UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 33-19811
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DIVERSIFIED HISTORIC INVESTORS VI
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2492210
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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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N/A
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ ------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
Assets
June 30, 2000 December 31, 1999
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(Unaudited)
Rental properties, at cost:
Land $ 950,238 $ 950,238
Buildings and improvements 27,287,100 27,176,328
Furniture and fixtures 814,820 883,522
----------- -----------
29,052,158 29,010,088
Less - accumulated depreciation (12,684,215) (12,134,403)
----------- -----------
16,367,943 16,875,685
Cash and cash equivalents 69,611 40,599
Restricted cash 332,990 365,632
Investment in affiliate (39,586) (27,778)
Other assets (net of amortization
of $715,296 and $682,154) 447,818 486,670
----------- -----------
Total $17,178,776 $17,740,808
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $16,953,491 $17,077,741
Accounts payable:
Trade 1,338,066 1,323,177
Taxes 13,277 18,797
Related parties 436,809 416,509
Other 18,018 51,107
Interest payable 1,426,438 1,175,479
Tenant security deposits 145,163 137,684
Advances 34,286 0
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Total liabilities 20,365,548 20,200,494
Partners' deficit (3,186,772) (2,459,686)
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Total $17,178,776 $17,740,808
=========== ===========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
Three months Six months
ended June 30, ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Rental income $599,887 $589,850 $1,200,704 $1,184,517
Interest income 1,360 594 3,214 1,834
-------- -------- ---------- ----------
Total revenues 601,247 590,444 1,203,918 1,186,351
-------- -------- ---------- ----------
Costs and expenses:
Rental operations 233,957 250,951 641,906 607,299
General and 0 60,000 0 120,000
administrative
Interest 347,532 352,920 694,710 701,789
Depreciation and
amortization 291,563 288,826 582,580 642,492
-------- -------- ---------- ----------
Total costs and
expenses 873,052 952,697 1,919,196 2,071,580
-------- -------- ---------- ----------
Loss before equity
in affiliate (271,805) (362,253) (715,278) (885,229)
Equity in net loss
of affiliate (7,092) (3,576) (11,808) (7,469)
-------- -------- ---------- ----------
Net loss ($278,897) ($365,829)($ 727,086)($ 892,698)
======== ======== ========== ==========
Net loss per limited
partnership unit:
Loss before equity
in affiliate ($ 10.57) ($ 14.08)($ 27.81)($ 34.43)
Equity in net loss
of affiliate (.27) (.14) (.46) (.29)
-------- -------- ---------- ----------
Net loss ($ 10.84) ($ 14.22)($ 28.27)($ 34.72)
======== ======== ========== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Six months ended
June 30,
2000 1999
---- ----
Cash flows from operating activities:
Net loss ($727,086) ($892,698)
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 582,580 642,492
Equity in loss of affiliate 11,808 7,469
Changes in assets and liabilities:
Decrease (increase) in restricted cash 32,641 (821)
Decrease in other assets 5,709 25,356
Increase (decrease) in accounts
payable - taxes 14,890 (5,369)
(Decrease) increase in accounts
payable - trade (5,520) 98,209
Increase in accounts payable -
related parties 20,300 0
Decrease in accounts payable - other (32,714) (16,254)
Increase in interest payable 250,959 128,181
Increase in tenant security deposits 7,479 7,583
-------- --------
Net cash provided by (used in)
operating activities 161,046 (5,852)
-------- --------
Cash flows from investing activities:
Capital expenditures (42,070) (2,921)
-------- --------
Net cash used in investing activities (42,070) (2,921)
-------- --------
Cash flows from financing activities:
Principal payments (89,964) (858)
-------- --------
Net cash used in financing activities (89,964) (858)
-------- --------
Increase (decrease) in cash and cash
equivalents 29,012 (9,631)
Cash and cash equivalents at
beginning of period 40,599 28,064
-------- --------
Cash and cash equivalents at end of period $ 69,611 $ 18,433
======== ========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors VI (the "Registrant") and related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and related notes should be read in
conjunction with the audited financial statements in Form 10-K and
notes thereto, in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1999.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
NOTE 2- SUBSEQUENT EVENTS
Strehlow Terrace Apartments was foreclosed by the Department of
Housing and Urban Development, the guarantor of the first mortgage, on
April 30, 2002.
