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, 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,3rd Floor, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 338-6900
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
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
FORM 10-Q
JUNE 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 15
Signatures 16
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
ASSETS
1999 1998
-------------- --------------
(Unaudited)
INVESTMENT IN REAL ESTATE
Building and building improvements $ 15,161,991 $ 15,145,302
Land 97,034 97,034
Furniture and equipment 1,467,247 980,447
Marina - land and improvements 1,692,906 1,659,050
Deferred evaluation and acquisition costs 1,102,600 1,102,600
-------------- --------------
19,521,778 18,984,433
Less accumulated
depreciation and amortization 4,489,645 4,242,639
-------------- --------------
15,032,133 14,741,794
Reserve for realization of Marina land
and improvements (845,672) (845,672)
-------------- --------------
14,186,461 13,896,122
CASH AND CASH EQUIVALENTS 194,283 540,298
CASH EQUIVALENT, SECURITY DEPOSITS 97,324 85,958
ESCROW DEPOSITS 652,247 546,834
DEFERRED COSTS, net of accumulated
amortization (1999,$60,895;1998, $51,761) 121,790 130,924
OTHER ASSETS 106,163 269,188
-------------- --------------
$ 15,358,268 $ 15,469,324
============== ==============
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Note payable $ 5,540,643 $ 5,619,134
Accrued expenses and other liabilities 365,480 338,908
Security deposits 89,443 78,055
--------------- --------------
Total liabilities 5,995,566 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 9,411,436 9,481,256
General Partner's deficit (48,734) (48,029)
--------------- --------------
Total partners' equity 9,362,702 9,433,227
--------------- --------------
$ 15,358,268 $ 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 JUNE 30, 1999 AND 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- --------- ----------
REVENUES:
Rental and related income $1,043,885 $ 938,796 $1,804,494 $1,746,083
Interest and other income 5,276 13,777 9,038 23,588
---------- ---------- ---------- ----------
1,049,161 952,573 1,813,532 1,769,671
---------- ---------- ---------- ----------
EXPENSES:
Operating and
administrative 78,628 62,523 145,625 122,196
Property operating
expenses 752,295 536,090 1,257,398 952,929
Depreciation and
amortization 138,235 142,885 261,766 289,341
---------- ---------- ---------- ----------
969,158 741,498 1,664,789 1,364,466
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 80,003 211,075 148,743 405,205
INTEREST EXPENSE 109,255 112,237 219,268 225,184
---------- --------- ---------- ---------
NET INCOME (LOSS) $ (29,252) $ 98,838 $ (70,525) $ 180,021
========== ========= ========== =========
NET INCOME (LOSS)ALLOCATED
TO GENERAL PARTNER $ (293) $ 988 $ (705) $ 1,800
========== ========= ========== =========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ (28,959) $ 97,850 $ (69,820) $ 178,221
========== ========== ========== =========
NET INCOME (LOSS) PER UNIT
OF INVESTOR LIMITED
PARTNERSHIP INTEREST,
BASED ON 16,361 UNITS
OUTSTANDING $ (1.77) $ 5.98 $ (4.27) $ 10.89
========== ========== ========== =========
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 SIX MONTHS ENDED JUNE 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) - (69,820) (705) (70,525)
-------- ---------- ---------- ----------
BALANCE, June 30, 1999
(Unaudited) 16,361 $9,411,436 $ (48,734) $9,362,702
========= ========== ========== ==========
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 SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (70,525) $ 180,021
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 261,766 289,341
Loss on disposal of asset 3,699 --
Decrease (Increase) in security
deposits, net 22 (3,231)
Increase in escrow deposits (105,413) (267,419)
Decrease (Increase) in other assets 82,310 (37,660)
Increase in accrued expenses and
other liabilities 26,572 57,544
--------- ---------
Net cash provided by operating activities 198,431 218,596
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements (37,952) --
Purchase of furniture & equipment (359,125) (4,869)
Additions to Marina (68,878) (126,634)
Proceeds from exchange of building and
building improvements -- 122,843
--------- ---------
Net cash used in investing activities (465,955) (8,660)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of mortgage note
payable (78,491) (72,584)
--------- ---------
Cash used in financing activities (78,491) (72,584)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (346,015) 137,352
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 540,298 670,811
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 194,283 $ 808,163
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 219,268 $ 225,184
========= =========
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
JUNE 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 six months ended June 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 June 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.
The economic occupancy for the quarter ended June 30, 1999 for the
residential units was 96% and the average occupancy for the Inn was 77%.
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 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.
7
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(3) Investment in Real Estate (Continued)
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 six months ended June 30,
1999 and 1998, the Building Venture distributed to HPP'90 $150,000,
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 June 30, 1999.
At June 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 June 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 six months ended June 30, 1999 and the years ended
December 31, 1998 and 1997 the Marina Venture added $33,855, $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.
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.
(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
8
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(4) Note Payable (continued)
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.
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, Contingencies and
Subsequent Events
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, 1999 and December 31, 1998, unpaid
Settlement Payments included in accrued expenses and other liabilities
totaled $86,954 and $106,280, respectively.
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. 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 six months ended June 30, 1999, management
fees paid to GFI by the Ventures totaled $76,317.
9
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(5) Transactions With Related Parties, Commitments, Contingencies and
Subsequent Events (Continued)
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 paid 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 the earlier of June 30,
2006 or upon the disposition of the Ventures' properties, as defined. For
the six months ended June 30, 1999, expense reimbursements to GFI totaled
$102,491.
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, 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. 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 is approximately $152,000 and was paid to the
condominium association in April 1999.
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 June 30,
1999 and December 31, 1998 is $408,057 and $404,681, respectively, that
HPP'90 has reserved for future capital improvements.
