Item 1. Business
a. General Development of Business
Diversified Historic Investors V ("Registrant") is a limited partnership formed in 1987 under Pennsylvania Law. As of December 31, 1998, Registrant had outstanding 11,142 units of limited partnership interest (the "Units").
Registrant is currently in its operating stage. It originally owned three properties or interests therein; however, in October 1996, its interest in one property was sold. It currently owns two properties or interests therein. See Item 2.
Item 2. Properties
As of the date hereof, Registrant owned two Properties, or interests therein. A summary description of each property held at December 31, 1998 is given below.
a. Redick Plaza Hotel is an historically-certified building located at 1504 Harney Street, Omaha, Nebraska. In December 1987, the Registrant acquired a 100% equity ownership interest in this property. The property has been rehabilitated as an 89-room hotel. Additionally, the property has a restaurant with a seating capacity for 160, 3,500 square feet ("sf") of meeting/banquet space, and 45,510 sf of garage space (119 covered spaces). The acquisition and rehabilitation price of this property was approximately $9,500,000 ($71 per sf), financed in part by industrial revenue bonds from the City of Omaha of $6,500,000 (principal balance at December 31, 1998 of $6,659,990). On February 9, 1995, the Registrant refinanced the outstanding bonds that lowered the interest rate from 7.75% to a variable rate based on market rates, with a maximum rate of 7.75%. Payments of interest only were due on the bonds monthly beginning March 2, 1995 and the entire principal balance was due on November 1, 1996. In October 1996, Redick Plaza Hotel, was transferred to 1504 Harney Street Associates ("HSA") a limited partnership in which the Registrant owns a 99% interest. HSA was unable to pay the bonds as they became due, and on October 28, 1996, HSA filed a reorganization petition pursuant to Chapter 11 of the U.S. Bankruptcy Code. In July 1997, the loan was sold and the bankruptcy dismissed. The Registrant entered into an agreement with the new holder of the note whereby monthly payments of interest are to be made to the new note holder in an amount equal to net operating income and the due date extended to September 30, 2002 and the interest rate was increased to 14%. In September, 1998, a second lender advanced $500,000 to fund improvements to the hotel. The new note has an interest rate of 10% and is due on March 29, 1999.
The property is managed by BCMI. Average occupancy was 39% in 1998 at an average room rate of $82.16. The occupancy for the previous four years was 53% for 1997, 73% for 1996, 83% for 1995 and 72% for 1994. The average room rates were $91.88 for 1997, $92.15 for 1996, $94.24 for 1995 and $90.84 for 1994. For tax purposes, this property has a basis of $10,626,692 and is depreciated using the straight-line method with a useful life of 31.5 years. The annual real estate taxes are $107,139 which is based on an assessed value of $3,818,100 taxed at a rate of $2.80608 per $100. It is the opinion of the management of the Registrant that the property is adequately covered by insurance.
b. The Lofts at Red Hill is an historically- certified, four-story former factory located at 350 Main Street, Red Hill Borough, Pennsylvania. In December 1987, the Registrant acquired the building and is the 100% equity owner of this property. The property was rehabilitated as a 21-unit rental residential complex. The acquisition and rehabilitation price of this property was approximately $1,350,000 ($81 per sf). In September 1997, a mortgage was placed on the property in the amount of $400,000 (principal balance of $406,984 at December 31, 1998). The note accrues interest at 14% and is payable at 10% interest monthly with the entire principal balance due October 1, 2002. The proceeds from the mortgage were utilized to satisfy certain outstanding liabilities of the Registrant.
The property is managed by BCMI. As of December 31, 1998, 16 apartment units were under lease (76%) at monthly rental rates ranging from $425 to $610. All leases are renewable, one-year leases. The occupancy for the previous four years was 92% for 1997, 78% for 1996, 90% for 1995 and 85% for 1994. The monthly rental range has been approximately the same since 1994. For tax purposes, this property has a basis of $1,478,232 and is depreciated using the straight-line method with a useful life of 27.5 years. The annual real estate taxes are $14,361 which is based on an assessed value of $42,700 taxed at a rate of $31.35 per $100. No one tenant occupies ten percent or more of the building. It is the opinion of the management of the Registrant that the property is adequately covered by insurance.
