UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1997


      For Quarter Ended                             Commission File Number
       March 31, 1997                                      0-15532


                        MLH INCOME REALTY PARTNERSHIP VI
       (Exact name of registrant as specified in its governing instrument)


                 New York                              13-3272339
          (State of Organization)          (I.R.S. Employer Identification No.)

                       World Financial Center, South Tower
                225 Liberty Street, New York, New York 10080-6112
               (Address of principal executive office) (Zip Code)

     Registrant's telephone number, including area code: (800) 288-3694.

     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 __.
                                              


<PAGE>





                         PART I - FINANCIAL INFORMATION



Item 1.  Financial Statements:


Consolidated Balance Sheets, March 31, 1997 and November 30, 1996.

Consolidated  Statements of Operations for the Three Months Ended March 31, 1997
and February 29, 1996

Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and February 29, 1996

Notes to Consolidated Financial Statements


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations


<PAGE>
<TABLE>
<CAPTION>
                        MLH INCOME REALTY PARTNERSHIP VI
                         AND CONSOLIDATED JOINT VENTURES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)



<S>                                                              <C>                      <C>
                                                                    (Unaudited)
                                                                  March 31, 1997        November 30, 1996
                                                                 ---------------          ---------------
ASSETS:
REAL ESTATE INVESTMENTS HELD FOR SALE (Note 1):
Land                                                             $        26,716          $        26,716
Other real estate assets                                                   6,199                    5,841
                                                                 ---------------          ---------------
    Total real estate investments                                         32,915                   32,557
                                                                 ---------------          ---------------

OTHER ASSETS:
Cash and equivalents (Note 1)                                              8,310                    9,083
Interest and other receivables, net of allowances
  of $1,851 in 1997 and $1,600 in 1996                                        20                      101
Prepaid expenses and other                                                    --                        4
                                                                 ---------------          ---------------
    Total other assets                                                     8,330                    9,188
                                                                 ---------------          ---------------
    TOTAL                                                        $        41,245          $        41,745
                                                                 ===============          ===============

LIABILITIES:
Accounts payable and accrued expenses                            $           366          $           319
Other liabilities                                                            573                      628
                                                                 ---------------          ---------------
    Total liabilities                                                        939                      947
                                                                 ---------------          ---------------

PARTNERS' CAPITAL:
General Partners:
  Capital contributions                                                       25                       25
  Cumulative income                                                       20,405                   20,405
  Cumulative distributions                                               (20,430)                 (20,430)
                                                                 ---------------          ---------------
                                                                               -                        -
                                                                 ---------------          ---------------
Limited Partners (322,275 Units):
  Capital contributions, net of offering expenses                        294,968                  294,968
  Cumulative income                                                      104,619                  105,111
  Cumulative distributions                                              (359,281)                (359,281)
                                                                 ---------------          ---------------
                                                                          40,306                   40,798
                                                                 ---------------          ---------------
    Total Partners' Capital                                               40,306                   40,798
                                                                 ---------------          ---------------
    TOTAL                                                        $        41,245          $        41,745
                                                                 ===============          ===============

</TABLE>

                See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>


                        MLH INCOME REALTY PARTNERSHIP VI
                         AND CONSOLIDATED JOINT VENTURES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in Thousands, Except Per Unit Data)
                                  (Unaudited)

<S>                                                               <C>                     <C>
                                                                         For the Three Months Ended
                                                                   ----------------------------------------
                                                                   March 31, 1997         February 29, 1996
                                                                   --------------         -----------------
OPERATING REVENUES:
Rental                                                             $            33          $         1,174
Interest                                                                        82                      852
Gains on sales of real estate
  investments (Note 3)                                                           0                    1,382
                                                                   ---------------          ---------------
              Total operating revenues                                         115                    3,408
                                                                   ---------------          ---------------

OPERATING EXPENSES:
Property operating                                                             453                      822
Depreciation                                                                     0                      288
General and administrative                                                     118                      247
Provision for loss on sale of
  real estate investment (Note 3)                                                0                      430
                                                                   ---------------          ---------------
              Total operating expenses                                         571                    1,787
                                                                   ---------------          ---------------

INCOME (LOSS) FROM OPERATIONS                                                 (456)                   1,621

MINORITY INTEREST IN CONSOLIDATED
       JOINT VENTURE'S OPERATIONS                                                0                        1
                                                                   ---------------          ---------------

NET INCOME (LOSS)                                                  $          (456)         $         1,622
                                                                   ===============          ===============


NET INCOME (LOSS) ALLOCATED TO GENERAL PARTNERS                    $             0          $            66
                                                                   ===============          ===============

NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS                    $          (456)         $         1,556
                                                                   ===============          ===============

NET INCOME (LOSS) PER UNIT OF LIMITED
       PARTNERSHIP INTEREST                                        $         (1.41)         $          4.83
                                                                   ===============          ===============

UNITS OF LIMITED PARTNERSHIP INTEREST                                      322,275                  322,275
                                                                   ===============          ===============

</TABLE>

                 See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>

                        MLH INCOME REALTY PARTNERSHIP VI
                         AND CONSOLIDATED JOINT VENTURES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                  (Unaudited)

<S>                                                                 <C>                 <C>
                                                                         For the Three Months Ended
                                                                    ------------------------------------
                                                                    March 31, 1997      February 29, 1996
                                                                    --------------      -----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income(loss)                                              $         (456)       $         1,622
      Items reconciling net income(loss) to net cash
        provided by operating activities:
            Gains on sales of real estate investments (Note 3)                  --                 (1,382)
            Provision for loss on sale of real estate
              investment (Note 3)                                               --                    430
            Depreciation                                                        --                    288
            Minority interest in consolidated
              joint venture's operations                                        --                     (1)
            Distributions of earnings to venture partner
              in consolidated joint venture                                     --                    (85)
            Bad Debt Expense                                                   258                     97
      Changes in operating assets and liabilities:
              Interest and other receivables                                  (264)                 1,166
              Accounts payable and accrued expenses                            196                    103
              Other assets and other liabilities, net                            3                    163
                                                                    --------------        ---------------
Net cash provided by (used in) operating activities                           (263)                 2,401
                                                                    --------------        ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sales of real estate investments,
        net of selling expenses (Note 3)                                        --                 32,426
      Property improvements                                                   (348)                (1,722)
      Maturities of marketable debt securities                                  --                 54,604
      Purchases of marketable debt securities                                   --                (26,343)
                                                                    --------------        ---------------
Net cash provided by (used in) investing activities                           (348)                58,965
                                                                    --------------        ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Distributions paid to partners                                            --                (89,571)
                                                                    --------------        ---------------
Net cash used in financing activities                                           --                (89,571)
                                                                    --------------        ---------------

NET DECREASE IN CASH AND EQUIVALENTS                                          (611)               (28,205)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                                    8,921                 46,253
                                                                    --------------        ---------------

CASH AND EQUIVALENTS, END OF PERIOD                                 $        8,310        $        18,048
                                                                    ==============        ===============

</TABLE>
                 See Notes to Consolidated Financial Statements.


<PAGE>


                        MLH INCOME REALTY PARTNERSHIP VI
                         AND CONSOLIDATED JOINT VENTURES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     MLH Income Realty  Partnership VI (the  "Partnership") was formed under the
New York Uniform  Limited  Partnership  Act on December 4, 1984. The Partnership
made  equity  investments  in  nineteen   income-producing   properties  located
throughout the United States.  All but one real estate investment has been sold.
The  Partnership's  last remaining real estate  investment was formerly known as
Treasure  Island,  a mobile home  property  (the  "property").  Existing  zoning
permits  use of the  property  only as a  mobile  home  property;  however,  the
Managing  General  Partner  believes  that  changing the use of the property may
maximize  its  value if  appropriate  zoning  and land use  entitlements  can be
obtained.  Although the property was officially  closed as a mobile home park on
March 15, 1996,  certain  tenants remain in residence and are involved in a rent
strike.  Treasure Island  Associates,  the joint venture between the Partnership
and an unaffiliated entity through which the Partnership owns an interest in the
property, is involved in several lawsuits concerning the closing of the property
as a mobile  home  park  and the  level of  compensation  to be paid to  certain
tenants  when they vacate the  property  (see Note 4 for a  discussion  of local
legislation,  administrative requirements and litigation affecting the potential
disposition and value of the property). Although the Managing General Partner is
making every effort to resolve these issues as quickly as possible, at this time
it cannot determine how successful it will be, how long it will take, or at what
point this property can most effectively be marketed for sale.

