UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 33-15597
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DIVERSIFIED HISTORIC INVESTORS V
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2479468
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
SUITE 500, 1521 LOCUST STREET, PHILADELPHIA, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
N/A
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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
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - June 30, 1995 (unaudited) and
December 31, 1994
Consolidated Statements of Operations - For the Three Months and
Six Months Ended June 30, 1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows - For the Six Months Ended
June 30, 1995 and 1994 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of June 30, 1995, Registrant had cash of $59,323. Such funds
are expected to be used to pay liabilities and general and administrative
expenses of Registrant, and to fund cash deficits of the properties. Cash
generated from operations is used primarily to fund operating expenses and debt
service. If cash flow proves to be insufficient, the Registrant will attempt to
negotiate loan modifications with the various lenders in order to remain current
on all obligations. The Registrant is not aware of any additional sources of
liquidity.
As of June 30, 1995, Registrant had restricted cash of $262,627
consisting primarily of funds held as security deposits, replacement reserves
and escrows for taxes and insurance. As a consequence of the restrictions as to
use, Registrant does not deem these funds to be a source of liquidity.
On February 9, 1995 the Registrant refinanced the outstanding
bonds on the Radisson Redick. The refinancing changed the interest rate from
7.75% to a variable rate, giving due regard to prevailing financial market
conditions, which in no event shall exceed 7.75%. The Registrant expects that
the change to a variable rate will result in lower interest expense and
additional positive cash flow. In connection with the refinancing, the
Registrant incurred approximately $250,000 of loan costs which were capitalized
and are being amortized over the remaining term of the bonds. The loan costs
were financed with a note payable which bears interest at 13% and is payable in
twenty-one equal installments of $10,550.24 of principal plus interest
commencing March 1, 1995.
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<PAGE>
(2) Capital Resources
Due to the recent rehabilitations of the properties, any capital
expenditures needed are generally replacement items and are funded out of cash
from operations or replacement reserves, if any. However, as part of the
determination of the best ultimate use for the commercial space at St. Mary's
Market, the Registrant will need to identify the source of financing for the
necessary fit-up costs. Such costs have not been identified or committed to, and
sources of financing for such costs have not been identified as of the date
hereof. Except for such costs, the Registrant is not aware of any factors which
would cause historical capital expenditure levels not to be indicative of
capital requirements in the future and accordingly, does not believe that it
will have to commit material resources to capital investment for the foreseeable
future.
The Registrant will seek to refinance the outstanding Radisson
Redick bonds which are scheduled to mature on November 1, 1996. There can be no
assurances that such financing will be available and, if not, the property will
be marketed for sale.
(3) Results of Operations
During the second quarter of 1995, Registrant incurred a net
loss of $86,750 ($7.71 per limited partnership unit) compared to a net loss of
$5,687 ($.51 per limited partnership unit) for the same period in 1994. Included
within the second quarter of 1994 loss is other income of $172,000 relating to
the Radisson Redick (described below). For the first six months of 1995,
Registrant incurred a loss of $286,985 ($25.50 per limited partnership unit)
compared to a net loss of $416,939 ($37.05 per limited partnership unit) for the
same period in 1994. Included in the first six months of 1994 were two
non-recurring expenses (developer's fee and legal fees totaling $150,000)
relating to the negotiations at St. Mary's Market, as disclosed in the
Diversified Historic Investors V Form 10-K.
Rental and hotel income combined increased $73,576 from $924,090
in the second quarter of 1994 to $997,666 in the same period in 1995. This
increase resulted mainly from an increase in hotel income of $55,000 and an
increase of $18,000 in rental income. The increase in hotel income is the result
of an increase in average room rates of ($90.50 to $95.71) and an increase in
average occupancy (79.6% to 94.5%). The increase in rental income is mainly
attributable to an increase in corporate apartment rentals at St. Mary's Market.
Corporate apartment rentals generate higher revenue than residential rentals
because the leases are generally short term in nature and are rented at higher
monthly rates.
Rental and hotel income increased $84,348 from $1,806,051 for
the first six months of 1994 to $1,890,399 for the same period of 1995. This
increase is due to a net increase of $53,000 in rental income and an increase in
hotel income of $31,000. The increase in hotel income is the result of an
increase in average occupancy (75.6% to 90.7%) and an increase in average room
rates of ($88.51 to $94.80). The increase in rental income is mainly
attributable to an increase in corporate apartment rentals at St. Mary's Market.
Corporate apartment rentals generate higher revenue than residential rentals
because the leases are generally short term in nature and are rented at higher
monthly rates.
