SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________________ to ______________________
Commission file number: 1-8356
DVL, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-2892858
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
70 East 55th Street, New York, New York 10022
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 350-9900
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Former name, former address and former fiscal year, if changed since last
report.
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:
---- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Class Outstanding at November 10, 2000
----------------------------- --------------------------------
Common Stock, $.01 par value 16,560,450
<PAGE>
DVL, INC. AND SUBSIDIARIES
INDEX
Part I. Item 1 - Financial Information: Page No.'s
----------
Consolidated Balance Sheets -
September 30, 2000 (unaudited) and December 31, 1999 1-2
Consolidated Statements of Operations -
Three Months Ended September 30, 2000 (unaudited)
and 1999 (unaudited) 3,5
Nine Months Ended September 30, 2000 (unaudited)
and 1999 (unaudited) 4-5
Consolidated Statement of Shareholders' Equity for
the Nine Months Ended September 30, 2000 (unaudited) 6
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2000 (unaudited)
and 1999 (unaudited) 7-8
Notes to Consolidated Financial Statements (unaudited) 9-13
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 14-20
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 20
Part II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 21
Signature 21
Exhibit Index 22
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
------------- -------------
ASSETS (unaudited)
------
Loans receivable (including amounts maturing
after one year)
Affiliates:
Mortgages due from affiliated partnerships $ 56,463 $ 48,038
Unearned interest (12,397) (5,810)
-------- --------
Net mortgage loans receivable from affiliated
partnerships 44,066 42,228
Others:
Non-performing loans collateralized by limited
partnership interests 399 764
Due from affiliated partnerships 91 48
-------- --------
Total loans receivable 44,556 43,040
Allowance for loan losses 6,376 6,697
-------- --------
Net loans receivable 38,180 36,343
Cash (including restricted cash of $288 and $75,
respectively) 1,779 1,270
Investments
Real estate at cost 528 494
Real estate lease interests 1,249 1,351
Affiliated limited partnerships (net of allowances
for losses of $851 and $927, respectively) 1,203 1,326
Other investments (net of allowances for losses of
$400 for 2000 and 1999) 648 648
Prepaid financing and other assets 551 426
-------- --------
Total assets $ 44,138 $ 41,858
======== ========
See notes to consolidated financial statements.
1
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
September 30, December 31,
2000 1999
--------- ------------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Underlying mortgages payable $ 27,568 $ 27,692
Long-term debt - Blackacre Bridge Capital, LLC 2,045 1,868
Long-term debt - Other 2,853 285
Notes payable - litigation settlement 3,055 3,003
Asset Service Fee Payable - NPO 843 1,467
Accounts payable, security deposits and
accrued liabilities 362 475
Deferred Income 152 -
-------- --------
Total liabilities 36,878 34,790
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock $10.00 par value, authorized -
100 shares for 2000 and 1999, issued - 100 shares
for 2000 and 1999 1 1
Preferred stock, $.01 par value, authorized 5,000,000
shares for 2000 and 0 shares for 1999, issued - 0
shares for 2000 and 1999 -- -
Common stock, $.01 par value, authorized -
90,000,000 shares for 2000 and 40,000,000 shares
for 1999, issued - 16,560,450 shares for 2000 and
1999 166 166
Additional paid-in capital 95,288 95,288
Deficit (88,195) (88,387)
-------- --------
Total shareholders' equity 7,260 7,068
-------- --------
Total liabilities and shareholders' equity $ 44,138 $ 41,858
======== ========
See notes to consolidated financial statements.
2
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)(unaudited)
Three Months Ended
September 30,
2000 1999
---------- ----------
Income from affiliates:
Interest on mortgage loans $ 844 $ 831
Partnership management fees 106 87
Transaction and other fees from partnerships 76 97
Distributions from investments 35 20
Rent and other income 2 2
Income from others:
Net rental income 133 173
Distributions from investments 28 34
Management fees 201 144
Other income and interest 23 10
---------- ----------
1,448 1,398
---------- ----------
Operating expenses:
Recovery of provision for losses (21) (33)
Interest on underlying mortgages 582 600
General and administrative 288 271
Asset Servicing Fee - NPO Management LLC 156 150
Legal and professional fees 112 97
Interest expense
Blackacre Bridge Capital, LLC 70 54
Litigation Settlement Notes 118 116
NPO 29 73
Others 71 28
---------- ----------
1,405 1,356
---------- ----------
Operating income before extraordinary gain 43 42
Extraordinary gain on the settlements
of indebtedness 107 25
---------- ---------
Net income $ 150 $ 67
========== =========
(continued)
See notes to consolidated financial statements.
3
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)(unaudited)
Nine Months Ended
September 30,
-----------------------
2000 1999
---------- ----------
Income from affiliates:
Interest on mortgage loans $ 2,562 $ 2,855
Gain on satisfaction of mortgage loans 194 1,581
Partnership management fees 308 302
Transaction and other fees from partnerships 240 440
Distributions from investments 103 97
Rent and other income 5 15
Income from others
Net rental income 437 432
Distributions from investments 28 34
Management fees 300 192
Other income and interest 51 79
---------- ----------
4,228 6,027
---------- ----------
Operating expenses
Recovery of provision for losses (26) (33)
Interest on underlying mortgages 1,761 2,034
General and administrative 919 970
Asset Servicing Fee - NPO Management LLC 467 450
Legal and professional fees 235 197
Interest expense
NPM Capital LLC - 665
Blackacre Bridge Capital, LLC 203 189
Litigation Settlement Notes 369 361
NPO 118 207
Others 246 73
---------- ----------
4,292 5,113
---------- ----------
Operating (loss) income before extraordinary gain (64) 914
Extraordinary gain on the settlements of
indebtedness 256 1,258
---------- ----------
Net income $ 192 $ 2,172
========== ==========
(continued)
See notes to consolidated financial statements.