     The financial  statements reflect all adjustments which are, in the opinion
of management,  necessary for a fair presentation of the financial condition and
results of operations  for the periods  presented.  Such  adjustments  were of a
normal, recurring nature. Footnote disclosure which substantially duplicates the
disclosure  contained in the  Partnership's  Annual  Report on Form 10-K for the
year ended November 30, 1996,  which is hereby  incorporated  by reference,  has
been omitted.

       Cash Equivalents and Marketable Debt Securities

     The Partnership  classifies its investments in debt  securities,  including
those  considered to be cash  equivalents,  as securities  held-to-maturity  and
carries them at amortized cost on the accompanying  consolidated  balance sheet.
The  purchase  cost  of  such   securities  is  included  in  either  "cash  and
equivalents" or "marketable debt securities".  All such securities mature within
one year, and any unrealized  gains or losses on these  securities for the three
months ended March 31, 1997 are immaterial.

2.   CHANGE IN FISCAL YEAR

     Effective  January 1, 1997, the Partnership  changed its fiscal year from a
twelve month period ending  November 30 to a twelve month period ending December
31. The first such fiscal year began on January 1, 1997 and will end on December
31, 1997.  The following is condensed  information  regarding  the  consolidated
results  of  operations  and cash  flows  for the 31 day  transition  period  of
December 1, 1996 through December 31, 1996 (dollars in thousands):

Condensed Consolidated Statement of Operations:
Operating revenues...............................                      $   87
Operating expenses...............................                        (123)
                                                                       ------
Net loss.........................................                      $  (36)
                                                                       ======
Net loss per Unit of Limited Partnership interest                      $(0.11)
                                                                       ======

Condensed Consolidated Statement of Cash Flows:
Net loss.........................................                      $  (36)
Changes in operating assets and liabilities......                        (116)
                                                                       ------
Net cash used in operating activities............                        (152)
Net cash used in investing activities............                         (10)
                                                                       ------
Net Decrease in cash and equivalents.............                        (162)
Cash and equivalents, beginning of period........                       9,083
                                                                       ------
Cash and equivalents, end of period..............                      $8,921
                                                                       ======
<PAGE>

3.   SALES OF REAL ESTATE INVESTMENTS

     During the three months ended February 29, 1996, the Partnership  sold four
real estate  investments:  Santa Paula Shopping Center ("Santa  Paula"),  Lompoc
Shopping Center ("Lompoc"), The Macy's Building and its ground lease interest in
1801 Century  property East (the "1801 Land").  The sale of The Macy's  Building
resulted in a gain to the Partnership of  approximately  $1.3 million,  while no
gain or loss was  recorded  for the sale of the 1801 Land.  For Santa  Paula and
Lompoc, the Partnership had previously  recorded  provisions for the anticipated
loss on their sale totalling $11.7 million.  A gain of $27,000 was recognized at
the time of their  fiscal 1996 sale to adjust the  provisions  to the final loss
amount. These four sales resulted in net sales proceeds totalling  approximately
$32.4  million,  prior  to the  payment  of the  General  Partners'  2%  carried
interest.  A fifth real  estate  investment,  Fullerton  Business  Center  South
("Fullerton"),  was sold in March  1996.  For  Fullerton,  the  Partnership  had
previously  recorded  provisions for the anticipated  loss on its sale totalling
$7.8 million.  A further provision of $430,000 was recognized as of February 29,
1996 to adjust the provision to the final March 1996 loss amount.

4.   LITIGATION

Treasure Island Associates Litigation

     The Partnership owns a joint venture  partnership  interest in the property
formerly known as Treasure  Island,  a mobile home  community  located in Laguna
Beach,  California.  The property was  purchased by Treasure  Island  Associates
("TIA"), a joint venture partnership between the Partnership and an unaffiliated
entity,  on August 1,  1989.  In  October  1991,  the City of Laguna  Beach (the
"City")  enacted an  ordinance  (the  "Ordinance")  which  requires  mobile home
property owners to apply for a conditional use permit ("CUP") prior to a closure
of a mobile home property.  The Ordinance  provides,  in part, that a closure is
deemed to have  occurred  whenever  fewer  than 75% of the  spaces in a property
contain  coaches owned by tenants  unrelated to the property  owner.  The stated
purpose  of the  Ordinance  was to allow the City to require  mitigation  of any
adverse impacts caused by a closure.

     TIA has been  purchasing  mobile home coaches at this  property and, in May
1992, reached the threshold described in the Ordinance and applied for a CUP.

     On February  15, 1994,  the Laguna Beach City Council  adopted a resolution
(the "Resolution")  approving the CUP and adopting findings that Treasure Island
was  deemed to have  closed on May 1,  1992,  and that  such  closure  adversely
impacted tenants.  To mitigate the impact, the CUP, as adopted,  required TIA to
do one of the following:  (i) guarantee each tenant a 10-year right of occupancy
in the property; (ii) if the tenant agrees, relocate each tenant to a comparable
mobile  home  property;  or  (iii)  pay  each  tenant  the  in-place  value of a
comparable  coach in a comparable  coastal  mobile home  property.  The CUP also
required TIA to pay the City  approximately  $2,856,000  to mitigate the loss of
affordable housing opportunities represented by Treasure Island.

     Due to the lack of replacement spaces in other propertys in the region, TIA
had originally  estimated that the CUP may require up to $23 million in payments
to tenants. The CUP also purported to give tenants a right of action against TIA
for the  benefits  due them  under the CUP if TIA  failed  to  timely  pay these
amounts.

     On March 24, 1994, TIA filed a lawsuit in the California Superior Court for
the County of Orange (the "Court")  against the City to have certain  conditions
of the CUP declared  void. TIA believes that the  requirements  contained in the
CUP  violate  California  law and  constitute  a  taking  of TIA's  property  in
violation  of the  California  and United  States  Constitutions.  TIA filed the
lawsuit in order to pursue vigorously its legal rights and remedies.

     On March 24, 1994, TIA obtained a temporary  restraining  order, and on May
5, 1994 a preliminary  injunction,  prohibiting  the City from enforcing the CUP
until the Court made a final ruling.  On October 4, 1994, the Court rendered its
tentative  decision,  ordering  issuance of a writ of mandate and  remanding the
Resolution to the City for further proceedings consistent with the decision. The
Court  agreed  with TIA that  non-resident  coach  owners  are not  entitled  to
mitigation benefits under California law; however,  the Court concluded that the
mitigation  benefits imposed by the City were not illegal if limited to resident
owners who would be displaced by closure of the property.

     On November 15,  1994,  the City  adopted an amended  resolution  ("Amended
Resolution")  effectively complying with the tentative decision. On December 21,
1994,  the Court filed its final  decision and order  issuing a writ of mandate,
which  invalidated  a provision of the CUP  requiring  binding  arbitration  but
otherwise  confirmed  the  tentative  decision.  Thereafter,  the Court  ordered
dissolution  of the  preliminary  injunction  effective  February  1, 1995.  The
tenants  have  appealed  from  the  final  judgment  in the  case.  TIA  filed a
cross-appeal  and has moved for a  dismissal  of the  appeal  and to vacate  the
judgment.
<PAGE>
     TIA filed a second  lawsuit with the Court on February 14, 1995 in order to
preserve  TIA's  right to  challenge  the  validity of the  mitigation  measures
re-imposed  by the  Amended  Resolution.  TIA  continues  to  believe  that  the
mitigation  measures  imposed by the City,  even when limited to resident owners
only,  violate  California  statutory law and the  California  and United States
Constitutions. As in the first lawsuit, the Treasure Island Residents and Owners
Association  ("TIROA") sought leave to intervene in the second lawsuit.  TIA did
not oppose this request, which was granted on June 13, 1995.

