10-Q FOR THE PERIOD ENDING 3/31/96
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1996
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 33-31778
Historic Preservation Properties 1990 L.P. Tax Credit Fund
(Exact name of registrant as specified in its charter)
Delaware 04-3066191
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
Batterymarch Park II, Quincy, Massachusetts 02169
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 472-1000
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
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
FORM 10-Q
MARCH 31, 1996
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Partners' Equity
(Deficiency) 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7-12
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-15
PART II - OTHER INFORMATION 16
Financial Data Schedule 17
Signatures 18
2
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
ASSETS
1996 1995
(Unaudited)
INVESTMENT IN REAL ESTATE:
Building and building improvements $15,069,530 $14,736,101
Land 97,034 97,034
Furniture and equipment 968,353 964,378
Marina - land and improvements 1,352,790 1,352,790
17,487,707 17,150,303
Less accumulated depreciation 2,708,714 2,573,713
14,778,993 14,576,590
Reserve for realization of Marina
land and improvements (845,672) (845,672)
13,933,321 13,730,918
CASH 328,751 474,835
ESCROW DEPOSITS 124,109 54,270
DEFERRED EVALUATION AND ACQUISITION
COSTS, net of accumulated amortization
of $144,713 and $137,822 in 1996 and
1995, respectively 957,887 964,778
OTHER DEFERRED COSTS 180,318 51,121
OTHER ASSETS 86,257 207,103
$15,610,643 $15,483,025
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Mortgages and note payable $6,225,000 $ 5,590,418
Accrued expenses and other liabilities 458,585 402,064
Security deposits 94,715 86,716
Total liabilities 6,778,300 6,079,198
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
MINORITY INTEREST - 268,325
PARTNERS' EQUITY
Limited Partners' Equity-Units of
Investor Limited Partnership
Interest, $1,000 stated value per
unit-issued and outstanding - 16,361
units 8,886,381 9,186,508
General Partner's equity (deficiency) (54,038) (51,006)
Total partners' equity 8,832,343 9,135,502
$15,610,643 $15,483,025
The accompanying notes are an integral part of these financial
statements.
3
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
(Unaudited) (Unaudited)
REVENUES:
Rental and related income $ 607,440 $ 582,659
Interest and other income 2,729 38,244
610,169 620,903
EXPENSES:
Operating and administrative 50,101 17,022
Property operating expenses 462,669 383,223
Professional fees 15,046 21,908
Depreciation and amortization 141,892 142,508
669,708 564,661
Income (loss) from operations (59,539) 56,242
OTHER EXPENSES:
Interest expense (177,362) (140,639)
Contingency note payable settlement (109,583) -
MINORITY INTEREST IN LOSS ON MARINA VENTURE 3,344 10,756
GAIN ON REDEMPTION OF MINORITY INTEREST 39,981 -
NET LOSS $ (303,159) $ (73,641)
NET LOSS ALLOCATED TO GENERAL PARTNER $ (3,032) $ (736)
NET LOSS ALLOCATED TO LIMITED PARTNERS $ (300,127) $ (72,905)
NET LOSS PER UNIT OF INVESTOR LIMITED
PARTNERSHIP INTEREST, BASED ON 16,361
UNITS OUTSTANDING $ (18.34) $ (4.46)
The accompanying notes are an integral part of these financial
statements.
<TABLE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
THE YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Units of
Investor Investor
Limited Limited General
Partnership Partners' Partner's
Interest Equity (Deficiency) Total
<S> <C> <C> <C> <C>
BALANCE, Dec 31, 1994 16,361 $ 9,541,939 $ (47,416) $ 9,494,523
Net loss - (355,431) (3,590) (359,021)
BALANCE, Dec 31, 1995 16,361 9,186,508 (51,006) 9,135,502
Net loss (Unaudited) - (300,127) 3,032) (303,159)
BALANCE, March 31, 1996
(Unaudited) 16,361 $ 8,886,381 $ (54,038) $ 8,832,343
</TABLE>
The accompanying notes are an integral part of these financial
statements.
