000.
The increase in equity in losses of limited partnerships was mainly due to the
completion of construction and rent up expenses of certain Local Limited
Partnerships.
Year Ended March 31, 2001 Compared to Period September 3, 1999 (Date operations
commenced to March 31, 2000).
The Partnership commenced operations on September 3, 1999. As a result, there
are no comparative results of operations or financial condition from prior
periods to report. Net income for the period ended March 31, 2000 was
principally composed of interest income, offset by amortization and other
operating expenses. Net income of $143,000 for the year ended March 31, 2001 was
principally composed of interest income of $343,000 offset by operating expenses
of $(110,000) and equity in losses of $(90,000). The two periods are not
comparable as minimal operations occurred during the period ended March 31,
2000.
10
Cash Flows and Liquidity
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001.
Net cash used during the year ended March 31, 2002 was $(2,218,000), compared to
net cash provided for the year ended March 31, 2001 of $808,000. Net cash flows
provided by financing activities decreased by $10,278,000 as a result of the
completion of the offering. Net cash flows used in investing activities
decreased by $7,473,000 to $(2,711,000) for the year ended March 31, 2002 from
$(10,184,000) for the year ended March 31, 2001 due primarily to a decrease cash
paid into escrow and a release of cash from escrow of $10,594,000, offset by a
increase in the net investment in Local Limited Partnerships of $5,276,000. Net
cash flows from operating activities decreased by $220,000 to net cash provided
by operating activities of $84,000 for the year ended March 31, 2002 from net
cash provided by operating activities of $304,000 for the year ended March 31,
2001.
Year Ended March 31, 2001 Compared to Period September 3, 1994 (Date operations
commenced to March 31, 2000).
Cash flows provided by operating activities for the year ended March 31, 2001
included interest income from cash investments offset by miscellaneous costs of
operations. For the year ended March 31, 2001, cash flows used in investing
activities substantially consisted of capital contributions paid to Local
Limited Partnerships of $2,636,000, capitalized acquisition fees and costs of
$1,053,000, net transfers to escrow of $5,521,000 and loans advanced in the form
of property deposits totaling $927,000. Cash flows provided by financing
activities for the year ended March 31, 2001 totaling $10,688,000 principally
consisted of capital contributions from sale of units of $12,266,000 offset by
offering costs of $1,578,000.
Other Matters
As of July 10, 2002, the Partnership had not obtained audited financial
statements for one of its investments, Lake Village Apartments, L.P. ("Lake
Village Apartments"), as of and for the year ended December 31, 2001. As a
result of this limitation in scope, the Partnership's independent certified
public accountants have qualified their report with respect to their audit of
the Partnership's 2002 financial statements. Furthermore, the Partnership has
not included the financial information of Lake Village Apartments in the
combined condensed financial statements presented elsewhere herein. The
Partnership's investment in Lake Village Apartments totaled $2,978,000
(unaudited) at March 31, 2002 and 2001. The Partnership's interest in the
results of operations of Lake Village Apartments totaled $0 (unaudited) for the
years ended March 31, 2002 and 2001. The Lake Village Apartments Housing Complex
was still under construction as of and for the years ended December 31, 2001 and
2000; as a result, no equity in losses have been recorded by the Partnership.
One Local Limited Partnership, ACN Southern Hills II, L.P. ("Southern Hills"),
in which the Partnership owns a 99.98% interest, has a construction loan payable
aggregating approximately $1,100,000 as of December 31, 2001. Such construction
loan due in March 2002 was not repaid. Consequently, the Local Limited
Partnership is in default of its loan covenants and the Housing Complex could be
foreclosed on by the bank. Southern Hills is attempting to refinance the loan.
The bank has issued a term sheet upon which a new loan will be granted, which
contemplates a substantial reduction in principal. There can be no assurances
that Southern Hills will be successful in its negotiations. Accordingly,
Southern Hills is subject to the risk of foreclosure and sale of the Housing
Complex by the lender, which would result in the loss and potential recapture of
certain tax losses and the tax credits. As a result, there is an uncertainty as
to the Partnership's ability to ultimately realize the carrying value of its
investment in Southern Hills, which totaled $1,210,000 at March 31, 2002. The
financial statements included elsewhere herein do not reflect any adjustments
that may result from any unfavorable outcome that may occur upon the ultimate
resolution of this uncertainty.
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.
Subsequent to March 31, 2002 and through July 10, 2002, the Partnership
committed to additional capital contributions in the amount of $855,628 to one
Local Limited Partnership, of which $524,541 had been advanced as of March 31,
2002 (see Note 2). Subsequent to March 31, 2002 and prior to the issuance of the
financial statements presented elewhere herein, the remaining committed capital
contribution was paid. Subsequent to March 31, 2002, the Partnership disbursed
the remaining $591,512 held in escrow to the respective Local Limited
Partnership.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2002, to be sufficient to meet all currently foreseeable
future cash requirements.
11
Impact of New Accounting Pronouncement
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001, and generally, is to be applied prospectively. The
Partnership has not yet completed its evaluation of the impact of SFAS 144 on
its financial position or results of operations.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
NONE.
Item 8. Financial Statements and Supplementary Data
12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 7
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
VI, L.P., Series 7 (a California Limited Partnership) (the "Partnership") as of
March 31, 2002 and 2001, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended March 31, 2002 and 2001, and
for the period September 3, 1999 (date operations commenced) through March 31,
2000. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our 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 investments in limited partnerships audited by other auditors
represented 36% and 6% of the total assets of the Partnership at March 31, 2002
and 2001, 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.
Except as discussed in the following paragraph, 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.
