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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
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[ ] 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 0-14934
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DIVERSIFIED HISTORIC INVESTORS
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2312037
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1521 LOCUST STREET, PHILADELPHIA, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215)557-9800
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act: 11,609.6 Units
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UNITS OF LIMITED PARTNERSHIP INTEREST
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(Title of Class)
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
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of Units held by non-affiliates of the
Registrant: Not Applicable*
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* Securities not quoted in any trading market to Registrant's
knowledge.
PART I
Item 1. Business
a. General Development of Business
Diversified Historic Investors ("Registrant") is a
limited partnership formed in 1984 under Pennsylvania law. As of
December 31, 2000, Registrant had outstanding 11,609.6 units of
limited partnership interest (the "Units").
Registrant is presently in its operating stage. It
originally owned eight properties or interests therein. Partial
or complete interests in six properties have been lost through
foreclosure. See Item 2. Properties, for a description thereof.
It currently owns two properties and a portion of its original
interest in one property. For a discussion of the operations of
the Registrant, See Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
b. Financial Information about Industry Segments
The Registrant operates in one industry segment.
c. Narrative Description of Business
Registrant is in the business of operating, holding,
selling, exchanging and otherwise dealing in and with real
properties containing improvements which are "Certified Historic
Structures," as such term is defined in the Internal Revenue Code
(the "Code"), for use as apartments, offices, hotels and
commercial spaces, or any combination thereof, or low income
housing eligible for the tax credit provided by Section 42 of the
Code, and such other uses as the Registrant's general partner may
deem appropriate.
Since the Registrant's inception, all the properties
acquired either by the Registrant, or the subsidiary partnerships
in which it has an interest, have been rehabilitated and
certified as historic structures and have received the related
investment tax credit. Each of the three properties currently
owned by the Registrant is held for rental operations. At this
time it is anticipated that all the properties will continue to
be held for this purpose. At such time as real property values
begin to increase, the Registrant will re-evaluate its investment
strategy regarding the properties.
As of December 31, 2000, Registrant owned three
properties located in Pennsylvania. In total, the three
properties contain 38 apartment units and 6,187 square feet
("sf") of commercial space. As of December 31, 2000, 37 of the
apartment units were under lease at monthly rental rates ranging
from $715 to $1,450. In addition, all of the commercial space
was under lease at annual rates ranging from $7.07 to $13.50 per
square foot. Rental of the apartments and commercial space is
not expected to be seasonal. For further discussion of the
properties, see Item 2. Properties.
The Registrant is affected by and subject to the
general competitive conditions of the residential and commercial
real estate industries. The properties currently owned by the
Registrant are all located in the Olde City Historic District in
Philadelphia, Pennsylvania in which there are several similar
historically certified rehabilitated buildings. The Registrant's
main competitor in this market is Historic Landmarks for Living,
which owns several similar residential buildings in the District.
The District has recently re-emerged as a popular place to live
for young professionals and has created a demand for the
apartments units owned by the Registrant.
Registrant has no employees. Registrant's activities
are overseen by Brandywine Construction & Management, Inc.,
hereafter known as "BCMI", a real estate management firm.
d. Financial Information About Foreign and Domestic Operations
and Export Sales.
See Item 8. Financial Statements and Supplementary
Data.
Item 2. Properties
As of the date hereof, Registrant owned three
properties or interests therein. A summary description of each
property held at December 31, 2000 is given below.
a. The Smythe Stores Condominium Complex - consists of
five adjoining buildings located at 101-111 Arch Street, in the
Olde City Historic District of Philadelphia, Pennsylvania. In
November 1984, the Registrant acquired 20 residential units of
the complex's 49 units as the 100% equity owner of these units.
The acquisition and rehabilitation cost was $4,056,375 ($171 per
sf) funded by an equity contribution and a series of condominium
mortgages with an original combined principal balance of
$2,440,000. The combined principal balance at December 31, 2000
is $1,792,063. Each mortgage bears interest at 12%. Scheduled
interest payments were made through April 1, 1988. At that time,
due to insufficient cash flow, the Registrant ceased making
payments. In 1990, the lender was placed in receivership by the
Resolution Trust Corporation ("RTC"). The two entities which
purchased the mortgages from the RTC each filed complaints for
foreclosure due to nonpayment. Foreclosure proceedings on nine
units were filed in the Court of Common Pleas, Philadelphia
County in the matter of Bruin Holdings, Inc. ("Bruin") v.
Diversified Historic Investors and foreclosure proceedings on
eleven units were filed in the Court of Common Pleas,
Philadelphia County in the matter of EMC Mortgage Corporation
("EMC") v. Diversified Historic Investors. In March 1996, the
Bruin cases were settled and the nine mortgages were sold. The
Registrant entered into an agreement with the new holder of the
mortgages whereby monthly payments of interest are to be made in
an amount equal to net operating income. In December 1996, the
eleven units associated with the EMC cases were foreclosed by the
lender. During 2000, two units were sold at sales prices of
$284,302, and $426,639, respectively. The net proceeds of each
sale were used to pay accrued interest on the mortgages.