5
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
1996 1995
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (303,159) $(73,641)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 141,892 142,508
Gain on redemption of minority interest (39,981) -
Minority interest in loss on Marina
Venture (3,344) (10,756)
Increase (decrease) in accrued expenses
and other liabilities 64,520 (1,029)
Increase in escrow deposits (69,839) ( 28,894)
Decrease (increase) in other assets 120,846 (29,442)
Net cash used in operating activities (89,065) (1,254)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment (3,975) (3,826)
Additions to building and improvements (333,429) (1,310)
Additions to deferred costs (129,197) -
Net cash used in investing activities (466,601) (5,136)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from refinancing 6,000,000 -
Payment of mortgage payable (5,590,418) -
Net cash provided by financing
activities 409,582 -
NET DECREASE IN CASH (146,084) (6,390)
CASH, BEGINNING OF PERIOD 474,835 505,501
CASH, END OF PERIOD $328,751 $499,111
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $157,649 $140,639
Non-cash financing activity:
On February 27, 1996, the minority interest holder redeemed its share
of interest for $225,000. The transaction resulted in a gain on
redemption of minority interest of $39,981.
The accompanying notes are an integral part of these financial statements.
6
(1) Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and generally with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31,
1996, are not necessarily indicative of the results that may be expected
for the year ending December 31, 1996. For further information, refer
to the financial statements and footnotes thereto included in the Annual
Report on Form 10-K for the year ended December 31, 1995 for Historic
Preservation Properties 1990 L.P. Tax Credit Fund (HPP'90), as filed
with the Securities and Exchange Commission.
(2) General Partner - Boston Historic Partners II Limited
Partnership
Boston Historic Partners II Limited Partnership (BHP II), the
general partner of HPP'90, was formed in June 1989 for the purpose of
organizing, syndicating and managing publicly offered real estate
limited partnerships (Public Rehabilitation Partnerships).
BHP II has a substantial amount of unpaid obligations to trade
creditors. In the event BHP II is not able to generate sufficient cash
to fund BHP II's operations and commitments and contingencies in the
future, there might be unfavorable consequences to HPP'90.
Under the partnership agreement, a bankruptcy of BHP II could
result in the dissolution of HPP'90, if at any time BHP II were to be
adjudicated bankrupt (either by way of a voluntary filing or by an
issuance of an order for relief in the event of an involuntary filing)
and BHP II continued to be the sole general partner of HPP'90. If an
additional general partner was admitted to HPP'90 prior to a bankruptcy
of BHP II, the business of HPP'90 would be able to continue.
If BHP II were to be adjudicated bankrupt, and at the time BHP
II was the sole general partner of HPP'90, HPP'90 would not be dissolved
upon the occurrence of such an event if a majority interest of the
limited partners, elect, within 90 days, to continue the business of
HPP'90 and another general partner is elected (under Delaware law,
within 90 days, a unanimous vote of the limited partners to continue
HPP'90 is required).
Although the partnership agreement provides for the above
mechanisms for continuing the business of HPP'90, BHP II's general
partners believe the most likely course of action would be to seek a
successor or additional general partner for HPP'90.
If such events were to happen whereby BHP II and/or HPP'90 could
not consummate the above, HPP'90 could be dissolved resulting in adverse
tax consequences to the limited partners, including recapture of a
portion of the Rehabilitation Tax Credits allocated to them.
7
(3) Investment in Real Estate
During 1990, HPP'90 acquired an interest in the following
entities (see below for subsequent changes in ownership):
Henderson's Wharf Baltimore, L.P. (the Building Venture) is a
Delaware limited partnership formed on July 20, 1990 to acquire a fee
interest in a seven-story building on 1.5 acres of land and to
rehabilitate the building into 128 residential units, 149 indoor parking
spaces and a 38 room inn located at 1000 Fell Street, Baltimore,
Maryland. The building contains a total of 137 residential units, 9 of
which are owned by unrelated parties. The building has been
substantially renovated and certain renovation costs qualify for
Rehabilitation Tax Credits. The Building Venture purchased its interest
for $6,812,500, which included seller financing of $6,350,000, and a
contingent purchase price promissory note (see Notes 4 and 6).