4
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(continued)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Basic earnings (loss) per share:
Income (loss) before extraordinary gain $ .00 $ .00 $ (.00) $ .05
Extraordinary gain .01 .00 .01 .08
------------ ---------- ---------- ---------
Net income $ .01 $ .00 $ .01 $ .13
============ ========== ========== =========
Diluted earnings (loss) per share:
Income (loss) before extraordinary gain $ .00 $ .00 $ (.00) $ .01
Extraordinary gain .00 .00 .01 .02
------------ ---------- ---------- ---------
Net income $ .00 $ .00 $ .01 $ .03
============ ========== ========== =========
Weighted average shares outstanding -
basic 16,560,450 16,560,450 16,560,450 16,560,450
Effect of dilutive securities 90,554,464 47,609,919 -- 47,609,919
------------ ---------- ---------- ----------
Weighted average shares outstanding -
diluted 107,114,914 64,170,369 16,560,450 64,170,369
============ ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands except share data)
(unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
--------------- -------------------- paid-in
Shares Amount Shares Amount capital Deficit Total
-------- ------ ----------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance-January 1, 2000 100 $ 1 16,560,450 $ 166 $ 95,288 $ (88,387) $ 7,068
Net income - - - - - 192 192
------- ----- ---------- ------- ------- ------- -----
Balance-September 30, 2000 100 $ 1 16,560,450 $ 166 $ 95,288 $ (88,195) $ 7,260
======= ==== ========== ====== ======= ======= =====
</TABLE>
6
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
--------------------
2000 1999
-------- --------
Cash flows from operating activities:
(Loss) income before extraordinary gain $ (64) $ 914
Adjustments to reconcile net income (loss) before
extraordinary gains to net cash provided by (used in)
operating activities
Recovery of provision for losses (26) (33)
Accrued interest added to indebtedness 203 191
Gain on satisfactions of mortgage loans (194) (1,581)
Amortization of unearned interest on loan receivables (41) (68)
Amortization of real estate lease interests 102 105
Amortization of debt discount - 234
Imputed interest on notes 369 360
Net decrease in real estate - 210
Net (increase) decrease in other assets (117) 357
Net (decrease) in accounts payable and accrued
liabilities (113) (207)
Net(decrease) increase in asset service fee
payable - NPO (624) 306
Net (increase) decrease in due from affiliated
partnerships (43) 408
Net increase in deferred income 152 113
------- ------
Net cash (used in) provided by operating activities (396) 1,309
------- ------
Cash flows from investing activities:
Investments in loans receivable (2,426) --
Collections on loans receivable 3,260 6,829
Real estate capital improvements (42) --
Net decrease in affiliated limited partnership
interests and other investments 123 156
------- ------
Net cash provided by investing activities 915 6,985
------- -----
7
<PAGE>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
(continued)
Nine Months Ended
September 30,
-------------------
2000 1999
-------- --------
Cash flows from financing activities:
Proceeds from new borrowings $ 3,425 $ 588
Repayment of indebtedness (883) (4,595)
Payments on underlying mortgages payable (2,491) (3,200)
Payments related to debt tender offer (61) (354)
-------- --------
Net cash (used in) financing activities (10) (7,561)
-------- --------
Net increase in cash 509 733
Cash, beginning of period 1,270 392
-------- --------
Cash, end of period $ 1,779 $ 1,125
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,856 $ 1,837
======== ========
Cash paid for income taxes $ 24 19
======== ========
Supplemental disclosure of non-cash investing and
financing activities:
======== ========
Net reduction of notes payable - debt tender offer $ 256 $ 1,258
======== ========
See notes to consolidated financial statements.
8
<PAGE>
DVL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Financial Condition
In the opinion of DVL, Inc. ("DVL" or the "Company"), the accompanying
financial statements contain all adjustments (consisting of only normal
accruals) necessary in order to present a fair presentation of the financial
position of DVL and the results of its operations for the periods set forth
herein. The results of the Company's operations for the three and nine months
ended September 30, 2000 should not be regarded as indicative of the results
that may be expected from its operations for the full year. Certain amounts from
the three and nine months ended September 30, 1999 have been reclassified to
conform to the presentation for the three and nine months ended September 30,
2000. For further information, refer to the consolidated financial statements
and the accompanying notes included in DVL's Annual Report on Form 10-K for the
year ended December 31, 1999.
DVL's cash flow generated by its mortgage portfolio is currently used to
pay the underlying first mortgages, and any excess is used for general operating
purposes. NPO Management LLC ("NPO") has agreed to defer amounts due under its
management agreement through December 31, 2000, unless DVL has sufficient cash
to pay such amounts and fund its operations through that date. DVL's anticipated
cash flow provided by operations is sufficient to meet its cash requirements
through January 2001.
In November 1992, DVL, Kenbee Management, Inc. ("Kenbee"), DVL's former
manager, and the limited partners of certain affiliated partnerships reached a
settlement in certain limited partnership class action litigation ("Limited
Partner Settlement") and, concurrently with this settlement, DVL reached
settlements with a number of its creditors providing for the restructuring of a
substantial portion of DVL's indebtedness and loan guarantees. The Limited
Partner Settlement established a settlement fund into which DVL is required to
deposit a portion of its cash flow received from affiliated partnership
mortgages and other loans receivable from affiliated partnerships, as well as a
contribution of 5% of DVL's net income subject to certain adjustments in the
years 2001 to 2012. For the three and nine months ended September 30, 2000, DVL
paid $4,031 and $64,756, respectively, to this fund and for the three and nine
months ended September 30, 1999, DVL paid $6,250 and $18,750, respectively, to
this fund.
2. Loans Receivable/Long Term Debt
In March 2000, DVL purchased five wrap mortgage loans from an unaffiliated
third party which are secured by real estate owned by partnerships in which DVL
is the general partner. The loans were purchased for an aggregate price of
$1,210,000, paid as follows: cash in the amount of $135,000, the issuance of an
unsecured promissory note in the amount of $75,000 to the seller of the loans
maturing on March 1, 2001 without interest, and bank financing of $1,000,000.
All closing costs were paid in cash. This bank financing is a self-amortizing
loan that matures on April 1, 2005, accrues interest at the rate of prime plus
1.5% and requires payments to be made from the net cash proceeds DVL will
receive on these loans. The wrap mortgage loans were previously owned by DVL and
were transferred to the seller in 1992 in settlement of indebtedness.
