UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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[ ] 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 33-19811
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DIVERSIFIED HISTORIC INVESTORS VI
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2492210
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1521 LOCUST STREET, PHILADELPHIA, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215)557-9800
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act: 25,461 Units
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UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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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. [ ]
Aggregate market value of Units held by non-affiliates of the
Registrant: Not Applicable*
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* Securities not quoted in any trading market to Registrant's
knowledge.
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes No X
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PART I
Item 1. Business
a. General Development of Business
Diversified Historic Investors VI ("Registrant") is a
limited partnership formed in 1988 under Pennsylvania law. As of
December 31, 2001, Registrant had outstanding 25,461 units of limited
partnership interest (the "Units").
Registrant is presently in its operating stage. It
originally owned eight properties or interests therein. Interest in
two properties have been lost through foreclosure and an interest in a
third property has been reduced substantially. See Item 2.
Properties, for a description thereof. For a discussion of the
operations of the Registrant, see Part II. Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
The following is a summary of significant transactions
involving the Registrant's interests:
b. Financial Information about Industry Segments
The Registrant operates in one industry segment.
c. Narrative Description of Business
Registrant is in the business of operating, holding,
selling, exchanging and otherwise dealing in and with real properties
containing improvements which are "Certified Historic Structures," as
such term is defined in the Internal Revenue Code (the "Code"), or
which are eligible for designation as such, for use as apartments,
offices, hotels and commercial spaces, or any combination thereof, or
low income housing eligible for the tax credit provided by Section 42
of the Code, and such other uses as the Registrant's general partner
may deem appropriate.
Since the Registrant's inception, all the properties
acquired either by the Registrant, or the subsidiary partnerships in
which it has an interest, have been rehabilitated and certified as
historic structures and have received the related investment tax
credit. In addition, four properties (Roseland, Mater Dolorosa,
Strehlow Terrace and Saunders Apartments) are low-income housing
structures which qualify for, have received, and will continue to
receive, the low income tax credits. Each of the properties currently
owned are held for rental operations. At this time it is anticipated
that all the properties will continue to be held for this purpose. At
such time as real property values begin to increase to a point where
they can be sold at a price which is sufficient to repay the
underlying indebtedness, the Registrant will re-evaluate its
investment strategy regarding the properties.
As of December 31, 2001, Registrant owned interests in
six properties, located in Nebraska (three), Virginia (one),
Pennsylvania (one), and Louisiana (one). In total, the properties
contain 100 apartment units, 149 condominium units used as rental
units, and 42,772 square feet ("sf") of commercial/retail space. As
of December 31, 2001, 219 of the apartment and condominium units were
under lease (88%) at monthly rental rates ranging from $246 to $1,550.
In addition, 44,115 sf of commercial/retail space was under lease
(100%) at annual rates ranging from $7.12 to $24.14 per sf. Rental of
the apartments and commercial space is not expected to be seasonal.
For a further discussion of the properties, see Item 2. Properties.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the Registrant.
The Registrant is affected by and subject to the general
competitive conditions of the residential and commercial real estate
industry. As a result of the overbuilding that occurred in the
1980's, the competition for both residential and commercial tenants in
the local markets where the Registrant's properties are located is
generally strong. In each of the markets, there are several similar
historically certified rehabilitated buildings. Two of the properties
held for rental are market-rate properties and are located in
Alexandria, Virginia, and Philadelphia, Pennsylvania. At these
properties the Registrant is forced to keep its rent levels
competitively low in order to maintain moderate to high occupancy
levels. Management of each of these properties makes frequent market
analyses in order to set rent levels. When occupancy nears the 97-99%
range, management considers raising the rents by more than a normal
cost of living increase. If occupancy falls below 85%, management
considers lowering rents. Four of the properties held for rental are
low-income housing structures located in Omaha, Nebraska, and New
Orleans, Louisiana. These properties have fixed rental rates and face
competition for low to moderate income tenants from other low income
properties in the area. However, there is no organization which holds
a dominant position in the residential housing or commercial leasing
market in any of the geographic areas in which the Registrant's
properties are located.
Registrant has no employees. Registrant's activities are
overseen by Brandywine Construction & Management, Inc. ("BCMI"), a
real estate management firm.
d. Financial Information About Foreign and Domestic
Operations and Export Sales
See Item 8. Financial Statements and Supplementary Data.
Item 2. Properties
As of December 31, 2001, Registrant owned interests in five
partnerships that each owns one property and a minority interest in an
additional partnership that owns one property. A summary description
of each property is given below.
a. Firehouse Square - consists of 31,431 sf of commercial
space at 902-910 King Street in Alexandria, Virginia. In December
1988, Registrant was admitted, with a 90% general partner interest, to
Firehouse Square General Partnership ("FSGP"), a Virginia general
partnership, for a cash capital contribution of $1,750,000. FSGP
acquired and rehabilitated the property for $5,660,000 ($151.51 per
sf), funded by the equity contribution and a mortgage note payable of
$4,207,000. On June 1, 1993, the first mortgage was modified. The
terms of the modification included the addition of all accrued and
unpaid interest ($218,728) to the principal balance and revision of
the payment terms. The lender also advanced $40,711 for real estate
taxes and $33,627 for tenant improvements. Monthly payments of
interest to the new note holder were to be made in an amount equal to
net operating income. The note accrued interest at prime plus 1/2%.
On November 16, 1994, the new first mortgage holder foreclosed upon
its mortgage. By "credit bidding" its mortgage, the mortgage holder
became the successful bidder at sale. The first mortgage holder sold
its successful bid to a partnership known as 901 King Street
Associates ("KSA"). KSA is a general partnership owned 90% by the
Registrant. The selling price of the mortgage was the amount that the
mortgage had been immediately prior to foreclosure. The obligation
has terms materially the same as the original mortgage loan and is
secured by a new mortgage on the property. Therefore, after the sale,
the Registrant's interest in the property was unchanged. The
principal balance of the mortgage at December 31, 1997 was $4,304,188.
The note accrued interest at prime plus 1/2% and the entire principal
balance was due October 1998. In June 1995, the Registrant refinanced
$900,000 of the first mortgage. This loan bore interest at 9.75%, was
payable in monthly installments of principal and interest of $8,021
and was due in June 2005. In November 1998, both mortgages were
refinanced. The first mortgage was refinanced with a $1,937,000
mortgage (principal balance of $1,849,227 at December 31, 2001) which
bears interest at 7.08%, is payable in monthly installments of
principal and interest of $13,789 and is due in November 2008. The
second mortgage was refinanced with a $4,330,107 mortgage (principal
balance of $4,367,913 at December 31, 2001) which bears interest at
7%, is due in December 2008 with monthly payments of interest to be
made in an amount equal to net operating income. Proceeds from the
refinancing of the first mortgage were used to reduce the second
mortgage principal.
In September 2002, the mortgages were refinanced. The
principal balance of the first mortgage was increased to $3,520,000
and the net proceeds were used to reduce the second mortgage. In
exchange for a 20% ownership interest in and a preferred return from
KSA, the second mortgage holder converted the balance of its
outstanding debt to equity. The new first mortgage bears interest at
6.75 % and is due March 1, 2013.
The property is managed by BCMI. As of December 31,
2001, all 31,431 sf of space were under lease (100%) at annual rates
ranging from $7.56 to $22.18 per sf. The occupancy for the previous
four years was 100% for 2000, 1999, and 1998, and 94% for 1997. The
average annual rent was $7.34 to $21.53 for 2000, and $7.12 to $20.89
for 1999,1998, and 1997. There are three tenants who each occupy ten
percent or more of the rentable square footage. They operate
principally as a law firm, an architectural firm and a computer
company. All leases are operating leases and the minimum future
rentals on the non-cancelable leases as of December 31, 2001 are
$866,610.
The following is a table showing commercial lease
expirations at Firehouse Square for the next five years.
Total annual
Number of Total sf of rental covered % of gross
leases expiring by expiring annual rental
Year expiring leases leases from property
2002 4 13,227 $216,570 43%
2003 5 14,286 244,805 45%
2004 0 0 0 0%
2005 1 1,344 28,224 4%
2006 1 2,574 48,906 8%
For tax purposes, this property has a basis of $4,227,405
and is depreciated using the straight-line method with a useful life
of 39 years. The annual real estate taxes are $39,710. It is the
opinion of the management of the Registrant that the property is
adequately covered by insurance.
b. Roseland - consists of 17 low-income apartments and 3,000
sf of retail space at 4932 South 24th Street in South Omaha, Nebraska.
