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 September 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
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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
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - September 30, 1995 (unaudited) and
December 31, 1994
Consolidated Statements of Operations - For the Three Months and
Nine Months Ended September 30, 1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows - For the Nine Months
Ended September 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 September 30, 1995, Registrant had cash of $30,632.
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 September 30, 1995, Registrant had restricted cash
of $255,157 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 change to a
variable rate has resulted in lower interest expense and additional cash flow.
The additional cash flow will be utilized primarily to fund the note payable
relating to the refinancing (see below) and ongoing operations. See Item 2.
Results of Operations. 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.
2
<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 third quarter of 1995, Registrant incurred a
net loss of $159,956 ($14.21 per limited partnership unit) compared to a net
loss of $206,408 ($18.34 per limited partnership unit) for the same period in
1994. For the first nine months of 1995, Registrant incurred a loss of $446,941
($39.71 per limited partnership unit) compared to a net loss of $623,347 ($55.39
per limited partnership unit) for the same period in 1994. Included in the first
nine 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 Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.
Rental and hotel income combined increased $96,250 from
$883,000 in the third quarter of 1994 to $979,250 in the same period in 1995.
This increase resulted mainly from an increase in hotel income of approximately
$98,000 and a decrease of approximately $2,000 in rental income. The increase in
hotel income is the result of an increase in average room rates of ($93.12 to
$96.19) partially offset by a decrease in average occupancy (70.1% to 69.6%).
The decrease in rental income is mainly attributable to a decrease in average
occupancy at St. Mary's Market.
Rental and hotel income increased $180,597 from $2,689,052
for the first nine months of 1994 to $2,869,649 for the same period of 1995.
This increase is due to a net increase of approximately $51,000 in rental income
and an increase in hotel income of approximately $129,000. The increase in hotel
income is the result of an increase in average room rates of ($90.01 to $95.17)
partially offset by a decrease in average occupancy (73.8% to 73.2%). 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.
3
<PAGE>
Other income decreased from $172,349 in the first nine
months of 1994 to $0 in the same period 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 $3,737 from
$180,083 in the third quarter of 1994 to $183,820 in the same period in 1995 due
to higher operating expenses at St. Mary's Market including corporate apartments
expense, maintenance and wages. Hotel operations expense increased $62,373 from
$476,524 in the third quarter of 1994 to $538,897 in the same period in 1995 due
to an increase in wages and cost of goods sold in connection with the opening of
a new restaurant in the hotel.
Expense for rental operations decreased by $11,195 from
$557,523 for the first nine months of 1994 to $546,328 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 $69,000 due to higher
operating expenses at St. Mary's Market including corporate apartments expense,
maintenance, parking and salaries. Hotel operations expense increased $4,892
from $1,502,230 for the first nine months of 1994 to $1,507,122 for the same
period in 1995 due to a increase in wages and cost of goods sold in connection
with the opening of a new restaurant in the hotel partially offset by a decrease
in professional fees incurred.
General and administrative expenses decreased $6,963 from
$31,153 in the third quarter of 1994 to $24,190 in the same in period in 1995
and decreased $126,056 from $199,219 for the first nine months of 1994 to
$73,163 for the same period in 1995. The first nine months of 1994 included
non-recurring professional fees referred to previously in Item 2, section 3.
Interest expense decreased $41,797 from $227,058 in the
third quarter of 1994 to $185,261 in the same period in 1995 and decreased
$101,111 from $681,173 for the first nine months of 1994 to $580,062 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% for both the
third quarter and the first nine months of 1994 to a variable rate which
averaged approximately 4.65% in the third quarter and 5.42% for the first nine
months of 1995.
Depreciation and amortization expense increased $32,629
from $174,943 in the third quarter of 1994 to $207,572 in the same period in
1995 and increased $64,850 from $546,484 for the first nine months of 1994 to
$611,334 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 fully depreciated in 1994.
4
<PAGE>
Losses incurred during the third quarter at the
Registrant's three properties amounted to $135,000, compared to loss of
approximately $172,000 for the same period in 1994. For the first nine months of
1995 the Registrant's three properties recognized a loss of $374,000 compared to
approximately $406,000 for the same period in 1994.
