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, 1997
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, 1997
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 7-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
PART II - OTHER INFORMATION 13
Signatures 14
2
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
ASSETS
1997 1996
(Unaudited)
INVESTMENT IN REAL ESTATE:
Building and building improvements $15,178,365 $15,178,365
Land 97,034 97,034
Furniture and equipment 961,236 961,236
Marina - land and improvements 1,340,258 1,335,858
Deferred evaluation and acquisition cost 1,102,600 1,102,600
----------- -----------
18,679,493 18,675,093
Less accumulated depreciation 3,411,103 3,267,294
----------- -----------
15,268,390 15,407,799
Reserve for realization of Marina
land and improvements (845,672) (845,672)
---------- ----------
14,422,718 14,562,127
CASH AND CASH EQUIVALENTS, including
security deposit cash (1997, $95,064;
1996, $94,364) 565,369 478,898
ESCROW DEPOSITS 147,892 100,204
DEFERRED COSTS, net of accumulated
amortization (1997, $21,049;
1996, $16,192) 173,239 178,096
OTHER ASSETS 72,861 72,879
---------- -----------
$15,382,079 $15,392,204
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $ 6,087,687 $ 6,123,084
Accrued expenses and other liabilities 387,014 303,840
Security deposits 91,070 88,767
---------- -----------
Total liabilities 6,565,771 6,515,691
---------- -----------
COMMITMENTS (Notes 4 and 5)
PARTNERS' EQUITY
Limited Partners' Equity-Units of Investor
Limited Partnership Interest, $1,000 stated
value per unit-issued and
outstanding - 16,361 units 8,870,506 8,930,109
General Partner's deficiency (54,198) (53,596)
---------- ----------
Total partners' equity 8,816,308 8,876,513
----------- -----------
$15,382,079 $15,392,204
----------- -----------
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, 1997 AND 1996
1997 1996
(Unaudited) (Unaudited)
REVENUES:
Rental and related income $ 681,721 607,440
Interest and other income 6,189 2,729
----------- -----------
687,910 610,169
----------- -----------
EXPENSES:
Operating and administrative 39,893 50,101
Property operating expenses 431,193 462,669
Professional fees 8,618 15,046
Depreciation and amortization 148,666 141,892
----------- -----------
628,370 669,708
----------- -----------
INCOME (LOSS) FROM OPERATIONS 59,540 (59,539)
INTEREST EXPENSE (119,745) (177,362)
MINORITY INTEREST IN LOSS ON MARINA VENTURE - 3,344
----------- -----------
NET LOSS $ (60,205) $ (233,557)
----------- -----------
NET LOSS ALLOCATED TO GENERAL PARTNER $ (602) $ (2,336)
----------- -----------
NET LOSS ALLOCATED TO LIMITED PARTNERS $ ( 59,603) $ (231,221)
NET LOSS PER UNIT OF INVESTOR LIMITED PARTNERSHIP
INTEREST, BASED ON 16,361 UNITS
OUTSTANDING $ (3.64) $ (14.13)
The accompanying notes are an integral part of these financial
statements.
4
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Units of
Investor Investor
Limited Limited General
Partnership Partners' Partner's
Interest Equity (Deficiency) Total
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 16,361 $ 9,186,508 $ (51,006) $9,135,502
Net loss - (256,399) (2,590) (258,989)
------ ------------ ----------- -----------
BALANCE, December 31, 1996 16,361 8,930,109 (53,596) 8,876,513
Net loss (Unaudited) - ( 59,603) (602) ( 60,205)
------ ------------ ----------- -----------
BALANCE, March 31, 1997
(Unaudited) 16,361 $ 8,870,506 $ (54,198) $ 8,816,308
------ ------------ ----------- ------------
</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, 1997 AND 1996
(UNAUDITED)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (60,205) $ (233,557)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 148,666 141,892
Minority interest in loss on
Marina Venture - (3,344)
Increase in accrued expenses and
other liabilities 85,477 64,520
Increase in escrow deposits (47,688) (69,839)
Decrease in other assets 18 120,846
---------- ------------
Net cash provided by
operating activities 126,268 20,518
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment - (3,975)
Additions to building and building
improvements - (443,012)
Additions to marina-land and
improvements (4,400) -
---------- ------------
Net cash used in
investing activities (4,400) (446,987)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from refinancing - 6,000,000
Payment of mortgage payable (35,397) (5,590,418)
Additions to deferred costs - (129,197)
---------- ------------
Net cash provided by (used in)
financing activities (35,397) 280,385
---------- ------------
NET INCREASE (DECREASE) IN CASH 86,471 (146,084)
CASH, BEGINNING OF PERIOD 478,898 474,835
--------- ------------
CASH, END OF PERIOD $565,369 $328,751
--------- ------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $119,745 $157,649
--------- ------------
NON-CASH INVESTING AND FINANCING ACTIVITY:
On February 27, 1996, the Partnership redeemed the minority interest
in the Marina Venture by issuing a $225,000 note payable. The transaction
resulted in a $39,981 reduction of the basis in the marina property.
