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 September 30, 1999
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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
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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.)
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 - September 30, 1999 (unaudited) and
December 31, 1998
Consolidated Statements of Operations - For the Three Months and
Nine Months Ended September 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows - For the Nine Months Ended
September 30, 1999 and 1998 (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 September 30, 1999, Registrant had cash of $4,027.
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 September 30, 1999, Registrant had restricted cash
of $111,795 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 January 15, 1999, one of the Registrant's properties, the
Redick Plaza Hotel, was declared in default on its second mortgage for
failure to make the minimum monthly payment. A settlement agreement
was reached whereby the Registrant agreed to relinquish its partnership
interests in the hotel in satisfaction of the mortgage.
(2) Capital Resources
Due to the relatively recent rehabilitations of the property,
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 third quarter of 1999, Registrant incurred
a net loss of $59,812 ($5.31 per limited partnership unit) compared to a
net loss of $510,254 ($45.34 per limited partnership unit) for the same
period in 1998. For the first nine months of 1999, Registrant recognized
income of $3,695,185 ($328.33 per limited partnership unit) compared to
a net loss of $1,548,593 ($137.60 per limited partnership unit) for the same
period in 1998. Included in income in the first nine months of 1999 is
extraordinary income of $3,997,619 related to the foreclosure of the Redick
Plaza Hotel in January 1999.
Rental and hotel income combined decreased $320,371 from $347,346
in the third quarter of 1998 to $26,975 in the same period in 1999. The
decrease resulted from a $318,191 decrease in hotel income and a $2,180
decrease in rental income. The decrease in hotel income is due to the
foreclosure of the Redick Plaza Hotel. The decrease in rental income is
due to a decrease in the average occupancy (84% to 77%) at the Lofts at Red
Hill.
Rental and hotel income decreased $905,916 from $1,006,318 for
the first nine months of 1998 to $100,402 for the same period of 1999.
The decrease resulted from a $894,417 decrease in hotel income and a $11,499
decrease in rental income. The decrease in hotel income is due to the
foreclosure of the Redick Plaza Hotel. The decrease in rental income is
due to a decrease in the average occupancy (91% to 80%) at the Lofts at Red
Hill.
Expense for rental operations decreased $730 from $26,206
in the third quarter of 1998 to $25,476 in the same period in 1999 and
decreased $5,804 from $64,712 for the first nine months of 1998 to
$58,908 for the same period in 1999 due to legal fees incurred in the
second quarter of 1998 in connection with the bankruptcy of the Redick Plaza
Hotel that did not recur in 1999.
Hotel operations expense decreased $420,267 from $420,267 in the
third quarter of 1998 to $0 in the same period in 1999 and decreased
$1,163,743 from $1,262,925 for the first nine months of 1998 to $99,182
for the same period in 1999 due to the foreclosure of the Redick Plaza Hotel.
Interest expense decreased $234,910 from $249,676 in the third
quarter of 1997 to $14,766 in the same period in 1999 and decreased
$658,185 from $744,055 for the first nine months of 1998 to $85,870
for the same period in 1999 due to the foreclosure of Redick Plaza Hotel
and the satisfaction of the related debt obligations as a result of that
foreclosure.
Depreciation and amortization expense decreased $114,919
from $145,551 in the third quarter of 1998 to $30,632 in the same period
in 1999 and decreased $325,468 from $436,655 for the first nine months
of 1998 to $111,187 for the same period in 1999 due to the foreclosure of
the Redick Plaza Hotel.
Losses incurred during the third quarter at the Registrant's
properties amounted to $29,000, compared to approximately $475,000 for
the same period in 1998. For the first nine months of 1999 the
Registrant's properties recognized income of $3,789,000 compared to a loss
of approximately $1,445,000 for the same period in 1998. Included in income
in the first nine months of 1999 is extraordinary income of $3,998,000
related to the foreclosure of the Redick Plaza Hotel.
In the third quarter of 1999, Registrant incurred a loss of
$0 at the Redick Plaza Hotel, compared to a loss of $452,000 in the third
quarter of 1998, including $115,000 of depreciation and amortization
expense. For the first nine months of 1999, recognized income of $3,855,000
including $19,000 of depreciation and amortization expense, compared to a
loss of $1,394,000 for the same period in 1998, including depreciation
and amortization expense of $345,000. Included in income for the first
nine months of 1999 is extraordinary income of $3,998,000 related to the
foreclosure of the Redick Plaza Hotel. The decrease in the loss from
the third quarter and the first nine months of 1998 to the same periods
in 1999 is due to the foreclosure of the Redick Plaza Hotel.
