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 March 31, 2001
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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
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
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Assets
March 31, 2001 December 31, 2000
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(Unaudited)
Rental properties, at cost:
Land $ 950,238 $ 950,238
Buildings and improvements 27,122,815 27,285,223
Furniture and fixtures 1,029,158 864,471
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29,102,211 29,099,932
Less - accumulated depreciation (13,517,900) (13,243,935)
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15,584,311 15,855,997
Cash and cash equivalents 62,660 46,215
Restricted cash 310,737 365,806
Investment in affiliate (53,105) (48,006)
Other assets (net of
amortization of
$784,492 and $751,489) 378,587 426,782
----------- -----------
Total $16,283,190 $16,646,794
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $16,772,290 $16,857,962
Accounts payable:
Trade 1,335,918 1,321,939
Taxes 14,945 20,465
Related parties 446,202 446,202
Other 22,170 10,824
Interest payable 1,646,170 1,618,642
Tenant security deposits 171,110 168,550
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Total liabilities 20,408,805 20,444,584
Partners' deficit (4,125,615) (3,797,790)
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Total $16,283,190 $16,646,794
=========== ===========
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 ended
March 31,
2001 2000
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Revenues:
Rental income $609,240 $ 600,818
Interest income 1,719 1,854
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Total revenues 610,959 602,672
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Costs and expenses:
Rental operations 375,875 347,950
General and administrative 0 60,000
Interest 250,841 347,178
Depreciation and amortization 306,968 291,017
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Total costs and expenses $933,684 $1,046,145
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Loss before equity in affiliate (322,725) (433,473)
Equity in net loss of affiliae (5,099) (4,716)
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Net loss ($327,824) ($ 448,189)
======== ==========
Net loss per limited
partnership unit:
Loss before equity in affiliate
and extraordinary loss ($ 12.55) ($ 17.25)
Equity in net loss of affiliate (.20) (.18)
-------- ----------
Net loss ($ 12.75) ($ 17.43)
======== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
Three months ended
March 31,
2001 2000
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Cash flows from operating activities:
Net loss ($327,824) ($448,189)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 306,968 291,016
Equity in loss of affiliate 5,099 4,716
Changes in assets and liabilities:
Decrease in restricted cash 55,069 50,104
Decrease (increase) in other assets 15,192 (24,102)
Increase in accounts payable - trade 13,979 89,695
Decrease in accounts payable - taxes (5,520) (5,520)
Increase (decrease) in accounts
payable - other 11,346 (15,477)
Increase in interest payable 27,528 121,637
Increase in tenant security deposits 2,560 1,186
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Net cash provided by operating activities 104,397 65,066
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Cash flows from investing activities:
Capital expenditures (2,280) (3,243)
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Net cash used in, investing activities (2,280) (3,243)
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Cash flows from financing activities:
Principal payments (85,672) (50,332)
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Net cash used in financing activities (85,672) (50,332)
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Increase in cash and cash equivalents 16,445 11,491
Cash and cash equivalents at
beginning of period 46,215 40,599
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Cash and cash equivalents at end of
period $ 62,660 $ 52,090
======== ========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS VI
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors VI (the "Registrant") and related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and related notes should be read in
conjunction with the audited financial statements in Form 10-K of the
Registrant, and notes thereto, for the year ended December 31, 2000.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
NOTE 2- SUBSEQUENT EVENTS
Strehlow Terrace Apartments was foreclosed by the Department of
Housing and Urban Development, the guarantor of the first mortgage, on
April 30, 2002.
On June 30, 2002, the Registrant sold its investment in Saunders
Apartments for $25,000. The proceeds of the sale were used to pay the
accrued expenses of the Registrant.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of March 31, 2001, Registrant had cash of $62,660.
Such funds are expected to be used to pay liabilities and general and
administrative expenses of Registrant, and to fund cash deficits of
the properties. 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 March 31, 2001, Registrant had restricted cash of
$310,738 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. At the present
time, the remaining properties are able to pay their operating
expenses and debt service; however, at two of the properties, the
mortgages are cash-flow mortgages, requiring all available cash after
payment of operating expenses to be paid to the first mortgage holder.
Therefore, it is unlikely that any cash will be available to the
Registrant to pay its general and administrative expenses.
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 first quarter of 2001, Registrant incurred a
net loss of $327,824 ($12.75 per limited partnership unit) compared to
a net loss of $448,189 ($17.43 per limited partnership unit) for the
same period in 2000.
Rental income increased $8,422 from $600,818 in the first
quarter of 2000 to $609,240 in the same period of 2001. The increase
in rental income from the first quarter of 2000 to the same period in
2001 is due to an increase in average rental rates at Canal House and
an increase in average occupancy at Firehouse Square (89% to 94%).
Rental operations expense increased $27,925 from $347,950
in the first quarter of 2000 to $375,875 in the same period of 2001.
The increase in rental operations expense from the first quarter of
2000 to the same period in 2001 is due to an increase in maintenance
expense at Roseland and an increase in utilities expense at Mater
Dolorosa, partially offset by a decrease in maintenance expense at
Firehouse Square. The increase in maintenance expense at Roseland is
due to an increase in grounds maintenance and trash removal. The
increase in utilities expense at Mater Dolorosa is due to an increase
in electricity, water, and gas charges. The decrease in maintenance
expense at Firehouse Square is due to a decrease in roof repairs,
maintenance service, plumbing and electrical expenses.