As more thoroughly discussed in Note 3 to the financial statements, the
Partnership was unable to obtain audited financial statements for one of its
investments, Lake Village Apartments, L.P. ("Lake Village Apartments"), as of
and for the year ended December 31, 2001. The Partnership's investment in Lake
Village Apartments totaled $2,978,000 (unaudited) as of March 31, 2002. As the
housing complex of Lake Village Apartments was under construction, there were no
results of operations recorded by the Partnership with respect to its investment
in Lake Village Apartments during the years ended March 31, 2002 and 2001.
In our opinion, except for the effects of such adjustments and disclosures, if
any, as might have been determined to be necessary had an audit of the 2001
financial statements of Lake Village Apartments been obtained, the financial
statements referred to above present fairly, in all material respects, the
financial position of WNC Housing Tax Credit Fund VI, L.P., Series 7 (a
California Limited Partnership) as of March 31, 2002 and 2001, and the results
of its operations and its cash flows for the years ended March 31, 2002 and
2001, and for the period September 3, 1999 (date operations commenced) through
March 31, 2000, in conformity with accounting principles generally accepted in
the United States of America.
As further discussed in Note 8 to the accompanying financial statements, the
Partnership retains an interest in ACN Southern Hills II Partnership, L.P. ("ACN
Southern Hills"). The carrying value of the Partnership's interest in ACN
Southern Hills totaled $1,210,000 at March 31, 2002. Certain issues exist with
respect to the housing complex owned and operated by ACN Southern Hills that
creates uncertainty as to the ability of the Partnership to ultimately realize
its investment in such partnership.
/s/BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
July 10, 2002
13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
BALANCE SHEETS
March 31, 2002 and 2001
2002 2001
------------- -------------
ASSETS
Cash and cash equivalents $ 2,886,305 $ 5,103,916
Funds held in escrow disbursement account (Note 8) 591,512 5,664,138
Subscriptions and notes receivable - 398,750
Investments in limited partnerships (Note 3) 13,125,199 9,482,570
Loans receivable (Notes 2 and 8) 953,241 1,080,974
Accrued interest receivable - 65,377
Other assets - 188
------------- -------------
$ 17,556,257 $ 21,795,913
============= =============
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Due to limited partnerships (Note 6) $ 1,552,985 $ 5,142,481
Accrued fees and expenses due to General
Partner and affiliates (Note 4) 132,577 112,886
------------- -------------
Total liabilities 1,685,562 5,255,367
------------- -------------
Commitments and contingencies (Note 3 and 8)
Partners' equity (deficit)
General partner (2,131) (1,424)
Limited partners (25,000 units authorized, 18,850 and 18,850
units outstanding at March 31, 2002 and 2001, respectively) 15,872,826 16,541,970
------------- -------------
Total partners' equity 15,870,695 16,540,546
------------- -------------
$ 17,556,257 $ 21,795,913
============= =============
See accompanying notes to financial statements
14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Period
September 3, 1999
(Date Operations
For The Years Ended Commenced)
March 31 through March 31
------------------------------ --------------------
2002 2001 2000
-------------- ------------- --------------------
Interest income $ 144,543 $ 343,152 $ 36,456
-------------- ------------- --------------------
Operating expenses:
Amortization (Notes 3 and 4) 56,916 40,617 4,398
Asset management fees (Note 4) 39,703 34,573 424
Other 125,386 34,454 3,932
-------------- ------------- --------------------
Total operating expenses 222,005 109,644 8,754
-------------- ------------- --------------------
Income (loss) from operations (77,462) 233,508 27,702
Equity in losses of limited
partnerships (Note 3) (622,249) (90,404) -
-------------- ------------- --------------------
Net income (loss) $ (699,711) $ 143,104 $ 27,702
============== ============= ====================
Net income (loss) allocated to:
General partner $ (700) $ 143 $ 28
============== ============= ====================
Limited partners $ (699,011) $ 142,961 $ 27,674
============== ============= ====================
Net income(loss) per limited partner unit $ (37.08) $ 10.13 $ 5.73
============== ============= ====================
Outstanding weighted limited partner units 18,850 14,110 4,831
============== ============= ====================
See accompanying notes to financial statements
15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
General Limited Total
Partner Partners
--------------- --------------- ---------------
Contribution from General Partner and initial
limited partner on September 3, 1999 $ 100 $ 1,000 $ 1,100
Sale of limited partnership units, net of
discounts of $7,225 - 7,139,775 7,139,775
Sale of limited partnership units issued for
promissory notes receivable (Note 8) - (434,000) (434,000)
Offering expenses (429) (921,456) (921,885)
Net income 28 27,674 27,702
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 (301) 5,812,993 5,812,692
Sale of limited partnership units, net of
discounts of $14,030 - 11,688,970 11,688,970
Collection of promissory notes receivable, net
(Note 8) - 397,000 397,000
Offering expenses (1,266) (1,498,954) (1,500,220)
Withdrawal of initial limited partner - (1,000) (1,000)
Net income 143 142,961 143,104
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2001 (1,424) 16,541,970 16,540,546
Collection of promissory notes receivable, net - 37,000 37,000
Offering expenses (7) (7,133) (7,140)
Net loss (700) (699,011) (699,711)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2002 $ (2,131) $ 15,872,826 $ 15,870,695
=============== =============== ===============
See accompanying notes to financial statements
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Period
September 3, 1999
(Date Operations
For The Years Ended Commenced)
March 31 through March 31
------------------------------ --------------------
2002 2001 2000
-------------- ------------- --------------------
Cash flows from operating activities:
Net (loss)income $ (699,711) $ 143,104 $ 27,702
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Amortization 56,916 40,617 4,398
Equity in losses of limited partnerships 622,249 90,404 -
Change in interest receivable 65,377 (60,742) (4,635)
Change in other assets 188 622 (810)
Change in accrued fees and expenses due
to general partner and affiliates 38,836 90,382 769
-------------- ------------- --------------------
Net cash provided by operating activities 83,855 304,387 27,424
-------------- ------------- --------------------
Cash flows from investing activities:
Investments in limited partnerships, net (7,911,290) (2,636,220) (142,788)
Funds held in escrow disbursement account, net 5,072,626 (5,521,323) (142,815)
