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, 2001, 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. In October 1996, its interest in one property was sold and effective as of January 1999, its interest in another was foreclosed. It currently owns one property. See Item 2.
Item 2. Properties
As of the date hereof, Registrant owned one property. A summary description of that property is given below.
The Lofts at Red Hill is a 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 square foot) ("sf"). In September 1997, a mortgage was placed on the property in the amount of $400,000 (principal balance of $459,699 at December 31, 2001). The proceeds from the mortgage were utilized to satisfy certain outstanding liabilities of the Registrant. The note accrues interest at 14% and is payable at 10%, with the entire principal balance and accrued interest due October 1, 2002. The note is current, as payments in excess of interest at 10% are being made. The Registrant intends to renew this mortgage at the same or better terms with the current lender or refinance it in the open market.
The property is managed by BCMI. As of December 31, 2001, 18 apartment units were under lease (85%) at monthly rental rates ranging from $415 to $665. All leases are renewable, one-year leases. The occupancy as of year end for the previous four years was 85% for 2000, 86% for 1999, 76% for 1998, and 92% for 1997. The monthly rental range has been approximately the same since 1997. For federal income tax purposes, this property has a basis of $1,469,408 and is depreciated using the straight-line method with a useful life of 27.5 years. The annual real estate taxes are $15,529 based on an assessed value of $803,520 taxed at a rate of $19.721 per $1,000 of assessed value. 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
To the best of its knowledge, as of December 31, 2001, Registrant was not a party to, nor was its property the subject of, any pending material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were 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 76 units were sold or exchanged of record in 2001.
b. As of December 31, 2001, there were 1,354 record holders of Units.
c. Registrant did not declare any cash dividends in 2001 or 2000.
Item 6.
Item 6. Selected Financial Data
The following selected financial data are for the five years ended December 31, 2001. 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.
2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- Rental income $133,688 $ 133,925 $ 110,807 $ 121,383 $ 20,685 Hotel income 0 0 18,181 1,131,690 1,755,787 Interest income 5,478 305 2,746 2,295 17,449 Net (loss) income (135,310) (132,797) 3,630,276 (2,777,858)(2,211,312) Net (loss) income per Unit (12.02) (11.80) 322.56 (246.82) (196.48) Total assets (net of depreciation and amortization) 954,952 1,065,966 1,179,580 6,764,832 7,964,174 Debt obligations 459,699 429,645 417,399 7,566,974 6,804,113
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
(1) Liquidity
As of December 31, 2001, Registrant had cash of $4,974. Such funds are expected to be used to pay liabilities and general and administrative expenses of Registrant, and to fund cash deficits of the property. 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 lender in order to remain current on all obligations. The Registrant is not aware of any additional sources of liquidity.
As of December 31, 2001, Registrant had restricted cash of $118,001 consisting primarily of funds held as security deposits and escrows for real estate taxes. 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.
(3) Results of Operations
During 2001, Registrant incurred a net loss of $135,310 ($12.02 per limited partnership unit) compared to a net loss of $132,797 ($11.80 per limited partnership unit) in 2000 and a net income of $3,630,276 ($322.56 per limited partnership unit) in 1999.
Rental income was $133,688 in 2001, $133,925 in 2000, and $110,807 in 1999. The increase in rental income from 1999 to 2000 is due to an increase in average occupancy (82% to 90%) at the Lofts at Red Hill.
Hotel income was $0 in both 2000 and 2001, and $18,181 in 1999. The decrease in hotel income from 1999 to 2001 is due to the foreclosure of the Redick Plaza Hotel effective as of January 1999.
Rental operations expense was $87,042 in 2001, $83,724 in 2000, and $81,554 in 1999. The increase from 2000 to 2001 is due to an increase in commission expense, partially offset by a decrease in maintenance expense. The increase in commission expense is due to an increase in the turnover of apartment units. The decrease in maintenance expense is due to a decrease in painting expense and cleaning service expense. The increase from 1999 to 2000 is due to an increase in maintenance expense at the Lofts at Red Hill due to painting and plumbing repairs made at the property throughout the year.