Item 3.
Item 3. Legal Proceedings
a. For a description of legal proceedings involving Registrant's properties, see Part I, Item 2 and Part II, Item 7.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fiscal years covered by this report to a vote of security holders.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
a. There is no established public trading market for the Units. Registrant does not anticipate any such market will develop. Trading in the units occurs solely through private transactions. The Registrant is not aware of the prices at which trades occur. Registrant's records indicate that 60 units were sold or exchanged of record in 1998.
b. As of December 31, 1998, there were 1,348 record holders of Units.
c. Registrant did not declare any cash dividends in 1998 or 1997.
Item 6.
Item 6. Selected Financial Data
The following selected financial data are for the five years ended December 31, 1998. The data should be read in conjunction with the consolidated financial statements included elsewhere herein. This data is not covered by the independent auditors' report.
1998 1997 1996 1995 1994
Rental income $ 121,383 $ 120,685 $ 767,508 $1,205,122 $1,162,137 Hotel income 1,131,690 1,755,787 2,387,200 2,548,434 2,442,274 Interest income 2,295 17,449 7,024 4,576 3,218 Net loss (2,777,858) (2,211,312) (607,725) (712,598) (827,606) Net loss per Unit (246.82) (196.48) (54.00) (63.32) (73.54) Total assets (net of depreciation and amortization) 6,764,832 7,964,174 9,046,109 13,517,285 14,035,936 Debt obligations 7,566,974 6,804,113 6,163,254 10,436,965 10,366,177
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
(1) Liquidity
As of December 31, 1998, Registrant had cash of $13,986. Such funds are expected to be used to pay liabilities and general and administrative expenses 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 December 31, 1998, Registrant had restricted cash of $263,862 consisting primarily of funds held as security deposits, replacement reserves and escrows for taxes and insurance. As a consequence of these restrictions as to use, Registrant does not deem these funds to be a source of liquidity.
(2) Capital Resources
Any capital expenditures needed are generally replacement items and are funded out of cash from operations or replacement reserves, if any. The 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. However, in 1998 at the Redick Plaza Hotel, the Registrant obtained a loan for $500,000 to fund capital improvements at the property in order to improve the competitive position of the property. Except for the Redick Plaza Hotel improvement program, which was completed in the first quarter of 1999.
(3) Results of Operations
During 1998, Registrant incurred a net loss of $2,777,858 ($246.82 per limited partnership unit) compared to a net loss of $2,211,312 ($196.48 per limited partnership unit) in 1997 and a net loss of $607,725 ($54.00 per limited partnership unit) in 1996.
Rental and hotel income combined decreased from $3,154,708 in 1996 to $1,876,472 in 1997 to $1,253,073 in 1998. The decrease from 1997 to 1998 is the result of a decrease in hotel income of $624,000 and an increase in rental income of $1,000. The decrease in hotel income is due to a decrease in the average occupancy (53% to 39%) and a decrease in the average nightly room rate ($91.88 to $82.16) at the Redick Plaza Hotel. The increase in rental income is due to a new commercial tenant that operates as a barber shop. The decrease from 1996 to 1997 is the result of a decrease in rental income of $647,000 and a decrease of $631,000 in hotel income. The decrease in rental income is mainly attributable to the sale in 1996 of one of the Registrant's rental properties partially offset by an increase in rental income at the Lofts at Red Hill due to an increase in the average occupancy. The decrease in hotel income is due to a decrease in the average occupancy (73% to 53%) and a decrease in the average nightly room rate ($92.15 to $91.88) at the Redick Plaza Hotel.