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<PAGE>
Other income decreased from $172,349 in the second quarter and
the first six months of 1994 to $0 in the same periods in 1995. The decrease is
related to the utilization of cash reserves, which had been initially deposited
by the developer, on behalf of the Registrant, in the second quarter of 1994, to
fund shortfalls in debt service at the Radisson Redick. As of June 30, 1994 such
reserves had been exhausted.
Expense for rental operations increased by $40,432 from $139,816
in the second quarter of 1994 to $180,248 in the same period in 1995 due to
higher operating expenses at St. Mary's Market including corporate apartments
expense, maintenance and management fees. Hotel operations expense decreased
$37,941 from $514,116 in the second quarter of 1994 to $476,175 in the same
period in 1995 due to a decrease in professional fees incurred partially offset
by an increase in wages and cost of goods sold in connection with the operating
of a new restaurant in the hotel.
Expense for rental operations decreased by $14,932 from $377,440
for the first six months of 1994 to $362,508 for the same period in 1995. The
expense for 1994 included a non-recurring payment of an $80,000 developer's fee
referred to in Item 2, section 3. Excluding such expense, expenses for rental
operations increased by approximately $65,000 due to higher operating expenses
at St. Mary's including corporate apartments expense, maintenance, parking and
salaries. Hotel operations expense decreased $57,482 from $1,025,706 for the
first six months of 1994 to $968,224 for the same period in 1995 due to a
decrease in professional fees incurred partially offset by wages and cost of
goods sold in connection with the operating of a new restaurant in the hotel.
General and administrative expenses decreased $18,158, from
$42,045 in the second quarter of 1994 to $23,887 in the same in period in 1995
and decreased $119,092 from $168,065 for the first six months of 1994 to $48,973
for the same period in 1995. The second quarter and first six months of 1994
included non-recurring professional fees referred to in Item 2, section 3.
Interest expense decreased $30,005 from $227,058 in the second
quarter of 1994 to $197,053 in the same period in 1995 and decreased $59,314
from $454,115 for the first six months of 1994 to $394,801 for the same period
in 1995. The decrease in interest expense is the result of a decrease in the
interest rate at the Radisson Redick from 7.75% to a variable rate which
averaged approximately 5.11% in the second quarter and 5.81% for the first six
months.
Depreciation and amortization expense increased $28,108 from
$179,464 in the second quarter of 1994 to $207,572 in the same period in 1995
and increased $32,221 from $371,541 for the first six months of 1994 to $403,762
for the same period in 1995. The increase is the result of the amortization of
loan costs incurred in connection with the bond refinancing at Radisson Redick,
partially offset by the discontinuance of depreciation expense of the investment
in St. Mary's Market, which became a fully depreciated in 1994.
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<PAGE>
Registrant earned $519 and $373 of interest income during the
second quarters of 1995 and 1994, respectively and $884 and $1,528 of interest
income for the first six months of 1995 and 1994, respectively. Registrant
expects this source of income to continue to decline as interest-bearing
deposits are drawn down to fund administrative expenses and property operations.
Losses incurred during the second quarter at the Registrant's
three properties amounted to $63,000, compared to income of approximately
$44,000 for the same period in 1994. For the first six months of 1995 the
Registrant's three properties recognized a loss of $238,000 compared to
approximately $234,000 for the same period in 1994.
In the second quarter of 1995, Registrant recognized a loss of
$5,000 at the Radisson Redick Hotel including $134,000 of depreciation expense,
compared to income of $80,000 in the second quarter of 1994, including $98,000
of depreciation expense. The second quarter of 1994 included $172,000 in other
income which was the result of the utilization of cash reserves, which had been
initially deposited by the developer, on behalf of the Registrant in the second
quarter of 1994 to fund shortfalls in debt service. Excluding such income, loss
from the second quarter of 1994 to the second quarter of 1995 decreased by
approximately $87,000 due to an increase in rooms revenue of $55,000, a decrease
in interest expense of $55,000, a decrease in operations expense of $13,000,
partially offset by an increase in depreciation and amortization of $36,000. The
increase in rooms revenue is the result of an increase in occupancy (79.6% to
94.5%) and an increase in average room rates ($90.50 to $95.71). The decrease in
interest expense is the result of a decrease in the interest rate from 7.75% to
a variable rate which average approximately 5.11% in the second quarter of 1995.
Operations expense decreased due to a decrease in professional fees incurred,
partially offset by an increase in wages and cost of goods sold in connection
with the opening of a new restaurant in the hotel. Depreciation and amortization
increased due to the amortization of loan fees incurred in connection with the
refinancing of bonds. Registrant anticipates that operating results in the
following quarters will be similar to those experiences in the second quarter of
1995.
