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, 1998


      For Quarter Ended                             Commission File Number
       March 31, 1998                                      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, 1998 and December 31, 1997.

Consolidated Statements of Operations
 for the Three Months Ended March 31, 1998 and March 31, 1997

Consolidated Statements of Cash Flows 
 for the Three Months Ended March 31, 1998 and March 31, 1997

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)
                                   (Unaudited)


<S>                                                                          <C>                      <C>
                                                                              
                                                                                 March 31,          December 31,
                                                                                   1998                 1997
                                                                                ----------            ---------
ASSETS:
REAL ESTATE INVESTMENTS HELD FOR SALE (Note 1):
Land                                                                             $  26,716            $  26,716
Other real estate assets                                                             8,133                7,696
                                                                                 ---------            ---------
           Total real estate investments                                            34,849               34,412
                                                                                 ---------            ---------

OTHER ASSETS:
Cash and equivalents (Note 1)                                                        5,773                6,434
Interest and other receivables, net of allowances
  of $848,000 in 1998 and $1,091 in 1997                                                18                   62
Prepaid expenses and other                                                              25                    8
                                                                                 ---------            ---------
           Total other assets                                                        5,816                6,504
                                                                                 ---------            ---------

           TOTAL                                                                 $  40,665            $  40,916
                                                                                 =========            =========

LIABILITIES:
Accounts payable and accrued expenses                                            $     332            $     367
Other liabilities                                                                      514                  514
                                                                                 ---------            ---------
           Total liabilities                                                           846                  881
                                                                                 ---------            ---------

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                                                                104,132              104,348
  Cumulative distributions                                                        (359,281)            (359,281)
                                                                                 ---------            ---------
                                                                                    39,819               40,035
                                                                                 ---------            ---------
           Total Partners' capital                                                  39,819               40,035
                                                                                 ---------            ---------

           TOTAL                                                                 $  40,665            $  40,916
                                                                                 =========            =========
</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,           March 31,
                                                                                  1998                1997
                                                                                --------             -------
OPERATING REVENUES:
Rental                                                                          $     49             $    33
Interest                                                                              83                  82
                                                                                --------             -------
             Total operating revenues                                                132                 115
                                                                                --------             -------

OPERATING EXPENSES:
property operating                                                                   280                 453
General and administrative                                                            68                 118
                                                                                --------             -------
             Total operating expenses                                                348                 571
                                                                                --------             -------

NET LOSS                                                                        $    216             $   456
                                                                                ========             =======


NET INCOME ALLOCATED TO
  GENERAL PARTNERS                                                              $     --             $    -- 
                                                                                ========             =======

NET LOSS ALLOCATED TO
  LIMITED PARTNERS                                                              $    216             $   456
                                                                                ========             =======

NET LOSS PER UNIT OF LIMITED
       Partnership INTEREST                                                     $   0.67             $  1.41 
                                                                                ========             ======= 

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,   March 31, 
                                                                                 1998         1997
                                                                              ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                 $    (216)   $    (456)
     Items reconciling net loss to net cash
       used in operating activities:
     Bad Debt Expense                                                               (16)         258
     Changes in operating assets and liabilities:
         Interest and other receivables                                              60         (264)
         Accounts payable and accrued expenses                                      (35)         196
         Other assets and other liabilities, net                                    (17)           3
                                                                              ---------    ---------
Net cash used in operating activities                                              (224)        (263)
                                                                              ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     property improvements                                                         (437)        (348)
                                                                              ---------    ---------
Net cash used in investing activities                                              (437)        (348)
                                                                              ---------    ---------

NET DECREASE IN CASH AND EQUIVALENTS                                               (661)        (611)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD                                         6,434        8,921
                                                                              ---------    ---------

CASH AND EQUIVALENTS, END OF PERIOD                                               5,773    $   8,310
                                                                              =========    =========
</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.

     The  Partnership's  last  remaining  real  estate  investment  is the  land
formerly  known as  Treasure  Island  (the  "property"),  a  scenic,  oceanfront
property  situated on approximately 27 acres,  including 4,000 feet of coastline
along the Pacific Ocean,  in Laguna Beach,  California.  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.  The property was
officially closed as a mobile park on March 15, 1996 and all former tenants have
vacated the property.  Treasure  Island  Associates  ("TIA"),  the joint venture
between the Partnership and an unaffiliated entity through which the Partnership
owns an interest in the property,  was involved in lawsuits  concerning  certain
tenants.  (see  Note 3,  Litigation,  for a  discussion  of  local  legislation,
administrative requirements and litigation affecting this property).

