WILDER RICHMAN HISTORIC CORPORATION
599 W. Putnam Avenue
Greenwich, CT 06830
(203) 869-0900
FAX (203) 869-1034
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901
(d) OF REGULATION S-T.
October 15, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Re: Wilder Richman Historic Properties II, L.P.
Form 10-Q
File No. 0-17793
August 31, 1998
To Whom It May Concern:
We hereby electronically file with the Securities and Exchange Commission the
accompanying Form 10-Q for Wilder Richman Historic Properties II, L.P. for the
period ended August 31, 1998. The document with original signatures is on file
in our office.
If you have any questions or comments, please call Neal Ludeke at (203)
869-0900.
Sincerely,
Richard Paul Richman
RPR/ilp
Enclosure
<PAGE>
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 August 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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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part I - Financial Information
Table of Contents
Item 1. Financial Statements Page
<S> <C>
Balance Sheets as of August 31, 1998 (Unaudited)
and February 28, 1998 3
Statements of Operations for the three and six month periods
ended August 31, 1998 and 1997 (Unaudited) 4
Statements of Cash Flows for the six months
ended August 31, 1998 and 1997 (Unaudited) 5
Notes to Financial Statements as of August 31, 1998 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
</TABLE>
2
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
August 31, 1998
(Unaudited) February 28, 1998
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 650,983 $ 649,233
Investments in operating partnerships 1,525,553 1,700,882
Note receivable 317,713 317,713
Accrued interest receivable 129,700 119,260
------------- ------------
$ 2,623,949 $ 2,787,088
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Other liabilities $ 10,000 $ 10,000
Due to related parties 161,701 154,201
------------- -------------
171,701 164,201
------------- -----------
Partners' Equity (Deficit)
Limited partners 2,594,034 2,762,967
General partner (141,786) (140,080)
------------- ------------
2,452,248 2,622,887
------------ ------------
$ 2,623,949 $ 2,787,088
=========== ===========
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
August 31, August 31, August 31, August 31,
1998 1998 1997 1997
<S> <C> <C> <C> <C>
REVENUES
Interest $ 14,185 $ 28,278 $ 13,93 $ 27,555
EXPENSES
Operating 15,919 23,588 10,979 16,926
-------------- ------------ ----------- ----------
Income (loss) from
operations (1,734) 4,690 2,959 10,629
Equity in loss of operating
partnerships (56,277) (175,329) (35,681) (149,354)
-------------- --------------- ---------- -------------
NET LOSS $ (58,011 $ (170,639 $ (32,722 $(138,725)
============= ============== =========== ============
NET LOSS PER UNIT OF
LIMITED PARTNERSHIP
INTEREST $ (71.79) $ (211.17) $ (40.49 $ (171.67)
================ =============== =========== =================
</TABLE>
See notes to financial statements.
4
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED AUGUST 31, 1998 AND 1997
(Unaudited)
1998 1997
----------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (170,639) $ (138,725)
Adjustments to reconcile net loss to
net cash provided by operating activities
Equity in loss of operating partnerships 175,329 149,354
Increase in accrued interest receivable (10,440) (10,441)
Decrease in other liabilities (2,875)
Increase in due to related parties 7,500 7,500
------------- -----------
Net cash provided by operating activities 1,750 4,813
------------- ------------
Net increase in cash and cash equivalents 1,750 4,813
Cash and cash equivalents at beginning of period 649,233 629,975
------------ ------------
Cash and cash equivalents at end of period $ 650,983 $ 634,788
============== =============
</TABLE>
See notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
AUGUST 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 six months ended August 31, 1998 are not
necessarily indicative of the results to be expected for the entire year.
2. The investments in Operating Partnerships as of August 31, 1998 and
February 28, 1998 are as follows:
<S> <C>
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 August 31, 1998 (175,329)
Balance, August 31, 1998 $ 1,525,553
=============
</TABLE>
6
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
AUGUST 31, 1998
(Unaudited)
Note 2 - Continued
The combined balance sheets of the Operating Partnerships as of June 30,
1998 and December 31, 1997 are as follows:
June 30, 1998
(Unaudited) December 31, 1997
ASSETS
<S> <C> <C>
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of accumulated
depreciation of $11,827,525 and
11,164,490, respectively) 40,973,736 41,475,474
Cash and cash equivalents 1,343,550 1,159,863
Deferred costs 515,363 537,180
Mortgage escrow deposits 1,049,752 1,067,734
Tenant security deposits 671,539 669,685
Other assets 79,716 34,043
------------ -------------
$ 45,784,129 $ 46,094,452
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $ 26,651,661 $ 26,776,894
Notes payable 317,713 317,713
Accounts payable and accrued expenses 105,989 137,084
Accrued interest 260,175 249,734
Tenant security deposits payable 671,539669,685
Due to general partner and affiliates 1,929,083 1,840,349
29,936,160 29,991,459
Partners' equity
Wilder Richman Historic Properties
II, L.P. 1,525,553 1,700,882
General partner 14,322,416 14,402,111
-------------- --------------
15,847,969 16,102,993
$ 45,784,129 $ 46,094,452
============ ============
</TABLE>
7
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
AUGUST 31, 1998
(Unaudited)
Note 2 - Continued
The unaudited statements of the operations of the Operating Partnerships
for the six months ended June 30, 1998 and 1997 are as follows:
<S> <C> <C>
1998 1997
------------------ -----------
REVENUE
Rent $ 3,031,089 $ 2,890,855
------------- -----------
3,031,089 2,890,855
-------------- ------------
EXPENSES
Administrative 311,779 302,310
Operating 1,272,335
1,099,305
Management fees 90,071 86,411
Interest 927,076 935,218
Depreciation and amortization 684,852 684,852
--------------- -------------
3,286,113 3,108,096
-------------- ------------
NET LOSS $ (255,024) $ (217,241)
=============== ===========
NET LOSS ALLOCATED TO
Wilder Richman Historic Properties
II, L.P. $ (175,329) $ (149,354)
General partner (79,695) (67,887)
---------------- --------------
$ (255,024) $ (217,241)
=============== ===========
</TABLE>
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
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
As of August 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 six months ended June 30, 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 six months ended August 31, 1998,
the Partnership accrued interest of $10,440 on such advance and has
accrued aggregate interest on such advance of $129,700 as of August 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 as of June 30, 1998. The
Operating Partnerships are required to deposit $5,400 per month into
the replacement reserve.
