HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
FORM 10-Q
SEPTEMBER 30, 1999
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
Management's Discussion and Analysis of Financial 12
Condition and Results of Operations
PART II - OTHER INFORMATION 13
Signatures 14
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
ASSETS
1999 1998
--------------- ---------------
(Unaudited)
INVESTMENT IN REAL ESTATE
Building and building improvements $ - $ 15,145,302
Land - 97,034
Furniture and equipment - 980,447
Marina - land and improvements - 1,659,050
Deferred evaluation and
acquisition costs - 1,102,600
--------------- ---------------
- 18,984,433
Less accumulated
depreciation and amortization - 4,242,639
--------------- ---------------
- 14,741,794
Reserve for realization of Marina
land and improvements - (845,672)
--------------- ---------------
- 13,896,122
CASH AND CASH EQUIVALENTS 270,696 540,298
CASH EQUIVALENT, SECURITY DEPOSITS - 85,958
ESCROW DEPOSITS 407,858 546,834
DEFERRED COSTS, net of accumulated
amortization (1998, $51,761) - 130,924
OTHER ASSETS 43,319 269,188
--------------- ---------------
$ 721,873 $ 15,469,324
=============== ===============
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Note payable $ - $ 5,619,134
Accrued expenses and other
liabilities 179,030 338,908
Security deposits - 78,055
--------------- ---------------
Total liabilities 179,030 6,036,097
--------------- ---------------
COMMITMENTS (Note 5)
PARTNERS' EQUITY
Limited Partners' equity-Units
of Investor
Limited Partnership Interest,
$1,000 stated value per unit-
16,361 units issued and
outstanding 606,151 9,481,256
General Partner's deficit (63,308) (48,029)
--------------- ---------------
Total partners' equity 542,843 9,433,227
--------------- ---------------
$ 721,873 $ 15,469,324
=============== ===============
The accompanying notes are an integral part of the financial statements.
3
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- --------- ----------
REVENUES:
Rental and related income $850,736 $ 978,018 $2,655,230 $2,724,101
Interest and other income 24,121 10,387 33,159 33,975
---------- ---------- ----------- -----------
874,857 988,405 2,688,389 2,758,076
---------- ---------- ----------- -----------
EXPENSES:
Operating and
administrative 54,807 59,151 200,432 181,347
Property operating
expenses 502,342 511,088 1,759,740 1,464,017
Depreciation and
amortization 220,121 117,507 481,887 406,848
---------- ---------- ----------- ----------
777,270 687,746 2,442,059 2,052,212
---------- ---------- ----------- ----------
INCOME FROM OPERATIONS 97,587 300,659 246,330 705,864
INTEREST EXPENSE (84,081) (111,514) (303,349) (336,698)
MORTGAGE PREPAYMENT EXPENSE (390,126) - (390,126) -
SOLICITATION EXPENSE (119,649) - (119,649) -
LOSS ON SALE OF REAL ESTATE
(NET OF DIRECT COSTS OF
$295,256 AND UNAMORTIZED
DEFERRED EVALUATION AND
ACQUISITION COSTS OF
$863,021) (961,140) - (961,140) -
---------- ---------- ----------- ----------
NET INCOME (LOSS) $(1,457,409) $ 189,145 $(1,527,934) $ 369,166
============ ========== ============ ==========
NET INCOME (LOSS)
ALLOCATED
GENERAL PARTNER $ (14,574) $ 1,891 $ (15,279) $ 3,692
============ ========= ============ =========
NET INCOME (LOSS)
ALLOCATED
LIMITED PARTNERS $(1,442,835) $187,254 $(1,512,655) $ 365,474
============ ========= ============ ==========
NET INCOME PER UNIT OF
INVESTOR LIMITED
PARTNERSHIP INTEREST,
BASED ON 16,361 UNITS
OUTSTANDING: $ (88.19) $ 11.45 $ (92.46) $ 22.34
============ ========= ========== ===========
The accompanying notes are an integral part of these financial statements.