The remaining four units are managed by BCMI. As of
December 31, 2000, three apartment units were under lease (75%)
at monthly rental rates ranging from $1,170 to $1,575. All
leases are renewable, one-year leases. The occupancy at the end
of the previous four years was 67% for 1999, 100% for 1998, 96%
for 1997 and 78% for 1996. The monthly rental range at the end
of the previous four years was $865 to $1,500 for 1999, $825 to
1,390 for 1998, $715 to $1,350 for 1997 and $825 to $1,073 for
1996. For tax purposes, this property has a federal tax basis of
$740,653 and is depreciated using the straight-line method with a
useful life of 27.5 years. The annual real estate taxes are
$4,909, which is based on an assessed value of $60,000 taxed at a
rate of $8.181 per $100. It is the opinion of the management of
the Registrant that the property is adequately covered by
insurance.
b. The Third Quarter Apartments - consists of 16
apartments and 1,000 square feet of commercial space located at
47 North Third Street Philadelphia, Pennsylvania. In November
1984, the Registrant acquired the building and is the 100% equity
owner of the property. The property was acquired and
rehabilitated for $1,725,000 ($102 per sf), funded by an equity
contribution and two mortgage loans of $860,000 and $140,000. On
June 1, 1993, the first mortgage was modified. The terms of the
modification included the addition of all accrued and unpaid
interest to the principal balance, changing the due date to
October 1999 and revising the payment terms. In October 1998,
the due date was extended to October 2003. The new payment terms
require monthly payments of interest equal to net operating
income, with a minimum of $6,833 per month. The property has
been making payments of at least the minimum in order to keep the
loan current. The first mortgage has a principal balance at
December 31, 2000 of $1,217,307 and bears interest at 12%. The
second note has a principal balance of $138,444, bears interest
at 15%, and was due in 1992. In 1991, the Registrant stopped
making scheduled mortgage payments. No notice of default has yet
been received from the lender.
The Third Quarter Apartments is managed by BCMI. As
of December 31, 2000, 16 units were under lease (100%) at monthly
rental rates ranging from $715 to $1,285 and one condominium
unit, which has 1,000 square feet of commercial space was under
lease (100%) at an annual rental rate of $13.50 per square foot.
All residential leases are renewable, one-year leases. The
residential occupancy for the previous four years was 100% for
1999, 94% for 1998, 88% for 1997 and 93% for 1996. The monthly
rental range at the end of the previous four years was $675 to
$1,200 for 1999, $635 to $1,100 for 1998, $625 to $1,030 for 1997
and $560 to $995 for 1996. The occupancy for the commercial
space at the end of the previous four years has been 100% for
1999, 100% for 1998, 58% for 1997 and 100% for 1996. The range
for annual rent was $11.16 per sf for 1999, $11.16 per sf for
1998, $8.40 per sf for 1997 and $9.90 per sf for 1996. The
commercial lease at Third Quarter expires in December 2004. For
tax purposes, this property has a federal tax basis of $1,631,304
and is depreciated using the straight-line method with a useful
life of 27.5 years. The annual real estate taxes are $17,279,
which is based on an assessed value of $211,200 taxed at a rate
of $8.181 per $100. It is the opinion of the management of the
Registrant that the property is adequately covered by insurance.
c. Wistar Alley - located in the District at 30-32
North Third Street, in Philadelphia, Pennsylvania, consists of
two adjoining buildings, which contain 18 residential units and
5,187 sf of commercial area. The Registrant acquired the
buildings in December 1984 and is the 100% equity owner of the
property. The property was acquired and rehabilitated for
$2,230,000 ($101 per sf), funded by an equity contribution and
three mortgage loans aggregating $1,400,000. On June 1, 1993,
the first mortgage was modified. The terms of the modification
included the addition of all accrued and unpaid interest to the
principal balance, changing the due date to October 1998 and
revising the payment terms. In October 1998, the due date was
extended to October 2003. The new payment terms require monthly
payments of interest equal to net operating income, with a
minimum of $9,000 per month. The property has been making
payments of at least the minimum amount in order to keep the loan
current. The first mortgage has a principal balance at December
31, 2000 of $1,420,794 and bears interest at 2 1/2% over the
Federal Home Bank Board Cost of Funds Index with a maximum of 14
1/2% and a minimum of 8 1/2%. The rate was 8 1/2% at December
31, 2000. The second and third notes have principal balances at
December 31, 2000 of $380,114 and $96,689. The notes bear
interest at 11%, and prime plus 1 1/2 (11.5%), as of December 31,
2000, respectively, and both principal and interest are due at
the earlier of the sale of the property or the year 2009.
Wistar Alley is managed by BCMI. As of December 31,
2000, 18 residential units were under lease (100%) at monthly
rents ranging from $785 to $1,450 and 5,187 square feet of
commercial space was under lease (100%) at annual rental rates
ranging from $7.07 to $11.33 per sf. All residential leases are
renewable, one-year leases. The residential occupancy at the end
of the previous four years was 100% for 1999, 94% for 1998, 90%
for 1997 and 88% for 1996. The monthly rental range at the end
of the previous four years was $740 to $1,350 for 1999, $730 to
$1,125 for 1998, $650 to $1,100 for 1997 and $675 to $920 for
1996. The commercial occupancy at the end of the previous four
years has been 100%. The average annual rental rate at the end
of the previous four years has been $7.07 to $11.00 per sf in
1999, $6.64 to $10.46 per sf in 1998, $6.00 to $13.85 per sf for
1997 and $5.14 to $13.85 per sf for 1996. The two commercial
leases expire in May and July of 2002.
For tax purposes, this property has federal tax basis
of $1,980,823 and is depreciated using the straight-line method
with a useful life of 27.5 years. The annual real estate taxes
are $22,908, which is based on an assessed value of $280,000
taxed at a rate of $8.181 per $100. It is the opinion of the
management of the Registrant that the property is adequately
covered by insurance.