Contributions by HPP'90 to the Building Venture totaled $12,214,500, as
of March 31, 1996.
HPP'90 has made all required capital contributions to the
Building Venture in accordance with the Building Venture's partnership
agreement, and is not required to make additional contributions,
although at its sole discretion, may do so.
The renovation of the residential units was substantially
complete and a certificate of occupancy was received on December 31,
1990. The Building Venture commenced lease-up in 1991 and has been
fully operational since 1992. For the quarter ending March 31, 1996,
the average economic occupancy for the residential units was
approximately 94% and the average occupancy for the Inn was 57%.
On February 27, 1996, the Building Venture purchased three
condominium units and parking spaces (the Property) owned by unrelated
parties, in conjunction with the refinancing of its note payable (see
Note 4).
Henderson's Wharf Marina, L.P. (the Marina Venture) is a
Delaware limited partnership formed on July 20, 1990 to acquire a fee
interest in a 1.92 acre parcel of land together with a 256-slip marina
located in Baltimore, Maryland. HPP'90 purchased the Marina Venture for
$1,266,363, which included seller financing of $1,187,500 (see Note 4).
Contributions to the Marina Venture by HPP'90 totaled $247,219, as of
March 31, 1996. The Marina Venture has operated a minimal number of
slips since 1991 due to the significant repairs necessary to be fully
operational. HPP'90 is required to make capital contributions to the
Marina Venture to provide funds not otherwise available to make real
estate tax and insurance payments. HPP'90 may make additional capital
contributions to the Marina Venture as provided in the Marina Venture's
partnership agreement, but is not required to do so.
Under the Second Amended and Restated Agreements of Limited
Partnership dated February 1, 1991 of Henderson's Wharf Baltimore, L.P.
and Henderson's Wharf Marina, L.P., Henderson's Wharf Development
Corporation (HWDC), a Delaware corporation wholly owned by HPP'90, was
admitted as a general partner of the Ventures (HPP'90 and HWDC are
collectively referred to as the "Henderson's General Partners"), and
Hillcrest Management, Inc. (HMI), a Massachusetts corporation, was
admitted as the Limited Partner of the Ventures and became a minority
interest holder in the Ventures. On August 1, 1991, the Second Amended
and Restated Agreement of Limited Partnership of Henderson's Wharf
Marina, L.P. was amended. The amendment provided for the withdrawal by
HPP'90 as a limited partner. Consequently, HWDC became the sole general
partner in the Marina Venture.
8
(3) Investment in Real Estate (Continued)
On December 31, 1992, the Third Amended and Restated Agreement
of Limited Partnership of Henderson's Wharf Marina, L.P. was executed.
HWFP, Inc. (HWFP), a Maryland corporation and the original holder of
the purchase money note relating to the purchase of the marina property,
received a 50% limited partnership interest in the Marina Venture and
became the holder of a minority interest (see Note 4). Concurrently,
HMI withdrew as a limited partner in the Marina Venture, HPP'90's
limited partnership interest in the Marina Venture was reduced to 49%
and HWDC retained a 1% general partnership interest in the Marina
Venture. The minority interest granted was recorded at fair market
value based on an independent appraisal and a priority distribution of
proceeds from capital transactions as provided for in the Marina
Venture's Third Amended and Restated Agreement of Limited Partnership.
In accordance with the termination of all HMI contracts (see
Note 5), effective January 1, 1995, HMI withdrew from the Building
Venture as a .1% limited partner and was replaced by HWDC.