In March 2000, the Company obtained additional bank financing in the amount
of $1,450,000 that is secured by the assignment of three existing mortgage
receivables and a $405,000 face value mortgage receivable which was purchased
from an entity that is part of the Opportunity Fund (as defined below) for
$315,000. The net proceeds of this loan were used to repay one existing
underlying mortgage of approximately $92,000 and the balance of the funds were
used for general corporate purposes including the payment of accrued fees to NPO
subject to interest accruing at 15% per annum. This bank financing is a
self-amortizing loan that matures on April 1, 2005 with interest accruing at the
rate of prime plus 1.5% and requires payments to be made from the net cash
proceeds DVL will receive on the assigned mortgages.
9
<PAGE>
During the second quarter of 2000, DVL, as the general partner of two
limited partnerships, negotiated the sale of the partnerships' properties of
which DVL held the wrap mortgages. The sold wrap mortgages resulted in aggregate
net final proceeds of $904,909 to DVL as the holder of the mortgages on such
properties. One of the properties sold by DVL was part of the mortgages
purchased by DVL in March 2000, discussed above. DVL paid $700,000 towards the
principal balance of the $1,000,000 loan mentioned above from the proceeds that
DVL received as mortgage holder. The aggregate net proceeds received by DVL from
the satisfaction of the two mortgage loans was $193,902 greater than DVL's
carrying value, which resulted in a gain on satisfaction of mortgages during the
quarter ended June 30, 2000.
In August 2000, DVL purchased two mortgage loans from an entity that is
part of the Opportunity Fund which are secured by real estate owned by
partnerships in which DVL is the general partner. The loans were purchased for
an aggregate price of $900,000, paid as follows: the issuance of a secured
promissory note in the amount of $200,000 to the seller of the loans maturing on
August 31, 2001 with interest accruing at the rate of 12% per annum, compounded
monthly, and bank financing of $700,000. All closing costs were paid in cash.
The bank loan was from the same lender and for the same terms as the $1,000,000
loan obtained in March 2000, discussed above.
3. Note Payable - Litigation Settlement/Debt Tender Offer
In December 1995, DVL completed its obligations under a 1993 settlement of
its class action litigation. The settlement, which was approved by the court in
1993, provided that DVL would issue the plaintiffs (1) 900,000 shares of DVL
common stock at a minimum price of $1.50 per share (or notes to cover any
deficiency in the event that aggregate market value was less than $1,340,000);
(2) $9 million face value of notes due in ten years, with interest at 10%
payable in kind for five years, callable after the third year and payable in the
tenth year in cash or with DVL common stock equal to 110% of the face value of
the notes (valued in 1993 at $3,690,000 by an independent investment banker) and
(3) $1.4 million plus interest at 3% from August 16, 1993 and expenses, payable
in cash or DVL common stock. In December 1995, DVL issued the 900,000 shares of
common stock and as a result of the deficiency in its market value, issued
additional notes with the same terms, in the face amount of $1,386,851 (valued
at $330,000 by DVL). In payment of the $1.4 million plus interest and expenses,
DVL issued 4,017,582 shares of common stock in December 1995.
In December 1995, DVL issued notes (the "Notes") in the aggregate principal
amount of $10,386,851 as a series in conjunction with the settlement agreed upon
in the DVL stockholder class action matter entitled IN RE DEL-VAL FINANCIAL
CORP. SECURITIES LITIGATION. The Notes, which are general unsecured obligations
of DVL, accrue interest at the rate of ten (10%) percent per annum, with
principal under the Notes, together with all accrued and unpaid interest
thereunder, due on December 31, 2005. Pursuant to the terms of the Notes,
accrued and unpaid interest payable on any of the first five anniversary dates
following the issuance of the Notes is payable, at the option of DVL, by the
issuance of similar additional Notes with a principal amount equal to the
accrued and unpaid interest obligation then due. On the four anniversary dates
following the issuance of the Notes, the Company satisfied its interest
obligations thereunder by issuing such additional Notes in lieu of payment of
any cash. The Company currently intends to issue additional Notes, rather than
make payments in cash, to satisfy its interest obligations under the Notes.
From October 27, 1997 through February 27, 1998 (the "First Tender
Expiration Date"), the Company conducted a cash tender offer (the "First Offer")
for the Notes at a price of $0.12 per $1.00 principal amount of the Notes. The
Company purchased and retired a total of $6,224,390 principal amount of Notes in
the First Offer. An additional $392,750 principal amount of the Notes were
purchased by Blackacre Bridge Capital, LLC ("Blackacre"), an unaffiliated
entity, pursuant to the terms of the BC Arrangement (as defined below).
10
<PAGE>
On February 26, 1999, the Company commenced a second cash tender offer (the
"Second Offer"), for its outstanding Notes at a price of $0.12 per $1.00
principal amount of the Notes. During the period from February 26, 1999 through
May 14, 1999, the Company purchased and retired a total of $2,413,652 principal
amount of Notes. In addition, $423,213 principal amount of the Notes were
purchased by Blackacre, pursuant to the terms of the BC Agreement.
On May 18, 2000, the Company commenced a third cash tender offer (the
"Third Offer"), and together with the First and Second Offer, (the "Offers") for
its outstanding Notes at a price of $.12 per $1.00 principal amount of the
Notes. The Third Offer was scheduled to expire on June 30, 2000; however, the
expiration date for the Third offer was extended until August 15, 2000. During
the period from May 18, 2000 through August 15, 2000, the Company purchased and
retired a total of $378,270 principal amount of Notes. Notes with an aggregate
principal amount of approximately $3,838,000 remain outstanding as of September
30, 2000, including those purchased by Blackacre.