Accrued and unpaid acquisition fees and advances
due to affiliate of general partner - (45,810) -
Loans receivable 127,733 (926,974) (154,000)
Capitalized acquisition costs and fees - (1,053,270) (597,420)
-------------- ------------- --------------------
Net cash used in investing activities (2,710,931) (10,183,597) (1,037,023)
-------------- ------------- --------------------
Cash flows from financing activities:
Capital contributions 435,750 12,266,220 6,127,875
Offering expenses (26,285) (1,577,565) (822,805)
Withdrawal of initial limited partner - (1,000) -
-------------- ------------- --------------------
Net cash provided by financing activities 409,465 10,687,655 5,305,070
-------------- ------------- --------------------
Net increase (decrease) in cash and cash equivalents (2,217,611) 808,445 4,295,471
Cash and cash equivalents, beginning of period 5,103,916 4,295,471 -
-------------- ------------- --------------------
Cash and cash equivalents, end of period $ 2,886,305 $ 5,103,916 $ 4,295,471
============== ============= ====================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Taxes paid $ 800 $ 800 $ 800
============== ============= ====================
Interest paid $ - $ 4,295 $ -
============== ============= ====================
See accompanying notes to financial statements
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 7, a California Limited Partnership
(the "Partnership"), was formed on June 16, 1997 under the laws of the state of
California, and commenced operations on September 3, 1999, the effective date of
its public offering pursuant to the Securities and Exchange Commission's
approval of the Partnership's Pre-Effective Amendment No. 3 to Form S-11 filed
on July 16, 1999. Prior to September 3, 1999, the Partnership was considered a
development-stage enterprise. The Partnership was formed to invest primarily in
other limited partnerships and limited liability companies (the "Local Limited
Partnerships") which own and operate multi-family housing complexes (the
"Housing Complex") that are eligible for low income housing credits. The local
general partners (the "Local General Partners") of each Local Limited
Partnership retain responsibility for maintaining, operating and managing the
Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a
California limited partnership. The chairman and president own substantially all
of the outstanding stock of WNC. The business of the Partnership is conducted
primarily through WNC, as the Partnership has no employees of its own.
The Partnership shall continue in full force and effect until December 31, 2060,
unless terminated prior to that date, pursuant to the partnership agreement or
law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of March 31, 2002, 18,850 Units, representing
subscriptions in the amount of $18,828,790 net of dealer discounts of $21,210.
The General Partner has a 0.1% interest in operating profits and losses, taxable
income and losses, in cash available for distribution from the Partnership and
tax credits. The limited partners will be allocated the remaining 99.9% interest
in proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 4) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Risks and Uncertainties
- -----------------------
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters, which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting for Investments in Limited Partnerships
- ------------------------------------------------------------
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership's are consistent with those of the Partnership. Costs incurred by
the Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Notes 3 and 4).
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with selling
limited partnership interests in the Partnership. The General Partner is
obligated to pay all offering and organization costs in excess of 4% (excluding
sales commissions and the dealer manager fee) of the total offering proceeds.
Offering expenses are reflected as a reduction of partners' capital and amounted
to $2,429,245, $2,422,105 and $921,885 as of March 31, 2002, 2001 and 2000,
respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
March 31, 2002 and 2001, the Partnership had cash equivalents of approximately
$1,000,000 and $2,100,000, respectively.
Concentration of Credit Risk
- ----------------------------
At March 31, 2002, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.
Net Income Per Limited Partner Unit
- -----------------------------------
Net income per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
- ------------------------------
The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income establishes standards for reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
during the years ended March 31, 2002, 2001 and 2000, as defined by SFAS No.
130.
New Accounting Pronouncement
- ----------------------------
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001, and generally, is to be applied prospectively. The
Partnership has not yet completed its evaluation of the impact of SFAS 144 on
its financial position or results of operations.
Reclassification
- ----------------
Certain prior year balances have been reclassified to conform to the 2002
presentation.
NOTE 2 - LOANS RECEIVABLE
- -------------------------
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. These loans are
generally applied against the first capital contribution due if the Partnership
ultimately invests in such entities. In the event that the Partnership does not
invest in such entities, the loans are to be repaid with interest at a rate
which is equal to the rate charged to the holder. At March 31, 2002, loans
receivable of $329,000 were due from one Local Limited Partnership in which the
Partnership had not acquired a limited partnership interest, and $524,541 and
$100,000 had been advanced to two additional Local Limited Partnerships in which
the Partnership has an investment (See Note 8). On July 25, 2002, the $329,000
loan was repaid to the Partnership.
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of March 31, 2002 and 2001, the Partnership has acquired limited partnership
interests in 13 and 8 Local Limited Partnerships, respectively, each of which
owns one Housing Complex consisting of an aggregate of 452 and 291 apartment
units. As of March 31, 2002 construction or rehabilitation of 3 of the Housing
Complexes was still in process. The respective general partners of the Local
Limited Partnerships manage the day-to-day operations of the entities.
Significant Local Limited Partnership business decisions require approval from
the Partnership. The Partnership, as a limited partner, is generally entitled to
99.98%, as specified in the Local Limited Partnership agreements, of the
operating profits and losses, taxable income and losses and tax credits of the
Local Limited Partnerships.