On June 30, 2002, the Registrant sold its investment in Saunders
Apartments for $25,000. The proceeds of the sale were used to pay the
accrued expenses of the Registrant.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of June 30, 2000, Registrant had cash of $69,611. Cash
generated from operations is used primarily to fund operating expenses
and debt service. If cash flow proves to be insufficient, the
Registrant will attempt to negotiate loan modifications with the
various lenders in order to remain current on all obligations. The
Registrant is not aware of any additional sources of liquidity.
As of June 30, 2000, Registrant had restricted cash of
$332,990 consisting primarily of funds held as security deposits,
replacement reserves and escrows for taxes and insurance. As a
consequence of the restrictions as to use, Registrant does not deem
these funds to be a source of liquidity.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the Registrant.
In recent years the Registrant has realized significant
losses, including the foreclosure of two properties and a substantial
reduction of interest in a third property. At the present time, all
remaining properties are able to pay their operating expenses and debt
service including two of the properties where the mortgages are cash-
flow mortgages, requiring all available cash after payment of
operating expenses to be paid to the first mortgage holder. None of
the properties are currently producing a material amount of revenues
in excess of operating expenses and debt service. Therefore, it is
unlikely that any cash will be available to the Registrant to pay its
general and administrative expenses.
It is the Registrant's intention to continue to hold the
properties until they can no longer meet the debt service requirements
and the properties are foreclosed, or the market value of the
properties increases to a point where they can be sold at a price
which is sufficient to repay the underlying indebtedness (principal
plus accrued interest).
(2) Capital Resources
Any capital expenditures needed are generally replacement
items and are funded out of cash from operations or replacement
reserves, if any. Registrant is not aware of any factors which would
cause historical capital expenditure levels not to be indicative of
capital requirements in the future and accordingly, does not believe
that it will have to commit material resources to capital investment
for the foreseeable future.
(3) Results of Operations
During the second quarter of 2000, Registrant incurred a
net loss of $278,897 ($10.84 per limited partnership unit) compared to
a net loss of $365,829 ($14.22 per limited partnership unit) for the
same period in 1999. For the first six months of 2000, the Registrant
incurred a net loss of $727,086 ($28.27 per limited partnership unit)
compared to a net loss of $892,698 ($34.72 per limited partnership
unit) for the same period in 1999.
Rental income increased $10,037 from $589,850 in the
second quarter of 1999 to $599,887 in the same period in 2000 and
increased $16,187 from $1,184,517 in the first six months of 1999 to
$1,200,704 in the same period in 2000. The increase in rental income
for the second quarter and first six months of 1999 to the same period
in 2000 is due to an increase in rental income at Canal House,
partially offset by a decrease at Strehlow Terrace and Firehouse
Square.
Rental operations expense increased $43,005 from $250,951
in the second quarter of 1999 to $293,956 in the same period in 2000
and increased $34,607 from $607,299 in the first six months of 1999 to
$641,906 in the same period in 2000. The increase in rental
operations expense from the second quarter and the first six months of
1999 to the same period in 2000 is due to an increase in maintenance
expense and wages and salaries expense at Strehlow Terrace, an
increase in real estate taxes and insurance expense at Roseland, and
an increase in wages and salaries expense at Mater Dolorosa, partially
offset by a decrease in real estate taxes at Firehouse Square and a
decrease in maintenance expense at Canal House. The increase in
maintenance expense at Strehlow Terrace is due to an increase in glass
replacement and HVAC repairs and the increase in wages and salaries
expense due to an increase in maintenance labor. The increase in
wages and salaries expense at Mater Dolorosa is due to an increase in
office salaries. The decrease in real estate taxes at Firehouse
Square is due to a change of quarter in which the taxes were paid.