General and administrative expenses decreased $60,000
from $60,000 in the first quarter of 2000 to $0 in same period of
2001. The Registrant has ceased accruing these fees as its lack of
liquidity makes it unlikely they will be paid.
Depreciation and amortization expense increased $15,953
from $291,016 in the first quarter of 2000 to $306,969 in the same
period of 2001. The increase is due to an increase in amortization
expense at Canal House.
Interest expense decreased $96,337 from $347,178 in the
first quarter of 2000 to $250,841 in the same period of 2001. The
decrease is due to the timing of interest expense accruals.
Losses incurred during the quarter at the Registrant's
were approximately $299,000 compared to losses of approximately
$364,000 for the same period in 2000.
In the first quarter of 2001, Registrant incurred a loss
of $22,000 at Roseland including $17,000 of depreciation and
amortization expense, compared to a loss of $16,000 including $18,000
of depreciation and amortization expense in the first quarter of 2000.
The increase in loss from the first quarter of 2000 to the same period
in 2001 is due to an increase in maintenance expense. The increase in
maintenance expense is due to an increase in grounds maintenance and
trash removal.
In the first quarter of 2001, Registrant incurred a loss
of $12,000 at Mater Dolorosa including $32,000 of depreciation and
amortization expense, compared to a loss of $9,000 including $32,000
of depreciation and amortization expense in the first quarter of 2000.
The increase in loss from the first quarter of 2000 to the same period
in 2001 is due to an increase in utilities expense and legal and
accounting expense. The increase in utilities expense is due to an
increase in electricity, water and gas charges.
In the first quarter of 2001, Registrant incurred a loss
of $161,000 at Canal House including $113,000 of depreciation and
amortization expense, compared to a loss of $160,000 including $98,000
of depreciation and amortization expense in the first quarter of 2000.
The increase in the loss from the first quarter of 2000 to the same
period in 2001 is due to an increase depreciation and amortization
expense, partially offset by an increase in rental income. The
increase in rental income is due to an increase in average rental
rates.
In the first quarter of 2001, Registrant incurred a loss
of $58,000 at Firehouse Square including $65,000 of depreciation and
amortization expense, compared to a loss of $113,000 including $64,000
of depreciation and amortization expense in the first quarter of 2000.
The decrease in loss from the first quarter of 2000 to the same period
in 2001 is due to an increase in rental income combined with a
decrease in maintenance expense. The increase in rental income is due
to an increase in average occupancy (89% to 94%). The decrease in
maintenance expense is due to a decrease in roof repairs, maintenance
service, plumbing and electrical expenses.
In the first quarter of 2001, Registrant incurred a loss
of $46,000 including $60,000 of depreciation expense at Strehlow
Terrace, compared to a loss of $66,000 including $60,000 of
depreciation expense in the first quarter of 2000. The decrease in
loss from the first quarter of 2000 to the same period in 2001 is due
to a decrease in interest expense and utilities expense. The decrease
is interest expense is due to the timing of interest expense accruals.
The decrease in utilities expense is due to a decrease in electricity
charges.
Strehlow Terrace Apartments was foreclosed by the
Department of Housing and Urban Development, the guarantor of the
first mortgage, on April 30, 2002.
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 information is
provided for the property. In the first quarter of 2001, Registrant
incurred a loss of $5,000 at Saunders Apartments compared to the same
loss of $5,000 in the first quarter 2000.
On June 30, 2002, the Registrant sold its investment in
Saunders Apartments for $25,000. The proceeds of the sale were used
to pay the accrued expenses of the Registrant.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
All of our assets and liabilities are denominated in U.S.
dollars, and as a result, we do not have exposure to currency exchange
risks.
We do not engage in any interest rate, foreign currency
exchange rate or commodity price-hedging transactions, and as a
result, we do not have exposure to derivatives risk.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our
Securities Exchange Act of 1934 reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and
communicated to our management, including our managing partner's
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures,
our management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and our management
necessarily was required to apply its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Under the supervision of our managing partner's principal
executive officer and principal financial officer we have carried out
an evaluation of the effectiveness of our adopted disclosure controls
and procedures as of the end of the period covered by this report.
Based upon that evaluation, our managing partner's president and
treasurer concluded that our disclosure controls and procedures are
effective.
There have been no significant changes in our internal
controls over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting during our most recent fiscal quarter.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party to,
nor is any of its property the subject of, any pending material legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by this
report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Number Document
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3 Registrant's Amended and
Restated Certificate of Limited
Partnership and Agreement of
Limited Partnership, previously
filed as part of Amendment No.
2 of Registrant's Registration
Statement on Form S-11, are
incorporated herein by
reference.
21 Subsidiaries of the Registrant
are listed in Item 2.
Properties on Form 10-K,
previously filed and
incorporated herein by
reference.
31 General Partners Opinion
Certification
32 Certification Pursuant to 18
U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended March 31, 2001.
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.
DIVERSIFIED HISTORIC INVESTORS VI
By: Dover Historic Advisors VI, its
general partner
By: EPK, Inc., managing partner
Date: July 19, 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 March 31, 2001, 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: July 19, 2004 /s/ Spencer Wertheimer
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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 March 31,
2001 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: July 19, 2004 /s/ Spencer Wertheimer
------------- ----------------------
Name: Spencer Wertheimer
Title: President (principal
executive officer,
principal financial
officer) of the
registrant's managing
partner, EPK, Inc.