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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 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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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.)
Suite 500, 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) 735-5001
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to section 12(g) of the Act: 25,461 Units
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 *
* Securities not quoted in any trading market to Registrant's
knowledge.
PART I
Item 1. Business
a. General Development of Business
Diversified Historic Investors VI ("Registrant")
is a limited partnership formed in 1988 under the Pennsylvania Uniform
Limited Partnership Act. As of December 31, 1997, Registrant had
outstanding 25,461 units of limited partnership interest (the
"Units").
Registrant is presently in its operating stage.
It originally owned eight properties or interests therein. Interest
in two properties have been lost through foreclosure, one of which was
foreclosed in March 1997, and an interest in a third property has been
reduced substantially. See Item 2. Properties, for a description
thereof.
The following is a summary of significant
transactions involving the Registrant's interests:
On January 21, 1994, a property owned by the
Registrant, Locke Mill Plaza, was transferred to Locke Mill Partners
("LMP") a limited partnership in which the Registrant owned a 99%
interest. The property was transferred so that it would be held by
the Registrant in a manner similar to all of the other properties held
by the Registrant. On February 14, 1994, LMP filed a reorganization
petition pursuant to Chapter 11 of the U.S. Bankruptcy Code. LMP
filed a Plan of Reorganization and Disclosure Statement on July 7,
1994. On June 6, 1995, LMP filed the Second Plan of Reorganization
(the "Plan") and the Plan was confirmed in August 1995. The Plan
provided for the following : (1) the sale of some or all of the units
to satisfy the claims of its creditors; and (2) an extension of the
maturity date of the notes payable for three years, with the option to
extend for an additional two years if at least fifty percent (50%) of
the principal amount of the debt outstanding at the confirmation of
the Plan has been repaid. The net proceeds of the sales were to be
used to retire the principal balance of the debt. At December 31,
1996 none of the units were sold. A new lender placed a wrap-around
mortgage on the property in the amount of $3,500,000 and agreed to
fund the necessary costs for the marketing of the units and any
improvements to the units. The wrap-around mortgage amount was
supported by a current appraisal of the property, therefore the
difference between the wrap-around mortgage and the underlying
mortgages was accounted for as an adjustment to the related fixed
assets. Monthly payments of interest to the new lender were to be
made in an amount equal to net operating income, with a minimum of
$25,000 per month. The note accrued interest at 12% and was due in
August 2000. On March 14, 1997, the Registrant was declared in
default on the first mortgage for failure to make the minimum monthly
payment. On March 31, 1997, a settlement agreement was reached
whereby the Registrant has agreed to relinquish its partnership
interests in LMP to the mortgage holder in lieu of foreclosure.
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"), or which are eligible for designation as such, 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. In addition, four properties (Roseland, Mater
Dolorosa, Strehlow Terrace and Saunders Apartments) are low-income
housing structures which qualify for, have received, and will continue
to receive, the low income tax credits. Each of the properties
currently owned are 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, 1997, Registrant owned
interests in six properties, located in Nebraska (three), Virginia
(one), Pennsylvania (one), and Louisiana (one). In total, the
properties contain 100 apartment units, 149 condominium units used as
rental units, and 44,115 square feet ("sf") of commercial/retail
space. As of December 31, 1997, 220 of the apartment and condominium
units were under lease (88%) at monthly rental rates ranging from $210
to $1,260. In addition, 42,022 sf of commercial/retail space was
under lease (95%) at annual rates ranging from $3.13 to $23.11 per sf.
Rental of the apartments and commercial space is not expected to be
seasonal. For a 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 industry. As a result of the overbuilding that occurred in the
1980's, the competition for both residential and commercial tenants in
the local markets where the Registrant's properties are located is
generally strong. In each of the markets, there are several similar
historically certified rehabilitated buildings. Two of the properties
held for rental are market-rate properties and are located in
Alexandria, Virginia, and Philadelphia, Pennsylvania. At these
properties the Registrant is forced to keep its rent levels
competitively low in order to maintain moderate to high occupancy
levels. Management of each of these properties makes frequent market
analyses in order to set rent levels. When occupancy nears the 97-99%
range, management considers raising the rents by more than a normal
cost of living increase. If occupancy falls below 85%, management
considers lowering rents. Four of the properties held for rental are
low-income housing structures and are located in Omaha, Nebraska, and
New Orleans, Louisiana. These properties have fixed rental rates and
face competition for low to moderate income tenants from other low
income properties in the area. However, there is no organization
which holds a dominant position in the residential housing or
commercial leasing market in any of the geographic areas in which the
Registrant's properties are located.
Registrant has no employees. Registrant's
activities are overseen by Brandywine Construction & Management, Inc.,
("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 December 31, 1997, Registrant owned interests in
five partnerships which each own one property and a minority interest
in an additional partnership which owns one property. A summary
description of each property is given below.
a. Firehouse Square - consists of 31,431 sf of
commercial space at 902-910 King Street in Alexandria, Virginia. In
December 1988, Registrant was admitted, with a 90% general partner
interest, to Firehouse Square General Partnership ("FSGP"), a Virginia
general partnership, for a cash capital contribution of $1,750,000.
FSGP acquired and rehabilitated the property for $5,660,000 ($151.51
per sf), funded by the equity contribution and a mortgage note payable
of $4,207,000. On June 1, 1993, the first mortgage was modified. The
terms of the modification include the addition of all accrued and
unpaid interest ($218,728) to the principal balance and revision of
the payment terms. The lender also advanced $40,711 for real estate
taxes and $33,627 for tenant improvements. Monthly payments of
interest to the new note holder were to be made in an amount equal to
net operating income. The note accrues interest at prime plus 1/2%
(9% and 8.75% at December 31, 1997 and 1996, respectively). On
November 16, 1994, the new first mortgage holder foreclosed upon its
mortgage. By "credit bidding" its mortgage, the mortgage holder
became the successful bidder at sale. The first mortgage holder sold
its successful bid to a partnership known as 901 King Street
Associates ("KSA"). KSA is a general partnership owned 90% by DHI-VI.
The selling price of the mortgage was the amount that the mortgage had
been immediately prior to foreclosure. The obligation has terms
materially the same as the original mortgage loan and is secured by a
new mortgage on the Property. Therefore, after the sale, the
Registrant's interest in the Property is unchanged. The principal
balance of the mortgage at December 31, 1997 was $4,304,188. The
entire principal balance is due October 1998. In June 1995, the
Registrant refinanced $900,000 of the first mortgage (principal
balance of $876,936 at December 31, 1997). The new loan bears
interest at 9.75%, payable in monthly installments of principal and
interest of $8,021 and is due in June 2005.
The property is managed by BCMI. As of December
31, 1997, all 31,431 sf of space was under lease (100%) at annual
rates ranging from $7.12 to $20.89 per sf. The occupancy for the
previous four years was 82% for 1996, 89% for 1995, 88% for 1994, 87%
for 1993 and 53% for 1992. The average annual rent has been $7.00 to
$20.55 per sf for 1996, $6.57 to $26.96 per sf for 1995, $6.50 to
$19.29 per sf for 1994 and $6.50 to $30.18 per sf for 1993. There are
two tenants who each occupy ten percent or more of the rentable square
footage. They operate principally as a law firm and an architectural
firm. All leases are operating leases and the minimum future rentals
on the noncancelable leases as of December 31, 1997 are $460,807.
There are no contingent liabilities included in income for the years
ended December 31, 1997, 1996 and 1995.
The following is a table showing commercial lease
expirations at Firehouse Square for the next five years.
Total annual % of gross
Number of Total sf of rental covered by annual rental
leases expiring expiring leases expiring leases from property
1998 2 3,467 $ 48,770 10%
1999 2 13,181 209,026 44%
2000 1 1,344 20,268 4%
2001 1 2,574 42,165 9%
2002 3 5,663 66,921 14%
Thereafter 4 5,202 73,657 16%
Although no firm commitments have been made, the
Registrant anticipates the two leases which are scheduled to expire in
1998 will be extended for at least an additional year, due to the
availability of renewal options.