As of July 10, 2002, the Partnership had not obtained audited financial
statements for one of its investments, Lake Village Apartments, L.P. ("Lake
Village Apartments"), as of and for the year ended December 31, 2001. As a
result, the Partnership has not included the financial information of Lake
Village Apartments in the combined condensed financial statements presented
herein. The Partnership's investment in Lake Village Apartments totaled
$2,978,000 (unaudited) at March 31, 2002 and 2001. The Partnership's interest in
the results of operations of Lake Village Apartments totaled $0 (unaudited) for
the years ended March 31, 2002 and 2001. The Lake Village Apartments Housing
Complex was still under construction as of and for the years ended December 31,
2001 and 2000; as a result, no equity in losses have been recorded. The combined
condensed financial statements presented herein for December 31, 2000 previously
included total assets of $1,137,000 (unaudited) and net losses of $0 (unaudited)
for Lake Village Apartments. The combined condensed financial information
presented for December 31, 2000 in this footnote has been restated to exclude
the accounts of Lake Village Apartments.
The Partnership's investments in limited partnerships as reflected in the
balance sheets at March 31, 2002 and 2001, are approximately $7,122,000 and
$7,569,000, respectively, greater than the Partnership's equity as shown in the
Local Limited Partnerships' combined financial statements. 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, to capital contributions payable to the limited partnerships
which were netted against partner capital in the Local Limited Partnerships'
financial statements (see Note 6), and to the exclusion of the Lake Village
Apartments from the combined condensed financial information.
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, 2002, no investment accounts in
Local Limited Partnerships had reached a zero balance.
21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The following is a summary of the equity method activity of the investments in
limited partnerships for the periods presented:
For The Period
September 3, 1999
(Date Operations
For The Years Ended Commenced)
March 31 through March 31
------------------------------ --------------------
2002 2001 2000
-------------- ------------- --------------------
Investments per balance sheet, beginning of period $ 9,482,570 $ 1,284,221 $ -
Capital contributions paid, net 4,013,757 2,205,074 142,788
Capital contributions payable 310,954 5,071,026 502,601
Capitalized acquisition fees and costs - 1,053,270 643,230
Tax credit adjustment (2,917) - -
Equity in losses of Limited Partnerships (622,249) (90,404) -
Amortization of capitalized acquisition fees and costs (56,916) (40,617) (4,398)
----------------- ----------------- --------------------
Investments in limited partnerships, end of period $ 13,125,199 $ 9,482,570 $ 1,284,221
================= ================= ====================
The financial information from the individual financial statements of the
Limited Partnerships include rental and interest subsidies. As no Local Limited
Partnerships were acquired as of December 31, 1999, no combined condensed
information is presented for that period. Approximate combined condensed
financial information from the individual financial statements of the Local
Limited Partnerships as of and for the year ended December 31 is as follows:
(Combined condensed financial information for Lake Village Apartments has been
excluded from the presentation below):
COMBINED CONDENSED BALANCE SHEETS
2000
2001 (Restated)
----------------- -------------------
ASSETS
Buildings and improvements (net of accumulated depreciation
for 2001 and 2000 of $712,000 and $159,000) $ 16,714,000 $ 7,145,000
Land 758,000 809,000
Construction in progress 3,861,000 276,000
Other assets 1,843,000 1,857,000
Due to related parties 496,000 -
----------------- -------------------
$ 23,672,000 $ 10,087,000
================= ===================
LIABILITIES AND PARTNERS' EQUITY
Mortgage and construction loans payable $ 12,978,000 $ 7,688,000
Other liabilities (including payables to affiliates for 2001
and 2000 of $2,754,000 and $132,000, respectively) 4,465,000 307,000
----------------- -------------------
17,443,000 7,995,000
----------------- -------------------
PARTNERS' CAPITAL
WNC Housing Tax Credit Fund VI, L.P., Series 7 6,003,000 1,914,000
Other partners 226,000 178,000
----------------- -------------------
6,229,000 2,092,000
----------------- -------------------
$ 23,672,000 $ 10,087,000
================= ===================
22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2001 2000
----------------- -------------------
Revenues $ 1,740,000 $ 867,000
----------------- -------------------
Expenses:
Operating expenses 936,000 398,000
Interest expense 663,000 372,000
Depreciation and amortization 510,000 154,000
----------------- -------------------
Total expenses 2,109,000 924,000
----------------- -------------------
Net income(loss) $ (369,000) $ (57,000)
================= ===================
Net loss allocable to the Partnership, before
equity in losses of Lake Village $ (368,000) $ (56,000)
================= ===================
Net loss recorded by the Partnership, before
equity in losses of Lake Village $ (622,000) $ (90,000)
Net loss of Lake Village Apartments allocable
to the Partnership - -
----------------- -------------------
Net loss recorded by the Partnership $ (622,000) $ (90,000)
================= ===================
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 7% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition
of Local Limited Partnerships. At the end of all periods presented,
the Partnership incurred acquisition fees of $1,319,500. Accumulated
amortization of these capitalized costs was $78,869 and $34,881 as of
March 31, 2002 and 2001, respectively.
Acquisition costs of 2% of the gross proceeds from the sale of Units
as full reimbursement of costs incurred by the General Partner in
connection with the acquisition of Local Limited Partnerships. At the
end of all periods presented, the Partnership incurred acquisition
costs of $377,000, respectively, which have been included in
investments in limited partnerships. Accumulated amortization was
$23,062 and $10,134 as of March 31, 2002 and 2001, respectively.