Future Developements of the Property

     On February 10, 1998,  TIA announced that it has entered into a non-binding
agreement in principle with The Athens Group for the sale of the property.  The
Athens Group, a Phoenix, Arizona based real estate developer,  plans to purchase
the property and to develop it as an oceanfront resort  community.  The purchase
price  of the  property  will be  based in part on the  entitlements  which  are
obtained.  However,  consummation of the sale is subject to several  conditions,
including approval by the Laguna Beach Planning Commission,  the City Council of
Laguna Beach and the California Coastal Commission of the master plan (Plan) for
the property.  The Partnership  had anticipated  that the sale would close after
City Council  approval of the Plan; the Partnership  presently  anticipates that
the  closing of the sale will be  subject  to and occur  only  after  California
Coastal Commission approval of the Plan. However, there can be no assurance that
a sale will be  consummated.  If a sale to The Athens Group does not take place,
the  Partnership  will assess  available  alternatives,  but expects to sell the
property to another buyer.

     After a series of public  hearings  before the Planning  Commission and the
City Council, on April 15, 1998, the Planning Commission approved the Plan which
now must be  considered  and approved by the City  Council.  The City Council is
scheduled to consider the Plan in June 1998.  Because the property is oceanfront
property,  the Plan must be approved by the California Coastal Commission before
the City of Laguna Beach can issue  further  permits and  approvals to implement
the  Plan.  TIA and the City  will  submit  the Plan to the  California  Coastal
Commission for an expected approval in the fall of 1998. Assuming the California
Coastal Commission  approves the Plan as submitted,  the Planning Commission and
City Council must then consider further  approvals that implement the Plan, such
as a  subdivision  map and  local  coastal  permit.  If the  California  Coastal
Commission modifies the Plan as a condition to approval, such modifications must
be accepted and approved by the City Council  before the Plan,  as modified,  is
final.  The  entitlements  for the  property  that are  actually  granted by the
Planning Commission, the City Council and the California Coastal Commission will
affect the value, and therefore, pricing, of the property.

     The Partnership  wishes to insure that  statements made regarding  expected
future  developments  regarding  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  Partnership's  expectations
that the  Partnership  will  successfully  receive  acceptance  by the  Planning
Commission,  the City Council and the California Coastal Commission and that the
property will be sold to The Athens Group. While the Partnership expects that it
will  successfully  receive  approvals  from the Planning  Commission,  the City
Council and the California Coastal Commission and that the property will be sold
to the Athens  Group,  receipt  of such  approvals  and  closing of the sale are
subject to future events and  uncertainties  which could  materially  affect the
ability of the  Partnership to receive these  approvals and consummate the sale.
Among these factors are: (i)  uncertainties  regarding the granting of approvals
by the  Planning  Commission,  the  City  Council  and  the  California  Coastal
Commission,  (ii)  possible  delays in the  administrative  process  required to
obtain the  approvals  which are outside the control of the  Partnership,  (iii)
objections by third parties to the development  plan proposed by the Partnership
for the property, including possible litigation, which could significantly delay
or  ultimately  prevent the receipt of the  approvals,  and (iv)  failure of The
Athens  Group  to close  for any  reason.  There  can be no  assurance  that the
approvals will be obtained or that the sale will be consummated.  If the sale to
The Athens Group is not consummated  and the Partnership  determines to sell the
property  to another  buyer,  there can be no  assurance  that such sale will be
consummated.
<PAGE>
     Since this is the last remaining  property  investment of the  Partnership,
pursuant to Section 8.1 (ii) of the Partnership's Amended and Restated Agreement
of  Limited  Partnership,  the  sale  of  this  last  property  will  cause  the
dissolution of the Partnership. The Partnership will not be liquidated, however,
until payment of a final liquidating  distribution to the Partnership's partners
of all of the Partnership's remaining assets.

     The following is a summary of significant  accounting  policies followed by
the Partnership in the preparation of its consolidated financial statements:

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 December 31, 1997,  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 three months ended March 31, 1998 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 ended on  December
31, 1997.

