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, 1999
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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) 557-9800
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, 1999 (unaudited) and
December 31, 1998
Consolidated Statements of Operations - Three Months and Nine Months
Ended September 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended September
30, 1999 and 1998 (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, 1999, Registrant had cash of
$66,714. 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, 1999, Registrant had restricted
cash of $128,748 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 of the Registrant's 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
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, doesnot 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 1999, Registrant incurred a net
loss of $58,388 ($11.49 per limited partnership unit) compared to a net
loss of $77,887 ($15.33 per limited partnership unit) for the same period
in 1998. For the first nine months of 1999, the Registrant incurred a net
loss of $212,191 ($41.75 per limited partnership unit) compared to a net
loss of $273,036 ($53.72 per limited partnership unit) for the same period
in 1998.
Rental income increased $3,769 from $274,239 in the third
quarter of 1998 to $278,008 in the same period in 1999 due to an increase
in the average occupancy at Jefferson Seymour (88% to 94%) combined with an
increase in rental income at Shockoe Hearth Apartments due to an increase
in the average rental rates of the residential units partially offset by a
decrease in rental income at the Bakery Apartments due to a decrease
in occupancy (94% to 89%).
Rental income increased $8,259 from $819,416 for the first nine
months of 1998 to $827,675 for the same period in 1999 due to an increase
in the average occupancy at Jefferson Seymour (90% to 95%) combined with an
increase in rental income at Shockoe Hearth Apartments due to an increase
in the average rental rates of the residential units partially offset by a
decrease in rental income at the Bakery Apartments due to a decrease
in occupancy (93% to 90%).
Expenses for rental operations decreased by $3,024 from
$118,054 in the third quarter of 1998 to $115,030 in the same period in
1999 due to a decrease in maintenance expense at both Jefferson Seymour and
the Bakery Apartments. The decrease in maintenance expense at Jefferson
Seymour is due to a decrease in the turnover in apartment units. The decrease
in the Bakery Apartments is due to a decrease in the average occupancy.
Expenses for rental operations decreased $15,031 from
$376,976 for the first nine months of 1998 to $361,945 for the same
period in 1999 due to a decrease in maintenance expense at Jefferson Seymour,
and a decrease in wages and salary expense partially offset by an increase
in maintenance expense at the Bakery Apartments. The maintenance expense
decrease at Jefferson Seymour is due to the decrease in the turnover of
apartment units. The decrease in wages and salary expense at the
Bakery Apartments is due to the replacement of employees with contracted
security service; maintenance expense increased due to the painting
and recarpeting of several apartment units.
Interest expense decreased $12,598 from $114,009 in the third
quarter of 1998 to $101,411 in the same period of 1999 and decreased
$43,157 from $360,477 in the first nine months of 1998 to $317,320 in
the same period of 1999 mainly due to a refinancing of the first mortgage
at Shockoe Hearth Apartments in May 1998 and the Bakery Apartments in
December 1998 which lowered the interest rates.
Depreciation and amortization expense increased $10,765 from
$118,858 in the third quarter of 1998 to $129,623 in the same period in
1999 and increased $3,450 from $353,566 for the first nine months of 1998
to $357,016 in the same period in 1999 due to the loan costs at Shockoe
Hearth and the Bakery Apartments incurred in connection with the
refinancings of the first mortgages.
Losses incurred during the third quarter at the Registrant's
three properties amounted to $66,000, compared to a loss of approximately
$69,000 for the same period in 1998. For the first nine months of 1999,
the Registrant's properties recognized a loss of $188,000, compared to
approximately $251,000 for the same period in 1998.