     After filing its second action, TIA entered into an agreement with the City
to stay further  proceedings in order to pursue  settlement  negotiations  among
TIA, the City and TIROA.  The parties were unable to reach agreement and, on May
2, 1995,  the City adopted a second  amended  resolution  (the  "Second  Amended
Resolution")  reducing  substantially  the total amount of  relocation  benefits
potentially payable to residents.

     In or about April 1995, 58 tenants began  withholding  rent, in addition to
four  tenants  who  earlier  began  withholding  rent,  claiming  they were owed
relocation  benefits  under  the  Amended  Resolution.  TIA  initiated  unlawful
detainer  actions  against these  tenants in the South Orange  County  Municipal
Court to obtain possession of its property. Prior to trial of these actions, TIA
had given notice that all tenancies in Treasure Island would terminate March 15,
1996  based  upon TIA's CUP  closing  the  property  and  payment of  relocation
benefits.  On March 15, 1996, these tenants,  in addition to approximately seven
tenants who rented mobile homes from TIA ("renter  tenants"),  refused to vacate
the  premises.  Pursuant  to a motion for  summary  judgment,  two  tenants  had
judgments  entered  against them,  have been  evicted.  Six of the renter tenant
cases were tried to a jury,  and a verdict  returned in favor of TIA against all
six renter  tenants,  who have now been  evicted.  TIA, in or about mid and late
March, 1996,  initiated a second series of unlawful detainer actions against the
remaining  tenants based upon property  closure.  All unlawful  detainer actions
were  consolidated  and  transferred to the Superior Court,  Complex  Litigation
Panel.  The  Superior  Court  entered  judgment for  possession  in favor of TIA
against all remaining  tenants,  based on property closure.  The Court permitted
the tenants to stay until August 1997,  provided they pay rent, to allow time to
vacate.  Trial is set for June 9,  1997 on TIA's  damage  claims  against  these
tenants.

     On May 26, 1995, TIROA commenced an action alleging that the City Council's
attempt to reduce  relocation  benefits  in the Second  Amended  Resolution  was
illegal and therefore invalid.  Alternatively,  TIROA challenged the validity of
the Second Amended  Resolution on  environmental  and other  grounds.  The Court
rejected TIROA's  challenge and upheld the Second Amended  Resolution,  entering
judgment against TIROA. TIROA has appealed.

     On June 16,  1995,  73  plaintiffs  filed an  action in the  United  States
District Court for the Central District of California alleging violations of the
antitrust  provisions of the Sherman and Clayton Acts and seeking damages in the
estimated amount of $15 million dollars and injunctive  relief.  The allegations
of this complaint are virtually identical to those of the Orange County Superior
Court action discussed above. TIA's motion to dismiss was granted,  and judgment
was entered in TIA's favor. The plaintiffs have appealed.

     A separate action was also filed on June 16, 1995 in the Court on behalf of
the same 73 individually named tenants of the property alleging causes of action
for  breach  of  implied  covenant  of good  faith  and fair  dealing,  unlawful
discrimination,  breach  of  covenant  of quiet  enjoyment  and/or  constructive
eviction,  violation of state antitrust law, and unlawful, unfair and fraudulent
business  practices and  declaratory  relief.  The  complaint  seeks damages and
injunctive  relief for alleged  wrongful conduct in a series of actions relating
to property  closure and  evictions of delinquent  tenants.  On August 22, 1995,
TIA's  demurrer was  sustained in part and overruled in part.  Plaintiffs  filed
their First Amended  Complaint on September 6, 1995.  TIA answered and initiated
discovery.

     On March 26, 1996, Mr. K.P. Rice and 100 other tenants, including virtually
all 73 tenants who filed suit on June 16, 1995,  filed a new action  against TIA
in Superior Court alleging claims for declaratory relief,  damages,  damages for
statutory violations, and unlawful, unfair or fraudulent business practices. TIA
filed a timely demurrer to this new complaint.  The Court ordered the tenants to
file a single amended complaint consolidating the claims in this action with the
claims the tenants  assert in their June 16, 1995 suit.  TIA filed a demurrer to
the amended  complaint.  The  demurrer  was heard on April 15,  1997.  The Court
ordered  the  plaintiffs  to file an amended,  single  complaint  combining  the
allegations  of the damage suits (the action by the 73 tenants and the action by
the 101  tenants).  TIA then  demurred  to that  amended  complaint.  The  Court
sustained  the demurrer  without leave to amend as to most claims in the amended
compliant,  and struck the claim for  punitive  damages.  Three causes of action
remain. TIA is conducting discovery in those claims. No trial date has been set.
<PAGE>

     The aforementioned  suits which remain pending have been consolidated under
a single action number in Superior Court.  However,  it is anticipated  that the
Court will continue to sever or otherwise  order the  proceedings as appropriate
for the efficient administration of the claims.

     Since June 13, 1995, TIA has executed settlement agreements with 83 tenants
out of a total of approximately  160 remaining  tenants under which the settling
tenants released TIA from all claims in consideration of cash payments and/or up
to one year free rent.  Also,  those tenants agreed to vacate the property under
the terms of their settlement with TIA on or before June 11, 1996. By the end of
April  1997,  all but two of the tenants who signed  settlement  agreements  are
expected to vacate the property. The two remaining tenants, who are employees of
the managing agent, will vacate when their employment terminates.

     The settlement agreements executed with tenants to date require the payment
of a total of  approximately  $2,400,000,  most of which has been paid.  At this
point in time,  TIA is  unable to  quantify  the  total  amount  of any  further
settlements which may be executed with the remaining tenants.

     On September 1, 1995, TIA served a statutory notice of closure  identifying
March 15, 1996 as the formal  closure  date.  On  February  6, 1996,  TIA mailed
checks to all such  tenants  in an amount  not to exceed  $20,000  per tenant in
accordance with the Second Amended Resolution.

     As of September 1, 1995, TIA executed a settlement  agreement with the City
which settled all lawsuits filed by TIA against the City  concerning the closure
of the mobile home property.  Under the settlement agreement,  TIA agreed to (i)
deliver a letter of credit  to the City in the  amount of  $1,287,990  to secure
TIA's obligations under settlement  agreements with residents  (described in the
preceding paragraph), and (ii) pay an additional sum of approximately $1,000,000
to the City to  mitigate  the  adverse  impacts to the  City's  supply of low to
moderate income housing,  $500,000 of which was paid in September 1995, with the
balance to be paid at a future date.  According to the agreement of the City and
TIA, the letter of credit expired on June 30, 1996 and was not renewed.

     TIA intends to capitalize the cost of all of the above  settlements as part
of its investment in the property related to any redevelopment efforts.

     On June 10, 1996,  another action was filed against TIA by one  individual,
David B. Mautner.  Mr. Mautner claims to have been improperly  denied relocation
benefits allegedly owed to him under the resolutions. In a statement of damages,
he seeks special  damages of $40,000,  general  damages of $100,000 and punitive
damages of $200,000.  Mr. Mautner's case has been  consolidated  with the damage
cases filed by the other tenants.