<PAGE>
3.   LITIGATION

TREASURE ISLAND ASSOCIATES LITIGATION

     The Partnership owns a joint venture  Partnership  interest in the property
formerly  known as  Treasure  Island (the  "property"),  which was 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. On April 30, 1992 in  compliance  with
the ordinance TIA applied to the City 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.  The Resolution required TIA to mitigate the adverse impact of
the closure on tenants  through  conditions  TIA deemed  violative of California
law.

     On March 24, 1994, TIA filed a lawsuit in the California Superior Court for
the  County of Orange  ("the  Court")  challenging  the  mitigation  conditions.
Treasure Island Residents and Owners  Association  ("TIROA")  intervened in this
action. On October 4, 1994, the Court issued a Writ of Mandate directing,  among
other things,  the City to amend the resolution  limiting  mitigation  measures,
i.e.,  payment of  relocation  benefits  to  tenants  whose  principal  place of
residence on May 1, 1992, was Treasure  Island.  On December 21, 1994, the Court
filed its final decision from which TIROA appealed and TIA cross-appealed.

     On November 15,  1994,  the City  adopted an Amended  Resolution  ("Amended
Resolution")  effectively  complying  with the Court's Writ of Mandate  although
TIA, again,  deemed the mitigation  measures  legally invalid.  Accordingly,  on
February 14, 1995, in order to preserve TIA's right to challenge the validity of
the mitigation measures reimposed by the Amended Resolution,  TIA filed a second
lawsuit with the Court. TIROA also intervened in this action.

     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 as a mitigation measure.  Accordingly,
on 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  $1,270,990  to  secure  TIA's
obligations  under the settlement  agreements  with residents  (described in the
following paragraph), and (ii) pay an additional sum of approximately $1,000,000
to the City to  mitigate  the  adverse  impact  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 between the City
and TIA, the letter of credit expired on June 30, 1996, and was not renewed.

     Following the adoption of the Second Amended  Resolution,  TIA entered into
settlement agreements covering 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.
These agreements required TIA to pay a total of approximately $2,400,000,  which
has been paid.  All but one of the tenants who signed a settlement  agreement at
that time have vacated the property.  The one remaining  settling tenant, who is
an employee of the  managing  agent,  is expected to vacate when his  employment
terminates.

     Of the 75 remaining  tenants who did not enter into a settlement  agreement
with TIA in 1995 following adoption of the Second Amended  Resolution,  62 began
or had begun,  withholding  rent and refusing to vacate the  property,  claiming
they were owed  relocation  benefits  under the Amended  Resolution and that the
Second  Amended  Resolution  was invalid.  On or about April 1995, TIA initiated
unlawful detainer actions (the "non-payment  unlawful  detainers") against these
tenants in the South Orange County  Municipal Court to obtain  possession of its
property, back rent, and damages.

     On May 26,  1995,  TIROA filed a lawsuit with the Court  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. In addition,  on June 16, 1995, 73 tenants and former tenants,  some of
whom had been named in the non-payment unlawful detainers,  filed with the Court
a lawsuit  alleging TIA had breached the implied covenant of good faith and fair
dealing,  unlawfully  discriminated,  breached the  covenant of quiet  enjoyment
and/or constructive  eviction,  violated antitrust laws, and committed unlawful,
unfair and  fraudulent  business  practices,  and for  declaratory  relief.  The
complaint  sought damages and injunctive  relief.  These same tenants and former
tenants also on June 16,  1995,  filed an action in the United  States  District
Court for the Central  District of California  (the "Federal  Action")  alleging
violations  of the  antitrust  provisions  of the Sherman  and Clayton  Acts and
seeking  damages in the estimated  amount of  $15,000,000  as well as injunctive
relief. The allegations contained in the Federal Action mirrored those contained
in the action filed with the State Court the same day.

     On September 1, 1995,  TIA,  pursuant to the Second Amended  Resolution and
California  law,  gave written  notice that all  tenancies  in Treasure  Island,
exclusive  of those  tenancies  for which  tenants  who had signed a  settlement
agreement earlier in 1995, would terminate upon park closure on March 15, 1996.

     In accordance with the Second Amended Resolution, on February 6, 1996, TIA,
mailed to all tenants who had not entered  into a  settlement  agreement in 1995
and who TIA determined qualified for relocation benefits,  checks in amounts not
exceeding $20,000 per tenant.

     In March 1996, TIA initiated  unlawful detainer actions against tenants who
did not execute settlement agreements and had not vacated upon closure.