Expense for rental operations decreased from $605,294 in 1996 to $196,216 in 1997 and $88,874 in 1998. The decrease from 1997 to 1998 is due to a decrease in legal fees. Legal fees were incurred in 1997 related to the bankruptcy proceedings at the Redick Plaza Hotel. See Item 2.a. The decrease from 1996 to 1997 is due to an overall decrease in operating expenses in 1997 as a result of the sale of one of the Registrant's rental properties. Hotel operations expense decreased from $2,237,857 in 1996 to $1,828,128 in 1997 to $1,607,056 in 1998. The decrease from 1996 to 1997 and the decrease from 1997 to 1998 is due to an overall decrease in operating expenses due to the decrease in average occupancy.
General and administrative expenses increased from $98,859 in 1996 to $548,996 in 1997 and decreased to $63,996 in 1998. The decrease from 1997 to 1998 is due to a decrease in administrative fees charged due to the sale of St. Mary's Market in 1996 and a decrease in fees incurred in connection with the bankruptcy at the Redick Plaza Hotel. The increase from 1996 to 1997 and the decrease from 1997 to 1998 is the result of administrative fees incurred in the third quarter of 1997 in connection with the bankruptcy and subsequent negotiations with the new mortgage holder at the Redick Plaza Hotel.
Interest expense increased from $662,031 in 1996 to $989,390 in 1997 to $1,011,704 in 1998. The increase from 1997 to 1998 is due to the Lofts at Red Hill having twelve month's interest expense on the mortgage financing incurred in September 1997 in 1998 compared to having only four months of interest expense in 1997. The increase from 1996 to 1997 is the result of an increase in the interest rate on the financing with respect to the Redick Plaza Hotel and the commencement of interest expense at the Lofts at Red Hill due to the new loan partially offset by the sale of one of the Registrant's rental properties and consequent discharge of the related financing.
Depreciation and amortization expense decreased from $820,712 in 1996 to $542,504 in 1997 and increased to $584,544 in 1998. The increase from 1997 to 1998 is due to twelve months of amortization of loan costs in 1998 at both the Redick Plaza Hotel and the Lofts at Red Hill compared to partial years of amortization expense in 1997. The decrease from 1996 to 1997 is the result of the sale of one of the Registrant's rental properties and loan costs at the Redick Plaza Hotel becoming fully amortized in November 1996 partially offset by the amortization of loan fees incurred in connection with refinancing of the Redick Plaza Hotel.
Impairment loss increased from $0 in 1996 and 1997 to $677,052 in 1998. During 1998, the Redick Plaza Hotel was deemed to be impaired and was written down to its fair value. Fair value, which was determined by reference to the present value of the estimated future cash inflows exceeded the carrying value by $677,052. An impairment loss of that amount (included in other expenses) has been charged to operations in 1998.
Of the total 1998 loss, a loss of approximately $1,962,000 was incurred at the Registrant's three properties compared to a loss of approximately $1,561,000 in 1997 and $501,000 in 1996. A discussion of property operations/activities follows.
In 1998, Registrant incurred a loss of $1,888,000 at the Redick Plaza Hotel, including $462,000 of depreciation and amortization expense, compared to a loss of $1,506,000, including $453,000 of depreciation and amortization expense, in 1997 and a loss of $782,000, including $574,000 of depreciation expense, in 1996. The increase in the loss from 1997 to 1998 is the result of a decrease in hotel income due to a decrease in the average occupancy (53% to 39%) partially offset by an overall decrease in operating expenses due to the decrease in occupancy. The occupancy decreased due to the conversion to an independent hotel from an affiliation with the Radisson chain of hotels. The Registrant is in the process of negotiating with a major chain of hotels to increase occupancy. The increase in the loss from 1996 to 1997 is mainly due to decrease in hotel income due to a decrease in the average occupancy (73% to 53%) and an increase in interest expense as a result of the increase in the interest rate of the first mortgage. The decrease is partially offset by an overall decrease in operating expenses due to the decrease in the average occupancy. The occupancy decreased due to the conversion to an independent hotel from an affiliation with the Radisson chain of hotels.