     In February of 1996, the  Partnership  submitted an application to the City
of  Laguna  Beach  for  the  redevelopment  of  Treasure  Island.   The  initial
application  included  a  combination  of  detached  single-family   residences,
multi-family  housing  and resort  hotel  complex  including  meeting  rooms and
restaurants.  After receiving input on the proposal from community groups in the
City of Laguna Beach, from the City Planning Staff and from various City Council
members and Planing  Commissioners,  the  application  was suspended on July 30,
1996 and a revised  application  was  submitted  in  March,  1997.  The  revised
application  continues  to  include  a  hotel  resort  component  along  with  a
residential  component  with  reduced  density  and  intensity  of  use.  TIA is
continuing to process entitlements and expects to participate in hearings before
the City Planning  Commission  in the third and fourth  quarter of calendar year
1997 and to further  participate  in  hearings  before the City  Council and the
California Coastal Commission during calendar year 1998.
<PAGE>
     Partnership Litigation

     On November 29, 1995, December 15, 1995, December 22, 1995, and February 6,
1996,  certain putative class actions were filed purportedly on behalf of, among
others,  all  persons  who  purchased  limited  partnership   interests  in  the
Partnership.  Pursuant to an order of the United States  District  Court for the
Southern  District of New York dated February 25, 1996,  these actions have been
consolidated  in that  Court for  pre-trial  purposes  under the  caption  In re
Merrill  Lynch  Limited  Partnerships  Litigation  (the "New  York  Consolidated
Action"). Pursuant to that order, on March 29, 1996 the plaintiffs filed a First
Consolidated  Amended Class Action  Complaint (the "Amended  Complaint"),  which
superseded the  allegations in the complaints  mentioned  above.  In addition to
investors of the  Partnership,  the Amended  Complaint was filed  purportedly on
behalf of all persons who  purchased  limited  partnership  interests in certain
other limited  partnerships formed by affiliates of the Managing General Partner
and for  which  the  Managing  General  Partner  has  acted or acts as a general
partner,  and certain other limited  partnerships for whom Merrill Lynch, Pierce
Fenner  & Smith  Incorporated  ("MLPF&S")  acted  as  selling  agent  (all  such
partnerships  other than the  Partnership  are  hereinafter  referred  to as the
"Other  Partnerships"),  against MLH  property  Managers  Inc.  and MLH Realprop
Associates VI L.P. (the "General  Partners"),  certain affiliates of the General
Partners, Merrill Lynch & Co., Inc. ("ML & Co."), MLPF&S, Merrill Lynch, Hubbard
Inc. ("MLH"),  and certain direct or indirect  subsidiaries and/or affiliates of
ML & Co., as defendants (collectively,  the "Defendants 1"). The Partnership and
certain of the Other Partnerships were originally named as defendants in certain
of the actions,  but those  partnerships were not named in the Amended Complaint
with the  understanding  that the time for bringing  such claims  against  those
partnerships would be tolled.  Plaintiffs' complaint alleges that the Defendants
1 (i) violated the Racketeer Influenced and Corrupt  Organizations Act ("RICO"),
(ii) engaged in fraud and negligent  misrepresentation  in  connection  with the
sale  of  limited  partnership  interests  in  the  Partnership  and  the  Other
Partnerships,  (iii) breached their  fiduciary  duties,  and (iv) breached their
contracts  or  tortiously  interfered  with  express  or implied  contracts  and
covenants.  The action seeks compensatory,  consequential,  treble,  general and
punitive damages,  disgorgement and restitution, the costs and expenses incurred
in connection with the action,  reasonable  attorneys'  fees, and such other and
further  relief as the Court may deem just and  proper.  On July 17,  1996,  the
court  endorsed a  stipulation  and order which  provides for (a) the  dismissal
without  prejudice  of  claims  relating  to the  Other  Partnerships;  (b)  the
certification  of a plaintiff  class as to certain of the claims  alleged in the
Amended Complaint;  and (c) the filing of a supplemental  pleading in the action
adding claims under the New Jersey  Securities  Fraud statute and the New Jersey
Criminal  Justice Act of 1970. On September 27, 1996, the  Partnership and other
defendants moved to dismiss the Amended  Complaint  pursuant to Federal Rules of
Civil Procedure 12(b)(6) and 9(b), on the grounds, among others, that the claims
contained in the Amended Complaint were barred by the statute of limitations. At
a hearing held on October 15, 1996, the Court granted  plaintiffs  until January
17, 1997 to file a second  consolidated  amended class action complaint ("Second
Amended  Complaint")  and held  that  Defendants  1's  motion  would  be  deemed
withdrawn.  Plaintiffs filed their Second amended Complaint on January 17, 1997.
Defendants 1 moved to dismiss the Second amended Complaint on February 17, 1997.
Plaintiffs  filed their  opposition to the motion for summary  judgment on March
28, 1997.  Defendants 1 filed their reply papers on April 25, 1997. Defendants 1
intend  to  contest  Plaintiffs'  claims  vigorously.  The  Partnership  may  be
obligated to indemnify certain of the Defendants 1 for loss,  liability,  claim,
damage  and  expense  subject  to the  terms  and  conditions  of the  indemnity
provisions of the Agency  Agreement  dated March 5, 1986 among the  Partnership,
its General Partners and MLPF&S.  The outcome of this action is not determinable
at this time.
<PAGE>
     On January 22,  1996,  a putative  class  action was filed in the  Superior
Court of New  Jersey,  Essex  County,  purportedly  on behalf of all persons who
purchased  limited  partnership  interests in the  Partnership and other limited
partnerships  formed by affiliates of the Managing General Partner and for which
the Managing General Partner has acted or acts as a general partner. As amended,
the complaint names MLH, MLPF&S, ML & Co., Merrill Lynch Realty,  Inc.,  certain
past and present  employees of MLH, the  Partnership  and certain  other limited
partnerships  for  which  MLPF&S  acted  as  selling  agent  (collectively,  the
"Defendants  2") as defendants.  The complaint  alleges (i) common law fraud and
deceit, (ii) equitable fraud, (iii) negligent misrepresentation,  (iv) breach of
fiduciary  duty, (v) breach of implied  covenant of good faith and fair dealing,
(vi) violation of the New Jersey  Securities Fraud statute;  and (vii) violation
of the New  Jersey  Criminal  Justice  Act of 1970;  allegedly  as a  result  of
material misrepresentations and omissions of fact in connection with the sale of
limited  partnership  interests  in  the  Partnership  and  such  other  limited
partnerships,  the subsequent  concealment of the fraud alleged, and the alleged
conduct of the Defendants 2 in the  management and operation of the  Partnership
and such other limited  partnerships.  The action seeks (i) unspecified  damages
including compensatory,  general, consequential,  treble, incidental,  punitive,
and exemplary damages,  (ii) disgorgement and restitution of earnings,  profits,
compensation and benefits  received by Defendants 2, (iii) interest,  (iv) costs
including attorneys',  accountants' and experts' fees, and (v) such other relief
as the Court  deems just and  proper.  Defendants  2 believe  that they  possess
meritorious  defenses to the claims in this  action,  and intend to contest such
claims vigorously.  On or about March 25, 1996, Defendants 2 moved to dismiss or
stay this action in favor of the New York Consolidated  Action,  and on June 24,
1996,  the Court  ordered the action  stayed until August 9, 1996.  On August 9,
1996,  the Court orally ruled that the action would be dismissed in favor of the
New York Consolidated  Action.  The Court signed a written order of dismissal on
August 26, 1996. The  Partnership  may be obligated to indemnify  certain of the
Defendants 2 for loss, liability, claim, damage and expense subject to the terms
and conditions of the indemnity  provisions of the Agency  Agreement dated March
5, 1986 among the Partnership,  its General Partners and MLPF&S.  The outcome of
this action is not determinable at this time.

     On or about  February  6, 1996,  a putative  class  action was filed in the
Circuit Court for Baltimore City,  Maryland and on February 13, 1996, an amended
complaint  was  filed,  purportedly  on  behalf  of all  persons  who  purchased
unspecified  limited partnership  interests,  which may include interests in the
Partnership,  against  ML & Co.,  MLPF&S,  and a limited  partnership  for which
MLPF&S acted as selling agent, as defendants (collectively, the "Defendants 3").
The  amended   complaint  alleges  that  the  Defendants  3  (i)  made  material
misrepresentations and omitted material information in the offering of interests
in the specified limited partnership and other unspecified limited partnerships;
(ii) breached their fiduciary  duties;  (iii) were unjustly  enriched;  and (iv)
converted  the  personal  property of the  plaintiff  and other  putative  class
members.  The action seeks (i) unspecified  compensatory  and punitive  damages;
(ii)  equitable  and  injunctive  relief,  including  disgorgement  of  gain,  a
constructive  trust  on all  fees,  discounts  and  commissions,  impounding  or
attachment of ill-gotten  moneys,  freezing of assets,  and  restitution;  (iii)
reasonable  attorneys' fees, costs and expenses  incurred in connection with the
action;  (iv) pre- and  post-judgment  interest;  and (v) such other and further
relief as the court may deem necessary or appropriate. Defendants 3 believe that
they  possess  meritorious  defenses to the claims in the action,  and intend to
contest such claims  vigorously.  The  Partnership may be obligated to indemnify
certain of the  Defendants  3 for loss,  liability,  claim,  damage and  expense
subject to the terms and  conditions of the  indemnity  provisions of the Agency
Agreement dated March 5, 1986 among the  Partnership,  its General  Partners and
MLPF&S. By stipulation the parties to the action have agreed to stay this matter
pending further proceedings in the New York Consolidated  Action. The outcome of
this action is not determinable at this time.

