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 June 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 - June 30, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 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 June 30, 1997, Registrant had cash of
$22,789. 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 June 30, 1997, Registrant had restricted
cash of $120,043 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 second quarter of 1997, Registrant
incurred a net loss of $113,251 ($22.27 per limited partnership unit)
compared to a net loss of $118,134 ($23.23 per limited partnership
unit) for the same period in 1996. For the first six months of 1997,
the Registrant incurred a net loss of $203,458 ($40.01 per limited
partnership unit) compared to a net loss of $196,643 ($38.67 per
limited partnership unit) for the same period in 1996.
Rental income decreased $10,337 from $278,344 in
the second quarter of 1996 to $268,007 in the same period in 1997 and
decreased $16,174 from $561,533 for the first six months of 1996 to
$545,359 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 Apartments. The decrease at
The Bakery Apartments is due to a reduction in the average occupancy
of residential units (95% to 92%) and (94% to 93%) for the second
quarter and first six months of 1997, respectively, and a reduction in
corporate apartment rentals, and the decrease at Jefferson Seymour is
due to the loss of one of its commercial tenants, as well as lower
average rental rates. The increase at Shockoe Hearth Apartments is
the result of a scheduled lease rental increase from the sole
commercial tenant and an increase in average rental rates.
Expenses for rental operations decreased by $8,951
from $136,304 in the second quarter of 1996 to $127,353 in the same
period in 1997 due to a decrease in maintenance, salaries and wages,
and corporate apartment expense at The Bakery Apartments, partially
offset by an increase in maintenance and bad debt expense at Jefferson
Seymour and an increase in real estate taxes at Shockoe Hearth
Apartments. Maintenance, salaries and wages expense decreased at The
Bakery Apartments as a result of a reduction in the average occupancy
of residential units, and corporate apartment expense decreased due to
a decline in corporate apartment rentals. Maintenance expense
increased at Jefferson Seymour due to new carpeting installed in
several units and roofing repairs at the property. Bad debt expense
increased due to the write-off of tenant receivables that were deemed
uncollectible, and real estate taxes increased at Shockoe Hearth due
to the expiration of a real estate tax abatement in 1996.
Expenses for rental operations increased $1,365
from $239,643 for the first six months of 1996 to $241,008 for the
same period in 1997 due to an increase in maintenance and bad debt
expense at Jefferson Seymour and an increase in real estate taxes at
Shockoe Hearth Apartments, partially offset by a decrease in
maintenance, salaries and wages, and corporate apartment expense at
the Bakery Apartments. 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 due to the
write-off of tenant receivables that were deemed uncollectible. Real
estate taxes increased at Shockoe Hearth due to the expiration of a
real estate tax abatement in 1996. Maintenance and salaries and wages
expense decreased at The Bakery Apartments as a result of a reduction
in the average occupancy of residential units, and corporate apartment
expense decreased due to a decline in corporate apartment rentals.
Interest expense decreased from $9,429 from
$137,713 in second quarter of 1996 to $128,284 in the same period of
1997 and decreased $7,274 from $264,302 in the first six months of
1996 to $257,028 in the same period of 1997 mainly due to an
adjustment made in the second quarter of 1996 to properly calculate
interest on a loan at Shockoe Hearth Apartments.
Depreciation and amortization expense decreased
$3,624 from $126,791 in the second quarter of 1996 to $123,167 in the
same period in 1997 and decreased $7,251 from $253,584 for the first
six months of 1996 to $246,333 in the same period in 1997 due to
certain assets becoming fully depreciated at The Bakery Apartments and
organizational fees becoming fully amortized in the fourth quarter of
1996 at Shockoe Hearth.
Losses incurred during the second quarter at the
Registrant's three properties amounted to $104,000, compared to a loss
of approximately $116,000 for the same period in 1996. For the first
six months of 1997, the Registrant's properties recognized a loss of
$184,000, compared to approximately $182,000 for the same period in
1996.
