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, 1997
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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 __________________
Commission file number 33-33093
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DIVERSIFIED HISTORIC INVESTORS 1990
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2604695
- ------------------------------- -------------------
(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
N/A
- ----------------------------------------------------------------------
(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 X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1997
(unaudited) and December 31, 1996
Consolidated Statements of Operations - Three Months and
Nine Months Ended September 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1997 and 1996 (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, 1997, Registrant had cash of
$20,539. 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, 1997, Registrant had
restricted cash of $111,229 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 1997, Registrant
incurred a net loss of $130,435 ($25.64 per limited partnership unit)
compared to a net loss of $150,270 ($29.55 per limited partnership
unit) for the same period in 1996. For the first nine months of 1997
the Registrant incurred a net loss of $333,893 ($65.65 per limited
partnership unit) compared to a net loss of $346,913 ($68.22 per
limited partnership unit) for the same period in 1996.
Rental income increased $13,778 from $249,408 in
the third quarter of 1996 to $263,186 in the same period in 1997 due
to an increase at Shockoe Hearth Apartments, partially offset by
decreases at Jefferson Seymour and The Bakery Apartments. The
increase at Shockoe Hearth Apartments is due to a scheduled lease
rental increase for the sole commercial tenant and an increase in the
average rental rates. Rental income decreased at Jefferson Seymour
due to the loss of one of its commercial tenants, as well as lower
average occupancy of the residential units (94% to 88%), and decreased
at The Bakery Apartments due to a decline in corporate apartment
rentals as well as lower average occupancy of residential units (93%
to 92%).
Rental income decreased $2,396 from $810,941 for
the first nine months of 1996 to $808,545 for the same period in 1997
due to a decrease in rental income at The Bakery Apartments and
Jefferson Seymour, partially offset by an increase at Shockoe Hearth.
Rental income decreased at The Bakery Apartments due to a decrease in
corporate apartment rentals as well as lower average occupancy of
residential units (94% to 92%) and decreased at Jefferson Seymour as a
result of the loss of one of the property's commercial tenants, as
well as a decrease in the average occupancy of residential units (91%
to 88%). Rental income increased at Shockoe Hearth Apartments due to
an increase in the average rental rates combined with an increase in
the rental income for the sole commercial tenant.
Expenses for rental operations decreased by
$15,760 from $156,137 in the third quarter of 1996 to $140,377 in the
same period in 1997 due to a decrease in maintenance expense at all
three properties, a decrease in corporate apartment expense and
salaries and wages at The Bakery Apartments and a decrease in
utilities expense at Jefferson Seymour, partially offset by an
increase in real estate taxes at Shockoe Hearth. Maintenance expense
decreased at Jefferson Seymour due to the loss of one of the
property's commercial tenants, as well as a decline in the average
occupancy of residential units. Maintenance expense decreased at
Shockoe Hearth Apartments due to extermination services performed to
control a termite problem in 1996 which was not repeated in the 1997
period, and maintenance expense decreased at the Bakery Apartments due
to the replacement of carpeting in several units and extermination
services performed in 1996 which was not repeated in the 1997 period.
Corporate apartment expense decreased at The Bakery Apartments due to
a decline in the rental of corporate apartments, and salaries and
wages decreased due to the decline in the average occupancy of
residential units. Utilities expense decreased at Jefferson Seymour
due to the decrease in the average occupancy. Real estate taxes
increased at Shockoe Hearth Apartments due to the expiration of a real
estate tax abatement in 1996.
Expenses for rental operations decreased $14,393
from $395,780 for the first nine months of 1996 to $381,387 for the
same period in 1997 due to a decrease in maintenance expense at
Shockoe Hearth and The Bakery Apartments, as well as a decrease in
corporate apartment expense and salaries and wages expense at The
Bakery Apartments, and a decrease in utilities expense at Jefferson
Seymour, partially offset by an increase in real estate taxes at
Shockoe Hearth Apartments and an increase in maintenance and bad debt
expense at Jefferson Seymour. Maintenance expense decreased at Shockoe
Hearth Apartments due to extermination services performed to control a
termite problem in 1996 which was not repeated in the 1997 period, and
maintenance expense decreased at the Bakery Apartments due to the
replacement of carpeting in several units and extermination services
performed in 1996 which was not repeated in the 1997 period.
Corporate apartment expense decreased at The Bakery Apartments due to
a decline in the rental of corporate apartments, and salaries and
wages decreased at The Bakery Apartments due to the decline in the
average occupancy of residential units. Utilities expense decreased
at Jefferson Seymour as a result of the decline in the occupancy of
residential units, and real estate taxes increased at Shockoe Hearth
Apartments due to the expiration of a real estate tax abatement in
1996. Maintenance expense increased at Jefferson Seymour due to new
carpeting installed in several units and roofing repairs at the
property, and bad debt expense increased at Jefferson Seymour as a
result of the write-off of tenant receivables that were deemed
uncollectible.
Interest expense decreased $6,802 from $397,807 in
the first nine months of 1996 to $391,725 in the same period of 1997
due to the reduction of the principal amount of the loan on which
interest is calculated at The Bakery Apartments and Shockoe Hearth.
