-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E8imZk8vY1iCm3CIppl0oY+s3Jsd8w3snPib/d7hqRFTi+Ollh24LOYGh31dCfrU g1MJMKDhFSewFjnZ9arcBQ== 0000857004-98-000001.txt : 19980401 0000857004-98-000001.hdr.sgml : 19980401 ACCESSION NUMBER: 0000857004-98-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HISTORIC PRESERVATION PROPERTIES 1990 LP TAX CREDIT FUND CENTRAL INDEX KEY: 0000857004 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 043066191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-19257 FILM NUMBER: 98583293 BUSINESS ADDRESS: STREET 1: BATTERYMARCH PARK II CITY: QUINCY STATE: MA ZIP: 02169 BUSINESS PHONE: 6174721000 MAIL ADDRESS: STREET 1: C/O HISTORIC PRESERVATION PROPERTIES STREET 2: ONE BATTERYMARCH PARK II CITY: QUINCY STATE: MA ZIP: 02169 10-K 1 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1997 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the transition period from to Commission file Number 33-31778 Historic Preservation Properties 1990 L.P. Tax Credit Fund (Exact name of registrant as specified in its charter) Delaware 04-3066191 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Batterymarch Park II, Quincy, MA 02169 (Address of principal executive offices) Registrant's telephone number, including area code 617- 472-1000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None Securities registered pursuant to Section 12(g) of the act: None (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. [x] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) 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. [x] HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND 1997 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS Sequential Page No. Page No. PART I Item 1 Business K-3 4 Item 2 Properties K-7 8 Item 3 Legal Proceedings K-7 8 Item 4 Submission of Matters to a Vote of Unit Holders K-7 8 PART II Item 5 Market for Registrant's Units and Related Unit Holder Matters K-8 9 Item 6 Selected Financial Data K-9 10 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations K-10 11 Item 8 Financial Statements and Supplementary Data K-13 14 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-13 14 PART III Item 10 Director and Executive Officer of the Registrant K-14 15 Item 11 Executive Compensation K-15 16 Item 12 Unit Ownership of Certain Beneficial Owners and Management K-15 16 Item 13 Certain Relationships and Related Transactions K-16 17 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K K-17 18 SIGNATURES K-25 26 SUPPLEMENTAL INFORMATION K-26 27 DOCUMENTS INCORPORATED BY REFERENCE Part of the Form 10-K Document into which Incorporated Incorporated by Reference I Prospectus of the Registrant dated March 30, 1990 (the "Prospectus"). Supplement No. 1 to the Prospectus dated August 1, 1990. Supplement No. 2 to the Prospectus dated December 3, 1990. III The Prospectus. PART I Item 1. Business. Historic Preservation Properties 1990 L.P. Tax Credit Fund (the Partnership or HPP'90), a Delaware limited partnership, was organized under the Delaware Revised Uniform Limited Partnership Act on October 4, 1989 for the purpose of investing in a portfolio of real properties for which the cost of rehabilitating acquired properties qualified for rehabilitation tax credits (Rehabilitation Tax Credits) afforded by Section 47 of the Internal Revenue Code of 1986, as amended (the Code), and rehabilitating such properties (or acquiring such properties in the process of rehabilitation and completing such rehabilitation) in a manner intended to render the cost of such rehabilitation eligible for classification as "Qualified Rehabilitation Expenditures", as such term is defined in the Code, and thus eligible for Rehabilitation Tax Credits. The Partnership was initially capitalized with contributions of $100 from its general partner and $100 from each of three initial limited partners. On October 26, 1989, the Partnership filed a Registration Statement on Form S-11, File Number 33-31778 (the Registration Statement), with the Securities and Exchange Commission (the Commission) with respect to the public offering of units of limited partnership interest (Units) in the Partnership. The Registration Statement, covering the offering of up to 50,000 Units at a purchase price of $1,000 per Unit (an aggregate of $50,000,000), was declared effective on March 30, 1990. The offering of Units terminated on December 31, 1990, at which time the Partnership had received gross offering proceeds of $16,361,000 from 1,391 investors. The general partner of the Partnership is Boston Historic Partners II Limited Partnership (the General Partner), a Massachusetts limited partnership. The general partner of the General Partner is BHP II Advisors Limited Partnership (BHP II Advisors). The general partners of BHP II Advisors are Terrence P. Sullivan (Sullivan) and Portfolio Advisory Services II, Inc. (PAS II) a corporation whose controlling