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, 1998
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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.)
1609 Walnut Street, Philadelphia, PA 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
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 X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - June 30, 1998 (unaudited)
and December 31, 1997
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1998 and 1997 (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, 1998, Registrant had cash of
$78,552. 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, 1998, Registrant had restricted
cash of $95,297 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 1998, Registrant
incurred a net loss of $87,777 ($17.27 per limited partnership unit)
compared to a net loss of $113,251 ($22.27 per limited partnership
unit) for the same period in 1997. For the first six months of 1998,
the Registrant incurred a net loss of $195,149 ($38.39 per limited
partnership unit) compared to a net loss of $203,458 ($40.01 per
limited partnership unit) for the same period in 1997.
Rental income decreased $921 from $268,007 in the
second quarter of 1997 to $267,086 in the same period in 1998 and
decreased $182 from $545,359 for the first six months of 1997 to
$545,177 for the same period in 1998 due to a decrease in rental
income at The Bakery Apartments partially offset by an increase at
Shockoe Hearth Apartments. The decrease at The Bakery Apartments is
due to a reduction in corporate apartment rentals and the increase at
Shockoe Hearth Apartments is due to an increase in the average rental
rates of the residential units.
Expenses for rental operations decreased by
$10,116 from $127,353 in the second quarter of 1997 to $117,237 in the
same period in 1998 due to a decrease in utilities and maintenance
expense at Jefferson Seymour, a decrease in corporate apartments
expense at the Bakery Apartments partially offset by an increase in
real estate taxes at Shockoe Hearth. At Jefferson Seymour, utility
expense decreased due to a decrease in the consumption levels at the
property and maintenance expense decreased due to new carpeting
installed in several units and roofing repairs at the property in the
first six months of 1997. At the Bakery Apartments, corporate
apartments expense decreased due to the decrease in the rental of the
corporate apartments. At Shockoe Hearth, real estate taxes increased
due to the expiration of a real estate tax abatement in 1997 which
caused an increase in the assessed value of the property.
Expenses for rental operations increased $17,914
from $241,008 for the first six months of 1997 to $258,922 for the
same period in 1998 due to an increase in real estate taxes at Shockoe
Hearth and an increase in maintenance expense at the Bakery Apartments
partially offset by a decrease in corporate apartments expense at the
Bakery Apartments and a decrease in utilities and maintenance expense
at Jefferson Seymour. At Shockoe Hearth, real estate taxes increased
due to the expiration of a real estate tax abatement in 1997 which
caused an increase in the assessed value of the property. At the
Bakery Apartments, maintenance expense increased as a result of
repairs to the roof in the first quarter of 1998 and corporate
apartments expense decreased due to the decrease in the rental of the
corporate apartments. At Jefferson Seymour, utility expense decreased
due to a decrease in the consumption levels at the property and
maintenance expense decreased due to new carpeting installed in
several units and roofing repairs at the property in the first six
months of 1997.
Interest expense decreased $8,172 from $128,284 in
second quarter of 1997 to $120,112 in the same period of 1998 and
decreased $10,560 from $257,028 in the first six months of 1997 to
$246,468 in the same period of 1998 mainly due to a refinancing of the
first mortgage at Shockoe Hearth Apartments in May 1998 which lowered
the interest rate from 10% to 8%.
Depreciation and amortization expense decreased
$6,138 from $123,167 in the second quarter of 1997 to $117,029 in the
same period in 1998 and decreased $11,625 from $246,333 for the first
six months of 1997 to $234,708 in the same period in 1998 due to
certain assets becoming fully depreciated at The Bakery Apartments and
organizational fees becoming fully amortized in the first quarter of
1998 at Jefferson Seymour.
Losses incurred during the second quarter at the
Registrant's three properties amounted to $81,000, compared to a loss
of approximately $104,000 for the same period in 1997. For the first
six months of 1998, the Registrant's properties recognized a loss of
$182,000, compared to approximately $184,000 for the same period in
1997.
