UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1999
------------------------------------------
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, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 472-1000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
FORM 10-Q
MARCH 31, 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 15
Signatures 16
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
ASSETS
1999 1998
-------------- --------------
(Unaudited)
INVESTMENT IN REAL ESTATE
Building and building
improvements $ 15,161,721 $ 15,145,302
Land 97,034 97,034
Furniture and equipment 1,286,588 980,447
Marina - land and improvements 1,683,095 1,659,050
Deferred evaluation and
acquisition costs 1,102,600 1,102,600
-------------- --------------
19,331,038 18,984,433
Less accumulated
depreciation and amortization 4,361,603 4,242,639
-------------- --------------
14,969,435 14,741,794
Reserve for realization of
Marina land and improvements (845,672) (845,672)
-------------- --------------
14,123,763 13,896,122
CASH AND CASH EQUIVALENTS 335,441 540,298
CASH EQUIVALENT, SECURITY DEPOSIT 89,902 85,958
ESCROW DEPOSITS 563,614 546,834
DEFERRED COSTS, net of accumulated
amortization (1999,$56,328;
1998, $51,761) 126,357 130,924
OTHER ASSETS 151,612 269,188
-------------- --------------
$ 15,390,689 $ 15,469,324
============== ==============
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Note payable $ 5,580,272 $ 5,619,134
Accrued expenses and other
liabilities 336,460 338,908
Security deposits 82,003 78,055
--------------- --------------
Total liabilities 5,998,735 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 9,440,396 9,481,256
General Partner's deficit (48,442) (48,029)
--------------- --------------
Total partners' equity 9,391,954 9,433,227
--------------- --------------
$ 15,390,689 $ 15,469,324
=============== ==============
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L. P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
-------------- ------------
REVENUE
Rental and related income $ 760,609 $ 807,287
Interest and other income 3,762 9,811
-------------- ------------
764,371 817,098
-------------- ------------
EXPENSES
Operating and administrative 73,997 59,673
Property operating expenses 498,103 416,839
Depreciation and amortization 123,531 146,456
-------------- ------------
695,631 622,968
-------------- ------------
INCOME FROM OPERATIONS 68,740 194,130
INTEREST EXPENSE 110,013 112,947
-------------- ------------
NET INCOME (LOSS) $ (41,273) $ 81,183
============== ============
NET INCOME (LOSS) ALLOCATED TO
GENERAL PARTNER $ (413) $ 812
============== ============
NET INCOME (LOSS) ALLOCATED TO
LIMITED PARTNERS $ (40,860) $ 80,371
============== ============
NET INCOME (LOSS) PER UNIT OF
LIMITED PARTNERSHIP INTEREST,
BASED ON 16,361 UNITS
OUTSTANDING $ (2.50) $ 4.91
============== ============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
THE YEAR ENDED DECEMBER 31, 1998
Units of
Investor Investor
Limited Limited General
Partnership Partners' 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) - (40,860) (413) (41,273)
--------- ------------- ---------- -----------
BALANCE, March 31, 1999
(unaudited) 16,361 $ 9,440,396 $ (48,442) $ 9,391,954
========= ============= ========== ============
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (41,273) $ 81,183
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization 123,531 146,456
Decrease (increase) in security
deposits, net 4 (666)
Increase (decrease) in accrued
expenses and other liabilities (2,448) 58,792
Increase in escrow deposits (16,780) (16,055)
Decrease in other assets 36,861 4,371
------------ -----------
Net cash provided by operating activities 99,895 274,081
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements (37,682) -
Purchase of furniture & equipment (169,641) (3,653)
Additions to Marina (58,567) (20,300)
Proceeds from exchange of building and
building improvements - 122,843
------------ -----------
Net cash provided by (used in) investing
activities (265,890) 98,890
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of mortgage note
payable (38,862) (35,937)
------------ -----------
Cash used in financing activities (38,862) (35,937)
------------ -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (204,857) 337,034
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 540,298 670,811
------------ -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 335,441 $ 1,007,845
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 110,013 $ 112,947
============ ===========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 three months ended March 31, 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.
Certain amounts in the 1998 consolidated statements of cash flows have
been reclassified to conform to the 1999 presentation.
(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 March 31, 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.
The economic occupancy for the quarter ended March 31, 1999 for the
residential units was 88% and the average occupancy for the Inn was 48%.
The Inn's average occupancy decreased in the first quarter of the fiscal
year, compared to prior years due to rooms being unavailable as a result
of deferred maintenance repairs and necessary renovations.
