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, 1998
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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.)
1609 WALNUT STREET, PHILADELPHIA, PA 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 557-9800
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, 1998 (unaudited)
and December 31, 1997
Consolidated Statements of Operations - For the Three
Months and Six Months Ended June 30, 1998 and 1997
(unaudited)
Consolidated Statements of Cash Flows - For the Six
Months Ended June 30, 1998 and 1997 (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, 1998, Registrant had cash of
$113,681. 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, 1998, Registrant had restricted cash
of $119,577 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.
(3) Results of Operations
During the second quarter of 1998, Registrant
incurred a net loss of $384,598 ($34.17 per limited partnership unit)
compared to a net loss of $297,471 ($26.43 per limited partnership
unit) for the same period in 1997. For the first six months of 1998,
Registrant incurred a loss of $1,038,340 ($92.26 per limited
partnership unit) compared to a net loss of $627,596 ($55.76 per
limited partnership unit) for the same period in 1997.
Rental and hotel income combined decreased $205,982
from $579,859 in the second quarter of 1997 to $372,877 in the same
period in 1997. $208,961 of the decrease was from hotel income and
there was a $2,979 increase in rental income. The decrease in hotel
income is due to a decrease in the average occupancy (66% to 46%) and
a decrease in average room rates ($93.90 to $84.08) at the Redick
Plaza Hotel. The increase in rental income is due to an increase in
the average occupancy (89% to 95%) at the Lofts at Red Hill.
Rental and hotel income decreased $391,735 from
$1,050,707 for the first six months of 1997 to $658,972 for the same
period of 1998. $398,349 of the decrease was due to hotel income and
there was a $6,614 increase in rental income. The decrease in hotel
income is due to a decrease in the average occupancy (64% to 39%) and
a decrease in average room rates ($95.37 to $86.98) at the Redick
Plaza Hotel. The increase in rental income is due to an increase in
average occupancy (89% to 94%) at the Lofts at Red Hill.
Expense for rental operations decreased by $75,559
from $91,608 in the second quarter of 1997 to $16,049 in the same
period in 1998 and decreased by $76,480 from $114,987 for the first
six months of 1997 to $38,507 for the same period in 1998 due to legal
fees incurred in the second quarter of 1997 in connection with the
bankruptcy of the Redick Plaza Hotel that did not recur in 1998.
Hotel operations expense decreased $142,515 from
$476,388 in the second quarter of 1997 to $333,873 in the same period
in 1998 and decreased $147,136 from $989,794 for the first six months
of 1997 to $842,658 for the same period in 1998 due to an overall
decrease in operating expenses due to the decrease in occupancy.
Interest expense increased $105,748 from $140,899
in the second quarter of 1997 to $246,647 in the same period in 1998
and increased $254,704 from $239,675 for the first six months of 1997
to $494,379 for the same period in 1998. The increase in interest
expense is the result of an increase in the interest rate at the
Redick Plaza Hotel due to the July 1997 refinancing and an increase in
interest expense at the Lofts at Red Hill due to a new loan.
Depreciation and amortization expense increased
$37,602 from $253,502 in the second quarter of 1997 to $291,104 in the
same period in 1998 and increased $18,801 from $126,751 for the first
six months of 1997 to $145,552 for the same period in 1998. The
increase is the result of the amortization of loan fees incurred in
July 1997 connection with the refinancing of the Redick Plaza Hotel.
Losses incurred during the second quarter at the
Registrant's three properties amounted to $351,000, compared to
approximately $181,000 for the same period in 1997. For the first six
months of 1998 the Registrant's three properties recognized a loss of
$970,000 compared to approximately $467,000 for the same period in
1997.
In the second quarter of 1998, Registrant
recognized a loss of $341,000 at the Redick Plaza Hotel including
$115,000 of depreciation and amortization expense, compared to a loss
of $180,000 in the second quarter of 1997, including $113,000 of
depreciation and amortization expense and; for the first six months of
1998, incurred a loss of $942,000 including $230,000 of depreciation
and amortization expense, compared to a loss of $461,000 for the same
period in 1997, including depreciation and amortization expense of
$225,000. The increase in the losses from the second quarter of 1997
and the first six months of 1997 to the same periods in 1998 is the
result of a decrease in rental income due to a decrease in average
occupancy (66% to 46%) and a decrease in the average nightly rates
($93.90 to $84.08) for the quarter and a decrease in the average
occupancy (64% to 39%) for the first six months and a decrease in the
average nightly rates ($95.37 to $86.98) combined with an increase in
interest expense due to the July 1997 refinancing which included an
interest rate increase. The increased loss is partially offset by an
overall decrease in operating expenses due to the decrease in
occupancy.
In the second quarter of 1998, Registrant incurred
a loss of $10,000 at the Lofts at Red Hill, including $14,000 of
depreciation expense, compared to a loss of $1,000 including $14,000
of depreciation expense in the second quarter of 1997 and for the
first six months of 1998, incurred a loss of $28,000, including
$30,000 of depreciation expense compared to a loss of $6,000 for the
first six months of 1997 including depreciation expense of $29,000.