In the third quarter of 1995, Registrant recognized a loss
of $48,000 at the Radisson Redick Hotel including $134,000 of depreciation
expense, compared to a loss of $90,000 in the third quarter of 1994, including
$98,000 of depreciation expense. The loss from the third quarter of 1994 to the
third quarter of 1995 decreased by approximately $42,000 due to an increase in
rooms revenue of $98,000, a decrease in interest expense of $42,000, partially
offset by a increase in operations expense of $62,000 and an increase in
depreciation and amortization of $36,000. The increase in rooms revenue is the
result of an increase in average room rates ($93.12 to $96.19) partially offset
by a decrease in occupancy (70.1% to 69.6%). 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 4.65% in the third quarter of 1995. Operations
expense increased due to 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 experienced in the
third quarter of 1995.
For the first nine months of 1995, Registrant recognized a
loss of $190,000 at the Radisson Redick Hotel including $391,000 of depreciation
expense compared to a loss of $147,000 for the same period in 1994, including
depreciation expense of $295,000. The first nine 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, losses from the first nine months of 1994 to the first
nine months of 1995 decreased by approximately $129,000 due to an increase in
rooms revenue of $129,000 and a decrease in interest expense of $101,000
partially offset by an increase in operations expense of $5,000 and an increase
in depreciation and amortization of $96,000. The increase in rooms revenue is
the result of an increase in average room rates ($90.01 to $95.17) partially
offset by a decrease in occupancy (73.8% to 73.2%). 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 5.42% for the first nine months of
1995. Operations expense increased due to an increase in wages and cost of goods
sold in connection with the opening of a new restaurant in the hotel partially
offset by a decrease in professional fees incurred. Depreciation and
amortization increased due to the amortization of loan fees incurred in
connection with the refinancing of bonds.
5
<PAGE>
In the third quarter of 1995, Registrant incurred a loss
of $67,000 at the St. Mary's Market, including $59,000 of depreciation expense,
compared to a loss of $56,000 including $59,000 of depreciation expense in the
second quarter of 1994. The increased loss is the result of an increase in
certain operating expenses such as wages, parking and corporate apartment
rentals. Operating expenses also increased due to the recarpeting of several
units in 1995. Registrant anticipates that operating results in the following
quarters will be similar to those experienced in the third quarter.
For the first nine months of 1995, Registrant incurred a
loss of $146,000 at St. Mary's Market, including $177,000 of depreciation
expense, compared to a loss of $212,000 for the first nine months of 1994,
including depreciation expense of $190,000. The first nine months of 1994 loss
included a non-recurring payment of an $80,000 developer's fee referred to
previously in Item 2, section 3. Excluding such expense, the operating loss
increased by approximately $14,000. The increased loss is the result of an
increase in operating expense of $78,000 partially offset by an increase of
rental income of $51,000, and a decrease in depreciation and amortization of
$13,000. Rental income increased due to an increase in corporate apartment
rentals partially offset by a lower average occupancy in the non-corporate
apartment rentals. Operating expenses increased due a corresponding increase in
corporate apartments expense and also due to the recarpeting of several units in
1995. Depreciation decreased due to the fact that all personal property became
fully depreciated early in 1994.
In the third quarter of 1995, Registrant incurred a loss
of $20,000 at the Lofts at Red Hill, including $14,000 of depreciation expense,
compared to a loss of $27,000 including $14,000 of depreciation expense in the
third quarter of 1994. The decreased loss is the result of a decrease in real
estate taxes. Registrant anticipates that operating results in the following
quarters will be similar to those experienced in the third quarter.
For the first nine months of 1995, Registrant incurred a
loss of $38,000 at the Lofts at Red Hill, including $43,000 of depreciation
expense compared to a loss of $48,000 for the first nine months of 1994
including depreciation expense of $43,000. The decreased loss is the result of a
decrease in commissions and real estate taxes of $10,000.