In 1997, Registrant incurred a loss of $25,000 with respect to accounts receivable balances held in connection with a property that it sold in 1996. These balances were deemed uncollectable In 1996, the Registrant has recorded income of $319,000, including $189,000 of depreciation expense and included in income in 1996 is a gain of $586,000 related to the sale of the building.
In 1998, Registrant incurred a loss of $74,000 at the Lofts at Red Hill including $61,000 of depreciation and amortization expense compared to a loss of $30,000 including $59,000 of depreciation expense in 1996 and a loss of $38,000 including $58,000 of depreciation expense in 1996. The increase in the loss from 1997 to 1998 is due to the Lofts at Red Hill having twelve month's interest expense on the mortgage financing incurred in September 1997 in 1998 compared to having only four months of interest expense in 1997. The decrease in the loss from 1996 to 1997 is due to an increase in rental income due to an increase in the average occupancy (78% to 92%) partially offset by an increase in interest expense due to the new note (See Part 2. Properties.)
Item7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 8.
Item 8. Financial Statement and Supplementary Data
Registrant is not required to furnish the supplementary financial information referred to in Item 302 of Regulations S-K.
Independent Auditor's Report
To the Partners Diversified Historic Investors V
We have audited the accompanying consolidated balance sheet of Diversified Historic Investors V (a Pennsylvania Limited Partnership) and subsidiaries as of December 31, 1998 and 1997 and the related statements of operations and changes in partners' equity and cash flows for the years ended December 31, 1998, 1997 and 1996. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Diversified Historic Investors V as of December 31, 1998 and 1997, and the results of operations and cash flows for the years ended December 31, 1998, 1997 and 1996 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedule of Real Estate and Accumulated Depreciation on page 21 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the partnership will continue as a going concern. In recent years, the partnership has incurred significant losses from operations, which raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Gross, Kreger & Passio, L.L.C. Philadelphia, Pennsylvania February 19, 1999
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Consolidated financial statements: Page
Consolidated Balance Sheets at December 31, 1998 and 1997 11
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1997, and 1996 12
Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 1998, 1997, and 1996 13
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997, and 1996 14
Notes to consolidated financial statements 15-19
Financial statement schedules:
Schedule XI - Real Estate and Accumulated Depreciation 21
Notes to Schedule XI 22
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
CONSOLIDATED BALANCE SHEETS December 31, 1998 and 1997
Assets
1998 1997 Rental properties at cost: Land $ 347,955 $ 347,955 Buildings and improvements 10,322,476 10,976,514 Furniture and fixtures 1,121,539 1,175,768 ---------- ---------- 11,791,970 12,500,237 Less - accumulated depreciation (5,752,945) (5,284,345) ---------- ---------- 6,039,025 7,215,892
Cash and cash equivalents 13,986 57,736 Restricted cash 263,862 176,129 Accounts and notes receivable 99,954 117,468 Other assets (net of amortization of $365,187 and $319,567, respectively) 348,005 396,949 ---------- ---------- Total $ 6,764,832 $ 7,964,174 ========== ========== Liabilities and Partners' Equity