     On May 9, 1996, a putative  class action was filed in the Supreme  Court of
the State of New York, County of New York,  purportedly on behalf of all persons
who purchased limited partnership interests in the Partnership and certain other
limited  partnerships  formed by  affiliates  of the Managing  General  Partner,
against ML & Co., MLPF&S,  the General Partners,  and certain affiliates of MLH,
as defendants  (collectively,  the  "Defendants  4"). The complaint  alleges (i)
fraud;  (ii) negligent  misrepresentation;  (iii) breach of fiduciary duty; (iv)
breach of third party beneficiary contract;  and (v) breach of implied covenant.
The action seeks (i) an order certifying the proposed Class;  (ii)  compensatory
damages;  (iii)  consequential  damages;  (iv)  general  damages;  (v)  punitive
damages;  (vi)  disgorgement  and  restitution;  (vii) costs and  disbursements;
(viii) reasonable attorneys' fees; and (ix) such other and further relief as the
Court may deem just and proper.  On May 29,  1996,  the parties  entered  into a
stipulation to dismiss the action without  prejudice,  based on the existence of
the New York Consolidated Action. Based on that stipulation,  Defendants 4 moved
for an order dismissing the action without prejudice.  On or about July 9, 1996,
the Court entered an order dismissing the action without prejudice.
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations

     Liquidity and Capital Resources

     The  Partnership's  last  remaining  real estate  investment  property  was
formerly  known as Treasure  Island,  a mobile home property  (the  "property").
Existing  zoning  permits use of the  property  only as a mobile home  property;
however,  the Managing  General  Partner  believes  that changing the use of the
property may maximize its value if appropriate  zoning and land use entitlements
can be obtained.  Although the property was  officially  closed as a mobile home
park on March 15, 1996,  certain tenants remain in residence and are involved in
a rent  strike.  Treasure  Island  Associates,  the joint  venture  between  the
Partnership  and an unaffiliated  entity through which the  Partnership  owns an
interest in the property, is involved in several lawsuits concerning the closing
of the property as a mobile home park and the level of  compensation  to be paid
to certain  tenants  when they vacate the  property  (see Part II, Item 1, Legal
Proceedings for a discussion of local legislation,  administrative  requirements
and litigation  affecting the potential  disposition and value of the property).
Although the Managing  General  Partner is making every effort to resolve  these
issues as quickly as possible,  at this time it cannot  determine how successful
it will be,  how long it will  take,  or at what  point  the  property  can most
effectively be marketed for sale.

     At March 31, 1997, the Partnership and its  consolidated  joint venture had
cash and equivalents of approximately  $8.3 million.  Such funds are expected to
be utilized for reserve  requirements,  redevelopment  of the property,  working
capital  requirements  and, to the extent available,  cash  distributions to the
Partners.  In  total,  cash  and  equivalents  and  marketable  debt  securities
decreased  $773,000  from  November 30, 1996 to March 31, 1997  primarily due to
disbursements for certain costs related to the redevelopment of the property.

     Cash used in operating activities primarily resulted from the Partnership's
operating  loss as well as from  disbursements  for  redevelopment  costs of the
property,  net of interest income earned on the Partnership's  portfolio of cash
equivalents.  Cash flows from operating  activities  decreased from 1996 to 1997
primarily due to the fiscal 1996 sales of various real estate investments.

     Cash provided by investing activities includes the receipt of proceeds from
the sales of real  estate  investments  during the first  quarter of fiscal 1996
totalling $32.4 million.  Cash flows from investing activities are also affected
by increases and  decreases in the  Partnership's  portfolio of marketable  debt
securities.  Excess funds are moved between cash and equivalents and longer term
marketable debt securities  depending on the  Partnership's  liquidity needs and
the relative  yields on each type of investment.  Additionally,  such cash flows
are affected by disbursements for the redevelopment of the property.

     Cash flows from financing  activities relate entirely to distributions paid
to the Partners.  Distributions of  distributable  cash and/or proceeds from the
sale of properties,  if any, are made semi-annually on or before the last day of
the third month following the end of the six month period.  Thus,  distributions
relating  to the  second  half of each  year are paid in the  first  half of the
subsequent year. Distributions paid in the first quarter of fiscal 1996 included
$83.7 million ($259.60 per Unit paid in December 1995) relating to proceeds from
sales of four real  estate  investments  in the second  half of fiscal 1995 plus
$5.9  million  ($16.53  per Unit paid in  January  1996) of  distributable  cash
related to the second half of fiscal 1995.


<PAGE>
     Cumulative  Limited Partners'  distributions paid through November 30, 1996
have been  allocated  to the Limited  Partners  based upon the dates they became
Unit Holders and are  summarized as follows:

<TABLE>
<CAPTION>
<S>                    <C>                <C>                 <C>                   <C>
                                                                                        Percentage
                                                                                         Return of
                                                                  Cumulative             Original
   Date Became                              Cumulative           Distributions            Capital
   Unit Holder             Units           Distributions          Per Unit             Contribution
-----------------------------------------------------------------------------------------------------
June 6, 1986               204,786        $229,684,000            $1,121.58                  112%
August 7, 1986              64,730          72,050,000             1,113.08                  111%
November 25, 1986           25,200          27,670,000             1,098.01                  110%
January 20, 1987             7,477           8,153,000             1,090.41                  109%
March 11, 1987              15,500          16,795,000             1,083.56                  108%
April 23, 1987                 253             272,000             1,077.67                  108%
May 7, 1987                  4,329           4,657,000             1,075.75                  108%

</TABLE>

     Such cumulative Limited Partners' distributions included sales proceeds and
related  interest  totalling  $211,670,000,  or $656.80 per Unit. For income tax
purposes all cash  distributions are a tax-free return of capital until the cash
received exceeds the tax basis of his/her partnership investment. Taxable income
or losses of the Partnership are passed through to the Partners for inclusion in
their  respective  tax  returns,  as  reflected  on the  Federal  Schedules  K-1
distributed to the Partners each year.

     Considering  reserve   requirements  for  the  costs  associated  with  the
redevelopment and eventual sale of the property, the Partnership's last property
(which currently does not generate cash flows from operations),  the Partnership
does not expect to make future cash  distributions to Limited Partners until the
sale of this last property.  Distributions of future sales proceeds will be made
in accordance with the Partnership's  Amended and Restated  Agreement of Limited
Partnership.  Buyers and sellers of Units will  receive  such  distributions  in
accordance with the terms of the Partnership's transfer documents. The level and
timing of distributions of sales proceeds will be dependent on the timing of the
future sale of the remaining  property and the ultimate sale price achieved,  as
well as on reserve requirements.

     Change in Fiscal Year

     Effective  January 1, 1997, the Partnership  changed its fiscal year from a
twelve month period ending  November 30 to a twelve month period ending December
31. During the 31 day transition period of December 1, 1996 through December 31,
1996  the  Partnership  incurred  a net  loss of  approximately  $36,000,  which
reflects  the net  operations  of the  property  and general and  administrative
expenses  of  the  Partnership,  net of  interest  earned  on the  Partnership's
securities  investments.  The  $162,000  decrease  in cash and cash  equivalents
primarily  resulted from the operating  loss as well as from  disbursements  for
redevelopment costs of the property.