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 as discussed in Note 4, the
7
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
(3) Investment in Real Estate (Continued)
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 are used to fund reserves for the capital needs of
HPP'90's real property entities. For each of the quarters ended March 31,
1999 and 1998, the Building Venture distributed to HPP'90 $75,000,
respectively.
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 $778,544 as of March 31, 1999.
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 quarter ended March 31, 1999 and the years ended
December 31, 1998 and 1997 the Marina Venture added $24,045, $282,791 and
$33,727, 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.
8
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
(4) Note Payable (continued)
On February 27, 1996, HPP'90 issued a $6,000,000 deed of trust note to a
third party lender which provided funds for the Building Venture to
refinance the then outstanding balance of the seller financed purchase
money note totaling $5,590,418, to pay $109,582 to the seller in release
of the contingent purchase price promissory note, and to purchase in part
three condominium units and parking spaces owned by unrelated parties for
an aggregate purchase price of $332,682. The deed of trust note bears
interest at 7.85%, amortizes over a 20-year schedule and requires monthly
principal and interest payments in the amount of $49,628, which commenced
April 1996 with the remaining unpaid principal and interest due in March
2016. Under the deed of trust note, the lender has the option with six
months written notice to call amounts outstanding under the deed of trust
note at the end of ten years (February 2006) or anytime thereafter. The
deed of trust note is secured by the Building Venture's property, rents
and assignment of leases and is guaranteed by the Building Venture.
As mentioned in Note 3, on February 27, 1996, HPP'90, HWDC and HWFP
entered into the First Amendment to the Third Amended and Restated
Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by
which the Partnership redeemed HWFP's 50% limited partnership interest in
the Marina Venture by issuing a $225,000 promissory note payable secured
by the marina property. The note 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 March 31, 1999 and December 31, 1998, unpaid
Settlement Payments included in accrued expenses and other liabilities
totaled $96,617 and $106,280, respectively.
9
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 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
quarter ended March 31, 1998, management fees paid to CMC by the Ventures
totaled $37,548.
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. The agreements
expire the earlier of June 30, 2006 or upon the disposition of the
Ventures' properties, as defined. Also, effective July 1, 1998, GFI
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. For the quarter ended March 31, 1999, management
fees paid to GFI by the Ventures totaled $33,155.
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
quarter ended March 31, 1998, expense reimbursements paid to CMC totaled
$42,877.
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 the earlier of June 30,
2006 or upon the disposition of the Ventures' properties, as defined. For
the quarter ended March 31, 1999, expense reimbursements to GFI totaled
$34,185.
According to a provision in one purchase and sale contract of one of
three 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, the Building Venture 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, the Building Venture has established a $25,000
collateral escrow in the event that an additional payment has to be made
to the seller.
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 payable in 1999 is approximately $152,000.
10
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
(5) Transactions With Related Parties, Commitments and
Contingencies (Continued)
Within the next several years, significant repairs are needed to maintain
the Marina Venture's land which provides parking to the Marina and Inn.
The Marina Venture anticipates that capital resources to fund the repairs
are likely to be provided by additional contributions from HPP'90. The
Marina Venture estimates the cost of replacing the bulkhead to retain the
land to be in excess of $2,300,000. Also, HPP'90 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. Included in escrow deposits as of March 31,
1999 and December 31, 1998 is $405,594 and $404,681, respectively, that
HPP'90 has reserved for future capital improvements.
(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 March 31, 1999 and December 31, 1998
approximate their fair values due to their short maturities. The fair
value of the note payable at March 31, 1999 and December 31, 1998
approximates its carrying amount based on the interest rates currently
available to HPP'90 for similar financing arrangements. All financial
instruments are held for non-trading purposes.
11
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1999
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 March 31,
1999, 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.
As of March 31, 1999, the Ventures and HPP'90 had cash and cash equivalents,
excluding security deposit cash, of $256,476 and $78,965, 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 each of the three months ended March 31, 1999 and 1998, the Building Venture
distributed $75,000, respectively, to HPP'90.
Within the next several years, significant repairs are needed to maintain the
Marina Venture's land which provides parking to the marina and inn. The Marina
Venture estimates the cost of repairs to maintain the land to be in excess of
$2,300,000. The Partnership anticipates that capital resources to fund the
repairs are likely to be provided by additional contributions to the
Partnership. The Partnership has reserved for future capital improvements,
included in the escrow deposits as of March 31, 1999 and December 31, 1998, is
$405,594 and $404,681, respectively.