     On March 26, 1996,  K.P. Rice and 100 other  tenants  filed another  action
against TIA with the Court alleging claims for declaratory  relief,  damages for
statutory violations, and unlawful, unfair or fraudulent business practices.

     On June 10, 1996, one tenant, David B. Mautner, filed an action against TIA
claiming to have been improperly denied relocation benefits.  This case has been
dismissed with prejudice.

     On May 2, 1996,  George Posey, a nonresident  tenant,  filed an action with
the Court against TIA for trespass, constructive eviction, breach of covenant of
quiet  enjoyment,   declaratory  relief,  and  unfair  business  practices.  TIA
successfully  demurred to the complaint and a first amended  complaint was filed
July 19, 1996, seeking to set aside  warehouseman's  lien sale,  cancellation of
instrument,  declaratory relief,  malicious prosecution,  constructive eviction,
breach of covenant of quiet enjoyment,  trespass, and unfair business practices.
Mr. Posey claims that TIA  wrongfully  sold his  mobilehome at a  warehouseman's
lien sale and thereafter  denied him entry to the  mobilehome.  He seeks special
damages  of  $50,000,  general  damages of  $250,000,  and  punitive  damages of
$500,000. No trial date has been set.

     TIROA's  lawsuit  challenging the Second Amended  Resolution,  the tenants'
actions filed with the Court and the non-payment  unlawful detainers and closure
unlawful  detainers were  consolidated  and  transferred to the Court's  Complex
Litigation  Panel.  The Court rejected  TIROA's  challenge to the Second Amended
Resolution and entered  judgment against TIROA and in favor of TIA. In addition,
the Court  entered a judgment of  possession in favor of TIA against all tenants
in the consolidated  unlawful detainer  actions.  TIROA and the tenants appealed
the adverse judgments.

     While these  appeals were  pending TIA, the tenants and TIROA  entered into
settlement  discussions  which resulted in a settlement of all litigation  among
them.  Pursuant to the settlement  the tenants  agreed to pay TIA  approximately
$807,000,  (the  "Settlement  Amount")  of which  $538,000  has been  collected.
Additionally,  the  Settlement  Amount has been  further  reduced by (i) certain
assignments of tenant receivables and, (ii) relocation benefits due to qualified
tenants.  The tenants  and TIROA have  released  all claims  against TIA and all
tenants have vacated the  property and  dismissed  the appeal of the judgment of
possession.  Upon full performance by the tenants of the settlement  agreements,
TIA will dismiss the  unlawful  detainer  actions.  Some tenants have refused to
sign a settlement agreement, or have not fully performed their obligations under
their settlement  agreement,  or are attempting to renegotiate their settlement.
TIA anticipates that the 11 unsigned or unperformed tenant settlement agreements
will either be signed,  fully performed,  or that a judgment will be entered for
money damages against the tenants by mid June 1998.

     The Federal  Action has been dismissed and judgment was entered in favor of
TIA.  The United  States  Court of Appeals for the Ninth  Circuit  affirmed  the
dismissal.

     In February 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.

     The Planning  Commission  approved a development  proposal for the property
consisting of up to 275 hotel rooms and 37  residences on April 15, 1998.  Final
condiseration of the proposal by the City Council is expected in June 1998.

     On February 10, 1998,  TIA announced that it has entered into a non-binding
agreement in principle with The Athens Group for the sale of the property.  The
Athens Group, a Phoenix, Arizona based real estate developer,  plans to purchase
the property and to develop it as an oceanfront resort  community.  The purchase
price  of the  property  will be  based in part on the  entitlements  which  are
obtained.  However,  consummation of the sale is subject to several  conditions,
including approval by the Laguna Beach Planning Commission,  the City Council of
Laguna Beach and the California Coastal Commission of the master plan (Plan) for
the property.  The Partnership  had anticipated  that the sale would close after
City Council  approval of the Plan; the Partnership  presently  anticipates that
the  closing of the sale will be  subject  to and occur  only  after  California
Coastal Commission approval of the Plan. However, there can be no assurance that
a sale will be  consummated.  If a sale to The Athens Group does not take place,
the  Partnership  will assess  available  alternatives,  but expects to sell the
property to another buyer.