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, 1997, are not necessarily
indicative of the results that may be expected for the year ending December
31, 1997. 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, 1996 for Historic Preservation Properties 1990 L.P. Tax
Credit Fund (HPP'90), as filed with the Securities and Exchange Commission.
(2) Organization and General Partner - BHP II
Historic Preservation Properties 1990 L.P. Tax Credit Fund (HPP'90)
was formed on October 4, 1989 under the Delaware Revised Uniform Limited
Partnership Act. The purpose of HPP'90 is to invest in a portfolio of real
properties which are intended to qualify for rehabilitation tax credits
(Rehabilitation Tax Credits) afforded by Section 47 of the Internal Revenue
Code of 1986, as amended, to rehabilitate such properties (or acquire such
properties in the process of rehabilitation and complete such
rehabilitation) in a manner intended to render a portion of the costs
thereof eligible for Rehabilitation Tax Credits, and to operate such
properties.
Boston Historic Partners II Limited Partnership (BHP II), a Delaware
limited partnership, is the general partner of HPP'90. BHP II was formed
in June 1989 for the purpose of organizing, syndicating, and managing
publicly offered real estate limited partnerships (Public Rehabilitation
Partnerships).
(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 residential apartment units with 152 indoor parking spaces and a 38
room inn located at 1000 Fell Street, Baltimore, Maryland. In addition to
the inn, 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 Note 4). Contributions by HPP'90 to the Building
Venture totaled $12,214,500 as of March 31, 1997.
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, 1997, the average
economic occupancy for the residential units was 97% and the average
occupancy for the inn was 59%.
On February 27, 1996, the Building Venture purchased three condominium
units and parking spaces owned by unrelated parties, in conjunction with
the refinancing of its note payable (see Note 4).
HPP'90's operations, principally accounting, investor services and
other general and administrative costs, are funded from distributions by
the Building Venture. During the three months ending March 31, 1997, the
Building Venture distributed $69,000 to HPP'90.
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. Contributions to the Marina
Venture by HPP'90 totaled $247,219 as of March 31, 1997.
7
(3) Investment in Real Estate (Continued)
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.
The Marina Venture had operated a minimal number of slips since 1991
due to the significant repairs necessary to be fully operational. During
1996, the Marina Venture added $23,049 of utility, safety and other
improvements. During the first quarter of 1997, the Marina Venture added
additional improvements totaling $4,400, increasing the number of fully
operational slips to 240. Further repairs are still needed to bring the
entire marina to full operation.
The Building Venture and the Marina Venture are collectively referred
to as "the Ventures".
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 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 Venture. On August 1, 1991 the Second Amended and Restated
Agreement of the Limited Partnership of Henderson's Wharf Marina, L.P. was
amended. The amendment provided for the withdrawal by HPP'90 as a general
partner. Consequently, HWDC became the sole general partner in the Marina
Venture. HPP'90 and HWDC are collectively referred to as the "Henderson's
General Partners."
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. 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.
During the year ended December 31, 1992, 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 reserved against its investment in
the marina land and improvements in the amount of $845,672. Consequently,
the property is carried at the lower of cost or net realizable value at
March 31, 1997.
In accordance with the termination of all HMI contracts (see Note 5),
effective January 1, 1995 HMI also withdrew from the Building Venture as a
.1% limited partner and was replaced by HWDC.
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.
On February 27, 1996, the Partnership redeemed HWFP's 50% limited
partnership interest in the Marina Venture by issuing a $225,000 promissory
note payable secured by the marina property (see Note 4). As a result of
this redemption, HPP'90's limited partnership interest in the Marina
Venture increased to 98% and HWDC's general partnership interest in the
Marina Venture increased to 2% as of the date of redemption.