In July 1988, Registrant was admitted with a 98% general partner
interest and a 1% limited partner interest to Roseland Redevelopment
Partners ("RRP"), a Nebraska limited partnership, for a cash capital
contribution of $700,000. RRP acquired and rehabilitated the property
for $1,680,000 ($70.29 per sf), funded by the equity contribution and
three notes payable. The first note payable of $500,000 is non-
interest bearing with principal due upon sale of the property; the
second note payable of $63,313 bore interest at 9.16%, with interest
adjusting every three years based on the three-year Treasury Bill rate
plus 250 basis points, was payable in semi-annual installments of
principal and interest of $4,856 and was due in November 2001. The
third note payable of $370,000 (principal balance of $323,279 at
December 31, 2001) bears interest at 8%, is payable in monthly
installments of principal and interest of $3,083 and is due in August
2006.
The property is managed by an independent property
management firm. On December 31, 2001, 15 of the units were leased
(71%) at monthly rents of $151 to $475 and 3,000 sf of commercial
space (100%) was leased at annual rents ranging from $3.00 to $8.00
per sf. All residential leases are renewable, one-year leases. The
occupancy for the residential units for the previous four years was
80% for 2000, 80% for 1999, 82% for 1998, and 92% for 1997. The
monthly rental range has been approximately the same since 1995. The
commercial space has been 100% occupied since 1995. The range for
annual rents has been $3.00 to $8.00 for 2000, $3.13 to $5.00 per sf
for 1999 and 1998, and $3.13 to $5.50 per sf for 1997. There is one
tenant who occupies ten percent or more of the rentable square
footage. It principally functions as a tax counseling provider. All
commercial leases are operating leases and the minimum future rentals
on the noncancelable leases as of December 31, 2001 are $8,400.
The following is a table showing commercial lease
expirations at Roseland for the next five years:
Total annual
Number of Total sf of rental covered
leases expiring by expiring % of gross
Year expiring leases leases annual rental
2002 0 0 $ 0 0%
2003 1 600 4,800 7
2004 0 0 0 0
2005 0 0 0 0
2006 0 0 0 0
For tax purposes, this property has a basis of $1,715,564
and is depreciated using the straight-line method with a useful life
of 27.5 years. The annual real estate taxes are $1,268. It is the
opinion of the management of the Registrant that the property is
adequately covered by insurance.
c. Mater Dolorosa Apartments - consists of 68 low income
apartments located at 1265 South Carrollton Avenue in New Orleans,
Louisiana. In July 1988, Registrant was admitted with a 90% general
partnership interest to Mater Dolorosa General Partnership ("MDGP") a
Pennsylvania general partnership, for a cash contribution of
$1,519,000. MDGP acquired and rehabilitated the property for
$3,149,000 ($59.39 per sf), funded by the equity contribution and a
note payable of $1,790,000. The note payable bears interest at 8.5%,
is payable in monthly installments of principal and interest of
$17,627, and is due in April 2005 (principal balance at December 31,
2001 of $446,261).
The property is managed by a property management firm
which is an affiliate of the Registrant's co-general partner of MDGP.
At December 31, 2001, 66 of the units were rented (97%) at monthly
rents of $530 to $625. All leases are renewable, one-year leases.
The occupancy for the previous four years was 100% for 2000, 97% for
1999, 1998, and 1997. The monthly rental range was $519 to $621 in
2000, and has been approximately the same since 1995. For tax
purposes, this property has a basis of $2,803,265 and is depreciated
using the straight-line method with a useful life of 27.5 years. The
annual real estate taxes are $5,541. There is no one tenant who
occupies ten percent or more of the building. It is the opinion of
the management of the Registrant that the property is adequately
covered by insurance.
d. Strehlow Terrace Apartments - consists of 70 low income
apartment units located at 2024 North 16th Street, Omaha, Nebraska.
In January 1989, Registrant was admitted with a 98% general partner
interest to Strehlow Terrace Apartments Limited Partnership ("STALP"),
a Nebraska limited partnership, for a cash capital contribution of
$2,250,000. STALP acquired and rehabilitated the property for
$5,817,000 ($52.02 per sf) funded by the equity contribution and three
mortgage loans. The first loan, financed through the Governmental
National Mortgage Association ("GNMA") is for $1,789,000 (principal
balance at December 31, 2001 of $1,775,053), bears interest at 10-
1/4%, is payable in monthly installments of principal and interest of
$15,540, and is due in 2030. In August 1993, six units were damaged
by a fire at Strehlow Terrace. Due to the financial difficulties
caused by the fire, STALP fell behind on its monthly debt service by
several months. Although the property was able to reduce the
arrearage by 50% and commenced regular, monthly payments by May 1994,
the loan was declared in default and was assigned by GNMA to the
Federal Housing Administration/Housing and Urban Development
("FHA/HUD") on June 24, 1994. As of December 31, 2001, workout
opportunities with HUD continue to be suspended. The other two loans
were made by the City of Omaha. One, in the amount of $1,700,000,
bears interest at 1%, and the other, in the amount of $75,000, is non-
interest bearing. The principal and applicable interest on both City
of Omaha loans is due upon the sale of the property or in the year
2030, whichever is earlier.
The property is managed by an independent property
management firm. On December 31, 2001, 47 of the apartments were
leased (67%) at monthly rents ranging from $200 to $577. All leases
are renewable, one-year leases. The occupancy for the previous four
years was 89% for 2000, 98% for 1999, 97% for 1998, and 97% for 1997.
The monthly rental range has been approximately the same since 1995.
For tax purposes, this property has a basis of $4,886,283 and is
depreciated using the straight-line method with a useful life of 27.5
years. The annual real estate taxes are $14,982. No one tenant
occupies ten percent of more of the building. It is the opinion of
the management of the Registrant that the property is adequately
covered by insurance.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
e. Canal House - consists of 71 residential condominium
units and 8,341sf of commercial condominium space located at 4250-4312
Main Street, Manayunk, Pennsylvania. In February 1989, Registrant was
admitted to Canal House Historic Associates ("CHHA"), a Pennsylvania
limited partnership, with a 99% general partner interest for a cash
contribution of $6,000,000. During 1990, Registrant made an
additional cash contribution of $200,000. The 1% limited partnership
interest is also controlled by Registrant; it is held by a
Pennsylvania corporation whose stock is owned by Registrant. CHHA
acquired and rehabilitated the property for $9,700,000 ($94.41 per sf)
which was funded by the equity contribution and a loan of $4,000,000
with interest at 7.75% and monthly principal and interest payments
(based on a 30-year amortization schedule). In October 1995, the
Registrant ceased making debt service payments. The loan was sold in
December 1995. The Registrant entered into an agreement with the new
holder of the note (principal balance of $1,520,117 at December 31,
2001) whereby the maturity of the loan was extended to December 2002
and monthly payments of interest are to be made to the new note holder
in an amount equal to net operating income. In April 1996, the
Registrant refinanced $3,216,000 of the first mortgage. This new loan
was a first mortgage which bore interest at 8.75%, payable in monthly
installments of principal and interest of $25,300 and was due in April
2003. In September 1998, the second mortgage lender advanced the
property $3,907,200 to repay the first mortgage with the intention of
refinancing the first mortgage at a lower interest rate. This
refinancing was completed in January 1999 with a $4,000,000 mortgage
loan which bears interest at 7.22%, is payable in monthly payments of
principal and interest of $27,206 and is due in January 2009.
The property is managed by BCMI. At December 31, 2001, 69
of the residential units were under lease (97%) at monthly rents of
$725 to $1,695, and 7,306 sf of commercial space was under lease (88%)
at annual rents ranging from $22.80 to $26.87 per sf. All residential
leases are renewable, one-year leases. The occupancy for the
residential units for the previous four years was 96% for 2000, 93%
for 1999, 92% for 1998, and 94% for 1997. The monthly rental range
has been approximately the same since 1995. The occupancy for the
commercial space was 100% for 2000, 1999, and 1998, and 90% for 1997.
The range for annual rents was $22.47 to $23.22 for 2000, $7.12 to
$20.89 for 1999, $19.00 to $24.14 per sf for 1998, and $19.00 to
$23.11 per sf for 1997. There are no tenants who occupy ten percent
or more of the rentable square footage. All leases are operating
leases and the minimum future rentals on the noncancelable leases as
of December 31, 2001 are $691,088.