For tax purposes, this property has a basis of
$3,629,950 and is depreciated using the straight-line method with a
useful life of 39 years. The annual real estate taxes are $31,031
which is based on an assessed value of $2,900,100 taxed at a rate of
$1.07 per $100. It is the opinion of the management of the Registrant
that the property is adequately covered by insurance.
b. Roseland - consists of 17 low income apartments
and 3,100 sf of retail space at 4932 South 24th Street in South Omaha,
Nebraska. In July 1988, Registrant was admitted with a 98% general
partner interest and a 1% limited partner interest to Roseland
Redevelopment Partners ("RRP"), a Nebraska limited partnership, for a
cash capital contribution of $700,000. RRP acquired and rehabilitated
the property for $1,680,000 ($70.29 per sf), funded by the equity
contribution and three notes payable. The first note payable of
$500,000 is non-interest bearing, principal due upon sale of the
property; the second note payable of $63,313 bears interest at 9.16%,
interest adjusting every three years based on the three-year Treasury
Bill rate plus 250 basis points, payable in semi-annual installments
of principal and interest of $4,856, due in November 2001 (principal
balance at December 31, 1997 of $32,506); the third note payable of
$370,000 (principal balance of $357,849 at December 31, 1997) bears
interest at 8.01% and is payable in monthly installments of principal
and interest of $3,083. In August 1996, the Registrant refinanced the
first mortgage which lowered the interest rate and extended the
maturity date. The closing costs were paid by a loan of $17,065
(principal balance of $5,979 at December 31, 1997) which bears
interest at 8.5%, payable in monthly payments of principal and
interest of $776 and is due in August 1998.
The property is managed by an independent property
management firm. On December 31, 1997, all 17 of the units were
leased (100%) at monthly rents of $210 to $455, and 3,100 sf of
commercial space (100%) was leased at annual rents ranging from $3.13
to $5.50 per sf. All residential leases are renewable, one-year
leases. The occupancy for the residential units for the previous four
years was 88% for 1996, 94% for 1995, 87% for 1994 and 98% for 1993.
The monthly rental range has been approximately the same since 1993.
The commercial space has been 100% occupied since 1993. The range for
annual rents has been $3.00 to $4.29 per sf for 1996, $3.00 to $3.43
per sf for 1995, $2.75 per sf for 1994 and $2.75 to $5.14 per sf for
1993. There is one tenant who occupies ten percent or more of the
rentable square footage. It principally functions as a counseling
center. All commercial leases are operating leases and the minimum
future rentals on the noncancelable leases as of December 31, 1997 are
$10,800. There are no contingent liabilities included in income for
the years ended December 31, 1997, 1996 and 1995.
The following is a table showing commercial lease
expirations at Roseland for the next five years:
Total annual % of gross
Number of Total sf of rental covered by annual rental
leases expiring expiring leases expiring leases from property
1998 0 0 0 0
1999 0 0 0 0
2000 2 3,100 $10,800 14%
2001 0 0 0 0
2002 0 0 0 0
For tax purposes, this property has a basis of
$1,672,833 and is depreciated using the straight-line method with a
useful life of 27.5 years. The annual real estate taxes are $8,659
which is based on an assessed value of $360,300 taxed at a rate of
$2.40320 per $100. It is the opinion of the management of the
Registrant that the property is adequately covered by insurance.
c. Mater Dolorosa Apartments - consists of 68 low
income apartments located at 1265 South Carrollton Avenue in New
Orleans, Louisiana. In July 1988, Registrant was admitted with a 90%
general partnership interest to Mater Dolorosa General Partnership
("MDGP") a Pennsylvania general partnership, for a cash contribution
of $1,519,000. MDGP acquired and rehabilitated the property for
$3,149,000 ($59.39 per sf), funded by the equity contribution and a
note payable of $1,790,000. The note payable bears interest at 8.5%,
is payable monthly in principal and interest payments of $17,627, and
is due in April 2005 (principal balance at December 31, 1997 of
$1,151,343).
The property is managed by a property management
firm which is an affiliate of the Registrant's co-general partner of
MDGP. At December 31, 1997, 66 of the units were rented (97%) at
monthly rents of $486 to $571. All leases are renewable, one-year
leases. The occupancy for the previous four years was 99% for 1996,
100% for 1995, 99% for 1994 and 99% for 1993. The monthly rental
range has been approximately the same since 1993. For tax purposes,
this property has a basis of $3,178,476 and is depreciated using the
straight-line method with a useful life of 27.5 years. The annual
real estate taxes are $5,248 which is based on an assessed value of
$32,530 taxed at a rate of $16.1328 per $100. There is no one tenant
who occupies ten percent or more of the building. It is the opinion
of the management of the Registrant that the property is adequately
covered by insurance.
d. Strehlow Terrace Apartments - consists of 70 low
income apartment units located at 2024 North 16th Street, Omaha,
Nebraska. In January 1989, Registrant was admitted with a 98% general
partner interest to Strehlow Terrace Apartments Limited Partnership
("STALP"), a Nebraska limited partnership, for a cash capital
contribution of $2,250,000. STALP acquired and rehabilitated the
property for $5,817,000 ($52.02 per sf) funded by the equity
contribution and three mortgage loans. The first loan, financed
through the Governmental National Mortgage Association ("GNMA") is for
$1,789,000 (principal balance at December 31, 1997 of $1,775,053),
bears interest at 10-1/4%, is payable in monthly installments of
principal and interest of $15,540, and is due in 2030. In August
1993, six units were damaged by a fire at Strehlow Terrace. Due to
the financial difficulties caused by the fire, STALP fell behind on
its monthly debt service by several months. Although the property was
able to reduce the arrearage by 50% and commenced regular, monthly
payments by May 1994, the loan was declared in default and was
assigned by GNMA to the Federal Housing Administration/Housing and
Urban Development ("FHA/HUD") on June 24, 1994. At December 31, 1997,
the Registrant and HUD were in the process of attempting a workout
agreement on the loan. The other two loans were made by the City of
Omaha. One, in the amount of $1,700,000, bears interest at 1%, and
the other, in the amount of $75,000, is non-interest bearing. The
principal and interest (if any) on both City of Omaha loans is due
upon the sale of the property or in the year 2030, whichever is
earlier.
The property is managed by an independent property
management firm. On December 31, 1997, 68 of the apartments were
leased (97%) at monthly rents ranging from $275 to $572. All leases
are renewable, one-year leases. The occupancy for the previous four
years was 96% for 1996, 87% for 1995, 91% for 1994 and 95% for 1993.
The monthly rental range has been approximately the same since 1993.
For tax purposes, this property has a basis of $5,902,819 and is
depreciated using the straight-line method with a useful life of 27.5
years. The annual real estate taxes are $16,284 which is based on an
assessed value of $575,500 taxed at a rate of $2.81991 per $100. No
one tenant occupies ten percent of more of the building. It is the
opinion of the management of the Registrant that the property is
adequately covered by insurance.
e. Canal House - consists of 71 residential
condominium units and 8,471 sf of commercial condominium space located
at 4250-4312 Main Street, Manayunk, Pennsylvania. In February 1989,
Registrant was admitted to Canal House Historic Associates ("CHHA"), a
Pennsylvania limited partnership with a 99% general partner interest
for a cash contribution of $6,000,000. During 1990, Registrant made
an additional cash contribution of $200,000. (The 1% limited
partnership interest is also controlled by Registrant; it is held by a
Pennsylvania corporation whose stock is owned by Registrant). CHHA
acquired and rehabilitated the property for $9,700,000 ($94.41 per sf)
which was funded by the equity contribution and a loan of $4,000,000
with interest at 7.75% and monthly principal (based on a 30-year
amortization) and interest payments. In October 1995, the Registrant
ceased making debt service payments. The loan was sold in December
1995. The Registrant entered into an agreement with the new holder of
the note (principal balance of $1,496,518 at December 31, 1997)
whereby the maturity of the loan was extended to December 2000 and
monthly payments of interest are to be made to the new note holder in
an amount equal to net operating income. In April 1996, the
Registrant refinanced $3,216,000 (principal balance of $3,176,315 at
December 31, 1997) of the first mortgage. The new loan is a first
mortgage which bears interest at 8.75%, payable in monthly
installments of principal and interest of $25,300 and is due in April
2003.