The decrease in maintenance expense at Canal House is due to a
decrease in maintenance service.
Interest expense decreased $5,388 from $352,920 in the
second quarter of 1999 to $347,532 in the same period in 2000 and
decreased $7,079 from $701,789 in the first six months of 1999 to
$694,710 for the same period in 2000. The decrease from the second
quarter and the first six months of 1999 to the same period in 2000 is
due to a decrease in principal balance upon which the interest is
calculated at Mater Dolorosa.
Losses incurred during the quarter at the Registrant's
properties were approximately $313,000, compared to a loss of
approximately $287,000 for the same period in 1999. For the first six
months of 2000 the Registrant's properties incurred a loss of
$677,000, compared to a loss of approximately $733,000 for the same
period in 1999.
In the second quarter of 2000, Registrant incurred a loss
of $88,000 at Strehlow Terrace, including $60,000 of depreciation
expense, compared to a loss of $47,000, including of $59,000
depreciation expense in the second quarter of 1999 and, for the first
six months of 2000, the Registrant incurred a loss of $154,000
including $120,000 of depreciation expense, compared to a loss of
$106,000, including $118,000 of depreciation and amortization expense,
for the same period in 1999. The increase in the loss from the second
quarter and the first six months of 1999 to the same period in 2000 is
due to a decrease in rental income and an increase in maintenance
expense and wages and salaries expense. The decrease in rental income
is due to a decrease in average occupancy. The increase in maintenance
expense is due to an increase in glass replacement expense and HVAC
repairs. The increase in wages and salaries expense is due to an
increase in maintenance labor.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
In the second quarter of 2000, Registrant recognized
income of $8,000 at Mater Dolorosa, including $32,000 of depreciation
and amortization expense, compared to income of $10,000 including
$32,000 of depreciation and amortization expense, in the second
quarter of 1999, and for the first six months of 2000, the Registrant
incurred a loss of $1,000 at Mater Dolorosa, including $63,000 of
depreciation and amortization expense, compared to income of $11,000,
including $63,000 of depreciation and amortization expense, for the
same period in 1999. The decrease in income from the second quarter of
1999 to the same period in 2000 and the increase in net loss for the
first six months of 1999 to the same period in 2000 is due to an
increase in wages and salaries expense, partially offset by a decrease
in interest expense. The increase in wages and salaries expense is due
to an increase in office salaries. The decrease in interest expense
is due to a decrease in principal balance upon which the interest is
calculated.
In the second quarter of 2000, Registrant incurred a loss
of $120,000 at Firehouse House, including $64,000 of depreciation and
amortization expense, compared to a loss of $131,000 including $65,000
of depreciation and amortization expense in the second quarter of
1999. For the first six months of 2000, the Registrant incurred a
loss of $233,000 at Firehouse Square including $128,000 of
depreciation and amortization expense, compared to a loss of $239,000,
including $129,000 of depreciation and amortization expense, for the
same period in 1999. The decrease in loss from the second quarter and
the first six months of 1999 to the same period in 2000 is due to a
decrease in real estate taxes, partially offset by a decrease in
rental income. The decrease in real estate taxes is due to a change of
quarter in which the taxes were being paid. The decrease in rental
income is due to a decrease in commercial expense reimbursement.
In the second quarter of 2000, Registrant incurred a loss
of $31,000 at Roseland, including $18,000 of depreciation and
amortization expense, compared to a loss of $24,000, including $17,000
of depreciation and amortization expense, in the second quarter of
1999 and for the first six months of 2000, the Registrant incurred a
loss of $47,000, including $36,000 of depreciation and amortization
expense, compared to a loss of $38,000, including $34,000 of
depreciation and amortization expense, for the same period in 1999.
The increase in loss from the second quarter and the first six months
of 1999 to the same period in 2000 is due to an increase in real
estate taxes and insurance expense.