The Company has had the option to redeem the outstanding Notes since
January 1, 1999 by issuing additional shares of Common Stock with a then current
market value (determined based on a formula set forth in the Notes), equal to
110% of the face value of the Notes plus any accrued and unpaid interest
thereon. Because the applicable market value of the Common Stock will be
determined at the time of redemption, it is not possible currently to ascertain
the precise number of shares of Common Stock that may be issued to redeem the
outstanding Notes. The redemption of the Notes may cause significant dilution
for current shareholders. The actual dilutive effect cannot be currently
ascertained since it depends on the number of shares to be actually issued to
satisfy the Notes. The Company currently intends to exercise at some point in
the future its redemption option to the extent it does not buy back the
outstanding Notes by means of cash tender offers.
The Offers effected a reduction in the Company's long-term debt and
resulted in extraordinary gains of $25,000 and $107,000 for the three months
ended September 30, 1999, and 2000, respectively, and extraordinary gains of
$1,258,000 and $256,000 for the nine months ended September 30, 1999, and 2000,
respectively. Furthermore, the Offers have reduced the potential dilutive effect
on the Company's current stockholders that would result from redemption of the
Notes for shares of Common Stock. However, given the aggregate principal amount
of Notes which remains outstanding, the potential dilutive effect of such a
redemption is still significant.
In order to fund the acquisition of the Notes in the First and Second
Offers and pay the related costs and expenses, the Company entered into an
amended financing arrangement (the "BC Arrangement") with Blackacre, NPM and NPO
as of October 20, 1997, in the form of a Fourth Amendment to a Loan Agreement
between such parties (as amended, the "Amended Loan Agreement), permitting the
Company to borrow up to $1,760,000 (the amount actually borrowed by the Company
pursuant to the BC Arrangement is referred to as the "BC Loan"). The BC Loan
matures on September 30, 2002 and bears interest at the rate of 12% per annum
compounded monthly payable at maturity. Total borrowings under the BC
Arrangement were $1,560,000 as of September 30, 2000. In addition, Blackacre is
entitled to acquire 15% of all notes acquired by the Company in excess of
$3,998,000 under the same terms and conditions as the Company. Blackacre
acquired notes aggregating $392,750 under these terms from the First Offer and
$423,213 from the Second Offer. DVL funded the Third Offer with available cash.
As further consideration for Blackacre's providing the Company with the BC
Loan, the Company issued to Blackacre 653,000 shares of Common Stock.
The Company's obligations under the BC Loan are secured by all of the
assets of the Company currently pledged to NPO under the Amended Loan Agreement
and the other documents executed in connection therewith. The BC Loan is senior
to all indebtedness of the Company other than indebtedness to NPO and, with
respect to individual assets, the related secured lender. The effective interest
rate to the Company for financial reporting purposes, including the Company's
costs associated with the BC Loan, and the value of the 653,000 shares issued to
Blackacre in connection therewith is approximately 14% per annum. Interest
payable in connection with the BC Loan will be deferred until the Company
satisfies all of its obligations owing to NPO. However, since April 27, 2000 the
Company must pay principal payments of 15% of all proceeds that would otherwise
be remitted to NPO, to Blackacre. Thereafter, interest and principal will be
paid from 100% of the proceeds then available to the Company from the mortgage
collateral held as security for the BC Loan.
11
<PAGE>
4. Other Transactions with Affiliates
A. In April 1998, DVL, an affiliate of Blackacre, and affiliates of NPO
entered into a certain Agreement Among Members (the "Opportunity Agreement"),
providing for an arrangement (the "Opportunity Fund"), pursuant to which
entities would be formed, from time to time, to enter into certain transactions
involving the acquisition of limited partnership interests in the assets of, or
mortgage loans to, affiliated limited partnerships or other assets in which the
Company has an interest. These investment opportunities will be presented to the
Opportunity Fund on a first refusal basis, if the Company, due to financial
constraints, is unable to pursue such business opportunities with its own funds.
The Opportunity Fund is expected to pursue each such opportunity with
respect to which it exercises its right of first refusal through the use of a
special purpose limited liability company. All of the required capital
contributions are to be provided by Blackacre and the NPO affiliates. The
Company will receive up to 20% of the profits from an opportunity after
Blackacre and the NPO affiliates receive the return of their investment plus
preferred returns ranging from 12% to 20%.
B. In June 1998, the Company entered into an agreement to provide
management services to a limited partnership of which certain of its partners
are affiliates of NPO and Blackacre. The agreement will continue until the date
that all these partnerships' assets are sold or at any time prior with 30 days
notice by either party. As compensation, the Company earns an aggregate fee
equal to (a) a monthly fee of $5,000 plus (b) after all the partners of the
partnership have earned a 20% internal rate of return, compounded quarterly, on
their capital contributions, an amount of cash equal to 25% of the profits, as
defined in the agreement. For the three months ended September 30, 2000 and
1999, the Company received management fees equal to $165,000 and $135,172,
respectively, and for the nine months ended September 30, 2000 and 1999 such
fees equaled $195,000 and $165,172, respectively.
C. The Company provides certain accounting and administrative services to
a limited partnership whose general partner is an affiliate of NPO. For the
three month periods ended September 30, 2000 and 1999, the Company received
$12,000 and $9,000, respectively, and for the nine months ended September 30,
2000 and 1999 the Company received $36,000 and $27,000, respectively, in
connection with such services.
D. The Company entered into a property management agreement with an
entity that is part of the Opportunity Fund, pursuant to which the Company
provides property management services in exchange for fees equal to 3% of rent
collections. For the three month periods ended September 30, 2000 and 1999 the
Company received approximately $6,600 and $4,500, respectively, and for the nine
months ended September 30, 2000 and 1999 the Company received approximately
$19,900 and $4,500, respectively, in connection with such services.
E. In November 1999, the Company entered into an agreement to provide
management, accounting and administrative services to an entity whose partners
are affiliates of NPO. As compensation, the Company receives a monthly fee, the
majority of which is deferred until the occurrence of certain capital events or
if a certain level of annual cash flow is attained, and an annual incentive fee
if certain levels of profitability occur. For the three months ended September
30, 2000, the Company was paid $6,000 and accrued fees of $19,500 and for the
nine months ended September 30, 2000 the Company was paid $18,000 and accrued
fees of $58,500.
