UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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
September 30, 2000 December 31, 1999
------------------ -----------------
(Unaudited)
Rental properties, at cost:
Land $ 950,238 $ 950,238
Buildings and improvements 27,244,073 27,176,328
Furniture and fixtures 821,586 883,522
----------- -----------
29,015,897 29,010,088
Less - accumulated depreciation (12,959,578) (12,134,403)
----------- -----------
16,056,319 16,875,685
Cash and cash equivalents 53,330 40,599
Restricted cash 361,240 365,632
Investment in affiliate (39,586) (27,778)
Other assets (net of amortization
of $731,459 and $682,154) 465,615 486,670
----------- -----------
Total $16,896,918 $17,740,808
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $16,903,101 $17,077,741
Accounts payable:
Trade 1,352,555 1,323,177
Taxes 13,277 18,797
Related parties 403,195 416,509
Other 17,346 51,107
Interest payable 1,573,820 1,175,479
Tenant security deposits 141,139 137,684
Advances 34,287 0
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Total liabilities 20,438,720 20,200,494
Partners' deficit (3,541,802) (2,459,686)
----------- -----------
Total $16,896,918 $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 Nine months
ended September 30, ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Rental income $614,405 $596,941 $1,815,109 $1,781,458
Other income 3,146 0 6,360 0
Interest income 1,110 938 1,110 2,772
-------- -------- ---------- ----------
Total revenues 618,661 597,879 1,822,579 1,784,230
-------- -------- ---------- ----------
Costs and expenses:
Rental operations 331,870 259,433 973,776 866,730
General and 0 60,000 0 180,000
administrative
Interest 349,920 348,682 1,044,630 1,050,471
Depreciation and
amortization 291,901 299,955 874,481 942,448
-------- -------- ---------- ----------
Total costs and
expenses 973,691 968,070 2,892,887 3,039,649
-------- -------- ---------- ----------
Loss before equity
in affiliate 0 (370,191) (1,070,308) (1,255,419)
Equity in net loss of
affiliate 0 (6,639) (11,808) (14,108)
-------- -------- ---------- ----------
Net loss ($355,030) ($376,830) ($1,082,116) ($1,269,527)
======== ======== ========== ==========
Net loss per limited
partnership unit:
Loss before equity in
affiliate ($ 13.80) ($ 14.39) ($ 41.62) ($ 48.81)
Equity in net loss of
affiliate 0 (.26) (.46) (.55)
-------- -------- ---------- ----------
Net loss ($ 13.80) ($ 14.65) ($ 42.08) ($ 49.36)
======== ======== ========== ==========
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)
Nine months ended
September 30,
2000 1999
---- ----
Cash flows from operating activities:
Net loss ($1,082,116) ($1,269,527)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 874,481 942,447
Equity in loss of affiliate 11,808 14,108
Changes in assets and liabilities:
Decrease (increase) in restricted cash 4,391 (40,202)
(Increase) decrease in other assets (28,250) 23,021
Decrease in accounts payable taxes (5,520) (19,124)
Increase in accounts payable - trade 29,378 137,739
(Decrease) increase in accounts
payable - related parties (13,314) 22,869
Decrease in accounts payable - other (33,761) (9,927)
Increase in interest payable 398,341 208,775
Increase in tenant security deposits 3,456 8,180
Increase in advances 34,287 0
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Net cash provided by operating activites 193,181 18,359
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Cash flows from investing activities:
Capital expenditures (5,809) 85
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Net cash (used in) provided by
investing activities (5,809) 85
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Cash flows from financing activities:
Proceeds from debt financing 0 17,049
Principal payments (174,641) (37,432)
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Net cash used in financing activities (174,641) (20,383)
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Increase (decrease) in cash and cash
equivalents 12,731 (1,939)
Cash and cash equivalents at
beginning of period 40,599 28,064
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Cash and cash equivalents at
end of period $ 53,330 $ 26,125
========== ==========
The accompanying notes are an integral part of these financial statements.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of September 30, 2000, Registrant had cash of $53,330.
