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 September 30, 1997


      For Quarter Ended                             Commission File Number
       September 30, 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, September 30, 1997 and November 30, 1996.

Consolidated  Statements  of Operations  for the
 Three Months and Nine Months Ended September 30, 1997
 and August 31, 1996

Consolidated Statements of Cash Flows for the
 Three Months and Nine Months Ended September 30, 1997 
 and August 31, 1996

Notes to Consolidated Financial Statements


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


                           Part II Other Information

Item 1.   Legal Proceedings

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



<S>                                                         <C>               <C>
                                                            September 30,      November 30,
                                                                1997              1996
                                                            ------------      ------------
ASSETS:
REAL ESTATE INVESTMENTS HELD FOR SALE (Note 1):
Land                                                        $     26,716      $     26,716
Other real estate assets                                           7,228             5,841
                                                            ------------      ------------
          Total real estate investments                           33,944            32,557
                                                            ------------      ------------

OTHER ASSETS:
Cash and equivalents (Note 1)                                      6,945             9,083
Interest and other receivables, net of allowances
  of $1,568 in 1997 and $1,298 in 1996                                56               101
Prepaid expenses and other                                            12                 4
                                                            ------------      ------------
          Total other assets                                       7,013             9,188
                                                            ------------      ------------

          TOTAL                                             $     40,957      $     41,745
                                                            ============      ============

LIABILITIES:
Accounts payable and accrued expenses                       $        300      $        319
Other liabilities                                                    514               628
                                                            ------------      ------------
          Total liabilities                                          814               947
                                                            ------------      ------------

PARTNERS' CAPITAL:
General Partners:
  Capital contributions                                               25                25
  Cumulative income                                               20,412            20,405
  Cumulative distributions                                       (20,430)          (20,430)
                                                            ------------      ------------
                                                                       7                --
                                                            ------------      ------------
  
Limited Partners (322,275 Units):
  Capital contributions, net of offering expenses                294,968           294,968
  Cumulative income                                              104,449           105,111
  Cumulative distributions                                      (359,281)         (359,281)
                                                            ------------      ------------
                                                                  40,136            40,798
                                                            ------------      ------------
          Total Partners' capital                                 40,143            40,798
                                                            ------------      ------------

          TOTAL                                             $     40,957      $     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>              <C>                 <C>
                                                            For the Three Months Ended           For the Nine Months Ended
                                                           September 30,      August 31,      September 30,       August 31,
                                                          ------------       ------------      ------------      ------------
                                                              1997              1996              1997              1996
                                                          ------------      ------------      ------------      ------------
OPERATING REVENUES:
Rental                                                    $        420      $      3,376      $        599      $      1,590
Interest                                                           102               897               308             2,278
Gains on sales of real
   estate investments (Note 3)                                      --                 4                --             1,369
                                                          ------------      ------------      ------------      ------------
           Total operating revenues                                522             4,277               907             5,237
                                                          ------------      ------------      ------------      ------------

OPERATING EXPENSES:
Property operating                                                 397             1,320             1,294             1,914
Depreciation                                                        --               768                --               288
General and administrative                                          52               221               232               648
Losses on sales of real estate investments (Note 3)                 --             6,033                --               430
                                                          ------------      ------------      ------------      ------------
           Total operating expenses                                449             8,342             1,526             3,280
                                                          ------------      ------------      ------------      ------------

INCOME FROM OPERATIONS                                              73            (4,065)             (619)            1,957

MINORITY INTEREST IN CONSOLIDATED
      JOINT VENTURE'S OPERATIONS                                    --               (22)               --                 1
                                                          ------------      ------------      ------------      ------------
NET INCOME (LOSS)                                         $         73      $     (4,087)     $       (619)     $      1,958
                                                          ============      ============      ============      ============

NET INCOME ALLOCATED TO
  GENERAL PARTNERS                                        $          7      $        191      $          7      $      4,334
                                                          ============      ============      ============      ============
                       