F. Millennium Financial Services, an affiliate of NPO, received from the
Company approximately $75,000 and $67,000 for the three months ended September
30, 2000 and 1999 and approximately $91,000 and $77,000 for the nine months
ended September 30, 2000 and 1999, respectively, representing compensation and
reimbursement of expenses for collection services with respect to limited
partner notes owed to the Company.
G. During the third quarter of 2000, DVL as the general partner of a
limited partnership, negotiated the sale of such partnership's property. This
sale resulted in net proceeds of approximately $2,323,000 to an entity that is
part of the Opportunity Fund as the holder of the mortgage on such property. In
addition, an entity whose partners are affiliates of NPO, earned a brokers
commission of $64,000 from the sale of this partnership's property.
12
<PAGE>
5. Shareholder's Equity
In February 2000, DVL amended its Certificate of Incorporation in order to
(a) increase the number of authorized shares of DVL's common stock, $.01 par
value, from 40,000,000 to 90,000,000 and (b) authorize 5,000,000 shares of
"blank check" preferred stock, $.01 par value. However, based upon the current
market price of the Company's common stock, there are not sufficient authorized
shares to be issued upon the exercise of the NPM warrants and the redemption of
the Notes.
6. Subsequent Events
In October 2000, DVL executed an agreement to purchase the land, buildings,
and improvements from a limited partnership who owns seven buildings located in
an industrial park in Kearny, NJ, for a purchase price of $3,000,000. Currently,
DVL is leasing all of these buildings, under a master lease agreement, and
subletting to various unrelated tenants. DVL paid $25,000 in cash as a deposit
for this purchase. DVL is negotiating to obtain financing that will fund this
purchase. It is anticipated that the purchase will close later this year.
In October 2000, DVL executed an agreement to purchase the fee title in a
parcel of land in Kearny, NJ from an unrelated third party for a purchase price
of $365,000. DVL has paid $125,000 in cash as a deposit for this purchase. DVL
is negotiating to obtain financing that will fund this purchase. It is
anticipated that the purchase will close in early 2001.
13
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This September 30, 2000, Quarterly Report on Form 10-Q contains statements
which constitute forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Those statements include statements regarding
the intent, belief or current expectations of DVL and its management team. DVL's
stockholders and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements. Such risks and uncertainties
include, among other things, general economic conditions and other risks and
uncertainties that are discussed herein and in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.
Recent Debt Tender Offers
-------------------------
From October 27, 1997 through February 27, 1998 (the "First Tender
Expiration Date"), the Company conducted a cash tender offer (the "First Offer")
for its outstanding 10% redeemable Promissory Notes due December 31, 2005 (the
"Notes") at a price of $0.12 per $1.00 principal amount of the Notes. The Notes
were originally issued in December 1995 in conjunction with the settlement of a
stockholder class action lawsuit. The Company purchased and retired a total of
$6,224,390 principal amount of Notes in the First Offer. An additional $392,750
principal amount of the Notes were purchased by Blackacre Bridge Capital, LLC
("Blackacre"), an unaffiliated entity, pursuant to the terms of the BC
Arrangement (as defined below).
On February 26, 1999, the Company commenced a second cash tender offer (the
"Second Offer"), for its outstanding Notes at a price of $0.12 per $1.00
principal amount of the Notes. During the period from February 26, 1999 through
May 14, 1999, the Company purchased and retired a total of $2,413,652 principal
amount of Notes. In addition, $423,213 principal amount of the Notes were
purchased by Blackacre, pursuant to the terms of the BC Agreement.
On May 18, 2000, the Company commenced a third cash tender offer (the
"Third Offer", and together with the First Offer and the Second Offer, the
"Offers") for its outstanding Notes at a price of $.12 per $1.00 principal
amount of the Notes. The Third Offer was scheduled to expire on June 30, 2000,
however, the expiration date was extended until August 15, 2000. During the
period from May 18, 2000 through August 15, 2000, the Company purchased and
retired a total of $378,270 principal amount of Notes. Notes with an aggregate
principal amount of approximately $3,838,000 remain outstanding as of September
30, 2000, including those purchased by Blackacre.
The Company has had the option to redeem the outstanding Notes since
January 1, 1999 by issuing additional shares of Common Stock with a then current
market value (determined based on a formula set forth in the Notes), equal to
110% of the face value of the Notes plus any accrued and unpaid interest
thereon. Because the applicable market value of the Common Stock will be
determined at the time of redemption, it is not possible currently to ascertain
the precise number of shares of Common Stock that may have to be issued to
redeem the outstanding Notes. The redemption of the notes may cause significant
dilution for current shareholders. The actual dilutive effect cannot be
currently ascertained since it depends on the number of shares to be actually
issued to satisfy the Notes. The Company currently intends to exercise at some
point in the future its redemption option to the extent it does not buy back the
outstanding Notes by means of cash tender offers.
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<PAGE>
The Offers effected a reduction in the Company's long-term debt and
resulted in extraordinary gains of $25,000 and $107,000 for the three months
ended September 30, 1999 and 2000, respectively, and extraordinary gains of
$1,258,000 and $256,000 for the nine months ended September 30, 1999 and 2000,
respectively. Furthermore, the Offers have reduced the potential dilutive effect
on the Company's current stockholders that would result from redemption of the
Notes for shares of Common Stock. However, given the aggregate principal amount
of Notes which remains outstanding, the potential dilutive effect of such a
redemption is still significant.
In order to fund the acquisition of the Notes in the First and Second
Offers and pay the related costs and expenses, the Company entered into an
amended financing arrangement (the "BC Arrangement") with Blackacre, NPM Capital
LLC ("NPM") and NPO Management LLC ("NPO") as of October 20, 1997, in the form
of a Fourth Amendment to a Loan Agreement between such parties (as amended, the
"Amended Loan Agreement), permitting the Company to borrow up to $1,760,000 (the
amount actually borrowed by the Company pursuant to the BC Arrangement is
referred to as the "BC Loan"). The BC Loan matures on September 30, 2002 and
bears interest at the rate of 12% per annum compounded monthly payable at
maturity. Total borrowings under the BC Arrangement were $1,560,000 as of
September 30, 2000. In addition, Blackacre is entitled to acquire 15% of all
Notes acquired by the Company in excess of $3,998,000 under the same terms and
conditions as the Company. Blackacre acquired Notes aggregating $392,750 under
these terms from the First Offer and $423,213 from the Second Offer. DVL funded
the Third Offer with available cash.
