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 June 30, 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
JUNE 30, 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 11-13
PART II - OTHER INFORMATION 14
Signatures 15
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
JUNE 30, 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 961,787 961,236
Marina - land and improvements 1,354,963 1,335,858
Deferred evaluation and acquisition
cost 1,102,600 1,102,600
____________ ___________
18,694,749 18,675,093
Less accumulated depreciation 3,549,556 3,267,294
____________ ___________
15,145,193 15,407,799
Reserve for realization of Marina
land and improvements (845,672) (845,672)
____________ __________
14,299,521 14,562,127
CASH AND CASH EQUIVALENTS, including
security deposit cash (1997, $95,803;
1996, $94,364) 691,976 478,898
ESCROW DEPOSITS 243,320 100,204
DEFERRED COSTS, net of accumulated
amortization (1997, $25,906;
1996, $16,192) 168,382 178,096
OTHER ASSETS 111,400 72,879
$ 15,514,599 $ 15,392,204
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Notes payable $ 6,051,684 $ 6,123,084
Accrued expenses and other
liabilities 452,315 303,840
Security deposits 90,893 88,767
___________ ___________
Total liabilities 6,594,892 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 8,972,871 8,930,109
General Partner's Deficiency (53,164) (53,596)
Total partners' equity 8,919,707 8,876,513
$ 15,514,599 $ 15,392,204
The accompanying notes are an integral part of these financial statements.
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
AND FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
REVENUES:
Rental and related income $ 854,381 $ 770,937 $ 1,536,102 $1,378,377
Interest and other income 10,106 8,395 16,295 11,124
__________ __________ ___________ ___________
864,487 779,332 1,552,397 1,389,501
EXPENSES:
Operating and administr 46,987 43,958 86,880 94,059
Property operating expenses 435,429 460,408 866,622 923,077
Professional fees 16,225 24,386 24,843 39,432
Depreciation and amortization 143,310 141,891 291,976 283,783
_________ _________ _________ ________
641,951 670,643 1,270,321 1,340,351
INCOME FROM OPERATIONS 222,536 108,689 282,076 49,150
INTEREST EXPENSE (119,137) (121,980) (238,882) (299,342)
MINORITY INTEREST IN LOSS
ON MARINA VENTURE - - - 3,344
__________ __________ ________ _________
NET INCOME (LOSS) $ 103,399 $ (13,291) $ 43,194 $(246,848)
__________ __________ ________ _________
NET INCOME (LOSS) ALLOCATED TO
GENERAL PARTNER $ 1,034 $ (133) $ 432 $ (2,469)
_________ __________ ________ _________
NET INCOME (LOSS) ALLOCATED TO
LIMITED PARTNERS $ 102,365 $ (13,158) $ 42,762 $(244,379)
_________ __________ _________ _________
NET INCOME (LOSS) PER UNIT OF
INVESTOR LTD PARTNERSHIP
INTEREST, BASED ON 16,361
UNITS OUTSTANDING $ 6.25 $ (.81) $ 2.61 $ (14.94)
_________ ___________ _________ _________
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 SIX MONTHS ENDED JUNE 30, 1997 AND
THE YEAR ENDED DECEMBER 31, 1996
Units of
Investor Investor
Limited Limited General
Partnership Partners' Partner's
Interest Equity (Deficiency) Total
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 income (Unaudited) - 42,762 432 43,194
___________ ___________ _________ ___________
BALANCE, June 30
(Unaudited) 16,361 $ 8,972,871 $ (53,164) $ 8,919,707
___________ __________ _________ ___________
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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 43,194 $ (246,848)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 291,976 283,783
Minority interest in loss on Marina Venture - (3,344)
Increase in accrued expenses and
other liabilities 150,601 99,050
Increase in escrow deposits (143,116) (136,513)
Decrease (increase) in other assets (38,521) 188,067
________ _______
Net cash provided by operating activities 304,134 184,195
________ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment (551) (10,909)
Additions to building and building improvements - (443,012)
Additions to marina-land and improvements (19,105) -
________ _______
Net cash used in investing activities (19,656) (453,921)
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from refinancing - 6,000,000
Payment of mortgage payable - (5,590,418)
Principal payments of mortgage payable (71,400) (33,389)
Additions to deferred costs - (143,166)
________ ________
Net cash provided by (used in) financing
activities (71,400) 233,027
________ ________
NET INCREASE (DECREASE) IN CASH 213,078 (36,699)
CASH, BEGINNING OF PERIOD 478,898 474,835
________ ________
CASH, END OF PERIOD $ 691,976 $ 438,136
________ ________
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 238,882 $ 279,542
________ ________
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
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
(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 six months ended
June 30, 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.