23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
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
$39,703, $34,573 and $424 were incurred during the years ended March
31, 2002, 2001 and 2000, respectively, of which $22,500, $0 and
$10,000 were paid, 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 return on investment (as defined in the
Partnership Agreement) and is payable only if the General Partner or
its affiliates render services in the sales effort.
The accrued fees and expenses due to General Partner and affiliates consist of the following:
March 31
----------------------------------
2002 2001
--------------- ---------------
Organizational, offering and selling costs payable $ 2,590 $ 21,735
Asset management fee payable 41,918 24,715
Reimbursements for expenses paid by the General Partner or an affiliate 1,467 -
Interest payable to Local Limited Partnerships 86,602 66,436
--------------- ---------------
Total $ 132,577 $ 112,886
=============== ===============
24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2002
----
Income $ 50,000 $ 29,000 $ 23,000 $ 42,000
Operating expenses (33,000) (27,000) (73,000) (89,000)
Equity in losses of limited
partnerships (33,000) (105,000) (64,000) (420,000)
--------------- --------------- --------------- ---------------
Net loss $ (16,000) (103,000) $ (114,000) $ (467,000)
=============== =============== =============== ===============
Loss available to limited partner $ (16,000) $ (103,000) $ (114,000) $ (466,000)
=============== =============== =============== ===============
Loss per limited partnership unit $ (1) $ (5) $ (6) $ (25)
=============== =============== =============== ===============
2001
----
Income $ 66,000 $ 86,000 $ 79,000 $ 112,000
Operating expenses (14,000) (27,000) (39,000) (30,000)
Equity in income (losses) of
limited partnerships (37,000) (83,000) (84,000) 114,000
--------------- --------------- --------------- ---------------
Net income (loss) $ 15,000 $ (24,000) $ (44,000) $ 196,000
=============== =============== =============== ===============
Income (loss) available to
limited partner $ 15,000 $ (24,000) $ (44,000) $ 196,000
=============== =============== =============== ===============
Income (loss) per limited
partnership unit $ 1 $ (2) $ (2) $ 10
=============== =============== =============== ===============
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).
Subsequent to March 31, 2002 and through July 10, 2002, the Partnership
disbursed $262,592 relating to the payables to limited partnerships reflected at
March 31, 2002.
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.
25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
Subsequent to March 31, 2002 and through July 10, 2002, the Partnership
committed to additional capital contributions in the amount of $855,628 to one
Local Limited Partnership, of which $524,541 had been advanced as of March 31,
2002 (see Note 2). Subsequent to March 31, 2002 and prior to the issuance of
these financial statements, the remaining committed capital contribution was
paid. Subsequent to March 31, 2002, the Partnership disbursed the remaining
$591,512 held in escrow to the respective Local Limited Partnership.
One Local Limited Partnership, ACN Southern Hills II, L.P. ("Southern Hills"),
in which the Partnership owns a 99.98% interest, has a construction loan payable
aggregating approximately $1,100,000 as of December 31, 2001. Such construction
loan due in March 2002 was not repaid. Consequently, the Local Limited
Partnership is in default of its loan covenants and the Housing Complex could be
foreclosed on by the bank. Southern Hills is attempting to refinance the loan.
The bank has issued a term sheet upon which a new loan will be granted, which
contemplates a substantial reduction in principal. There can be no assurances
that Southern Hills will be successful in its negotiations. Accordingly,
Southern Hills is subject to the risk of foreclosure and sale of the Housing
Complex by the lender, which would result in the loss and potential recapture of
certain tax losses and the tax credits. As a result, there is an uncertainty as
to the Partnership's ability to ultimately realize the carrying value of its
investment in Southern Hills, which totaled $1,210,000 at March 31, 2002. The
accompanying financial statements do not reflect any adjustments that may result
from any unfavorable outcome that may occur upon the ultimate resolution of this
uncertainty.
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, David N. Shafer, Wilfred N. Cooper, Jr. and Kay L.
Cooper. The principal shareholder of WNC & Associates, Inc. is a trust
established by Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., age 71, 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.
Wilfred N. Cooper, Jr., age 39, 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 50, 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.
Thomas J. Riha, age 47, 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 56, is Vice President - National Sales 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.
27
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2002 and 2001, and
For The Period September 3, 1999 (Date Operations Commenced)
through March 31, 2000
Michael J. Gaber, age 36, is Vice President - Acquisitions and a member of the
Acquisitions Committee of WNC & Associates, Inc. Mr. Gaber has been involved in
real estate acquisition, valuation and investment activities since 1989 and has
been employed with WNC since 1997. Prior to joining WNC & Associates, Inc., he
was involved in the valuation and classification of major assets, restructuring
of debt and analysis of real estate taxes with the H.F. Ahmanson company, parent
to Home Savings of America. Mr. Gaber graduated from the California State
University, Fullerton in 1991 with a Bachelor of Science degree in Business
Administration - Finance.
David Turek, age 47, 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 65, 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., and the mother of Wilfred N. Cooper, Jr. Ms. Cooper graduated from
the University of Southern California in 1958 with a Bachelor of Science degree.
28
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, 2002, 2001 and 2000
approximately $2,429,245, $2,422,105 and $921,885, respectively, for
selling commissions and other fees and expenses of the Partnership's
offering of Units. Of the total accrued or paid, approximately $1,298,245
was paid or to be paid to unaffiliated persons participating in 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,
2002 and 2001 the aggregate amount of acquisition fees paid or accrued was
approximately and $1,320,000, respectively.
(c) Acquisition Expense. The Partnership reimbursed the General Partner for
acquisition expenses in an amount equal to 2% of the Gross Proceeds,
pursuant to the terms of the partnership agreement. As of March 31, 2002
and 2001, the aggregate amount of acquisition fees paid or accrued was
approximately and $377,000, respectively.