shareholder, director and president is Sullivan. The Partnership does not have any employees. For the period July 1, 1993 through September 30, 1995, HPP'90 engaged Portfolio Advisory Services, Inc. (PAS), a Massachusetts corporation, which is related to the General Partner through certain common ownership and management, and in which Sullivan is the sole shareholder, to assist the General Partner in providing accounting, asset management and investor services. PAS received no fee for its services, however it was reimbursed for all operating costs of providing these services. Effective October 1, 1995, the Partnership engaged Claremont Management Corporation (CMC), an unaffiliated Massachusetts corporation to perform accounting, asset management and investor services for an annual fee of $38,400 and reimbursement of all operating expenses of providing such services. The agreement, which expires on June 30, 1998, is automatically extended on a year-to-date basis in June of each year unless otherwise terminated as provided for in the agreements. The Partnership's only business is investing in real properties for which the cost of rehabilitating acquired properties qualified for Rehabilitation Tax Credits and operating such properties. A presentation of information about industry segments is not applicable and would not be helpful in understanding the Partnership's business taken as a whole. The Partnership's investment objectives and policies are described in pages 28-36 of its prospectus dated March 30, 1990 (the Prospectus) under the caption "Investment Objectives and Policies," which description is incorporated herein by this reference. The Prospectus was filed with the Commission pursuant to Rule 424(b) on April 6, 1990. During 1990, the Partnership acquired interests in the following real estate, collectively referred to as the "Ventures". The Partnership's purchase of the Ventures was made on substantially the same terms described in Supplement No. 1 to the Prospectus dated August 1, 1990 (Supplement No. 1) and Supplement No. 2 to the Prospectus dated December 3, 1990 (Supplement No. 2). Both Supplement No. 1 and Supplement No. 2 are incorporated herein by this reference. Supplement No. 1 and Supplement No. 2 were filed pursuant to Rule 424(b) on August 14, 1990 and December 4, 1990, respectively. As of December 31, 1997, 100% of the limited partners' capital contributions (net of selling commissions, organizational and sales costs, acquisition fees and reserves) had been invested in real property investments: Henderson's Wharf Baltimore, L.P. (the Building Venture) is a Delaware limited partnership which was formed on July 20, 1990 to acquire a fee interest in a seven-story building on 1.5 acres of land located at 1000 Fell Street, Baltimore, Maryland and to rehabilitate the building into residential units, 149 indoor parking spaces and a 38 room inn. The building contains 137 residential units, 128 of which are owned by the Building Venture and 9 of which are owned by unrelated parties as of December 31, 1997. The building has been renovated and certain of the related renovation costs have qualified for Rehabilitation Tax Credits. The Building Venture purchased the building for $6,812,500 which included seller financing of $6,350,000. Lease-up of the residential units commenced in January 1991 and the inn opened in May 1991. Under the Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated February 1, 1991, Henderson's Wharf Development Corporation (HWDC), a Delaware corporation that is wholly-owned by the Partnership, was admitted as a general partner of the Building Venture (the Partnership and HWDC are collectively referred to as "Henderson's General Partners"). Hillcrest Management, Inc. (HMI), a Massachusetts corporation, was admitted as the limited partner of the Building Venture. The overall management and control of the business and affairs of the Building Venture are solely vested in Henderson's General Partners. On February 1, 1991, the Building Venture and the Marina Venture (discussed below) entered into long-term management agreements and an inn lease (Contracts) which were scheduled to expire on December 31, 1993, as well as a consulting agreement (Consulting Agreement) with HMI. The Consulting Agreement, which, expired on December 31, 1991, required the Building Venture to pay HMI certain fees, the commitment for which survived the December 31, 1991 expiration date of the Consulting Agreement and the termination of all other agreements with HMI. In 1993, the Ventures terminated the Contracts with, and commitments under the Consulting Agreement to HMI. In January 1995, HPP'90 entered into an agreement on behalf of the Ventures to pay HMI contract termination settlement payments (Settlement Payments) totaling $271,108. The Settlement Payments required an initial payment of $36,000 due on January 27, 1995 and requires monthly