4
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
THE YEAR ENDED DECEMBER 31, 1998
Units of
Investor Investor
Limited Limited General
PartnershipPartners' Partner's
Interest Equity Deficit Total
--------- ---------- ---------- -----------
BALANCE, December 31,
1997 16,361 $9,139,816 $(51,478) $9,088,338
Net income - 341,440 3,449 344,889
--------- ---------- ---------- -----------
BALANCE, December 31,
1998 16,361 9,481,256 (48,029) 9,433,227
Net loss (Unaudited) - (1,512,655) (15,279) (1,527,934)
Distributions - (7,362,450) - (7,362,450)
--------- ---------- ---------- -----------
BALANCE, September 30,
1999 (Unaudited) 16,361 $ 606,151 $ (63,308) $ 542,843
========= ========== ========== ============
The accompanying notes are an integral part of these financial statements.
5
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,527,934) $ 369,166
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 481,887 406,848
Loss on disposal of asset 3,699 -
Loss on sale of real estate 961,140 -
Decrease (Increase) in security
deposits, net 7,903 (3,315)
Decrease (Increase) in escrow deposits 138,976 (345,429)
Decrease (Increase) in other assets 145,154 (112,140)
Decrease in accrued expenses and
other liabilities (159,878) (46,224)
------------ -----------
Net cash provided by operating activities 50,947 268,906
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and building
improvements (62,953) -
Purchase of furniture & equipment (377,279) (12,289)
Additions to marina (82,427) (226,280)
Proceeds from exchange of building and
building improvements - 122,843
Proceeds from sale of real estate 13,183,694 -
------------ -----------
Net cash provided by (used in)
investing activities 12,661,035 (115,726)
activities
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of mortgage note (105,345) (109,954)
payable
Payoff of mortgage payable (5,513,789) -
Distributions (7,362,450) -
------------ -----------
Cash used in financing activities (12,981,584) (109,954)
------------ -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (269,602) 43,226
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 540,298 670,811
------------ -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 270,696 $ 714,037
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 321,728 336,698
============ ===========
The accompanying notes are an integral part of these financial statements.
6
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
(1) Organization and General Partner - BHPII
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).
(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 nine months ended September 30, 1999, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1999. 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, 1998 for HPP'90, as filed with the
Securities and Exchange Commission.
(3) Investment in Real Estate
HPP'90 has an interest in the following entities:
Henderson's Wharf Baltimore, L.P. (the Building Venture) is a Delaware
limited partnership formed on July 20, 1990 to acquire and retain a fee
interest in a seven-story building on 1.5 acres of land and to
rehabilitate the building into residential apartment units with 153 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, 8 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 September 30, 1999.
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.
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, the
Building Venture 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. On November 3, 1998, as part of a
negotiated settlement, the Building Venture purchased a condominium unit
and parking space owned by an unrelated party, with whom the Building
Venture was engaged in a lawsuit and countersuit, for a purchase price of
$110,000.
HPP'90's operations, principally consisting of accounting, investor
services and other general and administrative costs, are funded from
distributions by the Building Venture. Also, distributions from the
Building Venture were used to fund reserves for the capital needs of
HPP'90's real property entities. For the nine months ended September 30,
1998, the Building Venture distributed $225,000 to HPP'90. As discussed
later, in September 1999, the Building Venture sold its property and
distributed the net proceeds to HPPP'90, which then made a distribution of
funds to its Limited Partners. For the nine months ended September 30,
1999, the Building Venture distributed
7
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
(3) Investment in Real Estate (Continued)
$7,758,508 to HPP'90. On September 13, 1999, HPP'90 distributed $450 per
$1,000 unit for a total of $7,362,450 to its Limited Partners ($450 per
$1,000 unit, 16,361 units issued and outstanding).
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 and retain 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 $777,943 as of September 30, 1999.
At September 30, 1999, HPP'90 holds a 99% general partner interest and
Henderson's Wharf Development Corp. (HWDC), a wholly owned subsidiary of
HPP'90 holds total general and limited partner interest of 1% in the
Building Venture. At September 30, 1999, HPP'90 holds a 98% limited
partner interest and HWDC holds a 2% general partner interest in the
Marina Venture.
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. During the period January 1, 1999 through September 9, 1999
and the years ended December 31, 1998 and 1997 the Marina Venture added
$47,405, $282,791 and $33,727, respectively, of utility, safety and other
improvements, increasing the number of fully operational slips to 256.
Substantial repairs were 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.
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.
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.
In July 1999, the Ventures entered into purchase and sale agreements with
an affiliate of Gunn Financial, Inc., a party unaffiliated to HPP'90 and
the Ventures, to sell the properties owned by both the Building Venture
and the Marina Venture for a combined price of $13,550,000. The
Partnership had obtained two recent appraisals each of which valued the
combined properties at $13,500,000 and $13,540,000, respectively. The
partnership agreement states that a sale of substantially all the assets
requires the approval of a majority in interest of the Limited Partners.