The following is a table showing commercial lease
expirations at Canal House for the next five years.
Total annual
Number of Total sf of rental covered
leases expiring by expiring % of gross
Year expiring leases leases annual rental
2002 1 850 $ 19,740 2%
2003 0 0 0 0
2004 0 0 0 0
2005 1 2,426 55,313 5
2006 1 4,030 108,288 11
For tax purposes, this property has a basis of $8,488,548
and is depreciated using the straight-line method with a useful life
of 27.5 years. The annual real estate taxes are $93,268. It is the
opinion of the management of the Registrant that the property is
adequately covered by insurance.
f. Saunders Apartments - consists of 23 low-income
apartments at 415 North 41st Avenue in Omaha, Nebraska. Registrant
acquired a 99% joint venture interest in Saunders Apartments Joint
Venture ("SAJV"), a Nebraska Joint Venture, for a cash capital
contribution of $875,000. SAJV acquired and rehabilitated the
property for $1,815,000 ($79.96 per sf), funded by the equity
contribution and a mortgage payable of $675,000. The note was retired
with $285,000 advanced from Registrant's co-general partner, and a
mortgage note payable of $395,000 (principal balance at December 31,
2001 of $266,415). The mortgage note bears interest at 10.87%, is
payable in monthly installments of $3,723 and matured in May 1997. On
June 1, 1993 an amended and restated joint venture agreement was
reached whereby the Registrant's interest was reduced to a 30%
interest.
The property is managed by an independent property
management firm. As of December 31, 2001, 23 units were under lease
(96%) with rents ranging from $385 to $430. All leases are renewable,
one-year leases. The occupancy for the previous four years was 96%
for 2000, 100% for 1999, 100% for 1998, and 93% for 1997. The monthly
rental range has been approximately the same since 1995. For tax
purposes, this property has a basis of $2,010,482 and is depreciated
using the straight-line method with a useful life of 27.5 years. The
annual real estate taxes are $7,923. No one tenant occupies ten
percent or more of the building. It is the opinion of the management
of the Registrant that the property is adequately covered by
insurance.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the Registrant.
Item 3. Legal Proceedings
a. To the best of its knowledge, Registrant is not party to,
nor are any of its properties the subject of, any pending material
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fiscal years covered by
this report to a vote of security holders.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
a. There is no established public trading market for the
Units. Registrant does not anticipate any such market will develop.
Trading in the units occurs solely through private transactions. The
Registrant is not aware of the prices at which trades occur.
Registrant's records indicate that 203 units were sold or exchanged of
record in 2001.
b. As of December 31, 2001, there were 2,827 record holders
of Units.
c. Registrant did not declare any cash dividends in 2001 or 2000.
Item 6. Selected Financial Data
The following selected financial data are for the five years
ended December 31, 2001. This data should be read in conjunction with
the consolidated financial statements included elsewhere herein. This
data is not covered by the independent auditors' report.
2001 2000 1999 1998 1997
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Rental income $ 2,434,782 $ 2,445,698 $ 2,373,232 $ 2,295,927 $ 2,332,312
Interest income 4,681 6,966 3,677 2,783 949
Net loss 1,395,838 1,338,104 1,650,894 2,447,292 2,016,133
Net loss
per Unit 54.27 52.03 64.19 95.16 78.40
Total assets
(net of
depreciation
and amorti-
zation 15,571,065 16,646,793 17,740,808 18,878,736 19,709,306
and
amortization)
Debt
obligations 16,616,789 16,857,962 17,077,741 17,161,190 15,451,686
Note: See Part II, Item 7.3 Results of Operations for a discussion of
factors which materially affect the comparability of the information
reflected in the above table.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(1) Liquidity
At December 31, 2001, Registrant had total unrestricted
cash of $38,973. Cash generated from operations is used primarily to
fund operating expenses and debt service. If cash flow proves to be
insufficient, the Registrant will attempt to negotiate loan
modifications with the various lenders in order to remain current on
all obligations. The Registrant is not aware of any additional
sources of liquidity.
As of December 31, 2001, Registrant had restricted cash
of $294,265 consisting primarily of funds held as security deposits,
replacement reserves and escrows for taxes and insurance. As a
consequence of these restrictions as to use, Registrant does not deem
these funds to be a source of liquidity.
In recent years the Registrant has realized significant
losses, including the foreclosure of two properties and a substantial
reduction of interest in a third property. At the present time, all
remaining properties are able to pay their operating expenses and debt
service including two of the properties where the mortgages are cash-
flow mortgages, requiring all available cash after payment of
operating expenses to be paid to the first mortgage holder. None of
the properties is currently producing a material amount of revenues in
excess of operating expenses and debt service. Therefore, it is
unlikely that any cash will be available to the Registrant to pay its
general and administrative expenses.
It is the Registrant's intention to continue to hold the
properties until they can no longer meet the debt service requirements
and the properties are foreclosed, or the market value of the
properties increases to a point where they can be sold at a price
which is sufficient to repay the underlying indebtedness (principal
plus accrued interest).
Strehlow Terrace Apartments was foreclosed by the
Department of Housing
and Urban Development, the guarantor of the first mortgage, on April
30, 2002.
On June 30, 2002, the Registrant's investment in
Saunders Apartments was sold for $25,000. The proceeds of the sale
were used to pay the accrued expenses of the Registrant.
(2) Capital Resources
Any capital expenditures needed are generally replacement
items and are funded out of cash from operations or replacement
reserves, if any. The Registrant is not aware of any factors which
would cause historical capital expenditures levels not to be
indicative of capital requirements in the future and accordingly, does
not believe that it will have to commit material resources to capital
investments for the foreseeable future.
(3) Results of Operations
During 2001, Registrant incurred a net loss of $1,395,838
($54.27 per limited partnership unit) compared to a net loss of
$1,338,104 ($52.03 per limited partnership unit) in 2000 and a net
loss of $1,650,894 ($64.84 per limited partnership unit) in 1999.
Rental income increased from $2,373,232 in 1999 to
$2,445,698 in 2000 and decreased to $2,434,782 in 2001. The decrease
from 2000 to 2001 is due to a decrease in average occupancy at
Strehlow, partially offset by an increase in the average rental rates
at Canal House and Firehouse Square. The increase from 1999 to 2000 is
due to an increase in average occupancy at Canal House and Mater
Dolorosa, partially offset by a decrease in average occupancy at
Roseland and Strehlow.
Rental operations expense increased from $1,123,015 in
1999 to $1,192,754 in 2000 and to $1,247,800 in 2001. The increase
from 2000 to 2001 is due to an increase in maintenance expense at
Canal House, Mater Dolorosa, and Roseland, an increase in utilities
expense at Strehlow and Roseland, and an increase in insurance expense
at Canal House and Mater Dolorosa. The increase from 1999 to 2000 is
due increases in accounting fees and commissions expense at Canal
House, wages and salaries expense at Mater Dolorosa and Strehlow and
maintenance expense at Firehouse Square, partially offset by a
decrease in maintenance expense at Strehlow.
Interest expense decreased from $1,411,077 in 1999 to
$1,398,919 in 2000 and to $1,397,720 in 2001. The decrease from 2000
to 2001 and from 1999 to 2000 is due to a decrease in the principal
balance on which interest is calculated.
Depreciation and amortization expense decreased from
$1,229,432 in 1999 to $1,178,867 in 2000 and increased to $1,190,197
in 2001. The decrease from 1999 to 2000 is due to the full
amortization of loan costs at Canal House in 1999.
In 2001, losses of $1,293,000 were incurred at
Registrant's properties compared to losses of $ 1,227,000 in 2000 and
$1,301,000 in 1999. A discussion of property operations/activities
follows:
In 2001, Registrant incurred a loss of $86,000 at
Roseland, including $69,000 of depreciation expense, compared to a
loss of $79,000, including $70,000 of depreciation expense, in 2000
and a loss of $77,000 including, $71,000 of depreciation expense, in
1999. Since Roseland is a low income housing property, rents are
fixed in relation to specified income levels. As a result, similar to
Mater Dolorosa and Strehlow Terrace discussed below, the property
experiences high occupancy levels but rental income remains low. The
increase in loss from 2000 to 2001 is due to an increase in utilities
expense and maintenance expense. The increase in utilities expense is
due to an increase in electricity expense and the increase in
maintenance expense is due to an increase in apartment preparation
expenses. The increase in the loss from 1999 to 2000 is due to a
decrease in rental income and an increase in maintenance expense,
partially offset by a decrease in legal and accounting expense and
wages and salaries expense.