Hotel operations expense was $0 in both 2000 and 2001, and $96,318 in 1999. The decrease from 1999 to 2001 is due to the foreclosure of the Redick Plaza Hotel effective as of January 1999.
General and administrative expense was $0 in both 2000 and 2001, and $75,646 in 1999. The Registrant ceased accruing partnership administration fees in 2000. The cash flow and debt of the Registrant make it unlikely that these fees will be paid.
Interest expense was $63,854 in 2001, $60,246 in 2000, and $100,735 in 1999. The increase in interest expense from 2000 to 2001 is due to an increase in the principal balance of the loan on which the interest is calculated. The decrease in interest expense from 1999 to 2000 is due to the foreclosure of the Redick Plaza Hotel effective as of January 1999.
Depreciation and amortization expense was $123,580 in 2001, $123,057 in 2000, and $141,961 in 1999. The increase from 2000 to 2001 is due to additional capital improvements made at the property during 2001. The decrease from 1999 to 2000 is due to the foreclosure of the Redick Plaza Hotel effective as of January 1999.
Effective as of January 1999 the Redick Plaza Hotel was foreclosed by the second mortgage lender, with the consent of the first mortgage lender, by recordation of a deed in lieu of foreclosure. The deed was recorded in June 1999 to be effective as of January 15, 1999. As a result, the Registrant realized an extraordinary gain on forgiveness of indebtedness in the amount of $3,994,755, which is the difference between the debt of the hotel and the net book value of its assets.
During the year, a net loss of approximately $72,000 was incurred at the Registrant's remaining property compared to net loss of approximately $71,000 in 2000 and net income of $3,765,000 in 1999. Included in income for 1999 is extraordinary income of $3,994,755 related to the foreclosure of the Redick Plaza Hotel effective as of January 1999. A discussion of property operations/activities follows.
In 2001, Registrant incurred a net loss of $72,000 at the Lofts at Red Hill including $62,000 of depreciation and amortization expense compared to a net loss of $71,000 including $61,000 of depreciation and amortization expense in 2000, and a net loss of $90,000 including $61,000 of depreciation and amortization expense in 1999. The increase in net loss from 2000 to 2001 is due to the increase in leasing commission expense and interest expense, partially offset by a decrease in maintenance expense. The increase in leasing commission expense is due to the increase in the turnover of apartment units and the increase in interest expense is due to an increase in the principal balance of the loan on which the interest is calculated. The decrease in maintenance expense is due to a decrease in painting expense and cleaning service expense. The decrease in net loss from 1999 to 2000 is due to an increase in rental income and a decrease in rental operations expense. The increase in rental income is due to an increase in average occupancy (82% to 90%). The decrease in rental operations expense is due to a decrease in legal and accounting fees. In 1999, Registrant recognized income of $3,855,000 at the Redick Plaza Hotel, including $19,000 of depreciation and amortization expense. Included in income for 1999 is extraordinary income of $3,995,000 related to the foreclosure of the Redick Plaza Hotel effective as of January 1999.
Item 7A.
Item 7A. 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, 2001 and 2000 and the related statements of operations and changes in partners' equity and cash flows for the years ended December 31, 2001, 2000 and 1999. 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 auditing standards generally accepted in the United States of America. 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, 2001 and 2000, and the results of operations and cash flows for the years ended December 31, 2001, 2000 and 1999 in conformity with accounting principles generally accepted in the United States of America.