(d) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.2% of the Invested Assets of the Partnership. "Invested Assets"
is defined as the sum of the Partnership's Investment in Local Limited
Partnerships and the Partnership's allocable share of the amount of the
mortgage loans and other debts related to the Housing Complexes owned by
such Local Limited Partnerships. Fees of approximately $40,000, $35,000 and
$400 were incurred for the years ended March 31, 2002, 2001, and the period
September 3, 1999 (date of operations commenced) through March 31, 2000, of
which approximately $22,500, $0 and $10,000 was paid during the respective
periods.
(e) Operating Expenses. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $45,000, $35,500 and
$3,600 during the years ended March 31, 2002 and 2001 and the period
September 3, 1999 (date operations commenced) through March 31, 2000,
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) 11%
through December 31, 2010, and (ii) 6% for the balance of the Partnerships
term. No disposition fees have been paid.
(g) Interest in Partnership. The General Partner will receive 0.1% of the Low
Income Housing Credits. No Low Income Housing Credits were allocated for
the period ended December 31, 2000 and 1999. The General Partners are also
entitled to receive 0.1% of cash distributions. There were no distributions
of cash to the General Partner during the years ended March 31, 2002 and
2001, or during the period September 3, 1999 (date operations commenced)
through March 31, 2000.
29
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 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
Independent Auditors' Report
Balance Sheets, March 31, 2002 and 2001
Statements of Operations for the years ended March 31, 2002 and 2001,
and the period September 3, 1999
(Date Operations Commenced) through March 31, 2000
Statements of Partners' Equity (Deficit) for the years ended March 31,
2002 and 2001, and the period September 3, 1999(Date Operations
Commenced) through March 31, 2000
Statements of Cash Flows for the years ended March 31, 2002 and 2001,
and the period September 3, 1999 (Date Operations Commenced) through
March 31, 2000
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
--------------------------------------------------------
Report of Independent Certified Public Accountants on Financial
Statement Schedules Schedule III - Real Estate Owned by Local Limited
Partnerships
(b) Reports on Form 8-K.
-------------------
1. A Form 8-K dated October 2, 2000 was filed on October 11, 2000
reporting the acquisition of a Local Limited Partnership Interest under
Item 2. No financial statements were included.
2. A Form 8-K/A was filed on December 18, 2000 amending the Form 8-K filed
on October 11, 2000. Pro forma financial information respecting the
acquisition was included.
3. A Form 8-K dated December 18, 2000 was filed on January 2, 2001
reporting the acquisition of a Local Limited Partnership Interest under
Item 2. No financial statements were included.
4. A Form 8-K/A was filed on March 5, 2001 amending the Form 8-K filed on
January 2, 2001. Pro forma financial information respecting the
acquisition was included.
5. A Form 8-K dated April 16, 2001 was filed on April 27, 2001 reporting
the acquisition of a Local Limited Partnership Interest under Item 2.
No financial statements were included.
6. A Form 8-K/A was filed on July 2, 2001 amending the Form 8-K filed on
April 27, 2001. Pro forma financial information respecting the
acquisition was included.
(c) Exhibits.
--------
3.1 First Amended and Restated Agreement of Limited Partnership dated as of
April 1, 1999 included as Exhibit B to the Registration Statement filed
on April 16, 1999, is hereby incorporated herein as Exhibit 3.1.
10.1 Amended and Restated Limited Partnership Agreement of School Square
Limited Partnership filed as exhibit 10.1 to the current report on Form
8-K dated February 9, 2000, is herein incorporated by reference as
Exhibit 10.1.
10.2 Second Amended and Restated Operating Agreement of 2nd Fairhaven,
L.L.C. filed as Exhibit 10.2 to the current report on Form 8-K dated
January 25, 2000, is herein incorporated by reference as Exhibit 10.2.
10.3 Amended and Restated agreement of Red Oaks, L.P. filed as exhibit 10.5
to Post Effective Amendment No 3 to Form S-11 dated September 20, 2000,
is herein incorporated by reference as exhibit 10.3.
31
10.4 Third Amended and Restated Agreement of Limited Partnership of Hickory
Lane Partners Limited Partnership filed as exhibit 10.6 to Post
Effective Amendment No 3 to Form S-11 filed on September 20, 2000, is
herein incorporated by reference as exhibit 10.4
10.5 Second Amended and Restated agreement of Limited Partnership of Pierce
Street Partners Limited Partnership filed as Exhibit 10.1 to the
current report on Form 8-K dated January 25, 2000, is herein
incorporated by reference as Exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Lake Village
Apartments L.P. filed as Exhibit 10.1 to the current report on Form 8-K
dated December 18, 2000, is herein incorporated by reference as Exhibit
10.6.
10.7 Amended and Restated Agreement of Limited Partnership of United
Development Limited Partnership 2000 filed as Exhibit 10.1 to the
current report on Form 8-K dated April 16, 2001, is herein incorporated
by reference as Exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of ACN Southern
Hills II, L.P. filed as Exhibit 10.10 to Post Effective Amendment No 6
to Form S-11 filed on May 1, 2001, is herein incorporated by reference
as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Montrose
Country Estates Limited Dividend Housing Association, a Michigan
limited partnership, filed as Exhibit 10.9 to Post Effective Amendment
No 6 to Form S-11 filed on May 1, 2001, is herein incorporated by
reference as exhibit 10.9
21.1 Financial statements of Stroud Housing Associates, L.P., as of and for
the years ended December 31, 2001 and 2000 together with independent
auditors report thereon; a significant subsidiary of the Partnership.