payments of $3,221 which commenced September 1995 and are payable through the earlier of September 2001 or the occurrence of certain events as defined in the agreement. The Settlement Payments are secured by 100% of HPP'90's economic interest as a partner, as defined in the agreements, in the Ventures; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP'90's cash and marketable equity securities in excess of $150,000; and all of the Venture's cash in excess of the greater of $200,000 or reserves required by lenders. No distributions to the partners of HPP'90 are permitted until all Settlement Payments are paid in full. As of December 31, 1997 and 1996, unpaid settlement payments included in accrued expenses and other liabilities totaled $144,928 and $183,576, respectively. In accordance with the termination of all HMI contracts, effective January 1, 1995 HMI withdrew from the Building Venture as a limited partner and was replaced by HWDC. On February 27, 1996, HPP'90 issued a $6,000,000 deed of trust note to a third party lender which provided funds for the Building Venture to refinance the outstanding balance of the seller financed purchase money note totaling $5,590,418, to pay $109,582 to the seller in release of a contingent purchase price promissory note, and to purchase in part three condominium units and parking spaces owned by unrelated parties for an aggregate purchase price of $332,682. The deed of trust note bears interest at 7.85% and requires monthly principal and interest payments in the amount of $49,628. The deed of trust note amortizes over a 20 year schedule and all remaining unpaid principal and interest is due in March 2016. Under the deed of trust note, the lender has the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years (February 2006) or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. This refinancing transaction released approximately $1,057,000 of suspended Rehabilitation Tax Credits to the Partnership from the Building Venture in 1996. These credits had been suspended due to the fact that original financing was seller provided. Rehabilitation Tax Credits generated by the Building Venture and previously allocated to HPP'90's Limited Partners totaled $3,174,059 since inception. As of December 31, 1996, 100% of all Rehabilitation Tax Credits were fully vested. The Building Venture's investment property competes in the residential rental real estate and hotel markets. The Building Venture's apartment units generally compete on the basis of location, price, square footage and amenities with approximately six other similar complexes in the Fells Point area. The Building Venture's apartment units also compete with the local single family home market, which in recent years has become more competitive due to the increased availability of low mortgage rates. The Building Venture's inn generally competes with the smaller hotels and bed and breakfast establishments on the basis of room rates, location and amenities. There are approximately three other competitors for the inn in the Fells Point area, with the number of available rooms for each competitor ranging from four (4) to eighty-eight (88). As of December 31, 1997 and 1996, the apartment units had an economic occupancy rate of approximately 97% and 95%, respectively. The average occupancy for the inn in both 1997 and 1996 was 71%. The Partnership may invest in other real estate ventures as set forth on pages 28-36 of the Prospectus (which pages are hereby incorporated by this reference) upon the remaining lease-up and refinancing of this property. Henderson's Wharf Marina, L.P. (the Marina Venture) is a Delaware limited partnership which was formed on July 20, 1990 to acquire a 1.92 acre parcel of land together with a 256-slip marina which is adjacent to the Building Venture's property. The Marina Venture owns the fee interest in the property. The Marina Venture purchased the property for $1,266,363 which included seller financing for $1,187,500. The Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated February 1, 1991 provided ownership and management identical to that of the Building Venture described above. On August 1, 1991, Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership was executed. HWDC became the sole general partner of the Marina Venture and HMI and the Partnership became limited partners. The overall management and control of the business and affairs of the Marina Venture is solely vested with the general partner of the Marina Venture. After evaluating the marina property over the initial years following acquisition, the Marina Venture had determined that it was in its best interest to either renegotiate the debt or restructure the Marina Venture before proceeding with the development of the marina. On December 31, 1992, the seller (HWFP, Inc.) agreed to reduce the original principal amount of the purchase money note from $1,187,500 