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, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 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)
45 Broad Street, 3rd Floor, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 338-6900
Previous Address: Batterymarch Park II, Quincy, MA 02169
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, 1998
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Partners' Equity (Deficit) 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, 1998 AND DECEMBER 31, 1997
ASSETS
1998 1997
(Unaudited)
INVESTMENT IN REAL ESTATE
Building and building improvements $ 15,009,692 $ 15,178,365
Land 97,034 97,034
Furniture and equipment 966,105 970,736
Marina - land and improvements 1,502,893 1,376,259
Deferred evaluation and acquisition costs 1,102,600 1,102,600
---------- ------------
18,678,324 18,724,994
Less accumulated depreciation and
amortization 4,065,242 3,830,865
---------- ----------
14,613,082 14,894,129
Reserve for realization of Marina land
and improvements (845,672) (845,672)
----------- -----------
13,767,410 14,048,457
CASH AND CASH EQUIVALENTS 808,163 670,811
SECURITY DEPOSITS 87,986 86,641
ESCROW DEPOSITS 419,631 152,212
DEFERRED COSTS, net of accumulated
amortization (1998, $42,626; 1997, $33,492) 140,059 149,193
OTHER ASSETS 163,967 116,807
--------- ----------
$ 15,387,216 $ 15,224,121
============ ============
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Note payable $ 5,694,613 $ 5,767,197
Accrued expenses and other liabilities 343,859 286,315
Security deposits 80,385 82,271
------------ -----------
Total liabilities 6,118,857 6,135,783
------------ -----------
COMMITMENTS (Note 5)
PARTNERS' EQUITY
Limited Partners' equity-Units of Investor
Limited Partnership Interest, $1,000
stated value per Unit-16,361 issued and
outstanding units 9,318,037 9,139,816
General Partner's deficit (49,678) (51,478)
----------- -----------
Total partners' equity 9,268,359 9,088,338
------------ ----------
$ 15,387,216 $ 15,224,121
============= ============
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 JUNE 30, 1998 AND 1997
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
REVENUES:
Rental and related income $ 938,796 $ 857,409 $ 1,746,083 $1,539,130
Interest and other income 13,777 7,078 23,588 13,267
--------- --------- ----------- ----------
952,573 864,487 1,769,671 1,552,397
--------- --------- ---------- ---------
EXPENSES:
Operating and
administrative 62,523 51,622 122,196 96,010
Property operating expenses 536,090 447,019 952,929 882,335
Depreciation and
amortization 142,885 143,310 289,341 291,976
--------- -------- --------- --------
741,498 641,951 1,364,466 1,270,321
--------- -------- --------- ---------
INCOME FROM OPERATIONS 211,075 222,536 405,205 282,076
INTEREST EXPENSE 112,237 119,137 225,184 238,882
--------- -------- -------- --------
NET INCOME $ 98,838 $ 103,399 $ 180,021 $ 43,194
=========== ========= ========= =========
NET INCOME ALLOCATED TO
GENERAL PARTNER $ 988 $ 1,034 $ 1,800 $ 432
========== ========= ========= ========
NET INCOME ALLOCATED TO
LIMITED PARTNERS $ 97,850 $ 102,365 $ 178,221 $ 42,762
========== ========= ========= ========
NET INCOME PER UNIT OF
INTEREST, BASED ON
16,361 UNITS
OUTSTANDING $ 5.98 $ 6.25 $ 10.89 $ 2.61
========= ======== ======== =======
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 (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
Units of
Investor Investor
Limited Limited General
Partnership Partners' Partner's
Interest Equity Deficit Total
BALANCE,
December 31, 1996 16,361 $ 8,930,109 $ (53,596) $ 8,876,513
Net Income - 209,707 2,118 211,825
-------- ----------- ---------- -----------
BALANCE,
December 31, 1997 16,361 9,139,816 (51,478) 9,088,338
Net income
(Unaudited) - 178,221 1,800 180,021
------- --------- --------- ----------
BALANCE,
June 30, 1998
(Unaudited) 16,361 $ 9,318,037 $ (49,678) $ 9,268,359
======= =========== ========== ===========
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, 1998 AND 1997
(UNAUDITED)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 180,021 $ 43,194
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 289,341 291,976
Decrease (Increase) in security
deposits, net (3,231) 687
Increase in escrow deposits (267,419) (143,116)
Increase in other assets (37,660) (38,521)
Increase in accrued expenses and
other liabilities 57,544 148,475
--------- ---------
Net cash provided by operating activities 218,596 302,695
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture & equipment (4,869) (551)
Additions to Marina (126,634) (19,105)
Proceeds from exchange of building
and building improvements 122,843 -
---------- ---------
Net cash used in investing activities (8,660) (19,656)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of mortgage
note payable (72,584) (71,400)
----------- ---------
Cash used in financing activities (72,584) (71,400)
----------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 137,352 211,639
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 670,811 384,534
---------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 808,163 $ 596,173
=========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 225,184 $ 238,882
========== =========
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, 1998
(UNAUDITED)
(1) 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
qualified 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).