Item 3. Legal Proceedings
To the best of its knowledge, Registrant is not a 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 fiscal years covered
by this report to a vote of security holders.
PART II
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 20 Units of
record were sold or exchanged in 2000.
b. As of December 31, 2000, there were 1,236 record
holders of Units.
c. Registrant did not declare any cash dividends in
2000 or 1999.
Item 6. Selected Financial Data
The following selected financial data are for the five
years ended December 31, 2000. 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.
2000 1999 1998 1997 1996
Rental income $ 493,215 $ 494,852 $ 486,864 $ 420,903 $ 480,731
Interest
income 1,349 1,557 1,569 620 623
Net (loss)
income (22,275) 396,475 (736,581) (810,675) (127,434)
Net (loss)
income per unit (1.90) 33.81 (62.81) (69.13) (10.86)
Total assets
(net of deprecia-
tion and
amortization) 2,209,406 2,491,417 2,984,193 3,185,727 3,453,392
Debt
obligations 5,045,411 4,586,076 5,879,538 5,877,215 5,834,574
Note: See Part II, Item 7.3 Results of Operations for a
discussion of factors which materially affect the comparability
of the information reflected in the above table.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(1) Liquidity
At December 31, 2000, Registrant had cash of $8,872.
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 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, 2000, Registrant had restricted
cash of $83,662 consisting primarily of funds held as security
deposits and escrows for taxes. As a consequence of these
restrictions as to use, Registrant does not deem these funds to
be a source of liquidity.
In recent years the Registrant has realized
significant losses, including the foreclosure of five properties
and a portion of a sixth property, due to the properties'
inability to generate sufficient cash flow to pay their operating
expenses and debt service. The Registrant has first mortgages in
place on each of its remaining properties that are cash-flow
mortgages, requiring all available cash after payment of
operating expenses to be paid to the first mortgage holder.
Therefore it is unlikely that any cash will be available to the
Registrant to pay its general and administrative expenses, to pay
debt service on the past-due subordinate mortgage with respect to
the Third Quarter or to pay any debt service on the two accrual
mortgages with respect to Wistar Alley.
It is the Registrant's intention to continue to hold
the properties until they can no longer meet debt service
requirements (or with respect to Third Quarter and Wistar Alley,
the lenders seeks payment on the past due mortgages) 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.
Since the lenders have agreed either to forebear
from taking any foreclosure action as long as cash flow payments
are made, to accrue all debt service in lieu of payment, or have
not moved to declare a default (in the case of Third Quarter) for
a substantial period of time after the mortgage due date, the
Registrant believes it is appropriate to continue presenting its
financial statements on a going concern basis.
(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. If the need for capital expenditures does arise, the
first mortgage holder for Third Quarter, Wistar Alley and Smythe
Stores has agreed to fund capital expenditures. There were no
funds accrued for 2000 for capital expenditures.
(3) Results of Operations
During 2000, Registrant incurred a net loss of
$22,275 ($1.90 per limited partnership unit) compared to income
of $396,475 ($38.81 per limited partnership unit) in 1999
compared to a net loss of $736,581 ($62.81 per limited
partnership unit) in 1998.
Rental income was $493,215 in 2000, $494,852 in
1999, and $486,864 in 1998. The decrease from 1999 to 2000 is
due to the sale of two condominium units during 2000 at the
Smythe Stores. The decrease was partially offset by increases in
rental income at Third Quarter and Wistar Alley. Rental income
at Third Quarter increased due to an increase in average
occupancy (96% to 98%) and an increase in average rental rates.
Rental income at Wistar Alley increased due to an increase in
average rental rates. The increase from 1998 to 1999 is due to
an increase in rental income at Third Quarter and Wistar Alley
and partially offset by decrease at Smythe Stores due to the sale
of three condominium units in 1999. During 1999, rental income
at Third Quarter increased due to an increase in the average
occupancy (93% to 98%) and an increase in the average rental
rates. Rental income at Wistar Alley increased due to an
increase in the average rental rates.
Rental operations expense was $297,687 in 2000,
$269,895 in 1999 and $285,652 in 1998. The increase from 1999 to
2000 is due to an increase in rental operations expense at Third
Quarter and Wistar Alley, partially offset by a decrease in
rental operations expense at Smythe Stores. The increase in
rental operating expense at Third Quarter is due to an increase
in maintenance expense and accounting expense. The increase in
maintenance expense is due to an increase in apartment
preparation expense and the increase in accounting expense is due
to prior year invoices paid during 2000. The increase in rental
operating expense at Wistar Alley is due to an increase in
maintenance expense and leasing commissions expense. The decrease
at Smythe Stores is a result of the sale of two condominium units
in 2000. The decrease from 1998 to 1999 is due to a decrease in
rental operations expense at Smythe Stores, which is partially
offset by an increase in rental operations expense at Third
Quarter and at Wistar Alley. The increase at Third Quarter is due
to the increase in average occupancy. Maintenance expense
increased at Wistar Alley due to an increase in the turnover of
apartment units.
Interest expense was $627,735 in 2000, $567,159 in
1999 and $635,899 in 1998. The increase in interest expense from
1999 to 2000 is due to a reclassification by the mortgage lender
at Smythe Stores. The principal balances previously written off
due to the sale of condominium units at Smythe Stores were
reclassified to accrued any unpaid interest in accordance with
the terms of the mortgage. The restoration of the principal
balance resulted in additional interest expense being accrued in
2000 on the principal balance. The decrease in interest expense
from 1998 to 1999 is due to the principal write off reversed in
2000 from the sale of the condominium units at Smythe Stores in
1999.
