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, 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 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
Table of Contents
Item 1. Financial Statements Page
----
Balance Sheets as of May 31, 2000 (Unaudited)
and February 29, 2000 3
Statements of Operations for the three months
ended May 31, 2000 and 1999 (Unaudited) 4
Statements of Cash Flows for the three months
ended May 31, 2000 and 1999 (Unaudited) 5
Notes to Financial Statements as of May 31, 2000
(Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure about Market Risk 11
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
May 31, 2000 February 29,
(Unnaudited) 2000
------------ ----
ASSETS
Cash and cash equivalents $ 180,538 $ 180,125
Investments in operating partnerships 1,387,220 1,321,566
Other Assets 9,640 9,988
------------ ------------
$ 1,577,398 $ 1,511,679
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Other liabilities $ 10,000 $ 10,000
Due to related parties 187,951 184,201
------------ ------------
197,951 194,201
------------ ------------
Partners' equity (deficit)
Limited partners 1,522,321 1,460,972
General partner (142,874) (143,494)
------------ -----------
1,379,447 1,317,478
------------ -----------
$ 1,577,398 $ 1,511,679
============ ===========
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, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
Revenue
Interest $ 3,499 $ 10,365
Expenses
Operating 7,184 7,012
-------- ---------
Income (loss) from operations (3,685) 3,353
Equity in income of operating partnerships 65,654 86,171
-------- ---------
Net EARNINGS $ 61,969 $ 89,524
======== =========
Net EARNINGS per unit of limited
partnership interest
(800 units of limited partnership) $ 76.69 $ 110.79
======== =========
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, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 61,969 $ 89,524
Adjustments to reconcile net earnings to net
cash provided by operating activities
Equity in income of operating partnerships (65,654) (86,171)
Decrease in accrued interest receivable 140,083
Decrease in other assets 348
Increase in due to related parties 3,750 4,446
---------- -----------
Net cash provided by operating activities 413 147,882
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Receipt on note receivable 317,713
-----------
Net cash provided by investing activities 317,713
-----------
Net increase in cash and cash equivalents 413 465,595
Cash and cash equivalents at beginning of period 180,125 663,495
--------- ------------
Cash and cash equivalents at end of period $ 180,538 $ 1,129,090
========= ===========
See notes to financial statements.
5
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
(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 29, 2000 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, 2000 are
not necessarily indicative of the results to be expected for the entire
year.
2. The investments in Operating Partnerships as of May 31, 2000 and
February 29, 2000 are as follows:
Amount paid to investee through February 29, 2000 $ 16,388,000
Accumulated cash distributions from Operating
Partnerships through February 29, 2000 (3,180,441)
Equity in accumulated loss of Operating Partnerships
through February 29, 2000 (11,885,993)
-------------
Balance, February 29, 2000 1,321,566
Equity in income of operating partnerships for the
three months ended May 31, 2000 65,654
------------
Balance, May 31, 2000 $ 1,387,220
============
6
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Note 2 - continued
The combined balance sheets of the Operating Partnerships as of March
31, 2000 and December 31, 1999 are as follows:
March 31, 2000
(Unaudited) December 31, 1999
----------- -----------------
ASSETS
<S> <C> <C> <C>
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of accumulated depreciation
of $14,173,283 and $13,840,014, respectively) 38,871,760 39,205,029
Cash and cash equivalents 1,298,722 1,338,266
Deferred costs 459,003 449,912
Mortgage escrow deposits 1,411,495 1,199,642
Tenant security deposits 791,544 789,828
Other assets 57,055 76,687
------------- ------------
$ 44,040,052 $ 44,209,837
============= ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $ 26,178,790 $ 26,249,814
Accounts payable and accrued expenses 272,525 159,007
Accrued interest 132,298 132,298
Tenant security deposits payable 789,826 789,828
Due to general partner and affiliates 1,005,930 1,284,524
------------- ------------
28,379,369 28,615,471
------------- ------------
Partners' equity
Wilder Richman Historic Properties II, L.P. 1,387,220 1,321,566
General partner 14,273,463 14,272,800
------------- ------------
15,660,683 15,594,366
------------- ------------
$ 44,040,052 $ 44,209,837
============ ============
</TABLE>
7
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 2000
(Unaudited)
Note 2 - Continued
The unaudited statements of the operations of the Operating
Partnerships for the three months ended March 31, 2000 and 1999 are as
follows:
2000 1999
---- ----
Revenue
Rent $ 1,705,632 $ 1,605,824
------------ -----------
1,705,632 1,605,824
------------ -----------
Expenses
Administrative 144,407 134,782
Operating 657,783 494,511
Management fees 43,036 47,236
Interest 449,911 459,777
Depreciation and amortization 344,178 344,178
------------ -----------
1,639,315 1,480,484
------------ -----------
Net EARNINGS $ 66,317 $ 125,340
============ ===========
Net EARNINGS allocated to
Wilder Richman Historic
Properties II, L.P. $ 65,654 $ 86,171
General partner 663 39,169
------------ -----------
$ 66,317 $ 125,340
============ ===========
3. Additional information, including the audited February 29, 2000
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 29, 2000 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
Liquidity and Capital Resources
As of May 31, 2000, Wilder Richman Historic Properties II, L.P. (the
"Partnership") experienced few changes in its financial condition as compared to
February 29, 2000, with the exception of the investment in the Operating
Partnerships resulting from the equity in income of operating partnerships for
the three months ended March 31, 2000.