In the second quarter of 2000, Registrant incurred a loss
of $82,000 at Canal House, including $98,000 of depreciation and
amortization expense, compared to a loss of $91,000, including $97,000
of depreciation and amortization expense, in the second quarter of
1999 and, for the first six months of 2000, the Registrant incurred a
loss of $242,000 including $197,000 of depreciation and amortization
expense, compared to a loss $354,000 , including $259,000 of
depreciation and amortization expense, for the same period in 1999.
The decrease in the loss from the second quarter and the first six
months of 1999 to the same period in 2000 is due to an increase in
rental income, combined with a decrease in management fees and
interest expense. The increase in rental income is due to an increase
in average occupancy (89% to 96%). The decrease in maintenance expense
is due to a decrease in maintenance service.
In the second quarter of 2000, Registrant incurred a loss
of $7,000 at Saunders Apartments compared to a loss of $4,000 in the
second quarter of 1999 and, for the first six months of 2000 the
Registrant incurred a loss of $12,000 compared to a loss $7,000 for
the same period in 1999. The Registrant owns a minority interest in
Saunders Apartments which it accounts for on the equity method. The
Registrant does not include the assets or liabilities of Saunders
Apartments in its consolidated financial statements. The following
operating information is provided for the property. The increase in
loss is due to an increase in maintenance expense due to an increase
in landscaping expense combined with an increase in appliance and
flooring repairs.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the Registrant.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
All of our assets and liabilities are denominated in U.S.
dollars, and as a result, we do not have exposure to currency exchange
risks.
We do not engage in any interest rate, foreign currency
exchange rate or commodity price-hedging transactions, and as a
result, we do not have exposure to derivatives risk.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our
Securities Exchange Act of 1934 reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and
communicated to our management, including our managing partner's
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures,
our management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and our management
necessarily was required to apply its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Under the supervision of our managing partner's principal
executive officer and principal financial officer we have carried out
an evaluation of the effectiveness of our adopted disclosure controls
and procedures as of the end of the period covered by this report.
Based upon that evaluation, our managing partner's president and
treasurer concluded that our disclosure controls and procedures are
effective.
There have been no significant changes in our internal
controls over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting during our most recent fiscal quarter.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party to,
nor is any of its property the subject of any pending material legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by this
report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Number Document
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3 Registrant's Amended and
Restated Certificate of Limited
Partnership and Agreement of
Limited Partnership, previously
filed as part of Amendment No.
2 of Registrant's Registration
Statement on Form S-11, are
incorporated herein by
reference.
21 Subsidiaries of the Registrant
are listed in Item 2.
Properties on Form 10-K,
previously filed and
incorporated herein by
reference.
31 General Partners Opinion
Certification
32 Certification Pursuant to 18
U.S.C. Section 1350, As Adopted
Pursuant to Section 906 o the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended June 30, 2000.
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
By: Dover Historic Advisors VI, its
general partner
By: EPK, Inc., managing partner
Date: June 30, 2004 By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President (principal executive
officer, principal financial
officer)
Exhibit 31
CERTIFICATION
I, Spencer Wertheimer, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the
quarterly period ended June 30, 2000, of Diversified Historic
Investors VI;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) [Omission in accordance with SEC Release Nos. 33-
8238, 34-47986 and IC-26068 (June 5, 2003)] for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during
the period in which this report is being prepared;
(b) [Omitted in accordance with SEC Release Nos. 33-8238, 34-
47986 and IC-26068 (June 5, 2003)];
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: June 30, 2004 /s/ Spencer Wertheimer
------------- ----------------------
Name: Spencer Wertheimer
Title: President (principal executive
officer, principal financial
officer) of the registrant's
managing partner, EPK, Inc.
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Diversified Historic
Investors VI on Form 10-Q for the quarterly period ended June 30, 2000
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Spencer Wertheimer, President and Treasurer
of the Company's managing partner, EPK, Inc., certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934, and
(2) The information contained in the Report fairly presents, in all
material respects, the , financial condition and results of operations
of the Company.
Date: June 30, 2004 /s/ Spencer Wertheimer
------------- ----------------------
Name: Spencer Wertheimer
Title: President (principal executive
officer, principal financial
officer) of the registrant's
managing partner, EPK, Inc.