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 20 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 March 26, 2002
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, 2001 and 2000 10 Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000, and 1999 11
Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 2001, 2000, and 1999 12
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999 13
Notes to consolidated financial statements 14-18
Financial statement schedules:
Schedule XI - Real Estate and Accumulated 20 Depreciation
Notes to Schedule XI 21
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, 2001 and 2000
Assets
2001 2000 Rental properties at cost: Land $ 61,046 $ 61,046 Buildings and improvements 1,445,431 1,445,431 Furniture and fixtures 92,107 89,316 ---------- ---------- 1,598,584 1,595,793 Less - accumulated depreciation (828,871) (769,734) ---------- ---------- 769,713 826,059 Cash and cash equivalents 4,974 7,545 Restricted cash 118,001 112,630 Accounts and notes receivable 13,930 6,954 Other assets (net of amortization of $289,362 and $224,919, respectively) 48,334 112,778 ---------- ---------- Total $ 954,952 $1,065,966 ========== ==========
Liabilities and Partners' Equity
Liabilities: Debt obligations $ 459,699 $ 429,645 Accounts payable: Trade 127,132 115,800 Related parties 33,656 33,656 Taxes 0 17,332 Other liabilities 13,564 12,811 Tenant security deposits 9,205 9,715 ---------- ---------- Total liabilities 643,256 618,959 Partners' equity 311,696 447,007 ---------- ---------- Total $ 954,952 $1,065,966 ========== ==========
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, 2001, 2000 and 1999
2001 2000 1999 ---- ---- ---- Revenues: Rental income $133,688 $133,925 $ 110,807 Hotel income 0 0 18,181 Interest income 5,478 305 2,746 -------- -------- ---------- Total revenues 139,166 134,230 131,734 -------- -------- ---------- Costs and expenses: Rental operations 87,042 83,724 81,554 Hotel operations 0 0 96,317 General and administrative 0 0 75,646 Interest 63,854 60,246 100,735 Depreciation and amortization 123,580 123,057 141,961 -------- -------- ---------- Total costs and expenses 274,476 267,027 496,213 -------- -------- ---------- Loss before extraordinary item (135,310) (132,797) (364,479) Extraordinary gain on extinguishment of debt 0 0 3,994,755 -------- -------- ---------- Net (loss) income ($135,310)($132,797)($3,630,276) ======== ======== ==========
Net (loss) income per limited partnership unit: Loss before extraordinary item ($ 12.02)($ 11.80) ($ 32.39) Extraordinary item 0 0 354.95 -------- -------- --------- ($ 12.02)($ 11.80) $ 322.56 ======== ======== =========
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, 2001, 2000 and 1999
Dover Historic Limited Advisors Partners V (1) (2) Total -------- -------- ----- Percentage participation in profit or loss 1% 99% 100% == === ==== Balance at December 31, 1998 ($199,658) ($2,850,814) ($3,050,472) Net income 36,303 3,593,973 3,630,276 -------- ---------- ---------- Balance at December 31, 1999 (163,355) 743,159 579,804 Net loss (1,328) (131,469) (132,797) -------- ---------- ---------- Balance at December 31, 2000 (164,683) 611,690 447,007 Net loss (1,353) (133,957) (135,310) -------- ---------- ---------- Balance at December 31, 2001 ($166,036) $ 477,733 $ 311,697 ======== ========== ==========
(1) General Partner.
(2) 11,142 limited partnership units outstanding at December 31, 2001, 2000, and 1999.
