<PAGE>
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 March 31, 1995
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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
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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
- - - - - --------------------------------------------------------------------------------
(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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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - March 31, 1995 (unaudited) and December
31, 1994
Consolidated Statements of Operations - Three Months Ended March 31,
1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows - Three Months Ended March 31,
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 March 31, 1995, Registrant had cash of $32,050. 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 March 31, 1995, Registrant had restricted cash of
$237,653 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.
(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
2
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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 yet 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 first quarter of 1995, Registrant incurred a net
loss of $200,235 ($17.79 per limited partnership unit) compared to a net loss of
$411,250 ($36.54 per limited partnership unit) for the same period in 1994.
Included within the first quarter 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 1994
Form 10-K.
Rental and hotel income combined increased $10,772 from
$881,961 in the first quarter of 1994 to $892,733 in the same period in 1995.
This increase resulted from an increase of $35,000 in rental income and an
decrease of $24,000 in hotel income. 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. The decrease in hotel income is the result of a decrease in
occupancy (75% to 66%) partially offset by an increase in average room rates
($86.45 to $93.74).
Expense for rental operations decreased by $55,362 from
$237,622 in the first quarter of 1994 to $182,260 in the same period in 1995.
The first quarter 1994 expense 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 $25,000 due to higher
operating expenses incurred at St. Mary's Market relating to corporate
apartments' expense, salaries, repairs, and maintenance. Hotel operations
expense decreased $19,541 from $511,590 in the first quarter of 1994 to $492,049
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 opening of a new restaurant in the hotel.
General and administrative expenses decreased $100,934 from
$126,020 in the first quarter of 1994 to $25,086 in the same in period in 1995.
The first quarter 1994 expense included non-recurring legal fees referred to in
Item 2, Section 3.
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Depreciation and amortization expense increased $4,113 from
$192,077 in the first quarter of 1994 to $196,190 in 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.
Registrant earned $365 and $1,155 of interest income during the
first quarters 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 quarter at the Registrant's three
properties amounted to $175,000, compared to a loss of approximately $278,000
for the same period in 1994.
In the first quarter of 1995, Registrant incurred a loss of
$136,000 at the Radisson Redick Hotel including $123,000 of depreciation and
amortization expense, compared to a loss of $137,000 in the first quarter of
1994, including $98,000 of depreciation expense. The decreased loss from the
first quarter of 1994 to the first quarter of 1995 is the result of a decrease
in interest expense of $29,000 and a decrease in operations expense of $20,000,
partially offset by an increase in depreciation and amortization expense of
$24,000 and a decrease in rooms revenue of $24,000. Depreciation and
amortization expense increased due to the amortization of loan fees incurred in
connection with the refinancing of bonds. The decrease in rooms revenue is the
result of a decrease in occupancy (75% to 66%) partially offset by an increase
in average room rates ($86.45 to $93.74). Interest expense decreased due to a
decrease in the interest rate from 7.75% to a variable rate which averaged
approximately 6.50% in the first 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. Registrant anticipates that operating results in the
following quarters will be similar to those experienced in the first quarter of
1995.
In the first quarter of 1995, Registrant incurred a loss of
$31,000 at the St. Mary's Market, including $59,000 of depreciation expense,
compared to a loss of $126,000 including $72,000 of depreciation expense in the
first quarter of 1994. The first quarter 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 decreased by approximately $15,000
due to an increase in profit from the corporate apartment rentals. The decreased
loss is also the result of a decrease in depreciation expense partially offset
by an increase in other operating expenses such as repairs and maintenance and
salaries. Registrant anticipates that operating results in the following
quarters will be similar to those experienced in the first quarter of 1995.
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In the first quarter of 1995, Registrant incurred a loss of
$8,000 at the Lofts at Red Hill, including $14,000 of depreciation expense,
compared to a loss of $15,000 including $14,000 of depreciation expense in the
first quarter of 1994. The rental income for the first quarter of 1995 was
enhanced by the collection, in that quarter, of rents which were previously
deemed to be uncollectible. The decrease is also the result of a decrease in
commissions due to lower turnover. Registrant anticipates that operating results
in the following quarters will be comparable to those experienced in the first
quarter of 1995.
5
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DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
March 31, 1995 December 31, 1994
-------------- -----------------
(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
------------ ------------
19,403,221 19,403,221
Less - Accumulated depreciation (5,987,550) (5,814,124)
------------ ------------
13,415,671 13,589,097
Cash and cash equivalents 32,050 84,643
Restricted cash 237,653 248,546
Accounts and notes receivable 79,302 75,635
Other assets (net of amortization of
$88,374 and $65,610) 270,318 38,016
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Total $ 14,034,994 $ 14,035,937
============ ============
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 10,516,841 $ 10,301,560
Accounts payable:
Trade 257,750 214,785
Related parties 34,690 12,966
Taxes 23,734 43,097
Interest payable 0 38,781
Accrued liabilities 64,826 90,812
Tenant security deposits 78,367 74,915
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Total liabilities 10,976,208 10,776,916
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Partners' equity 3,058,786 3,259,021
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Total $ 14,034,994 $ 14,035,937
============ ============
The accompanying notes are an integral part of these financial statements.