For the first six months of 1995, Registrant recognized a loss
of $142,000 at the Radisson Redick Hotel including $257,000 of depreciation
expense compared to a loss of $57,500 for the same period in 1994, including
depreciation expense of $197,000. The first six months of 1994 included $172,000
in other income which was the result of the utilization of cash reserves, which
had been initially deposited by the developer, on behalf of the Registrant in
the second quarter of 1994 to fund shortfalls in debt service. Excluding such
income, loss from the first six months of 1994 to the first six months of 1995
decreased by approximately $87,000 due to an increase in rooms revenue of
$32,000, a decrease in interest expense of $59,000, a decrease in operations
expense of $56,000, partially offset by an increase in depreciation and
amortization of $60,000. The increase in rooms revenue is the result of an
increase in occupancy (75.6% to 90.7%) and an increase in average room rates
($88.51 to $94.80). The decrease in interest expense is the result of a decrease
in the interest rate from 7.75% to a variable rate which averaged approximately
5.81% for the first six months of 1995. Operations expense decreased due to a
decrease in professional fees incurred, partially offset by an increase in wages
and cost of goods sold in connection with the opening of a new restaurant in the
hotel. Depreciation and amortization increased due to the amortization of loan
fees incurred in connection with the refinancing of bonds.
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<PAGE>
In the second quarter of 1995, Registrant incurred a loss of
$47,000 at the St. Mary's Market, including $59,000 of depreciation expense,
compared to a loss of $30,000 including $59,000 of depreciation expense in the
second quarter of 1994. The increased loss is the result of an increase in
operating expenses of $41,000 partially offset by an increase in rental income
of $24,000. Rental income and operating expenses increased due to an increase in
corporate apartment rentals and a corresponding increase in the expenses related
to such rentals. Operating expenses also increased due to the replacement of
carpets in several units in 1995. Registrant anticipates that operating results
in the following quarters will be similar to those experienced in the second
quarter.
For the first six months of 1995, Registrant incurred a loss of
$79,000 at the St. Mary's Market, including $118,000 of depreciation expense,
compared to a loss of $156,000 for the first six months of 1994, including
depreciation expense of $131,000. The first six months of 1994 loss included a
non-recurring payment of an $80,000 developer's fee referred to in Item 2,
section 3. Excluding such expense, the operating loss increased by approximately
$3,000. The increased loss is the result of an increase in operating expense of
$70,000 partially offset by an increase of rental income of $54,000, and a
decrease in depreciation and amortization of $13,000. Rental income and
operating expenses increased due to an increase in corporate apartment rentals
and a corresponding increase in the expenses related to such rentals.
Depreciation decreased due to the fact that all personal property became fully
depreciated early in 1994.
In the second quarter of 1995, Registrant incurred a loss of
$10,000 at the Lofts at Red Hill, including $14,000 of depreciation expense,
compared to a loss of $6,000 including $14,000 of depreciation expense in the
second quarter of 1994. The increased loss is the result of a decrease in rental
income of $4,000 due primarily to a decrease in average occupancy from 90% to
85%. Registrant anticipates that operating results in the following quarters
will be similar to those experienced in the second quarter.
For the first six months of 1995, Registrant incurred a loss of
$17,000 at the Lofts at Red Hill, including $29,000 of depreciation expense
compared to a loss of $21,000 for the first six months of 1994 including
depreciation expense of $29,000. The decreased loss is the result of a decrease
in commissions and real estate taxes of $4,000.
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<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
Assets
June 30, 1995 December 31, 1994
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(Unaudited)
Rental properties, at cost:
Land $ 1,133,669 $ 1,133,669
Buildings and improvements 17,021,595 17,021,595
Furniture and fixtures 1,247,957 1,247,957
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19,403,221 19,403,221
Less - Accumulated depreciation (6,160,976) (5,814,124)
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13,242,245 13,589,097
Cash and cash equivalents 59,323 84,643
Restricted cash 262,627 248,546
Accounts and notes receivable 97,707 75,635
Other assets (net of amortization of
$122,520 and $65,610 at June 30,
1995 and December 31, 1994,
respectively). 233,349 38,016
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Total $ 13,895,251 $ 14,035,937
============= =============
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 10,459,253 $ 10,301,560
Accounts payable:
Trade 244,462 214,785
Related parties 31,449 12,966
Taxes 54,899 43,097
Interest payable 0 38,781
Accrued liabilities 61,483 90,812
Tenant security deposits 71,670 74,915
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Total liabilities 10,923,216 10,776,916
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Partners' equity 2,972,035 3,259,021
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Total $ 13,895,251 $ 14,035,937
============= =============
The accompanying notes are an integral part of these financial statements.
