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, 2000
----------------------------------
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
-------------------------------------------
DIVERSIFIED HISTORIC INVESTORS V
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2479468
------------------------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1609 Walnut Street, Philadelphia, PA 19103
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215)557-9800
--------------
N/A
-----------------------------------------------------------------
(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, 2000
(unaudited) and December 31, 1999
Consolidated Statements of Operations - For the Three
Months and Nine Months Ended September 30, 2000 and 1999
(unaudited)
Consolidated Statements of Cash Flows - For the Nine
Months Ended September 30, 2000 and 1999 (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, 2000, Registrant had cash of
$4,842. 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 lender in
order to remain current on all obligations. The Registrant is
not aware of any additional sources of liquidity.
As of September 30, 2000, Registrant had restricted
cash of $114,032 consisting primarily of funds held as security
deposits escrows for real estate taxes. 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 third quarter of 2000, Registrant incurred
a net loss of $44,916 ($3.99 per limited partnership unit)
compared to a net loss of $59,812 ($5.31 per limited partnership
unit) for the same period in 1999. For the first nine months of
2000, Registrant incurred a loss of $161,855 ($14.38 per limited
partnership unit) compared to a net income of $3,695,185 ($328.33
per limited partnership unit) for the same period in 1999.
Included in income in the first nine months of 1999 is an
extraordinary gain of $3,994,755 related to the foreclosure of
the Redick Plaza Hotel in January 1999.
Rental income increased $11,522 to $38,497 in the
third quarter of 2000 from $26,975 in the same period in 1999 and
increased $17,109 to $99,330 for the first nine months of 2000
from $82,221 for the same period in 1999. The increase in rental
income is due to an increase in average occupancy during the
third quarter (98% from 79%) and for nine months (91% from 81%)
at the Lofts at Red Hill.
Rental operations expense decreased $3,815 to $21,661
in the third quarter of 2000 from $25,476 in the same period in
1999 and increased $17,691 to $76,599 for the first nine months
of 2000 from $58,908 for the same period in 1999. The decrease
from quarter to quarter is the result of a decrease in real
estate taxes partially offset by increases in maintenance and
commission expenses. The increase for the first nine months is
due to increases in maintenance and commission expenses. In both
periods, the expense increases are due to the increase in average
occupancy.
Interest expense increased $411 to $15,177 in the
third quarter of 2000 from $14,766 in the same period in 1999.
The increase is due to a higher principal balance on the
mortgage.
Interest expense decreased $40,894 to $44,886 for the
first nine months of 2000 from $85,870 for the same period in
1999. The decrease is due to the foreclosure of the Redick Plaza
Hotel effective as of January 1999, partially offset by an
increase in interest expense at the Lofts at Red Hill due to a
higher principal balance on the mortgage.
As of January 1999 the Redick Plaza Hotel was
foreclosed by the second mortgage lender, with the consent of the
first mortgage lender, by recordation of a deed in lieu of
foreclosure. The deed was recorded in June 1999 to be effective
as of January 15, 1999. As a result, the Registrant realized an
extraordinary gain on forgiveness of indebtedness in the amount
of $3,994,755, which is the difference between the debt of the
hotel and the net book value of its assets in the first quarter
of 1999.
In the third quarter of 2000, Registrant incurred a
loss of approximately $13,000 at the Lofts at Red Hill, including
$15,000 of depreciation and amortization expense, compared to a
loss of approximately $28,000 including $15,000 of depreciation
expense in the third quarter of 1999 and for the first nine
months of 2000, incurred a loss of approximately $67,000,
including $44,000 of depreciation expense compared to a loss of
approximately $66,000 for the first nine months of 1999 including
depreciation expense of $44,000. The decrease in the loss from
quarter to quarter is the result of an increase in rental income
and a decrease in real estate taxes partially offset by
increases in maintenance and commission expenses. The increase in
the loss to the first nine months of 2000 from 1999 is the result
of increases in maintenance and commission expenses partially
offset by an increase in rental income.