NET INCOME (LOSS) ALLOCATED TO
  LIMITED PARTNERS                                        $         66      $     (4,278)     $       (626)     $     (2,376)
                                                          ============      ============      ============      ============

NET INCOME (LOSS) PER UNIT OF LIMITED
      PARTNERSHIP INTEREST                                $       0.21      $     (13.27)     $      (1.94)     $      (7.37)
                                                          ============      ============      ============      ============

DISTRIBUTIONS PER UNIT OF LIMITED
      PARTNERSHIP INTEREST:
      Distributable sale proceeds                         $         --      $         --        $       --      $     123.41
      Distributable cash                                            --                --                --                --
                                                          ------------      ------------      ------------      ------------
                                                          $         --      $         --        $       --      $     123.41
                                                          ============      ============      ============      ============
UNITS OF LIMITED PARTNERSHIP INTEREST                          322,275           322,275           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 Nine Months Ended
                                                                                September 30,               August 31,   
                                                                                ------------              ------------
                                                                                    1997                      1996
                                                                                ------------              ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                                        (619)             $      1,958
     Items reconciling net income to net cash
       provided by operating activities:
           Gains on sales of real estate investments (Note 3)                            --                    (1,369)
           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                                                              38                       611
           Changes in operating assets and liabilities:
              Interest and other receivables                                            (80)                      915
              Accounts payable and accrued expenses                                     131                      (506)
              Other assets and other liabilities, net                                   (11)                      117
                                                                                -----------              ------------
Net cash provided by (used in)operating activities                                     (541)                    2,358
                                                                                -----------              ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sales of real estate investments,
       net of selling expenses (Note 3)                                                  --                    42,901
     Property improvements                                                           (1,435)                   (4,028)
     Settlement of escrow account                                                        --                     1,299
     Maturities of marketable debt securities                                            --                    80,948
     Purchases of marketable debt securities                                             --                   (26,344)
                                                                                -----------              ------------
Net cash provided by (used in) investing activities                                  (1,435)                   94,776
                                                                                -----------              ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Distributions paid to partners                                                      --                  (133,663)
                                                                                -----------              ------------
Net cash used in financing activities                                                    --                  (133,663)
                                                                                -----------              ------------

NET DECREASE IN CASH AND EQUIVALENTS                                                 (1,976)                  (36,529)

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

CASH AND EQUIVALENTS, END OF PERIOD                                                   6,945              $      9,724
                                                                                ===========              ============


</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. 

Valuation of Real Estate Investments

     The Partnership's  last remaining real estate investment was formerly known
as Treasure Island, a mobile home park (the "property"). Existing zoning permits
use of the property only as a mobile home park;  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  park on March 15,  1996,  certain
tenants  remained at the property and were  involved in a rent strike.  Treasure
Island  Associates  (TIA),  the joint  venture  between the  Partnership  and an
unaffiliated  entity  through  which the  Partnership  owns an  interest  in the
property,  is involved in lawsuits concerning certain tenants and the closing of
the  property  as a  mobile  home  park.  See Note 4 for a  discussion  of local
legislation,  administrative requirements and litigation affecting the potential
disposition and value of the property.

Future Developements of the Property

     The Partnership  wishes to insure that  statements made regarding  expected
future  developments  of the Property are  accompanied by meaningful  cautionary
statements  pursuant to the safe harbor  established  in the Private  Securities
Litigation  Reform Act of 1995. These forward looking  statements are based upon
current available data and reflect the Managing General  Partner's  expectations
that the  Registrant  will  successfully  receive  acceptance by the  California
Coastal  Commission  and  the  City  of  Laguna  Beach.  These  forward  looking
statements  reflect the Managing  General  Partner's  expectations and are based
upon current  available  data. As a result,  actual receipt of such approvals is
subject to future events and  uncertainties  which could  materially  affect the
ability of the Managing  General Partner to receive these  approvals.  Among the
factors which could materially affect the Managing General  Partner's  prospects
for  receiving the approvals  are: (i)  uncertainties  regarding the granting of
approvals by the  California  Coastal  Commission or City of Laguna Beach,  (ii)
possible delays in the  administrative  process required to obtain the approvals
which are outside the control of the Managing General Partner;  (iii) objections
by third  parties to the  development  plan  proposed  by the  Managing  General
Partner  for  the  Property,   including   possible   litigation,   which  could
significantly  delay or  ultimately  prevent  the  receipt of one or both of the
approvals.  However,  there  can be no  assurance  that  the  approvals  will be
obtained.  Also, at this time,  even assuming the  acceptances are obtained on a
timely basis,  the Managing  General Partner is unable to predict with certainty
at what point the Property can most effectively be marketed for sale.