The increased loss from the second quarter and the first six months of
1998 from the same periods in 1997 is the result of an increase in
interest expense partially offset by an increase in rental income due
to an increase in the average occupancy (89% to 95%) for the second
quarter and (89% to 94%) for the first six months. Interest expense
increased due to the new note placed on the property in September
1997.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
Assets
June 30, 1998 December 31, 1997
(Unaudited)
Rental properties, at cost:
Land $ 347,955 $ 347,955
Buildings and improvements 10,976,514 10,976,514
Furniture and fixtures 1,175,768 1,175,768
---------- ----------
12,500,237 12,500,237
Less - Accumulated depreciation (5,535,727) (5,284,345)
---------- ----------
6,964,510 7,215,892
Cash and cash equivalents 113,681 57,736
Restricted cash 119,577 176,129
Accounts and notes receivable 117,274 117,468
Other assets (net of amortization of
$325,465 and $190,812 at June 30,
1998 and December 31, 1997,
respectively). 364,727 396,949
---------- ----------
Total $ 7,679,769 $ 7,964,174
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,815,427 $ 6,804,113
Accounts payable:
Trade 621,133 385,613
Related parties 33,656 55,000
Taxes 95,258 35,123
Interest payable 1,334,227 869,660
Accrued liabilities 81,152 77,899
Tenant security deposits 9,870 9,380
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Total liabilities 8,990,723 8,236,788
---------- ----------
Partners' equity (1,310,954) (272,614)
---------- ----------
Total $ 7,679,769 $ 7,964,174
========== ==========
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, 1998 and 1997
(Unaudited)
Three months Six months
ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 32,745 $ 29,766 $ 64,565 $ 57,951
Hotel income 340,132 549,093 594,407 992,756
Interest income 645 5,315 1,334 11,653
-------- -------- --------- ---------
Total revenues 373,522 584,174 660,306 1,062,360
-------- -------- --------- ---------
Costs and expenses:
Rental operations 16,049 91,608 38,507 114,987
Hotel operations 333,873 476,388 842,658 989,794
General and
Administrative 15,999 45,999 31,998 91,998
Interest 246,647 140,899 494,379 239,675
Depreciation and
Amortization 145,552 126,751 291,104 253,502
-------- -------- --------- --------
Total costs and
Expenses 758,120 881,645 1,698,646 1,689,956
-------- -------- --------- --------
Net loss ($ 384,598) ($ 297,471) ($1,038,340) ($ 627,596)
======== ======== ========= ========
Net loss per limited
partnership unit ($ 34.17) ($ 26.43) ($ 92.26) ($ 55.76)
======== ======== ========= ========
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, 1998 and 1997
(Unaudited)
Six months ended
June 30,
1998 1997
Cash flows from operating activities:
Net loss ($1,038,340) ($ 627,596)
Adjustments to reconcile net loss to net cash
provided (used in) by operating activities:
Depreciation and amortization 291,104 253,502
Changes in assets and liabilities:
Decrease (increase) in restricted cash 56,552 (269,513)
Decrease (increase) in accounts receivable 194 (6,366)
Increase in other assets (7,499) (87,062)
Increase (decrease) in accounts payable - trade 235,519 (22,847)
Decrease in accounts payable - related parties (21,344) (75,063)
Increase in accounts payable - taxes 60,135 7,674
Increase in interest payable 464,567 239,796
Increase (decrease) increase in accrued liabilities 3,253 (5,610)
Increase in tenant security deposits 490 605
--------- ---------
Net cash provided by (used in) operating activities: 44,631 (592,480)
--------- ---------
Cash flows from investing activities:
Capital expenditures 0 (3,962)
--------- ---------
Net cash used in investing activities: 0 (3,962)
--------- ---------
Cash flows from financing activities:
Proceeds from debt financings 11,314 0
Principal payments 0 0
--------- ---------
Net cash provided by financing activities: 11,314 0
--------- ---------
Increase (decrease) in cash and cash equivalents 55,945 (596,442)
Cash and cash equivalents at beginning of period 57,736 1,126,711
--------- ---------
Cash and cash equivalents at end of period $ 113,681 $ 530,269
========= =========
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, 1997.
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
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 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 June 30, 1998.
<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 20, 1998 DIVERSIFIED HISTORIC INVESTORS V
---------------
By: Dover Historic Advisors V, General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President
and
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 113,681
<SECURITIES> 0
<RECEIVABLES> 117,274
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,500,237
<DEPRECIATION> 5,535,727
<TOTAL-ASSETS> 7,679,769
<CURRENT-LIABILITIES> 750,047
<BONDS> 6,815,427
0
0
<COMMON> 0
<OTHER-SE> (1,310,954)
<TOTAL-LIABILITY-AND-EQUITY> 7,679,769
<SALES> 0
<TOTAL-REVENUES> 660,306
<CGS> 0
<TOTAL-COSTS> 881,165
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 494,379
<INCOME-PRETAX> (1,038,340)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,038,340)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,038,340)
<EPS-PRIMARY> (92.26)
<EPS-DILUTED> 0
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