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, 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 ___________________
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, 1999 (unaudited)
and December 31, 1998
Consolidated Statements of Operations - For the Three
Months and Six Months Ended June 30, 1999 and 1998
(unaudited)
Consolidated Statements of Cash Flows - For the Six
Months Ended June 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 June 30, 1999, Registrant had cash of $19,188.
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, 1999, Registrant had restricted cash
of $160,036 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
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 1999, Registrant
incurred a net loss of $417,582 ($37.10 per limited partnership unit)
compared to a net loss of $384,598 ($26.43 per limited partnership
unit) for the same period in 1998. For the first six months of 1999,
Registrant incurred a loss of $1,119,730 ($99.49 per limited
partnership unit) compared to a net loss of $1,038,340 ($92.26 per
limited partnership unit) for the same period in 1998.
Rental and hotel income combined increased $41,007
from $372,877 in the second quarter of 1998 to $413,884 in the same
period in 1999. $42,638 of the increase was from hotel income and
there was a $1,631 decrease in rental income. The increase in hotel
income is due to an increase in the average occupancy (46% to 52%) at
the Redick Plaza Hotel. The decrease in rental income is due to a
decrease in the average occupancy (95% to 88%) at the Lofts at Red
Hill.
Rental and hotel income decreased $40,992 from
$658,972 for the first six months of 1998 to $617,980 for the same
period of 1999. $34,533 of the decrease was due to hotel income and
$6,459 increase due to rental income. The decrease in hotel income is
due to a decrease in the average room rates ($86.98 to $72.99) at the
Redick Plaza Hotel. The decrease in rental income is due to a
decrease in average occupancy (94% to 82%) at the Lofts at Red Hill.
Expense for rental operations decreased by $402 from
$16,049 in the second quarter of 1998 to $15,647 in the same period in
1999 and decreased by $5,076 from $38,507 for the first six months of
1998 to $33,431 for the same period in 1999 due to a decrease in
operating expenses at the Lofts at Red Hill due to the decrease in
average occupancy.
Hotel operations expense increased $50,342 from
$333,873 in the second quarter of 1998 to $384,215 in the same period
in 1999 and decreased $386 from $842,658 for the first six months of
1998 to $842,272 for the same period in 1999. The increase from the
second quarter of 1998 to the same period in 1999 is due to an overall
increase in operating expenses due to the increase in occupancy.
Interest expense increased $22,636 from $246,647
in the second quarter of 1998 to $269,283 in the same period in 1999
and increased $43,099 from $494,379 for the first six months of 1998
to $537,478 for the same period in 1999. The increase in interest
expense is the result of an increase in the principal balance of the
mortgage at the Redick Plaza Hotel due to advances made to fund
improvements at the hotel.
Losses incurred during the second quarter at the
Registrant's two properties amounted to $385,000, compared to
approximately $351,000 for the same period in 1998. For the first six
months of 1998 the Registrant's three properties recognized a loss of
$1,056,000 compared to approximately $970,000 for the same period in
1998.
In the second quarter of 1999, Registrant incurred
a loss of $370,000 at the Redick Plaza Hotel including $115,000 of
depreciation and amortization expense, compared to a loss of $341,000
in the second quarter of 1998, including $115,000 of depreciation and
amortization expense. The increase in the loss from the second
quarter of 1998 to the same period in 1999 is the result of an
increase in interest expense, an overall increase in operating
expenses partially offset by an increase in rental income due to an
increase in average occupancy (46% to 52%). Interest expense
increased due to an increase in the principal balance of the mortgage
due to advances made for improvements at the hotel. Overall operating
expenses increased due to the increase in the average occupancy.
For the first six months of 1999, Registrant
incurred a loss of $1,019,000 at the Redick Plaza Hotel including
$231,000 of depreciation and amortization expense, compared to a loss
of $942,000 for the same period in 1998, including depreciation and
amortization expense of $230,000. The increase in the loss from the
first six months of 1998 to the same period in 1999 is the result of
an increase in interest expense combined with a decrease in rental
income. Interest expense increased due to an increase in the
principal balance of the mortgage due to advances made for
improvements at the hotel. The decrease in rental income is due to a
decrease in the average room rates ($86.98 to $72.99) while average
occupancy remained stable.
In the second quarter of 1999, Registrant incurred
a loss of $15,000 at the Lofts at Red Hill, including $15,000 of
depreciation expense, compared to a loss of $10,000 including $14,000
of depreciation expense in the second quarter of 1998 and for the
first six months of 1999, incurred a loss of $37,000, including
$30,000 of depreciation expense compared to a loss of $28,000 for the
first six months of 1998 including depreciation expense of $30,000.