to $350,000 and forgave $237,500 of accrued interest. Also on December 31, 1992, the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. was executed. HWFP, Inc., a Maryland corporation, received a 50% limited partnership interest in the Marina Venture. Concurrently, HMI withdrew as a limited partner in the Marina Venture, HPP'90's limited partnership interest in the Marina Venture was reduced to 49% and HWDC retained a 1% general partnership interest in the Marina Venture. Based on the fair market value of marina land and improvements determined by independent appraisal and the priority distribution of proceeds from capital transactions as provided for in the Marina Venture's Third Amended and Restated Agreement of Limited Partnership, the Partnership had reserved $845,672 against its investment in the marina land and improvements at December 31, 1992. The property is carried at the lower of cost or net realizable value. On February 27, 1996, HPP'90, HWDC and HWFP, Inc. executed the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. The Partnership redeemed HWFP's 50% limited partnership interest in the Marina Venture by issuing a $225,000 promissory note secured by the marina property. The note bore interest at 7.50%, was scheduled to mature in March 2006, and required monthly principal and interest payments in the amount of $2,086. As a result of this transaction, HPP'90's limited partnership interest in the Marina Venture increased to 98%, and HWDC's general partnership interest increased to 2%. On September 30, 1997, the Building Venture advanced $200,000 to the Marina Venture. The Marina Venture then settled in full the promissory note payable to HWFP. The Marina Venture had operated a minimal number of its 256 slips from 1991 to 1995 due to significant repairs necessary to be fully operational. During 1997 and 1996, the Marina Venture added $40,401 and $23,049, respectively, of utility, safety and other improvements increasing the number of fully operational slips to 224. The Marina Venture competes with approximately seven other marinas located in the inner harbor of Fells Point. The marinas generally compete on the basis of slip fee rates (seasonal and year round), marina services and amenities. The Marina Venture has no marina services and offers minimum boating amenities. Item 2. Properties. See Item 1 above. Item 3. Legal Proceedings. In 1997, the Building Venture and the condominium association to which it belongs filed suit against one unit owner for failure to pay condominium assessments and nuisance. The suit asks for actual damages as well as compensatory and punitive damages totaling $120,000. The case is currently not yet in the discovery stage and no estimate can be made as to the time or the amount, if any, of ultimate recovery. The unit owner filed a counterclaim against the Building Venture, the condominium association to which it belongs, and other third parties for alleged breach of contract and related counts. The counterclaim asks for compensatory and punitive damages totaling $3,901,000. The Building Venture believes that the counterclaim is completely without merit and intends to vigorously defend its position. The case relating to the counterclaim also is currently not yet in the discovery stage and the Building Venture's legal counsel is unable to determine the likelihood of an unfavorable outcome or the amount or range of potential loss. It is reasonably possible that the outcome of the uncertainty might be determined in the near term. Item 4. Submission of Matters to a Vote of Unit Holders. No matters were submitted to a vote of Unit holders. PART II Item 5. Market For Registrant's Units and Related Unit Holder Matters. (a) There is no established public trading market for the Units and no such market is expected to develop. Trading in the Units is limited and sporadic and occurs solely through private transactions. (b) As of March 16, 1998, there were 1,392 holders of Units. The Amended and Restated Agreement of Limited Partnership (Partnership Agreement) requires that any Cash Flow (as defined therein) be distributed quarterly to the investor limited partners (Limited Partners) in specified proportions and priorities and that Sale or Refinancing Proceeds (as defined therein) be distributed as and when available. As discussed in Item 1, there are certain restrictions on the Partnership's present and future ability to make distributions of Cash Flow or Sale or Refinancing Proceeds. For the periods ended December 31, 1997, 1996 and 1995, no distributions of Cash Flow or Sale or Refinancing Proceeds were paid or accrued to the Limited Partners. Item 6. Selected Financial Data. Periods Ended December 31, 1997 1996 1995 1994 1993 Revenues $3,261,261 $2,909,744 $2,769,347 $2,501,562 $2,220,822 Net Income (Loss) $211,825 $(258,989) $(359,021) $(667,504) $(917,379) Net Income (Loss) per unit of Investor Limited Partnership Interest based on Units outstanding $ 12.82 $ (15.67) $ (21.72) $ (40.39) $ (55.51) Total Assets as of December 31, $15,224,121 $15,392,204 $15,483,025 $15,849,184 $16,276,877 Long Term Debt as of December 31, $5,767,197 $ 6,123,084 $ 5,590,418 $ 5,590,418 $ 5,350,000 Cash Distributions per weighted average Unit outstanding $ 0 $ 0 $ 0 $ 0 $ 0 Rehabilitation Tax Credit per Unit $ 0 $ 63.94 $ 0 $ 0 $ 0 See Item 7 for a discussion of the factors that may materially affect the foregoing information in future years. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources. The Partnership terminated its offering of Units on December 31, 1990, at which time Limited Partners had purchased 16,361 Units, representing gross capital contributions of $16,361,000. As of December 31, 1997, the Partnership had invested an aggregate of $12,461,719 in the Building and Marina Ventures. Such amount contributed in the Building and Marina Ventures represents approximately 100% of the Limited Partners' capital contribution after deducting selling commissions, organizational and sales costs, acquisition fees and reserves. The Partnership does not anticipate making any additional investments in new real estate. As of December 31, 1997, the Ventures and HPP'90 had cash and cash equivalents, excluding security deposit cash, of $320,713 and $350,098, respectively. HPP'90's cash and cash equivalents are used primarily to fund general and administrative expenses of running the public fund. The Venturers' cash and cash equivalents are used to fund operating expenses and debt service of the properties. In addition, to the extent available, the Building Venture distributes cash to HPP'90 to fund general and administrative expenses of managing the public fund. For the years ended December 31, 1997, 1996 and 1995, the Building Venture distributed $501,000, $203,000, and $223,138, respectively, to HPP'90. Settlement Payments due HMI, that were negotiated as part of the contract termination (See Item 1), are secured by 100% of HPP'90's economic interest as a partner, as defined in the agreements, in the Ventures; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP'90's cash and marketable equity securities in excess of $150,000; and all of the Ventures' cash in excess of the greater of $200,000 or reserves required by potential lenders. No distributions to the partners of HPP'90 are permitted until all settlement payments are paid in full. The Settlement Payments may be prepaid, as defined in the agreement, without penalty. As of December 31, 1997 and 1996, unpaid Settlement Payments included in accrued expenses and other liabilities totaled $144,928 and $183,576, respectively. As mentioned in Item 1, on February 27, 1996, the Building Venture obtained financing of $6,000,000 at 7.85% which requires monthly principal and interest payments totaling $49,628 based on a 20 year amortization. The deed of trust note matures in March 2016, however, under the deed of trust note, the lender has the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years (February 2006) or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. Also as mentioned in Item 1, on February 27, 1996, HPP'90, HWDC and HWFP, Inc. entered into the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by which the Partnership redeemed HWFP's 50% limited partnership interest in the Marina Venture by issuing a $225,000 promissory note secured by the marina property. The note bore interest at 7.50%, originally matured on March 15, 2006, and required monthly principal and interest payments in the amount of $2,086. On September 30, 1997, the Building Venture loaned the Marina Venture $200,000 and the Marina Venture settled in full the remaining outstanding principal balance of $212,532 and all accrued interest due under the promissory note payable to HWFP. Within the next several years, significant repairs are needed to maintain the Marina Venture's land which provides parking to the marina and inn. In October 1997, the Marina Venture entered into a letter of intent with a third party real estate developer to form an entity whose purpose would include repairing the land and the developing of the marina. The letter of intent expired on January 10, 1998. The Marina Venture estimates the cost of repairs to maintain the land to be approximately $1,500,000. The Partnership anticipates that capital resources to fund the repairs could be obtained from additional financing sources and/or additional capital investment. Also, the Partnership is investigating other potential sources of available parking for the marina and inn. HPP'90's short-term liquidity depends upon its ability to receive distributions from the Building Venture. The short-term liquidity of the Building Venture depends on its ability to generate sufficient rental income to fund operating expenses and debt service requirements and have sufficient cash to