     After a series of public  hearings  before the Planning  Commission and the
City Council, on April 15, 1998, the Planning Commission approved the Plan which
now must be  considered  and approved by the City  Council.  The City Council is
scheduled to consider the Plan in June 1998.  Because the property is oceanfront
property,  the Plan must be approved by the California Coastal Commission before
the City of Laguna Beach can issue  further  permits and  approvals to implement
the  Plan.  TIA and the City  will  submit  the Plan to the  California  Coastal
Commission for an expected approval in the fall of 1998. Assuming the California
Coastal Commission  approves the Plan as submitted,  the Planning Commission and
City Council must then consider further  approvals that implement the Plan, such
as a  subdivision  map and  local  coastal  permit.  If the  California  Coastal
Commission modifies the Plan as a condition to approval, such modifications must
be accepted and approved by the City Council  before the Plan,  as modified,  is
final.  The  entitlements  for the  property  that are  actually  granted by the
Planning Commission, the City Council and the California Coastal Commission will
affect the value, and therefore, pricing, of the property.


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 26, 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 District
Court  dismissed  plaintiffs'  RICO  claims with  prejudice  and  dismissed  the
remaining state law claims for lack of subject matter jurisdiction. The District
Court  declined to grant  plaintiffs  leave to replead.  On September  24, 1997,
plaintiffs  filed a notice of  appeal  with  Second  Circuit  Court of  Appeals.
Plaintiffs' appeal has now been briefed and argued and the parties are awaiting
a decision  by the  Second  Circuit  Court of  Appeals.  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.

     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

     Because the land formerly  known as Treasure  Island is the last  remaining
property  investment  of the  Partnership,  pursuant  to Section 8.1 (ii) of the
Partnership's Amended and Restated Agreement of Limited Partnership, the sale of
this  last  property  will  cause  the  dissolution  of  the  Partnership.   The
Partnership  will  not  be  liquidated,   however,  until  payment  of  a  final
liquidating   distribution  to  the   Partnership's   partners  of  all  of  the
Partnership's  remaining assets. (see Part II, Item 1, Legal Proceedings,  for a
discussion of local  legislation,  administrative  requirements  and  litigation
affecting the potential disposition and value of this property).

     At March 31, 1998, the Partnership and its  consolidated  joint venture had
cash and equivalents of approximately  $5.8 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  $661,000 from December 31,
1997 to March 31, 1998 primarily due to disbursements  for certain costs related
to the  redevelopment  of the  property,  net of interest  income  earned on the
Partnership's portfolio of cash equivalents.

     Cash flows are  affected  by  disbursements  for the  redevelopment  of the
property.  Cash  used  in  investing  activities  increased  from  1997  to 1998
primarily due to disbursments for the redevelopment of the property.

     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             1,075.10                  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,  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.

     Results of Operations

     Fluctuations in the  Partnership's  operating  results for the three months
ended March 31, 1998, as compared to the three months ended March 31, 1997,  are
primarily attributable to the following:

     The decreases in property operating expenses and general and administrative
expenses  primarily  relate to declined  activities  at the  Partnership's  last
remaining property.

<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 (the  "property"),  which was 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. On April 30, 1992 in  compliance  with
the ordinance TIA applied to the City 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.  The Resolution required TIA to mitigate the adverse impact of
the closure on tenants  through  conditions  TIA deemed  violative of California
law.

     On March 24, 1994, TIA filed a lawsuit in the California Superior Court for
the  County of Orange  ("the  Court")  challenging  the  mitigation  conditions.
Treasure Island Residents and Owners  Association  ("TIROA")  intervened in this
action. On October 4, 1994, the Court issued a Writ of Mandate directing,  among
other things,  the City to amend the resolution  limiting  mitigation  measures,
i.e.,  payment of  relocation  benefits  to  tenants  whose  principal  place of
residence on May 1, 1992, was Treasure  Island.  On December 21, 1994, the Court
filed its final decision from which TIROA appealed and TIA cross-appealed.

     On November 15,  1994,  the City  adopted an Amended  Resolution  ("Amended
Resolution")  effectively  complying  with the Court's Writ of Mandate  although
TIA, again,  deemed the mitigation  measures  legally invalid.  Accordingly,  on
February 14, 1995, in order to preserve TIA's right to challenge the validity of
the mitigation measures reimposed by the Amended Resolution,  TIA filed a second
lawsuit with the Court. TIROA also intervened in this action.

     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 as a mitigation measure.  Accordingly,
on 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  $1,270,990  to  secure  TIA's
obligations  under the settlement  agreements  with residents  (described in the
following paragraph), and (ii) pay an additional sum of approximately $1,000,000
to the City to  mitigate  the  adverse  impact  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 between the City
and TIA, the letter of credit expired on June 30, 1996, and was not renewed.