As further consideration for Blackacre's providing the Company with the BC
Loan, the Company issued to Blackacre 653,000 shares of Common Stock.
The Company's obligations under the BC Loan are secured by all of the
assets of the Company currently pledged to NPO under the Amended Loan Agreement
and the other documents executed in connection therewith. The BC Loan is senior
to all indebtedness of the Company other than indebtedness to NPO and, with
respect to individual assets, the related secured lender. The effective interest
rate to the Company for financial reporting purposes, including the Company's
costs associated with the BC Loan, and the value of the 653,000 shares issued to
Blackacre in connection therewith, is approximately 14% per annum. Interest
payable in connection with the BC Loan will be deferred until the Company
satisfies all of its obligations owing to NPO. However, since April 27, 2000 the
Company must pay principal payments of 15% of all proceeds that would otherwise
be remitted to NPO, to Blackacre. Thereafter, interest and principal will be
paid from 100% of the proceeds then available to the Company from the mortgage
collateral held as security for the BC Loan.
Opportunity Fund
----------------
In April 1998, DVL, an affiliate of Blackacre and affiliates of NPO entered
into a certain Agreement Among Members (the "Opportunity Agreement"), providing
for an arrangement (the "Opportunity Fund"), pursuant to which entities would be
formed, from time to time, to enter into certain transactions involving the
acquisition of limited partnership interests in the assets of, or mortgage loans
to, Affiliated Limited Partnerships or other assets in which the Company has an
interest. These investment opportunities will be presented to the Opportunity
Fund on a first refusal basis, if the Company, due to financial constraints, is
unable to pursue such business opportunities with its own funds.
The Opportunity Fund is expected to pursue each opportunity with respect to
which it exercises its right of first refusal through the use of a special
purpose limited liability company. All of the required capital contributions are
to be provided by Blackacre and the NPO affiliates. The Company will receive up
to 20% of the profits from an opportunity after Blackacre and the NPO affiliates
receive a return of their investment plus preferred returns ranging from 12% to
20%.
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<PAGE>
In March 2000, the Company purchased from an entity that is part of the
Opportunity Fund a mortgage in the face amount of approximately $405,000 for the
sum of $315,000.
As of October 31, 2000 the Opportunity Fund has purchased 15 wrap mortgages
of Affiliated Limited Partnerships from unaffiliated third parties (seven were
purchased in 1998, one was purchased in 1999 and seven mortgages were purchased
in January 2000), acquired limited partnership units from unaffiliated
individuals in three Affiliated Limited Partnerships, and acquired a property
owned by an Affiliated Limited Partnership. In addition, during 1999, the
Opportunity Fund acquired the land underlying this property from DVL. The
Company performs management services for the entities that comprise the
Opportunity Fund and receives fees for such services.
In May and July 2000, the Company as general partner of such partnerships
negotiated the sale of two partnerships' property, which resulted in aggregate
net mortgage proceeds of approximately $4,088,000 to the Opportunity Fund as the
holder of both of the mortgages relating to the sold properties.
In August 2000, the Company purchased from an entity that is part of the
Opportunity Fund two mortgages which have aggregate face amounts due of
approximately $2,196,000 for the sum of $900,000. As part of this purchase, the
Company executed a secured promissory note in the amount of $200,000 to the
seller of the loans maturing on August 31, 2001 with interest accruing at the
rate of 12% per annum.
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<PAGE>
RESULTS OF OPERATIONS
---------------------
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999
DVL realized operating income before extraordinary gain of $43,000 for the
three months ended September 30, 2000 compared to operating income before
extraordinary gain of $42,000 for the three months ended September 30, 1999. DVL
realized net income of $150,000, after extraordinary gains of $107,000, for the
three months ended September 30, 2000 compared to net income of $67,000, after
extraordinary gains of $25,000, for the three months ended September 30, 1999.
These extraordinary gains resulted from debt settlements in connection with the
Offers.
Interest income on mortgage loans from affiliates increased slightly from
1999 to 2000, whereas, interest expense on underlying mortgages decreased
slightly when comparing the same period. During 2000, the Company purchased
eight new mortgage loans, some of which have underlying mortgages, however, the
additional interest income and interest expense that are generated from these
purchases were partially offset by the disposition of certain existing mortgage
loans in DVL's mortgage portfolio.
During the third quarter of 2000 and 1999, DVL earned transaction and other
fees from affiliated partnerships of $76,000 and $97,000, respectively.
Transaction fees are earned in conjunction with the sales of partnership
properties and the refinancing of underlying mortgages.
Net rental income from others decreased in 2000 from 1999 primarily due to
greater repairs and maintenance costs, as well as, a $10,000 per month rent
reduction granted to a major tenant, beginning in September 2000. This decrease
in net rental income was partially offset by higher occupancy of the real estate
properties, as well as higher rents to new tenants.
Management fees from others increased from $144,000 in 1999 to $201,000 in
2000. The increase was a result of a new management service agreement entered
into in November 1999 with an entity whose partners are affiliates of NPO, to
render certain accounting and administrative services, as well as, a higher
incentive management fee earned and paid in 2000 compared to 1999, from an
entity that is owned by affiliates of BCG and NPO.
General and administrative expenses increased in 2000 from 1999, primarily
due to greater franchise tax costs.
The asset servicing fee due from the Company to NPO Management LLC,
increased in 2000 from 1999 due to an increase in the consumer price index, as
provided for in the governing agreement.
Legal and professional fees increased in 2000 from 1999 primarily due to
higher costs incurred relating to transaction fees earned.
Interest expense associated with the NPO asset servicing fee decreased in
2000 from 1999 due to a reduction in the outstanding balance due to NPO.