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, 2001, 2000 and 1999
2001 2000 1999 ---- ---- ---- Cash flows from operating activities: Net (loss) income ($135,310) ($132,797) $3,630,276 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 123,580 123,057 141,961 Extraordinary gain on extinguishment of debt 0 0 (3,994,755) Changes in assets and liabilities: (Increase) decrease in restricted cash (5,371) 3,409 (3,612) Increase in accounts and notes receivable (6,977) (6,804) (90) Increase in accounts payable - trade 11,332 4,276 114,167 (Decrease) increase in accounts payable - taxes (17,332) 3,639 57,756 Increase in interest payable 0 0 42,320 Increase (decrease) in accrued liabilities 753 (1,350) 153 (Decrease) increase in tenant security deposits (510) 371 1,199 -------- -------- ---------- Net cash used in operating activites (29,835) (6,199) (10,625) -------- -------- ---------- Cash flows from investing activities: Capital expenditures (2,790) (2,453) (1,420) -------- -------- ---------- Net cash used in investing activities (2,790) (2,453) (1,420) -------- -------- ---------- Cash flows from financing activities: Proceeds from debt financings 30,054 12,246 10,414 Repayments of debt financings 0 0 (8,404) -------- -------- ---------- Net cash provided by financing activities 30,054 12,246 2,010 -------- -------- ---------- (Decrease) increase in cash and (2,571) 3,594 (10,035) cash equivalents Cash and cash equivalents at beginning of year 7,545 3,951 13,986 -------- --------- ----------- Cash and cash equivalents at end of year $ 4,974 $ 7,545 $ 3,951 ======== ========= ===========
Supplemental Disclosure of Cash Flow Information: Cash paid during the year for interest $ 48,000 $ 48,000 $ 48,000
The accompanying notes are an integral part of these financial statments.
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION Diversified Historic Investors V (the "Partnership") is a Pennsylvania limited partnership formed in July 1987 to acquire, rehabilitate, renovate, manage, operate, hold, sell, exchange, and otherwise deal in and with real properties containing improvements which are certified historic structures, as defined in the Internal Revenue Code (the "Code"), or which were eligible for designation as such, and to engage in any and all activities related or incidental thereto. Any rehabilitations undertaken by the Partnership were done with a view to obtaining certification of expenditures as "qualified rehabilitation expenditures" as defined in the Code.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows:
1. Principles of Consolidation
The accompanying financial statements include the accounts of the Partnership and a subsidiary partnership, with appropriate elimination of inter-partnership transactions and balances. These financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of the General Partner, are necessary for a fair statement of the results for those years.
2. Depreciation
Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Buildings and improvements are depreciated over 25 years and furniture and fixtures over five years.
3. Net Loss Per Limited Partnership Unit
The net loss per limited partnership unit is based on the weighted average number of limited partnership units outstanding (11,142 in 2001, 2000, and 1999).
4. Income Taxes Income taxes or credits resulting from earnings or losses are payable by or accrue to the benefit of the partners; accordingly, no provision has been made for income taxes in these financial statements.
5. Cash and Cash Equivalents
The Partnership considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents.
6. Restricted Cash
Restricted cash includes amounts held for tenant security deposits and real estate tax reserves.
7. Revenue Recognition
Revenues are recognized when rental payments are due on a straight-line basis. Rental payments received in advance are deferred until earned.
8. Deferred Expenses
Loan fees have been incurred with respect to certain loans. Such fees were deferred and are being amortized over the term of the related loans.
9. Rental Properties
Rental properties are stated at cost. A provision for impairment of value is recorded when a decline in value of a property is determined to be other than temporary as a result of one or more of the following: (1) a property is offered for sale at a price below its current carrying value, (2) a property has significant balloon payments due within the foreseeable future, which the Partnership does not have the resources to meet, and anticipates it will be unable to obtain replacement financing or debt modification sufficient to allow it to continue to hold the property over a reasonable period of time, (3) a property has been, and is expected to continue, generating significant operating deficits and the Partnership is unable, or unwilling, to sustain such deficits, and has been unable, or anticipates it will be unable, to obtain debt modification, financing or refinancing sufficient to allow it to continue to hold the property for a reasonable period of time or (4) a property's value has declined based on management's expectations with respect to projected future operational cash flows and prevailing economic conditions. An impairment loss is indicated when the undiscounted sum of estimated future cash flows from an asset, including estimated sales proceeds, and assuming a reasonable period of ownership up to 5 years, is less than the carrying amount of the asset. The impairment loss is measured as the difference between the estimated fair value and the carrying amount of the asset. In the absence of the above circumstances, properties and improvements are stated at cost. An analysis is done on an annual basis at December 31 of each year.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
NOTE C - PARTNERSHIP AGREEMENT
1. Capital Contributions
The Partnership offered investors limited partnership units at $1,000 per unit; the minimum purchase per investor was three units. A total of 11,142 limited partnership units were sold. After payment of costs of issuance as provided for in the Agreement and the withdrawal of the initial limited partner, initial Partnership capital was $9,722,760 from limited partners and $9,900 from the General Partner.