In July 1999, the Ventures entered into purchase and sale agreements to
sell the properties owned by both the Building Venture and the Marina
Venture for $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. In August 1999, the Partnership began
the process of obtaining the required approval for the sale. If approved,
a sale is expected to be consummated in September 1999.
10
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(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 June 30, 1999 and December 31, 1998
approximate their fair values due to their short maturities. The fair
value of the note payable at June 30, 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
JUNE 30, 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 June 30,
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 June 30, 1999, the Ventures and HPP'90 had cash and cash equivalents of
$127,130 and $67,153, 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 six months
ended June 30, 1999 and 1998, the Building Venture distributed $150,000,
respectively, to HPP'90.
For the six months ended June 30, 1999, the Building Venture made deferred
maintenance repairs and necessary renovations to the 38 inn rooms and other
facilities totaling $484,659. At December 31, 1998, the Building Venture had
made deposits on such improvements of approximately $141,200.
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 is
approximately $152,000 and was paid to the condominium association in April
1999.
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 six months ended June 30, 1999 and in the years 1998 and 1997
the Marina Venture added $33,855, $282,791, and $33,727, respectively, of
utility, safety and other improvements increasing the number of fully
operational slips to 256.
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 Marina Venture anticipates that capital resources to fund the
repairs are likely to be provided by additional contributions from the
Partnership. The Partnership has reserved for future capital improvements,
included in the escrow deposits as of June 30, 1999 and December 31, 1998, is
$408,057 and $404,681, respectively.
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, 1999 and December 31, 1998,
unpaid Settlement Payments included in accrued expenses and other liabilities
totaled $86,954 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.
12
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1999
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 on its ability to generate sufficient rental income to fund
operating expenses. HPP'90 has advanced approximately $968,000 to the Marina
through June 30, 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. In July 1999, the
Ventures entered into purchase and sale agreements to sell the properties owned
by both the Building Venture and the Marina Venture for $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. In
August 1999, the Partnership began the process of obtaining the required
approval for the sale. If approved, a sale is expected to be consummated in
September 1999.
Results of Operations. The Partnership generated a net loss under generally
accepted accounting principles of $70,525 for the six months ended June 30, 1999
which includes depreciation and amortization of $261,766.
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 six months ended June 30, 1999 and in the years 1998 and 1997 the
Marina Venture added $33,855, $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 96% and 94% for the three months
ended June 30, 1999 and 1998, respectively. 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 June 30, 1999 and
1998 was 77% and 84%, respectively. Management is projecting Inn occupancy of
approximately 70% for the calendar year 1999, down from an occupancy of 74% in
1998. The reduction in occupancy is expected to be offset by an increase in the
average daily room rate which is expected to result in a slight increase in
revenue 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 $29,252 for the three months ended June
30, 1999, a decrease of $128,090, compared to net income of $98,838 for the
three months ended June 30, 1998. This decrease is primarily attributed to
increases in property operating and operating and administrative expenses of
approximately $216,000 and $16,000, respectively, offset by an increase in
rental and related income of approximately $105,000. Rental and related income
increased in the three months
13
<PAGE>
HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
JUNE 30, 1999
ended June 30, 1999 compared to the three months ended June 30, 1998, due to
increases in both the Apartment's and Inn's average rental and room rates and
also due to slight increases in occupancy at the Apartments and Marina.
Although the Inn's occupancy decreased in the second quarter of 1999 compared
to the second quarter of 1998, the average daily room rate increased. The
Apartments recorded a slight increase in occupancy and average rental rates
experienced a market rate increase. Operating and administrative expenses
increased as a result of audit, tax preparation and printing expenses. Property
operating expenses increased mainly due to a special condominium assessment
paid in April of 1999 of approximately $152,000 and increased payroll costs due
to additional staffing at the Ventures'.
The Partnership recorded a net loss of $70,525 for the six months ended June
30, 1999, a decrease of $250,546, compared to net income of $180,021 for the
six months ended June 30, 1998. This decrease is primarily attributed to
increases in property operating and operating and administrative expenses of
approximately $304,000 and $23,000, respectively, offset by an increase in
rental and related income of approximately $58,000 and a decrease in
depreciation and amortization of approximately $28,000. Rental and related
income increased due to heightened occupancy at the Marina and elevated average
room and rental rates at both the Inn and Apartments. The Inn's average
occupancy decreased to 63% for the six months ended June 30, 1999 compared to
74% for the same period in 1998, due to unavailable rooms in the first quarter
of 1999 as a result of deferred maintenance repairs and necessary renovations.
Operating and administrative expenses increased as a result of audit, tax
preparation and printing expenses. 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. Depreciation and amortization decreased because the
Building Venture had fully depreciated its furniture and fixtures in the second
quarter of 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, 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
JUNE 30, 1999
Item 1. Legal Proceedings - At June 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 - 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: August 1, 1999 By: /s/ Terrence P. Sullivan
------------------------
Terrence P. Sullivan,
President
and
Date: August 1, 1999 By: /s/ Terrence P. Sullivan
------------------------
Terrence P. Sullivan,
General Partner
16
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 194,283
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,521,778
<DEPRECIATION> 4,489,645
<TOTAL-ASSETS> 15,358,268
<CURRENT-LIABILITIES> 0
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0
0
<COMMON> 0
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<TOTAL-LIABILITY-AND-EQUITY> 15,358,268
<SALES> 0
<TOTAL-REVENUES> 1,813,532
<CGS> 0
<TOTAL-COSTS> 1,664,789
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<LOSS-PROVISION> 0
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<INCOME-PRETAX> (70,525)
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<CHANGES> 0
<NET-INCOME> (70,525)
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