Interest expense relating to other debts increased in 2000 from 1999 due to
the Company entering into two new bank loans in the aggregate principal amount
of $2,450,000 in March 2000. The Company paid $700,000 towards the principal
balance of one of such loans in May 2000; however, an additional $700,000 was
borrowed in August 2000 to partially fund the acquisition of additional mortgage
loans.
17
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
DVL incurred an operating loss before extraordinary gain of $64,000 for the
nine months ended September 30, 2000 compared to operating income before
extraordinary gain of $914,000 for the nine months ended September 30, 1999. DVL
realized net income of $192,000, after extraordinary gains of $256,000, for the
nine months ended September 30, 2000, compared to net income of $2,172,000,
after extraordinary gains of $1,258,000, for the nine months ended September 30,
1999. These extraordinary gains resulted from debt settlements in connection
with the Offers.
Interest income on mortgage loans from affiliates and interest expense on
underlying mortgages decreased from 1999 to 2000. During 2000, the Company
purchased eight new mortgage loans, some of which have underlying mortgages;
however, the additional interest income and interest expense that is generated
from these purchases were offset by the disposition of certain existing mortgage
loans in DVL's mortgage portfolio.
During the nine month periods ended September 30, 2000 and 1999, DVL
recognized gains on satisfaction of mortgage loans of $194,000 and $1,581,000,
respectively, and earned transaction and other fees from affiliated partnerships
of $240,000 and $440,000, respectively. The gains resulted from the Company
collecting net proceeds on the satisfaction of mortgage loans that were greater
than the net carrying value. Transaction fees are earned in conjunction with the
sales of partnership properties and the refinancing of underlying mortgages.
Net rental income from others increased slightly in 2000 from 1999. The
increase in net rental income was primarily due to higher occupancy at the real
estate properties, as well as, higher rents to new tenants. However, the
increase was partially offset by greater repairs and maintenance costs, as well
as, a $10,000 per month rent reduction granted to a major tenant beginning in
September 2000.
Management fees from others increased from $192,000 in 1999 to $300,000 in
2000. The increase was a result of a new management service agreement entered
into in November 1999 with an entity whose partners are affiliates of NPO, to
render certain accounting and administrative services, as well as, a higher
incentive management fee earned and paid in 2000 compared to 1999, from an
entity that is owned by affiliates of BCG and NPO.
General and administrative expenses decreased in 2000 from 1999, primarily
due to a decrease in salaries and personnel related costs. However, this
decrease was partially offset by greater franchise tax costs.
The asset servicing fee due from the Company to NPO Management LLC,
increased in 2000 from 1999 due to an increase in the consumer price index, as
provided for in the governing agreement.
Legal and professional fees increased in 2000 from 1999 primarily due to
the reduction of in-house legal personnel and the use of outside legal counsel
for all corporate matters, including those costs incurred relating to
transaction fees earned.
Interest expense due to NPM Capital, LLC was $665,000 in 1999 compared to
$0 in 2000 since this loan was fully satisfied in May 1999.
Interest expense associated with the NPO asset servicing fee decreased in
2000 from 1999 due to a reduction in the outstanding balance due to NPO.
Interest expense relating to other debts increased in 2000 from 1999 due to
the Company entering into two new bank loans in the aggregate principal amount
of $2,450,000 in March 2000. The Company paid $700,000 towards the principal
balance of one of such loans in May 2000, resulting in the costs of financing
this loan being amortized at an accelerated rate. In addition, the Company
borrowed $700,000 in August 2000, to partially fund the acquisition of
additional mortgage loans.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operations is generated principally from
rental income from its leasehold interests in real estate, management fees from
the operation of Affiliated Limited Partnerships and transaction and other fees
received as a result of the sale and/or refinancing of partnership properties
and mortgages. The Company's portfolio of loans to Affiliated Limited
Partnerships currently does not produce substantial cash flow from operations
because most of the cash received from the mortgages is used to pay the debt
service on mortgages on the properties senior to those held by the Company, with
any excess being used to pay certain other creditors, including NPO.
The Company is currently able to meet its operating expenses, other than
the management fee payable to NPO, with income from operations. The Company has
in the past, and expects in the future, to augment its cash flow with the
proceeds from the sale or refinancing of assets and borrowings. NPO has agreed
to waive any events of default that may exist under its servicing agreements due
to the deferral of fees through December 31, 2000. As of August 1, 2000, the
Company owed approximately $771,000 to NPO. From January 1, 2000 through August
1, 2000, the Company paid an aggregate of $1,104,400 to NPO as partial payment
of amounts due, as well as current asset servicing fees. Of this amount paid,
$750,000 was paid out of proceeds from the refinancing in March 2000 discussed
below. DVL believes that its current liquid assets and credit resources will be
sufficient to fund operations on a short term basis as well as on a long term
basis.
In 1997, the Company entered into the BC Loan with Blackacre, permitting
the Company to borrow up to $1,760,000 to fund the purchase of Notes, and to pay
related costs and expenses. A total of $1,060,000 had been borrowed as of the
expiration of the First Offer and an additional $500,000 was borrowed as of May
14, 1999 to fund the Second Offer. During the period from May 18, 2000 through
August 1, 2000, DVL expended approximately $30,000 from available cash to fund
the purchase of notes, and to pay related costs and expenses, for the Third
Offer. As further consideration for Blackacre's providing the Company with the
BC Loan, the Company issued to Blackacre 653,000 shares of Common Stock. The BC
Loan matures on September 30, 2002 and bears interest at the rate of 12% per
annum. The effective rate to the Company for financial reporting purposes,
including the Company's costs associated with the BC Loan, and the value of the
653,000 shares issued to Blackacre is approximately 14%. Interest payable in
connection with the BC Loan will be payable in the form of the issuance of
additional notes until the Company satisfies all of its obligations owing to
NPO. However, since April 27, 2000, the Company must pay principal payments of
15% of all proceeds that would have otherwise been remitted to NPO, to
Blackacre. Once NPO is paid in full, interest and principal will be paid from
100% of the proceeds then available to the Company from the mortgage collateral
held as security for the BC Loan.