(2) 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, 1998, are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1998. 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, 1997 for HPP'90, as filed with the Securities and
Exchange Commission.
Certain amounts in the 1997 financial statements have been
reclassified to conform to the 1998 presentation.
(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 149 indoor parking spaces (the
Apartments) and a 38 room inn (the 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 June 30, 1998.
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 economic occupancy for the quarter ended June 30, 1998
for the residential units was 94% (unaudited) and the average
occupancy for the inn was 84% (unaudited).
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).
On March 17, 1998, HWB exchanged a condominium unit and
parking spaces with an unrelated party in return for that
unrelated party's condominium unit, parking spaces and
$135,000. The transaction resulted in net cash proceeds of
$122,843 after closing costs.
HPP'90's operations, principally accounting, investor
services and other general and administrative costs, are
funded from distributions by the Building Venture. For the
six months ended June 30, 1998 and 1997, the Building
Venture distributed to HPP'90, $150,000 and $141,000,
respectively.
7
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
(UNAUDITED)
(3) Investment in Real Estate (continued)
Rehabilitation Tax Credits generated by the Building Venture
and previously allocated to HPP'90's Limited Partners totaled
$3,174,059 since inception. As of December 31, 1996, 100% of
the credits were fully vested.
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 (the 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, 1998.
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
from 1991 through 1995 due to the significant repairs
necessary to be fully operational. For the six months ended
June 30, 1998 and for the years ended December 31, 1997 and
1996, the Marina Venture added $126,634, $33,727 and $23,049,
respectively, of utility, safety and other improvements,
increasing the number of fully operational slips to 256.
Substantial repairs are still needed to maintain the Marina
Venture's land which provides parking to the Marina and Inn
(see Note 5).
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).
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. 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. On September
30, 1997, the Building Venture advanced the Marina Venture
$200,000, and the Marina Venture then settled in full the
promissory note payable to HWFP (see Note 4).
The Building Venture and the Marina Venture are collectively
referred to as "the Ventures".
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.
(4) Note 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. 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.
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.
8
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
(UNAUDITED)
(4) Note Payable (continued)
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 bore interest at
7.50%, matured in March 2006, and required 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 during the year ended
December 31, 1996. 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. On September 30, 1997, the
Building Venture advanced the Marina Venture $200,000, and
the Marina Venture settled in full the remaining outstanding
principal balance of $212,532 and all accrued interest due
under the promissory note to HWFP.
Approximate aggregate annual maturities under the deed of
trust note for each of the next five years are as follows:
Year Ending December 31 Amount
1999 $ 160,113
2000 173,145
2001 187,236
2002 202,475
2003 218,954
(5) Transactions With Related Parties, Commitments and
Contingencies
The Building Venture entered into a consulting agreement
(Consulting Agreement), which expired on December 31, 1991,
that required the Building Venture to pay Hillcrest
Management Inc., (HMI) a Massachusetts corporation and former
limited partner of the Ventures with whom the Ventures had
several contracts, 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).
HPP'90 entered into an agreement on behalf of the Ventures to
pay contract termination settlement payments (Settlement
Payments) totaling $271,108 to HMI. The Settlement Payments
required an initial payment of $36,000 on January 27, 1995
and require monthly payments of $3,221 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. The Settlement
Payments may be prepaid, as defined in the agreement, without
penalty. As of June 30, 1998 and December 31, 1997, unpaid
Settlement Payments included in accrued expenses and other
liabilities totaled $125,604 and $144,928, respectively.