The property is managed by BCMI. At December 31,
1997, 67 of the residential units were under lease (94%) at monthly
rents of $635 to $1,260, and 7,491 sf of the commercial space was
under lease (88%) at annual rents ranging from $19.00 to $23.11 per
sf. All residential leases are renewable, one-year leases. The
occupancy for the residential units for the previous four years was
93% for 1996, 88% for 1995, 90% for 1994 and 99% for 1993. The
monthly rental range has been approximately the same since 1993. The
occupancy for the commercial space was 88% for 1996, 94% for 1995, 88%
for 1994 and 88% for 1993. The range for annual rents has been $19.00
to $22.61 per sf for 1996, $18.86 to $19.52 per sf for 1995, $17.00 to
$19.00 per sf for 1994 and $11.59 to $18.51 per sf in 1993. There are
three tenants who each occupy ten percent or more of the rentable
square footage. They function principally as a bank, a restaurant and
a retail store. All leases are operating leases and the minimum
future rentals on the noncancelable leases as of December 31, 1997 are
$158,910. There are no contingent liabilities included in income for
the years ended December 31, 1997, 1996 and 1995.
The following is a table showing commercial lease
expirations at Canal House for the next five years.
Total annual % of gross
Number of Total sf of rental covered by annual rental
leases expiring expiring leases expiring leases from property
1998 0 0 0 0
1999 0 0 0 0
2000 1 2,426 46,094 5%
2001 2 5,065 112,816 13%
2002 0 0 0 0
For tax purposes, this property has a basis of
$9,271,760 and is depreciated using the straight-line method with a
useful life of 27.5 years. The annual real estate taxes are $87,863
which is based on an assessed value of $1,063,200 taxed at a rate of
$8.264 per $100. It is the opinion of the management of the
Registrant that the property is adequately covered by insurance.
f. Saunders Apartments - consists of 23 low-income
apartments at 415 North 41st Avenue in Omaha, Nebraska. Registrant
acquired a 99% joint venture interest in Saunders Apartments Joint
Venture ("SAJV"), a Nebraska Joint Venture, for a cash capital
contribution of $875,000. SAJV acquired and rehabilitated the
property for $1,815,000 ($79.96 per sf), funded by the equity
contribution and a mortgage payable of $675,000. The note was retired
with $285,000 advanced from Registrant's co-general partner, and a
mortgage note payable of $395,000 (principal balance at December 31,
1997 of $289,454). The mortgage note bears interest at 10.87%, is
payable in monthly installments of $3,723 and matures in May 1997. On
June 1, 1993 an amended and restated joint venture agreement was
reached whereby the Registrant's interest was reduced to a 30%
interest.
The property is managed by an independent property
management firm. As of December 31, 1997, all 23 units were under
lease (100%) with rents ranging from $385 to $430. All leases are
renewable, one-year leases. The occupancy for the previous four years
was 87% for 1996, 83% for 1995, 78% for 1994 and 83% for 1993. The
monthly rental range has been approximately the same since 1993. For
tax purposes, this property has a basis of $1,947,071 and is
depreciated using the straight-line method with a useful life of 27.5
years. The annual real estate taxes are $9,901 which is based on an
assessed value of $382,700 taxed at a rate of $2.5873 per $100. No
one tenant occupies ten percent or more of the building. It is the
opinion of the management of the Registrant that the property is
adequately covered by insurance.
Item 3. Legal Proceedings
a. On February 14, 1994, Locke Mill Partners, a limited
partnership in which the Registrant owns a 99% interest, filed a
reorganization petition pursuant to Chapter 11 of the U.S. Bankruptcy
Code. On March 31, 1997, the lender foreclosed on the property. For
a description of the proceedings, see Item 1.a, Business.
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 399 units were sold
or exchanged of record in 1997.
b. As of December 31, 1997, there were 2,805 record
holders of Units.
c. Registrant did not declare any cash dividends in
1997 or 1996.
Item 6. Selected Financial Data
The following selected financial data are for the five
years ended December 31, 1997. This data should be read in
conjunction with the consolidated financial statements included
elsewhere herein. This data is not covered by the independent
auditors' report.
1997 1996 1995 1994 1993
Rental income $ 2,332,312 $ 2,622,418 $ 2,516,916 $ 2,976,153 $ 3,053,542
Interest income 949 1,229 3,330 5,864 6,430
Net loss 2,016,133 2,114,935 2,497,861 816,728 2,555,477
Net loss per Unit 78.40 82.24 97.13 31.75 99.36
Total assets (net of
depreciation and
amortization) 19,709,306 25,557,744 26,767,721 26,779,880 34,240,234
Debt obligations 15,451,686 19,353,961 19,141,915 17,026,650 22,292,519
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, 1997, Registrant had total
unrestricted cash of $23,036. Cash generated from operations is used
primarily to fund operating expenses and debt service. If cash flow
proves to be insufficient, the Registrant will attempt to negotiate
loan modifications with the various lenders in order to remain current
on all obligations. The Registrant is not aware of any additional
sources of liquidity.
As of December 31, 1997, Registrant had restricted
cash of $334,180 consisting primarily of funds held as security
deposits, replacement reserves and escrows for taxes and insurance.
As a consequence of these restrictions as to use, Registrant does not
deem these funds to be a source of liquidity.
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 six properties where
the mortgages are basically "cash-flow" mortgages, requiring all
available cash after payment of operating expenses to be paid to the
first mortgage holder. None of the properties is 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
Due to the relatively recent rehabilitations of
the properties, 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 expenditures 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 investments for the foreseeable future.
(3) Results of Operations
During 1997, Registrant incurred a net loss of
$2,016,133 ($78.40 per limited partnership unit) compared to a net
loss of $2,114,935 ($82.24 per limited partnership unit) in 1996 and a
net loss of $2,497,861 ($97.13 per limited partnership unit) in 1995.
Included in the 1997 loss is $769,620 of extraordinary loss relating
to the foreclosure of Locke Mill Plaza.
Rental income increased from $2,516,916 in 1995 to
$2,622,418 in 1996 and decreased to $2,332,312 in 1997. The decrease
from 1996 to 1997 is mainly due to the loss of Locke Mill in March
1997 combined with a decrease at Strehlow Terrace partially offset by
increases at Canal House and Firehouse Square. The increase from 1995
to 1996 is mainly the result of an increase in rental income at Canal
House, Strehlow Terrace Apartments, and Locke Mill partially offset by
a decrease at Firehouse Square.
Rental operations expense increased from
$1,228,389 in 1995 to $1,373,076 in 1996 and decreased to $1,045,979
in 1997. The decrease from 1996 to 1997 is mainly due to the loss of
Locke Mill in March 1997 combined with a decrease in legal fees at
Canal House partially offset by an increase in maintenance expense at
Mater Dolorosa. The increase from 1995 to 1996 is mainly the result
of an increase in commissions expense and condominium fees at Locke
Mill, an increase in legal fees at Canal House partially offset by a
decrease in legal fees at Firehouse Square and Locke Mill.
General and administrative expenses decreased from
$280,577 in 1995 to $176,949 in 1996 and increased to $253,791 in
1997. The decrease from 1995 to 1996 is the result of a decrease in
administrative fees charged.