     In February of 1996, the  Partnership  submitted a development  proposal to
the City of Laguna  Beach for the  redevelopment  of the  property.  The initial
application  included  a  combination  of  detached  single-family   residences,
multi-family  housing and a resort hotel  complex  including  meeting  rooms and
restaurants.  The application consisted of a local coastal program ("LCP") and a
specific plan reflecting such uses. An LCP is required by California law because
the City has not obtained approval from the California  Coastal Commission for a
Local  Coastal  Program for the Property as required by the  California  Coastal
Act.

     After receiving input on the  development  proposal from community  groups,
City Planning Staff and various City Councilmembers and Planning  Commissioners,
the  application  was suspended on July 30, 1996 and a revised  application  was
submitted in March, 1997. The revised  development  proposal has been reduced in
scale and describes a project consisting of a resort center with up to 250 guest
rooms  and  associated  conference,   restaurant  and  parking  facilities,   47
single-family  lots and  approximately  11.6 acres of public open space. A draft
Environmental Impact Report required by the California Environmental Quality Act
was  prepared  to  examine  the  environmental  impacts of the  project  and was
released  to the public on August 25,  1997.  California  law  requires a 45-day
public review period before the development proposal may be approved by the City
Planning Commission.
<PAGE>
     Hearings  before the City Planning  Commission  commenced in September 1997
and are expected to continue through December;  hearings before the City Council
are expected to commence in January,  1998. A hearing on the application  before
the  California  Coastal  Commission  is expected to take place in the second or
third quarter of 1998.

     Once the LCP and Specific Plan are approved by the City and the  California
Coastal Commission,  the Partnership will seek implementing approvals which will
consist of a site plan for the specific  improvements  to be  constructed on the
Property and a tract map which will  subdivide  the Property for  financing  and
sale purposes.

     Basis of Presentation

     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

     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 "cash and equivalents" . All
such  securities  mature within one year, and any unrealized  gains or losses on
these securities for the six months ended September 30, 1997 are immaterial.

     Income Taxes

     No provision for income taxes has been made since all income and losses are
allocated to the partners for inclusion in their tax returns.

     Allocations Among Partners

     Pursuant to the Partnership  Agreement,  Distributable Cash from operations
if any,  will be  allocated  90.16%  to the  Limited  Partners  and 9.84% to the
Managing  General  Partners.  In  addition  to the  distribution  of  cash  from
operations,  the Partnership  Agreement provides for the General Partners,  as a
class,  to  receive  2%  of  Sale  or  Financing  Proceeds  to  be  distributed,
representing their residual carried interest. 

     Net income or loss is  allocated  to the  Partners in  accordance  with the
Partnership Agreeement.

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 nine months  ended August 31, 1996,  the  Partnership  sold five
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") and Fullerton Business Center South
("Fullerton").  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 a loss of $11.7
million was recognized at the time of their fiscal 1996 sale. For Fullerton, the
Partnership had recorded  provisions for the anticipated  loss prior to the sale
date totalling $7.8 million.