General and administrative expense was $0 in 2000
and $69,840 in 1999 and 1998. 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.
In 2000, income of approximately $19,000 was
recognized at the Registrant's three properties compared to
income of approximately $516,000 in 1999 and a loss of
approximately $616,000 in 1998. Included in income for 2000 and
1999 are gains due to the sale of units of approximately $140,000
and $103,000, respectively and extraordinary gains due to the
extinguishment of debt related to those sales of approximately
$505,000 and $939,000, respectively. A discussion of property
operations/activities follows:
In 2000, Registrant recognized income of
approximately $246,000 at the Smythe Stores Condominium complex
including approximately $75,000 of depreciation expense compared
to income of approximately $755,000 including $75,000 of
depreciation expense in 1999 compared to a loss of approximately
$354,000 including $75,000 of depreciation expense in 1998.
Included in income for 2000 and 1999 are gains of $140,000 and
$103,000, respectively related to the sale of condominium units
and extraordinary gains of approximately $505,000 and $939,000,
respectively for the extinguishment of debt related to those
sales. The extraordinary gain represents the excess of the debt
extinguished by the sale of the condominium units over the fair
market value of the units. Overall, exclusive of the gains, the
property would have incurred a loss of approximately $396,000 for
2000 compared to a loss of approximately $287,000 in 1999. The
increase in the loss from 1999 to 2000 is due to a decrease in
rental income and an increase in rental operations expense
including professional fees, taxes, and an increase in interest
expense. The decrease in rental income is due to the sale of the
two condominium units in 2000. The increase in the loss from
1998 to 1999 is due to a decrease in rental income partially
offset by a decrease in rental operations expense including
maintenance, management fees, commissions and condominium fees,
and a decrease in interest expense. The decrease in rental
income, rental operations expense and interest expense is due to
the sale of the three condominium units in 1999.
On June 30, 1992 DHP, Inc., assigned to D, LTD (its
parent) a note receivable from the Registrant in the amount of
$127,418 which bears interest at 10% with the entire principal
and accrued interest due on June 30, 1997. On October 8, 1993 D,
LTD obtained a judgment in the amount of $156,873 on this note in
Common Pleas Court for Philadelphia County, Pennsylvania. The
judgment accrues interest at 15%. Interest accrued was $6,713
during both 1999 and 2000. Payments on the judgment are to be
made from available cash flow from any of the three properties
and before any distribution can be made to the Registrant's
limited partners. The balance of the note at December 31, 2000
was $85,545.
In 2000, Registrant incurred a loss of $131,000 at
the Third Quarter Apartments including $74,000 of depreciation
and amortization expense compared to a loss of $144,000 including
$72,000 of depreciation and amortization expense in 1999 and a
loss of $164,000 including $72,000 of depreciation and
amortization expense in 1998. The decrease in the loss from 1999
to 2000 is due to an increase in rental income due to an increase
in the average occupancy (96% to 98%) and an increase in average
rental rates, partially offset by an increase in rental
operations expense including management fees due to the increase
in rent. The decrease in the loss from 1998 to 1999 is due to an
increase in rental income due to an increase in the average
occupancy (93% to 96%) and an increase in the average rental
rates partially offset by an increase in rental operations
expense including management fees due to the increase in rent.
In 2000, Registrant incurred a loss of approximately
$98,000 at Wistar Alley including $87,000 of depreciation and
amortization expense compared to a loss of $95,000 including
$88,000 of depreciation and amortization expense in 1999 and a
loss of $98,000 including $88,000 of depreciation and
amortization expense in 1998. The increase in the loss from 1999
to 2000 is due to an increase in rental operations expense
including maintenance expense. Maintenance expense increased due
to an increase in the turnover of apartment units. The decrease
in the loss from 1998 to 1999 is due to an increase in rental
income due to an increase in the average rental rates partially
offset by an increase in maintenance expense. Maintenance
expense increased due to an increase in the turnover of apartment
units.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk
Not applicable.
Item 8. Financial Statements 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 of
Diversified Historic Investors
We have audited the accompanying consolidated balance sheet of
Diversified Historic Investors (a Pennsylvania Limited
Partnership) and subsidiaries as of December 31, 2000 and 1999
and the related statements of operations, changes in partners'
equity and cash flows for the years ended December 31, 2000, 1999
and 1998. These consolidated financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
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 as of December 31,
2000 and 1999, and the results of operations and cash flows for
the years ended December 31, 2000, 1999 and 1998, in conformity
with accounting principles generally accepted in the United
States.