In 2001, Registrant incurred a loss of $460,000 at
Firehouse Square, including $276,000 of depreciation and amortization
expense, compared to a loss of $499,000, including $268,000 of
depreciation and amortization expense, in 2000 and a loss of $480,000,
including $261,000 of depreciation and amortization expense in 1999.
The decrease in loss from 2000 to 2001 is due to an increase in rental
income, partially offset by an increase in depreciation and interest
expense. The increase in rental income is due to an increase in
average rental rates. The increase in loss from 1999 to 2000 is due
to an increase in rental and interest income, partially offset by an
increase in maintenance expense. The increase in rental income is due
to an increase in average occupancy and the increase in interest
income is due to interest earned on a lender reserve balance. The
increase in maintenance expense is due to an increase in maintenance
service and plumbing and electrical expense.
In 2001, Registrant recognized income of $16,000 at Mater
Dolorosa, including depreciation expense of $126,000, compared to
income of $21,000, including depreciation expense, of $126,000 in 2000
and a loss of $9,000, including depreciation expense, of $127,000 in
1999. Since Mater Dolorosa is a low income housing property, rents
are fixed in relation to specified income levels. As a result,
similar to Roseland and Strehlow Terrace, the property experiences
high occupancy levels but rental income remains low. The decrease in
income from 2000 to 2001 is due to an increase in insurance expense
and maintenance expense. The increase in maintenance expense is due to
an increase in repairs expense. The increase in income from 1999 to
2000 is due to an increase in rental income, partially offset by an
increase in operating expenses. The increase in rental income is due
to an increase in occupancy. The increase in operating expenses is due
to an increase in utilities expense and wages and salaries expense,
partially offset by a decrease in maintenance expense and real estate
tax expense.
In 2001, Registrant incurred a loss of $449,000 at
Strehlow Terrace Apartments, including depreciation expense of
242,000, compared to a loss of $325,000, including $240,000 of
depreciation expense, in 2000 and a loss of $306,000, including
$239,000 of depreciation expense, in 1999. Since Strehlow is a low
income housing property, rents are fixed in relation to specified
income levels. As a result, similar to Registrant's other low-income
properties, the property experiences high occupancy levels but rental
income remains low. The increase in loss from 2000 to 2001 is due to
an increase in operating expenses and a decrease in rental income. The
decrease in rental income is due to a decrease in average occupancy
and the increase in operating expense is due to an increase in
utilities expense and management fees. The increase in loss from 1999
to 2000 is due to a decrease in rental income and an increase in
operating expenses. The decrease in rental income is due to a decrease
in average occupancy and the increase in operating expenses is due to
an increase in legal fees. Legal fees increased due to HUD
foreclosure proceedings.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
In 2001, Registrant incurred a loss of $314,000 at Canal
House, including $400,000 of depreciation and amortization expense
compared to a loss of $344,000 including depreciation and amortization
expense of $396,000 in 2000 and a loss of $447,000 including
depreciation and amortization expense of $455,000 in 1999. The
decrease in loss from 2000 to 2001 is due to an increase in rental
income, partially offset by an increase in operating expense. The
increase in rental income is due to an increase in average rental
rates and the increase in operating expense is due to an increase in
commissions expense and real estate tax expense. The decrease in loss
from 1999 to 2000 is due to an increase in rental income and a
decrease in amortization expense, partially offset by an increase in
operating expenses. The increase in rental income is due to an
increase in average occupancy and the decrease in amortization expense
is due to the full amoritzation of loan costs in 1999. The increase in
operating expenses is due to an increase in commissions expense and
accounting expense, due to the accrual of prior year accounting fees.
Summary of Equity Method Investments
In 2001, Registrant incurred a loss of $11,000 at
Saunders Apartments compared to a loss of $20,000 in 2000 and a loss
of $19,000 in 1999. The decrease in loss from 2000 to 2001 is due to
an increase in rental income and a decrease in maintenance expense.
The increase in rental income is due to an increase in occupancy and
the decrease in maintenance expense is due to a decrease in apartment
preparation expenses and repairs expense. The increase in loss from
1999 to 2000 is due to an increase in maintenance expense. The
increase in maintenance expense is due to an increase in cleaning
service and repairs expense.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the partnership.
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
All of our assets and liabilities are denominated in U.S.
dollars, and as a result, we do not have exposure to currency exchange
risks.
We do not engage in any interest rate, foreign currency
exchange rate or commodity price-hedging transactions, and as a
result, we do not have exposure to derivatives risk.
Item 8. Financial Statements and Supplementary Data
Registrant is not required to furnish the supplementary
financial information referred to in Item 302 of Regulations S-K.
Independent Auditor's Report
To the Partners of Diversified Historic Investors VI
We have audited the accompanying consolidated balance sheet of
Diversified Historic Investors VI (a Pennsylvania limited partnership)
and subsidiaries as of December 31, 2001 and 2000 and the related
statements of operations, changes in partners' equity and cash flows
for the years ended December 31, 2001, 2000 and 1999. These
consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion
on these financial statements based on our audit. We did not audit
the financial statements of Strehlow Terrace Apartments Limited
Partnership, which reflect total assets of $3,344,968 and $3,336,607
as of December 31, 2001 and 2000 and total revenues of $262,574 and
$364,615, respectively, for the years then ended. In addition, we did
not audit the financial statements of Mater Dolorosa General
Partnership which reflect assets of $1,509,658 and $1,625,365 as of
December 31, 2001 and 2000 and total revenues of $426,567 and
$429,229, respectively, for the years then ended. Those statements
were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included
Strehlow Terrace Apartments Limited Partnership and Mater Dolorosa
General Partnership, is based solely on the reports of the other
auditors.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. These standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of
Diversified Historic Investors VI as of December 31, 2001 and 2000,
and the results of operations and cash flows for the years ended
December 31, 2001, 2000 and 1999 in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the
consolidated financial statements taken as a whole. The Schedule of
Real Estate and Accumulated Depreciation on page 33 is presented for
the purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the consolidated
financial statements and, in our opinion, which insofar as it relates
to Strehlow Terrace Apartments Limited Partnership and Mater Dolorosa
General Partnership is based on the report of other auditors, such
information is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that
the partnership will continue as a going concern. In recent years,
the partnership has incurred significant losses from operations, which
raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Gross, Kreger & Passio, L.L.C.
Philadelphia, Pennsylvania
May 28, 2004
Independent Auditor's Report
To the Partners of
Strehlow Terrace Apartments Limited Partnership
We have audited the accompanying balance sheets of Strehlow Terrace
Apartments Limited Partnership, (a Nebraska limited partnership), FHA
Project No. 103-94006, as of December 31, 2001 and 2000, and the
related statements of operations, partners' deficit, and cash flows
for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America, Government
Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs
(the Guide) issued by the Department of Housing and Urban Development,
Office of the Inspector General. Those standards and that guide
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 consolidated financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Strehlow
Terrace Apartments Limited Partnership at December 31, 2001 and 2000,
and the results of its operations, changes in partners' deficit and
cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Partnership will continue as a going concern. As discussed in
Note F to the financial statements, the Partnership has incurred
significant losses since its formation to operate Strehlow Terrace
Apartments beginning in 1990. The Partnership has experienced a
deficiency in cash flows resulting in past due mortgage principal,
interest and escrow payments. In addition, work-out opportunities
with the Department of Housing and Urban Development (HUD) have been
suspended. These conditions raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these
matters are also described in Note F. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued a report
dated May 28, 2002 on our consideration of the Partnership's internal
control structure and reports dated May 28, 2002 on its compliance
with specific requirements applicable to Fair Housing and Non-
discrimination, and specific requirements applicable to its major HUD
program and its non-major HUD program transactions.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplementary information
is presented for the purposes of additional analysis and is not a
required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements
taken as a whole.
Blackman & Associates, P.C.
Omaha, Nebraska
May 28, 2002
Independent Auditor's Report
To the Partners of
Mater Dolorosa General Partnership
We have audited the accompanying balance sheets of Mater Dolorosa
General Partnership, for December 31, 2001 and 2000 and the related
statements of operations, partners' equity and cash flows for the
years then ended. These financial statements are the responsibility
of the partnership's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
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 audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Mater
Dolorosa General Partnership as of December 31, 2001 and 2000, and the
results of its operations and its cash flows for the years then ended
in conformity with accounting principles generally accepted in the
United States of America.