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 park
owners to apply for a  conditional  use permit  ("CUP")  prior to a closure of a
mobile home park. The Ordinance  provides,  in part, that a closure is deemed to
have occurred  whenever  fewer than 75% of the spaces in a park contain  coaches
owned by  tenants  unrelated  to the  park  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 park;  (ii) if the tenant  agrees,  relocate  each tenant to a comparable
mobile home park;  or (iii) pay each tenant the  in-place  value of a comparable
coach in a comparable coastal mobile home park. 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 parks 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 park.

     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.

     Since June 13, 1995, and prior to commencing unlawful detainer actions, TIA
had  executed  settlement  agreements  for 84  tenant  spaces  out of a total of
approximately  159  remaining  tenant  spaces 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
July 1997, all but one of the tenants who signed  pre-unlawful  detainer  action
settlement  agreements  had vacated the  property.  The one  remaining  settling
tenant,  who  is an  employee  of the  managing  agent,  will  vacate  when  his
employment terminates.

     The  pre-unlawful  detainer  settlement  agreements  executed  with tenants
required the payment of a total of approximately  $2,400,000,  most of which has
been paid.

     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 park and payment of  relocation  benefits.
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.

     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 who had
judgments  entered  against them,  have been  evicted.  Six of the renter tenant
cases were tried to a jury,  and a verdict was  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 park 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 park closure.
The Court  permitted  the tenants to stay until August 1997,  provided  they pay
rent, to allow time to vacate. The tenants have appealed from TIA's Judgment for
Possession,  and  had  sought  in the  Appellate  Court  an  additional  stay of
enforcement of TIA's judgment,  pending  resolution of the appeal. The Appellate
Court  denied the request for a further  stay.  All tenants have now vacated the
property.

     Trial was set for June 9, 1997 on TIA's damage claims  against the tenants.
During pre-trial hearings, a series of settlement  conferences evolved that have
resulted in  settlement of TIA's damage  claims  against all tenants.  Under the
terms of the settlements,  besides releasing all claims against TIA, the tenants
must pay to TIA a total of approximately $807,000. The settlements are currently
being formalized and TIA anticipates they will be fully executed by November 30,
1997.

     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.  In or about  September  1997, TIA
settled its claims with TIROA whereby TIROA will dismiss all actions and appeals
in exchange for TIA's assignment of approximately  $114,800 of receivables under
the terms of its settlement agreements with various tenants. The settlement with
TIROA  is  currently  being  formalized  and TIA  anticipates  it will be  fully
executed by November 30, 1997.
 <PAGE>
     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 appealed, and the United States Ninth
Circuit Court of Appeals affirmed the dismissal.

     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 park 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.

     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.  With the  settlement  of the
tenant  unlawful  detainer  actions  and the TIROA  action  and  appeals,  those
remaining consolidated actions will be dismissed.

     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 park.  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.

     A  development  proposal  for the  redevelopment  of the  property has been
submitted to the City of Laguna Beach that  describes a project  consisting of a
resort center and  associated  conference,  restaurant  and parking  facilities,
single-family  lots and public open  space.  Hearings  before the City  Planning
Commission have begun and hearings before the City Council are expected to begin
in the second or third quarter of 1998.