The Partnership submitted a Consent Solicitation Statement, dated August
2, 1999 as filed with the Securities and Exchange Commission, to the
Limited Partners to obtain the approval for the sale, subsequent
distribution of net proceeds and liquidation of the Partnership. By August
31, 1999, the Partnership received the approval for the sale from 57% in
interest of its Limited Partners.
On September 9, 1999, the Ventures consummated the sale of their
respective properties. The sale price paid for the Ventures' properties
was $13,550,000 with payments due at closing for direct costs of $295,256,
capital costs assumed by the buyer of $71,050, mortgage note payable of
$5,513,789, mortgage prepayment expense of $390,126 and accrued interest
of $30,858.
8
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
(3) Investment in Real Estate (Continued)
As discussed previously, on September 13, 1999, HPP'90 distributed $450
per $1,000 unit for a total of $7,362,450 to its Limited Partners ($450
per $1,000 unit, 16,361 units issued and outstanding). HPP'90 intends to
make a final distribution to its Limited Partners and wind up its
operations by December 31, 1999. Solicitation expenses for the quarter
ended September 30, 1999 totaled $119,649.
(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 bore
interest at 7.85%, amortized over a 20-year schedule and required 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 had 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 was secured by the Building Venture's property, rents
and assignment of leases and was guaranteed by the Building Venture.
As discussed in Note 3, on September 9, 1999 the Building Venture sold its
property and HPP'90 paid to the lender the remaining principal due of
$5,513,789, as well as accrued interest of $30,058 and mortgage prepayment
expense of $390,126.
(5) Transactions With Related Parties, Commitments and Contingencies
The Ventures 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 Ventures to pay HMI an incentive fee equal to 1% of the
gross sales proceeds resulting from the sale of the properties to an
unaffiliated third party buyer. The incentive fee commitment survived the
December 31, 1991 expiration date of the Consulting Agreement and the
termination of all other agreements with HMI (see below). The Building
Venture paid the $15,000 refinancing fee to HMI in March 1996 as a result
of refinancing its purchase price promissory note as discussed in Note 4.
The Ventures paid HMI a total of $135,500 in September 1999 as a result of
the sale of the Ventures' property discussed in Note 3.
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 were permitted until all Settlement Payments were paid
in full. The Settlement Payments may have been prepaid, as defined in the
agreement, without penalty. In September 1999, HMI and the Ventures agreed
that final payment of all unpaid Settlements Payments totaling $70,010
would be made in December 1999. As of September 30, 1999 and December 31,
1998, unpaid Settlement Payments included in accrued expenses and other
liabilities totaled $70,010 and $106,280, respectively.
9
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
(5) Transactions With Related Parties, Commitments and Contingencies
(Continued)
On November 1, 1995, the Building Venture 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% and 4.5% of apartment and
inn gross receipts, as defined, respectively, and 9% of marina gross
receipts, as defined. The agreements expired on June 30, 1998. For the six
months ended June 30, 1998, management fees paid to CMC by the Ventures
totaled $74,668.
Effective July 1, 1998, the Building Venture and Marina Venture entered
into property management contracts with Gunn Financial, Incorporated
(GFI), 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
GFI equal to 4% of apartment gross receipts, 4% of inn gross receipts, and
4% of marina gross receipts, as defined, respectively. Also, effective
July 1, 1998, GFI subcontracted Winn Management Company, an unaffiliated
Massachusetts corporation who managed numerous properties throughout the
East Coast, to provide certain on site property management services to the
apartment, inn and marina operations. The agreements expired upon the
disposition of the Ventures' properties, as discussed in Note 3. For the
period January 1, 1999 through September 9, 1999, the date of the sale of
the properties, and for the period July 1, 1998 through September 30,
1998, management fees paid to GFI by the Ventures totaled $112,195 and
$40,011, respectively.
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. For the
six months ended June 30, 1998, expense reimbursements to CMC totaled
$83,080.