Pailet, Meunier and LeBlanc, L.L.P.
Metairie, Louisiana
February 20, 2002
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
AND FINANCIAL STATEMENT SCHEDULES
---------------------------------
Consolidated financial statements: Page
Consolidated Balance Sheets at December 31, 2001 and 2000 20
Consolidated Statements of Operations for the Years
Ended December 31, 2001, 2000, and 1999 21
Consolidated Statements of Changes in Partners' Equity
for the Years Ended December 31, 2001, 2000, and 1999 22
Consolidated Statements of Cash Flows for the Years
Ended December 31, 2001, 2000, and 1999 23
Notes to consolidated financial statements 24-32
Financial statement schedules:
Schedule XI - Real Estate and Accumulated Depreciation 33
Notes to Schedule XI 34
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or notes thereto.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31, 2001 and 2000
Assets
2001 2000
---- ----
Rental properties at cost:
Land $ 950,238 $ 950,238
Buildings and improvements 27,280,952 27,373,551
Furniture and fixtures 970,440 776,142
----------- -----------
29,201,630 29,099,931
Less - accumulated depreciation (14,365,627) (13,243,935)
----------- -----------
14,836,003 15,855,996
Cash and cash equivalents 38,973 46,215
Restricted cash 294,265 365,806
Investment in affiliate (59,113) (48,006)
Other assets (net of accumulated
amortization of $819,993 and $751,489) 460,937 426,782
----------- -----------
Total $15,571,065 $16,646,793
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $16,616,789 $16,857,962
Accounts payable:
Trade 1,423,037 1,321,939
Taxes 21,780 20,465
Related parties 481,605 446,202
Other 28,717 10,824
Interest payable 2,022,602 1,618,641
Tenant security deposits 134,443 168,550
Advances 35,720 0
----------- -----------
Total liabilities 20,764,693 20,444,583
Partners' deficit (5,193,628) (3,797,790)
----------- -----------
Total $15,571,065 $16,646,793
=========== ===========
The accompanying notes are an integral part of these finanicial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
For the years ended December 31, 2001, 2000 and 1999
2001 2000 1999
---- ---- ----
Revenues:
Rental income $2,434,782 $2,445,698 $2,373,232
Other income 11,523 0 10,670
Interest income 4,681 6,966 3,677
---------- ---------- ----------
Total revenues 2,450,986 2,452,664 2,387,579
---------- ---------- ----------
Costs and expenses:
Rental operations 1,247,800 1,192,754 1,123,015
General and administrative 0 0 256,142
Interest 1,397,720 1,398,919 1,411,077
Depreciation and amortization 1,190,197 1,178,867 1,229,432
---------- ---------- ----------
Total costs and expenses 3,835,717 3,770,540 4,019,666
---------- ---------- ----------
Loss before equity in affiliate (1,384,731) (1,317,876) (1,632,087)
Equity in net loss of affiliate (11,107) (20,228) (18,807)
---------- ---------- ----------
Net loss ($1,395,838) ($1,338,104) ($1,650,894)
========== ========== ==========
Net loss per limited
partnership unit:
Loss before equity in
affiliate ($ 53.84) ($ 51.24) ($ 63.46)
Equity in net loss of
affiliate (0.43) (0.79) (0.73)
---------- ---------- ----------
($ 54.27) ($ 52.03) ($ 64.19)
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY
-----------------------------------------------------
For the years ended December 31, 2001, 2000 and 1999
Dover
Historic Limited
Advisors Partners
VI (1) (2) Total
-------- -------- -----
Percentage participation in
profit or loss 1% 99% 100%
== === ====
Balance at December 31, 1997 ($194,274) $1,832,774 $1,638,500
Net loss (24,473) (2,422,819) (2,447,292)
-------- ---------- ----------
Balance at December 31, 1998 (218,747) (590,045) (808,792)
Net loss (16,509) (1,634,385) (1,650,894)
-------- ---------- ----------
Balance at December 31, 1999 (235,256) (2,224,430) (2,459,686)
Net loss (13,381) (1,324,723) (1,338,104)
-------- ---------- ----------
Balance at December 31, 2000 ($248,637) (3,549,153) (3,797,790)
Net loss (13,958) (1,381,880) (1,395,838)
-------- ---------- ----------
Balance at December 31, 2001 ($262,595) ($4,931,033) ($5,193,628)
======== ========== ==========
(1) General Partner.
(2) 25,461 limited partnership units outstanding at December 31,
2001, 2000, and 1999.
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the years ended December 31, 2001, 2000 and 1999
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net loss ($1,395,838)($1,338,104)($1,650,894)
Adjustments to reconcile net
loss to net cash provided
by operating activities:
Depreciation and amortization 1,190,197 1,178,867 1,229,432
Equity in loss of affiliate 11,107 20,228 18,807
Changes in assets and liabilities:
Decrease (increase) in
restricted cash 71,541 (175) (84,734)
(Increase) decrease in other assets (102,659) (9,447) 12,374
Increase (decrease) in accounts
payable - trade 101,098 (1,237) 241,400
Increase (decrease) in accounts
payable - taxes 1,315 1,668 (1,695)
Increase in accounts payable -
related party 35,403 29,693 19,980
Increase (decrease) in accounts
payable - other 17,893 (40,283) 24,068
Increase in interest payable 403,960 443,163 304,836
(Decrease) increase in tenant
security deposits (34,107) 30,866 7,826
Increase in advances 35,720 0 0
---------- ---------- ----------
Net cash provided by
operating activities 335,630 315,239 121,400
---------- ---------- ----------
Cash flows from investing
activities:
Capital improvements (101,699) (89,844) (25,416)
---------- ---------- ----------
Net cash used in investing
activities (101,699) (89,844) (25,416)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from debt financing 0 0 25,416
Principal payments (241,173) (219,779) (108,865)
---------- ---------- ----------
Net cash used in financing activities (241,173) (219,779) (83,449)
---------- ---------- ----------
(Decrease) increase in cash and
cash equivalents (7,242) 5,616 12,535
Cash and cash equivalents at
beginning of year 46,215 40,599 28,064
---------- ---------- ----------
Cash and cash equivalents at end
of year $ 38,973 $ 46,215 $ 40,599
========== ========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for
interest $1,397,720 $1,398,919 $1,106,241
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Diversified Historic Investors VI (the "Partnership"), a limited
partnership, was formed in January 1988 to acquire, rehabilitate,
renovate, manage, operate, hold, sell, exchange, and otherwise deal in
and with real properties containing improvements which are "certified
historic structures" as defined in the Internal Revenue Code of 1986
(the "Code"), or which are eligible for the tax credit provided by
Section 42 of the Code, and such other uses as Dover Historic Advisors
VI (the "General Partner") deems appropriate, and to engage in any and
all activities related or incidental thereto. Rehabilitations
undertaken by the Partnership were done with a view to obtaining
certification of expenditures therefor as "qualified rehabilitation
expenditures" as defined in the Code.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial
statements follows:
1. Principles of Consolidation
The accompanying financial statements include the accounts of the
Partnership and five subsidiary partnerships ("Ventures") in which the
Partnership has controlling interests, with appropriate elimination of
inter-partnership transactions and balances. In addition, the
Partnership owns a minority interest of 30% in one partnership, which
it accounts for on the equity method. Allocations of income and loss
to the minority owners of the Ventures will be made until and unless
the cumulative losses applicable to the minority interests exceed the
minority interests in the equity capital of the Ventures. These
financial statements reflect all adjustments (consisting only of
normal recurring adjustments) which, in the opinion of the
Partnership's General partner, are necessary for a fair statement of
the results for those years.
2. Depreciation
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets. Buildings and improvements are
depreciated over 25 years and furniture and fixtures over five years.
3. Net Loss Per Partnership Unit
The net loss per limited partnership unit is based on the weighted
average number of limited partnership units outstanding (25,461 units
in 2001, 2000 and 1999).
3. Costs of Issuance
Costs incurred in connection with the offering and sale of limited
partnership units were charged against partners' equity as incurred.
4. Cash and Cash Equivalents
The Partnership considers all highly liquid instruments purchased with
a maturity of less than three months to be cash equivalents.