Based on the fair market value of marina land and improvements
determined by independent appraisal and the priority distribution of
proceeds from capital transactions as provided for in the Marina
Venture's Third Amended and Restated Agreement of Limited Partnership,
the Partnership has reserved against its investment in the marina land
and improvements.
Generally, allocations of net profits and losses as well as cash
flow of the Building Venture and Marina Venture are allocated in
accordance with the Second Amended and Restated Agreement of Limited
Partnership and Third Amended and Restated Agreement of Limited
Partnership, respectively, as defined in the agreements. The overall
management and control of the business and affairs of the Ventures is
solely vested in Henderson's General Partners.
As discussed in Note 3, on February 27, 1996, HPP'90, HWDC and
HWFP, Inc. entered into the First Amendment to the Third Amended and
Restated Agreement of Limited Partnership of Henderson's Wharf Marina,
L.P. by which HWFP, Inc. redeemed its 50% limited partnership interest
in the Marina Venture in return for a $225,000 first mortgage note
secured by the marina property. As a result of this redemption,
HPP'90's limited partnership interest in the Marina Venture was
increased to 98% and HWDC received a 1% limited partnership interest and
maintained its 1% general partnership interest in the Marina Venture.
(4) Mortgages and Note Payable
The Building Venture financed $6,350,000 of the purchase price
of the property by issuing a purchase money note to the seller, HWFP.
HPP'90 paid $1,000,000 of principal under this note in December 1990,
reducing the balance to $5,350,000 at December 31, 1990. During 1992,
the maturity date of the note was extended until January 2, 1994. In
consideration for extending the maturity date of the note, the Building
Venture was required to pay $150,000 to the holder of the purchase money
note (the Lender) on the earlier of January 2, 1994 or a refinancing of
the purchase money note. The Building Venture negotiated three
extensions in 1994. In April 1994, the Lender extended the maturity date
on the note until December 31, 1995 and added the $150,000 extension fee
to the outstanding principal balance of the note along with unpaid
interest totaling $89,168 on the note (for the period March 16, 1994
through May 15, 1994) and unpaid interest on the extension fee totaling
$1,250 (for the period April 16, 1994 through May 15, 1994). Interest
was due monthly on the new principal balance of the note at the annual
rate of 10%. In addition, the Lender required the Building Venture to
establish a real estate tax escrow account (Tax Escrow) which was being
funded on a monthly basis. The note was secured by the property, rents
and assignment of leases.
9
(4) Mortgages and Note Payable (Continued)
In conjunction with issuing a purchase money note to the
seller, the Building Venture entered into a contingent purchase price
promissory note with the seller for $1,250,000. Payment on the note was
contingent upon the cash flow (as defined) generated from the future
sale of apartment units in the Building Venture. The note was unsecured,
bore no interest, and had no maturity date. As discussed below, the
Building Venture paid off the contingent purchase price promissory note
for $109,583 on February 27, 1996.
On February 27, 1996, HPP'90 obtained a $6,000,000 deed of
trust note with a third party lender which provided funds for the
Building Venture to refinance the outstanding balance of the seller
financed purchase money note totaling $5,590,418, to pay $109,583 to the
seller in release of the contingent purchase price promissory note, and
to purchase in part three condominium units and parking spaces owned by
unrelated parties for an aggregate purchase price of $333,429 (see Note
4). The deed of trust note bears interest at 7.85% and requires monthly
principal and interest payments in the amount of $49,628 commencing in
April 1996. The note amortizes over a 20 year schedule and all remaining
unpaid principal and interest is due in March 2006. Under the deed of
trust note, the lender has the option with six months written notice to
call amounts outstanding under the deed of trust note at the end of ten
years or anytime thereafter. The deed of trust note is secured by the
Building Venture's property, rents and assignment of leases and is
guaranteed by the Building Venture.
