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, 1998
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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.)
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 - March 31, 1998 (unaudited)
and December 31, 1997
Consolidated Statements of Operations - Three Months
Ended March 31, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 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 March 31, 1998, Registrant had cash of
$93,877. 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, 1998, Registrant had restricted
cash of $180,498 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 first quarter of 1998, Registrant
incurred a net loss of $653,740 ($58.09 per limited partnership unit)
compared to a net loss of $330,125 ($29.33 per limited partnership
unit) for the same period in 1997.
Rental and hotel income combined decreased
$185,753 from $471,848 in the first quarter of 1997 to $286,095 in the
same period in 1998. This decrease resulted from an increase of
$3,635 in rental income and a decrease of $189,388 in hotel income.
The increase in rental income is the result of an increase in average
occupancy at the Lofts at Red Hill (88% to 93%). The decrease in
hotel income is due to a decrease in average occupancy (50% to 31%)
combined with a decrease in average nightly rates ($97.27 to $89.89)
at the Redick Plaza Hotel, as discussed below.
Hotel operations expense decreased $4,621 from
$513,406 in the first quarter of 1997 to $508,785 in the same period
in 1998 due to an overall decrease in operating expenses due to the
decrease in occupancy.
Depreciation and amortization expense increased
$18,801 from $126,751 in the first quarter of 1997 to $145,552 in the
same period in 1998. The increase from the first quarter of 1996 to
the same period in 1997 is the result of the amortization of loan fees
incurred in connection with the refinancing of the Redick Plaza Hotel
in July 1997.
Interest expense increased by $148,956 from
$98,776 in the first quarter of 1997 to $247,732 in the same period in
1998. The increase 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.
Losses incurred during the quarter at the
Registrant's two properties amounted to $619,000, compared to a loss
of approximately $286,000 for the same period in 1997.
In the first quarter of 1998, Registrant incurred
a loss of $601,000 at the Redick Plaza Hotel including $115,000 of
depreciation and amortization expense compared to a loss of $281,000
in the first quarter of 1997, including $112,000 of depreciation and
amortization expense. The increased loss from the first quarter of
1997 to the first quarter of 1998 is the result due to a decrease in
average occupancy (50% to 31%) combined with a decrease in average
nightly rates ($97.27 to $89.89) at the Redick Plaza Hotel 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 first quarter of 1998, Registrant incurred
a loss of $18,000 at the Lofts at Red Hill, including $15,000 of
depreciation and amortization expense, compared to a loss of $5,000
including $14,000 of depreciation expense in the first quarter of
1997. The increase in the loss from the first quarter of 1996 to the
same period in 1997 is due to an increase in interest expense
partially offset by an increase in rental income due to an increase in
the average occupancy (88% to 92%). 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
Assets
March 31, 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
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12,500,237 12,500,237
Less - Accumulated depreciation (5,410,036) (5,284,345)
---------- ----------
7,090,201 7,215,892
Cash and cash equivalents 93,877 57,736
Restricted cash 180,498 176,129
Accounts and notes receivable 90,539 117,468
Other assets (net of amortization of
$305,604 and $319,567 at March 31, 1998
and December 31, 1997, respectively) 377,089 396,949
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Total $ 7,832,204 $ 7,964,174
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,807,655 $ 6,804,113
Accounts payable:
Trade 622,074 385,613
Related parties 33,656 55,000
Taxes 97,833 35,123
Interest payable 1,101,850 869,660
Accrued liabilities 85,675 77,899
Tenant security deposits 9,815 9,380
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Total liabilities 8,758,558 8,236,788
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Partners' equity (926,354) (272,614)
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Total $ 7,832,204 $ 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 Ended March 31, 1998 and 1997
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1998 1997
Revenues:
Rental income $ 31,820 $ 28,185
Hotel income 254,275 443,663
Interest income 689 6,338
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Total revenues 286,784 478,186
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Costs and expenses:
Rental operations 22,456 23,379
Hotel operations 508,785 513,406
General and administrative 15,999 45,999
Interest 247,732 98,776
Depreciation and amortization 145,552 126,751
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Total costs and expenses 940,524 808,311
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Net loss ($ 653,740) ($ 330,125)
======= =======
Net loss per limited partnership unit ($ 58.09) ($ 29.33)
======= =======
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, 1998 and 1997
(Unaudited)
Three months ended
March 31,
1998 1997
Cash flows from operating activities:
Net loss ($ 653,740) ($ 330,125)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 145,552 126,751
Changes in assets and liabilities:
Increase in restricted cash (4,369) (100,045)
Decrease in accounts receivable 26,929 4,138
Increase in other assets 0 (1,127)
Increase (decrease) in accounts payable - trade 236,460 (19,906)
Decrease in accounts payable - related parties (21,344) (75,063)
Increase (decrease) in accounts payable - taxes 62,710 (25,541)
Increase in interest payable 232,190 98,897
Increase (decrease) increase in accrued liabilities 435 (5,615)
Increase (decrease) in tenant security deposits 7,776 (713)
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Net cash provided by (used in) operating activities 32,599 (328,349)
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Cash flows from investing activities:
Capital expenditures 0 (1,332)
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Net cash used in investing activities 0 (1,332)
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Cash flows from financing activities:
Principal payments 3,542 0
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Net cash provided by financing activities 3,542 0
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Increase (decrease) in cash and cash equivalents 36,141 (329,681)
Cash and cash equivalents at beginning of period 57,736 1,126,711
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Cash and cash equivalents at end of period $ 93,877 $ 797,030
======= =========
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, 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 March 31, 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: June 29, 1998 DIVERSIFIED HISTORIC INVESTORS V
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By: Dover Historic Advisors V, General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President and Treasurer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 93,877
<SECURITIES> 0
<RECEIVABLES> 90,539
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 12,500,237
<DEPRECIATION> 5,410,036
<TOTAL-ASSETS> 7,832,204
<CURRENT-LIABILITIES> 753,563
<BONDS> 6,807,655
0
0
<COMMON> 0
<OTHER-SE> (926,354)
<TOTAL-LIABILITY-AND-EQUITY> 7,832,204
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<TOTAL-REVENUES> 286,784
<CGS> 0
<TOTAL-COSTS> 531,241
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<INTEREST-EXPENSE> 247,732
<INCOME-PRETAX> (653,740)
<INCOME-TAX> 0
<INCOME-CONTINUING> (653,740)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (653,740)
<EPS-PRIMARY> (58.09)
<EPS-DILUTED> 0
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