(4) Notes Payable
The Building Venture originally financed $6,350,000 of the purchase
price of the property by issuing a purchase money note to the seller, HWFP.
The note was secured by the property, rents and assignment of leases.
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
8
(4) Notes Payable (Continued)
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 $109,582
on February 27, 1996.
On February 27, 1996, HPP'90 issued a $6,000,000 deed of trust note to
a third party lender which provided funds for the Building Venture to
refinance the then outstanding balance of the seller financed purchase
money note totaling $5,590,418, to pay $109,582 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 $332,682. The deed of trust note
bears interest at 7.85%, amortizes over a 20-year schedule and requires
monthly principal and interest payments in the amount of $49,628, which
commenced April 1996 with the remaining unpaid principal and interest due
in March 2016. 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 (February 2006) 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 mentioned in Note 3, on February 27, 1996, HPP'90, HWDC and HWFP
entered into the First Amendment to the Third Amended and Restated
Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by which
the Partnership redeemed HWFP's 50% limited partnership interest in the
Marina Venture by issuing a $225,000 promissory note payable 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 which commenced April 1996. The transaction resulted in a $39,981
reduction of basis in the marina property. HPP'90's limited partnership
interest in the Marina Venture increased to 98% and HWDC's general
partnership interest in the Marina Venture increased to 2% as of the date
of the redemption.
Approximate aggregate annual maturities of the deed of trust note and
promissory note for each of the next five years are as follows:
Year Ending December 31, Amount
1998 157,425
1999 170,212
2000 183,997
2001 198,985
2002 215,530
(5) Transactions With Related Parties, Commitments and Contingencies
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. On January 1, 1992,
the Marina Venture entered into a long term Property Management Agreement
with HMI.
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. 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. The incentive fee commitment survives the December 31, 1991
expiration date of the Consulting Agreement and the termination of all
other agreements with HMI (see below).
Effective July 31, 1993, the Ventures terminated their respective
Management Agreement and Inn Lease with HMI.
During October 1994, HPP'90 and HMI agreed in principle to an
agreement whereby the parties would settle their differences to put to rest
all further controversy and to 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. The Settlement Payments required
an initial payment of $36,000 due on January 27, 1995 and require monthly
payments of $3,221 commencing September 1995 through the earlier of
September 2001 or the occurrence of certain events as defined in the
agreement. The Settlement Payments
9
(5) Transactions With Related Parties, Commitments and Contingencies
(Continued)
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, 1997 and December 31, 1996,
unpaid Settlement Payments included in accrued expenses and other
liabilities totaled $173,913 and $183,576, respectively.
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. As of March 31, 1997, the Ventures' operating cash
and contingency reserves totaled $265,635. 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.
Management fees paid to CMC by the Ventures totaled $36,600, and
$30,054 for the quarters ending March 31, 1997, and 1996, respectively.
On July 1, 1993, HPP'90 engaged Portfolio Advisory Services, Inc.
(PAS), a Massachusetts corporation, which is related to BHP II through
certain common ownership and management, to provide accounting, asset
management 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. Expense reimbursements to PAS for the period January 1,
1995 through September 30, 1995 totaled $65,903.
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. Expense reimbursements to CMC for the
quarters ending March 31, 1997 and 1996 totaled $27,460, and $36,663,
respectively.
According to a provision in one purchase and sale contract of one of
three condominiums purchased on February 27, 1996, the purchase price for
that condominium is the greater of the seller's outstanding mortgage
balance as of the date of purchase or the fair market value of the property
determined by independent appraisal through a period extending through June
1, 1999. At the February 27, 1996 closing, the purchase price paid was the
then outstanding balance of the seller's mortgage. If, through June 1,
1999, the fair market value is determined to be greater than the amount
paid at the closing, HWB will be required to pay the excess of the
determined fair market value over the purchase price paid at the closing to
the seller. As a part of the purchase agreement, HWB has established a
$25,000 collateral escrow in the event that an additional payment has to be
made to the seller.
(6) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, escrow deposits,
other assets, accrued expenses and other liabilities, and security deposits
at March 31, 1997 and December 31, 1996 approximate their fair values due
to their short maturities. The fair value of the notes payable at March
31, 1997 and December 31, 1996 approximate their carrying amounts based on
the interest rates currently available to HPP'90 for similar financing
arrangements. All financial instruments are held for non-trading purposes.