As discussed in Note 3, on February 27, 1996, HPP'90, HWDC and
HWFP, Inc. entered into the First Amendment to the Third Amended and
Restated Agreement of Limited Partnership of Henderson's Wharf Marina,
L.P. by which HWFP, Inc. redeemed its 50% limited partnership interest
in the Marina Venture in return for a $225,000 first mortgage note
secured by the marina property. The note bears interest at 7.50%,
matures in March 2006, and requires monthly principal and interest
payments in the amount of $2,086 commencing April 1996.
(5) Transactions With Related Parties and Commitments
On February 1, 1991, the Building Venture entered into a long
term property management and brokerage agreement (Management Agreement),
an inn lease (Inn Lease) and a consulting agreement (Consulting
Agreement) with HMI. The Management Agreement originally expired on
December 31, 1993 and the Inn Lease originally expired on December 31,
1995. The Management Agreement required the payment of management fees
to HMI equal to 6% of gross rental receipts, as defined in the
agreement. The Management Agreement also required the payment of a one
time lease up fee for leasing residential units during the lease-up
phase equal to one month's rent. The Inn Lease required the payments to
HMI of 50% of the operating profit, as defined in the agreement,
relating to the 38 room inn. If the total management fees earned based
on the inn's gross rental receipts were less than $75,000 for any one
year, then the Inn Lease required a payment to HMI equal to the
difference between actual management fees paid and $75,000. The
Management Agreement and Inn Lease were terminated by the Building
Venture on July 31, 1993.
The Consulting Agreement, which expired on December 31, 1991,
required the Building Venture to pay HMI a $15,000 refinancing fee upon
the closing of any refinancing of the existing Building Venture's
financing. The Consulting Agreement also required the Building Venture
to pay HMI an incentive fee equal to 1% of the gross sales proceeds
resulting from the sale of the building property to an unaffiliated
third party buyer. These commitments survive the December 31, 1991
expiration date of the Consulting Agreement and the termination of all
other agreements with HMI (see below). The Building Venture paid the
$15,000 refinancing fee to HMI in March 1996 as a result of refinancing
its purchase price promissory note as discussed in Note 4.
10
(5) Transactions With Related Parties and Commitments (Continued)
On January 1, 1992, the Marina Venture entered into a long term
Property Management Agreement with HMI. The agreement provided for
payment of management fees to HMI equal to 9% of the Gross Operating
Revenues, as defined in the agreement.
Effective July 31, 1993, the Ventures terminated their
respective Management Agreements and Inn Lease (the Contracts) with HMI.
As of December 31, 1993, HPP'90 had not reached an agreement with HMI as
to whether any additional payments were due under the Contracts as a
result of the termination. Consequently, HPP'90 was unable to reasonably
estimate amounts due to HMI, if any, and no liability was recorded as of
December 31, 1993.
During October 1994, HPP'90 and HMI agreed in principle to an
agreement whereby the parties would settle their differences and put to
rest all further controversy and avoid substantial expense of burdensome
and protracted litigation. In January 1995, HPP'90 entered into an
agreement on behalf of the Ventures to pay HMI contract termination
settlement payments (Settlement Payments) totaling $271,108 which has
been recorded during the fourth quarter of 1994 and which has been
included in accrued expenses and other liabilities as of December 31,
1995 and March 31, 1996. The Settlement Payments required an initial
payment of $36,000 that was paid on January 27, 1995 and monthly
payments of $3,221 commencing in September 1995 through the earlier of
September 2001 or the occurrence of certain events as defined in the
agreement. The Settlement Payments are secured by 100% of HPP'90's
economic interest as a partner in the Ventures, as defined in the
agreements; net sales and refinancing proceeds; cash flow; return of
capital contributions; all of HPP'90's cash and marketable securities in
excess of $150,000; and all of the Ventures' cash in excess of the
greater of $200,000 or reserves required by lenders. No distributions to
the partners of HPP'90 are permitted until all Settlement Payments are
paid in full. As of March 31, 1996, unpaid settlement Payments included
in accrued expenses and other liabilities totaled $215,782.