     Results of Operations

     Fluctuations in the  Partnership's  operating  results for the three months
ended March 31, 1997,  as compared to the three months ended  February 29, 1996,
are primarily attributable to the following:

     The  Partnership's  interests  in four real  estate  investments  were sold
during  the  first  quarter  of fiscal  1996.  The sale of The  Macy's  Building
resulted in a gain to the Partnership of  approximately  $1.3 million,  while no
gain or loss was  recorded  for the sale of the ground  lease  interest  in 1801
Century  property  East. For Santa Paula  Shopping  Center  ("Santa  Paula") and
Lompoc Shopping Center ("Lompoc"),  the Partnership had recorded  provisions for
the  anticipated  losses on their sales  totalling  $11.7. A gain of $27,000 was
recognized at the time of their fiscal 1996 sale to adjust the provisions to the
final loss amount.  A fifth real estate  investment,  Fullerton  Business Center
South ("Fullerton"),  was sold in March 1996. For Fullerton, the Partnership had
recorded  provisions  for the  anticipated  loss on its sale  totalling  $7.8. A
further  provision of $430,000 was  recognized as of February 29, 1996 to adjust
the provision to the final March 1996 loss amount.

     The decreases in rental income,  property operating expenses,  depreciation
expense  and  minority  interest  in  consolidated  joint  venture's  operations
primarily relate to various property sales in fiscal 1996.

<PAGE>
                                     PART II

Item 1. Legal Proceedings

Response:

Treasure Island Associates Litigation

     The Partnership owns a joint venture  partnership  interest in the property
formerly known as Treasure  Island,  a mobile home  community  located in Laguna
Beach,  California.  The property was  purchased by Treasure  Island  Associates
("TIA"), a joint venture partnership between the Partnership and an unaffiliated
entity,  on August 1,  1989.  In  October  1991,  the City of Laguna  Beach (the
"City")  enacted an  ordinance  (the  "Ordinance")  which  requires  mobile home
property owners to apply for a conditional use permit ("CUP") prior to a closure
of a mobile home property.  The Ordinance  provides,  in part, that a closure is
deemed to have  occurred  whenever  fewer  than 75% of the  spaces in a property
contain  coaches owned by tenants  unrelated to the property  owner.  The stated
purpose  of the  Ordinance  was to allow the City to require  mitigation  of any
adverse impacts caused by a closure.

     TIA has been  purchasing  mobile home coaches at this  property and, in May
1992, reached the threshold described in the Ordinance and applied for a CUP.

     On February  15, 1994,  the Laguna Beach City Council  adopted a resolution
(the "Resolution")  approving the CUP and adopting findings that Treasure Island
was  deemed to have  closed on May 1,  1992,  and that  such  closure  adversely
impacted tenants.  To mitigate the impact, the CUP, as adopted,  required TIA to
do one of the following:  (i) guarantee each tenant a 10-year right of occupancy
in the property; (ii) if the tenant agrees, relocate each tenant to a comparable
mobile  home  property;  or  (iii)  pay  each  tenant  the  in-place  value of a
comparable  coach in a comparable  coastal  mobile home  property.  The CUP also
required TIA to pay the City  approximately  $2,856,000  to mitigate the loss of
affordable housing opportunities represented by Treasure Island.

     Due to the lack of replacement spaces in other propertys in the region, TIA
had originally  estimated that the CUP may require up to $23 million in payments
to tenants. The CUP also purported to give tenants a right of action against TIA
for the  benefits  due them  under the CUP if TIA  failed  to  timely  pay these
amounts.

     On March 24, 1994, TIA filed a lawsuit in the California Superior Court for
the County of Orange (the "Court")  against the City to have certain  conditions
of the CUP declared  void. TIA believes that the  requirements  contained in the
CUP  violate  California  law and  constitute  a  taking  of TIA's  property  in
violation  of the  California  and United  States  Constitutions.  TIA filed the
lawsuit in order to pursue vigorously its legal rights and remedies.

     On March 24, 1994, TIA obtained a temporary  restraining  order, and on May
5, 1994 a preliminary  injunction,  prohibiting  the City from enforcing the CUP
until the Court made a final ruling.  On October 4, 1994, the Court rendered its
tentative  decision,  ordering  issuance of a writ of mandate and  remanding the
Resolution to the City for further proceedings consistent with the decision. The
Court  agreed  with TIA that  non-resident  coach  owners  are not  entitled  to
mitigation benefits under California law; however,  the Court concluded that the
mitigation  benefits imposed by the City were not illegal if limited to resident
owners who would be displaced by closure of the property.

     On November 15,  1994,  the City  adopted an amended  resolution  ("Amended
Resolution")  effectively complying with the tentative decision. On December 21,
1994,  the Court filed its final  decision and order  issuing a writ of mandate,
which  invalidated  a provision of the CUP  requiring  binding  arbitration  but
otherwise  confirmed  the  tentative  decision.  Thereafter,  the Court  ordered
dissolution  of the  preliminary  injunction  effective  February  1, 1995.  The
tenants  have  appealed  from  the  final  judgment  in the  case.  TIA  filed a
cross-appeal  and has moved for a  dismissal  of the  appeal  and to vacate  the
judgment.

     TIA filed a second  lawsuit with the Court on February 14, 1995 in order to
preserve  TIA's  right to  challenge  the  validity of the  mitigation  measures
re-imposed  by the  Amended  Resolution.  TIA  continues  to  believe  that  the
mitigation  measures  imposed by the City,  even when limited to resident owners
only,  violate  California  statutory law and the  California  and United States
Constitutions. As in the first lawsuit, the Treasure Island Residents and Owners
Association  ("TIROA") sought leave to intervene in the second lawsuit.  TIA did
not oppose this request, which was granted on June 13, 1995.

     After filing its second action, TIA entered into an agreement with the City
to stay further  proceedings in order to pursue  settlement  negotiations  among
TIA, the City and TIROA.  The parties were unable to reach agreement and, on May
2, 1995,  the City adopted a second  amended  resolution  (the  "Second  Amended
Resolution")  reducing  substantially  the total amount of  relocation  benefits
potentially payable to residents.
<PAGE>
     In or about April 1995, 58 tenants began  withholding  rent, in addition to
four  tenants  who  earlier  began  withholding  rent,  claiming  they were owed
relocation  benefits  under  the  Amended  Resolution.  TIA  initiated  unlawful
detainer  actions  against these  tenants in the South Orange  County  Municipal
Court to obtain possession of its property. Prior to trial of these actions, TIA
had given notice that all tenancies in Treasure Island would terminate March 15,
1996  based  upon TIA's CUP  closing  the  property  and  payment of  relocation
benefits.  On March 15, 1996, these tenants,  in addition to approximately seven
tenants who rented mobile homes from TIA ("renter  tenants"),  refused to vacate
the  premises.  Pursuant  to a motion for  summary  judgment,  two  tenants  had
judgments  entered  against them,  have been  evicted.  Six of the renter tenant
cases were tried to a jury,  and a verdict  returned in favor of TIA against all
six renter  tenants,  who have now been  evicted.  TIA, in or about mid and late
March, 1996,  initiated a second series of unlawful detainer actions against the
remaining  tenants based upon property  closure.  All unlawful  detainer actions
were  consolidated  and  transferred to the Superior Court,  Complex  Litigation
Panel.  The  Superior  Court  entered  judgment for  possession  in favor of TIA
against all remaining  tenants,  based on property closure.  The Court permitted
the tenants to stay until August 1997,  provided they pay rent, to allow time to
vacate.  Trial is set for June 9,  1997 on TIA's  damage  claims  against  these
tenants.

     On May 26, 1995, TIROA commenced an action alleging that the City Council's
attempt to reduce  relocation  benefits  in the Second  Amended  Resolution  was
illegal and therefore invalid.  Alternatively,  TIROA challenged the validity of
the Second Amended  Resolution on  environmental  and other  grounds.  The Court
rejected TIROA's  challenge and upheld the Second Amended  Resolution,  entering
judgment against TIROA. TIROA has appealed.