In the third quarter of 1999, Registrant incurred a loss
of $27,000 at Jefferson Seymour, including $30,000 of depreciation and
amortization expense, compared to a loss of $29,000 in the third quarter
of 1998, including $30,000 of depreciation and amortization expense, and
for the first nine months of 1998, incurred a loss of $88,000, including
$90,000 of depreciation and amortization expense, compared to a loss of
$90,000, including $91,000 of depreciation and amortization expense for the
first nine months of 1998. The decreases in the losses from the third
quarter and the first nine months of 1998 to the same periods in 1999 is
due to an increase in rental income combined with a decrease in maintenance
expense. The increase in rental income is due to an increase in
average occupancy in the third quarter (88% to 94%) and for the first nine
months (90% to 95%). The decrease in maintenance expense is due to a decrease
in the turnover of apartment units.
In the third quarter of 1999, Registrant incurred a loss of
$2,000 at Shockoe Hearth, including $27,000 of depreciation and amortization
expense, compared to a loss of $3,000 including $27,000 of depreciation
and amortization expense for the same period in 1998. The decrease in
the loss for the third quarter of 1998 to the same period in 1999 is mainly
the result of an increase in rental income combined with a decrease in
interest expense partially offset by an increase in amortization expense.
Rental income increased due to an increase in the average rental rates
of apartment units. Interest expense decreased due to a refinancing of the
first mortgage in May 1998 which lowered the interest rate from 10% to 8%.
The increase in amortization expense is due to the amortization of loan
costs incurred in connection with the refinancing of the first mortgage.
For the first nine months of 1999, Registrant incurred a loss of
$28,000 at Shockoe Hearth, including $80,000 of depreciation and amortization
expense, compared to a loss of $43,000, including $76,000 of depreciation
and amortization expense for the same period in 1998. The decrease in
the loss for the first nine months of 1998 to the same period in 1999
is mainly the result of an increase in rental income combined with a
decrease in interest expense. Rental income increased due to an
increase in the average rental rates of apartment units. 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 third quarter of 1999, the Bakery Apartments incurred a
loss of $37,000 including $66,000 of depreciation and amortization expense
compared to a loss of $37,000 including $56,000 of depreciation and
amortization expense for the same period in 1998. Although there was no
overall change in the loss from the third quarter of 1998 to the same period
in 1999, there was a decrease in rental income and an increase in
amortization expense partially offset by a decrease in maintenance and
interest expense. The decrease in rental income and the decrease in
maintenance expense is due to a decrease in average occupancy
(94% to 89%). Interest expense decreased due to a reduction in the
interest rate due to the refinancing of the first mortgage in December of 1998.
The significant increase in amortization expense is due to the amortization
of additional loan costs incurred in connection with the refinancing.
For the first nine months of 1999, the Bakery Apartments
incurred a loss of $72,000, including $167,000 of depreciation and
amortization expense compared to a loss of $118,000, including $167,000
of depreciation and amortization expense for the same period in 1998.
The decrease in the loss from the first nine months of 1998 to the same
period in 1999 is due to a decrease in wages and salaries and interest
expense partially offset by an increase in maintenance expense and a
decrease in rental income. Wages and salaries expense decreased due to the
replacement of employees with a contracted security service. Interest
expense decreased due to a reduction in the interest rate due to the
refinancing of the first mortgage in December of 1998. Maintenance
expense increased due to the painting and recarpeting of several
apartment units. The decrease in rental income is due to the decrease in
the average occupancy (93% to 90%).