Cash generated from operations is used primarily to fund operating
expenses and debt service. If cash flow proves to be insufficient,
the Registrant will attempt to negotiate loan modifications with the
various lenders in order to remain current on all obligations. The
Registrant is not aware of any additional sources of liquidity.
As of September 30, 2000, Registrant had restricted cash
of $361,240 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 third quarter of 2000, Registrant incurred a
net loss of $355,030 ($13.80 per limited partnership unit) compared to
a net loss of $376,830 ($14.65 per limited partnership unit) for the
same period in 1999. For the first nine months of 2000, the
Registrant incurred a net loss of $1,082,116 ($42.08 per limited
partnership unit) compared to a net loss of $1,269,527 ($49.36 per
limited partnership unit) for the same period in 1999.
Rental income increased $17,464 from $596,941 in the
third quarter of 1999 to $614,405 in the same period of 2000 and for
the first nine months increased $33,651 from $1,781,458 in the first
nine months of 1999 to $1,815,109 in the same period of 2000. The
increase in rental income from the third quarter and the first nine
months of 1999 to the same period in 2000 is due to an increase in
rental income at Canal House and Roseland, partially offset by a
decrease in rental income at Strehlow Terrace. Rental income
increased at Canal House due to an increase in average occupancy (91%
to 96%).
Rental operations expense increased $72,437 from $259,433
in the third quarter of 1999 to $331,870 in the same period in 2000
and for the first nine months increased $107,046 from $866,730 in 1999
to $973,776 in the same period in 2000. The increase in rental
operations expense from the third quarter and the first nine months of
1999 to the same period in 2000 is due to an increase in maintenance
expense at Firehouse Square and Canal House, an increase in real
estate taxes at Strehlow Terrace and an increase in wages and salaries
at Strehlow Terrace and Mater Dolorosa. The increase in maintenance
expense at Firehouse Square is due to an increase in maintenance
service, plumbing and electrical expenses. The increase in maintenance
expense at Canal House is due to an increase in contract cleaning,
painting expense, maintenance service and contract security. The
increase in real estate taxes at Strehlow Terrace is due to change of
quarter in which the taxes were paid. The increase in wages and
salaries expense at Strehlow is due to an increase in maintenance
salaries and resident managers salaries. The increase in wages and
salaries at Mater Dolorosa is due to an increase in office salaries
and manager salaries.
Interest expense increased $51,238 from $348,682 in the
third quarter of 1999 to $399,920 in the same period in 2000 and
decreased $5,841 from $1,050,471 in the first nine months of 1999 to
$1,044,630 for the same period in 2000. The increase from the third
quarter of 1999 to the same period in 2000 is due to an increase in
interest expense at Firehouse Square due to an increase in the
principal balance upon which the interest is calculated. The decrease
from the first nine months of 1999 to the same period of 2000 is due
to a decrease at Canal House, Mater Dolorosa and Roseland due to a
decrease in the principal balance upon which the interest is
calculated.
Losses incurred during the quarter at the Registrant's
properties were approximately $336,000, compared to a loss of
approximately $291,000 for the same period in 1999. For the first
nine months of 2000 the Registrant's properties incurred a loss of
$1,013,000 compared to approximately $1,017,000 for the same period in
1999.
In the third quarter of 2000, Registrant incurred a loss
of $167,000 at Firehouse Square, including $64,000 of depreciation and
amortization expense, compared to a loss of $114,000, including
$65,000 of depreciation and amortization expense, in the third quarter
of 1999 and for the first nine months of 2000 incurred a loss of
$400,000, including $193,000 of depreciation and amortization expense,
compared to a loss of $352,000, including $194,000 of depreciation and
amortization expense, for the same period in 1999. The increase in
loss from the third quarter and the first nine months of 1999 to the
same period in 2000 is due to an increase in maintenance expense,
utilities expense and interest expense. The increase in maintenance
expense is due to an increase in maintenance service, and an increase
in plumbing and electrical expenses. The increase in utilities
expense is due to an increase in electric charges. The increase in
interest expense is due to an increase in the principal balance upon
which the interest is calculated.