distribute to HPP'90. The short-term liquidity of the Marina Venture depends on its ability to generate sufficient rental income to fund operating expenses and make capital expenditures to maintain the existing capacity of the marina and make additional capital improvements to expand the marina's existing capacity. HPP'90 has advanced approximately $277,000 to the Marina through December 31, 1997 to fund operations. It is not expected that the Marina Venture will generate sufficient short-term liquidity to repay advances made by HPP'90. Cash flow generated from the Partnership's present investment properties and the Partnership's share of the proceeds from the sale of such properties is expected to be the source of future long-term liquidity. Results of Operations. The Partnership generated net income under generally accepted accounting principles of $211,825 in 1997 which includes depreciation and amortization of $582,710. The Building Venture was fully operational during the entire year. The Marina Venture had operated a minimal number of its 256 slips from 1991 to 1995 due to significant repairs necessary to be fully operational. During 1997 and 1996, the Marina Venture added $40,401 and $23,049, respectively, of utility, safety and other improvements increasing the number of fully operational slips to 224. However, other substantial repairs are still needed to bring the marina to full operation. The results of the Partnership's operations in future years should be comparable to 1997 numbers provided the Building Venture is able to maintain greater than 90% economic occupancy in the Apartments and greater than 65% occupancy in the Inn. Expense levels are expected to increase with the rate of inflation but, it is anticipated that the monthly rents and the average daily room rate revenues should increase accordingly. The Apartments have achieved stabilized occupancy with economic occupancy rates of 97%, 95% and 94% for the years 1997, 1996 and 1995, respectively. Management is projecting economic occupancy for the Apartments to be approximately 96% as well as a 6% increase in rental rates for calendar year 1998. Management expects economic occupancy to remain around 95% and rental rates to increase between 3% to 5% in future years after 1998. The Apartments also began charging parking fees for garaged parking in 1996 and achieved full implementation of the parking fee policy by the end of 1997. Management is projecting a 25% increase in parking fee rates for the calendar year 1998. The average occupancy of the Inn for the years 1997, 1996 and 1995 was 71%, 71%, and 74%, respectively. The Inn experienced higher occupancy in 1995 due in part to a major competitor temporarily discontinuing operations for renovations. That major competitor reopened in 1996. Management is projecting Inn occupancy of 72%, as well as a 4% increase in the average daily room rate for calendar year 1998. The Inn occupancy in future years is expected to stay at the same level, absent any significant adverse market conditions or increase in existing market competition. Management expects the Inn's average daily room rate to increase between 3% to 5% in future years after 1998. The Partnership recorded net income of $211,825 in 1997, an increase of $470,814, compared to a net loss of $258,989 in 1996. The Partnership's net loss for 1996 decreased by $100,032 compared to a net loss of $359,021 in 1995. The increase in net income for 1997, compared to 1996, is attributed to an increase in income of approximately $350,000 and decreases in both total expenses and interest expense of approximately $52,000 and $71,000, respectively. The decrease in net loss for 1996, compared to 1995, is due to an increase in income of approximately $140,000, a decrease in interest expense of approximately $18,000, offset by an increase in total expenses of approximately $25,000 and a decrease in minority interest loss of approximately $33,000. The increases in income from 1997 compared to 1996, and from 1996 compared to 1995, are primarily due to the increase in rental and related income. Rental and related income increased in 1997 compared to 1996, primarily due to increased room, rental and parking rates at both the Inn and Apartments and a slight increase in occupancy at the Apartments and Marina. Rental and related income increased in 1996, compared to 1995, due to increased room rates at the Inn. The average daily rate for inn rooms increased approximately 7% in both 1997 and 1996 and the average apartment rental income rates increased approximately 7% in 1997 compared to 1996. Operating and administrative expense increased in 1996, compared to 1995, due to the initial engagement of a third party entity to perform asset management, accounting and investor services for HPP'90. Payroll services decreased in 1996, compared to 1995, due to certain efficiencies implemented by management. Management