Interest expense decreased from $2,123,206 in 1995
to $1,773,685 in 1996 to $1,313,837 in 1997. The decrease from 1996
to 1997 is mainly due to the loss of Locke Mill in March 1997 combined
with a decrease at Canal House partially offset by increases at Mater
Dolorosa and Firehouse Square. The decrease from 1995 to 1996 is the
result of a decrease at Canal House and Mater Dolorosa partially
offset by an increase at Locke Mill.
Depreciation and amortization expense increased
from $1,364,876 in 1995 to $1,397,601 in 1996 and decreased to
$1,162,964 in 1997. The decrease from 1996 to 1997 is mainly due to
the loss of Locke Mill in March 1997 combined with decreases at
Firehouse Square and Roseland partially offset by an increase at
Strehlow Terrace. The increase from 1995 to 1996 is mainly the result
of an increase in amortization expense at Canal House and Locke Mill
due to the amortization of loan fees.
In 1997, losses of $1,834,000 were incurred at
Registrant's Properties compared to a loss of $1,845,000 in 1996 and
$2,136,000 in 1995. A discussion of property operations/activities
follows:
In 1997, Registrant sustained a loss of $852,000
at Locke Mill Plaza including $63,000 of depreciation and amortization
expense, compared to a loss of $481,000 including $251,000 of
depreciation and amortization expense in 1996 and a loss of $338,000
including $240,000 of depreciation and amortization expense in 1995.
The 1997 loss without the effect of the foreclosure would have been
$119,000. Included in operations for 1997 is an extraordinary loss of
$733,000 representing the excess of the fair market value of the Locke
Mill Plaza property over the liabilities satisfied in the foreclosure.
The decrease in the loss from 1996 to 1997 is due to the loss of the
property in March 1997. The increased loss from 1995 to 1996 is the
result of an increase in interest, leasing commissions, condominium
fees and amortization expense partially offset by an increase in
rental income and a decrease in legal fees. Interest expense
increased due to a higher debt balance resulting from a loan
restructuring and an increase in the interest rate with respect to the
financing secured by the property while leasing commissions increased
due to increased unit turnover. Condominium fees increased due to a
special assessment charged by the condominium association for capital
improvements to the building. Amortization increased due to the
amortization of loan fees paid in connection with the restructuring.
Rental income increased due to an increase in the average rental rates
and legal fees decreased as a result of the termination of bankruptcy
proceedings (and the legal fees incurred in connection therewith) in
1995.
In 1997, Registrant incurred losses of $56,000 at
Roseland including $62,000 of depreciation expense compared to a loss
of $71,000 including $73,000 of depreciation expense in 1996 and a
loss of $77,000 including $73,000 of depreciation expense in 1995.
Since Roseland is a low income housing property, rents are fixed in
relation to specified income levels. As a result, similar to Mater
Dolorosa and Strehlow Terrace discussed below, the property
experiences high occupancy but rental income remains low. The
decrease in the loss from 1996 to 1997 is due to a decrease in
depreciation expense resulting from personal property becoming fully
depreciated in 1997. The decrease in the loss from 1995 to 1996 is
the result of an overall decrease in the operating expenses of the
property.
In 1997, Registrant incurred a loss of $511,000 at
Firehouse Square including $235,000 of depreciation and amortization
expense compared to a loss of $594,000 including $267,000 of
depreciation and amortization expense in 1996 and a loss of $575,000
including $255,000 of depreciation and amortization expense in 1995.
The decrease in the loss from 1996 to 1997 is due to an increase in
rental income due to an increase in the average occupancy (86% to 94%)
and a decrease in amortization expense partially offset by an increase
in interest expense. Amortization expense decreased due to the
amortization of leasing commissions for tenants who vacated in 1997.
Interest expense increased due to an increase in principal balance
upon which interest is accrued. The decrease in the loss from 1995 to
1996 is mainly due to a decrease in legal fees partially offset by a
decrease in rental income due to a decrease in the average rental
rates. Legal fees had increase in 1995 over historical levels as a
result of legal fees incurred in the third quarter of 1995 in
connection with the refinancing of part of the debt.
In 1997, Registrant incurred a loss of $31,000 at
Mater Dolorosa including depreciation expense of $127,000 compared to
a loss of $6,000 including depreciation expense of $127,000 in 1996
and a loss of $24,000 including depreciation expense of $130,000 in
1995. Since Mater Dolorosa is a low income housing property, rents
are fixed in relation to specified income levels. As a result,
similar to Roseland and Strehlow Terrace, the property experiences
high occupancy but rental income remains low. The increase in the
loss from 1996 to 1997 is due to an increase in maintenance expense
due to deferred maintenance performed at the property in 1997 and an
increase in interest expense due to the correction of interest in
1996. The decrease in the loss from 1995 to 1996 is due to a decrease
in interest expense due to a correction of interest expense relating
to a prior period.
In 1997, Registrant incurred a loss of $254,000 at
Strehlow Terrace Apartments, including $232,000 of depreciation
expense compared to a loss of $213,000 including $228,000 of
depreciation expense in 1996 and a loss of $239,000 including $226,000
of depreciation expense in 1995. Since Strehlow is a low income
housing property, rents are fixed in relation to specified income
levels. As a result, similar to Registrant's other low-income
properties, the property experiences high occupancy but rental income
remains low. The increase in the loss from 1996 to 1997 is the result
of a decrease in rental income due to the lump sum payment received in
1996 combined with an increase in depreciation expense due to the
depreciation of improvements to the property. The decrease in the
loss from 1995 to 1996 is mainly the result of an increase in rental
income due to a one-time lump sum payment for rental increases
received in the first quarter of 1996 from the Omaha Housing Authority
retroactive to the years 1989-1994.
In 1997, Registrant incurred a loss of $130,000 at
Canal House, including $368,000 of depreciation expense compared to a
loss of $480,000 including depreciation and amortization expense of
$377,000 in 1996 and a loss of $883,000 including depreciation and
amortization expense of $443,000 in 1995. The decrease in the loss
from 1996 to 1997 is the result of an increase in rental income
combined with a decrease in legal fees and interest expense. Rental
income increased due to an increase in the average rental rates and
legal fees decreased to more normal levels in 1997 as compared to the
level in 1996 which reflected legal fees incurred in connection with a
debt restructuring in 1996. Interest expense decreased due to a
scheduled reduction in the interest rate on the loan. The decrease in
the loss from 1995 to 1996 is due to an increase in rental income due
to higher average rental rates and a decrease in interest expense
partially offset by an increase in legal fees and amortization
expense. Interest expense decreased due to default interest incurred
in 1995. Legal fees increased due to fees incurred in connection with
a debt restructuring while amortization expense increased due to the
amortization of loan fees occurred in the refinancing of the mortgage.
Summary of Minority Interest Investments
In 1997, Registrant incurred losses of $22,000 at
Saunders Apartments compared to a loss of $17,000 in 1996 and a loss
of $21,000 in 1995. The Registrant expects to achieve in 1997 results
comparable to those experienced in 1996.
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 VI
We have audited the accompanying consolidated balance sheets of
Diversified Historic Investors VI (a Pennsylvania Limited Partnership)
and subsidiaries as of December 31, 1997 and 1996 and the related
consolidated statements of operations, changes in partners' equity and
cash flows for the years ended December 31, 1997, 1996 and 1995.
