UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 33-33093
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DIVERSIFIED HISTORIC INVESTORS 1990
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2604695
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Suite 500, 1521 Locust Street, Philadelphia, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
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N/A
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(Former name, former address and former fiscal year, if changed since
last report)
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 No X
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - September 30, 1996
(unaudited) and December 31, 1995
Consolidated Statements of Operations - Three Months and
Nine Months Ended September 30, 1996 and 1995 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1996 and 1995 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of September 30, 1996, Registrant had cash of
$7,728. Such funds are expected to be used to pay liabilities of
Registrant and to fund cash deficits of the properties. Cash generated
from operations is used primarily to fund operating expenses and debt
service. If cash flow proves to be insufficient, the Registrant will
attempt to negotiate loan modifications with the various lenders in
order to remain current on all obligations. The Registrant is not
aware of any additional sources of liquidity.
As of September 30, 1996, Registrant had
restricted cash of $124,257 consisting primarily of funds held as
security deposits, replacement reserves and escrows for taxes and
insurance. As a consequence of the restrictions as to use, Registrant
does not deem these funds to be a source of liquidity.
At the present time, all three properties are able
to pay their operating expenses and debt service, but it is unlikely
that any cash will be available to the Registrant to pay its general
and administrative expenses.
It is the Registrant's intention to continue to
hold the properties until they can no longer meet the debt service
requirements and the properties are foreclosed, or the market value of
the properties increases to a point where they can be sold at a price
which is sufficient to repay the underlying indebtedness (principal
plus accrued interest).
(2) Capital Resources
Due to the relatively recent rehabilitations of
the properties, any capital expenditures needed are generally
replacement items and are funded out of cash from operations or
replacement reserves, if any. Registrant is not aware of any factors
which would cause historical capital expenditure levels not to be
indicative of capital requirements in the
future and accordingly, does not believe that it will have to commit
material resources to capital investment for the foreseeable future.
(3) Results of Operations
During the third quarter of 1996, Registrant
incurred a net loss of $150,270 ($29.55 per limited partnership unit)
compared to a net loss of $103,362 ($20.33 per limited partnership
unit) for the same period in 1995. For the first nine months of 1996,
the Registrant incurred a net loss of $346,913 ($68.22 per limited
partnership unit) compared to a net loss of $305,368 ($60.05 per
limited partnership unit) for the same period in 1995.
Rental income decreased $7,540 from $256,948 in
the third quarter of 1995 to $249,408 in the same period in 1996.
Rental income decreased as a result of a decrease in rental income at
The Bakery Apartments, partially offset by an increase in rental
income at Shockoe Hearth and Jefferson Seymour. Rental income
decreased at The Bakery Apartments due to a decrease in the average
occupancy of residential units and corporate apartments, (97% to 93%).
Rental income increased at Shockoe Hearth Apartments due an increase
in average occupancy (98% to 100%), combined with an increase in the
rental income from the sole commercial tenant, and rental income
increased at Jefferson Seymour due to higher average rental rates.
Rental income increased $2,318 from $808,623 for
the first nine months of 1995 to $810,941 for the same period in 1996.
Rental income increased due to an increase in rental income at Shockoe
Hearth Apartments and Jefferson Seymour, partially offset by a
decrease of rental income at The Bakery Apartments. Rental income
increased at Shockoe Hearth Apartments due to an increase in the
average occupancy (95% to 100%) combined with an increase in the
rental income from the sole commercial tenant. Rental income
increased at Jefferson Seymour due to higher average rental rates, and
rental income decreased at The Bakery Apartments due to a decrease in
the average occupancy, (98% to 94%).
Expenses for rental operations increased by
$55,201 from $100,936 in the third quarter of 1995 to $156,137 in the
same period in 1996 and increased $71,657 from $324,121 for the first
nine months of 1995 to $395,780 for the same period in 1996. Expenses
for rental operations increased for both the third quarter and first
nine months in 1996 compared to the same periods in 1995 due to an
increase in maintenance expense at all three properties, and an
increase in salaries and wage expense at The Bakery Apartments,
partially offset by a decrease in insurance expense at Jefferson
Seymour and a decrease in corporate apartment expense at The Bakery
Apartments, as discussed below.