6
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DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1995 and 1994
Unaudited
Three months Three months
ended ended
March 31, March 31,
1995 1994
Revenues: ----------- -----------
Rental income $ 327,271 $ 292,695
Hotel income 565,462 589,266
Interest income 365 1,155
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Total revenues 893,098 883,116
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Costs and expenses:
Rental operations 182,260 237,622
Hotel operations 492,049 511,590
General and administrative 25,086 126,020
Interest 197,748 227,057
Depreciation and amortization 196,190 192,077
----------- -----------
Total costs and expenses 1,093,333 1,294,366
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Net loss ($ 200,235) ($ 411,250)
=========== ===========
Net loss per limited partnership unit ($ 17.79) ($ 36.54)
=========== ===========
The accompanying notes are an integral part of these financial statements.
7
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DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
Three months ended
March 31,
1994 1993
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Cash flows from operating activities:
Net loss ($200,235) ($411,250)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 196,190 192,077
Changes in assets and liabilities:
Decrease in restricted cash 10,893 234,364
Increase in accounts receivable (3,667) (49,821)
(Increase) decrease in other assets (255,067) 28,884
Increase (decrease) in accounts
payable - trade 42,965 (21,670)
Increase in accounts payable - related parties 21,725 2,742
(Decrease) increase in accounts payable - (19,363) 28,322
taxes
(Decrease) increase in interest payable (38,781) 77,345
Decrease in accrued liabilities (25,986) (10,108)
Increase (decrease) in tenant security deposits 3,452 (9,883)
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Net cash (used in) provided by operating
activities (267,874) 61,002
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Cash flows from investing activities:
Capital expenditures 0 (22,786)
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Net cash provided by (used in) investing 0 (22,786)
activities --------- ---------
Cash flows from financing activities:
Proceeds from debt financings 221,555 0
Principal payments (6,274) (6,463)
--------- ---------
Net cash used in financing activities 215,281 (6,463)
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(Decrease) increase in cash and cash equivalents (52,593) 31,753
Cash and cash equivalents at beginning of period 84,643 90,544
--------- ---------
Cash and cash equivalents at end of period $ 32,050 $ 122,297
========= =========
The accompanying notes are an integral part of these financial statements.
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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") and related notes 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 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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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
March 31, 1995.
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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: May 9, 1995 DIVERSIFIED HISTORIC INVESTORS V
------------
By: Dover Historic Advisors V, General Partner
By: DHP, Inc., Partner
By: /s/ Michael J. Tuszka
-----------------------------
MICHAEL J. TUSZKA,
Chairman
By: /s/ Donna M. Zanghi
-----------------------------
DONNA M. ZANGHI,
Secretary and Treasurer
By: /s/ Michele F. Rudoi
-----------------------------
MICHELE F. RUDOI,
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
DOVER HISTORIC ADVISORS V General Partner
By: DHP, Inc., Partner
By: /s/ Michael J. Tuszka May 8, 1995
----------------------------- -----------
MICHAEL J. TUSZKA,
Chairman
By: /s/ Donna M. Zanghi May 9, 1995
----------------------------- -----------
DONNA M. ZANGHI,
Secretary and Treasurer
By: /s/ Michele F. Rudoi May 9, 1995
----------------------------- -----------
MICHELE F. RUDOI,
Assistant Secretary
11
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<ARTICLE> 5
<CIK>0000818669
<NAME>Diversified Historic Investors V
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Mar-31-1995
<CASH> 32,050
<SECURITIES> 0
<RECEIVABLES> 79,302
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 270,318
<PP&E> 19,403,221
<DEPRECIATION> 5,987,550
<TOTAL-ASSETS> 14,034,994
<CURRENT-LIABILITIES> 316,174
<BONDS> 10,516,841
<COMMON> 0
0
0
<OTHER-SE> 3,058,786
<TOTAL-LIABILITY-AND-EQUITY> 14,034,994
<SALES> 0
<TOTAL-REVENUES> 893,098
<CGS> 0
<TOTAL-COSTS> 699,395
<OTHER-EXPENSES> 196,190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 197,748
<INCOME-PRETAX> (200,235)
<INCOME-TAX> 0
<INCOME-CONTINUING> (200,235)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (200,235)
<EPS-PRIMARY> (17.79)
<EPS-DILUTED> (17.79)
</TABLE>