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 audits. We
did not audit the financial statements of Strehlow Terrace Apartments
Limited Partnership, which reflect total assets of $4,005,740 and
$4,233,870 as of December 31, 1997 and 1996 and total revenues of
$364,016 and $393,567, respectively for the years then ended. In
addition, we did not audit the financial statements of Mater Dolorosa
General Partnership which reflect assets of $2,014,364 and $2,165,984
as of December 31, 1997 and 1996 and total revenues of $398,560 and
$396,038, respectively for the years then ended. Those statements were
audited by other auditors whose reports have been furnished to us, and
our opinion, insofar as it relates to the amounts included Strehlow
Terrace Apartments Limited Partnership and Mater Dolorosa General
Partnership, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the
audits 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 audits and the
reports of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of
Diversified Historic Investors VI and subsidiaries as of December 31,
1997 and 1996, and the results of their operations and their cash flow
for the years ended December 31, 1997, 1996 and 1995 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Schedule of Real
Estate and Accumulated Depreciation on page 33 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.
Gross, Kreger & Passio, L.L.C.
Philadelphia, Pennsylvania
March 17, 1998
Independent Auditor's Report
To the Partners of
Strehlow Terrace Apartments Limited Partnership
We have audited the accompanying balance sheets of Strehlow Terrace
Apartments Limited Partnership, (a Nebraska limited partnership), FHA
Project No. 103-94006, as of December 31, 1997 and 1996, and the
related statements of operations, partners' deficit, and cash flows
for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller
General of the United States, and the Consolidated Audit Guide for
Audits of HUD Programs (the Guide) issued by the Department of Housing
and Urban Development, Office of the Inspector General. Those
standards and the guide require that we plan and perform the audit to
obtain reasonable assurance about whether the 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Strehlow
Terrace Apartments Limited Partnership at December 31, 1997 and 1996,
and the results of its operations, changes in partners' deficit and
cash flows for the years then ended, in conformity with generally
accepted accounting principles.
As discussed in Note F to the financial statements, the Partnership
has incurred significant losses since its formation to operate
Strehlow Terrace Apartments beginning in 1990. The Partnership has
experienced a deficiency in cash flows resulting in past due mortgage
principal, interest and escrow payments. In addition, work-out
opportunities with the Department of Housing and Urban Development
(HUD) have been suspended. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note F. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs, we have also issued a report
dated February 23, 1998 on our consideration of the Partnership's
internal control structure and reports dated February 23, 1998 on its
compliance with specific requirements applicable to Affirmative Fair
Housing, and specific requirements applicable to its non-major HUD
program transactions.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplementary information
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 audits 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.
Blackman & Associates, P.C.
Omaha, Nebraska
February 23, 1998
Independent Auditor's Report
To the Partners of
Mater Dolorosa General Partnership
We have audited the accompanying balance sheets of Mater Dolorosa
General Partnership, for December 31, 1997 and 1996 and the related
statements of operations, partners' equity and cash flows for the
years then ended. These 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
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the 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 audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Mater
Dolorosa General Partnership as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended
in conformity with generally accepted accounting principles.
Pailet, Meunier and LeBlanc, L.L.P.
Metairie, Louisiana
January 29, 1998
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Consolidated financial statements: Page
Consolidated Balance Sheets at December 31, 1997 and 1996 20
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996, and 1995 21
Consolidated Statements of Changes in Partners' Equity for
the Years Ended December 31, 1997, 1996, and 1995 22
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996, and 1995 23
Notes to consolidated financial statements 24-31
Financial statement schedules:
Schedule XI - Real Estate and Accumulated Depreciation 33
Notes to Schedule XI 34
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 VI
(a limited partnership)
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
Assets
1997 1996
Rental properties at cost:
Land $ 950,238 $ 1,081,164
Buildings and improvements 27,138,941 33,506,607
Furniture and fixtures 845,914 1,068,784
---------- ----------
28,935,093 35,656,555
Less - accumulated depreciation (9,949,357) (10,933,587)
---------- ----------
18,985,736 24,722,968
Cash and cash equivalents 23,036 59,334
Restricted cash 334,180 362,796
Investment in affiliate 5,748 27,301
Other assets (net of accumulated
Amortization of $426,518 and $424,590) 360,606 385,345
---------- ----------
Total $19,709,306 $25,557,744
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $15,451,686 $19,353,961
Accounts payable:
Trade 872,625 790,335
Taxes 20,004 21,830
Related parties 308,474 272,760
Other 1,026 70,926
Interest payable 1,292,641 1,254,336
Tenant security deposits 124,350 138,963
---------- ----------
Total liabilities 18,070,806 21,903,111
---------- ----------
Partners' equity 1,638,500 3,654,633
---------- ----------
Total $19,709,306 $25,557,744
========== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
Revenues:
Rental income $2,332,312 $2,622,418 $2,516,916
Other income 218,350 0 0
Interest income 949 1,229 3,300
--------- --------- ---------
Total revenues 2,551,611 2,623,647 2,520,216
--------- --------- ---------
Costs and expenses:
Rental operations 1,045,979 1,373,076 1,228,389
General and administrative 253,791 176,949 280,577
Interest 1,313,837 1,773,685 2,123,206
Depreciation and amortization 1,162,964 1,397,601 1,364,876
--------- --------- ---------
Total costs and expenses 3,776,571 4,721,311 4,997,048
--------- --------- ---------
Loss before minority interests and
equity in affiliate (1,224,960) (2,097,664) (2,476,832)
Equity in net loss of affiliate (21,553) (17,271) (21,029)
--------- --------- ---------
Loss before extraordinary item (1,246,513) (2,114,935) (2,497,861)
Extraordinary loss (769,620) 0 0
--------- --------- ---------
Net loss ($2,016,133) ($2,114,935) ($2,497,861)
========= ========= =========
Net loss per limited partnership unit:
Loss before minority interests
and equity in affiliate ($ 47.63) ($ 81.57) ($ 96.31)
Equity in net loss of affiliate (.84) (.67) (.82)
--------- --------- ---------
Loss before extraordinary item (48.47) (82.24) (97.13)
Extraordinary item (29.93) 0 0
--------- --------- ---------
($ 78.40) ($ 82.24) ($ 97.13)
========= ========= =========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Years Ended December 31, 1997, 1996 and 1995
Dover
Historic
Advisors Limited
VI (1) Partners (2) Total
Percentage participation in profit or loss 1% 99% 100%
Balance at December 31, 1994 ($127,985) $8,395,414 $8,267,429
Net loss (24,979) (2,472,882) (2,497,861)
------- --------- ---------
Balance at December 31, 1995 (152,964) 5,922,532 5,769,568
Net loss (21,149) (2,093,786) (2,114,935)
------- --------- ---------
Balance at December 31, 1996 (174,113) 3,828,746 3,654,633
Net loss (20,161) (1,995,972) (2,016,133)
------- --------- ---------
Balance at December 31, 1997 ($194,274) $1,832,774 $1,638,500
======= ========= =========
(1) General Partner.
(2) 25,461 limited partnership units outstanding at December 31,
1997, 1996, and 1995.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
Cash flows from operating activities:
Net loss ($2,016,133) ($2,114,935) ($2,497,861)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,162,964 1,397,601 1,364,876
Extraordinary loss 769,620 0 0
Equity in loss of affiliate 21,553 17,271 21,029
Changes in assets and liabilities:
Decrease (increase) in restricted cash 5,542 (65,045) (6,211)
Increase in other assets (97,661) (108,436) (249,461)
Increase in accounts payable - trade 230,341 115,195 215,589
Decrease in accounts payable - taxes (1,826) (27,584) (18,308)
Increase (decrease) in accounts payable -
related party 45,714 (23,406) 27,355
(Decrease) increase in accounts payable
- other (64,825) 31,616 (3,333)
Increase in interest payable 261,583 599,439 144,748
Increase (decrease) in tenant security
deposits 1,187 (2,347) 4,386
Net cash provided by (used in) --------- --------- ---------
operating activities 318,059 (180,631) (997,191)
--------- --------- ---------
Cash flows from investing activities:
Purchase of rental property and
improvements (103,135) (44,476) (171,516)
--------- --------- ---------
Net cash used in investing activities (103,135) (44,476) (171,516)
--------- --------- ---------
Cash flows from financing activities
Proceeds from debt financing 67,967 360,704 1,309,064
Principal payments (319,189) (148,658) (127,138)
--------- ---------- ---------
Net cash (used in) provided by
financing activities (251,222) 212,046 1,181,926
--------- ---------- ---------
(Decrease) increase in cash and cash
equivalents (36,298) (13,061) 13,219
Cash and cash equivalents at beginning of year 59,334 72,395 59,176
--------- ---------- ---------
Cash and cash equivalents at end of year $ 23,036 $ 59,334 $ 72,395
========= ========== =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $1,275,532 $1,174,246 $1,076,594
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Net assets transferred for liability reduction*:
Net assets transferred $4,815,026 0 0
Liability reduction $4,081,547 0 0
* As a result of foreclosures on properties owned by the Partnership.