As of March 31, 2000, the Operating Partnerships' balance in the replacement
reserves account, which is controlled by the Lender to be used for certain
repairs or capital improvements, was approximately $882,000.
Although the Property is reporting cash flow for the three months ended March
31, 2000 (see Results of Operations, below), the Operating Partnerships' cash
and cash equivalents as of March 31, 2000 have decreased by approximately
$40,000 compared to December 31, 1999 while accounts payable and accrued
expenses have increased by approximately $68,000. The replacement reserve
account, which is controlled by the lender for the purpose of funding needed
repairs or capital improvements, has increased by approximately $16,000 to
approximately $882,000.
The Operating Partnerships refinanced their respective outstanding mortgage
liabilities as of April 28, 2000 under the $27,545,000 Jersey City Redevelopment
Agency Multifamily Housing Revenue Bonds, Series 1992 (Fannie Mae Pass-through
Certificate Program/Dixon Mill Apartments Project). Prior to the refinancing,
the annual fixed interest rate of the mortgage was approximately 6.74%. The
total new indebtedness in the amount of $28,600,000 for a term of 30 years is
provided by (a) variable-rate tax-exempt bonds in the amount of $26,435,000, and
(b) variable-rate taxable bonds in the amount of $2,165,000. The initial
interest rates on the tax-exempt and taxable bonds are 5.1% and 6.15%,
respectively. The Operating Partnerships purchased an interest cap which would
limit the interest rates to 6.97% for five years on the tax-exempt portion, and
9.15% for five and one-half years on the taxable portion. Proceeds from the new
bond issue were used to pay off the existing 1992 bonds (approximately
$26,435,000), pay the costs of the transaction (approximately $800,000), and
fund reserves for capital improvements (approximately $1,365,000).
Because the property has been in operation for approximately ten years,
management is addressing the need for extensive capital improvements. As a
result of the refinancing and the funding of reserves for capital improvements,
the Operating General Partner intends to make approximately $1.6 million in
capital improvements to the Complex over the next twelve months. The planned
improvements include roof replacement, replacement of the fire/smoke alarm
system, elevator repairs, new entry doors and other repairs throughout the
complex.
Because of the reduction of the mortgage interest rate, there may be greater
potential for the Partnership to make cash distributions to the Limited Partners
on a regular basis. However, the Partnership's ability to make distributions
will depend on the level of interest rates and future operating results of the
Complex, which will be extremely dependent on competition and market conditions,
and therefore may be subject to significant volatility. Accordingly, there can
be no assurance as to whether or not the Partnership may be able to make
distributions, nor the timing or amount of any potential distributions to
Limited Partners. The Operating General Partners and the General Partner plan to
periodically assess the feasibility of cash flow distributions based on the
results of operations, the physical condition of the Property, the then current
interest rates, and local market conditions, among other things.
9
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions and Results
of Operations
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.
