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, 1997
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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 ___________________
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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - June 30, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Operations - For the Three
Months and Six Months Ended June 30, 1997 and 1996
(unaudited)
Consolidated Statements of Cash Flows - For the Six
Months Ended June 30, 1997 and 1996 (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, 1996, Registrant had cash of
$530,269. 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, 1997, Registrant had restricted cash
of $278,469 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.
(2) Capital Resources
Due to the relatively 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. 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. In the second quarter of
1997, expenditures fpr capital items were $0 at the Radisson Redick
and $97 at the Lofts at Red Hill and for the first six months of 1997,
expenditures for capital items were $2,533 at the Radisson Redick and
$1,429 at the Lofts at Red Hill.
In October 1996, Radisson Redick, was transferred to
1504 Harney Street Associates ("HSA") a limited partnership in which
the Registrant owns a 99% interest. The property was transferred so
that it would be held by the Registrant in a manner similar to the
other properties held by the Registrant. HSA was unable to pay bonds
issued with respect to the property as they became due, and on October
28, 1996, HSA filed a reorganization petition pursuant to Chapter 11
of the U.S. Bankruptcy Code as disclosed in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996.
(3) Results of Operations
During the second quarter of 1997, Registrant
incurred a net loss of $297,471 ($26.43 per limited partnership unit)
compared to a net loss of $254,172 ($22.58 per limited partnership
unit) for the same period in 1996. For the first six months of 1997,
Registrant incurred a loss of $627,596 ($55.76 per limited partnership
unit) compared to a net loss of $437,963 ($38.91 per limited
partnership unit) for the same period in 1996.
Rental and hotel income combined decreased $320,128
from $898,987 in the second quarter of 1996 to $579,859 in the same
period in 1997. $92,220 of the decrease was from hotel income and
$227,908 of the decrease was from rental income. The decrease in
hotel income is due to a decrease in the average occupancy (72% to
66%) and a decrease in average room rates ($94.50 to $93.90). The
decrease in rental income is mainly attributable to the sale of the
St. Mary's Market partially offset by an increase in rental income at
the Lofts at Red Hill due to an increase in the average occupancy (72%
to 89%).
Rental and hotel income decreased $779,070 from
$1,829,777 for the first six months of 1996 to $1,050,707 for the same
period of 1997. $240,973 of the decrease was due to hotel income and
$538,097 of the decrease was due to rental income. The decrease in
hotel income is due to a decrease in the average occupancy (80% to
64%) partially offset by an increase in average room rates ($93.96 to
$95.37). The decrease in rental income is mainly attributable to the
sale of the St. Mary's Market partially offset by an increase in
rental income at the Lofts at Red Hill due to an increase in average
occupancy (77% to 89%).
Expense for rental operations decreased by $85,770
from $177,378 in the second quarter of 1996 to $91,608 in the same
period in 1997 and decreased by $233,072 from $348,059 for the first
six months of 1996 to $114,987 for the same period in 1997 due to the
sale of the St. Mary's Market. Hotel operations expense decreased
$81,635 from $558,023 in the second quarter of 1996 to $476,388 in the
same period in 1997 and decreased by $96,088 from $1,085,882 for the
first six months of 1996 to $989,794 for the same period in 1997 due
mainly to a decrease in management fees (which are based upon hotel
revenues) and a decrease in overall operating expenses.
Interest expense decreased $44,017 from $184,916 in
the second quarter of 1996 to $140,899 in the same period in 1997 and
decreased $128,440 from $368,115 for the first six months of 1996 to
$239,675 for the same period in 1997. The decrease in interest
expense is the result of the sale of the St. Mary's Market partially
offset by an increase in the interest rate at the Radisson Redick.
Depreciation and amortization expense decreased
$82,472 from $209,223 in the second quarter of 1996 to $126,751 in the
same period in 1997 and decreased $164,944 from $418,446 for the first
six months of 1996 to $253,502 for the same period in 1997. The
decrease is the result of the sale of the St. Mary's Market and loan
costs at Radisson Redick becoming fully amortized in November 1996.