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Diversified Historic Investors VI (the "Partnership"), a limited
partnership, was formed in January 1988 to acquire, rehabilitate,
renovate, manage, operate, hold, sell, exchange, and otherwise deal in
and with real properties containing improvements which are "certified
historic structures" as defined in the Internal Revenue Code of 1986
(the "Code"), or which are eligible for the tax credit provided by
Section 42 of the Code, and such other uses as Dover Historic Advisors
VI (the "General Partner") deems appropriate, and to engage in any and
all activities related or incidental thereto. Any rehabilitations
undertaken by the Partnership will be done with a view to obtaining
certification of expenditures therefor as "qualified rehabilitation
expenditures" as defined in the Code.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial
statements follows:
1. Principles of Consolidation
The accompanying financial statements include the accounts of the
Partnership and five subsidiary partnerships ("Ventures") in which the
Partnership has controlling interests, with appropriate elimination of
inter-partnership transactions and balances. In addition, the
Partnership owns a minority interest of 30% in one partnership, which
it accounts for on the equity method. Allocations of income and loss
to the minority owners of the Ventures will be made until and unless
the cumulative losses applicable to the minority interests exceed the
minority interests in the equity capital of the Ventures. 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. Net Loss Per Partnership Unit
The net loss per limited partnership unit is based on the weighted
average number of limited partnership units outstanding (25,461 in
1997, 1996 and 1995).
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. 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.
6. Restricted Cash
Restricted cash includes amounts held for tenant security deposits and
real estate tax reserves.
7. Revenue Recognition
Revenues are recognized when rental payments are due on a straight-
line basis. Rental payments received in advance are deferred until
earned.
8. Rental Properties
Rental properties are stated at cost. A provision for impairment of
value is recorded when a decline in value of property is determined to
be other than temporary as a result of one or more of the following:
(1) a property is offered for sale at a price below its current
carrying value, (2) a property has significant balloon payments due
within the foreseeable future which the Partnership does not have the
resources to meet, and which the Partnership anticipates it will be
unable to obtain replacement financing or debt modification sufficient
to allow a continued hold of 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 deficit results of operations, and has been
unable to, or anticipates it will be unable to, obtain debt
modification, financing or refinancing sufficient to allow a continued
hold of 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.
NOTE C - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During 1995, a new lender placed a wrap-around mortgage in the amount
of $3,500,000 on one of the properties owned by the Partnership. The
wrap-around mortgage amount is supported by a current appraisal of the
property, therefore the difference between the wrap-around mortgage
and the underlying mortgages is accounted for as an adjustment to
related fixed assets. The effect of this transaction, which is
excluded from the statement of cash flows, follows:
Increase in assets $ 933,339
Increase in liabilities (933,339)
--------
Net effect on Partnership $ 0
========
NOTE D - LEASES
The Partnership's leases with commercial tenants are classified as
operating leases. Leases are generally for a period of three to five
years and provide for a fixed base rent plus contingent rents based on
level of sales and sharing of certain operating costs.
Minimum future commercial rentals on operating leases as of December
31, 1997 are as follows:
1998 $581,747
1999 372,721
2000 295,559
2001 140,578
2002 73,657
NOTE E - PARTNERSHIP AGREEMENT
The significant terms of the amended and restated Agreement of Limited
Partnership (the "Agreement"), as they relate to the financial
statements, follow:
1. Capital Contributions
The partnership offered investors limited partnership units at $1,000
per unit; the minimum purchase per investor was three units. A total
of 25,461 limited partnership units was sold. After payment of costs
of issuance as provided for in the Agreement and the withdrawal of the
initial limited partner, initial partnership capital net of costs of
issuance was $22,181,070 from limited partners and $9,900 from the
General Partner.
2. Distributions from Operations
The Agreement provides that, beginning with the date of the admission
of subscribers as limited partners, all distributable cash from
operations (as defined) will be distributed 99% to the limited
partners and 1% to the General Partner. After cash flows from
operations are positive, the General Partner shall also receive 4% of
such cash flows exclusive of interest earned on investments.
All distributable cash from sales or dispositions will be distributed
to the limited partners up to their adjusted invested capital plus an
amount equal to the sum of the greater of an 8.5% cumulative, non-
compounded annual return on the average after-credit invested capital
or a 6% cumulative, non-compounded annual return on the average
adjusted invested capital, plus an early investor incentive, less
amounts previously distributed; thereafter, after receipt by the
General Partner or its affiliates of any accrued but unpaid real
estate brokerage commissions, the balance will be distributed 85% to
the limited partners and 15% to the General Partner. Terms used
throughout this paragraph are as defined under the Agreement.
3. Allocation of Net Income and Net Losses from Operations
Net income and net loss (as defined) will be allocated 99% to the
limited partners and 1% to the General Partner with certain exceptions
as defined in the Agreement.
The Agreement provides that the fiscal year of the Partnership will be
the calendar year and that the Partnership shall continue until
December 31, 2038, unless sooner terminated upon the occurrence of
certain events.
NOTE F - ACQUISITIONS
The Partnership acquired one property and five general or limited
partnership interests in Ventures during the period from January 7,
1988, to December 1988, and one general and one limited partnership
interest in Ventures in 1989, as discussed below.
In July 1988, the Partnership was admitted, with a 98% general partner
and a 1% limited partner interest, to a Nebraska limited partnership
which owns a building located in Omaha, Nebraska, consisting of 17
apartment units, for a cash capital contribution of $700,000. In
addition, $128,284 in acquisition costs relating to the investment
have been capitalized as part of buildings and improvements.
In July 1988, the Partnership was admitted, with a 90% general partner
interest, to a Louisiana general partnership which owns a building
located in New Orleans, Louisiana, consisting of 68 apartment units,
for a cash capital contribution of $1,519,000. In addition, $241,173
of acquisition costs relating to the investment have been capitalized
as part of buildings and improvements. During 1990, as permanent
financing was obtained, $60,000 of the capital contribution was
returned to the Partnership.
In December 1988, the Partnership acquired a 99% joint venture
interest in a Nebraska joint venture which owns a building located in
Omaha, Nebraska, consisting of 23 apartment units, for a cash capital
contribution of $875,000. In addition, $153,940 in acquisition costs
relating to the investment have been capitalized as part of buildings
and improvements. These capitalized costs have been removed from the
balance sheet. Pursuant to the June 1993 Amended and Restated Joint
Venture Agreement, the Partnership's interest was reduced to 30%.
In December 1988, the Partnership was admitted, with a 97% general
partner and a 1% limited partner interest, to a West Virginia limited
partnership which owned a building located in Huntington, West
Virginia, consisting of 53 apartment units and 41,590 square feet of
commercial space, for a general partner cash capital contribution of
$1,470,000 and limited partner cash capital contribution of $10,000.
In addition, $492,609 of acquisition costs relating to the investment
were capitalized as part of building and improvements. The lender
foreclosed on the property in October 1994.