     On June 16,  1995,  73  plaintiffs  filed an  action in the  United  States
District Court for the Central District of California alleging violations of the
antitrust  provisions of the Sherman and Clayton Acts and seeking damages in the
estimated amount of $15 million dollars and injunctive  relief.  The allegations
of this complaint are virtually identical to those of the Orange County Superior
Court action discussed above. TIA's motion to dismiss was granted,  and judgment
was entered in TIA's favor. The plaintiffs have appealed.

     A separate action was also filed on June 16, 1995 in the Court on behalf of
the same 73 individually named tenants of the property alleging causes of action
for  breach  of  implied  covenant  of good  faith  and fair  dealing,  unlawful
discrimination,  breach  of  covenant  of quiet  enjoyment  and/or  constructive
eviction,  violation of state antitrust law, and unlawful, unfair and fraudulent
business  practices and  declaratory  relief.  The  complaint  seeks damages and
injunctive  relief for alleged  wrongful conduct in a series of actions relating
to property  closure and  evictions of delinquent  tenants.  On August 22, 1995,
TIA's  demurrer was  sustained in part and overruled in part.  Plaintiffs  filed
their First Amended  Complaint on September 6, 1995.  TIA answered and initiated
discovery.

     On March 26, 1996, Mr. K.P. Rice and 100 other tenants, including virtually
all 73 tenants who filed suit on June 16, 1995,  filed a new action  against TIA
in Superior Court alleging claims for declaratory relief,  damages,  damages for
statutory violations, and unlawful, unfair or fraudulent business practices. TIA
filed a timely demurrer to this new complaint.  The Court ordered the tenants to
file a single amended complaint consolidating the claims in this action with the
claims the tenants  assert in their June 16, 1995 suit.  TIA filed a demurrer to
the amended  complaint.  The  demurrer  was heard on April 15,  1997.  The Court
ordered  the  plaintiffs  to file an amended,  single  complaint  combining  the
allegations  of the damage suits (the action by the 73 tenants and the action by
the 101  tenants).  TIA then  demurred  to that  amended  complaint.  The  Court
sustained  the demurrer  without leave to amend as to most claims in the amended
compliant,  and struck the claim for  punitive  damages.  Three causes of action
remain. TIA is conducting discovery in those claims. No trial date has been set.
<PAGE>

     The aforementioned  suits which remain pending have been consolidated under
a single action number in Superior Court.  However,  it is anticipated  that the
Court will continue to sever or otherwise  order the  proceedings as appropriate
for the efficient administration of the claims.

     Since June 13, 1995, TIA has executed settlement agreements with 83 tenants
out of a total of approximately  160 remaining  tenants under which the settling
tenants released TIA from all claims in consideration of cash payments and/or up
to one year free rent.  Also,  those tenants agreed to vacate the property under
the terms of their settlement with TIA on or before June 11, 1996. By the end of
April  1997,  all but two of the tenants who signed  settlement  agreements  are
expected to vacate the property. The two remaining tenants, who are employees of
the managing agent, will vacate when their employment terminates.

     The settlement agreements executed with tenants to date require the payment
of a total of  approximately  $2,400,000,  most of which has been paid.  At this
point in time,  TIA is  unable to  quantify  the  total  amount  of any  further
settlements which may be executed with the remaining tenants.

     On September 1, 1995, TIA served a statutory notice of closure  identifying
March 15, 1996 as the formal  closure  date.  On  February  6, 1996,  TIA mailed
checks to all such  tenants  in an amount  not to exceed  $20,000  per tenant in
accordance with the Second Amended Resolution.

     As of September 1, 1995, TIA executed a settlement  agreement with the City
which settled all lawsuits filed by TIA against the City  concerning the closure
of the mobile home property.  Under the settlement agreement,  TIA agreed to (i)
deliver a letter of credit  to the City in the  amount of  $1,287,990  to secure
TIA's obligations under settlement  agreements with residents  (described in the
preceding paragraph), and (ii) pay an additional sum of approximately $1,000,000
to the City to  mitigate  the  adverse  impacts to the  City's  supply of low to
moderate income housing,  $500,000 of which was paid in September 1995, with the
balance to be paid at a future date.  According to the agreement of the City and
TIA, the letter of credit expired on June 30, 1996 and was not renewed.

     TIA intends to capitalize the cost of all of the above  settlements as part
of its investment in the property related to any redevelopment efforts.

     On June 10, 1996,  another action was filed against TIA by one  individual,
David B. Mautner.  Mr. Mautner claims to have been improperly  denied relocation
benefits allegedly owed to him under the resolutions. In a statement of damages,
he seeks special  damages of $40,000,  general  damages of $100,000 and punitive
damages of $200,000.  Mr. Mautner's case has been  consolidated  with the damage
cases filed by the other tenants.

     In February of 1996, the  Partnership  submitted an application to the City
of  Laguna  Beach  for  the  redevelopment  of  Treasure  Island.   The  initial
application  included  a  combination  of  detached  single-family   residences,
multi-family  housing  and resort  hotel  complex  including  meeting  rooms and
restaurants.  After receiving input on the proposal from community groups in the
City of Laguna Beach, from the City Planning Staff and from various City Council
members and Planing  Commissioners,  the  application  was suspended on July 30,
1996 and a revised  application  was  submitted  in  March,  1997.  The  revised
application  continues  to  include  a  hotel  resort  component  along  with  a
residential  component  with  reduced  density  and  intensity  of  use.  TIA is
continuing to process entitlements and expects to participate in hearings before
the City Planning  Commission  in the third and fourth  quarter of calendar year
1997 and to further  participate  in  hearings  before the City  Council and the
California Coastal Commission during calendar year 1998.
<PAGE>
PARTNERSHIP LITIGATION