On August 23, 1993, the Ventures hired McKenna Management
Associates, Inc. (McKenna) as the independent onsite property management
company. The management agreement with McKenna originally expired in
August 1995 and was extended until October 31, 1995. The agreement
required the payment of $9,000 per month for the first year and $7,650
per month for the second year from the Ventures.
On November 1, 1995, the Building and Marina Venture entered into
property management contracts with Claremont Management Corporation
(CMC), an unaffiliated Massachusetts corporation, to manage the
apartment, inn and marina operations. The property management contracts
provide for payment of management fees to CMC equal to 4% and 4.5% of
apartment and inn gross receipts, as defined, respectively, and 9% of
marina gross receipts, as defined. The agreements expire on June 30,
1997, and are automatically extended on a year to year basis unless
otherwise terminated as provided for in the agreements. A condition of
the agreements requires the Ventures to maintain with CMC, for the
benefit of the Ventures, operating cash and contingency reserves of
$190,000 and $70,000, respectively. To facilitate the transition of
property management and through an arrangement with CMC, McKenna
continued to provide management services to the apartment, inn and
marina operations through December 31, 1995.
On July 1, 1993, HPP'90 hired Portfolio Advisory Services,
Inc. (PAS), a Massachusetts corporation, which is related to BHP II
through certain common ownership and management, to provide asset
management, accounting and investor services. The original contract was
for one year and was extended through September 30, 1995. PAS received
no fee for its services, however, it was reimbursed for all operating
costs of providing these services.
11
(5) Transactions With Related Parties and Commitments (Continued)
On October 1, 1995, HPP'90 engaged CMC to provide accounting,
asset management and investor services. CMC provides such services for
an annual management fee of $38,400, plus reimbursement of all its costs
of providing these services. The initial term of the agreement expires
on June 30, 1997, and is automatically extended on a year to year basis
unless terminated as provided for in the agreement. For the period
January 1, 1996 to March 31, 1996, CMC received management fees of
$9,600 and expense reimbursement totaling approximately $34,200.
(6) Fair Value of Financial Investments
The carrying amounts of cash, escrow deposits, accrued expenses
and other liabilities, and security deposits approximate their fair
values due to their short maturities. The fair value of the Building
Venture's mortgages payable is deemed equal to their carrying amount.
All financial statements are held for non-trading purposes.
12
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31,1996
(UNAUDITED)
Liquidity and Capital Resources. HPP'90 terminated its offering of
Units on December 31, 1990, at which time Limited Partners had purchased
16,361 Units, representing gross capital contributions of $16,361,000.
As of March 31, 1996, the Partnership had invested an aggregate of
$12,461,719 in the Building and Marina Ventures. The rehabilitation of
the Building Venture is intended to qualify for Rehabilitation Tax
Credits.
Such amount contributed in the Building and Marina Ventures
represents approximately 100% of the Limited Partners' capital
contribution after deducting selling commissions, organizational and
sales costs, acquisition fees and reserves. The Partnership does not
anticipate making any additional investments in new real estate.
As of March 31, 1996, the Ventures and HPP'90 had unrestricted cash
of $93,400. HPP'90's cash is used primarily to fund general and
administrative expenses of operating the public fund. The Ventures' cash
is used to fund operating expenses of the properties. In addition, to
the extent available, the Building Venture distributes cash to HPP'90.
The short term liquidity of HPP'90 depends on the Building Venture's
ability to make monthly distributions to HPP'90.
Settlement Payments due HMI, that were negotiated as part of the
contract termination, are secured by 100% of HPP'90's economic interest
as a partner, as defined in the agreements, in the Ventures; net sales
and refinancing proceeds; cash flow; return of capital contributions;
all of HPP'90's cash and marketable equity securities in excess of
$150,000; and all of the Ventures' cash in excess of the greater of
$200,000 or reserves required by potential lenders.
Cash flow generated from the Partnership's present investment
properties and the Partnership's share of the proceeds from the sale of
such properties is expected to be the source of future long-term
liquidity.