Results of Operations
For the three months ended May 31, 2000, the statement of operations of the
Partnership reflects net earnings of $61,969, which includes equity in income of
operating partnerships of $65,654. The Operating Partnerships reported net
earnings during the three months ended March 31, 2000 of $66,317, inclusive of
depreciation and amortization of $344,178. The Operating Partnerships generated
cash flow after required debt service payments and required replacement reserve
deposits during the three months ended March 31, 2000 of approximately $323,000,
which includes principal amortization under the mortgages (approximately
$71,000) and deposits to required escrows (approximately $16,000). The Operating
Partnerships' results of operations do not reflect the effects of the
refinancing, as it took place subsequent to the first quarter of operations. The
Partnership's interest revenue declined compared to the three months ended May
31, 1999 as a result of (i) making a distribution to limited partners of
approximately $964,000 in the fourth fiscal quarter of the year ended February
29, 2000 and (ii) the repayment of the note by the Operating Partnerships in the
first fiscal quarter of the year ended February 29, 2000. The Operating
Partnerships did not utilize any replacement reserves during the three months
ended March 31, 2000.
For the three months ended May 31, 1999, the statement of operations of the
Partnership reflects net earnings of $89,524, which includes equity in income of
operating partnerships of $86,171. Nonrecognition of income of the Partnership's
investment in Dixon Mills Phase I during the three months ended May 31, 1999 was
approximately $38,000 in accordance with the equity method of accounting. The
Operating Partnerships reported net earnings during the three months ended March
31, 1999 of $125,340, inclusive of depreciation and amortization of $344,178.
The Operating Partnerships generated cash flow after required debt service
payments and required replacement reserve deposits during the three months ended
March 31, 1999 of approximately $382,000, which includes principal amortization
under the mortgages (approximately $66,000) and deposits to required escrows
(approximately $22,000) . The Operating Partnerships did not utilize any
replacement reserves during the three months ended March 31, 1999.
Although the Operating Partnerships are operating above breakeven, management is
continuing to examine methods to maintain high occupancy rates while steadily
increasing rents and economizing operations. 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, 2000 and 1999 was approximately 98%. The future operating results of the
Complex will be extremely dependent on competition and market conditions and
therefore may be subject to significant volatility.
Year 2000 Compliance
The Partnership successfully completed a program to ensure Year 2000 readiness.
As a result, the Partnership had no Year 2000 problems that affected its
business, results of operations or financial condition.
10
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 3 Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------
The Partnership has market risk sensitivity with regard to financial instruments
concerning interest rate fluctuations in connection with the low-floater
interest rates associated with the Operating Partnerships' mortgages as
refinanced as of April 28, 2000 (see discussion above). Although an interest
rate cap was purchased, an increase in the low-floater rates could have a
material adverse impact on the Partnership's results of operations.
11
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part II - Other Information
Item 1. Legal Proceedings
Although Registrant is not involved in any legal proceedings, the
Operating Partnerships are involved in three complaints which have
been filed with the Equal Employment Opportunity Commission
against the Operating Partnerships, among others, by a former
employee, a former part-time rental agent, and a security person
employed by a private non-affiliated security company which
provided service to the Property, alleging, among other things,
discrimination in connection with advancement, hiring and
termination. The Operating Partnerships intend to vigorously
defend these matters. 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
The Operating Partnerships refinanced their respective outstanding
mortgage liabilities under the $27,545,000 Jersey City
Redevelopment Agency Multifamily Housing Revenue Bonds, Series
1992 (Fannie Mae pass-through Certificate Program/Dixon Mill
Apartments Project) as of April 28, 2000. The total new
indebtedness in the amount of $28,600,000 for a term of 30 years
is provided by (a) variable-rate tax-exempt bonds in the amount of
$26,435,000 and (b) variable-rate taxable bonds in the amount of
$2,165,000. The Operating Partnerships have purchased an interest
cap which would limit the interest rates to 6.97% for five years
on the tax-exempt portion, and 9.15% for five and one-half years
on the taxable portion. Proceeds from the new bond issue were used
to pay off the existing 1992 bonds (approximately $26,435,000),
pay the costs of the transaction (approximately $800,000), and
fund reserves for capital improvements (approximately $1,365,000).
As a result of the refinancing, deferred costs of $449,912
reflected on the Operating Partnerships' balance sheet as of
December 31, 1999 will be written off in the year ending December
31, 2000.
The new mortgage terms require monthly payments of $6,362 to a
replacement reserve.
12
<PAGE>
Wilder Richman Historic Properties II, L.P.
Form 10-Q
May 31, 2000
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 17, 2000 /s/ Richard Paul Richman
------------------------
Richard Paul Richman
President and Chief Executive Officer
13