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 provided for payment of
management fees to CMC equal to 4% of apartment gross
receipts, 4.5% of inn gross receipts, and 9% of marina gross
receipts, as defined, respectively. The agreements expired
on June 30, 1998. A condition of the agreements required 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, 1998, the
Ventures' operating cash and contingency reserves totaled
$622,533. Management fees paid to CMC by the Ventures
totaled $74,668 and $72,535 for the six months ended June
30, 1998 and 1997, respectively.
9
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
(UNAUDITED)
(5) Transactions With Related Parties, Commitments and
Contingencies (continued)
Effective July 1, 1998, the Building Venture and Marina
Venture entered into property management contracts with Gunn
Financial, Inc. (Gunn), an unaffiliated Massachusetts
corporation, to oversee the property management of the
apartment, inn and marina operations. The Property
management contracts will provide for the payment of
management fees to Gunn equal to 4% of apartment gross
receipts, 4% of inn gross receipts, and 4% of marina gross
receipts, as defined, respectively. The agreements expire
the earlier of June 30, 2006 or upon the disposition of the
Ventures' properties, as defined. Also effective July 1,
1998, Gunn subcontracted Winn Management Company, an
unaffiliated Massachusetts corporation who manages numerous
properties throughout the East Coast, to provide certain on-
site property management services to the apartment, inn and
marina operations.
On October 1, 1995, HPP'90 engaged CMC to provide accounting,
asset management and investor services. CMC provided such
services for an annual management fee of $38,400, plus
reimbursement of all its costs of providing these services.
The agreement expired on June 30, 1998. Expense
reimbursements to CMC for the six months ended June 30, 1998
and 1997 totaled $84,951 and $59,237, respectively.
Effective July 1, 1998, HPP'90 engaged Gunn to provide
accounting, asset management and investor services. Gunn
will provide such services for an annual management fee of
$36,000, plus reimbursement of all its costs of providing
these services. The agreement expires the earlier of June
30, 2006 or upon the disposition of the Ventures'
properties, as defined.
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.
During 1997, the Building Venture and the condominium
association to which it belongs filed suit against one unit
owner for failure to pay condominium assessments and
nuisance. The suit asked for actual damages as well as
compensatory and punitive damages totaling $120,000. The unit
owner filed a counterclaim against the Building Venture, the
condominium association to which it belongs, and other third
parties for alleged breach of contract and related counts.
The counterclaim asked for compensatory and punitive damages
totaling $3,901,000. In July 1998, the parties agreed to
settle these disputes out of court through an agreement by
which the Building Venture would purchase the unit owner's
unit for an agreed upon market price and other certain terms
with a closing date expected in September 1998.
Within the next few years, significant repairs are needed to
maintain the Marina Venture's land which provides parking to
the Marina and Inn. In October 1997, the Marina Venture
entered into a letter of intent with a third party real
estate developer to form an entity whose purpose would
include repairing the land and the developing of the marina.
The letter of intent expired on January 10, 1998 with no
expectation of further negotiations. The Partnership now
anticipates that capital resources to fund the repairs are
likely to be provided by additional contributions of the
Partnership. The Marina Venture estimates the cost of
replacing the bulkhead to retain the land to be approximately
$2,000,000. Also, the Partnership is
investigating other potential sources of available parking
for the Marina and Inn. It is reasonably possible that the
outcome of this uncertainty might be determined in the near
term.
(6) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, escrow
deposits, accrued expenses and other liabilities, and
security deposits at June 30, 1998 and December 31, 1997
approximate their fair values due to their short maturities.
The fair value of the note payable at June 30, 1998 and
December 31, 1997 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, 1998
Liquidity and Capital Resources. The Partnership 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, 1998, the Partnership
had invested an aggregate of $12,461,719 in the Building and Marina
Ventures.
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, except for the occasional purchase of one of the nine third
party owned condominium units and the potential acquisition of
needed off-site parking.