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 24 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
June 14, 2001
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Consolidated financial statements: Page
Consolidated Balance Sheets at December 31, 2000 and 1999 12
Consolidated Statements of Operations for the Years
Ended December 31, 2000, 1999, and 1998 13
Consolidated Statements of Changes in Partners'
Equity for the Years Ended December 31, 2000, 1999, and 1998 14
Consolidated Statements of Cash Flows for the Years
Ended December 31, 2000, 1999, and 1998 15
Notes to consolidated financial statements 16-22
Financial statement schedules:
Schedule XI - Real Estate and Accumulated Depreciation 24
Notes to Schedule XI 25
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
(a limited partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31, 2000 and 1999
Assets
2000 1999
---- ----
Rental properties at cost:
Land $ 301,483 $ 305,223
Buildings and improvements 4,709,536 5,113,269
Furniture and fixtures 138,632 127,333
---------- ----------
5,149,651 5,545,825
Less - accumulated depreciation (3,044,292) (3,158,976)
---------- ----------
2,105,359 2,386,849
Cash and cash equivalents 8,872 11,813
Restricted cash 83,662 74,163
Accounts receivable 7,083 16,969
Other assets (net of accumulated
amortization of $32,113 and
$30,510) 4,430 1,623
---------- ----------
Total $2,209,406 $2,491,417
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $5,045,411 $4,586,076
Accounts payable:
Trade 609,438 596,181
Related parties 387,621 357,526
Notes Payable - Related Party 85,545 78,831
Interest payable 1,090,869 1,863,947
Tenant security deposits 42,108 38,318
Other liabilities 8,770 8,619
---------- ---------
Total liabilities 7,269,762 7,529,498
Partners' deficit (5,060,356) (5,038,081)
---------- ----------
Total $2,209,406 $2,491,417
========== ==========
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 493,215 $ 494,852 $ 486,864
Gain on sale 139,632 102,626 0
Interest income 1,349 1,557 1,569
---------- ---------- ----------
Total revenues 634,196 599,035 488,433
---------- ---------- ----------
Costs and expenses:
Rental operations 297,686 269,895 285,652
General and administrative 0 69,840 69,840
Interest 627,735 567,159 635,899
Depreciation and amortization 235,688 234,999 233,623
---------- ---------- ----------
Total costs and expenses 1,161,109 1,141,893 1,225,014
---------- ---------- ----------
Loss before extraordinary item (526,913) (542,858) (736,581)
Extraordinary gain on
extinguishment of debt 504,638 939,333 0
---------- ---------- ----------
Net (loss) income ($ 22,275) $ 396,475 ($ 736,581)
========== ========== ==========
Net loss per limited partnership
unit:
Loss before extraordinary item ($ 44.93)($ 46.29)($ 62.81)
Extraordinary gain 43.03 80.10 0
---------- ---------- ----------
($ 1.90)($ 33.81)($ 62.81)
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
------------------------------------------------------
For the Years Ended December 31, 2000, 1999 and 1998
Diversified
Historic Limited
Advisors Partners
(1) (2) Total
----------- -------- -----
Percentage participation in
profit or loss 1% 99% 100%
== === ====
Balance at December 31, 1997 ($138,845) ($4,559,130) ($4,697,975)
Net loss (7,366) (729,215) (736,581)
-------- ---------- ----------
Balance at December 31, 1998 (146,211) (5,288,345) (5,434,556)
Net income 3,965 392,510 396,475
-------- ---------- ----------
Balance at December 31, 1999 (142,246) (4,895,835) (5,038,081)
Net loss (223) (22,052) (22,275)
-------- ---------- ----------
Balance at December 31, 2000 ($142,469) ($4,917,887) ($5,060,356)
======== ========== ==========
(1) General Partner.
(2) 11,609.6 limited partnership units outstanding at December 31,
2000, 1999, and 1998.
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Cash flows from operating
activities:
Net income (loss) ($ 22,275) $ 396,475 ($736,581)
Adjustments to reconcile net loss
to net cash (used in) provided by
operating activities:
Gain on sale of units (139,632) (102,626) 0
Extraordinary gain on extinguish-
ment of debt (504,638) (939,333) 0
Depreciation and amortization 235,688 234,999 233,623
Changes in assets and liabilities:
Increase in restricted cash (9,499) (723) (4,553)
Decrease (increase) in accounts
receivable 9,885 (187) (4,313)
Increase in other assets (4,410) (1,623) 0
Increase in accounts payable -
trade 13,257 88,657 134,402
Increase in accounts payable -
related parties 36,809 36,809 36,809
Increase in interest payable 389,325 290,149 343,657
Increase (decrease) in tenant
security deposits 3,790 (5,680) 6,050
Increase (decrease) in other
liabilities 153 (5,724) 11,806
-------- ---------- --------
Net cash provided by (used in)
operating activities 8,453 (8,807) 20,900
-------- ---------- --------
Cash flows from investing
activities:
Proceeds from the sale of units 710,941 1,301,921 0
Capital expenditures (21,264) (502) (11,049)
-------- ---------- --------
Net cash provided by (used in)
investing activities 689,677 1,301,419 (11,049)
-------- ---------- --------
Cash flows from financing activities:
Repayment of borrowings (710,941) (1,301,921) 0
Borrowings under debt obligations 9,870 8,238 2,323
-------- ---------- --------
Net cash (used in) provided by
financing activities (701,071) (1,293,683) 2,323
-------- ---------- --------
(Decrease) increase in cash and
cash equivalents (2,941) (1,071) 12,174
Cash and cash equivalents at
beginning of year 11,813 12,884 710
-------- ---------- --------
Cash and cash equivalents at end of
year $ 8,872 $ 11,813 $ 12,884
======== ========== ========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for
interest $203,600 $ 277,010 $292,242
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Diversified Historic Investors (the "Partnership") was formed in
March 1984, with Diversified Historic Advisors as the General
Partner. Upon the admission of additional limited partners, the
initial limited partner withdrew.
The Partnership was formed to acquire, rehabilitate, and manage
real properties which are certified historic structures as
defined in the Internal Revenue Code (the "Code"), or which were
eligible for designation as such, utilizing the mortgage
financing and the net proceeds from the sale of limited
partnership units. Any rehabilitation undertaken by the
Partnership was done with a view to obtaining certification of
expenditures therefore 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 statement
follows:
1. Principles of Consolidation
These financial statements reflect all adjustments (consisting
only of normal recurring adjustments) which, in the opinion of
the Partnership's 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. Costs of Issuance
Costs incurred in connection with the offering and sale of
limited partnership units were charged against partners' equity
as incurred.