10
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
(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, 1997, the Partnership had invested an aggregate of $12,461,719
in the Building and Marina Ventures. The rehabilitation of the Building
Venture was 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, 1997, the Ventures and HPP'90 had cash, excluding
security deposit cash, of $352,488 and $117,817, respectively. HPP'90's
cash is used primarily to fund general and administrative expenses of
running the public fund. The Venturers' cash is used to fund operating
expenses of the properties. In addition, to the extent available, the
Building Venture distributes cash to HPP'90 to fund general and
administrative expenses of running the public fund. As mentioned in Note 4
of the financial statements, on February 27, 1996, the Building Venture
obtained financing of $6,000,000 at 7.85% which requires principal and
interest monthly payments of $49,628 based on a 20 year amortization and
matures in March 2016. 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 (February 2006) 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.
HPP'90's short-term liquidity depends upon its ability to receive
distributions from the Building Venture. The short-term liquidity of the
Building Venture depends on its ability to generate sufficient rental
income to fund operating expenses and debt service requirements and have
sufficient cash to distribute 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 its 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 a total loss under
generally accepted accounting principles of $60,205 for the three months
ending March 31, 1997, which includes depreciation and amortization of
$148,666.
The Building Venture was fully operational during the entire year.
The Marina Venture had operated on a minimal number of its 256 slips since
1991 due to significant repairs necessary to be fully operational. During
1996, the Marina Venture added $23,049 of utility, safety and other
improvements. During the first quarter of 1997, the Marina Venture added
additional improvements totaling $4,400, increasing the number of fully
operational slips to 240. Further repairs are still needed to bring the
entire marina to full operation.
The results of the Partnership's operations in future years should
be comparable to 1996 numbers provided the Ventures is able to maintain
greater than 95% occupancy in the Apartments and greater than 65% occupancy
in the Inn. Expense levels expected to increase with the rate of inflation
but, it is anticipated that the monthly rents and the average daily room
rate revenues should increase accordingly.
In recent years, the occupancy of the apartments has increased from
previous years as a result of management's decision to enter into more
traditional annual leases. The Apartments have achieved stabilized
occupancy with occupancy rates of 97% and 94% for the quarters ending
March 31, 1997 and 1996, respectively.
The average occupancy for the Inn for the quarters ending March 31,
1997 and 1996 was 59% and 57%, respectively.
11
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1997
(UNAUDITED)
The Partnership's net loss for the three months ending March 31,
1997 decreased when compared to the same period in 1996, as a result of
increased revenue and a decrease in both operating expenses and interest
expense. Rental and related income increased in 1997 compared to 1996, as
a result of increased occupancy at both the Inn and
Apartments and an approximately 9% increase in rents at the Apartments.
The decrease in property expenses in 1997 compared to 1996 is primarily due
to certain staffing and other efficiencies implemented by management.
Interest expense decreased in 1997, as a result of the refinancing at a
lower interest rate of the Building Venture's debt in February 1996.
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, 1997 and December 31, 1996, unpaid
settlement Payments included in accrued expenses and other liabilities
totaled $173,913 and $183,576, respectively.
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 $332,682. The deed of trust
note bears interest at 7.85% and requires monthly principal and interest
payments in the amount of $49,628 which commenced in April 1996. 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 (February 2006) 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. This transaction
released approximately 41,057,000 of suspended rehabilitation tax credits
to the Partnership from the Building Venture in 1996.
The Marina Venture requires further 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 full development
of the marina property.
Based on the fair market value of the 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. The property is carried at the lower
of cost or net realizable value.
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 the Partnership
redeemed HWFP's 50% limited partnership interest in the Marina Venture in
return for a $225,000 promissory note secured by the marina property. The
note bears interest at 7.50%, matures in March 15, 2006, and requires
monthly principal and interest payments in the amount of $2,086. 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's general
partnership interest in the Marina Venture increased to 2%.
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 Ventures are
subject to a substantial mortgage debt as of March 31, 1997. 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.
12
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
MARCH 31, 1997
Item 1. Legal Proceedings - None.
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.
13
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, II Inc.
General Partner
Date: May 1, 1997 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
President
and
Date: May 1, 1997 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
General Partner
14
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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