Depreciation and amortization expense decreased
$2,152 from $128,943 in the third quarter of 1995 to $126,791 in the
same period in 1996 and decreased $6,454 from $386,829 for the first
nine months of 1995 to $380,375 in the same period in 1996. The
decreases are due to organization fees becoming fully amortized in the
fourth quarter of 1995.
Losses incurred during the third quarter of 1996
at the Registrant's three properties amounted to $132,000, compared to
a loss of approximately $81,000 for the same period in 1995. For the
first nine months of 1996, the Registrant's properties recognized a
loss of $291,000 compared to approximately $243,000 for the same
period in 1995.
In the third quarter of 1996, Registrant incurred
a loss of $41,000 at Jefferson Seymour including $32,000 of
depreciation and amortization expense, compared to a loss of $28,000
in the third quarter of 1995, including $33,000 of depreciation and
amortization expense, and for the first nine months of 1996,
Registrant incurred a loss of $99,000 including $96,000 of
depreciation and amortization expense, compared to a loss of $83,000,
including $98,000 of depreciation and amortization expense for the
first nine months of 1995. The increase in the loss from the third
quarter and first nine months of 1995 to the same periods in 1996 is
due to an increase in maintenance expense, partially offset by an
increase in rental income as well as a decrease in insurance expense.
Maintenance expense increased as a result of pay increases of
maintenance personnel. The increase in rental income is due to higher
average rental rates, and insurance expense decreased due to a
reduction of property insurance premiums.
In the third quarter of 1996, Registrant incurred
a loss of $23,000 at Shockoe Hearth Apartments, including $25,000 of
depreciation and amortization expense, compared to a loss of $20,000
including $25,000 of depreciation and amortization expense in the
third quarter of 1995. The increase in the loss from the third
quarter of 1995 to the same period in 1996 is due to an increase in
maintenance expense, partially offset by an increase in rental income.
Maintenance expense increased due to an increase in the average
occupancy of residential units. Rental income increased due to an
increase in rental income from the sole commercial tenant combined
with an increase in the average occupancy of residential units (98% to
100%).
In the first nine months of 1996, Registrant
incurred a loss of $70,000 at Shockoe Hearth Apartments, including
$76,000 of depreciation and amortization expense, compared to a loss
of $83,000, including $75,000 of depreciation and amortization expense
for the first nine months of 1995. The decrease in the loss from the
first nine months of 1995 to the same period in 1996 is due to an
increase in rental income from the sole commercial tenant as a result
of a scheduled rent increase, as well as an increase in the average
occupancy of residential units (95 to 100%), partially offset by an
increase in maintenance expense due to the increase in occupancy.
In the third quarter of 1996, Registrant incurred
a loss of $68,000 at the Bakery Apartments, including $63,000 of
depreciation and amortization expense compared to a loss of $33,000,
including $63,000 of depreciation and amortization expense in the
third quarter of 1995, and for the first nine months of 1996,
Registrant incurred a loss of $122,000, including $189,000 of
depreciation and amortization expense compared to a loss of $77,000,
including $189,000 of depreciation and amortization expense for the
same period in 1995. The increase in the loss from the third quarter
and the first nine months of 1995 to the same periods in 1996 is due
to a decrease in rental income, combined with an increase in
maintenance and salaries and wage expense, partially offset by a
decrease in corporate apartment expense. Rental income decreased due
to a decrease in average occupancy in both the third quarter (97% to
93%) and for the first nine months (98% to 94%). Maintenance expense
increased due to the replacement of carpeting in several units and
extermination services performed to control the termites which are
prevalent in the New Orleans area. Salaries and wage expense increased
due to a reallocation of certain expenses by the management company.