The increased loss from the second quarter and the first six months of
1998 to the same periods in 1999 is the result of a decrease in rental
income due to a decrease in the average occupancy (95% to 88%) for the
second quarter and (94% to 82%) for the first six months. The loss
for the six-month period was partially offset by a decrease in
operating expenses due to the decrease in average occupancy.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
Assets
June 30, 1999 December 31, 1998
(Unaudited)
Rental properties, at cost:
Land $ 347,955 $ 347,955
Buildings and improvements 10,322,476 10,322,476
Furniture and fixtures 1,294,701 1,121,539
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11,965,132 11,791,970
Less - Accumulated depreciation (6,005,976) (5,752,945)
---------- ----------
5,959,156 6,039,025
Cash and cash equivalents 19,188 13,986
Restricted cash 160,036 263,862
Accounts and notes receivable 134,741 99,954
Other assets (net of amortization of
$404,909 and $365,187 at June 30,
1999 and December 31, 1998,
respectively). 308,283 348,005
---------- ----------
Total $ 6,581,404 $ 6,764,832
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 7,985,757 $ 7,566,974
Accounts payable:
Trade 681,096 578,973
Related parties 33,656 33,656
Taxes 183,383 95,258
Interest payable 1,815,046 1,498,851
Accrued liabilities 43,613 33,447
Tenant security deposits 9,055 8,145
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Total liabilities 10,751,606 9,815,304
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Partners' equity (4,170,202) (3,050,472)
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Total $ 6,581,404 $ 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 Six Months Ended June 30, 1999 and 1998
(Unaudited)
Three months Six months
ended June 30, Ended June 30,
1999 1998 1999 1998
Revenues:
Rental income $ 31,114 $ 32,745 $ 58,106 $ 64,565
Hotel income 382,770 340,132 559,874 594,407
Interest income 55 645 222 1,334
------- ------- ------- -------
Total revenues 413,939 373,522 618,202 660,306
------- ------- ------- -------
Costs and expenses:
Rental operations 15,647 16,049 33,431 38,507
Hotel operations 384,215 333,873 842,272 842,658
General and
Administrative 15,999 15,999 31,998 31,998
Interest 269,283 246,647 537,478 494,379
Depreciation and
Amortization 146,377 145,552 292,753 291,104
------- ------- --------- ---------
Total costs and
Expenses 831,521 758,120 1,737,932 1,698,646
------- ------- --------- ---------
Net loss ($417,582) ($384,598) ($1,119,730)($1,038,340)
======= ======= ========= =========
Net loss per limited
partnership unit ($ 37.10) ($ 34.17) ($ 99.49)($ 92.26)
======= ======= ========= =========
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, 1999 and 1998
(Unaudited)
Six months ended
June 30,
1999 1998
Cash flows from operating activities:
Net loss ($1,119,730) ($1,038,340)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 292,753 291,104
Changes in assets and liabilities:
Decrease in restricted cash 103,826 56,552
(Increase) decrease in accounts receivable (34,787) 194
Increase in other assets 0 (7,499)
Increase in accounts payable - trade 102,123 235,519
Decrease in accounts payable - related parties 0 (21,344)
Increase in accounts payable - taxes 88,125 60,135
Increase in interest payable 316,195 464,567
Increase in accrued liabilities 10,166 3,253
Increase in tenant security deposits 910 490
--------- ---------
Net cash (used in) provided by operating activities (240,419) 44,631
--------- ---------
Cash flows from investing activities:
Capital expenditures (173,162) 0
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Net cash used in investing activities: (173,162) 0
--------- ---------
Cash flows from financing activities:
Proceeds from debt financings 418,783 11,314
Principal payments 0 0
--------- ---------
Net cash provided by financing activities: 418,783 11,314
--------- ---------
Increase in cash and cash equivalents 5,202 55,945
Cash and cash equivalents at beginning of period 13,986 57,736
--------- ---------
Cash and cash equivalents at end of period $ 19,188 $ 113,681
========= =========
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 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
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, 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: August 26, 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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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,188
<SECURITIES> 0
<RECEIVABLES> 134,741
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,965,132
<DEPRECIATION> 6,005,976
<TOTAL-ASSETS> 6,581,404
<CURRENT-LIABILITIES> 681,096
<BONDS> 7,985,757
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<COMMON> 0
<OTHER-SE> (4,170,202)
<TOTAL-LIABILITY-AND-EQUITY> 6,581,404
<SALES> 0
<TOTAL-REVENUES> 618,202
<CGS> 842,272
<TOTAL-COSTS> 33,431
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 537,478
<INCOME-PRETAX> (1,119,730)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,119,730)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,119,730)
<EPS-BASIC> 0
<EPS-DILUTED> (99.49)
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