Losses incurred during the second quarter at the
Registrant's three properties amounted to $181,000, compared to
approximately $230,000 for the same period in 1996. For the first six
months of 1997 the Registrant's three properties recognized a loss of
$470,000 compared to approximately $390,000 for the same period in
1996.
In the second quarter of 1997, Registrant
recognized a loss of $180,000 at the Radisson Redick Hotel including
$113,000 of depreciation expense, compared to a loss of $125,000 in
the second quarter of 1996, including $134,000 of depreciation and
amortization expense and for the first six months of 1997, Registrant
recognized a loss of $461,000 including $225,225 of depreciation
expense compared to a loss of $267,000 for the same period in 1996,
including depreciation expense of $268,000. The increase in the loss
from the second quarter of 1996 and the first six months of 1996 to
the same periods in 1997 is the result of a decrease in hotel income
and an increase in interest expense partially offset by a decrease in
management fees, operating expenses and amortization expense. Hotel
income decreased due to a decrease in the average occupancy (72% to
66%) and a decrease in the average nightly rates ($94.50 to $93.90)
for the quarter and a decrease in the average occupancy (80% to 64%)
for the first six months partially offset by an increase in average
nightly rates ($93.96 to $95.37) resulting from the opening of a new
hotel in the area served by the Registrant and, accordingly, an
increase in competition. Interest expense increased due to an
increase in the interest rate as a result of the default interest that
is charged on the bonds while the property is in bankruptcy.
Management fees (which are based upon hotel revenues) decreased due to
the decrease in hotel income, and overall operating expenses decreased
due to the decrease in average occupancy. Amortization expense
decreased due to loan costs becoming fully amortized in November 1996.
In the second quarter of 1997, Registrant incurred a
loss of $0 at the St. Mary's Market, compared to a loss of $97,000
including $61,000 of depreciation expense in the second quarter of
1996 and for the first six months of 1997, Registrant incurred a loss
of $3,000, compared to a loss of $110,000 for the first six months of
1996, including depreciation expense of $121,000. The decreased loss
for both the second quarter and the first six months of 1997 from the
same periods in 1996 is the result of the sale of the property in
October 1996.
In the second quarter of 1997, Registrant incurred a
loss of $1,000 at the Lofts at Red Hill, including $14,000 of
depreciation expense, compared to a loss of $8,000 including $14,000
of depreciation expense in the second quarter of 1996 and for the
first six months of 1997, Registrant incurred a loss of $6,000,
including $29,000 of depreciation expense compared to a loss of
$13,000 for the first six months of 1996 including depreciation
expense of $29,000. The decreased loss from the second quarter and
the first six months of 1997 from the same periods in 1996 is the
result of an increase in rental income due to an increase in the
average occupancy (72% to 89%) for the quarter and (77% to 89%) for
the first six months.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
Assets
June 30, 1997 December 31, 1996
(Unaudited)
Rental properties, at cost:
Land $ 347,955 $ 347,955
Buildings and improvements 10,977,943 10,976,514
Furniture and fixtures 1,161,138 1,158,605
---------- ----------
12,487,036 12,483,074
Less - Accumulated depreciation (5,030,680) (4,777,178)
---------- ----------
7,456,356 7,705,896
Cash and cash equivalents 530,269 1,126,711
Restricted cash 278,469 8,956
Accounts and notes receivable 179,235 172,869
Other assets (net of amortization of
$284,230 and $190,812 at June 30,
1997 and December 31, 1996,
respectively). 118,739 31,677
---------- ----------
Total $ 8,563,068 $ 9,046,109
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,163,254 $ 6,163,254
Accounts payable:
Trade 494,448 517,295
Related parties 55,000 130,063
Taxes 51,758 44,084
Interest payable 398,758 158,962
Accrued liabilities 79,848 79,243
Tenant security deposits 8,900 14,510
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Total liabilities 7,251,966 7,107,411
---------- ----------