     Following the adoption of the Second Amended  Resolution,  TIA entered into
settlement agreements covering 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.
These agreements required TIA to pay a total of approximately $2,400,000,  which
has been paid.  All but one of the tenants who signed a settlement  agreement at
that time have vacated the property.  The one remaining  settling tenant, who is
an employee of the  managing  agent,  is expected to vacate when his  employment
terminates.

     Of the 75 remaining  tenants who did not enter into a settlement  agreement
with TIA in 1995 following adoption of the Second Amended  Resolution,  62 began
or had begun,  withholding  rent and refusing to vacate the  property,  claiming
they were owed  relocation  benefits  under the Amended  Resolution and that the
Second  Amended  Resolution  was invalid.  On or about April 1995, TIA initiated
unlawful detainer actions (the "non-payment  unlawful  detainers") against these
tenants in the South Orange County  Municipal Court to obtain  possession of its
property, back rent, and damages.

     On May 26,  1995,  TIROA filed a lawsuit with the Court  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. In addition,  on June 16, 1995, 73 tenants and former tenants,  some of
whom had been named in the non-payment unlawful detainers,  filed with the Court
a lawsuit  alleging TIA had breached the implied covenant of good faith and fair
dealing,  unlawfully  discriminated,  breached the  covenant of quiet  enjoyment
and/or constructive  eviction,  violated antitrust laws, and committed unlawful,
unfair and  fraudulent  business  practices,  and for  declaratory  relief.  The
complaint  sought damages and injunctive  relief.  These same tenants and former
tenants also on June 16,  1995,  filed an action in the United  States  District
Court for the Central  District of California  (the "Federal  Action")  alleging
violations  of the  antitrust  provisions  of the Sherman  and Clayton  Acts and
seeking  damages in the estimated  amount of  $15,000,000  as well as injunctive
relief. The allegations contained in the Federal Action mirrored those contained
in the action filed with the State Court the same day.

     On September 1, 1995,  TIA,  pursuant to the Second Amended  Resolution and
California  law,  gave written  notice that all  tenancies  in Treasure  Island,
exclusive  of those  tenancies  for which  tenants  who had signed a  settlement
agreement earlier in 1995, would terminate upon park closure on March 15, 1996.

     In accordance with the Second Amended Resolution, on February 6, 1996, TIA,
mailed to all tenants who had not entered  into a  settlement  agreement in 1995
and who TIA determined qualified for relocation benefits,  checks in amounts not
exceeding $20,000 per tenant.

     In March 1996, TIA initiated  unlawful detainer actions against tenants who
did not execute settlement agreements and had not vacated upon closure.

     On March 26, 1996,  K.P. Rice and 100 other  tenants  filed another  action
against TIA with the Court alleging claims for declaratory  relief,  damages for
statutory violations, and unlawful, unfair or fraudulent business practices.

     On June 10, 1996, one tenant, David B. Mautner, filed an action against TIA
claiming to have been improperly denied relocation benefits.  This case has been
dismissed with prejudice.

     On May 2, 1996,  George Posey, a nonresident  tenant,  filed an action with
the Court against TIA for trespass, constructive eviction, breach of covenant of
quiet  enjoyment,   declaratory  relief,  and  unfair  business  practices.  TIA
successfully  demurred to the complaint and a first amended  complaint was filed
July 19, 1996, seeking to set aside  warehouseman's  lien sale,  cancellation of
instrument,  declaratory relief,  malicious prosecution,  constructive eviction,
breach of covenant of quiet enjoyment,  trespass, and unfair business practices.
Mr. Posey claims that TIA  wrongfully  sold his  mobilehome at a  warehouseman's
lien sale and thereafter  denied him entry to the  mobilehome.  He seeks special
damages  of  $50,000,  general  damages of  $250,000,  and  punitive  damages of
$500,000. No trial date has been set.

     TIROA's  lawsuit  challenging the Second Amended  Resolution,  the tenants'
actions filed with the Court and the non-payment  unlawful detainers and closure
unlawful  detainers were  consolidated  and  transferred to the Court's  Complex
Litigation  Panel.  The Court rejected  TIROA's  challenge to the Second Amended
Resolution and entered  judgment against TIROA and in favor of TIA. In addition,
the Court  entered a judgment of  possession in favor of TIA against all tenants
in the consolidated  unlawful detainer  actions.  TIROA and the tenants appealed
the adverse judgments.