Corporate apartment expense decreased due to a decrease in the rental
of corporate apartments.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
September 30,1996 December 31, 1995
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,899,636 10,856,073
Furniture and fixtures 155,592 156,271
11,304,084 11,261,200
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Less - Accumulated depreciation (2,650,312) (2,301,499)
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8,653,772 8,956,701
Cash and cash equivalents 7,728 5,116
Restricted cash 124,257 146,315
Accounts receivable 19,632 10,165
Other assets (net of amortization of
$222,586 and $190,322 at September 30,
1996 and December 31, 1995, respectively)
92,803 122,309
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Total $ 8,898,192 $ 9,243,606
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,148,230 $ 6,199,255
Accounts payable:
Trade 501,525 414,230
Related parties 149,932 147,934
Interest payable 73,435 23,296
Tenant security deposits 59,327 63,129
Other liabilities 29,463 61,651
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Total liabilities 6,961,912 6,909,495
Minority interests 511,899 562,116
Partners' equity 1,424,381 1,771,995
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Total $ 8,898,192 $ 9,243,606
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three months Nine months
ended September 30, ended September 30,
1996 1995 1996 1995
------- ------- ------- -------
Revenues:
Rental income $249,408 $256,948 $810,941 $808,623
Interest income 783 539 1,891 1,495
------- ------- ------- -------
Total revenues 250,191 257,487 812,832 810,118
------- ------- ------- -------
Costs and expenses:
Rental operations 156,137 100,936 395,780 324,121
General and
administrative 12,000 13,500 36,000 37,500
Interest 133,505 131,114 397,807 398,676
Depreciation and
amortization 126,791 128,943 380,375 386,829
------- ------- --------- -------
Total costs and
expenses 428,433 374,493 1,209,962 1,147,126
------- ------- --------- ---------
Loss before minority
interests (178,242) (117,006) (397,130) (337,008)
Minority interests'
portion of loss 27,972 13,644 50,217 31,640
-------- ------- ------- -------
Net loss ($150,270) ($103,362) ($346,913) ($305,368)
======= ======= ======= =======
Net loss per limited
partnership unit ($ 29.55) ($ 20.33) ($ 68.22) ($ 60.05)
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Nine months ended
September 30,
1996 1995
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Cash flows from operating activities:
Net loss ($346,913) ($305,368)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 380,375 386,829
Minority interest (50,217) (31,640)
Changes in assets and liabilities:
Decrease (increase) in restricted cash 22,058 (27,510)
(Increase) decrease in accounts receivable (9,467) 6,541
Increase in other assets (2,757) (12,729)
Increase accounts payable - trade 87,294 39,045
Increase in accounts payable -
related parties 1,998 12,875
Increase in interest payable 50,139 28,491
Decrease in other liabilities (32,188) (39,482)
(Decrease) increase security deposits (3,802) 4,758
------- -------
Net cash provided by operating activities 96,520 61,810
------- -------
Cash flows from investing activities:
Capital expenditures (42,883) (11,450)
------- -------
Net cash used in investing activities (42,883) (11,450)
------- -------
Cash flows from financing activities:
Principal payments (51,025) (44,302)
------- -------
Net cash used in financing activities (51,025) (44,302)
------- -------
Increase in cash and cash equivalents 2,612 6,058
Cash and cash equivalents at the beginning
of the period 5,116 4,390
------- -------
Cash and cash equivalents at end of period $ 7,728 $ 10,448
======= =======
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $374,322 $383,916
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors 1990 (the "Registrant") and related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and related notes should be read in
conjunction with the audited financial statements in Form 10-K of the
Registrant, and notes thereto, for the year ended December 31, 1995.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party
to, nor is any of its property the subject of, any pending material
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by
this report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Document
Number
3 Registrant's Amended and Restated Certificate
of Limited Partnership and Agreement of
Limited Partnership, previously filed as part
of Amendment No. 2 of Registrant's
Registration Statement on Form S-11, are
incorporated herein by reference.
21 Subsidiaries of the Registrant are listed in
Item 2. Properties on Form 10-K, previously
filed and incorporated herein by reference.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the
quarter ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: November 8, 1996 DIVERSIFIED HISTORIC INVESTORS 1990
By: Dover Historic Advisors 1990, General Partner
By: Dover Historic Advisors, Inc., Partner
By: /s/ Donna M. Zanghi
--------------------
DONNA M. ZANGHI
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,728
<SECURITIES> 0
<RECEIVABLES> 19,632
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,304,084
<DEPRECIATION> 2,650,312
<TOTAL-ASSETS> 8,898,192
<CURRENT-LIABILITIES> 651,457
<BONDS> 6,148,230
0
0
<COMMON> 0
<OTHER-SE> 1,936,280
<TOTAL-LIABILITY-AND-EQUITY> 8,898,192
<SALES> 0
<TOTAL-REVENUES> 812,832
<CGS> 0
<TOTAL-COSTS> 395,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 397,807
<INCOME-PRETAX> (346,913)
<INCOME-TAX> 0
<INCOME-CONTINUING> (346,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (346,913)
<EPS-PRIMARY> (68.22)
<EPS-DILUTED> 0
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