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
September 30, December 31,
1999 1998
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,957,623 10,928,637
Furniture and fixtures 155,592 155,592
---------- ----------
11,362,071 11,333,085
Less-Accumulated depreciation (3,966,977) (3,636,531)
---------- ----------
7,395,094 7,696,554
Cash and cash equivalents 66,714 59,236
Restricted cash 128,748 152,762
Accounts receivable 28,366 26,700
Other assets (net of amortization
of $340,882 and $314,312 at
September 30, 1999 and
December 31, 1998, respectively) 207,057 181,392
---------- ----------
Total $ 7,825,979 $ 8,116,644
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,282,505 $ 6,340,936
Accounts payable:
Trade 564,623 547,097
Related parties 164,699 166,699
Interest payable 200,139 221,346
Tenant security deposits 52,779 62,196
Other liabilities 37,506 5,151
---------- ----------
Total liabilities 7,302,251 7,343,425
---------- ----------
Minority interests 353,043 390,343
Partners' equity 170,685 382,876
---------- ----------
Total $ 7,825,979 $ 8,116,644
========== ==========
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, 1999 and 1998
(Unaudited)
Three months Nine months
Ended September 30, Ended September 30,
1999 1998 1999 1998
Revenues:
Rental income $278,008 $274,239 $ 827,675 $ 819,416
Other income 10,890 0 10,890 0
Interest income 73 0 166 17
------- ------- --------- ---------
Total revenues 288,971 274,239 838,731 819,433
------- ------- --------- ---------
Costs and expenses:
Rental operations 115,030 118,054 361,945 376,976
General and administrative 12,000 12,000 36,000 36,000
Interest 101,411 114,009 317,320 360,477
Depreciation and amortization 129,623 118,858 357,016 353,566
------- ------- --------- ---------
Total costs and expenses 358,064 362,921 1,072,281 1,127,019
------- ------- --------- ---------
Loss before minority interests (69,093) (88,682) (233,550) (307,586)
Minority interests' portion 10,705 10,795 21,359 34,550
of loss ------- ------- -------- --------
Net loss ($ 58,388) ($ 77,887) ($ 212,191) ($ 273,036)
======= ======= ======== ========
Net loss per limited
partnership unit:
Loss before minority ($ 13.60) ($ 17.46) ($ 45.95) ($ 60.52)
interests
Minority interests 2.11 2.13 4.20 6.80
-------- ------- -------- --------
($ 11.49) ($ 15.33) ($ 41.75) ($ 53.72)
======== ======= ======== ========
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, 1999 and 1998
(Unaudited)
Nine months ended
September 30,
1999 1998
Cash flows from operating activities:
Net loss ($212,191) ($273,036)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 357,015 353,566
Minority interest (21,359) (34,550)
Changes in assets and liabilities:
Decrease (increase) in restricted cash 24,014 (3,272)
Increase in accounts receivable (1,666) (844)
Increase in other assets (52,236) (59,192)
Increase (decrease) in accounts
payable - trade 17,526 (77,689)
Decrease in accounts payable - (2,000) 0
related parties
(Decrease) increase in interest payable (21,207) 11,847
(Decrease) increase in other liabilities (9,417) 4,348
Increase (decrease) in security deposits 32,354 (339)
------- -------
Net cash provided by (used in) operating activities 110,833 (79,161)
------- -------
Cash flows from investing activities:
Capital expenditures (28,986) (5,965)
------- -------
Net cash used in investing activities (28,986) (5,965)
------- -------
Cash flows from financing activities:
Distributions to partners (15,938) 0
Proceeds from debt financing 0 168,699
Principal payments (58,431) (61,930)
------- -------
Net cash (used in) provided by financing activities (74,369) 106,769
------- -------
Increase in cash and cash equivalents 7,478 21,643
Cash and cash equivalents at beginning of period 59,236 28,549
------- -------
Cash and cash equivalents at end of period $ 66,714 $ 50,192
======= =======
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, 1998.
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, 1999.
<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: December 16, 1999 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 66,714
<SECURITIES> 0
<RECEIVABLES> 28,366
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,395,094
<DEPRECIATION> 3,966,977
<TOTAL-ASSETS> 7,825,979
<CURRENT-LIABILITIES> 564,623
<BONDS> 6,282,505
0
0
<COMMON> 0
<OTHER-SE> 170,685
<TOTAL-LIABILITY-AND-EQUITY> 7,825,979
<SALES> 0
<TOTAL-REVENUES> 827,675
<CGS> 0
<TOTAL-COSTS> 361,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 317,320
<INCOME-PRETAX> (212,191)
<INCOME-TAX> 0
<INCOME-CONTINUING> (212,191)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212,191)
<EPS-BASIC> 0
<EPS-DILUTED> (41.75)
</TABLE>