32
Report of Independent Certified Public Accountants on
Financial Statement Schedules
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 7
The audits referred to in our report dated July 10, 2002, relating to the 2002,
2001 and 2000 financial statements of WNC Housing Tax Credit Fund VI, L.P.,
Series 7 (the "Partnership"), which is contained in Item 8 of this Form 10-K,
included the audit of the accompanying financial statement 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. The opinion to the financial
statements contains an audit scope limitation paragraph describing the inability
of the Partnership to obtain independently audited financial statements of one
Local Limited Partnership and an emphasis paragraph related to the uncertainty
of realizing the investment in another Local Limited Partnership.
In our opinion, except for the effects of such audit scope limitation, such
financial statement schedules present fairly, in all material respects, the
financial information set forth therein.
/s/BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
July 10, 2002
33
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
-------------------------------------- --------------------------------------------------
As of March 31, 2002 As of December 31, 2001
-------------------------------------- --------------------------------------------------
Partnership's
Total Investment Amount of Encumbrances
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC Federalsburg,
Maryland $ 360,000 $ 360,000 $ 998,000 $ 1,250,000 $ 79,000 $ 1,171,000
ACN Southern Hills Oskaloosa,
Partners II, L.P. Oklahoma 1,339,000 785,000 1,100,000 2,141,000 84,000 2,057,000
Hickory Lane Sioux City,
Partners, L.P. Iowa 633,000 472,000 2,108,000 2,470,000 56,000 2,414,000
Lake Village Kewanee,
Apartments, L.P. Illinois 2,978,000 2,978,000 * * * *
Montrose County
Estates Limited
Dividend Housing Montrose,
Association, L.P. Michigan 553,000 450,000 688,000 1,244,000 34,000 1,210,000
Ozark Ozark,
Properties III Arkansas 300,000 300,000 844,000 1,237,000 35,000 1,202,000
Pierce Street Sioux City,
Partners, L.P. Iowa 1,527,000 1,104,000 2,656,000 4,892,000 120,000 4,772,000
Red Oaks Holly Springs,
Estates, L.P. Mississippi 242,000 242,000 730,000 1,015,000 61,000 954,000
School Albany,
Square, L.P. Minnesota 286,000 286,000 1,004,000 1,290,000 113,000 1,177,000
Stroud Housing Stroud,
Associates, L.P. Oklahoma 891,000 847,000 1,246,000 1,691,000 121,000 1,570,000
* Results of Lake Village Apartments, L.P. have not been audited and thus
have been excluded. See Note 3 to the financial statements and report
of independent certified public accountants. The housing complex was
under construction at December 31, 2001.
34
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
-------------------------------------- --------------------------------------------------
As of March 31, 2002 As of December 31, 2001
-------------------------------------- --------------------------------------------------
Partnership's
Total Investment Amount of Encumbrances
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Tahlequah Tahlequah,
Properties IV Oklahoma 375,000 338,000 850,000 1,438,000 9,000 1,429,000
Timberwolf Deer River,
Townhomes, L.P. Minnesota 509,000 429,000 -(1) 703,000 -(1) 703,000
United West Memphis,
Development, L.P. Arkansas 2,250,000 2,100,000 754,000 2,674,000 (1) 2,674,000
----------- ------------ ------------ ------------ --------- ------------
$12,243,000 $ 10,691,000 $ 12,978,000 $ 22,045,000 $ 712,000 $ 21,333,000
=========== ============ ============ ============ ========= ============
(1) The Housing Complex was under construction at December 31, 2001.
35
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
-------------------------------------------------------------------------------------
For the year ended December 31, 2001
-------------------------------------------------------------------------------------
Partnership Name Rental Net Income Year Status Estimated Estimated
Investment Useful Life Completion
Income (Loss) Acquired (Years) Date
- -----------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC 106,000 (32,000) 2000 Completed 40 2000
ACN Southern Hills Partners II,
L.P. 78,000 (102,000) 2000 Completed 27.5 2001
Hickory Lane
Partners, L.P. 262,000 (31,000) 2000 Completed 40 2001
Lake Village Under
Apartments, L.P. Construction
* * 2000 Rehabilitation * 2002
Montrose County Estates Limited
Dividend Housing Association,
L.P. 115,000 (11,000) 2001 Completed 40 2001
Ozark Properties III 73,000 (26,000) 2001 Completed 40 2001
Pierce Street
Partners, L.P. 625,000 88,000 2000 Completed 40 2001
Red Oaks
Estates, L.P. 101,000 (47,000) 2000 Completed 27.5 2000
School Square, L.P. 100,000 (50,000) 2000 Completed 27.5 2000
Stroud Housing
Associates, L.P. 115,000 (160,000) 2000 Completed 40 2001
Tahlequah Properties IV - (19,000) 2001 Completed 40 2001
Timberwolf Townhomes, L.P. Under
Construction
-(1) 9,000 2001 Rehabilitation (1) 2002
United Development, L.P. Under
Construction
-(1) 12,000 2000 Rehabilitation (1) 2002
---- ------
$1,575,000 $(369,000)
========== ==========
(1) The housing complex is under construction and has not yet began operations.
* Results of Lake Village Apartments L.P. have not been audited and thus have
been excluded. See Note 3 to the financial statements and report of
independent certified public accountants. The housing complex is under
construction and has not yet begun operations.