Effective July 1, 1998, HPP'90 engaged GFI to provide accounting, asset
management and investor services. GFI provides such services for an annual
management fee of $36,000, plus reimbursement of all its costs of
providing these services. The agreement expires June 30, 2000 due to the
disposition of the Ventures' properties, as discussed in Note 3. HPP'90
intends to pay GFI by December 31, 1999 for the accounting, asset
management and investor services required for the liquidation of the
Partnership through the expiration date of the contract. For the period
January 1, 1999 through September 30, 1999 and for the period July 1, 1998
through September 30, 1998, expense reimbursements to GFI totaled $153,304
and $47,109, 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 was 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 was determined to be greater than the
amount paid at the closing, the Building Venture was 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, the
Building Venture has established a $25,000 collateral escrow in the event
that an additional payment was made to the seller. In August 1999, the
Building Venture and the seller agreed to an additional payment of $25,000
to be paid to the seller to conclude this transaction.
On November 3, 1998, the Building Venture and the condominium association
to which it belongs settled a lawsuit against one unit owner for failure
to pay condominium assessments and nuisance, and a counterclaim filed by
that unit owner against the Building Venture, the condominium association,
and other third parties for alleged breach of contract and related counts.
As part of the settlement, the Building Venture paid $110,000 to purchase
the condominium unit and parking space as well as an additional $65,000.
In late 1998, the condominium association to which the Building Venture
belongs engaged an engineering firm to conduct a capital needs assessment
of its property. Based on that study, the condominium association assessed
its owners in 1999 a special assessment totaling $160,000 to provide
reserves for certain replacement items. The Building Venture's share of
the special assessment was approximately $152,000 and was paid to the
condominium association in April 1999.
10
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
(5) Transactions With Related Parties, Commitments and Contingencies
(Continued)
Within the next several years, significant repairs were needed to maintain
the Marina Venture's land which provides parking to the Marina and Inn.
The Marina Venture anticipated that capital resources to fund the repairs
were likely to have been provided by additional contributions from HPP'90.
The Marina Venture estimated the cost of replacing the bulkhead to retain
the land to have been in excess of $2,300,000. Also, HPP'90 was
investigating other potential sources of available parking for the Marina
and Inn. Included in escrow deposits as of December 31, 1998 was $404,681
that HPP'90 had reserved for future capital improvements.
As of September 30, 1999, HPP'90 had escrow deposits totaling $407,858,
which includes amounts reserved for the following; required remittance to
the state of Maryland for withholding tax, remaining Settlement Payments
to HMI, audit, tax, legal, general and administrative, and final
liquidation expenses of the Partnership.
(6) Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, cash equivalent,
security deposits, escrow deposits, accrued expenses and other
liabilities, and security deposits at September 30, 1999 and December 31,
1998 approximate their fair values due to their short maturities. The fair
value of the note payable at December 31, 1998 approximates its carrying
amount based on the interest rates available to HPP'90 for similar
financing arrangements. All financial instruments are held for non-trading
purposes.
11
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HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
Liquidity and Capital Resources. In July 1999, the Ventures entered into
purchase and sale agreements with an affiliate of Gunn Financial, Inc., a party
unaffiliated to HPP'90 and the Ventures, to sell the properties owned by both
the Building Venture and the Marina Venture for a combined price of $13,550,000.
The Partnership had obtained two recent appraisals each of which valued the
combined properties at $13,500,000 and $13,540,000, respectively. The
partnership agreement states that a sale of substantially all the assets
requires the approval of a majority in interest of the Limited Partners. The
Partnership submitted a Consent Solicitation Statement, dated August 2, 1999 as
filed with the Securities and Exchange Commission, to the Limited Partners to
obtain the approval for the sale, subsequent distribution of net proceeds and
liquidation of the Partnership. By August 31, 1999, the Partnership received the
approval for the sale from 57% in interest of its Limited Partners.
On September 9, 1999, the Ventures consummated the sale of their respective
properties. The sale price paid for the Ventures' properties was $13,550,000
with payments due at closing for direct costs of $295,256, capital costs assumed
by the buyer of $71,050, mortgage note payable of $5,513,789, mortgage
prepayment expense of $390,126 and accrued interest of $30,858.
On September 13, 1999, HPP'90 distributed $450 per $1,000 unit for a total of
$7,362,450 to its Limited Partners ($450 per $1,000 unit, 16,361 units issued
and outstanding). HPP'90 intends to make a final distribution to its Limited
Partners and wind up its operations by December 31, 1999.