Certain amounts in the 1996 statement of operations have been
reclassified to conform to their 1997 presentation.
(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 unrelatedparties. 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 June 30, 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 ended June 30, 1997, the average economic occupancy for the
residential units was 97% and the average occupancy for the inn was 82%.
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 six months ended June 30, 1997, the Building
Venture distributed $141,000 to HPP'90.
7
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
0 JUNE 30, 1997
(UNAUDITED)
(3) Investment in Real Estate (Continued)
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 June 30, 1997.
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 1997, the Marina Venture added additional improvements totaling
$19,105, increasing the number of fully operational slips to 224. 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 June 30, 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
Ventures' respective amended partnership 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.
8
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
(4) Notes 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 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 $109,582 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 lendr 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.
9
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
(5) Transactions With Related Parties, Commitments and Contingencies (Continued)
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 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 June 30, 1997 and December 31, 1996,
unpaid Settlement Payments included in accrued expenses and other liabilities
totaled $164,251 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 June 30, 1997, the Ventures' operating and contingency
reserves totaled $388,994. 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 $72,535, and $60,108
for the six months ended June 30, 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 six
months ended June 30, 1997 and 1996 totaled $59,237 and $67,563, 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, and accrued expenses and other liabilities, and security
deposits at June 30, 1997 and December 31, 1996 approximate their fair values
due to their short maturities. The fair value of the notes payable at June 30,
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
JUNE 30, 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 June 30, 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 June 30, 1997, the Ventures and HPP'90 had cash, excluding
security deposit cash, of $488,529 and $107,644, respectively. HPP'90's cash
is used primarily to fund general and administrative expenses of running 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 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. During the six months ended June 30, 1997, the
building venture distributed $141,000 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 marketableequity 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 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 1997, the Marina Venture added additional
improvements totaling $19,105, increasing the number of fully operational
slips to 224. 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 Building Venture 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 economic occupancy rates of 97% and 94% for the quarters ended June 30,
1997 and 1996, respectively.
The average occupancy for the Inn for the quarters ended June 30, 1997
and 1996 was 82% and 79%, respectively.
11
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
The Partnership reported net income of $103,399 for the three months ended
June 30, 1997, as compared to a net loss of $13,291 for the same period in
the prior year. This increase in net income is attributable to an increase
in rental and related income and a decrease in both property operating and
professional fee expenses. The Partnership reported net income of $43,194
for the six months ended June 30, 1997, as compared to a net loss of $246,848
for the same period in 1996. This increase in net income is attributable to
an increase in rental and related income and decreases in property operating,
professional fee and interest expenses. Rental and related income increased
for the three months ended June 30, 1997, as well as for the six months ended
June 30, 1997, when compared to the same periods in 1996, as a result of
increased occupancy and rate increases at both the Inn and Apartments. The
Inn's average room rate increased by approximately 4%, while the Apartments
rental rates increased by approximately 7%. Property operating expenses
decreased in the first two quarters of 1997, compared to the same periods
in 1996, as a result of certain staffing and other efficiencies implemented
by management. The decrease in professional fees and interest expense
in 1997, compared to 1996 is a result of the mortgage debt refinancing in
February 1996. The 1996 refinancing provided for the payment of the
$15,000 consulting fee to HMI and the reduction of the Building Venture's
interest rate from 10% to 7.85%
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 June 30, 1997 and December 31, 1996, unpaid settlement Payments
included in accrued expenses and other liabilities totaled $164,251 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 $109,582 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% 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 $1,057,000 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%.
12
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1997
(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
Ventures are subject to a substantial mortgage debt as of June 30, 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.
13
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
JUNE 30, 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.
14
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: August 1, 1997 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
President
and
Date: August 1, 1997 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
General Partner
15
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 691,976
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 18,694,749
<DEPRECIATION> 3,549,556
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0
0
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<TOTAL-COSTS> 1,270,321
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<INTEREST-EXPENSE> 238,882
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<NET-INCOME> 43,194
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