SECURITIES AND EXCHANGE COMMISSION
Washington, DC
-------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1998
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 0-17793
Wilder Richman Historic Properties II, L.P.
(Exact name of Registrant as specified in its charter)
Delaware
13-3481443
State or other jurisdiction of (I.R.S.
Employer
incorporation or organization Identification
No.)
599 W. Putnam Avenue
Greenwich, Connecticut
06830
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 869-0900
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 filing requirements
for the past 90 days.
Yes X No
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part I - Financial Information
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Table of Contents
Item 1. Financial Statements Page
Balance Sheets as of May 31, 1998
(Unaudited) and February 28, 1998 3
Statements of Operations for the three months ended
ended May 31, 1998 and 1997 (Unaudited) 4
Statements of Cash Flows for the three months
ended May 31, 1998 and 1997 (Unaudited) 5
Notes to Financial Statements as of May 31,
1998 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
and Results of Operations 9
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
May 31, 1998
(Unaudited) February 28, 1998
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 654,244 $ 649,233
Investments in operating partnerships 1,581,830 1,700,882
Note receivable 317,713 317,713
Accrued interest receivable 124,423 119,260
------------- ------------
$ 2,678,210 $ 2,787,088
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Other liabilities $ 10,000 $ 10,000
Due to related parties 157,951 154,201
------------- -------------
167,951 164,201
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Partners' Equity (Deficit)
Limited partners 2,651,465 2,762,967
General partner (141,206) (140,080)
------------ ------------
2,510,259 2,622,887
------------ ------------
$ 2,678,210 $ 2,787,088
=========== ===========
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See notes to financial statements.
3
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, 1998 AND 1997
(Unaudited)
1998 1997
<S> <C> <C>
REVENUE
Interest $ 14,093 $ 13,617
EXPENSES
Operating 7,669 5,947
---------------- -------------
Income from operations 6,424 7,670
Equity in loss of operating partnerships (119,052) (113,673)
------------ ------------
NET LOSS $ (112,628) $ (106,003)
=========== ===========
NET LOSS PER UNIT OF LIMITED
PARTNERSHIP INTEREST
(800 units of limited partnership) $ (139.38) $ (131.18)
============ ============
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See notes to financial statements.
4
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MAY 31, 1998 AND 1997
(Unaudited)
Three Months Three Months
Ended Ended
May 31, 1998 May 31, 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (112,628) $ (106,003)
Adjustments to reconcile net loss to
net cash provided by operating activities
Equity in loss of operating partnerships 119,052 113,673
Increase in accrued interest receivable (5,163) (5,163)
Increase in other liabilities 2,125
Increase in due to related parties 3,750 3,750
------------------------------
Net cash provided by operating activities 5,011 8,382
------------------------------
Net increase in cash and cash equivalents 5,011 8,382
Cash and cash equivalents at beginning of period 649,233 629,975
---------- ------------
Cash and cash equivalents at end of period $ 654,244 $ 638,357
============ ============
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See notes to financial statements.
5
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998
(Unaudited)
1. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. They do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements. The
results of operations are impacted significantly by the results of operations of
the Operating Partnerships, which are provided on an unaudited basis during
interim periods. Accordingly, the accompanying financial statements are
dependent on such unaudited information. In the opinion of the General Partner,
the financial statements include all adjustments necessary to reflect fairly the
results of the interim periods presented. All adjustments are of a normal
recurring nature. No significant events have occurred subsequent to February 28,
1998 and no material contingencies exist which would require additional
disclosures in the report under Regulation S-X, Rule 10-01 paragraph A-5.
The results of operations for the three months ended May 31, 1998 are not
necessarily indicative of the results to be expected for the entire year.