Liabilities: Debt obligations $ 7,566,974 $ 6,804,113 Accounts payable: Trade 578,973 385,613 Related parties 33,656 55,000 Taxes 95,258 35,123 Interest payable 1,498,851 869,660 Accrued liabilities 33,447 77,899 Tenant security deposits 8,145 9,380 ---------- ---------- Total liabilities 9,815,304 8,236,788 ---------- ---------- Partners' equity (3,050,472) (272,614) ---------- ---------- Total $ 6,764,832 $ 7,964,174 ========== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Revenues: Rental income $ 121,383 $ 120,685 $ 767,508 Hotel income 1,131,690 1,755,787 2,387,200 Interest income 2,295 17,449 7,024 Gain on sale of property 0 0 655,296 --------- --------- --------- Total revenues 1,255,368 1,893,921 3,817,028 --------- --------- --------- Costs and expenses: Rental operations 88,874 196,215 605,294 Hotel operations 1,607,056 1,828,128 2,237,857 General and administrative 63,996 548,996 98,859 Interest 1,011,704 989,390 662,031 Depreciation and amortization 584,544 542,504 820,712 Impairment loss 677,052 0 0 --------- --------- --------- Total costs and expenses 4,033,226 4,105,233 4,424,753 --------- --------- --------- Net loss ($2,777,858) ($2,211,312) ($ 607,725) ========= ========= =========
Net loss per limited partnership unit ($ 246.82) ($ 196.48) ($ 54.00) ========= ========= =========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the Years Ended December 31, 1998, 1997 and 1996
Dover Historic Limited Advisors V (1)Partners (2) Total
Percentage participation in profit or loss 1% 99% 100%
Balance at December 31, 1995 ($143,689) $2,690,112 $2,546,423 Net loss (6,077) (601,648) (607,725) ------- --------- --------- Balance at December 31, 1996 (149,766) 2,088,464 1,938,698 Net loss (22,113) (2,189,199) (2,211,312) ------- --------- --------- Balance at December 31, 1997 (171,879) (100,735) (272,614) Net loss (27,779) (2,750,079) (2,777,858) ------- --------- --------- Balance at December 31, 1998 ($199,658) ($2,850,814)($3,050,472) ======= ========= =========
(1) General Partner.
(2) 11,142 limited partnership units outstanding at December 31, 1998, 1997, and 1996.
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash flows from operating activities: Net loss ($2,777,858) ($2,211,312) ($ 607,725) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 584,544 542,504 820,712 Impairment loss 677,052 0 0 Gain on sale 0 0 (655,296) Changes in assets and liabilities: (Increase) decrease in restricted cash (87,733) (167,173) 232,280 Decrease (increase) in accounts and notes receivable 17,514 55,401 (85,222) (Increase) decrease in other assets (67,000) (400,613) 1,116,709 Increase (decrease) in accounts payable - trade 193,360 (131,681) 189,190 (Decrease) increase in accounts payable - related parties (21,344) (75,063) 143,012 Increase (decrease) in accounts payable - taxes 60,135 (8,961) 3,760 Increase in interest payable 629,191 710,698 152,085 Decrease in accrued liabilities (44,452) (5,130) (57,646) Decrease in tenant security deposits (1,235) (1,344) (3,667) Net cash (used by) provided by --------- --------- --------- operating activities (837,826) (1,692,674) 1,248,192 --------- --------- --------- Cash flows from investing activities: Assets disposed of 73,000 0 0 Capital expenditures (41,785) (17,163) (170,375) Net cash provided by (used in) --------- --------- --------- investing activities 31,215 (17,163) (170,375) --------- --------- --------- Cash flows from financing activities: Borrowings under debt obligations 762,861 640,862 20,939 Repayments of debt financing 0 0 (12,899) Net cash provided by financing --------- --------- --------- activities 762,861 640,862 8,040 --------- --------- --------- (Decrease) increase in cash and cash equivalents (43,750) (1,068,975) 1,085,857 Cash and cash equivalents at beginning of year 57,736 1,126,711 40,854 --------- --------- --------- Cash and cash equivalents at end of year $ 13,986 $ 57,736 $1,126,711 ========= ========= ========= Supplemental Disclosure of Cash Flow Information Cash paid during the year for interest $ 382,513 $ 278,692 $ 509,946
The accompanying notes are an integral part of these financial statements.