     Once  the  proposal  is  approved  by the  City  of  Laguna  Beach  and the
California Coastal Commission, the implementing approvals for construction,  and
a tract map which will  subdivide the property for financing and sale  purposes,
will  be  sought  from  the  City.  (See  Note  1 for  a  discussion  of  Future
Developments of the Property).
<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.
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 certain of 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. On August 25, 1997,
the Honorable  Michael B. Mukasey,  United States District Judge in the Southern
District  of  New  York,  issued  a  51-page  Opinion  and  Order  granting  the
Defendants' motion to dismiss the Consolidated Action.  Finding that plaintiffs'
RICO claims were barred by the  applicable  statutes of  limitations,  the Court
dismissed  plaintiffs'  RICO claims with  prejudice  and dismissed the remaining
state law claims for lack of subject matter jurisdiction.  The Court declined to
grant  plaintiffs  leave to replead.  On September 24, 1997,  plaintiffs filed a
notice of appeal.  Plaintiffs'  initial appellate briefs are due on November 17,
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  ultimate  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  without
prejudice  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 park (the "property"). Existing
zoning  permits use of the  property  only as a mobile home park;  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 park on March
15, 1996,  certain tenants  remained at the property and were involved in a rent
strike.  Treasure  Island  Associates  (TIA),  the  joint  venture  between  the
partnership  and an unaffiliated  entity through which the  Partnership  owns an
interest in the property, is involved in lawsuits concerning certain tenants and
the closing of the  property as a mobile home park,  (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).
There have been  significant  decisions at the trial court and appellate  levels
that have  disposed of  critical  issues in TIA's  favor.  TIA is, and has been,
engaged  in  extensive   negotiations  in  an  effort  to  resolve  the  various
outstanding tenant and TIA claims on an individual basis.  Although the Managing
General  Partner is endeavoring to swiftly  resolve these matters,  at this time
the  Managing  General  Partner is unable to predict with  certainty  when these
claims  might be  finally  resolved  or at what  point  this  property  can most
effectively be marketed for sale.

     At September 30, 1997, the Partnership and its  consolidated  joint venture
had cash and equivalents of approximately $6.9 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 decreased $2,138,000 from November 30,
1996 to September  30, 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  half of fiscal  1996
totalling $42.9 million.  Cash flows from investing activities are also affected
by increases and decreases in the  Partnership's  portfolio of cash equivalents.
Such cash flows are  affected  by  disbursements  for the  redevelopment  of the
Property.

     Cash Distributions

     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.
<PAGE>
     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 half 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.

     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.

     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 and nine
months ended  September 30, 1997, as compared to the three and nine months ended
August 31, 1996, are primarily attributable to the following:

     During the nine months  ended August 31, 1996,  the  Partnership  sold five
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") and Fullerton Business Center South
("Fullerton").  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 a loss of $11.7
million was recognized at the time of their fiscal 1996 sale. For Fullerton, the
Partnership had recorded  provisions for the anticipated  loss prior to the sale
date totalling $7.8 million.

     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 park
owners to apply for a  conditional  use permit  ("CUP")  prior to a closure of a
mobile home park. The Ordinance  provides,  in part, that a closure is deemed to
have occurred  whenever  fewer than 75% of the spaces in a park contain  coaches
owned by  tenants  unrelated  to the  park  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 park;  (ii) if the tenant  agrees,  relocate  each tenant to a comparable
mobile home park;  or (iii) pay each tenant the  in-place  value of a comparable
coach in a comparable coastal mobile home park. 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 parks 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 park.

     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.

     Since June 13, 1995, and prior to commencing unlawful detainer actions, TIA
had  executed  settlement  agreements  for 84  tenant  spaces  out of a total of
approximately  159  remaining  tenant  spaces 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
July 1997, all but one of the tenants who signed  pre-unlawful  detainer  action
settlement  agreements  had vacated the  property.  The one  remaining  settling
tenant,  who  is an  employee  of the  managing  agent,  will  vacate  when  his
employment terminates.

     The  pre-unlawful  detainer  settlement  agreements  executed  with tenants
required the payment of a total of  approximately  $2,400,000,  all of which has
been paid.

     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 park and payment of  relocation  benefits.
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.

     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 who had
judgments  entered  against them,  have been  evicted.  Six of the renter tenant
cases were tried to a jury,  and a verdict was  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 park 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 park closure.
The Court  permitted  the tenants to stay until August 1997,  provided  they pay
rent, to allow time to vacate. The tenants have appealed from TIA's Judgment for
Possession,  and  had  sought  in the  Appellate  Court  an  additional  stay of
enforcement of TIA's judgment,  pending  resolution of the appeal. The Appellate
Court  denied the request for a further  stay.  All tenants have now vacated the
property.
<PAGE>
     Trial was set for June 9, 1997 on TIA's damage claims  against the tenants.
During pre-trial hearings, a series of settlement  conferences evolved that have
resulted in  settlement of TIA's damage  claims  against all tenants.  Under the
terms of the settlements,  besides releasing all claims against TIA, the tenants
must pay to TIA a total of approximately $807,000. The settlements are currently
being formalized and TIA anticipates they will be fully executed by November 30,
1997.