As of June 30, 1998, the Ventures and HPP'90 had cash and cash
equivalents, excluding security deposit cash, of $623,883 and
$184,280, respectively. HPP'90's cash and cash equivalents are used
primarily to fund general and administrative expenses of running
the public fund. The Venturers' cash and cash equivalents are used
to fund operating expenses and debt service of the properties. In
addition, to the extent available, the Building Venture distributes
cash to HPP'90 to fund general and administrative expenses of
managing the public fund. For the six months ended June 30, 1998
and 1997, the Building Venture distributed $150,000 and $141,000,
respectively, 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. No distributions to the partners of HPP'90 are permitted
until all settlement payments are paid in full. The Settlement
Payments may be prepaid, as defined in the agreement, without
penalty. As of June 30, 1998 and December 31, 1997, unpaid
Settlement Payments included in accrued expenses and other
liabilities totaled $125,604 and $144,928, respectively.
On February 27, 1996, the Building Venture obtained financing of
$6,000,000 at 7.85% which requires monthly principal and interest
payments totaling $49,628 based on a 20 year amortization. The deed
of trust note matures in March 2016, however, 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.
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 by issuing a $225,000 promissory note secured by the
marina property. On September 30, 1997, the Building Venture
advanced the Marina Venture $200,000 and the Marina Venture then
settled in full the remaining outstanding principal balance of
$212,532 and all accrued interest due under the promissory note
payable to HWFP.
On March 17, 1998, HWB exchanged a condominium unit and parking
spaces with an unrelated party in return for that unrelated party's
condominium unit, parking spaces and $135,000. The transaction
resulted in net cash proceeds of $122,843 after closing costs.
Within the next few years, significant repairs are needed to
maintain the Marina Venture's land which provides parking to the
Marina and Inn. In October 1997, the Marina Venture entered into a
letter of intent with a third party real estate developer to form
an entity whose purpose would include repairing the land and the
developing of the marina. The letter of intent expired on January
10, 1998 with no expectation of further negotiations. The
Partnership now anticipates that capital resources to fund the
repairs are likely to be provided by additional contributions of
the Partnership. The Marina Venture estimates the cost of
replacing the bulkhead to retain the land to be approximately
$2,000,000. Also, the Partnership is investigating other potential
sources of available parking for the Marina and Inn.
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. The short-term liquidity of the Marina Venture depends on
its ability to generate sufficient rental income to fund operating
expenses and make capital expenditures to maintain the existing
capacity of the marina and make additional capital improvements to
expand the marina's existing capacity. HPP'90 has advanced
approximately $277,000 to the Marina through June 30, 1998 to fund
operations. It is not expected that the Marina Venture will
generate sufficient short-term liquidity to repay advances made by
HPP'90.
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, 1998
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 generated net income under
generally accepted accounting principles of $180,021 for the six
months ended June 30, 1998 which includes depreciation and
amortization of $289,341.
The Building Venture was fully operational during the entire year.
The Marina Venture had operated a minimal number of its 256 slips
from 1991 to 1995 due to significant repairs necessary to be fully
operational. During the six months ended June 30, 1998 and in the
years 1997 and 1996 the Marina Venture added $126,634, $33,727, and
$23,049, respectively, of utility, safety and other improvements
increasing the number of fully operational slips to 256. However,
other substantial repairs are still needed to maintain the Marina
Venture's land which provides parking to the Marina and Inn.
The results of the Partnership's operations in future years should
be comparable to 1997 numbers provided the Building Venture is able
to maintain greater than 90% economic occupancy in the Apartments
and greater than 65% occupancy in the Inn. Expense levels are
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.
The Apartments have achieved stabilized occupancy with economic
occupancy rates of 94%, and 97% for the quarters ended June 30,
1998 and 1997, respectively. Management is projecting economic
occupancy for the Apartments to be approximately 95% as well as a
5% increase in rental rates for calendar year 1998. Management
expects economic occupancy to remain about 95% and rental rates to
increase between 3% to 5% in future years after 1998.
The Apartments also began charging parking fees for garaged parking
in 1996 and achieved full implementation of the parking fee policy
by the end of 1997. Management is projecting a 25% increase in
parking fee rates for the calendar year 1998.