SUPPLEMENTAL INFORMATION
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1998
Initial Cost to Partnership
Buildings and Date of Date Description (a) Encumbrances Land Improvements Constr. (a) Acquired (e)
21 unit condominium Complex in Red Hill, $ 406,984 $ 61,046 $ 1,461,413 1987 12/31/87 PA
105 apartment units and 6,900 square feet of commercial space in New Orleans, LA - - - 1988 12/30/87
89 room hotel in Omaha, NE 7,159,990 286,909 10,166,705 1986-1987 12/28/87 --------- ------- ---------- $7,566,974 $347,955 $11,628,118 ========= ======= ==========
Costs Gross Amount at which Carried Capitalized at December 31, 1998 Subsequent to Acquisition
Buildings and Accumulated Description (a) Improvements Land Improvements Total Depr. (b)(c) (c) (d)
21 unit condominium complex in Red Hill, - $61,046 $ 1,463,562 $ 1,524,608 $ 652,895 PA
105 apartment units and 6,900 square feet of commercial space in New Orleans, LA - - 67,312 67,312
89 room hotel in Omaha, NE 116,598 286,909 9,913,141 10,200,050 5,100,050 ------- ------- ---------- ---------- --------- $116,598 $347,955 $11,444,015 $11,791,970 $5,752,945 ======= ======= ========== ========== =========
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
NOTES TO SCHEDULE XI
December 31, 1998
(A) All properties are certified historic structures as defined in the Internal Revenue Code of 1986, or are eligible for designation as such. The "date of construction" refers to the period in which such properties are rehabilitated.
(B) The cost of real estate owned at December 31, 1998, for Federal income tax purposes was approximately $12,104,924. However, the depreciable basis of buildings and improvements for the Omaha and Red Hill properties was reduced for Federal income tax purposes by 50% of the historic rehabilitation credit obtained.
(C) Reconciliation of land, buildings and improvements:
1998 1997 1996 Balance at beginning of year $12,500,237 $12,483,074 $19,507,622 Additions during the year: Improvements 41,785 17,163 170,375 Deductions during the year: Impairment loss (677,052) 0 0 Sale of property (73,000) 0 (7,194,923) ---------- ---------- ---------- Balance at end of year $11,791,970 $12,500,237 $12,483,074 ========== ========== ========== Reconciliation of accumulated depreciation: 1998 1997 1996 Balance at beginning of year $ 5,284,345 $ 4,777,178 $ 6,514,441 Depreciation expense for the year 468,600 507,167 695,508 Deductions during the year 0 0 (2,432,771) ---------- ---------- ---------- Balance at end of year $ 5,752,945 $ 5,284,345 $ 4,777,178 ========== ========== ==========
(D) See Note B to the consolidated financial statements for depreciation method and lives.
(E) See Note E to the consolidated financial statements for further information.
Item 9.
Item 9. Changes in and disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of Registrant
a. Identification of Directors - Registrant has no directors.
b. Identification of Executive Officers
The General Partner of the Registrant is Dover Historic Advisors V (DoHA-V), a Pennsylvania general partnership. The partners of DoHA-V are as follows:
Name Age Position Term of Office Period Served
SWDHA, Inc. -- Partner in DoHA-V No fixed term Since May 1997
EPK, Inc. -- Partner in DoHA-V No fixed term Since May 1997
For further description of DHP, Inc., see paragraph e. of this Item. There is no arrangement or understanding between either person named above and any other person pursuant to which any person was or is to be selected as an officer.
c. Identification of Certain Significant Employees. Registrant has no employees. Its administrative and operational functions are carried out by a property management and partnership administration firm engaged by the Registrant.
d. Family Relationships. There is no family relationship between or among the executive officers and/or any person nominated or chosen by Registrant to become an executive officer.
e. Business Experience. DoHA-V is a general partnership formed in 1988. The General Partner is responsible for management and control of Registrant's affairs and will have general responsibility and authority in conducting its operations. The General Partner may retain its affiliates to manage certain of the Properties.
On May 13, 1997, SWDHA, Inc. replaced Gerald Katzoff and EPK, Inc. replaced DHP, Inc. as partners of DoHA-V. Spencer Wertheimer, the President of SWDHA, Inc., is an attorney with extensive experience in real estate activities ventures.
EPK, Inc. is a Delaware corporation formed for the purpose of managing properties or interests therein. EPK, Inc. is a wholly-owned subsidiary of D, LTD, an entity formed in 1985 to act as the holding company for various corporations engaged in the development and management of historically certified properties and conventional real estate as well as a provider of financial (non- banking) services. EPK, Inc. is an affiliate of DoHA-V.
The officers and directors of EPK, Inc. are described below.