In the second quarter of 1998, Registrant incurred
a loss of $8,000 at Jefferson Seymour, including $30,000 of
depreciation and amortization expense, compared to a loss of $50,000
in the second quarter of 1997, including $32,000 of depreciation and
amortization, and for the first six months of 1998, incurred a loss of
$61,000 at Jefferson Seymour, including $61,000 of depreciation and
amortization expense, compared to a loss of $80,000, including $64,000
of depreciation and amortization expense for the first six months of
1997. The decreases in the losses from the second quarter and first
six months of 1997 to the same periods in 1998 is the result of a
decrease in utilities, maintenance and amortization expense.
Utilities expense decreased due to a decrease in the consumption
levels at the property and maintenance expense decreased due to new
carpeting installed in several units and roofing repairs at the
property in the first six months of 1997. Amortization expense
decreased due to the fact that organization costs became fully
amortized in January 1998.
In the second quarter of 1998, Registrant incurred
a loss of $33,000 at Shockoe Hearth, including $25,000 of depreciation
and amortization expense, compared to a loss of $22,000 including
$25,000 of depreciation and amortization expense in the second quarter
of 1997. The increase in the loss from the second quarter of 1997 to
the same period in 1998 is the result of an increase in real estate
taxes partially offset by a decrease in interest expense. Real estate
taxes increased due to the expiration of a real estate tax abatement
in 1997 which caused an increase in the assessed value of the
property. Interest expense decreased due to a refinancing of the
first mortgage in May 1998 which lowered the interest rate from 10% to
8%.
For the first six months of 1998, Registrant
incurred a loss of $40,000 at Shockoe Hearth, including $50,000 of
depreciation and amortization expense, compared to a loss of $38,000,
including $49,000 of depreciation and amortization expense for the
first six months of 1997. The increase in the loss from the first six
months of 1997 to the same period in 1998 is the result of an increase
in real estate taxes partially offset by an increase in rental income
due to an increase in the average rental rates of the residential
units and a decrease in interest expense. Real estate taxes increased
due to the expiration of a real estate tax abatement in 1997 which
caused an increase in the assessed value of the property. Interest
expense decreased due to a refinancing of the first mortgage in May
1998 which lowered the interest rate from 10% to 8%.
In the second quarter of 1998, the Bakery
Apartments incurred a loss of $40,000 including $55,000 of
depreciation and amortization expense compared to a loss of $32,000
including $60,000 of depreciation and amortization expense for the
same period in 1996 and for the first six months of 1998, incurred a
loss of $81,000, including $111,000 of depreciation and amortization
expense compared to a loss of $66,000, including $120,000 of
depreciation and amortization expense for the same period in 1997.
The increase in the losses from the second quarter and first six
months of 1997 to the same periods in 1998 is due to a decrease in
rental income and an increase in maintenance expense partially offset
by a decrease in depreciation and corporate apartments expense.