For the quarter ended March 31, 1999, the Building Venture made deferred
maintenance repairs and necessary renovations to the 38 inn rooms and other
facilities totaling $320,449. At December 31, 1998, the Building Venture had
made deposits on such improvements of approximately $141,200.
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 March 31, 1999 and December 31, 1998,
unpaid Settlement Payments included in accrued expenses and other liabilities
totaled $96,617 and $106,280, respectively.
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, the Building Venture
purchased a condominium unit and parking space owned by an unrelated party for a
purchase price of $110,000.
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.
HPP'90's short-term liquidity depends upon its ability to receive distributions
from the Building Venture and to make contributions to the Marina Venture to
maintain the land which provides parking to the marina and inn. 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
12
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1999
on its ability to generate sufficient rental income to fund operating expenses.
HPP'90 has advanced approximately $968,000 to the Marina through March 31, 1999
to fund operations. It is not expected that the Marina Venture will generate
sufficient short-term liquidity to repay advances made by HPP'90.
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 a net loss under generally
accepted accounting principles of $41,273 for the three months ended March 31,
1999 which includes depreciation and amortization of $123,521.
The Building Venture has been fully operational since 1991. 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. In 1996, the Marina
Venture began to make certain repairs needed to increase its operational slips.
During the three months ended March 31, 1999 and in the years 1998 and 1997 the
Marina Venture added $24,045, $282,791, and $33,727, 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 1998 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 had economic occupancy rates of 88%, and 98% for the three months
ended March 31, 1999 and 1998, respectively. The economic occupancy at the
Apartments decreased in the first quarter of this fiscal year compared to prior
years due to unexpected significant turnover in the slow winter months.
Management is projecting economic occupancy for the Apartments to be
approximately 94% as well as a 3% increase in rental rates for calendar year
1999. Management expects economic occupancy to return to about 95% and rental
rates to increase between 3% to 5% in future years after 1999.
The average occupancy of the Inn for the three months ended March 31, 1999 and
1998 was 48% and 63%, respectively. The average occupancy of the Inn decreased
in the first quarter of this fiscal year, compared to prior years due to rooms
being unavailable as a result of deferred maintenance repairs and necessary
renovations. Management is projecting Inn occupancy of approximately 70%, as
well as a 5% increase in the average daily room rate for calendar year 1999. 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 1999.
The Partnership recorded a net loss of $41,273 for the three months ended March
31, 1999, a decrease of $122,456, compared to net income of $81,183 for the
three months ended March 31, 1998. This decrease is primarily attributed to an
increase in expenses of approximately $73,000 and a decrease in rental and
related income of approximately $47,000. Rental and related income decreased as
a result of decreases in occupancy at both the Inn and Apartments offset by a
slight increase in revenue at the Marina. Although occupancy had decreased at
the Inn and Apartments, for the quarter ended March 31, 1999 compared to the
same period in 1998, apartment rental rates increased approximately 7.5% while
the inn's average room rate increased approximately 12.5%. Expenses increased
primarily due to increases in operating and administrative and property
operating expenses offset by a decrease in depreciation and amortization.
Operating and administrative expenses increased due to increases in audit and
tax preparation, professional fees and printing expenses. Property operating
expenses increased due to increases in utility expenses associated with the
elevated number of occupied slips at the Marina, payroll services due to
additional staffing at the Ventures', and carpeting and painting associated with
turnover of apartment units.
13
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
MARCH 31, 1999
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 March
31, 1999. 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.
14
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
PART II - OTHER INFORMATION
MARCH 31, 1999
Item 1. Legal Proceedings - At March 31, 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 - 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.
15
<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: May 1, 1999 By: /s/ Terrence P. Sullivan
----------------
Terrence P. Sullivan,
President
and
Date: May 1, 1999 By: /s/ Terrence P. Sullivan
------------------------
Terrence P. Sullivan,
General Partner
16
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 335,441
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,331,038
<DEPRECIATION> 4,361,603
<TOTAL-ASSETS> 15,390,689
<CURRENT-LIABILITIES> 0
<BONDS> 5,580,272
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,390,689
<SALES> 0
<TOTAL-REVENUES> 764,371
<CGS> 0
<TOTAL-COSTS> 695,631
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,013
<INCOME-PRETAX> (41,273)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,273)
<EPS-PRIMARY> (2.50)
<EPS-DILUTED> (2.50)
</TABLE>