Results of Operations. The Partnership incurred total losses under
generally accepted accounting principles of $303,159 for the three
months ended March 31, 1996, which includes depreciation and
amortization of $141,892.
The Building Venture has been fully operational during the entire
year, and the Marina Venture had available approximately 240 slips for
use, of which a minimal number of slips were fully operational offering
various utility hook-ups. The results of the Partnership's operations
in future years should be comparable to 1995 numbers provided the
Ventures are able to maintain greater than 90% average annual occupancy
in the Apartments and 60% average annual occupancy in the Inn. Expense
levels should increase with the rate of inflation but, it is anticipated
that the monthly rents and the average daily room rate revenues should
increase accordingly.
The occupancy of the apartments has increased from previous years as
a result of management's decision to enter into more traditional long
term, annual leases. In addition, a market study of the competition was
prepared, and the Building Ventures' monthly rental rates were adjusted
to reflect where the actual rates should be for a property located in
the Fells Point, Baltimore neighborhood. The average economic occupancy
for the residential units was approximately 94% for the quarter ended
March 31, 1996, which will be indicative of the expected occupancy
levels in the future.
The average annual occupancy of the Inn increased from 64% in 1994
to 74% in 1995. The average occupancy for the Inn for the quarter
ending March 31, 1996 was 57%. The increase in occupancy of the Inn for
1995 was due in part to a direct competitor temporarily discontinuing
operations for major renovations. The Building Venture has engaged a
full time hospitality manager to generate new business from previously
untapped markets. In addition, the hospitality market nationwide
experienced an increase from previous years. Management is projecting
60% occupancy for the Inn for calendar year 1996 and is expecting
occupancy for the Inn to fluctuate around that same level in future
years, depending upon market conditions from year to year.
13
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1996
(UNAUDITED)
The occupancy in both the Apartments and the Inn has shown a steady
increase over the past three years. This increase is due primarily to
the decision to go with more traditional long term leases and an
aggressive marketing campaign which is administered onsite. The
Apartments and the Inn should continue to operate at approximately 92%
and 60% respectively in future years. The 1996 budget has been projected
to indicate these levels.
The Marina Venture requires substantial rehabilitation to become
fully operational. After evaluating the marina over the past few years,
the Marina Venture determined that it was in its best interest to
restructure the Marina Venture before proceeding with the development of
the marina. The Marina Venture did not pay the real estate taxes in 1991
or the interest due on its property's mortgage in 1992 and 1991.
Accordingly, the mortgage was in default and the lender could have, at
its option, demanded immediate payment of the note.
During 1994, HPP'90 entered into an agreement to make settlement
payments to HMI totaling $271,108 which has been recorded in the fourth
quarter of 1994. As of March 31, 1996, unpaid settlement Payments
included in accrued expenses and other liabilities totaled $215,782.
On February 27, 1996, HPP'90 obtained a $6,000,000 deed of
trust note with a third party lender which provided funds for the
Building Venture to refinance the outstanding balance of the seller
financed purchase money note totaling $5,590,418, to pay $109,583 to the
seller in release of the contingent purchase price promissory note, and
to purchase in part three condominium units and parking spaces owned by
unrelated parties for an aggregate purchase price of $333,429 (see Note
4). The deed of trust note bears interest at 7.85% and requires monthly
principal and interest payments in the amount of $49,628 commencing in
April 1996. The note amortizes over a 20 year schedule and all remaining
unpaid principal and interest is due in March 2006. Under the deed of
trust note, the lender has the option with six months written notice to
call amounts outstanding under the deed of trust note at the end of ten
years or anytime thereafter. The deed of trust note is secured by the
Building Venture's property, rents and assignment of leases and is
guaranteed by the Building Venture.