At September 30, 1999, the Partnership had combined cash and cash equivalents
totaling $270,696, as well as escrowed funds totaling $407,858. Such cash and
cash equivalents and escrow funds will be utilized for the payment of
outstanding obligations of the Partnership, including a required remittance to
the state of Maryland for withholding tax, remaining Settlement Payments to HMI,
audit, tax, legal, general and administrative, and final liquidation expenses of
the Partnership and distributions to Limited Partners. These sources of
liquidity are expected to be sufficient to meet the Partnership's needs through
its expected date of liquidation.
Results of Operations. The Partnership generated a net loss under generally
accepted accounting principles of $1,527,934 for the nine months ended September
30, 1999 which includes depreciation and amortization of $469,207, mortgage
prepayment expense of $390,126, solicitation expenses of $119,649 and loss on
sale of real estate of $961,440, (net of direct costs of $295,256 and
unamortized deferred evaluation and acquisition costs of $863,021).
As discussed in the Liquidity Section, on September 9, 1999 the Ventures
consummated the sale of their respective properties and ceased operating
activities as of that date. Therefore, the Partnership's revenues and expenses
for the three and nine months ended September 30, 1999 are not comparative to
their respective prior periods due to the shorter period of activity.
Nevertheless, for the nine months ended September 30, 1999, property operating
expenses increased mainly due to a special condominium assessment paid in April
of 1999 of approximately $152,000, increases in payroll costs due to additional
staffing at the Ventures' and utility expenses associated with the elevated
number of occupied slips at the Marina. Also, depreciation and amortization for
the three and nine months ended September 30, 1999 includes the amortization of
certain unamortized deferred financial and legal costs at the date of the sale
of the properties.
Year 2000 Issues
As noted above, the Partnership expects to be liquidated by December 31, 1999.
Notwithstanding this, the Partnership and the Ventures have analyzed the effect
of the Year 2000 on their respective financial and computer systems and 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.
12
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
SEPTEMBER 30, 1999
Item 1. Legal Proceedings - At September 30, 1999, the Partnership and the
Ventures are not party to, to the best knowledge of the General Partner,
any material pending legal proceedings.
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
As required by the Partnership's Agreement of Limited
Partnership the consent of a majority in interest of the Limited
Partners to the sale of the Partnership's property was submitted
for a vote to the Limited Partners, pursuant to a Consent
Solicitation Statement, dated August 2, 1999. The Partnership's
property consisted of the land and seven-story building located
at 1000 Fell Street, Baltimore, MD and (the Building Venture)and
the land and Marina located at 1001 Fell Street, Baltimore, MD
(the Marina Venture). The Partnership owned these properties
through its 100% ownership of the two Delaware limited
partnerships, Henderson's Wharf Baltimore,L.P. and Henderson's
Wharf Marina Inc.
As of August 31, 1999, the Partnership obtained the approval for
the sale with 9,464 vote "For", 1,375 votes "Against", 195 votes
to "Abstain, and 5,317 units that did not vote.
The sale closed on September 9, 1999.
On September 13, 1999, the Partnership distributed $7,362,450 to
its Limited Partners.
Item 5. Other Information - Not applicable.
Item 6. Exhibits and Reports from Form 8-K Filed September 24, 1999
(a) Exhibits Filed September 24, 1999 with Form 8-K and
incorporated herein as referenced
1. Agreement for the Purchase and Sale of Real Property of
Henderson's Wharf Baltimore L.P.
2. Agreement for the Purchase and Sale of Real Property of
Henderson's Wharf Marina L.P.
(b) Reports from Form 8-K filed September 14, 1999 with Form
8-K and incorporated herein as referenced
Item 2 - Acquisition or Disposition of Assets - Sale of
Property
Item 5 - Other Events - Distribution to Limited Partners
13
<PAGE>
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: November 1, 1999 By: /s/ Terrence P. Sullivan
-------------------------
Terrence P. Sullivan,
President
and
Date: November 1, 1999 By: /s/ Terrence P. Sullivan
------------------------
Terrence P. Sullivan,
General Partner
14
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 270,696
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 721,873
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 721,873
<SALES> 0
<TOTAL-REVENUES> 2,688,389
<CGS> 0
<TOTAL-COSTS> 2,442,059
<OTHER-EXPENSES> 1,470,915
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,349
<INCOME-PRETAX> (1,527,934)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,527,934)
<EPS-BASIC> (92.46)
<EPS-DILUTED> (92.46)
</TABLE>