5. Income Taxes
Income taxes or credits resulting from earnings or losses are payable
by or accrue to the benefits of the partners; accordingly, no
provision has been made for income taxes in these financial
statements.
6. Restricted Cash
Restricted cash includes amounts held for tenant security deposits and
real estate tax reserves.
7. Revenue Recognition
Revenues are recognized when rental payments are due on a straight-
line basis. Rental payments received in advance are deferred until
earned.
8. Rental Properties
Rental properties are stated at cost. A provision for impairment of
value is recorded when a decline in the value of a property is
determined to be other than temporary as a result of one or more of
the following: (1) a property is offered for sale at a price below its
current carrying value, (2) a property has significant balloon
payments due within the foreseeable future which the Partnership does
not have the resources to meet, and anticipates it will be unable to
obtain replacement financing or debt modification sufficient to allow
it to continue to hold the property over a reasonable period of time,
(3) a property has been, and is expected to continue, generating
significant operating deficits and the Partnership is unable or
unwilling to sustain such deficit results of operations, and has been
unable to, or anticipates it will be unable to, obtain debt
modification, financing or refinancing sufficient to allow it to
continue to hold the property for a reasonable period of time or, (4)
a property's value has declined based on management's expectations
with respect to projected future operational cash flows and prevailing
economic conditions. An impairment loss is indicated when the
undiscounted sum of estimated future cash flows from an asset,
including estimated sales proceeds, and assuming a reasonable period
of ownership up to 5 years, is less than the carrying amount of the
asset. The impairment loss is measured as the difference between the
estimated fair value and the carrying amount of the asset. In the
absence of the above circumstances, properties and improvements are
stated at cost. An analysis is done on an annual basis at December 31
of each year.
9. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
NOTE C - LEASES
The Partnership's leases with commercial tenants are classified as
operating leases. Leases are generally for a period of three to five
years and provide for a fixed base rent plus contingent rents based on
level of sales and sharing of certain operating costs.
Minimum future commercial rentals on operating leases as of December
31, 2001 are as follows:
2002 $677,763
2003 353,370
2004 247,655
2005 208,465
2006 70,446
NOTE D - PARTNERSHIP AGREEMENT
The significant terms of the amended and restated Agreement of Limited
Partnership (the "Agreement"), as they relate to the financial
statements, follow:
1. Capital Contributions
The partnership offered investors limited partnership units at $1,000
per unit; the minimum purchase per investor was three units. A total
of 25,461 limited partnership units was sold. After payment of costs
of issuance as provided for in the Agreement and the withdrawal of the
initial limited partner, initial partnership capital net of costs of
issuance was $22,181,070 from limited partners and $9,900 from the
General Partner.
2. Distributions from Operations
The Agreement provides that, beginning with the date of the admission
of subscribers as limited partners, all distributable cash from
operations (as defined) will be distributed 99% to the limited
partners and 1% to the General Partner. After cash flows from
operations are positive, the General Partner shall also receive 4% of
such cash flows exclusive of interest earned on investments.
All distributable cash from sales or dispositions will be distributed
to the limited partners up to their adjusted invested capital plus an
amount equal to the sum of the greater of an 8.5% cumulative, non-
compounded annual return on the average after-credit invested capital
or a 6% cumulative, non-compounded annual return on the average
adjusted invested capital, plus an early investor incentive, less
amounts previously distributed; thereafter, after receipt by the
General Partner or its affiliates of any accrued but unpaid real
estate brokerage commissions, the balance will be distributed 85% to
the limited partners and 15% to the General Partner. Terms used
throughout this paragraph are as defined under the Agreement.
3. Allocation of Net Income and Net Losses from Operations
Net income and net loss (as defined) will be allocated 99% to the
limited partners and 1% to the General Partner with certain exceptions
as defined in the Agreement.
The Agreement provides that the fiscal year of the Partnership will be
the calendar year and that the Partnership shall continue until
December 31, 2038, unless sooner terminated upon the occurrence of
certain events.
NOTE E - ACQUISITIONS
The Partnership acquired one property and five general or limited
partnership interests in Ventures during the period from January 7,
1988 to December 1988, and one general and one limited partnership
interest in Ventures in 1989, as discussed below.
In July 1988, the Partnership was admitted, with a 98% general partner
and a 1% limited partner interest, to a Nebraska limited partnership
which owns a building located in Omaha, Nebraska, consisting of 17
apartment units, for a cash capital contribution of $700,000. In
addition, $128,284 in acquisition costs relating to the investment
were capitalized as part of buildings and improvements.
In July 1988, the Partnership was admitted, with a 90% general partner
interest, to a Louisiana general partnership which owns a building
located in New Orleans, Louisiana, consisting of 68 apartment units,
for a cash capital contribution of $1,519,000. In addition, $241,173
of acquisition costs relating to the investment were capitalized as
part of buildings and improvements. During 1990, as permanent
financing was obtained, $60,000 of the capital contribution was
returned to the Partnership.
In December 1988, the Partnership acquired a 99% joint venture
interest in a Nebraska joint venture which owns a building located in
Omaha, Nebraska, consisting of 23 apartment units, for a cash capital
contribution of $875,000. In addition, $153,940 in acquisition costs
relating to the investment were capitalized as part of buildings and
improvements. These capitalized costs have been removed from the
balance sheet. Pursuant to the June 1993 Amended and Restated Joint
Venture Agreement, the Partnership's interest was reduced to 30%.
In December 1988, the Partnership was admitted, with a 97% general
partner and a 1% limited partner interest, to a West Virginia limited
partnership which owned a building located in Huntington, West
Virginia, consisting of 53 apartment units and 41,590 square feet of
commercial space, for a general partner cash capital contribution of
$1,470,000 and limited partner cash capital contribution of $10,000.
In addition, $492,609 of acquisition costs relating to the investment
were capitalized as part of building and improvements. The lender
foreclosed on the property in October 1994.
In December 1988, the Partnership was admitted, with a 90% general
partner interest, to a Virginia general partnership which owns a
building located in Alexandria, Virginia, consisting of 32,544 square
feet of commercial space, for a cash capital contribution of
$1,750,000. In addition, $436,164 in acquisition costs relating to
the investment have been capitalized as part of buildings and
improvements. In 1990, the Partnership made an additional cash
contribution of $196,621 pursuant to an agreement with the co-general
partner.
In December 1988, the Partnership purchased 78 condominium units and
6,700 square feet of commercial space located in North Carolina for
$5,042,000. In addition, $774,258 of acquisition costs relating to
the property were capitalized as part of buildings and improvements.
On January 21, 1994, the property was transferred to a Pennsylvania
limited partnership in which the partnership owns a 99% interest. On
March 14, 1997, the Registrant was declared in default on the first
mortgage for failure to make the minimum monthly payment. On March
31, 1997, a settlement agreement was reached whereby the Registrant
has agreed to relinquish its partnership interests in the limited
partnership in lieu of foreclosure.
In January 1989, the Partnership was admitted, with a 98% general
partner interest, to a Nebraska general partnership which owns a
building located in Omaha, Nebraska, consisting of 70 apartments
units, for a cash capital contribution of $2,250,000. In addition,
$448,993 of acquisition costs relating to the investment were
capitalized as part of buildings and improvements.
In February 1989, the Partnership was admitted, with a 99% general
partner interest, to a Pennsylvania limited partnership which owns a
building located in Manayunk, Pennsylvania, consisting of 73 apartment
units and 8,471 square feet of commercial space, for a total cash
capital contribution of $6,000,000, less funds advanced prior to
admittance ($2,431,552 at December 31, 1988). In addition, $664,509
of acquisition costs relating to the investment were capitalized as
part of buildings and improvements. The building was subsequently
converted to a condominium, with the Partnership retaining title to
all property. During 1990, the Partnership made additional cash
contributions of $220,000.
NOTE F - DEBT OBLIGATIONS
Debt obligations were as follows: December 31,
2001 2000
---- ----
Note payable, non-interest bearing; $ 500,000 $ 500,000
principal due upon sale of property;
collateralized by related rental
property.
Note payable, interest at 7.75% and 9.16% 0 8,784
at December 31, 1999 and 1998, adjusted
every three years, based upon the three-
year Treasury Bill rate plus 250 basis
points, payable in semi-annual
installments of principal and interest of
$4,856 (payment adjusted in accordance
with interest rate changes); due in
November 2001; collateralized by related
rental property.