Depreciation and amortization expense decreased
$3,236 from $126,791 in the third quarter of 1996 to $123,555 in the
same period in 1997 and decreased $10,487 from $380,375 for the first
nine months of 1996 to $369,888 in the same period in 1997. The
decreases are due to organization fees becoming fully amortized in the
fourth quarter of 1996 at Shockoe Hearth Apartments and certain fixed
assets becoming fully depreciated in 1996 at The Bakery Apartments.
Losses incurred during the third quarter of 1997
at the Registrant's three properties amounted to $128,000, compared to
a loss of approximately $160,000 for the same period in 1996. For the
first nine months of 1997, the Registrant's properties recognized a
loss of $312,000 compared to approximately $341,000 for the same
period in 1996.
In the third quarter of 1997, Registrant incurred
a loss of $43,000 at Jefferson Seymour including $32,000 of
depreciation and amortization expense, compared to a loss of $41,000
in the third quarter of 1996, including $32,000 of depreciation and
amortization expense. The increase in the loss from the third quarter
of 1996 to the same period in 1997 is due to a decrease in rental
income, partially offset by a decrease in maintenance and utilities
expense. The decreases in rental income, maintenance expense and
utilities expense were all due to the loss of one of the property's
commercial tenants as well as lower average occupancy of the
residential units (94% to 88%).
In the first nine months of 1997, Registrant
incurred a loss of $124,000 at Jefferson Seymour, including $96,000
of depreciation and amortization expense, compared to a loss of
$99,000, including $96,000 of depreciation and amortization expense
for the same period in 1996. The increase in the loss from the first
nine months of 1996 to the same period in 1997 is due to a decrease in
rental income combined with an increase in maintenance and bad debt
expense, partially offset by a decrease in utilities expense. The
decrease in rental income is the result of the loss of one of the
property's commercial tenants, as well as a decrease in average
occupancy (91% to 88%). Maintenance expense increased due to new
carpeting installed in several units and roofing repairs at the
property, and bad debt expense increased as a result of the write-off
of tenant receivables that were deemed uncollectible. Utilities
expense decreased due to a decline in the average occupancy of
residential units.
In the third quarter of 1997, Registrant incurred
a loss of $27,000 at Shockoe Hearth Apartments, including $25,000 of
depreciation and amortization expense, compared to a loss of $23,000
including $25,000 of depreciation and amortization expense in the
third quarter of 1996. The increase in the loss from the third
quarter of 1996 to the same period in 1997 is due to an increase in
real estate taxes, partially offset by an increase in rental income
and a decrease in maintenance and amortization expense. Real estate
taxes increased due to the expiration of a real estate tax abatement
in 1996. Rental income increased due to a scheduled rent increase for
the sole commercial tenant, combined with higher average rental rates
of the residential units. Maintenance expense decreased due to
extermination services performed to control a termite problem in 1996
which was not repeated in the 1997 period, and amortization expense
decreased due to organizational fees becoming fully amortized in the
fourth quarter of 1996.
In the first nine months of 1997, Registrant
incurred a loss of $65,000 at Shockoe Hearth Apartments, including
$75,000 of depreciation and amortization expense, compared to a loss
of $70,000 including $76,000 of depreciation and amortization expense
for the first nine months of 1996. The decrease in the loss from the
first nine months of 1996 to the same period in 1997 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 average rental
rates of residential units, combined with a decrease in maintenance,
interest, and amortization expense, partially offset by an increase in
real estate taxes. Maintenance expense decreased due to extermination
services performed to control a termite problem in 1996 which was not
repeated in the 1997 period, and interest expense decreased due to the
reduction in the loan balance on which interest is calculated.
Amortization expense decreased due to organizational fees becoming
fully amortized in the fourth quarter of 1996, and real estate taxes
increased due to the expiration of a real estate tax abatement in
1996.