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<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three months Six months
ended June 30, ended June 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
Revenues:
Rental income $ 306,364 $ 288,121 $ 633,635 $ 580,816
Hotel income 691,302 635,969 1,256,764 1,225,235
Other income 0 172,349 0 172,349
Interest income 519 373 884 1,528
------------ ------------ ------------ ------------
Total revenues 998,185 1,096,812 1,891,283 1,979,928
------------ ------------ ------------ ------------
Costs and expenses:
Rental operations 180,248 139,816 362,508 377,440
Hotel operations 476,175 514,116 968,224 1,025,706
General and
administrative 23,887 42,045 48,973 168,065
Interest 197,053 227,058 394,801 454,115
Depreciation and
amortization 207,572 179,464 403,762 371,541
------------ ------------ ------------ ------------
Total costs and
expenses 1,084,935 1,102,499 2,178,268 2,396,867
------------ ------------ ------------ ------------
Net loss $ (86,750) $ (5,687) $ (286,985) $ (416,939)
============ ============ ============ ============
Net loss per limited
partnership unit $ (7.71) $ (.51) $ (25.50) $ (37.05)
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
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<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
Six months ended
June 30,
1995 1994
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Cash flows from operating activities:
Net loss $(286,985) $(416,939)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 403,762 371,541
Changes in assets and liabilities:
(Increase) decrease in restricted cash (14,081) 201,016
Increase in accounts receivable (22,072) (81,383)
(Increase) decrease in other assets (252,244) 63,191
Increase (decrease) in accounts payable -
trade 29,677 (35,243)
Increase (decrease) in accounts payable -
related parties 18,483 (4,535)
Increase in accounts payable - taxes 11,802 9,882
Decrease in interest payable (38,781) (2)
Decrease in accrued liabilities (29,329) (10,312)
Decrease in tenant security deposits (3,245) (15,321)
--------- ---------
Net cash (used in) provided by
operating activities: (183,013) 81,895
--------- ---------
Cash flows from investing activities:
Capital expenditures 0 (29,563)
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Net cash used in investing activities: 0 (29,563)
--------- ---------
Cash flows from financing activities:
Proceeds from debt financings 221,555 0
Principal payments (63,862) (11,300)
--------- ---------
Net cash provided by (used in)
financing activities: 157,693 (11,300)
--------- ---------
(Decrease) increase in cash and cash equivalents (25,320) 41,032
Cash and cash equivalents at beginning of period 84,643 90,544
--------- ---------
Cash and cash equivalents at end of period $ 59,323 $ 131,576
========= =========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors V (the "Registrant") have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying consolidated
financial statements and related notes should be read in conjunction with the
audited financial statements in Form 10-K of the Registrant, and notes thereto,
for the fiscal year ended December 31, 1994.
The information furnished reflects, in the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the results of the interim periods presented.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party to, nor is
any of its property the subject of, any pending material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by this
report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Number Document
3 Registrant's Amended and Restated
Certificate of Limited Partnership and
Agreement of Limited Partnership,
previously filed as part of Amendment
No. 2 of Registrant's Registration
Statement on Form S-11, are incorporated
herein by reference.
21 Subsidiaries of the Registrant are
listed in Item 2. Properties on Form
10-K, previously filed and incorporated
herein by reference.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended June
30, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: July 26, 1995 DIVERSIFIED HISTORIC INVESTORS V
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By: Dover Historic Advisors V, General Partner
By: DHP, Inc., Partner
By: /s/ Donna M. Zanghi
-----------------------
DONNA M. ZANGHI,
Secretary and Treasurer
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<CIK>0000818669
<NAME>DIVERSIFIED HISTORIC INVESTORS V
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 59,323
<SECURITIES> 0
<RECEIVABLES> 97,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 233,349
<PP&E> 19,403,221
<DEPRECIATION> 6,160,976
<TOTAL-ASSETS> 13,242,245
<CURRENT-LIABILITIES> 330,810
<BONDS> 10,459,253
<COMMON> 0
0
0
<OTHER-SE> 2,972,035
<TOTAL-LIABILITY-AND-EQUITY> 13,895,251
<SALES> 0
<TOTAL-REVENUES> 1,891,283
<CGS> 0
<TOTAL-COSTS> 1,379,705
<OTHER-EXPENSES> 403,762
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 394,801
<INCOME-PRETAX> (286,985)
<INCOME-TAX> 0
<INCOME-CONTINUING> (286,985)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (286,985)
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