6
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994
Assets
September 30, December 31,
1995 1994
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(Unaudited)
Rental properties, at cost:
Land $ 1,133,669 $ 1,133,669
Buildings and improvements 17,022,585 17,021,595
Furniture and fixtures 1,307,849 1,247,957
------------ ------------
19,464,103 19,403,221
Less - Accumulated depreciation (6,334,402) (5,814,124)
------------ ------------
13,129,701 13,589,097
Cash and cash equivalents 30,632 84,643
Restricted cash 255,157 248,546
Accounts and notes receivable 116,714 75,635
Other assets (net of amortization of
$156,666 and $65,610 at September 30,
1995 and December 31, 1994,
respectively) 202,200 38,016
------------ ------------
Total $ 13,734,404 $ 14,035,937
============ ============
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 10,443,865 $ 10,301,560
Accounts payable:
Trade 274,059 214,785
Related parties 22,184 12,966
Taxes 29,655 43,097
Interest payable 3,325 38,781
Accrued liabilities 71,098 90,812
Tenant security deposits 78,138 74,915
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Total liabilities 10,922,324 10,776,916
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Partners' equity 2,812,080 3,259,021
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Total $ 13,734,404 $ 14,035,937
============ ============
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Three months Nine months
ended September 30, ended September 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
Revenues:
Rental income $ 279,870 $ 281,355 $ 913,505 $ 862,172
Hotel income 699,380 601,645 1,956,144 1,826,880
Other income -0- -0- -0- 172,349
Interest income 537 353 1,421 1,881
----------- ----------- ----------- -----------
Total revenues 979,787 883,353 2,871,070 2,863,282
----------- ----------- ----------- -----------
Costs and expenses:
Rental operations 183,823 180,083 546,330 557,523
Hotel operations 538,897 476,524 1,507,122 1,502,230
General and
administrative 24,190 31,153 73,163 199,219
Interest 185,261 227,058 580,062 681,173
Depreciation and
amortization 207,572 174,943 611,334 546,484
----------- ----------- ----------- -----------
Total costs and
expenses 1,139,743 1,089,761 3,318,011 3,486,629
----------- ----------- ----------- -----------
Net loss $ (159,956) $ (206,408) $ (446,941) $ (623,347)
=========== =========== =========== ===========
Net loss per limited
partnership unit $ (14.21) $ (18.34) $ (39.71) $ (55.39)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
Nine months ended
September 30,
1995 1994
---------- ---------
Cash flows from operating activities:
Net loss $(446,941) $(623,347)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 611,334 546,484
Changes in assets and liabilities:
(Increase) decrease in restricted cash (6,611) 210,347
Increase in accounts receivable (41,079) (47,191)
(Increase) decrease in other assets (255,240) 70,423
Increase (decrease) in accounts payable -
trade 59,274 (56,080)
Increase (decrease) in accounts payable -
related parties 9,218 (7,409)
Decrease in accounts payable - taxes (13,442) (18,497)
Decrease in interest payable (35,456) (2)
Decrease in accrued liabilities (19,714) (11,259)
Increase (decrease) in tenant security deposits 3,223 (11,128)
--------- ---------
Net cash (used in) provided by
operating activities: (135,434) 52,341
--------- ---------
Cash flows from investing activities:
Capital expenditures (60,882) (95,685)
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Net cash used in investing activities: (60,882) (95,685)
--------- ---------
Cash flows from financing activities:
Proceeds from debt financings 221,555 58,875
Principal payments (79,250) (16,137)
--------- ---------
Net cash provided by (used in)
financing activities: 142,305 (42,738)
--------- ---------
(Decrease) increase in cash and cash equivalents (54,011) (606)
Cash and cash equivalents at beginning of period 84,643 90,544
--------- ---------
Cash and cash equivalents at end of period $ 30,632 $ 89,938
========= =========
The accompanying notes are an integral part of these financial statements.
9
<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.
10
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended
September 30, 1995.
11
<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: November 7, 1995 DIVERSIFIED HISTORIC INVESTORS V
----------------
By: Dover Historic Advisors V, General Partner
By: DHP, Inc., Partner
By: /s/ Donna M. Zanghi
DONNA M. ZANGHI,
Secretary and Treasurer
12
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<CIK>0000818669
<NAME>DIVERSIFIED HISTORIC INVESTORS V
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 30,632
<SECURITIES> 0
<RECEIVABLES> 116,714
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,200
<PP&E> 19,464,103
<DEPRECIATION> 6,334,402
<TOTAL-ASSETS> 13,734,404
<CURRENT-LIABILITIES> 324,898
<BONDS> 10,443,865
<COMMON> 0
0
0
<OTHER-SE> 2,812,080
<TOTAL-LIABILITY-AND-EQUITY> 13,734,404
<SALES> 0
<TOTAL-REVENUES> 2,871,070
<CGS> 0
<TOTAL-COSTS> 2,126,615
<OTHER-EXPENSES> 611,334
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 580,062
<INCOME-PRETAX> (446,941)
<INCOME-TAX> 0
<INCOME-CONTINUING> (446,941)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,941)
<EPS-PRIMARY> (39.71)
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