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, 1997
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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 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 - March 31, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Operations - Three Months
Ended March 31, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 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 March 31, 1997, Registrant had cash of
$797,030. 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, 1997, Registrant had restricted
cash of $109,001 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 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.
(3) Results of Operations
During the first quarter of 1997, Registrant
incurred a net loss of $330,125 ($29.33 per limited partnership unit)
compared to a net loss of $183,790 ($16.33 per limited partnership
unit) for the same period in 1996.
Rental and hotel income combined decreased
$458,942 from $930,790 in the first quarter of 1996 to $471,848 in the
same period in 1996. This decrease resulted from a decrease of
$310,189 in rental income and a decrease of $148,753 in hotel income.
The decrease in rental income is the result of the sale of St. Mary's
Market in October 1996 and an increase in average occupancy at the
Lofts at Red Hill (83% to 88%). The decrease in hotel income is due
to a decrease in average occupancy (66% to 50%) partially offset by an
increase in average nightly rates ($93.39 to $97.27) at the Radisson
Redick.
Expense for rental operations decreased by
$147,302 from $170,681 in the first quarter of 1996 to $23,379 in the
same period in 1996. Expenses for rental operations decreased due to
the sale of the St. Mary's Market partially offset by an increase in
maintenance expense at the Lofts at Red Hill due to the painting of
several units. Hotel operations expense decreased $14,453 from
$527,859 in the first quarter of 1996 to $513,406 in 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
partially offset by an increase in legal fees incurred in connection
with the bankruptcy proceedings.
Depreciation and amortization expense decreased
$82,472 from $209,223 in the first quarter of 1996 to $126,751 in the
same period in 1997. The decrease from the first quarter of 1996 to
the same period in 1997 is the result of the sale of the St. Mary's
Market and loan costs at Radisson Redick becoming fully amortized in
November 1996.
Interest expense decreased by $84,423 from
$183,199 in the first quarter of 1996 to $98,776 in the same period in
1996. The decrease is the result of the sale of the St. Mary's
Market.
Losses incurred during the quarter at the
Registrant's three properties amounted to $289,000, compared to a loss
of approximately $160,000 for the same period in 1996.
In the first quarter of 1997, Registrant incurred
a loss of $281,000 at the Radisson Redick Hotel including $112,000 of
depreciation compared to a loss of $142,000 in the first quarter of
1996, including $134,000 of depreciation and amortization expense.
The increased loss from the first quarter of 1996 to the first quarter
of 1997 is the result of a decrease in hotel income and an increase in
legal fees partially offset by a decrease in management fees,
operating expenses and amortization expense. Hotel income decreased
due to a decrease in the average occupancy (66% to 50%) partially
offset by an increase in average nightly rates ($93.39 to $97.27)
resulting from the opening of a new hotel in the area served by the
Registrant and, accordingly, an increase in competition. Legal fees
increased due to fees incurred in connection with the bankruptcy
proceedings, 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 first quarter of 1997, Registrant incurred
a loss of $3,000 at the St. Mary's Market compared to a loss of
$13,000 including $61,000 of depreciation expense in the first quarter
of 1996. The decreased loss from the first quarter of 1996 to the
first quarter of 1997 is the result of the sale of the property in
October 1996.
In the first quarter of 1997, Registrant incurred
a loss of $5,000 at the Lofts at Red Hill, including $14,000 of
depreciation expense, compared to a loss of $5,000 including $14,000
of depreciation expense in the first quarter of 1996. Although there
was no change in the overall loss from the first quarter of 1996 to
the same period in 1997, there was an increase in rental income due to
an increase in the average occupancy (83% to 88%) partially offset by
an increase in maintenance expense due to the painting of several
units in the first quarter of 1997.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
March 31, 1997 December 31, 1996
(Unaudited)
Rental properties, at cost:
Land $ 347,955 $ 347,955
Buildings and improvements 10,977,846 10,976,514
Furniture and fixtures 1,158,605 1,158,605
12,484,406 12,483,074
Less - Accumulated depreciation (4,903,929) (4,777,178)
---------- ----------
7,580,477 7,705,896
Cash and cash equivalents 797,030 1,126,711
Restricted cash 109,001 8,956
Accounts and notes receivable 168,731 172,869
Other assets (net of amortization of
$284,230 and $190,812 at March 31, 1997
and December 31, 1996, respectively) 32,804 31,677
---------- ----------
Total $ 8,688,043 $ 9,046,109
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,163,254 $ 6,163,254
Accounts payable:
Trade 497,389 517,295
Related parties 55,000 130,063
Taxes 18,543 44,084
Interest payable 257,859 158,962
Accrued liabilities 78,530 79,243
Tenant security deposits 8,895 14,510
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Total liabilities 7,079,470 7,107,411
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Partners' equity 1,608,573 1,938,698
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Total $ 8,688,043 $ 9,046,109
========== ==========
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 Ended March 31, 1997 and 1996
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1997 1996
Revenues:
Rental income $ 28,185 $ 338,374
Hotel income 443,663 592,416
Interest income 6,338 382
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Total revenues 478,186 931,172
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Costs and expenses:
Rental operations 23,379 170,681
Hotel operations 513,406 527,859
General and administrative 45,999 24,000
Interest 98,776 183,199
Depreciation and amortization 126,751 209,223
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Total costs and expenses 808,311 1,114,962
------- ---------
Net loss ($330,125) ($ 183,790)
======= =========
Net loss per limited partnership unit ($ 29.33) ($ 16.33)
======= =========
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 Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three months ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss ($ 330,125) ($ 183,790)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization 126,751 209,223
Changes in assets and liabilities:
Increase in restricted cash (100,045) (18,258)
Decrease (increase) in accounts receivable 4,138 (77,543)
Increase in other assets (1,127) (5,357)
(Decrease) increase in accounts payable - trade (19,906) 67,934
Increase in accounts payable - related parties (75,063) (10,581)
(Decrease) increase in accounts payable - taxes (25,541) 35,618
Increase in interest payable 98,897 3,551
(Decrease) increase in accrued liabilities (5,615) 4,122
Decrease in tenant security deposits (713) (554)
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Net cash (used in) provided by operating activities (328,349) 24,365
--------- -------
Cash flows from investing activities:
Capital expenditures (1,332) (43,290)
--------- -------
Net cash used in investing activities (1,332) (43,290)
--------- -------
Cash flows from financing activities:
Principal payments 0 (4,838)
--------- -------
Net cash used in financing activities 0 (4,838)
--------- -------
Decrease in cash and cash equivalents (329,681) (23,763)
Cash and cash equivalents at beginning of period 1,126,711 40,854
--------- -------
Cash and cash equivalents at end of period $ 797,030 $ 17,091
========= =======
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") 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, 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 Document
Number
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, 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 12, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 797,030
<SECURITIES> 0
<RECEIVABLES> 168,731
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,484,406
<DEPRECIATION> 4,903,929
<TOTAL-ASSETS> 8,688,043
<CURRENT-LIABILITIES> 570,932
<BONDS> 6,163,254
0
0
<COMMON> 0
<OTHER-SE> 1,608,573
<TOTAL-LIABILITY-AND-EQUITY> 8,688,043
<SALES> 0
<TOTAL-REVENUES> 471,848
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 536,785
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,776
<INCOME-PRETAX> (330,125)
<INCOME-TAX> 0
<INCOME-CONTINUING> (330,125)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (330,125)
<EPS-PRIMARY> (29.33)
<EPS-DILUTED> 0
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