In the third quarter of 1997, Registrant incurred
a loss of $58,000 at the Bakery Apartments, including $60,000 of
depreciation and amortization expense compared to a loss of $96,000
including $63,000 of depreciation and amortization expense for the
same period in 1996, and for the first nine months of 1997, Registrant
incurred a loss of $123,000, including $180,000 of depreciation and
amortization expense compared to a loss of $172,000, including
$189,000 of depreciation and amortization expense for the same period
in 1996. The decrease in the losses from both the third quarter and
first nine months of 1997 to the same periods in 1996 is due to a
decrease in maintenance, corporate apartment expense, interest,
depreciation, and salaries and wages expense, partially offset by a
decrease in rental income. Maintenance expense decreased due to the
replacement of carpeting in several units and extermination services
performed to control termites in 1996 which was not repeated in the
1997 period. Corporate apartment expense decreased due to lower
rentals of corporate apartments, and interest expense decreased due to
a decrease in the principal loan balance on which interest is
calculated. Depreciation expense decreased due to certain fixed
assets becoming fully depreciated in 1996, and salaries and wages
expense decreased as a result of a reduction in the average occupancy
of residential units. Rental income decreased due to a reduction in
corporate apartment rentals and a decline in the average occupancy of
residential units (93% to 92%) and (94% to 92%) for the third quarter
and first nine months of 1997, respectively.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
September 30,1997 December 31, 1996
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,911,845 10,896,321
Furniture and fixtures 155,592 155,592
---------- ----------
11,316,293 11,300,769
Less - Accumulated depreciation (3,095,733) (2,755,349)
---------- ----------
8,220,560 8,845,420
Cash and cash equivalents 20,539 33,160
Restricted cash 111,229 91,969
Accounts receivable 9,170 17,901
Other assets (net of amortization of
$258,394 and $228,521 at September 30,
1997 and December 31, 1996, respectively) 78,717 83,070
---------- ----------
Total $ 8,440,215 $ 8,711,520
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,106,729 $ 6,154,278
Accounts payable:
Trade 527,315 482,016
Related parties 192,010 148,010
Interest payable 112,245 91,435
Tenant security deposits 59,517 67,040
Other liabilities 45,647 52,524
---------- ----------
Total liabilities 7,043,463 6,995,303
---------- ----------
Minority interests 454,760 500,332
Partners' equity 941,992 1,275,885
---------- ----------
Total $ 8,440,215 $ 8,771,520
========== ==========
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, 1997 and 1996
(Unaudited)
Three months Nine months
ended September 30, ended September 30,
1997 1996 1997 1996
------ ------ ------ ------
Revenues:
Rental income $263,186 $249,408 $ 808,545 $ 810,941
Interest income 36 783 182 1,891
------- ------- -------- --------
Total revenues 263,222 250,191 808,727 812,832
Costs and expenses:
Rental operations 140,377 156,137 381,387 395,780
General and administrative 12,000 12,000 36,000 36,000
Interest 134,697 133,505 391,725 397,807
Depreciation and amortization 123,555 126,791 369,888 380,375
------- ------- --------- ---------
Total costs and expenses 410,629 428,433 1,179,000 1,209,962
------- ------- --------- ---------
Loss before minority interests (147,407) (178,242) (370,273) (397,130)
Minority interests' portion of loss 16,972 27,972 36,380 50,217
------- ------- --------- ---------
Net loss ($130,435) ($150,270)($ 333,893)($ 346,913)
======= ======= ======== ========
Net loss per limited partnership unit:
Loss before minority interests ($ 28.98) ($ 35.05)($ 72.80)($ 78.08)
Minority interests 3.34 5.50 7.15 9.86
------- ------- -------- --------
($ 25.64) ($ 29.55)($ 65.65)($ 68.22)
======= ======= ======== ========
The accompanying notes are an integral part of thes financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
Nine months ended
September 30,
1997 1996
Cash flows from operating activities: ------ ------
Net loss ($333,893) ($346,913)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 369,888 380,375
Minority interest (45,572) (51,217)
Changes in assets and liabilities:
(Increase) decrease in restricted cash (19,260) 22,058
Decrease (increase) in accounts receivable 8,731 (9,467)
Increase in other assets (25,151) (2,757)
Increase in accounts payable - trade 45,299 87,294
Increase in accounts payable - related parties 44,000 1,198
Increase in interest payable 20,810 50,139
Decrease in other liabilities (6,877) (32,188)
Decrease in security deposits (7,523) (3,802)
------- -------
Net cash provided by operating activities 50,452 96,520
------- -------
Cash flows from investing activities:
Capital expenditures (15,524) (42,883)
------- -------
Net cash used in investing activities (15,524) (42,883)
------- -------
Cash flows from financing activities:
Principal payments (47,549) (51,025)
------- -------
Net cash used in financing activities (47,549) (51,025)
------- -------
(Decrease) increase in cash and cash equivalents (12,621) 2,612
Cash and cash equivalents at the beginning of the period33,160 5,116
------- -------
Cash and cash equivalents at end of period $ 20,539 $ 7,728
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $370,915 $374,322
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, 1996.
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, 1997.
<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 17, 1997 DIVERSIFIED HISTORIC INVESTORS 1990
-----------------
By: Dover Historic Advisors 1990, General Partner
By: EPK, Inc., Partner
By: /s/ Donna M. Zanghi
----------------------------
DONNA M. ZANGHI
Vice President and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 20,539
<SECURITIES> 0
<RECEIVABLES> 9,170
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,316,293
<DEPRECIATION> 3,095,733
<TOTAL-ASSETS> 8,440,215
<CURRENT-LIABILITIES> 719,325
<BONDS> 6,106,729
0
0
<COMMON> 0
<OTHER-SE> 941,992
<TOTAL-LIABILITY-AND-EQUITY> 8,440,215
<SALES> 0
<TOTAL-REVENUES> 808,727
<CGS> 0
<TOTAL-COSTS> 381,387
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 391,725
<INCOME-PRETAX> (333,893)
<INCOME-TAX> 0
<INCOME-CONTINUING> (333,893)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (333,893)
<EPS-PRIMARY> (65.65)
<EPS-DILUTED> 0
</TABLE>