Rental income decreased due to a decline in the rental of corporate
apartments and maintenance expense increased as a result of repairs to
the roof in the first quarter of 1998. Depreciation expense decreased
to personal property becoming fully depreciated and corporate
apartment expense decreased due to the decrease in the rental of the
corporate apartments.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1998 December 31, 1997
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,921,590 10,915,625
Furniture and fixtures 155,592 155,592
---------- ----------
11,326,038 11,320,073
Less - Accumulated depreciation (3,416,027) (3,195,801)
---------- ----------
7,910,011 8,124,272
Cash and cash equivalents 78,552 28,549
Restricted cash 95,297 95,609
Accounts receivable 27,186 24,505
Other assets (net of amortization of
$279,537 and $248,437 at June 30, 1998
and December 31, 1997, respectively) 122,212 79,944
---------- ----------
Total $ 8,233,258 $ 8,352,879
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,209,160 $ 6,085,969
Accounts payable:
Trade 548,527 579,708
Related parties 192,796 192,796
Interest payable 135,986 125,670
Tenant security deposits 63,828 61,038
Other liabilities 32,031 37,864
---------- ----------
Total liabilities 7,182,328 7,083,045
---------- ----------
Minority interests 420,704 444,459
Partners' equity 630,226 825,375
---------- ----------
Total $ 8,233,258 $ 8,352,879
========== ==========
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, 1998 and 1997
(Unaudited)
Three months Six months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues:
Rental income $267,086 $268,007 $545,177 $545,359
Interest income 17 121 17 144
------- ------- ------- -------
Total revenues 267,103 268,128 545,194 545,503
------- ------- ------- -------
Costs and expenses:
Rental operations 117,237 127,353 258,922 241,008
General and administrative 12,000 12,000 24,000 24,000
Interest 120,112 128,284 246,468 257,028
Depreciation and amortization 117,029 123,167 234,708 246,333
------- ------- ------- -------
Total costs and expenses 366,378 390,804 764,098 768,369
------- ------- ------- -------
Loss before minority interests (99,275) (122,676) (218,904) (222,866)
Minority interests' portion of loss 11,498 9,425 23,755 19,408
------- ------- ------- -------
Net loss ($ 87,777) ($113,251) ($195,149) ($203,458)
======= ======= ======= =======
Net loss per limited partnership unit:
Loss before minority interests ($ 19.53) ($ 24.12) ($ 43.06) ($ 43.83)
Minority interests 2.26 1.85 4.67 3.82
------- ------- ------- -------
($ 17.27) ($ 22.27) ($ 38.39) ($ 40.01)
======= ======= ======= =======
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, 1998 and 1997
(Unaudited)
Six months ended
June 30,
1998 1997
Cash flows from operating activities:
Net loss ($195,149) ($203,458)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 234,708 246,333
Minority interest (23,755) (28,600)
Changes in assets and liabilities:
Decrease (increase) in restricted cash 312 (28,073)
Increase in accounts receivable (2,681) (1,212)
Increase in other assets (56,750) (8,249)
(Decrease) increase in accounts payable - trade (31,181) 40,844
Increase in accounts payable - related parties 0 30,500
Increase in interest payable 10,316 903
Increase (decrease) in other liabilities 2,790 (11,253)
Decrease in security deposits (5,833) (3,085)
------- -------
Net cash (used in) provided by operating activities (67,223) 34,650
------- -------
Cash flows from investing activities:
Capital expenditures (5,965) (12,117)
------- -------
Net cash used in investing activities (5,965) (12,117)
------- -------
Cash flows from financing activities:
Proceeds from debt financing 168,699 0
Principal payments (45,508) (32,904)
------- -------
Net cash provided by (used in) financing activities 123,191 (32,904)
------- -------
Increase (decrease) in cash and cash equivalents 50,003 (10,371)
Cash and cash equivalents at beginning of period 28,549 33,160
------- -------
Cash and cash equivalents at end of period $ 78,552 $ 22,789
======= =======
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, 1997.
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
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, 1998.
<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 20, 1998 DIVERSIFIED HISTORIC INVESTORS 1990
---------------
By: Dover Historic Advisors 1990, General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
-----------------------
SPENCER WERTHEIMER
President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 78,552
<SECURITIES> 0
<RECEIVABLES> 27,186
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,326,038
<DEPRECIATION> 3,416,027
<TOTAL-ASSETS> 8,233,258
<CURRENT-LIABILITIES> 741,323
<BONDS> 6,209,160
0
0
<COMMON> 0
<OTHER-SE> 1,050,930
<TOTAL-LIABILITY-AND-EQUITY> 8,233,258
<SALES> 0
<TOTAL-REVENUES> 545,194
<CGS> 0
<TOTAL-COSTS> 258,922
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 246,468
<INCOME-PRETAX> (195,149)
<INCOME-TAX> 0
<INCOME-CONTINUING> (195,149)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (195,149)
<EPS-PRIMARY> (38.39)
<EPS-DILUTED> 0
</TABLE>