In the third quarter of 2000, Registrant incurred a loss
of $66,000 at Canal House, including $98,000 of depreciation and
amortization expense, compared to a loss of $68,000, including
$108,000 of depreciation and amortization expense, in the third
quarter of 1999 and for the first nine months of 2000, the Registrant
incurred a loss of $308,000, including $295,000 of depreciation and
amortization expense, compared to a loss of $422,000, including
$367,000 of depreciation and amortization expense, for the same period
in 1999. The decrease in the loss from the third quarter and the
first nine months of 1999 to the same period in 2000 is due to an
increase in rental income and a decrease in maintenance expense. The
increase in rental income is due to an increase in average occupancy
(91% to 96%). The decrease in maintenance expense is due to a
decrease in maintenance service and contract security service.
In the third quarter of 2000, the Registrant incurred a
loss of $85,000 at Strehlow Terrace, including $60,000 of depreciation
expense, compared to a loss of $78,000, including $59,000 of
depreciation expense in the third quarter of 1999 and for the first
nine months of 2000, the Registrant incurred a loss of $239,000 at
Strehlow Terrace, including $180,000 of depreciation expense, compared
to a loss of $184,000, including $177,000 of depreciation and
amortization expense, for the same period in 1999. The increase in
loss from the third quarter and the first nine months of 1999 to the
same period in 2000 is due to a decrease in rental income, an increase
in real estate taxes and an increase in wages and salaries. The
increase in real estate tax is due to a change of quarter in which the
taxes were paid. The increase in wages and salaries is due to an
increase in maintenance salaries and resident manager salaries.
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 third quarter of 2000, Registrant recognized
income of $4,000 at Mater Dolorosa, including $32,000 of depreciation
and amortization expense, compared to a income of $3,000, including
$35,000 of depreciation and amortization expense, in the third quarter
of 1999 and for the first nine months of 2000, the Registrant
recognized income of $3,000, including $96,000 of depreciation and
amortization expense, compared to income of $13,000, including $95,000
of depreciation and amortization expense, for the same period in 1999.
The increase in income from the third quarter of 1999 to the same
period in 2000 is due to a decrease in miscellaneous operating expense
due to a decrease in postage, copy machine and computer expenses. The
decrease in income from the first nine 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
and manager salaries. Interest expense decreased due to a decrease in
the principal balance upon which the interest is calculated.
In the third quarter of 2000, Registrant incurred a loss
of $22,000 at Roseland including $18,000 of depreciation and
amortization expense, compared to a loss of $34,000, including $17,000
of depreciation and amortization expense, in the third quarter of 1999
and for the first nine months of 2000, the Registrant incurred a loss
of $69,000, including $53,000 of depreciation and amortization
expense, compared to a loss of $72,000, including $51,000 of
depreciation expense, for the same period in 1999. The decrease in
loss from the third quarter and the first nine months of 1999 to the
same period in 2000 is due to a decrease in wages and salary expense,
a utilities expense, interest expense, and an increase in rental
income. The decrease in wages and salaries is due to a decrease in
maintenance salaries. The decrease in utilities expense is due to a
decrease in electric charges. The decrease in interest expense is due
to a decrease in principal balance upon which the interest is
calculated.
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. In the third quarter of
2000, Registrant incurred a loss of $ 4,000 at Sauders Apartments,
compared to a loss of $7,000 in the third quarter of 1999 and for the
first nine months of 2000, Registrant incurred a loss of $12,000 at
Saunders Apartments, compared to a loss of $14,000 for the same period
of 1999. The decrease in the loss from the third quarter and first
nine months of 1999 to the same period in 2000 is due to an increase
in rental income.
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.
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 and notes thereto
contained 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.
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 September 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 September 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 September 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.