     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.  In or about  September  1997, TIA
settled its claims with TIROA whereby TIROA will dismiss all actions and appeals
in exchange for TIA's assignment of approximately  $114,800 of receivables under
the terms of its settlement agreements with various tenants. The settlement with
TIROA  is  currently  being  formalized  and TIA  anticipates  it will be  fully
executed by November 30, 1997.

     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 appealed, and the United States Ninth
Circuit Court of Appeals affirmed the dismissal.

     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 park 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.

     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.  With the  settlement  of the
tenant  unlawful  detainer  actions  and the TIROA  action  and  appeals,  those
remaining consolidated actions will be dismissed.

     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 park.  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.
<PAGE>
     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 a development  proposal to
the City of Laguna  Beach for the  redevelopment  of the  property.  The initial
application  included  a  combination  of  detached  single-family   residences,
multi-family  housing and a resort hotel  complex  including  meeting  rooms and
restaurants.  The application consisted of a local coastal program ("LCP") and a
specific plan reflecting such uses. An LCP is required by California law because
the City has not obtained approval from the California  Coastal Commission for a
Local  Coastal  Program for the Property as required by the  California  Coastal
Act.

     After receiving input on the  development  proposal from community  groups,
City Planning Staff and various City Councilmembers and Planning  Commissioners,
the  application  was suspended on July 30, 1996 and a revised  application  was
submitted in March, 1997. The revised  development  proposal has been reduced in
scale and describes a project consisting of a resort center with up to 250 guest
rooms  and  associated  conference,   restaurant  and  parking  facilities,   47
single-family  lots and  approximately  11.6 acres of public open space. A draft
Environmental Impact Report required by the California Environmental Quality Act
was  prepared  to  examine  the  environmental  impacts of the  project  and was
released  to the public on August 25,  1997.  California  law  requires a 45-day
public review period before the development proposal may be approved by the City
Planning Commission.

     Hearings  before the City Planning  Commission  commenced in September 1997
and are expected to continue through December;  hearings before the City Council
are expected to commence in January,  1998. A hearing on the application  before
the  California  Coastal  Commission  is expected to take place in the second or
third quarter of 1998.

     Once the LCP and Specific Plan are approved by the City and the  California
Coastal Commission,  the Partnership will seek implementing approvals which will
consist of a site plan for the specific  improvements  to be  constructed on the
Property and a tract map which will  subdivide  the Property for  financing  and
sale purposes.
<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.
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 certain of 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. On August 25, 1997,
the Honorable  Michael B. Mukasey,  United States District Judge in the Southern
District  of  New  York,  issued  a  51-page  Opinion  and  Order  granting  the
Defendants' motion to dismiss the Consolidated Action.  Finding that plaintiffs'
RICO claims were barred by the  applicable  statutes of  limitations,  the Court
dismissed  plaintiffs'  RICO claims with  prejudice  and dismissed the remaining
state law claims for lack of subject matter jurisdiction.  The Court declined to
grant  plaintiffs  leave to replead.  On September 24, 1997,  plaintiffs filed a
notice of appeal.  Plaintiffs'  initial appellate briefs are due on November 17,
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  ultimate  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  without
prejudice  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>
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 September 30, 1997.

         b) Reports on Form 8-K:

            Report filed on September 18, 1997  disclosing  under Item 5, Other 
            Events, (i) the  granting  of a motion to dismiss  the class  action
            lawsuit, and (ii)developments at the land formerly known as Treasure
            Island.


<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:      ______________________________
                                 Audrey Bommer
                                 Vice President & Chief Financial Officer



Dated:  November 14, 1997