36
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
-------------------------------------- --------------------------------------------------
As of March 31, 2001 As of December 31, 2000
-------------------------------------- --------------------------------------------------
Partnership's
Total Investment Amount of Encumbrances
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC Federalsburg,
Maryland $ 360,000 $ 360,000 $ 1,001,000 $ 1,245,000 $ 49,000 $ 1,196,000
ACN Southern Hills Oskaloosa,
Partners II, L.P. Oklahoma 1,339,000 760,000 -(1) -(1) -(1) -(1)
Hickory Lane Sioux City,
Partners, L.P. Iowa 633,000 252,000 1,950,000 1,848,000 17,000 1,831,000
Lake Village Kewanee,
Apartments, L.P. Illinois 2,978,000 429,000 * * * *
Montrose County
Estates Limited
Dividend Housing Montrose,
Association, L.P. Michigan 553,000 - -(1) -(1) -(1) -(1)
Pierce Street Sioux City,
Partners, L.P. Iowa 1,527,000 580,000 2,930,000 2,990,000 32,000 2,958,000
Red Oaks Holly Springs,
Estates, L.P. Mississippi 245,000 184,000 734,000 1,016,000 17,000 999,000
School Albany,
Square, L.P. Minnesota 286,000 214,000 1,073,000 1,290,000 44,000 1,246,000
----------- ----------- ----------- ----------- --------- -----------
$ 7,921,000 $ 2,779,000 $ 7,688,000 $ 8,389,000 $ 159,000 $ 8,230,000
=========== =========== =========== =========== ========= ===========
(1) The Housing Complex was under construction at December 31, 2000.
* Results of Lake Village Apartments, L.P. were not audited in 2001 and thus
have been excluded to aid in comparability. See Note 3 to the financial
statements and report of independent certified public accountants. The
housing complex was under construction as of December 31, 2000.
37
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
-------------------------------------------------------------------------------------
For the year ended December 31, 2000
-------------------------------------------------------------------------------------
Year Estimated Estimated
Rental Net Income Investment Useful Life Completion
Partnership Name Income (Loss) Acquired Status (Years) Date
- -----------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC $ 99,000 $ (30,000) 2000 Completed 40 1999
ACN Southern Hills Partners II, Under
L.P. - - 2000 Construction - 2001
Hickory Lane Under
Partners, L.P. Construction/
155,000 (27,000) 2000 Rehabilitation 40 2001
Lake Village Under
Apartments, L.P. * * 2000 Construction - 2001
Montrose County Estates Limited
Dividend Housing Association, Under
L.P. - - 2001 Construction - 2001
Pierce Street Under
Partners, L.P. Construction/
375,000 61,000 2000 Rehabilitation 40 2001
Red Oaks
Estates, L.P. 59,000 (9,000) 2000 Completed 27.5 2000
School Square, L.P. 43,000 (52,000) 2000 Completed 27.5 2000
--------- ----------
$ 731,000 $ (57,000)
========= ==========
* Results of Lake Village Apartments, L.P. were not audited in 2001 and thus
have been excluded to aid comparability. See Note 3 to the financial
statements and report of independent certified public accountants. The
housing complex was under construction as of December 31, 2000.
38
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
-------------------------------------- --------------------------------------------------
As of March 31, 2000 As of December 31, 1999
-------------------------------------- --------------------------------------------------
Partnership's
Total Investment Amount of Encumbrances
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC Federalsburg,
Maryland $ 360,000 $ - (1) (1) (1) (1)
School Square Albany,
Ltd. Partnership Minnesota 285,000 142,000 (1) (1) (1) (1)
--------- --------- ------ ------ ------ -------
$ 645,000 $ 142,000 $ (1) $ (1) $ (1) $ (1)
========= ========= ====== ====== ====== ======
(1) The Housing Complex was under construction at December 31, 1999.
39
WNC Housing Tax Credit Fund VI, L.P., Series 7
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
-------------------------------------------------------------------------------------
For the year ended December 31, 1999
-------------------------------------------------------------------------------------
Year Estimated Estimated
Rental Net Income Investment Useful Life Completion
Partnership Name Income (Loss) Acquired Status (Years) Date
- -----------------------------------------------------------------------------------------------------------------------
2nd Fairhaven, LLC (1) (1) 2000 Completed 40 -
Under
School Square Ltd. Partnership (1) (1) 2000 Construction - 2001
40
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 7
By: WNC & Associates, Inc. General Partner
By: /s/ Wilfred N. Cooper, Jr.
-------------------------
Wilfred N. Cooper, Jr. President and
Chief Operating Officer of WNC & Associates, Inc.
Date: August 08, 2002
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha Vice-President and
Chief Financial Officer of WNC & Associates, Inc.
Date: August 08, 2002
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 and Chief Executive Officer of
WNC & Associates, Inc.
Date: August 08, 2002
By: /s/ David N. Shafer
-------------------
David N Shafer Director of WNC & Associates, Inc.
Date: August 08, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of WNC Housing Tax Credit Fund
VI, L.P., Series 8 (the "Partnership") for the year ended March 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), and pursuant to 18 U.S.C. section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, I, Wilfred N. Cooper, Sr.,
Chairman and Chief Executive Officer of WNC & Associates, Inc., general partner
[of the general partner] of the Partnership, hereby certify that:
1. The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Partnership.
/s/WILFRED N. COOPER, SR.
Wilfred N. Cooper, Sr.
Chairman and Chief Executive Officer of WNC & Associates, Inc.
August 7, 2002
41
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of WNC Housing Tax Credit Fund
VI, L.P., Series 8 (the "Partnership") for the year ended March 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), and pursuant to 18 U.S.C. section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, I, Thomas J. Riha, Chief
Financial Officer of WNC & Associates, Inc., general partner [of the general
partner] of the Partnership, hereby certify that:
1. The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Partnership.
/s/THOMAS J. RIHA
Thomas J. Riha
Chief Financial Officer of WNC & Associates, Inc.
August 7, 2002
42