In December 1988, the Partnership was admitted, with a 90% general
partner interest, to a Virginia general partnership which owns a
building located in Alexandria, Virginia, consisting of 32,544 square
feet of commercial space, for a cash capital contribution of
$1,750,000. In addition, $436,164 in acquisition costs relating to
the investment have been capitalized as part of buildings and
improvements. In 1990, the Partnership made an additional cash
contribution of $196,621 pursuant to an agreement with the co-general
partner.
In December 1988, the Partnership purchased 78 condominium units and
6,700 square feet of commercial space located in North Carolina for
$5,042,000. In addition, $774,258 of acquisition costs relating to
the property were capitalized as part of buildings and improvements.
On January 21, 1994, the property was transferred to a Pennsylvania
limited partnership in which the partnership owns a 99% interest. On
March 14, 1997, the Registrant was declared in default on the first
mortgage for failure to make the minimum monthly payment. On March
31, 1997, a settlement agreement was reached whereby the Registrant
has agreed to relinquish its partnership interests in the limited
partnership.
In January 1989, the Partnership was admitted, with a 98% general
partner interest, to a Nebraska general partnership which owns a
building located in Omaha, Nebraska, consisting of 70 apartments
units, for a cash capital contribution of $2,250,000. In addition,
$448,993 of acquisition costs relating to the investment have been
capitalized as part of buildings and improvements.
In February 1989, the Partnership was admitted, with a 99% general
partner interest, to a Pennsylvania limited partnership which owns a
building located in Manayunk, Pennsylvania, consisting of 73 apartment
units and 8,471 square feet of commercial space, for a total cash
capital contribution of $6,000,000, less funds advanced prior to
admittance ($2,431,552 at December 31, 1988). In addition, $664,509
of acquisition costs relating to the investment have been capitalized
as part of buildings and improvements. The building was subsequently
converted to a condominium, with the Partnership retaining title to
all property. During 1990, the Partnership made additional cash
contributions of $220,000.
NOTE G - DEBT OBLIGATIONS
Debt obligations were as follows: December 31,
1997 1996
------ ------
Note payable, non-interest bearing; principal due upon $ 500,000 $ 500,000
sale of property; collateralized by related rental
property.
Note payable, interest at 9.16% and 8.64% at December 31, 32,506 39,457
1997 and 1996, respectively, adjusted every three years,
based upon the three-year Treasury Bill rate plus 250
basis points, payable in semi-annual installments of
principal and interest of $4,856 (payment adjusted in
accordance with interest rate changes); due in November
2001; collateralized by related rental property.
Note payable, interest at 8.01% and 8.25% at December 31, 357,849 365,808
1997 and 1996, respectively; payable in monthly
installments of principal and interest of $3,083; due in
August 2006; collateralized by related rental property.
Note payable, interest at 9.16% and 8.5% at December 31, 5,979 15,013
1997 and 1996, respectively; payable in monthly
installments of principal and interest of $776; due in
August 1998.
Note payable, interest at 8.5%, payable in monthly 1,151,343 1,251,224
installments of principal and interest of $17,627,
due in April 2005; collateralized by related rental
property.
Mortgage loan, interest accrues at prime plus .5% e 4,304,188 4,239,795
(effective rate of 9% and 8.75% at December 31, 1997
and 1996, respectively), interest only payable monthly
to the extent of net operating income; principal due
October 1998; collateralized by related rental property.
Mortgage loan, interest at 9.75%, payable in monthly 876,936 887,140
installments of principal and interest of $8,021;
principal due June 2005; collateralized by related
rental property.
Mortgage loan, interest at 12%, interest only payable 0 3,649,988
to the extent of net operating income with a minimum of
$25,000; principal due August 2000; collateralized by
related rental property. (A)
Note payable, non-interest bearing; principal due upon 75,000 75,000
sale of property; collateralized by related rental property.
Note payable, interest at 10.25%; payable in monthly 1,775,053 1,775,053
installments of principal and interest of $15,540,
with maturity in March 2030; collateralized by related
rental property.
Note payable, interest at 1%, accruing to principal; 1,700,000 1,700,000
unpaid principal and interest are due upon sale or in
January 2030; collateralized by related rental property.
Note payable, interest at 7.75%; interest only payable 1,496,518 1,652,722
monthly to the extent of net operating income; due
December 2000; collateralized by related rental property.
Mortgage loan, interest at 8.75%, payable in monthly
installments of principal and interest of $25,300;
principal due April 2003; collateralized by related
rental property. 3,176,314 3,202,761
---------- ----------
$15,451,686 $19,353,961
========== ==========
(A) See Note H.
Maturities of debt obligation at December 31, 1997 were as follows:
Year Ending December 31,
1998 $ 4,533,898
1999 215,125
2000 1,727,834
2001 246,279
2002 257,184
Thereafter 8,471,366
----------
$15,451,686
==========
NOTE H - EXTRAORDINARY GAINS/LOSSES
On February 14, 1994, Locke Mill Partners, a limited partnership in
which the Partnership owns a 99% interest, filed a reorganization
petition pursuant to Chapter 11 of the U.S. Bankruptcy Code. On June
6, 1995, LMP filed the Second Plan of Reorganization (the "Plan") and
the Plan was confirmed in August 1995. The Plan provides for the
following : (1) the sale of some or all of the units in order to
satisfy the claims of its creditors; and (2) an extension of the
maturity date of the notes payable for three years, with the option to
extend for an additional two years if fifty percent (50%) of the
principal amount of the debt had been retired at that time. The net
proceeds of the sales were to be used to retire the principal balance
of the debt. The Partnership entered into an agreement with a new
lender who agreed to fund necessary marketing costs and costs for any
improvements to the units in return for a wrap mortgage on the
property in the amount of $3,500,000. Monthly payments of interest to
the new lender were to be made in an amount equal to net operating
income, with a minimum of $25,000 per month. The note accrued
interest at 12% and was due in August 2000. On March 14, 1997, the
Partnership was declared in default on the first mortgage for failure
to make the minimum monthly payment. On March 31, 1997, a settlement
agreement was reached whereby the Partnership has agreed to relinquish
its partnership interests in LMP. The Partnership recognized an
extraordinary loss of $770,000 in 1997 for the difference between the
book value of the property (which approximated fair value) and the
extinguished debt.