In the second quarter of 1997, Registrant incurred
a loss of $50,000 at Jefferson Seymour, including $32,000 of
depreciation and amortization expense, compared to a loss of $30,000
in the second quarter of 1996, including $32,000 of depreciation and
amortization, and for the first six months of 1997, Registrant
incurred a loss of $80,000 at Jefferson Seymour, including $64,000 of
depreciation and amortization expense, compared to a loss of $58,000,
including $64,000 of depreciation and amortization expense for the
first six months of 1996. The increases in the losses from the second
quarter and first six months of 1996 to the same periods in 1997 is
the result of a decrease in rental income, combined with an increase
in maintenance and bad debt 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 rental rates. Maintenance expense
increased due to new carpeting installed in several units and roofing
repairs at the property. Bad debt expense increased as a result of
the write-off of tenant receivables that were deemed uncollectible.
In the second quarter of 1997, Registrant incurred
a loss of $22,000 at Shockoe Hearth, including $25,000 of depreciation
and amortization expense, compared to a loss of $32,000 including
$25,000 of depreciation and amortization expense in the second quarter
of 1996, and for the first six months of 1997, Registrant incurred a
loss of $38,000, including $49,000 of depreciation and amortization
expense, compared to a loss of $48,000, including $51,000 of
depreciation and amortization expense for the first six months of
1996. The decrease in the losses from the second quarter and first
six months of 1996 to the same periods in 1997 is the result of an
increase in rental income from the sole commercial tenant as well as
an increase in average rental rates of the residential units, combined
with a decrease in interest and amortization expense, partially offset
by an increase in real estate taxes. Interest expense decreased due
to an adjustment made in the second quarter of 1996 to properly
calculate accrued interest on a loan to an affiliate, and amortization
expense decreased due to certain intangible assets becoming fully
amortized in the fourth quarter of 1996. Real estate taxes increased
due to the expiration of a real estate tax abatement in 1996 which
caused an increase in the assessed value of the property.
In the second quarter of 1997, Registrant incurred
a loss of $32,000 at The Bakery Apartments, including $60,000 of
depreciation and amortization expense compared to a loss of $54,000,
including $63,000 of depreciation and amortization expense in the
second quarter of 1996, and for the first six months of 1997,
Registrant incurred a loss of $66,000, including $120,000 of
depreciation and amortization expense compared to a loss of $76,000,
including $126,000 of depreciation and amortization expense for the
same period in 1996. The decrease in the losses from the second
quarter and the first six months of 1996 to the same periods in 1997
is due to a decrease in maintenance, salaries and wages, depreciation,
and corporate apartment expense, partially offset by a decrease in
rental income. Maintenance, salaries and wages expense decreased as a
result of a reduction in the average rental of units, and depreciation
expense decreased due to certain fixed assets becoming fully
depreciated. Corporate apartment expense decreased due to a decline
in corporate apartment rentals. Rental income decreased due to a
reduction in corporate apartment rentals and lower occupancy levels of
residential units (95% to 92%) and (94% to 93%) for the second quarter
and first six months of 1997, respectively.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1997 December 31, 1996
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,908,438 10,896,321
Furniture and fixtures 155,592 155,592
---------- ----------
11,312,886 11,300,769
Less - Accumulated depreciation (2,982,134) (2,755,349)
---------- ----------
8,330,752 8,545,420
Cash and cash equivalents 22,789 33,160
Restricted cash 120,043 91,969
Accounts receivable 19,113 17,901
Other assets (net of amortization of
$248,437 and $228,889 at June 30, 1997
and December 31, 1996, respectively) 71,770 83,070