Note payable, interest at 7.75% at 323,279 331,957
December 31, 2001 and 2000, respectively;
payable in monthly installments of
principal and interest of $3,083; due in
August 2006; collateralized by related
rental property.
Note payable, interest at 8.5%; payable 612,116 764,501
in monthly installments of principal and
interest of $17,627; due in April 2005;
collateralized by related rental
property.
Mortgage loan, interest accrues at 7%; 4,367,913 4,367,913
interest only payable monthly to the
extent of net operating income; due in
December 2008; collateralized by the
related rental property
Mortgage loan, interest at 7.08%; payable 1,849,227 1,880,725
in monthly installments of principal and
interest of $21,471; due in November
2008; collateralized by the related
rental property.
Note payable, non-interest bearing; due 75,000 75,000
upon sale of property; collateralized by
related rental property.
Note payable, interest at 10.25%; payable 1,775,053 1,775,053
in monthly installments of principal and
interest of $15,540; due in March 2030;
collateralized by related rental
property.
Note payable, interest at 1% accruing to 1,700,000 1,700,000
principal; unpaid principal and interest
are due upon sale of property or in
January 2030; collateralized by related
rental property.
Note payable, interest at 18%; interest 1,520,117 1,520,117
only payable monthly to the extent of net
operating income; due December 2002;
collateralized by related rental
property. (A)
Note payable, interest at 7.22%; interest
only payable monthly in the amount of
$27,206; due January 2009; collateralized 3,894,084 3,933,912
by related rental property. ----------- -----------
$16,616,789 $16,857,962
=========== ===========
Maturities of debt obligation at December 31, 2001 were as follows:
Year ending December 31,
2002 $ 1,520,117
2003 0
2004 0
2005 612,116
2006 323,279
Thereafter 14,161,277
-----------
$16,616,789
===========
NOTE G - RELATED PARTIES
In June 1998, the General Partner advanced the Partnership $77,975 to
pay certain outstanding liabilities of the Partnership. The advance
is non-interest bearing and will be paid out of available cash flow.
Included in Accounts Payable - Related Party is $378,630 at December
31, 2001 owed to the co - general partner, by three of the
Partnership's Ventures, for additional amounts advanced for working
capital needs. These advances are non-interest bearing and will be
paid out of available cash flow.
Included in Accounts Payable - Related Party is $25,000 at December
31, 2001 owed to the general partner, by two of the Partnership's
Ventures, for additional amounts advanced for working capital needs.
These advances are non-interest bearing and will be paid out of
available cash flow.
NOTE H - GOING CONCERN
Since the formation of Strehlow Terrace Limited Partnership ("STLP",
one of the Partnership's ventures) in 1990, STLP has incurred
significant losses. In addition, at December 31, 2001, current
liabilities exceed current assets. During 2001, the Partnership was
delinquent in payments on the mortgage and has outstanding interest
payable of $600,270. These factors raise substantial doubt about the
STLP's ability to continue as a going concern. The financial
statements were prepared assuming that STLP will continue as a going
concern and does not include any adjustments that might result from
the outcome of this uncertainty.
Strehlow Terrace Apartments was foreclosed by the Department of
Housing and Urban Development, the guarantor of the first mortgage, on
April 30, 2002.
NOTE I - INCOME TAX BASIS RECONCILIATION
Certain items enter into the determination of the results of
operations in different time periods for financial reporting ("book")
purposes and for income tax ("tax") purposes. Reconciliations of net
loss and partners' equity follow:
For the Years Ended December 31,
2001 2000 1999
---- ---- ----
Net loss - book ($1,395,838) ($1,338,104) ($1,650,894)
Excess of tax under
book depreciation 163,338 283,161 458,619
Interest 114,148 103,804 94,398
Loss on foreclosure 0 0 0
Gain on sale 0 0 0
Administrative expenses 0 0 0
Other timing differences 3,492 20,228 18,807
Minority interest - tax only 95,976 86,705 218,951
---------- ---------- ----------
Net loss - tax ($1,018,884) ($ 844,206) ($ 860,119)
========== ========== ==========
Partners' equity - book ($5,193,628) ($3,797,789) ($2,459,686)
Costs of issuance 3,279,930 3,279,930 3,279,930
Cumulative tax under book loss 6,563,429 6,186,474 5,692,577
Investment credit recapture 9,900 9,900 9,900
Rehabilitation credit (251,117) (251,117) (251,117)
---------- ---------- ----------
Partner's equity - tax $4,408,514 $5,427,398 $6,271,604
========== ========== ==========
NOTE J- SUBSEQUENT EVENTS
Strehlow Terrace Apartments was foreclosed by the Department of
Housing and Urban Development, the guarantor of the first mortgage, on
April 30, 2002.
On June 30, 2002, the partnership sold its investment in Saunders
Apartments for $25,000.
SUPPLEMENTAL INFORMATION
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
------------------------------------------------------
DECEMBER 31, 2001
Cost
Capitalized
Initial Cost Subsequent
to Partnership to
(b) Acquisition
Buildings
and Date Date
Encum- Improve- Improve- of Ac-
Description brances Land ments ments Constr. quired
- ----------- ------- ---- --------- -------- ------- ------
(a) (e) (b) (a)
17 unit
apartments
and 3,000
square
feet of
retail
space in
Omaha, NE $ 823,279 $ 10,000 $ 1,774,986 $ 61,868 1988 7/88
68 unit
apartments
in New
Orleans, LA 612,116 - 2,948,634 471,015 1988 7/88
32,500 square
feet of
commercial
space in
Alexandria,
VA 6,217,140 540,238 5,014,827 1,336,272 1988 12/88
70 apartment
units in
Omaha, NE 3,550,053 - 448,993 5,979,828 1989 1/89
71 unit
apartments
and 8,500
square feet of
commercial
space in
Manayunk, PA 5,414,201 400,000 664,508 9,550,461 1989 2/89
----------- -------- ----------- -----------
$16,616,789 $950,238 $10,851,948 $17,339,444
=========== ======== =========== ===========
Gross Amount
at which
Carried at
December 31, 2001
Buildings
and Accumu-
Description Improve- Total lated
(a) Land ments (c)(d) Depr.(d)(e)
- ----------- ---- --------- ------- -----------
17 unit
apartments
and 3,000
square
feet of
retail space
in Omaha, NE $ 10,000 $ 1,836,854 $ 1,846,854 $ 917,938
68 unit
apartments
in New
Orleans, LA - 3,419,649 3,419,649 1,741,527
32,500 square
feet of
commercial
space in
Alexandria,
VA 540,238 6,351,009 6,891,337 2,960,130
70 apartment
units
in Omaha, NE - 6,428,821 6,428,821 2,676,791
71 unit
apartments
and 8,500
square feet
of commercial
space in
Manayunk, PA 400,000 10,214,969 10,614,969 4,885,111
-------- ----------- ----------- -----------
$950,238 $28,251,392 $29,201,630 $13,181,497
======== =========== =========== ===========
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
NOTES TO SCHEDULE XI
DECEMBER 31, 2001
(A) All properties are certified historic structures as defined in
the Internal Revenue Code of 1986. The "date of construction"
refers to the period in which such properties were rehabilitated.
(B) Represents costs of a parcel of land with historic building
located thereon. Amounts do not include any
development/rehabilitation costs incurred pursuant to a turnkey
development agreement entered into when the property was
purchased.
(C) The cost of real estate owned at December 31, 2001, for Federal
income tax purposes was approximately $24,696,289. The
depreciable basis of the building and improvements of the
properties has been reduced for Federal income tax purposes by
the historic rehabilitation credit.
(D) Reconciliation of real estate:
2001 2000 1999
---- ---- ----
Balance at beginning of year $29,099,931 $29,010,088 $28,984,672
Additions during this year:
Improvements 101,699 89,843 25,416
Deductions during the year:
Retirements 0 0 0
----------- ----------- -----------
Balance at end of year $29,201,630 $29,099,931 $29,010,088
=========== =========== ===========
Reconciliation of accumulated depreciation:
2001 2000 1999
---- ---- ----
Balance at beginning of year $13,234,935 $12,134,403 $11,038,617
Depreciation expense for the year 1,121,692 1,109,532 1,095,786
Retirements 0 0 0
----------- ----------- -----------
Balance at end of year $14,356,627 $13,243,935 $12,134,403
=========== =========== ===========
(D) See Note E to the consolidated financial statements for further
information.