2. Distributions from Operations
The Agreement provides that, beginning with the date of the admission of the additional limited partners, all distributable cash from operations (as defined) will be distributed 99% to the limited partners and 1% to the General Partner. The General Partner also receives an incentive management fee equal to 4% of available cash (as defined).
All distributable cash from sales or dispositions will be distributed to the limited partners in an amount equal to their adjusted invested capital plus an amount equal to the greater of an 8.5% cumulative, non-compounded annual return on the average after-credit invested capital or a 6% cumulative, non-compounded annual return on average adjusted invested capital, less amounts previously distributed. Thereafter, after receipt by the General Partner or its affiliates of any accrued but unpaid real estate brokerage commissions, the balance will be distributed 15% to the General Partner and 85% to the limited partners.
3. Allocation of Net Income and Net Losses from Operations
Net income and net loss (as defined) will be allocated 99% to the limited partners and 1% to the General Partner with certain exceptions as defined in the Agreement.
The Agreement provides that the fiscal year of the Partnership will be the calendar year and that the partnership shall continue until December 31, 2037, unless sooner terminated upon the occurrence of certain events. NOTE D - ACQUISITIONS
The Partnership acquired two properties and a general partnership interest in a partnership, which acquired a property in December 1987, as discussed below.
The Partnership purchased a four-story building located in Pennsylvania for an acquisition and rehabilitation price of $1,325,000.
The Partnership purchased an 89-room hotel located in Nebraska. The acquisition and rehabilitation price of this property was $9,500,000. This property was foreclosed effective as of January 1999.
The Partnership was admitted, with a 95% general partner interest, to a Pennsylvania limited partnership, which owned a building located in Louisiana consisting of 105 residential apartment units and 6,900 square feet of commercial space, for a cash contribution of $3,450,000. This property was sold in October 1996.
NOTE E- DEBT OBLIGATIONS
Debt obligations consist of the following: December 31, 2001 2000 ---- ----
Note payable, interest accrues at 14% and $459,699 $429,645 is payable at 10%; principal due October -------- -------- 1, 2002.
Annual principal payments of debt obligations are as follows:
Year ending December 31, 2001 $ 0 2002 459,699 2003 0 2004 0 2005 0 -------- $459,699 ========
NOTE F - TRANSACTIONS WITH RELATED PARTIES
Included in Accounts Payable - Related Parties was $33,656 at December 31, 2001 and 2000 owed to the co-general partner in the partnership referred to in Note D, for amounts owed in connection with the sale of such partnership's property.
NOTE G - EXTRAORDINARY GAIN
Effective as of January 1999, the Redick Plaza Hotel was foreclosed by the second mortgage lender, with the consent of the first mortgage lender, by recordation of deed in lieu of foreclosure. As a result, the Registrant realized an extraordinary gain on forgiveness of indebtedness in the amount of $3,994,755, which is the difference between the debt of the hotel and the net book value of its assets.