The average occupancy of the Inn for the quarters ended June 30,
1998 and 1997 was 84% and 82%, respectively. Management is
projecting an average annual occupancy for the Inn of 72%, as well
as a 4% increase in the average daily room rate for calendar
year 1998. The Inn occupancy in future years is expected to
stay at the same level, absent any significant adverse
market conditions or increase in existing market competition.
Management expects the Inn's average daily room rate to
increase between 3% to 5% in future years after 1998.
The Partnership recorded net income of $98,838 for the three months
ended June 30, 1998, a slight decrease as compared to net income
of $103,399 for the three months ended June 30, 1997. Rental and
related income increased for the three months ended June 30, 1998,
compared to the same period in 1997, due to increased occupancy and
average daily room rates at the Inn as well as increased rental and
parking rates at the Apartments. The Inn's occupancy increased
approximately 4% and the average daily rate for inn rooms increased
approximately 12% for the quarter ended June 30, 1998, as compared
to the quarter ended June 30, 1997. Due to the strength of the
residential rental market, the average apartment rental income rate
increased approximately 3% and parking revenue increased by
approximately $9,000 for the quarter ended June 30, 1998, compared
to the same period in 1997. Property operating expenses increased
for the three months ended June 30, 1998, compared to the same
period in 1997, primarily due to increased food and beverage
activity at the Inn, repair and maintenance expenditures at the
Apartments, and salaries for additional staffing at the Marina.
The Partnership recorded net income of $180,021 for the six months
ended June 30, 1998, a $136,827 increase compared to the net income
of $43,194 for the six months ended June 30, 1997. This increase
in net income is primarily attributed to an increase in rental and
related income offset by an increase in property operating
expenses. Rental and related income increased for the six months
ended June 30, 1998, compared to the same period in 1997, due to
increased occupancy and average daily room rates at the Inn as well
as increased rental and parking rates at the Apartments. For the
six months ended June 30, 1998, the average daily rate for Inn
rooms increased approximately 17% as compared to the six months
ended June 30, 1997. The average apartment rental income rate
increased 4% and parking revenue increased by approximately $19,000
for the six months ended June 30, 1998, as compared to the same
period in 1997. Property operating expenses increased for the
quarters ended June 30, 1998, compared to the same period in 1997,
primarily due to increased food and beverage activity at the Inn,
repair and maintenance expenditures at the Apartments, and salaries
for additional staffing at the Marina.
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, 1998
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 mortgage debt as of June 30, 1998. 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.
Year 2000 Issues
The Partnership and the Ventures have analyzed the effect of the
Year 2000 on their respective financial and computer systems and
have incorporated and/or expect to have incorporated the necessary
modifications to avert any negative consequences. The Partnership
does not anticipate Year 2000 issues to have any material effect on
its operations or the operations of the Ventures, or incur
substantial costs to address Year 2000 issues.
13
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
JUNE 30, 1998
Item 1. Legal Proceedings - In 1997, the Building Venture
and the condominium association to which it belongs filed
suit against one unit owner for failure to pay condominium
assessments and nuisance. The suit asked for actual damages
as well as compensatory and punitive damages totaling
$120,000. The unit owner filed a counterclaim against the
Building Venture, the condominium association to which it
belongs, and other third parties for alleged breach of
contract and related counts. The counterclaim asked for
compensatory and punitive damages totaling $3,901,000. In
July 1998, the parties agreed to settle these disputes out
of court through an agreement by which the Building Venture
would purchase the unit owner's unit for an agreed upon
market price and other certain terms with a closing date
expected in September 1998.
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, 1998 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan,
President
and
Date: August 1, 1998 By: /s/ Terrence P. Sullivan
Terrence P. Sullivan
15
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] JUN-30-1998
[CASH] 808,163
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 18,678,324
[DEPRECIATION] 4,065,242
[TOTAL-ASSETS] 15,387,216
[CURRENT-LIABILITIES] 0
[BONDS] 5,694,613
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 15,387,216
[SALES] 0
[TOTAL-REVENUES] 1,769,671
[CGS] 0
[TOTAL-COSTS] 1,364,466
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 225,184
[INCOME-PRETAX] 180,021
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 180,021
[EPS-PRIMARY] 10.89
[EPS-DILUTED] 10.89
</TABLE>