As discussed in Note 3, on February 27, 1996, HPP'90, HWDC and
HWFP, Inc. entered into the First Amendment to the Third Amended and
Restated Agreement of Limited Partnership of Henderson's Wharf Marina,
L.P. by which HWFP, Inc. redeemed its 50% limited partnership interest
in the Marina Venture in return for a $225,000 first mortgage note
secured by the marina property. The note bears interest at 7.50%,
matures in March 2006, and requires monthly principal and interest
payments in the amount of $2,086 commencing April 1996. As a result of
the redemption of HWFP's interest, HPP'90's limited partnership interest
in the Marina Venture increased to 98% and HWDC received a 1% limited
partnership interest and maintained its 1% general partnership interest
in the Marina Venture.
Based on management's analysis completed during the fourth quarter of
1992 which considered the fair market value of marina land and
improvements determined by independent appraisal and priority
distribution of proceeds from capital transactions as provided for in
the Marina Venture's Third Amended and Restated Agreement of Limited
Partnership, the Partnership reserved $845,672 against its investment in
the marina land and improvements as of December 31, 1992.
14
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1996
(UNAUDITED)
Inflation and Other Economic Factors. Recent economic trends have
kept inflation relatively low although the Partnership cannot make any
predictions as to whether recent trends will continue. The assets of
the Partnership are highly leveraged in view of the fact that the
Building Venture is subject to a substantial purchase money note.
Operating expenses and rental revenues of each property are subject to
inflationary factors. Low rates of inflation could result in slower
rental rate increases, and to the extent that these factors are not
offset by similar increases in property operating expenses (which could
arise as a result of general economic circumstances such as an increase
in the cost of energy or fuel, or from local economic circumstances),
the operations of the Partnership could be adversely affected. Actual
deflation in prices generally would, in effect, increase the economic
burden of the mortgage debt service with a corresponding adverse effect.
High rates of inflation, on the other hand, raise the operating expenses
for projects and to the extent they cannot be passed on to tenants
through higher rents, such increases could also adversely affect
Partnership operations. Although, to the extent rent increases are
commensurable, the burden imposed by the mortgage leverage is reduced
with a favorable effect. Low levels of new construction of similar
projects and high levels of interest rates may foster demand for
existing properties through increasing rental income and appreciation in
value.
15
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
MARCH 31, 1996
Item 1. Legal Proceedings - Not applicable.
Item 2. Changes in Securities - Not applicable.
Item 3. Defaults Upon Securities - Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders - Not
applicable.
Item 5. Other Information - Not applicable.
Item 6. Exhibits and Reports from Form 8-K
(a) Exhibits
None.
(b) Reports from Form 8-K
None.
16
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HISTORIC PRESERVATION PROPERTIES 1990
L.P. TAX CREDIT FUND
By: Boston Historic Partners II Limited
Partnership
General Partner
By: BHP II Advisors Limited Partnership
General Partner
By: Portfolio Advisory Services, Inc.
General Partner
Date: May 15, 1996 By: /s/Terrence P. Sullivan
Terrence P. Sullivan,
President
and
Date: May 15, 1996 By: /s/Terrence P. Sullivan
Terrence P. Sullivan,
General Partner
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-mos YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> MAR-31-1996 DEC=31-1995
<CASH> $328,751 $474,835
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 17,487,707 17,150,303
<DEPRECIATION> 2,708,714 2,573,713
<TOTAL-ASSETS> 15,610,643 15,483,025
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<BONDS> 6,225,000 5,590,418
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<TOTAL-LIABILITY-AND-EQUITY> 15,610,643 15,483,025
<SALES> 0 0
<TOTAL-REVENUES> 610,169 2,769,347
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<TOTAL-COSTS> 669,708 2,605,366
<OTHER-EXPENSES> 66,258 36,392
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 177,362 559,394
<INCOME-PRETAX> (303,159) (359,521)
<INCOME-TAX> 0 0
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<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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<NET-INCOME> (303,159) (359,021)
<EPS-PRIMARY> (18.34) (21.72)
<EPS-DILUTED> (18.34) (21.72)
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