     While these  appeals were  pending TIA, the tenants and TIROA  entered into
settlement  discussions  which resulted in a settlement of all litigation  among
them.  Pursuant to the settlement  the tenants  agreed to pay TIA  approximately
$807,000,  (the  "Settlement  Amount")  of which  $538,000  has been  collected.
Additionally,  the  Settlement  Amount has been  further  reduced by (i) certain
assignments of tenant receivables and, (ii) relocation benefits due to qualified
tenants.  The tenants  and TIROA have  released  all claims  against TIA and all
tenants have vacated the  property and  dismissed  the appeal of the judgment of
possession.  Upon full performance by the tenants of the settlement  agreements,
TIA will dismiss the  unlawful  detainer  actions.  Some tenants have refused to
sign a settlement agreement, or have not fully performed their obligations under
their settlement  agreement,  or are attempting to renegotiate their settlement.
TIA anticipates that the 11 unsigned or unperformed tenant settlement agreements
will either be signed,  fully performed,  or that a judgment will be entered for
money damages against the tenants by mid June 1998.

     The Federal  Action has been dismissed and judgment was entered in favor of
TIA.  The United  States  Court of Appeals for the Ninth  Circuit  affirmed  the
dismissal.

     In February 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.

     The Planning  Commission  approved a development  proposal for the property
consisting of up to 275 hotel rooms and 37  residences on April 15, 1998.  Final
condiseration of the proposal by the City Council is expected in June 1998.

     On February 10, 1998,  TIA announced that it has entered into a non-binding
agreement in principle with The Athens Group for the sale of the property.  The
Athens Group, a Phoenix, Arizona based real estate developer,  plans to purchase
the property and to develop it as an oceanfront resort  community.  The purchase
price  of the  property  will be  based in part on the  entitlements  which  are
obtained.  However,  consummation of the sale is subject to several  conditions,
including approval by the Laguna Beach Planning Commission,  the City Council of
Laguna Beach and the California Coastal Commission of the master plan (Plan) for
the property.  The Partnership  had anticipated  that the sale would close after
City Council  approval of the Plan; the Partnership  presently  anticipates that
the  closing of the sale will be  subject  to and occur  only  after  California
Coastal Commission approval of the Plan. However, there can be no assurance that
a sale will be  consummated.  If a sale to The Athens Group does not take place,
the  Partnership  will assess  available  alternatives,  but expects to sell the
property to another buyer.

     After a series of public  hearings  before the Planning  Commission and the
City Council, on April 15, 1998, the Planning Commission approved the Plan which
now must be  considered  and approved by the City  Council.  The City Council is
scheduled to consider the Plan in June 1998.  Because the property is oceanfront
property,  the Plan must be approved by the California Coastal Commission before
the City of Laguna Beach can issue  further  permits and  approvals to implement
the  Plan.  TIA and the City  will  submit  the Plan to the  California  Coastal
Commission for an expected approval in the fall of 1998. Assuming the California
Coastal Commission  approves the Plan as submitted,  the Planning Commission and
City Council must then consider further  approvals that implement the Plan, such
as a  subdivision  map and  local  coastal  permit.  If the  California  Coastal
Commission modifies the Plan as a condition to approval, such modifications must
be accepted and approved by the City Council  before the Plan,  as modified,  is
final.  The  entitlements  for the  property  that are  actually  granted by the
Planning Commission, the City Council and the California Coastal Commission will
affect the value, and therefore, pricing, of the property.

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 26, 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 District
Court  dismissed  plaintiffs'  RICO  claims with  prejudice  and  dismissed  the
remaining state law claims for lack of subject matter jurisdiction. The District
Court  declined to grant  plaintiffs  leave to replead.  On September  24, 1997,
plaintiffs  filed a notice of  appeal  with  Second  Circuit  Court of  Appeals.
Plaintiffs' appeal has now been briefed and argued and the parties are awaiting
a decision  by the  Second  Circuit  Court of  Appeals.  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.

     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 March 31, 1998.

b) Reports on Form 8-K:

            Report  filed on February  18, 1998  disclosing  under Item 5, Other
            Events,  the execution of an Agreement in Principle to sell 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:      /s/ Audrey Bommer
                                 Audrey Bommer
                                 Vice President and
                                 Chief Financial Officer

May 15, 1998