---------- ----------
Total $ 8,564,467 $ 8,771,520
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,121,373 $ 6,154,278
Accounts payable:
Trade 522,861 482,016
Related parties 178,510 148,010
Interest payable 92,338 91,435
Tenant security deposits 63,955 67,040
Other liabilities 41,271 52,524
---------- ----------
Total liabilities 7,020,308 6,995,303
Minority interests 471,732 500,332
Partners' equity 1,072,427 1,275,885
---------- ----------
Total $ 8,564,467 $ 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 Six Months Ended June 30, 1997 and 1996
(Unaudited)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Revenues:
Rental income $268,007 $278,344 $545,359 $561,533
Interest income 121 625 144 1,108
------- ------- ------- -------
Total revenues 268,128 278,969 545,503 562,641
------- ------- ------- -------
Costs and expenses:
Rental operations 127,353 136,304 241,008 239,643
General and administrative 12,000 12,000 24,000 24,000
Interest 128,284 137,713 257,028 264,302
Depreciation and amortization 123,167 126,791 246,333 253,584
------- ------- ------- -------
Total costs and expenses 390,804 412,808 768,369 781,529
------- ------- ------- -------
Loss before minority interests (122,676) (133,839) (222,833) (218,888)
Minority interests' portion of loss 9,425 15,705 19,408 22,245
------- ------- ------- -------
Net loss ($113,251)($118,134) ($203,458)($196,643)
======= ======= ======= =======
Net loss per limited partnership unit:
Loss before minority interests ($ 24.12)($ 26.32) ($ 43.83)($ 43.04)
Minority interests 1.85 3.09 3.82 4.37
------- ------- ------- -------
($ 22.27)($ 23.23) ($ 40.01)($ 38.67)
======= ======= ======= =======
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 Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six months ended
June 30,
1997 1996
Cash flows from operating activities:
Net loss ($203,458) ($196,643)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 246,333 253,584
Minority interest (28,600) (22,245)
Changes in assets and liabilities:
(Increase) decrease in restricted cash (28,073) 18,965
Increase in accounts receivable (1,212) (26,859)
Increase in other assets (8,249) (4,451)
Increase in accounts payable - trade 40,844 44,390
Increase in accounts payable - related parties 30,500 649
Increase in interest payable 903 51,538
Decrease in other liabilities (11,253) (21,505)
Decrease in security deposits (3,085) (1,646)
------- -------
Net cash provided by operating activities 34,650 95,777
------- -------
Cash flows from investing activities:
Capital expenditures (12,117) (35,497)
------- -------
Net cash used in investing activities (12,117) (35,497)
------- -------
Cash flows from financing activities:
Principal payments (32,904) (34,832)
------- -------
Net cash used in financing activities (32,904) (34,832)
------- -------
(Decrease) increase in cash and cash equivalents (10,371) 25,448
Cash and cash equivalents at beginning of period 33,160 5,116
------- -------
Cash and cash equivalents at end of period $ 22,789 $ 30,564
======= =======
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 and
notes thereto, in the Registrant's Annual Report on Form 10-K 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
Number Document
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 June 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: August 26, 1997 DIVERSIFIED HISTORIC INVESTORS 1990
By: Dover Historic Advisors 1990, General Partner
By: EPK, Inc., Partner
By: /s/ Donna M. Zanghi
-----------------------
DONNA M. ZANGHI
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,789
<SECURITIES> 0
<RECEIVABLES> 19,113
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,312,886
<DEPRECIATION> 2,982,134
<TOTAL-ASSETS> 8,564,467
<CURRENT-LIABILITIES> 701,371
<BONDS> 6,121,373
0
0
<COMMON> 0
<OTHER-SE> 1,544,159
<TOTAL-LIABILITY-AND-EQUITY> 8,564,467
<SALES> 0
<TOTAL-REVENUES> 545,503
<CGS> 0
<TOTAL-COSTS> 241,008
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 257,028
<INCOME-PRETAX> (203,458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (203,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (203,458)
<EPS-PRIMARY> (40.01)
<EPS-DILUTED> 0
</TABLE>