NOTE I - INCOME TAX BASIS RECONCILIATION
Certain items enter into the determination of the results of
operations in different time periods for financial reporting ("book")
purposes and for income tax ("tax") purposes. Reconciliations of net
loss and partners' equity follow:
For the Years Ended December 31,
1997 1996 1995
Net loss - book ($ 2,016,133) ($ 2,114,935) ($ 2,497,861)
Excess of tax under book depreciation 328,246 403,406 380,754
Interest 78,066 (618,142) 676,241
Loss on foreclosure 399,505 0 0
Gain on sale (205,643) 0 0
Administrative expenses (118,750) 0 0
Other timing differences 0 22,804 (81,401)
Minority interest - tax only 211,654 53,507 46,386
--------- --------- ----------
Net loss - tax ($ 1,323,055) ($ 2,253,360) ($ 1,475,881)
Partners' equity - book $ 1,638,500 $ 3,654,633 $ 5,769,568
Costs of issuance 3,279,930 3,279,930 3,279,930
Cumulative tax under book loss 4,095,745 3,402,667 3,541,092
Investment credit recapture 9,900 9,900 9,900
Rehabilitation credit (251,117) (251,117) (251,117)
---------- ---------- ----------
Partner's equity - tax $ 8,772,958 $10,096,013 $12,349,373
========== ========== ==========
SUPPLEMENTAL INFORMATION
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Costs Capitalized
Subsequent to
Initial Cost to Partnership Acquisition
(b)
Buildings and
Description (a) Encumbrances Land Improvements Improvements
(e) (b)
17 unit apartments
and 3,100 square
feet of retail
space in Omaha, NE $ 896,333 $ 10,000 $ 1,774,986 $ 39,136
68 unit apartments
in New Orleans, LA 1,151,343 - 2,948,634 471,015
32,500 square feet
of commercial space
in Alexandria, VA 5,181,123 540,238 5,014,827 1,819,293
70 apartment units
in Omaha, NE 3,550,053 - 448,993 5,902,443
71 unit apartments
and 8,500 square feet
of commercial space
in Manyunk, PA 4,672,834 400,000 664,508 9,851,258
$15,451,686 $950,238 $10,851,948 $18,083,145
Gross Amount at
which Carried at
December 31, 1997
Buildings and Accum Date of Date
Description (a) Land Improvements Total(c)(d) Depr. Constr. Acq
(d)(e) (a)
17 unit apartments
and 3,100 square
feet of retail
space in Omaha, NE $ 10,000 $1,804,122 $1,814,122 $ 686,438 1988 7/88
68 unit apartments
in New Orleans, LA - 3,419,649 3,419,64 9 1,343,023 1988 7/88
32,500 square feet
of commercial space
in Alexandria, VA 540,238 6,293,882 6,834,120 2,144,883 1988 12/88
70 apartment units
in Omaha, NE - 6,351,436 6,351,436 2,108,500 1989 1/89
71 unit apartments
and 8,500 square feet
of commercial space
in Manayunk, PA 400,000 10,115,766 10,515,766 3,666,413 1989 2/89
------- ---------- ---------- ---------
$950,238 $27,984,855 $28,935,093 $9,949,357
======= ========== ========== =========
DIVERSIFIED HISTORIC INVESTORS VI
(a limited partnership)
NOTES TO SCHEDULE XI
DECEMBER 31, 1997
(A) All properties are certified historic structures as defined in
the Internal Revenue Code of 1986. The "date of construction"
refers to the period in which such properties were
rehabilitated.
(B) Represents costs of a parcel of land with historic building
located thereon. Amounts do not include any
development/rehabilitation costs incurred pursuant to a turnkey
development agreement entered into when the property was
purchased.
(C) The cost of real estate owned at December 31, 1997, for Federal
income tax purposes was approximately $23,655,838. The
depreciable basis of the building and improvements of the
properties has been reduced for Federal income tax purposes by
the historic rehabilitation credit.
(D) Reconciliation of real estate:
1997 1996 1995
Balance at beginning of year $35,656,555 $35,612,079 $34,507,224
Additions during this year:
Improvements 103,135 44,476 171,516
Other increase 0 0 933,339
---------- ---------- ----------
Deductions during the year:
Retirements (6,824,597) 0 0
---------- ---------- ----------
Balance at end of year $28,935,093 $35,656,555 $35,612,079
========== ========== ==========
Reconciliation of accumulated depreciation:
1997 1996 1995
Balance at beginning of year $10,933,587 $ 9,605,719 $ 8,277,323
Depreciation expense for the year 1,105,796 1,327,868 1,328,396
Retirements (2,090,026) 0 0
---------- ---------- ----------
Balance at end of year $ 9,949,357 $10,933,587 $ 9,605,719
========== ========== ==========
(D) See Note E to the consolidated financial statements for further
information.
(E) See Note B to the consolidated financial statements for
depreciation method and lives.
Item 9. Changes in and disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of Registrant
a. Identification of Directors - Registrant has no
directors.
b. Identification of Executive Officers
The General Partner of the Registrant is Dover
Historic Advisors VI (DoHA-VI), a Pennsylvania general partnership.
The partners of DoHA-VI are as follows:
Name Age Position Term of Office Period Served
Gerald Katzoff 49 Partner in DoHA-VI No fixed term January 1988 -
May 1997
DHP, Inc. -- Partner in DoHA-VI No fixed term January 1988 -
(Formerly Dover May 1997
Historic Properties,
Inc.)
SWDHA, Inc. -- Partner in DoHA-VI No fixed term Since May 1997
EPK, Inc. -- Partner in DoHA-VI No fixed term Since May 1997
For further description of DHP, Inc., see
paragraph e. of this Item. There is no arrangement or understanding
between either person named above and any other person pursuant to
which any person was or is to be selected as an officer.
c. Identification of Certain Significant Employees.
Registrant has no employees. Its administrative and operational
functions are carried out by property management and partnership
administration firm engaged by the Registrant.
d. Family Relationships. There is no family
relationship between or among the executive officers and/or any person
nominated or chosen by Registrant to become an executive officer.
e. Business Experience. DoHA-VI is a general
partnership formed in 1987. The General Partner is responsible for
management and control of Registrant's affairs and will have general
responsibility and authority in conducting its operations. The
General Partner may retain its affiliates to manage certain of the
Properties.
On May 13, 1997, SWDHA, Inc. replaced Gerald Katzoff and
EPK, Inc. replaced DHP, Inc. as partners of DoHA-VI. Spencer
Wertheimer, the President and Sole Director of SWDHA, Inc., is an
attorney with extensive experience in real estate activities ventures.
EPK, Inc. is a Delaware corporation formed for the
purpose of managing properties or interests therein. EPK, Inc. is a
wholly-owned subsidiary of D, LTD, an entity formed in 1985 to act as
the holding company for various corporations engaged in the
development and management of historically certified properties and
conventional real estate as well as a provider of financial (non-
banking) services. EPK, Inc. is an affiliate of DoHA-VI.
The officers and directors of EPK, Inc. are described
below.
Spencer Wertheimer was appointed May 13, 1997 as
President, Treasurer and Sole Director of EPK, Inc. Mr. Wertheimer is
an attorney with extensive experience in real estate activities
ventures.
Donna M. Zanghi (age 40) was appointed on May 13, 1997 as
Vice President and Secretary of EPK, Inc. Ms. Zanghi previously
served as Secretary and Treasurer of DHP, Inc. since June 14, 1993
and as a Director and Secretary/Treasurer of D, LTD. She was
associated with DHP, Inc. and its affiliates since 1984 except for the
period from December 1986 to June 1989 and the period from November 1,
1992 to June 14, 1993.
Michele F. Rudoi (age 32) was appointed on May 13, 1997
as Assistant Secretary of EPK, Inc. Ms. Rudoi previously served as
Assistant Secretary and Director of both D, LTD and DHP, Inc. since
January 27, 1993.
Item 11. Executive Compensation
a. Cash Compensation - During 1997, Registrant paid
no cash compensation to DoHA-VI, 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
1997, or is proposed to be paid or distributed in the future, to DoHA-
VI, 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 1997 to DoHA-VI, 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
a. Pursuant to Registrant's Amended and Restated
Agreement of Limited Partnership, DoHA-VI is entitled to 10% of
Registrant's distributable cash from operations in each year. There
was no such share allocable to DoHA-VI for fiscal years 1995 through
1997.
b. Certain Business Relationships - Registrant has no
directors. For a description of business relationships between
Registrant and certain affiliated persons, see paragraph a. of this
Item.
c. 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, 1997
and 1996.
b. Consolidated Statements of Operations for the Years
Ended December 31, 1997, 1996 and 1995.
c. Consolidated Statements of Changes in Partners' Equity
for the Years Ended December 31, 1997, 1996 and 1995.
d. Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995.
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 Document
Number
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, 1997.
(c) Exhibits:
See Item 14 (A) (3) above.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIVERSIFIED HISTORIC INVESTORS VI
Date: April 15, 1998 By: Dover Historic Advisors VI, General Partner
--------------
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
-----------------------
SPENCER WERTHEIMER
President and Treasurer
By: /s/ Michele F. Rudoi
------------------------
MICHELE F. RUDOI,
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
DOVER HISTORIC ADVISORS VI General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer April 15, 1998
----------------------- --------------
SPENCER WERTHEIMER
President and Treasurer
By: /s/ Michele F. Rudoi April 15, 1998
----------------------- --------------
MICHELE F. RUDOI,
Assistant Secretary