4. Cash and Cash Equivalents
The Partnership considers all highly liquid instruments purchased
with a maturity of less than three months to be cash equivalents.
5. Net Income or Loss Per Limited Partnership Unit
The net income or loss per limited partnership unit is based on
the weighted average number of limited partnership units
outstanding during the period (11,609.6 in 2000, 1999, and 1998).
6. Income Taxes
Income taxes or credits resulting from earnings or losses are
payable by or accrue to the benefits of the partners;
accordingly, no provision has been made for income taxes in these
financial statements.
7. Restricted Cash
Restricted cash includes amounts held for tenant security
deposits and real estate tax reserves.
8. Revenue Recognition
Revenues are recognized when rental payments are due on a
straight-line basis. Rental payments received in advance are
deferred until earned.
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 for 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 to, 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.
10. 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 - GOING CONCERN
In recent years the Partnership has realized significant losses,
including the foreclosure of five properties and a portion of a
sixth property, due to the properties' inability to generate
sufficient cash flow to pay their operating expenses and debt
service. The Partnership has first mortgages in place on each of
its remaining properties that are cash-flow mortgages, requiring
all available cash after payment of operating expenses to be paid
to the first mortgage holder. Therefore it is unlikely that any
cash will be available to the Partnership to pay its general and
administrative expenses, to pay debt service on the past-due
subordinate mortgage with respect to the Third Quarter or to pay
any debt service on the two accrual mortgages with respect to
Wistar Alley.
It is the Partnership's intention to continue to hold the
properties until they can no longer meet debt service
requirements (or with respect to Third Quarter and Wistar Alley,
the lender seeks payment on the past due mortgage) 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.
Since the lenders have agreed either to forebear from taking any
foreclosure action as long as cash flow payments are made, to
accrue all debt service in lieu of payment, or have (in the case
of Third Quarter) not moved to declare a default for a
substantial period of time after the mortgage due date, the
Partnership believes it is appropriate to continue presenting the
financial statements on a going concern basis.
NOTE D - PARTNERSHIP AGREEMENT
The significant terms of the amended and restated Agreement of
Limited Partnership (the "Agreement"), as they relate to the
financial statements, follow:
The Agreement provides that, beginning with the date of the
admission of subscribers as limited partners, all distributable
cash from operations (as defined) will be distributed 90% to the
limited partners and 10% to the General Partner.
All distributable cash from sales or refinancing will be
distributed to the limited partners in an amount equal to their
Original Capital Contribution plus an amount equal to 6% of their
Original Capital Contribution per annum on a cumulative basis
less the sum of all prior distributions and, thereafter, after
receipt by certain affiliates of the General Partner of their
subordinated real estate commissions, the limited partners will
receive 85% of cash from sales or refinancings.
Net income or loss from operations of the Partnership is
allocated 1% to the General Partner and 99% to the Limited
Partners.
NOTE E - ACQUISITIONS
The Partnership acquired six properties and two general or
limited partnership interests during the period November 1984 to
December 1986, as discussed below.
In November 1984, the Partnership purchased 20 residential
apartments located in Philadelphia, Pennsylvania for $4,056,475.
The lender on eleven of the apartments foreclosed in December
1996. In 1999, the Partnership sold three of the apartment
units, and in 2000, the Partnership sold two of the apartment
units.
In November 1984, the Partnership purchased a building located in
Philadelphia, Pennsylvania, consisting of 17 units, for
$1,725,000.
In December 1984, the Partnership purchased two adjoining
buildings located in Philadelphia, Pennsylvania, consisting of 18
residential units and 4,500 square feet of commercial space, for
$405,000.
In December 1984, the Partnership purchased a four-story building
located in Philadelphia, Pennsylvania, consisting of 22,200
square feet of commercial space, for $465,000. The lender on the
property foreclosed in 1992.
In December 1984, the Partnership acquired a building located in
Philadelphia, Pennsylvania, consisting of 14 residential units,
for $160,000. The lender on the property foreclosed in 1993.
In February 1985, the Partnership was admitted, with a 99%
general partner interest, to a Pennsylvania general partnership,
which owned 21 residential units located in East Greenwich, Rhode
Island, for a cash capital contribution of $3,600,000. The
lender on the property foreclosed in 1993.
In June 1985, the Partnership was admitted, with a 99.5% general
partner interest, to a Pennsylvania general partnership which
owned a building consisting of 50 residential units located in
Reading, Pennsylvania, for a cash capital contribution of
$2,650,000. The lender on the property foreclosed in 1995.
In December 1986, the Partnership acquired a building located in
Savannah, Georgia, consisting of 13 apartments and 7,820 square
feet of commercial space, for $812,916. The lender on the
property foreclosed in 1993.