Despite the implementation of planned improvements of approximately
$300,000 (of which approximately $187,000 was capitalized), the Operating
Partnerships' liquidity as of June 30, 1998 has improved compared to
December 31, 1997, as cash and cash equivalents have increased by
approximately $184,000 and the replacement reserve has increased by
approximately $44,000. In addition, accounts payable and accrued expenses
decreased by approximately $31,000 while due to general partner and
affiliates increased by approximately $89,000 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 Partnerships 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 Partnership 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 six months ended August 31, 1998, the statement of operations of
the Partnership reflects a net loss of $170,639 which includes equity in
loss of Operating Partnerships of $175,329. Nonrecognition of losses of
the Partnership's investment in Dixon Mills Phase I during the six months
ended August 31, 1998 was approximately $78,000 in accordance with the
equity method of accounting. The Operating Partnerships reported a net
loss during the six months ended June 30, 1998 of $255,024, inclusive of
depreciation and amortization of $684,852. Despite expenditures incurred
in connection with the planned improvements discussed above, the Operating
Partnerships generated cash flow of approximately $160,000 after required
debt service payments and required replacement reserve deposits during the
six months ended June 30, 1998, which
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
includes principal amortization under the mortgages (approximately
$125,000) and deposits to required escrows and interest thereon
(approximately $45,000), and excludes accrued fees to affiliates of the
Operating General Partner (approximately $78,000) and accrued interest to
the Partnership (approximately $10,000). The Operating Partnerships did
not utilize any replacement reserves during the six months ended June 30,
1998. For the six months ended August 31, 1997, the statement of
operations of the Partnership reflects a net loss of $138,725, which
includes equity in loss of Operating Partnerships of $149,354.
Nonrecognition of losses of the Partnership's investment in Dixon Mills
Phase I during the six months ended August 31, 1997 was approximately
$66,000 in accordance with the equity method of accounting. The Operating
Partnerships reported a net loss during the six months ended June 30, 1997
of $217,241, inclusive of depreciation and amortization of $648,852.
However, the operating Partnerships generated cash flow after required
debt service payments and required replacement reserve deposits of
approximately $331,000 during the six months ended June 30, 1997, which
includes principal amortization under the mortgages (approximately
$117,000) and deposits to required escrows (approximately $104,000), and
excludes accrued fees to affiliates of the Operating General Partner and
the General Partner (approximately $74,000) and accrued interest to the
Partnership (approximately $10,000). The Operating Partnerships did not
utilize any replacement reserves during the six months ended June 30,
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 six months ended June 30,
1998 and 1997 was approximately 98% for each period. 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
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part II - Other Information
Item 1. Legal Proceedings.
As of August 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 former employee of the Operating Partnerships filed a complaint through
the Equal Employment Opportunity Commission 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
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
By: Wilder Richman Historic Corporation
General Partner
Dated: October 15, 1998 /s/ Richard Paul Richman
---------------------------------
Richard Paul Richman
President and Chief Executive
Officer
13
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This article contains summary information extracted for the six months
ended August 31, 1998 From 10-Q consolidated Balance Sheet and Consolidated
Statement of Operations as of August 31, 1998 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> 6-mos
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> AUG-31-1998
<EXCHANGE-RATE> 1.00
<CASH> 650,983
<SECURITIES> 0
<RECEIVABLES> 317,713
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 2,623,949
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 171,701
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,452,248
<TOTAL-LIABILITY-AND-EQUITY> 2,623,949
<SALES> 0
<TOTAL-REVENUES> 28,278
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 198,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (170,639)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,639)
<EPS-PRIMARY> (211.17)
<EPS-DILUTED> 0
</TABLE>