Spencer Wertheimer was appointed on May 13, 1997 as President, Treasurer and Sole Director of EPK, Inc. Mr. Wertheimer is an attorney with extensive experience in real estate activities ventures.
Donna M. Zanghi (age 41) was appointed on May 13, 1997 as Vice President and Secretary of EPK, Inc. Ms. Zanghi previously served as Secretary and Treasurer of DHP, Inc. since June 14, 1993 and as a Director and Secretary/Treasurer of D, LTD. She was associated with DHP, Inc. and its affiliates since 1984 except for the period from December 1986 to June 1989 and the period from November 1, 1992 to June 14, 1993.
Michele F. Rudoi (age 33) was appointed on May 13, 1997 as Assistant Secretary of EPK, Inc. Ms. Rudoi previously served as Assistant Secretary and Director of both D, LTD and DHP, Inc. since January 27, 1993.
Item 11.
Item 11. Executive Compensation
a. Cash Compensation - During 1998, Registrant has paid no cash compensation to DoHA-V, any partner therein or any person named in paragraph c. of Item 10.
b. Compensation Pursuant to Plans - Registrant has no plan pursuant to which compensation was paid or distributed during 1998, or is proposed to be paid or distributed in the future, to DoHA- V, any partner therein, or any person named in paragraph c. of Item 10 of this report.
c. Other Compensation - No compensation not referred to in paragraph a. or paragraph b. of this Item was paid or distributed during 1998 to DoHA-V, any partner therein, or any person named in paragraph c. of Item 10.
d. Compensation of Directors - Registrant has no directors.
e. Termination of Employment and Change of Control Arrangement - Registrant has no compensatory plan or arrangement, with respect to any individual, which results or will result from the resignation or retirement of any individual, or any termination of such individual's employment with Registrant or from a change in control of Registrant, or a change in such individual's responsibilities following such a change in control.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
a. Security Ownership of Certain Beneficial Owners - No person is known to Registrant to be the beneficial owner of more than five percent of the issued and outstanding Units.
b. Security Ownership of Management - No equity securities of Registrant are beneficially owned by any person named in paragraph c. of Item 10.
c. Changes in Control - Registrant does not know of any arrangement, the operation of which may at a subsequent date result in a change in control of Registrant.
Item 13.
Item 13. Certain Relationships and Related Transactions
a. Pursuant to Registrant's Amended and Restated Agreement of Limited Partnership, DoHA-V is entitled to 10% of Registrant's distributable cash from operations in each year. There was no such share allocable to DoHA-V for fiscal years 1996 through 1998.
b. Certain Business Relationships - Registrant has no directors.
c. Indebtedness of Management - No employee of Registrant, Registrant's general partner, (or any employee thereof), or any affiliate of any such person, is or has at any time been indebted to Registrant.
PART V
Item 14.
Item 14. (A) Exhibits, Financial Statement Schedules and Reports on Form 8-K.
1. Financial Statements:
a. Consolidated Balance Sheets at December 31, 1998 and 1997.
b. Consolidated Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996.
c. Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 1998, 1997 and 1996.
d. Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996.
e. Notes to consolidated financial statements.
2. Financial statement schedules:
a. Schedule XI - Real Estate and Accumulated Depreciation.
b. Notes to Schedule XI.
3. Exhibits:
(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 of this Form 10-K.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended December 31, 1998.
(c) Exhibits:
See Item 14(A)(3) above.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) 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.
DIVERSIFIED HISTORIC INVESTORS V
Date: April 26, 1998 By: Dover Historic Advisors V, General Partner -------------- By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer ---------------------- SPENCER WERTHEIMER President and Treasurer
By: /s/ Michele F. Rudoi ----------------------- MICHELE F. RUDOI, Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
DOVER HISTORIC ADVISORS V General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer April 26, 1998 ------------------------ -------------- SPENCER WERTHEIMER President and Treasurer
By: /s/ Michele F. Rudoi April 26, 1998 ------------------------- -------------- MICHELE F. RUDOI, Assistant Secretary