In the third quarter of 1999, Registrant incurred a loss of
$29,000 at the Lofts at Red Hill, including $15,000 of depreciation
and amortization expense, compared to a loss of $23,000 including
$15,000 of depreciation expense in the third quarter of 1998 and for the
first nine months of 1999, incurred a loss of $66,000, including $45,000
of depreciation expense compared to a loss of $51,000 for the first
nine months of 1997 including depreciation expense of $45,000. The increased
loss from the third quarter and the first nine months of 1998 from the same
periods in 1999 is the result of a decrease in rental income due to a
decrease in the average occupancy (84% to 77%) for the third quarter and
(91% to 80%) for the first nine months.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
September 30, 1999 and December 31, 1998
Assets
September 30, 1999 December 31, 1998
(Unaudited)
Rental properties, at cost:
Land $ 61,046 $ 347,955
Buildings and improvements 1,445,431 10,322,476
Furniture and fixtures 85,443 1,121,539
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1,591,920 11,791,970
Less - Accumulated depreciation (696,458) (5,752,945)
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895,462 6,039,025
Cash and cash equivalents 4,027 13,986
Restricted cash 111,795 263,862
Accounts and notes receivable 213 99,954
Other assets (net of amortization
of $144,364 and $365,187 at
September 30, 1999 and December
31, 1998, respectively). 193,332 348,005
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Total $ 1,204,829 $ 6,764,832
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 414,534 $ 7,566,974
Accounts payable:
Trade 91,539 578,973
Related parties 33,656 33,656
Taxes 0 95,258
Interest payable 0 1,498,851
Accrued liabilities 12,847 33,447
Tenant security deposits 7,540 8,145
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Total liabilities 560,116 9,815,304
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Partners' equity 644,713 (3,050,472)
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Total $ 1,204,829 $ 6,764,832
========== ==========
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 Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three months Nine months
Ended September 30, Ended September 30,
1999 1998 1999 1998
Revenues:
Rental income $ 26,975 $ 29,155 $ 82,221 $ 93,720
Hotel income 0 318,191 18,181 912,598
Interest income 86 99 308 1,433
------- ------- --------- ---------
Total revenues 27,061 347,445 100,710 1,007,751
------- ------- --------- ---------
Costs and expenses:
Rental operations 25,476 26,206 58,908 64,712
Hotel operations 0 420,267 99,182 1,262,925
General and
administrative 15,999 15,999 47,997 47,997
Interest 14,766 249,676 85,870 744,055
Depreciation and
amortization 30,632 145,551 111,187 436,655
------- ------- --------- ---------
Total costs and expenses 86,873 857,699 403,144 2,556,344
------- ------- --------- ---------
Loss before
extraordinary item (59,812) (510,254) (302,434) (1,548,593)
Extraordinary income 0 0 3,997,619 0
------- ------- --------- ---------
Net (loss) income ($ 59,812) ($ 510,254) $3,695,185 ($1,548,593)
======= ======= ========= =========
Net (loss) income per
limited partnership unit
Loss before ($ 5.31) ($ 45.34) $ 26.87 ($ 137.60)
extraordinary item
Extraordinary income 0 0 355.20 0
------- -------- --------- ---------
($ 5.31) ($ 45.34) $ 328.33 ($ 137.60)
======= ======== ========= =========
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 Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Nine months ended
September 30,
1999 1998
Cash flows from operating activities:
Net income (loss) $3,695,185 ($1,548,593)
Extraordinary income (3,997,619) 0
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 111,187 436,655
Changes in assets and liabilities:
Increase (decrease) in restricted cash 633 (302,070)
(Decrease) increase in accounts
receivable 19,236 (39,572)
Increase in other assets 0 (30,499)
Increase in accounts payable - trade 108,727 241,637
Decrease in accounts payable -
related parties 0 (21,344)
(Decrease) increase in accounts
payable - taxes (3,566) 60,135
Increase in interest payable 50,475 466,809
Decrease in accrued liabilities (1,161) (980)
Decrease in tenant security deposits (605) (5,342)
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Net cash used in operating activities: (17,508) (743,164)
------- -------
Cash flows from investing activities:
Capital expenditures 0 0
------- -------
Net cash used in investing activities: 0 0
------- -------
Cash flows from financing activities:
Proceeds from debt financings 7,549 704,072
Principal payments 0 0
------- -------
Net cash provided by financing activities: 7,549 704,072
------- -------
Decrease in cash and cash equivalents (9,959) (39,092)
Cash and cash equivalents at 13,986 57,736
beginning of period ------- -------
Cash and cash equivalents at end of $ 4,027 $ 18,644
period ======= =======
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, 1998.
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
a 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
September 30, 1999.
<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: December 16, 1999 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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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,027
<SECURITIES> 0
<RECEIVABLES> 213
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,591,920
<DEPRECIATION> 696,458
<TOTAL-ASSETS> 1,204,829
<CURRENT-LIABILITIES> 91,539
<BONDS> 414,534
0
0
<COMMON> 0
<OTHER-SE> 644,713
<TOTAL-LIABILITY-AND-EQUITY> 1,204,829
<SALES> 0
<TOTAL-REVENUES> 100,710
<CGS> 0
<TOTAL-COSTS> 158,090
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,870
<INCOME-PRETAX> (302,434)
<INCOME-TAX> 0
<INCOME-CONTINUING> (302,434)
<DISCONTINUED> 0
<EXTRAORDINARY> 3,997,619
<CHANGES> 0
<NET-INCOME> 3,695,185
<EPS-BASIC> 0
<EPS-DILUTED> 328.33
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