Partners' equity 1,311,102 1,938,698
---------- ----------
Total $ 8,563,068 $13,517,285
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1997 and 1996
(Unaudited)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Revenues:
Rental income $ 29,766 $ 257,674 $ 57,951 $ 596,048
Hotel income 549,093 641,313 992,756 1,233,729
Interest income 5,315 380 11,653 762
------- --------- --------- ---------
Total revenues 584,174 899,367 1,062,360 1,830,539
------- --------- --------- ---------
Costs and expenses:
Rental operations 91,608 177,378 114,987 348,059
Hotel operations 476,388 558,023 989,794 1,085,882
General and
administrative 45,999 24,000 91,998 48,000
Interest 140,899 184,916 239,675 368,115
Depreciation and
amortization 126,751 209,223 253,502 418,446
------- --------- --------- ---------
Total costs and
expenses 881,645 1,153,540 1,689,956 2,268,502
------- --------- --------- ---------
Net loss ($297,471) ($ 254,172) ($ 627,596) ($ 437,963)
======= ========= ========= =========
Net loss per limited
partnership unit ($ 26.43) ($ 22.58) ($ 55.76) ($ 38.91)
======= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six months ended
June 30,
1997 1996
Cash flows from operating activities:
Net loss ($ 627,596) ($ 437,963)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization 253,502 418,446
Changes in assets and liabilities:
(Increase) decrease in restricted cash (269,513) 25,383
Increase in accounts receivable (6,366) (90,543)
Increase in other assets (87,062) (8,778)
(Decrease) increase in accounts payable - trade (22,847) 145,354
(Decrease) increase in accounts payable -
related parties (75,063) 22,109
Increase in accounts payable - taxes 7,674 9,625
Increase in interest payable 239,796 7,102
(Decrease) increase in accrued liabilities (5,610) 12,220
Increase (decrease) in tenant security deposits 605 (9,794)
--------- ---------
Net cash (used in) provided by operating activities: (592,480) 93,161
--------- ---------
Cash flows from investing activities:
Capital expenditures (3,962) (87,687)
--------- ---------
Net cash used in investing activities: (3,962) (87,687)
--------- ---------
Cash flows from financing activities:
Proceeds from debt financings 0 0
Principal payments 0 (9,675)
--------- ---------
Net cash used in financing activities: 0 (9,675)
--------- ---------
Decrease in cash and cash equivalents (596,442) (4,201)
Cash and cash equivalents at beginning of period 1,126,711 40,854
--------- ---------
Cash and cash equivalents at end of period $ 530,269 $ 36,653
========= =========
The accompanying notes are an integral part of these financial statements.
<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 and notes thereto, in the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1996.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In October 1996, Radisson Redick, was transferred to
1504 Harney Street Associates ("HSA") a limited partnership in which
the Registrant owns a 99% interest. The property was transferred so
that it would be held by the Registrant in a manner similar to the
other properties held by the Registrant. HSA was unable to pay the
bonds as they became due, and on October 28, 1996, HSA filed a
reorganization petition pursuant to Chapter 11 of the U.S. Bankruptcy
Code as disclosed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996.
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, 1997.
<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: August 26, 1997 DIVERSIFIED HISTORIC INVESTORS V
By: Dover Historic Advisors V, General Partner
By: EPK, Inc., Partner
By: /s/ Donna M. Zanghi
-----------------------
DONNA M. ZANGHI,
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 530,269
<SECURITIES> 0
<RECEIVABLES> 179,235
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,487,036
<DEPRECIATION> 5,030,680
<TOTAL-ASSETS> 8,563,068
<CURRENT-LIABILITIES> 601,206
<BONDS> 6,163,254
0
0
<COMMON> 0
<OTHER-SE> 1,311,102
<TOTAL-LIABILITY-AND-EQUITY> 8,563,068
<SALES> 0
<TOTAL-REVENUES> 1,062,360
<CGS> 0
<TOTAL-COSTS> 1,104,781
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 239,675
<INCOME-PRETAX> (627,596)
<INCOME-TAX> 0
<INCOME-CONTINUING> (627,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (627,596)
<EPS-PRIMARY> (55.76)
<EPS-DILUTED> 0
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