2. The investments in Operating Partnerships as of May 31, 1998 and February
28, 1998 are as follows:
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Amount paid to investee through February 28, 1998 $ 16,388,000
Accumulated cash distributions from Operating Partnerships
through February 28, 1998 (3,180,441)
Equity in accumulated loss of operating partnerships
through February 28, 1998 (11,506,677)
Balance, February 28, 1998 1,700,882
Equity in loss of operating partnerships March 1, 1998
to May 31, 1998 (119,052)
Balance, May 31, 1998 $ 1,581,830
=============
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6
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 1998
(Unaudited)
Note 2 - continued
The combined balance sheets of the Operating Partnerships as of March 31,
1998 and December 31, 1997 are as follows:
March 31, 1998
(Unaudited) December 31, 1997
<S> <C> <C>
ASSETS
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of
accumulated depreciation
of $11,496,008 and 11,164,490,
respectively) 41,305,253 41,475,474
Cash and cash equivalents 1,084,242 1,159,863
Deferred costs 526,271 537,180
Mortgage escrow deposits 1,033,312 1,067,734
Tenant security deposits 669,685 669,685
Other assets 204,340 34,043
$ 45,973,576 $ 46,094,452
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $ 26,714,804 $ 26,776,894
Notes payable 317,713 317,713
Accounts payable and accrued expenses 205,670 137,084
Accrued interest 254,898 249,734
Tenants' security deposits payable 669,685 669,685
Due to general partner and affiliates 1,880,980 1,840,349
30,043,750 29,991,459
Partners' equity
Wilder Richman Historic Properties II, L.P. 1,581,830 1,700,882
General partner 14,347,996 14,402,111
15,929,826 16,102,993
$ 45,973,576 $ 46,094,452
============ ============
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7
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 1998
(Unaudited)
Note 2 - Continued
The unaudited statements of the operations of the Operating Partnerships
for the three months ended March 31, 1998 and 1997 are as follows:
1998 1997
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REVENUE
Rent $ 1,494,786 $ 1,433,847
------------ -----------
1,494,786 1,433,847
------------- ------------
EXPENSES
Administrative 160,305 151,934
Operating 656,782 593,924
Management fees 44,432 42,859
Interest 464,007 468,044
Depreciation and amortization 342,427 342,425
------------- -------------
1,667,953 1,559,186
------------ ------------
NET LOSS $ (173,167) $ (165,339)
============ ===========
NET LOSS ALLOCATED TO
Wilder Richman Historic Properties
II, L.P. $ (119,052) (113,673)
General partner (54,115) (51,666)
$ (173,167) $ (165,339)
============ ===========
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3. Additional information, including the audited February 28, 1998 Financial
Statements and the Summary of Significant Accounting Policies, is included
in the Partnership's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998 on file with the Securities and Exchange Commission.
8
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
As of May 31, 1998, Wilder Richman Historic Properties II, L.P. (the
"Partnership") experienced few changes in its financial condition as
compared to February 28, 1998, with the exception of the investment in the
Operating Partnerships resulting from the equity in loss of Operating
Partnerships for the three months ended March 31, 1998. Cash and cash
equivalents of the Partnership includes approximately $582,000 which was
previously held in an operating deficit escrow established in connection
with the refinancing of the mortgages of the Operating Partnerships.
Pursuant to the Partnership Agreement, such funds may be held or utilized
for other Partnership purposes in the discretion of the General Partner.
Presently, the General Partner intends for the Partnership to continue to
hold such funds. The Partnership's advance to the Operating Partnerships
in the amount of $317,713 in connection with the refinancing of the
mortgages remains outstanding. For the three months ended May 31, 1998,
the Partnership accrued interest of $5,163 on such advance and has accrued
aggregate interest on such advance of $124,423 as of May 31, 1998.
Because of the outstanding advance, the Operating Partnerships are subject
to restrictions concerning cash flow distributions. Cash flow, if any,
generated subsequent to 1995 may be retained by the Operating Partnerships
or may be distributed at the discretion of management. If distributed,
such cash flow distributions must follow the priority of (i) accrued
interest owing to the Partnership, (ii) principal owing to the Partnership
and (iii) thereafter, pursuant to the terms of the limited partnership
agreements of the Operating Partnerships. Although recent rental market
conditions have been strong, management has been accumulating reserves to
protect against potential adverse changes in market conditions and
unanticipated expenses. In addition to its cash balances, the Operating
Partnerships' balance in the replacement reserve account, which is
controlled by the lender to be used for certain repairs or capital
improvements, was approximately $731,000 of March 31, 1998. The Operating
Partnerships are required to deposit $5,400 per month into the replacement
reserve.
Due to the implementation of planned improvements of approximately
$300,000 (of which approximately $187,000 was capitalized), the Operating
Partnerships' liquidity as of March 31, 1998 has slightly diminished
compared to December 31, 1997, as cash and cash equivalents have decreased
by approximately $76,000 while the replacement reserve has increased by
approximately $22,000. In addition, accounts payable and accrued expenses
increased by approximately $68,000 and due to general partner and
affiliates increased by approximately $41,000 due to the accrual of
management fees and investor service fees.
The Partnership's operating results are dependent upon the operating
results of the Operating Partnership and are significantly impacted by the
Operating Partnerships policies. The Partnership accounts for its
investment in the Operating Partnerships in accordance with the equity
method of accounting, under which the investment is carried at cost and is
adjusted for the Partnership's share of the Operating Partnerships'
results of operations and by any cash distributions received. Equity in
loss of each investment in Operating Partnerships allocated to the
Partnership is recognized to the extent of the Partnership's investment
balance in each Operating Partnership. Any equity in loss in excess of the
Partnership's investment balance in an Operating Partnership is allocated
to other partners' capital in any Operating Partnership. As a result, the
equity in loss of investment in Operating Partnerships is expected to
decrease as the Partnership's investment balances in the respective
Operating Partnerships become zero. However, the combined statements of
operations of the Operating Partnerships reflected in Note 2 to the
Partnership's financial statements include the operating results of all
Operating Partnerships, regardless of the Partnership's investment
balances.