From January 1998 through May 1999, NPM advanced additional amounts
aggregating $370,000 to DVL to fund quarterly payments to a creditor of the
Company. These advances were not required under the original loan transaction
with NPM, consummated in September 1996 (the "Original Loan"). These advances
bore interest at 15% per annum and were paid pari passu with the Original Loan.
The Original Loan, together with all advances, are referred to in the aggregate
herein as the "NPM Loan". In May 1999, DVL paid all remaining outstanding
amounts due on the NPM Loan.
In March 2000, DVL purchased five wrap mortgage loans from an unaffiliated
third party which are secured by real estate properties owned by partnerships in
which DVL is the general partner. The loans were purchased for an aggregate
price of $1,210,000, plus closing costs, paid as follows: cash of $135,000, the
issuance of an unsecured promissory note in the amount of $75,000 to the seller
of the loans maturing on March 1, 2001 without interest, and bank financing of
$1,000,000. This bank financing is a self amortizing loan that matures on April
1, 2005 with interest accruing at the rate of prime plus 1.5% and requires
payments to be made from the net cash proceeds DVL will receive on these loans.
The wrap mortgage loans were previously owned by DVL and were transferred to the
seller in 1992 in settlement of indebtedness. In May 2000, DVL, as the general
partner of a limited partnership that owned one of the real estate properties
that secured this bank loan, negotiated the sale of the partnerships' property.
DVL paid $700,000, towards the principal balance of the loan from the proceeds
that DVL received as mortgage holder.
19
<PAGE>
In March 2000, the Company obtained additional bank financing in the amount
of $1,450,000 that is secured by the assignment of three existing mortgage
receivables and a $405,000 face value mortgage receivable which was purchased
from an entity that is part of the Opportunity Fund for $315,000. The net
proceeds of this loan were used to repay one existing underlying mortgage of
approximately $92,000 and the balance of the funds were used for general
corporate purposes including the payment of accrued fees to NPO. This bank
financing is a self-amortizing loan that matures on April 1, 2005 with interest
accruing at the rate of prime plus 1.5% and requires payments to be made from
the net cash proceeds DVL will receive on these loans.
During the second quarter of 2000, DVL purchased two mortgage loans from an
entity that is part of the Opportunity Fund which are secured by real estate
owned by partnerships in which DVL is the general partner. The loans were
purchased for an aggregate price of $900,000, paid as follows: the issuance of a
secured promissory note in the amount of $200,000 to the seller of the loans
maturing on August 31, 2001 with interest accrued at the rate of 12% per annum,
compounded monthly, and bank financing of $700,000. All closing costs were paid
in cash. The bank loan was from the same lender and for the same terms as the
$1,000,000 loan obtained in March 2000, discussed above.
In October 2000, DVL executed an agreement to purchase the land, buildings,
and improvements from a limited partnership who owns seven buildings located in
an industrial park in Kearney, NJ, for a purchase price of $3,000,000.
Currently, DVL is leasing all of these buildings, under a master lease
agreement, and subletting to various unrelated tenants. DVL has paid $25,000 in
cash as a deposit for this purchase. DVL is attempting to obtain financing that
will fund this purchase. It is anticipated that the purchase will close later
this year.
In October 2000, DVL executed an agreement to purchase the fee title in a
parcel of land in Kearney, NJ from an unrelated third party for a purchase price
of $365,000. DVL has paid $125,000 in cash as a deposit for this purchase. DVL
is attempting to obtain financing that will fund this purchase. It is
anticipated that the purchase will close later this year.
IMPACT OF INFLATION AND CHANGES IN INTEREST RATES
-------------------------------------------------
The Company's portfolio of mortgage loans made to Affiliated Limited
Partnerships consists primarily of loans made at fixed rates of interest.
Therefore, increases or decreases in market interest rates are generally not
expected to have an effect on the Company's earnings. Other than as a factor in
determining market interest rates, inflation has not had a significant effect on
the Company's net income.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DVL has no substantial cash flow exposure due to interest rate changes for
long term debt obligations, because all long-term debt is at fixed rates. DVL
primarily enters into long-term debt for specific business purposes such as the
repurchase of debt at a discount or the acquisition of mortgage loans.
DVL's ability to realize on its mortgage holdings is sensitive to interest
rate fluctuations in that the sales prices of real property and mortgages vary
with interest rates.
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Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(A) Exhibits:
10.27 - First Amendment to Loan Agreement, Pledge Agreement,
Promissory Note and Other Documents dated August 2000,
relating to a loan from Pennsylvania Business Bank to DVL in
the original principal amount of $1,000,000.
10.28 - Mortgage Assignment Agreement dated August 2000, relating to
an assignment and sale of two mortgage loans from Rumson
Mortgage Holdings, LLC to DVL for a total sale price of
$900,000.
10.29 - Note in the original principal amount of $200,000, dated
August 2000, relating to the sale of two mortgage loans from
Rumson Mortgage Holdings, LLC to DVL.
11 - Statement RE: Computation of Earnings Per Share
27 - Financial Data Schedule
(B) There were no reports on Form 8-K filed during the three months ended
September 30, 2000.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DVL, INC.
By: /s/ GARY FLICKER
--------------------------------
Gary Flicker, Executive Vice
President and Chief Financial
Officer (Principal Financial and
Chief Accounting Officer)
November 10, 2000
21
<PAGE>
EXHIBIT INDEX
-------------
10.27 - First Amendment to Loan Agreement, Pledge Agreement,
Promissory Note and Other Documents dated August 2000,
relating to a loan from Pennsylvania Business Bank to DVL in
the original principal amount of $1,000,000.
10.28 - Mortgage Assignment Agreement dated August 2000, relating to
an assignment and sale of two mortgage loans from Rumson
Mortgage Holdings, LLC to DVL for a total sale price of
$900,000.
10.29 - Note in the original principal amount of $200,000, dated
August 2000, relating to the sale of two mortgage loans from
Rumson Mortgage Holdings, LLC to DVL.
11 - Statement RE: Computation of Earnings Per Share - Three
and Nine Months
27 - Financial Data Schedule
22