NOTE F- DEBT OBLIGATIONS
Debt obligations are as follows:
December 31,
2000 1999
---- ----
Mortgage loans, interest accrues at 12%, $1,792,063 $1,335,267
interest only payable monthly to the
extent of net operating income; principal
due 2015; collateralized by the related
rental properties
Mortgage loan, interest accrues at 12%, 1,217,307 1,217,307
interest only payable monthly to the
extent of net operating income with a
minimum of $6,833; principal due October
31, 2003; collateralized by the related
rental property
Mortgage loan, interest at 15%, payable 138,444 138,444
in equal monthly installments of $1,770
(including interest); due in 1992;
collateralized by the related rental
property [A]
Mortgage loan, interest accrues at 2 1/2% 1,420,794 1,418,255
over the Federal Home Bank Board Cost of
Funds Index with a maximum of 14 1/2% and
a minimum of 8 1/2%; therefore 8 1/2% at
December 31, 2000 and 1999, interest only
payable monthly to the extent of net
operating income with a minimum of
$9,000; principal due October 31, 2003;
collateralized by the related rental
property
Notes payable, interest at 11%; payable 380,114 380,114
monthly, based on the lesser of 75% of
cash flow from the operation of the
properties or certain stated amounts;
principal and all accrued interest is due
at the earlier of sale of the related
properties or 2009; collateralized by the
related rental property [B]
Notes payable, interest at prime plus 1 1/2% 96,689 96,689
(11% and 10% at December 31, 2000 and ---------- ----------
1999, respectively); principal and
interest due upon sale of the related
property; collateralized by the related
rental property[C]
$5,045,411 $4,586,076
========== ==========
(A) In 1991, the Partnership stopped making scheduled mortgage
payments. No notice of default has yet been received from
the lender. The interest in arrears amounts to $197,284 at
December 31, 2000, which includes $20,767 for each of 2000,
1999 and 1998.
(B) Interest is no longer being accrued on these notes, since
the first mortgage is a cash flow mortgage and is not being
serviced to the extent of total interest due. The interest
in arrears amounts to $397,220 at December 31, 2000, which
includes $41,813 for each of 2000, 1999 and 1998.
(C) This note represents amounts owed to developers pursuant to
negative cash flow guarantees. Interest is no longer being
accrued on the remaining note, since the first mortgage is a
cash flow mortgage and is not being serviced to the extent
of total interest due. The interest in arrears amounts to
$87,045 at December 31, 2000 which includes $11,044, $9,501
and $9,488 for 2000, 1999 and 1998, respectively.
Approximate maturities of the mortgage loan obligations at
December 31, 2000, for each of the succeeding five years are as
follows:
2001 $ 138,444
2002 0
2003 2,638,101
2004 0
2005 0
Thereafter 2,268,866
----------
$5,045,411
==========
NOTE G - TRANSACTIONS WITH RELATED PARTIES
On June 30, 1992 DHP, Inc., assigned to D, LTD (its parent) a
note receivable from the Partnership in the amount of $127,418
which bears interest at 10% with the entire principal and accrued
interest due on June 30, 1997. On October 8, 1993 D, LTD
obtained a judgment in the amount of $156,873 on this note in
Common Pleas Court for Philadelphia County, Pennsylvania. The
judgment accrues interest at 15%. Interest accrued was $6,713
during both 1999 and 2000. Payments on the judgment are to be
made from available cash flow and before any distribution can be
made to the Partnership's limited partners. The balance of the
note at December 31, 2000 is $85,545.
NOTE H - EXTRAORDINARY GAIN
During 2000, the Partnership sold two condominium units at the
Smythe Stores condominium complex. In connection with those
sales, $504,638 of debt was extinguished. During 1999, the
Partnership sold three condominium units at the Smythe Stores
condominium complex. In connection with those sales, $939,333 of
debt was extinguished. The extraordinary gain represents the
excess of the debt extinguished over the fair market value of the
units.
NOTE I - INCOME TAX BASIS RECONCILIATION
Certain items enter into the determination of the results of
operations in different time periods for financial reporting
("book") purposes and for income tax ("tax") purposes.
Reconciliations of net loss and partners' equity follow:
For the Years Ended December 31,
2000 1999 1998
---- ---- ----
Net (loss) income book ($ 22,275) $ 396,475 ($ 736,581)
Excess of book over tax
depreciation 38,311 19,626 8,169
Difference between book and tax
basis of units sold 0 105,234 0
Other (1,852) 0 0
---------- ---------- ----------
Net income (loss) - tax $ 14,184 $ 521,335 ($ 728,412)
========== ========== ==========
Partners' deficit - book ($5,060,356) ($5,038,081) ($5,434,556)
Costs of issuance 1,393,762 1,393,762 1,393,762
Cumulative tax under book loss (556,992) (593,451) (718,311)
---------- ---------- ----------
Partners' deficit - tax ($4,223,586) ($4,237,770) ($4,759,105)
========== ========== ==========
SUPPLEMENTAL INFORMATION
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Cost
Capitalized
Initial Cost Subsequent
to Partnership to
(b) Acquisition
Buildings
and Date Date
Encum- Improve- Improve- of Acquir-
Description brances Land ments ments Constr. ed
- ----------- ------- ---- --------- -------- ------ -------
(a) (g) (a) (d)
4 condominium
apartment
units in
Philadelphia, (106,626)
PA (h)
$1,792,063 $ 7,483 $ 831,504 $51,046 1984 11/9/84
16 apartment
units and
1 unit
[1,000 S.F.]
of
commercial
space in
Philadelphia,
PA 1,355,751 120,000 1,744,097 91,603 1984 11/14/84
18 apartment
units
and 5,188
square feet
of
commercial
space in (45,079)
Philadelphia, (h) 1984-
PA 1,897,597 174,000 2,188,961 92,662 1985 12/14/84
---------- -------- ---------- -------
TOTAL $5,045,411 $301,483 $4,764,562 $83,606
========== ======== ========== =======
Gross Amount at which Carried
at December 31, 2000
Buildings
and
Improve- Accumulated
Description Land ments Total Depreciation
- ----------- ---- --------- ----- ------------
(c)(e) (e)(f)
4
condominium
apartment
units in
Philadelphia,
PA $7,483 $ 831,504 $ 838,987 $ 490,989
16 apartment
units
and 1 unit
[1,000 S.F.]