NOTE H - INCOME TAX BASIS RECONCILIATION
Certain items enter into the determination of the results of operations in different time periods for financial reporting ("book") purposes and for income tax ("tax") purposes. A reconciliation of the results of operations follows:
For the Years Ended December 31, 2001 2000 1999 ---- ---- ---- Net income (loss) - book ($ 135,310)($ 132,797) $3,630,276 Excess of book over tax depreciation 9,130 4,609 6,033 Minority interest - tax only 0 0 (17,168) Other 2,333 0 0 Extraordinary gain on debt extinguishment 0 0 (946,522) ---------- ---------- ---------- Net income (loss) - tax ($ 123,847)($ 128,188) $2,672,619 ========== ========== ==========
Partners' equity - book $ 311,696 $ 447,007 $ 579,804 Costs of issuance 1,419,240 1,419,240 1,419,240 Cumulative book over tax loss 988,648 977,184 972,575 Facade easement donation (tax only) (612,750) (612,750) (612,750) ---------- ---------- ---------- Partners' equity - tax $2,106,834 $2,230,681 $2,358,869 ========== ========== ==========
SUPPLEMENTAL INFORMATION
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2001 Cost Capitalized Initial Cost Subsequent to Partnership to Acquisition
Buildings and Date Date Encum- Improve- Improve- of Acquir- Description brances Land ments ments Constr. ed - ----------- ------- ---- --------- -------- ------ ------- (a) (e) (a)
21 unit condominium Complex in $459,699 $61,046 $1,461,413 $ 8,813 1987 12/31/87 Red Hill, PA
Personal property located in New Orleans, LA 0 0 0 67,312 1988 12/30/87 -------- ------- ---------- ------- TOTAL $459,699 $61,046 $1,461,413 $76,125 ======== ======= ========== =======
Gross Amount at which Carried at December 31, 2001
Buildings and Improve- Accumulated Description Land ments Total Depreciation - ----------- ---- --------- ----- ------------ (a) (b)(c) (c)(d) 21 unit condominium complex in Red Hill, PA $61,046 $1,470,226 $1,531,272 $828,871
Personal property located in New Orleans, LA 0 67,312 67,312 0 ------- ---------- ---------- -------- TOTAL $61,046 $1,537,538 $1,598,584 $828,871 ======= ========== ========== ========
DIVERSIFIED HISTORIC INVESTORS V (a limited partnership)
NOTES TO SCHEDULE XI
December 31, 2001
(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 were rehabilitated.
(B) The cost of real estate owned at December 31, 2001, for Federal income tax purposes was approximately $1,469,408. The depreciable basis of buildings and improvements was reduced for Federal income tax purposes by 50% of the historic rehabilitation credit obtained.
(C) Reconciliation of land, buildings and improvements:
2001 2000 1999 ---- ---- ---- Balance at beginning of year $1,595,794 $1,593,340 $11,791,970 Additions during the year: Improvements 2,790 2,453 1,420 Deductions during the year: Foreclosure of property 0 0 (10,200,050) ---------- ---------- ----------- Balance at end of year $1,598,854 $1,595,793 $ 1,593,340 ========== ========== ===========
Reconciliation of accumulated depreciation:
Balance at beginning of year $ 769,734 $ 711,121 $ 5,752,945 Depreciation expense for the year 59,137 58,613 76,892 Deductions during the year 0 0 (5,118,716) ---------- ---------- ----------- Balance at end of year $ 828,871 $ 769,734 $ 711,121 ========== ========== ===========
(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 DoHA-V, 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 and 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 and ventures.
Donna M. Zanghi (age 44) 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., a subsidiary of D, LTD, since June 14, 1993 and as a Director and Secretary/Treasurer of D, LTD. She has been 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 36) was appointed on May 13, 1997 as Assistant Secretary of EPK, Inc. Ms. Rudoi has 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 2001, Registrant 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 2001, 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 2001 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. Neither the general partner of the registrant, nor its partners own any units.
Security Ownership of Management - None.
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 1999 through 2001.
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 8K.
1. Financial Statements:
a. Consolidated Balance Sheets at December 31, 2001 and 2000.
b. Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000 and 1999.
c. Consolidated Statements of Changes in Partners' Equity for the Years Ended December 31, 2001, 2000 and 1999.
d. Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999.
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.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended December 31, 2001.
(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
Date: June 2, 2003 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 June 2, 2003 ---------------------- ------------ SPENCER WERTHEIMER President and Treasurer
By: /s/ Michele F. Rudoi June 2, 2003 ---------------------- ------------ MICHELE F. RUDOI, Assistant Secretary