     On November 29, 1995, December 15, 1995, December 22, 1995, and February 6,
1996,  certain putative class actions were filed purportedly on behalf of, among
others,  all  persons  who  purchased  limited  partnership   interests  in  the
Partnership.  Pursuant to an order of the United States  District  Court for the
Southern  District of New York dated February 25, 1996,  these actions have been
consolidated  in that  Court for  pre-trial  purposes  under the  caption  In re
Merrill  Lynch  Limited  Partnerships  Litigation  (the "New  York  Consolidated
Action"). Pursuant to that order, on March 29, 1996 the plaintiffs filed a First
Consolidated  Amended Class Action  Complaint (the "Amended  Complaint"),  which
superseded the  allegations in the complaints  mentioned  above.  In addition to
investors of the  Partnership,  the Amended  Complaint was filed  purportedly on
behalf of all persons who  purchased  limited  partnership  interests in certain
other limited  partnerships formed by affiliates of the Managing General Partner
and for  which  the  Managing  General  Partner  has  acted or acts as a general
partner,  and certain other limited  partnerships for whom Merrill Lynch, Pierce
Fenner  & Smith  Incorporated  ("MLPF&S")  acted  as  selling  agent  (all  such
partnerships  other than the  Partnership  are  hereinafter  referred  to as the
"Other  Partnerships"),  against MLH  property  Managers  Inc.  and MLH Realprop
Associates VI L.P. (the "General  Partners"),  certain affiliates of the General
Partners, Merrill Lynch & Co., Inc. ("ML & Co."), MLPF&S, Merrill Lynch, Hubbard
Inc. ("MLH"),  and certain direct or indirect  subsidiaries and/or affiliates of
ML & Co., as defendants (collectively,  the "Defendants 1"). The Partnership and
certain of the Other Partnerships were originally named as defendants in certain
of the actions,  but those  partnerships were not named in the Amended Complaint
with the  understanding  that the time for bringing  such claims  against  those
partnerships would be tolled.  Plaintiffs' complaint alleges that the Defendants
1 (i) violated the Racketeer Influenced and Corrupt  Organizations Act ("RICO"),
(ii) engaged in fraud and negligent  misrepresentation  in  connection  with the
sale  of  limited  partnership  interests  in  the  Partnership  and  the  Other
Partnerships,  (iii) breached their  fiduciary  duties,  and (iv) breached their
contracts  or  tortiously  interfered  with  express  or implied  contracts  and
covenants.  The action seeks compensatory,  consequential,  treble,  general and
punitive damages,  disgorgement and restitution, the costs and expenses incurred
in connection with the action,  reasonable  attorneys'  fees, and such other and
further  relief as the Court may deem just and  proper.  On July 17,  1996,  the
court  endorsed a  stipulation  and order which  provides for (a) the  dismissal
without  prejudice  of  claims  relating  to the  Other  Partnerships;  (b)  the
certification  of a plaintiff  class as to certain of the claims  alleged in the
Amended Complaint;  and (c) the filing of a supplemental  pleading in the action
adding claims under the New Jersey  Securities  Fraud statute and the New Jersey
Criminal  Justice Act of 1970. On September 27, 1996, the  Partnership and other
defendants moved to dismiss the Amended  Complaint  pursuant to Federal Rules of
Civil Procedure 12(b)(6) and 9(b), on the grounds, among others, that the claims
contained in the Amended Complaint were barred by the statute of limitations. At
a hearing held on October 15, 1996, the Court granted  plaintiffs  until January
17, 1997 to file a second  consolidated  amended class action complaint ("Second
Amended  Complaint")  and held  that  Defendants  1's  motion  would  be  deemed
withdrawn.  Plaintiffs filed their Second amended Complaint on January 17, 1997.
Defendants 1 moved to dismiss the Second amended Complaint on February 17, 1997.
Plaintiffs  filed their  opposition to the motion for summary  judgment on March
28, 1997.  Defendants 1 filed their reply papers on April 25, 1997. Defendants 1
intend  to  contest  Plaintiffs'  claims  vigorously.  The  Partnership  may  be
obligated to indemnify certain of the Defendants 1 for loss,  liability,  claim,
damage  and  expense  subject  to the  terms  and  conditions  of the  indemnity
provisions of the Agency  Agreement  dated March 5, 1986 among the  Partnership,
its General Partners and MLPF&S.
<PAGE>
     On January 22,  1996,  a putative  class  action was filed in the  Superior
Court of New  Jersey,  Essex  County,  purportedly  on behalf of all persons who
purchased  limited  partnership  interests in the  Partnership and other limited
partnerships  formed by affiliates of the Managing General Partner and for which
the Managing General Partner has acted or acts as a general partner. As amended,
the complaint names MLH, MLPF&S, ML & Co., Merrill Lynch Realty,  Inc.,  certain
past and present  employees of MLH, the  Partnership  and certain  other limited
partnerships  for  which  MLPF&S  acted  as  selling  agent  (collectively,  the
"Defendants  2") as defendants.  The complaint  alleges (i) common law fraud and
deceit, (ii) equitable fraud, (iii) negligent misrepresentation,  (iv) breach of
fiduciary  duty, (v) breach of implied  covenant of good faith and fair dealing,
(vi) violation of the New Jersey  Securities Fraud statute;  and (vii) violation
of the New  Jersey  Criminal  Justice  Act of 1970;  allegedly  as a  result  of
material misrepresentations and omissions of fact in connection with the sale of
limited  partnership  interests  in  the  Partnership  and  such  other  limited
partnerships,  the subsequent  concealment of the fraud alleged, and the alleged
conduct of the Defendants 2 in the  management and operation of the  Partnership
and such other limited  partnerships.  The action seeks (i) unspecified  damages
including compensatory,  general, consequential,  treble, incidental,  punitive,
and exemplary damages,  (ii) disgorgement and restitution of earnings,  profits,
compensation and benefits  received by Defendants 2, (iii) interest,  (iv) costs
including attorneys',  accountants' and experts' fees, and (v) such other relief
as the Court  deems just and  proper.  Defendants  2 believe  that they  possess
meritorious  defenses to the claims in this  action,  and intend to contest such
claims vigorously.  On or about March 25, 1996, Defendants 2 moved to dismiss or
stay this action in favor of the New York Consolidated  Action,  and on June 24,
1996,  the Court  ordered the action  stayed until August 9, 1996.  On August 9,
1996,  the Court orally ruled that the action would be dismissed in favor of the
New York Consolidated  Action.  The Court signed a written order of dismissal on
August 26, 1996. The  Partnership  may be obligated to indemnify  certain of the
Defendants 2 for loss, liability, claim, damage and expense subject to the terms
and conditions of the indemnity  provisions of the Agency  Agreement dated March
5, 1986 among the Partnership, its General Partners and MLPF&S.

     On or about  February  6, 1996,  a putative  class  action was filed in the
Circuit Court for Baltimore City,  Maryland and on February 13, 1996, an amended
complaint  was  filed,  purportedly  on  behalf  of all  persons  who  purchased
unspecified  limited partnership  interests,  which may include interests in the
Partnership,  against  ML & Co.,  MLPF&S,  and a limited  partnership  for which
MLPF&S acted as selling agent, as defendants (collectively, the "Defendants 3").
The  amended   complaint  alleges  that  the  Defendants  3  (i)  made  material
misrepresentations and omitted material information in the offering of interests
in the specified limited partnership and other unspecified limited partnerships;
(ii) breached their fiduciary  duties;  (iii) were unjustly  enriched;  and (iv)
converted  the  personal  property of the  plaintiff  and other  putative  class
members.  The action seeks (i) unspecified  compensatory  and punitive  damages;
(ii)  equitable  and  injunctive  relief,  including  disgorgement  of  gain,  a
constructive  trust  on all  fees,  discounts  and  commissions,  impounding  or
attachment of ill-gotten  moneys,  freezing of assets,  and  restitution;  (iii)
reasonable  attorneys' fees, costs and expenses  incurred in connection with the
action;  (iv) pre- and  post-judgment  interest;  and (v) such other and further
relief as the court may deem necessary or appropriate. Defendants 3 believe that
they  possess  meritorious  defenses to the claims in the action,  and intend to
contest such claims  vigorously.  The  Partnership may be obligated to indemnify
certain of the  Defendants  3 for loss,  liability,  claim,  damage and  expense
subject to the terms and  conditions of the  indemnity  provisions of the Agency
Agreement dated March 5, 1986 among the  Partnership,  its General  Partners and
MLPF&S. By stipulation the parties to the action have agreed to stay this matter
pending further proceedings in the New York Consolidated  Action. The outcome of
this action is not determinable at this time.
<PAGE>

     On May 9, 1996, a putative  class action was filed in the Supreme  Court of
the State of New York, County of New York,  purportedly on behalf of all persons
who purchased limited partnership interests in the Partnership and certain other
limited  partnerships  formed by  affiliates  of the Managing  General  Partner,
against ML & Co., MLPF&S,  the General Partners,  and certain affiliates of MLH,
as defendants  (collectively,  the  "Defendants  4"). The complaint  alleges (i)
fraud;  (ii) negligent  misrepresentation;  (iii) breach of fiduciary duty; (iv)
breach of third party beneficiary contract;  and (v) breach of implied covenant.
The action seeks (i) an order certifying the proposed Class;  (ii)  compensatory
damages;  (iii)  consequential  damages;  (iv)  general  damages;  (v)  punitive
damages;  (vi)  disgorgement  and  restitution;  (vii) costs and  disbursements;
(viii) reasonable attorneys' fees; and (ix) such other and further relief as the
Court may deem just and proper.  On May 29,  1996,  the parties  entered  into a
stipulation to dismiss the action without  prejudice,  based on the existence of
the New York Consolidated Action. Based on that stipulation,  Defendants 4 moved
for an order dismissing the action without prejudice.  On or about July 9, 1996,
the Court entered an order dismissing the action without prejudice.

Items 2-5 are  herewith  omitted as the  response to all items is either none or
not applicable.

Item 6.           Exhibits and Reports on Form 8-K

                  Responses:

                  a)       Exhibits: Exhibit 27  Financial Data Schedule
                                     For the period ending March 31, 1997.

                  b)       Reports on Form 8-K:  None


<PAGE>

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the  Partnership  has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                        MLH INCOME REALTY PARTNERSHIP VI

                        By:      MLH Property Managers Inc.
                                 Managing General Partner



                        By:      ______________________________
                                 Joseph S. Valenti
                                 Vice President and
                                 Chief Financial Officer




Dated:  May 14, 1997