(E) See Note B to the consolidated financial statements for
depreciation method and lives.
Item 9. Changes in and disagreements with Accountants on Accounting
and Financial
Disclosure
None.
Item 9A. Controls and Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed
in our Securities Exchange Act of 1934 reports is recorded,
processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our managing partner's
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and
procedures, our management recognized that any controls and
procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control
objectives, and our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.
Under the supervision of our managing partner's principal
executive officer and principal financial officer we have carried
out an evaluation of the effectiveness of our adopted disclosure
controls and procedures as of the end of the period covered by this
report. Based upon that evaluation, our managing partner's president
and treasurer concluded that our disclosure controls and procedures
are effective.
There have been no significant changes in our internal
controls over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting during our most recent fiscal quarter.
PART III
Item 10. Directors and Executive Officers of Registrant
a. Identification of Directors - Registrant has no
directors.
b. Identification of Executive Officers
The General Partner of the Registrant is Dover Historic
Advisors VI (DoHA-VI), a Pennsylvania general partnership. The
partners of DoHA-VI are as follows:
Name Age Position Term of Office Period Served
- ---- --- -------- -------------- -------------
SWDHA, Inc. -- Partner in DoHA-VI No fixed term Since May 1997
EPK, Inc. -- Partner in DoHA-VI No fixed term Since May 1997
For further description of DoHA - VI, see paragraph e. of
this Item. There is no arrangement or understanding between either
person named above and any other person pursuant to which any person
was or is to be selected as an officer.
c. Identification of Certain Significant Employees.
Registrant has no employees. Its administrative and operational
functions are carried out by property management and partnership
administration firm engaged by the Registrant.
d. Family Relationships. There is no family relationship
between or among the executive officers and/or any person nominated or
chosen by Registrant to become an executive officer.
e. Business Experience. DoHA-VI is a general partnership
formed in 1987. The General Partner is responsible for management and
control of Registrant's affairs and will have general responsibility
and authority in conducting its operations. The General Partner may
retain its affiliates to manage certain of the Properties.
On May 13, 1997, SWDHA, Inc. replaced Gerald Katzoff and EPK,
Inc. replaced DHP, Inc. as partners of DoHA-VI. Spencer Wertheimer,
the President and Sole Director of SWDHA, Inc., is an attorney with
extensive experience in real estate activities ventures.
EPK, Inc. is a Delaware corporation formed for the purpose of
managing properties or interests therein. EPK, Inc. is a wholly-owned
subsidiary of D, LTD, an entity formed in 1985 to act as the holding
company for various corporations engaged in the development and
management of historically certified properties and conventional real
estate as well as a provider of financial (non-banking) services.
EPK, Inc. is an affiliate of DoHA-VI.
The officers and directors of EPK, Inc. are described below.
Spencer Wertheimer was appointed May 13, 1997 as President,
Treasurer and Sole Director of EPK, Inc. Mr. Wertheimer is an
attorney with extensive experience in real estate activities ventures.
Donna M. Zanghi (age 43) was appointed on May 13, 1997 as
Vice President and Secretary of EPK, Inc. Ms. Zanghi previously
served as Secretary and Treasurer of DHP, Inc. since June 14, 1993
and as a Director and Secretary/Treasurer of D, LTD. She was
associated with DHP, Inc. and its affiliates since 1984 except for the
period from December 1986 to June 1989 and the period from November 1,
1992 to June 14, 1993.
Michele F. Rudoi (age 35) was appointed on May 13, 1997 as
Assistant Secretary of EPK, Inc. Ms. Rudoi previously served as
Assistant Secretary and Director of both D, LTD and DHP, Inc. since
January 27, 1993.
Item 11. Executive Compensation
a. Cash Compensation - During 2001, Registrant paid no cash
compensation to DoHA-VI, any partner therein or any person named in
paragraph c. of Item 10.
b. Compensation Pursuant to Plans - Registrant has no plan
pursuant to which compensation was paid or distributed during 2001, or
is proposed to be paid or distributed in the future, to DoHA-VI, any
partner therein, or any person named in paragraph c. of Item 10 of
this report.
c. Other Compensation - No compensation not referred to in
paragraph a. or paragraph b. of this Item was paid or distributed
during 2001 to DoHA-VI, any partner therein, or any person named in
paragraph c. of Item 10.
d. Compensation of Directors - Registrant has no directors.
e. Termination of Employment and Change of Control
Arrangement -
Registrant has no compensatory plan or arrangement, with respect to
any individual, which results or will result from the resignation or
retirement of any individual, or any termination of such individual's
employment with Registrant or from a change in control of Registrant
or a change in such individual's responsibilities following such a
change in control.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
a. Security Ownership of Certain Beneficial Owners - No
person is known to Registrant to be the beneficial owner of more than
five percent of the issued and outstanding Units.
b. Security Ownership of Management - None.
c. Changes in Control - Registrant does not know of any
arrangement, the operation of which may at a subsequent date result in
a change in control of Registrant.
Item 13. Certain Relationships and Related Transactions
a. Pursuant to Registrant's Amended and Restated Agreement
of Limited Partnership, DoHA-VI is entitled to 10% of Registrant's
distributable cash from operations in each year. There was no such
share allocable to DoHA-VI for fiscal years 1997 through 2000.
b. Certain Business Relationships - Registrant has no
directors. For a description of business relationships between
Registrant and certain affiliated persons, see paragraph a. of this
Item.
c. Indebtedness of Management - No executive officer or
significant employee of Registrant, Registrant's general partner (or
any employee thereof), or any affiliate of any such person, is or has
at any time been indebted to Registrant.
PART IV
Item 14. (A) Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
1. Financial Statements:
a. Consolidated Balance Sheets at December 31, 2001
and 2000.
b.Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999
c. Consolidated Statements of Changes in
Partners' Equity for the Years Ended December 31,
2001, 2000 and 1999.
d. Consolidated Statements of Cash Flows for
the Years Ended December 31, 2001, 2000 and 1999.
e. Notes to consolidated financial statements.
2. Financial statement schedules:
a. Schedule XI - Real Estate and Accumulated Depreciation.
b. Notes to Schedule XI.
3. Exhibits:
(a) Exhibit Number Document
-------------- --------
3 Registrant's Amended and
Restated Certificate of
Limited Partnership and
Agreement of Limited
Partnership, previously
filed as part of Amendment
No. 2 of Registrant's
Registration Statement on
Form S-11, are incorporated
herein by reference.
21 Subsidiaries of the
Registrant are listed in
Item 2. Properties of this
Form 10-K.
31 General Partners Opinion
Certification
32 Certification Pursuant to 18
U.S.C. Section 1350, As
Adopted Pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during
the quarter ended December 31, 2001.
(c) Exhibits:
See Item 14 (A) (3) above.
SIGNATURES
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.
Date: July 21, 2004 DIVERSIFIED HISTORIC INVESTORS VI
-------------
By: Dover Historic Advisors VI, its
general partner
By: EPK, Inc., managing partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President (principal executive
officer, principal financial
officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: July 21, 2004 DIVERSIFIED HISTORIC INVESTORS VI
-------------
By: Dover Historic Advisors VI, its
general partner
By: EPK, Inc., managing partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President (principal executive
officer, principal financial
officer)
Exhibit 31
CERTIFICATION
I, Spencer Wertheimer, certify that:
1. I have reviewed this annual report on Form 10-K for the period
ended December 31, 2001 of Diversified Historic Investors VI;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) [Omission in accordance with SEC Release Nos. 33-
8238, 34-47986 and IC-26068 (June 5, 2003)] for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during
the period in which this report is being prepared;
(b) [Omitted in accordance with SEC Release Nos. 33-8238, 34-
47986 and IC-26068 (June 5, 2003)];
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: July 21, 2004 /s/ Spencer Wertheimer
------------- ----------------------
Name: Spencer Wertheimer
Title: President
(principal executive
officer, principal
financial officer) of the
registrant's managing
partner, EPK, Inc.
Exhibit 32
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 of Diversified Historic
Investors VI on Form 10-K for the period ended December 31, 2001 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Spencer Wertheimer, President and Treasurer of the
Company's managing partner, EPK, Inc., certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 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 results of operations
of the Company.
Date: July 21, 2004 /s/ Spencer Wertheimer
------------- ----------------------
Name: Spencer Wertheimer
Title: President
(principal executive
officer, principal
financial officer) of the
registrant's managing
partner, EPK, Inc.