The results of operations for the third quarter and
the first nine months of 1999 have been restated to reflect the
foreclosure of the Redick Plaza Hotel effective as of January
1999.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
September 30, December 31,
2000 1999
(Unaudited)
Rental properties, at cost:
Land $ 61,046 $ 61,046
Buildings and improvements 1,445,431 1,445,431
Furniture and fixtures 86,863 86,863
---------- ----------
1,593,340 1,593,340
Less - accumulated depreciation (754,719) (711,121)
---------- ----------
838,621 882,219
Cash and cash equivalents 4,842 3,951
Restricted cash 114,032 116,039
Accounts and notes receivable 7,009 150
Other assets (net of amortization
of $208,808 and $160,475 at
September 30, 2000 and
December 31, 1999, respectively) 128,889 177,221
---------- ----------
Total $1,093,393 $1,179,580
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 426,285 $ 417,399
Accounts payable:
Trade 168,490 111,524
Related parties 33,656 33,656
Taxes 23,008 13,693
Accrued liabilities 12,836 14,160
Tenant security deposits 11,170 9,344
---------- ----------
Total liabilities 675,445 599,776
Partners' equity 417,948 579,804
---------- ----------
Total $1,093,393 $1,179,580
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months Nine months
ended September 30, ended September 30,
2000 1999 2000 1999
Restated Restated
Revenues:
Rental income $38,497 $26,975 $ 99,330 $ 82,221
Hotel income 0 0 0 18,181
Interest income 56 86 228 308
------- ------- -------- ----------
Total revenues 38,553 27,061 99,558 100,710
------- ------- -------- ----------
Costs and expenses:
Rental operations 21,661 25,476 76,599 58,908
Hotel operations 0 0 0 96,318
General and
administrative 15,999 15,999 47,997 47,997
Interest 15,177 14,766 44,886 85,870
Depreciation and
amortization 30,632 30,632 91,931 111,187
------- ------- -------- ----------
Total costs and expenses 83,469 86,873 261,413 400,280
------- ------- -------- ----------
Loss before extraordinary
item (44,916) (59,812) (161,855) (299,570)
Extraordinary gain from
extinguishment of
indebtedness 0 0 0 3,994,755
------- ------- -------- ----------
Net (loss) income ($44,916) ($59,812) ($161,855) $3,695,185
======= ======= ======== ==========
Net (loss) income per
limited partnership unit:
Loss before extraordinary
item ($ 3.99) ($ 5.31) ($ 14.38) ($ 26.62)
Extraordinary gain 0 0 0 354.95
------- ------- -------- ---------
Net (loss) income ($ 3.99) ($ 5.31) ($ 14.38) ($ 328.33)
======= ======= ======== =========
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
(Unaudited)
Nine months ended
September 30,
2000 1999
Restated
Cash flows from operating activities:
Net (loss) income ($161,855) $3,695,185
Adjustments to reconcile net (loss)
income to net cash used in operating
activities:
Depreciation and amortization 91,931 111,187
Extraordinary gain from
entinguishment of debt 0 (3,994,755)
Changes in assets and liabilities:
Decrease in restricted cash 2,007 633
Increase in accounts receivable (6,859) (154)
Increase in accounts payable - trade 56,964 94,183
Increase in accounts payable - taxes 9,315 44,063
Increase in interest payable 0 42,320
Decrease in accrued liabilities (1,324) (1,161)
Increase (decrease) in tenant
security deposits 1,826 (605)
-------- ----------
Net cash used in operating activities: (7,995) (9,104)
-------- ----------
Cash flows from financing activities:
Proceeds from debt financings 8,886 7,549
Repayments of debt financings 0 (8,404)
-------- ----------
Net cash provided by (used in)
financing activities 8,886 (855)
-------- ----------
Increase (decrease) in cash and cash
equivalents 891 (9,959)
Cash and cash equivalents at
beginning of period 3,951 13,986
-------- ----------
Cash and cash equivalents at end of
period $ 4,842 $ 4,027
======== ==========
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 and notes thereto in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1999.
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 a party
to, nor is 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 Number 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.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended September 30, 2000.
<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: November 27, 2000 DIVERSIFIED HISTORIC INVESTORS V
-----------------
By: Dover Historic Advisors V,
General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President and Treasurer
<PAGE>