of
commercial
space
Philadelphia,
PA 120,000 1,807,606 1,927,606 1,152,651
18 apartment
units
and 5,188
square feet
of
commercial
space
in
Philadelphia,
PA 174,000 2,209,058 2,383,058 1,400,653
-------- ---------- ---------- ----------
TOTAL $301,483 $4,848,168 $5,149,651 $3,044,293
======== ========== ========== ==========
DIVERSIFIED HISTORIC INVESTORS
(a limited partnership)
NOTES TO SCHEDULE XI
December 31, 2000
(A) All properties are certified historic structures as defined
in the Internal Revenue Code, or are eligible for
designation as such. The "date of construction" refers to
the period in which such properties were rehabilitated.
(B) Includes development/rehabilitation costs incurred pursuant
to development agreements entered into when the properties
were acquired.
(C) The aggregate cost of real estate owned at December 31,
2000, for Federal income tax purposes is approximately
$4,352,780. The depreciable basis of buildings and
improvements is reduced for Federal income tax purposes by
the investment tax credit and the historic rehabilitation
credit obtained.
(D) Development /rehabilitation was completed during 1986.
(E) Reconciliation of real estate:
2000 1999 1998
---- ---- ----
Balance at beginning of year $5,545,825 $6,171,259 $6,160,210
Additions during the year: 21,264 0 0
Improvements 0 502 11,049
---------- ---------- ----------
5,567,089 6,171,761 6,171,259
Deductions during the year:
Retirements (417,438) (625,936) 0
Balance at end of year $5,149,651 $5,545,825 $6,171,259
========== ========== ==========
Reconciliation of accumulated
depreciation:
2000 1999 1998
---- ---- ----
Balance at beginning of year $3,158,976 $3,290,172 $3,056,549
Depreciation expense for the year 234,084 234,999 233,623
Retirements (348,768) (366,195) 0
---------- ---------- ----------
Balance at end of year $3,044,292 $3,158,976 $3,290,172
========== ========== ==========
(F) See Note B to the financial statements for depreciation
method and lives.
(G) See Note F to the financial statements for further
information.
(H) In connection with the purchase of certain of the
properties, the sellers agreed to reimburse the Partnership
for cash flow deficits, as defined, of these properties.
Such reimbursements were treated as a reduction of amounts
allocated to the buildings and improvements account.
Item 9. Changes in and Disagreements with Accountants on
Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
a. Identification of Directors - Registrant has no
directors.
b. Identification of Executive Officers
The General Partner of the Registrant is Diversified
Historic Advisors (DHA), a Pennsylvania general partnership. The
partners of DHA are as follows:
Name Age Position Term of Office Period Served
- ---- --- -------- -------------- -------------
SWDHA, Inc. -- Partner in DHA No fixed term Since May 1997
EPK, Inc. -- Partner in DHA No fixed term Since May 1997
For further description of DHA, 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 separate property management and
partnership administration firm engaged by the Registrant.
d. Family Relationships. None.
e. Business Experience. DHA is a general partnership
formed in March 1984. The General Partner is responsible for the
management and control of the Registrant's affairs and has
general responsibility and authority in conducting its
operations.
On May 13, 1997, SWDHA, Inc. replaced Gerald Katzoff and
EPK, Inc. replaced Diversified Historic Properties, Inc. ("DHP")
as partners of DHA. 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.
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 43) was appointed on May 13, 1997
as Vice President and Secretary of EPK, Inc. Ms. Zanghi
previously served as Secretary and Treasurer of DHP since June
14, 1993 and as a Director and Secretary/Treasurer of D, LTD.
She was associated with DHP 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 35) 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 since
January 27, 1993.
Item 11. Executive Compensation
a. Cash Compensation - During 2000 Registrant paid no
cash compensation to DHA, 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 2000, or is proposed to be paid or distributed in the
future, to DHA, 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 2000 to DHA, 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. 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. Certain Relationships and Related Transactions
Pursuant to Registrant's Amended and Restated Agreement
of Limited Partnership, DHA is entitled to 10% of Registrant's
distributable cash from operations in each year. There was no
such share allocable to DHA for fiscal years 1998 through 2000.
a. Certain Business Relationships - Registrant has no
directors.
b. Indebtedness of Management - No executive officer or
significant 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 IV
Item 14. (A) Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
1. Financial Statements:
a. Consolidated Balance Sheets at December 31, 2000
and 1999.
b. Consolidated Statements of Operations for the
Years Ended December 31, 2000, 1999 and 1998.
c. Consolidated Statements of Changes in Partners' Equity for
the Years Ended December 31, 2000, 1999 and 1998.
d. Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998.
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, 2000.
(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, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DIVERSIFIED HISTORIC INVESTORS
By: Diversified Historic Advisors,
Date: September 26, 2002 General Partner
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By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President and Treasurer
By: /s/ Michele F. Rudoi
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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 the Registrant and in the capacities and on
the dates indicated.
Signature Capacity Date
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DIVERSIFIED HISTORIC ADVISORS General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer September 26, 2002
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SPENCER WERTHEIMER
President and Treasurer
By: /s/ Michele F. Rudoi September 26, 2002
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MICHELE F. RUDOI,
Assistant Secretary