For the three months ended May 31, 1998, the statement of operations of
the Partnership reflects a net loss of $112,628, which includes equity in
loss of Operating Partnerships of $119,052. Nonrecognition of losses of
the Partnership's investment in Dixon Mills Phase I during the three
months ended May 31, 1998 was approximately $52,000 in accordance with the
equity method of accounting. The Operating Partnerships reported a net
loss during the three months ended March 31, 1998 of $173,167, inclusive
of depreciation and amortization of $342,427. Due to the planned
improvements discussed above, the Operating Partnerships operated at a
deficit of approximately $59,000 after required debt service payments and
required replacement reserve deposits during the three months ended March
31, 1998, which includes principal amortization under
9
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
the mortgages (approximately $62,000) and deposits to required escrows
(approximately $22,000), and excludes accrued fees to affiliates of the
Operating General Partner (approximately $38,000) and accrued interest to
the Partnership (approximately $5,000). The Operating Partnerships did not
utilize any replacement reserves during the three months ended March 31,
1998.
For the three months ended May 31, 1997, the statement of operations of
the Partnership reflects a net loss of $106,003, which includes equity in
loss of Operating Partnerships of $113,673. Nonrecognition of losses of
the Partnership's investment in Dixon Mills Phase I during the three
months ended May 31, 1997 was approximately $50,000 in accordance with the
equity method of accounting. The Operating Partnership reported a net loss
during the three months ended March 31, 1997 of $165,399, inclusive of
depreciation and amortization of $342,425. However, the Operating
Partnerships generated cash flow after required debt service payments and
required replacement reserve deposits of approximately $108,000 during the
three months ended March 31, 1997, which includes principal amortization
under the mortgages (approximately $58,000) and deposits to required
escrows (approximately $52,000), and excludes accrued fees to affiliates
of the Operating General Partner (approximately $37,000) and accrued
interest to the Partnership (approximately $5,000). The Operating
Partnerships did not utilize any replacement reserves during the three
months ended March 31, 1997.
Although the Operating Partnerships are operating above breakeven,
management is continuing to examine methods to maintain high occupancy
rates while steadily increasing rents and economize operating expenses.
There has been ongoing new construction of luxury multi-housing in the
vicinity of the Dixon Mill Complex (the "Complex"). Such housing includes
asking rents that are comparable and higher than rents currently charged
by the Complex. Although the Complex as not been adversely impacted by the
new competition, it cannot be readily determined whether such new housing
will have a positive or negative impact on the Complex or its cash flow in
the future. The ability to continue to perform at recent levels will be
dependent on the ability to lease units as lease terms expire on a month
to month basis. The average occupancy for the three months ended March 31,
1998 and 1997 was 98% and 98%, respectively. The future operating results
of the Complex will be extremely dependent on competition and market
conditions and therefore may be subject to significant volatility.
10
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part II - Other Information
Item 1. Legal Proceedings
As of May 31, 1998, there were no
material pending legal proceedings to which Registrant
or any of its affiliates was a party or to which any of their property
was subject except for the following:
A complaint has been filed in Federal Court by a former employee of the
Operating Partnerships claiming sexual harassment. The Operating
General Partner cannot measure the potential liability, if any, at this
time.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
11
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Wilder Richman Historic Properties II, L.P.
Form 10-Q
May 31, 1997
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it behalf by the
undersigned thereunto duly authorized.
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
By: Wilder Richman Historic Corporation
General Partner
Dated: July 15, 1998 /s/ Richard Paul Richman
------------------------
Richard Paul Richman
President and Chief Executive Officer
12
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<ARTICLE> 5
<LEGEND>
This article contains summary information extracted from the three
months ended May 31, 1998 Form 10-Q and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000827830
<NAME> Neal Ludeke
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-START> Mar-1-1998
<PERIOD-END> May-31-1998
<EXCHANGE-RATE> 1.00
<CASH> 654,244
<SECURITIES> 0
<RECEIVABLES> 124,423
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,678,210
<CURRENT-LIABILITIES> 167,951
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,510,259
<TOTAL-LIABILITY-AND-EQUITY> 2,678,210
<SALES> 0
<TOTAL-REVENUES> 14,093
<CGS> 0
<TOTAL-COSTS> 7,669
<OTHER-EXPENSES> 119,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (112,628)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