fees, which are based on gross receipts, increased in 1997 and 1996, compared to previous years, due to the increase in rental and related income. Depreciation and amortization increased in 1996, compared to 1995, as a result of the purchase of three additional units in February 1996. Interest expense decreased in 1997, compared to 1996, due to amortization of the loan balances and the settlement of the marina debt in September 1997. The decrease in interest expense in 1996, compared to 1995, is primarily due to the refinancing of Building Venture's debt in February 1996. As of February 27, 1996, the Partnership no longer records minority interest due to the redemption of HWFP's 50% limited partnership interest in the Marina Venture. Inflation and Other Economic Factors Recent economic trends have kept inflation relatively low although the Partnership cannot make any predictions as to whether recent trends will continue. The assets of the Partnership are highly leveraged in view of the fact that the Building Venture is subject to a substantial mortgage debt as of December 31, 1997. Operating expenses and rental revenues of each property are subject to inflationary factors. Low rates of inflation could result in slower rental rate increases, and to the extent that these factors are not offset by similar increases in property operating expenses (which could arise as a result of general economic circumstances such as an increase in the cost of energy or fuel, or from local economic circumstances), the operations of the Partnership could be adversely affected. Actual deflation in prices generally would, in effect, increase the economic burden of the mortgage debt service with a corresponding adverse effect. High rates of inflation, on the other hand, raise the operating expenses for projects and to the extent they cannot be passed on to tenants through higher rents, such increases could also adversely affect Partnership operations. Although, to the extent rent increases are commensurable, the burden imposed by the mortgage leverage is reduced with a favorable effect. Low levels of new construction of similar projects and high levels of interest rates may foster demand for existing properties through increasing rental income and appreciation in value. Year 2000 Issues The Partnership and the Ventures have analyzed the effect of the Year 2000 on their respective financial and computer systems and have incorporated and/or expect to have incorporated the necessary modifications to avert any negative consequences. The Partnership does not anticipate Year 2000 issues to have any material effect on its operations or the operations of the Ventures, or incur substantial costs to address Year 2000 issues. Item 8. Financial Statements and Supplementary Data. See the Financial Statements of the Partnership included as part of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None PART III Item 10. Directors and Executive Officers of the Registrant. (a) and (b) Identification of Directors and Executive Officers. The following table sets forth the name and age of the director and executive officer of BHP II Advisors and the offices held by such person. Name Office Age Terrence P. Sullivan President and Director 51 Mr. Sullivan has served as a director and executive officer of BHP II Advisors since the organization of PAS II in June 1989. Since that time he has also been a general partner of BHP II Advisors. He will continue to serve in the capacity indicated above until his successor is elected and qualified. Mr. Sullivan is also an executive officer of Boston Capital Planning. (c) Family Relationships. None. (e) Business Experience. The background and experience of the executive officer and director of BHP II Advisors and Boston Capital Planning identified above in Items 10(a) and 10(b) are as follows: Terrence P. Sullivan, 51, is the founder and sole shareholder of Boston Capital Planning, a financial consulting and real estate syndication firm, and its wholly-owned subsidiary, Boston Bay Capital, Inc. (Boston Bay Capital). Founded in 1979, Boston Bay Capital was an NASD-Registered broker/dealer specializing in placement of interests in real estate limited partnerships which own historic and restoration properties. From 1986 through December 31, 1989, Boston Bay Capital participated in the placement of limited partnership interest in 98 real estate programs, over 60 of which were historic rehabilitation or restoration partnerships, placing a total of approximately $140,000,000 in equity. In addition, from 1987 to 1990, Boston Bay Capital served as dealer manager in connection with the sale of units of limited partnership interest in Historic Preservation Properties Limited Partnership, Historic Preservation Properties 1988 Limited Partnership, Historic Preservation Properties 1989 Limited Partnership and the Partnership, the first four public programs sponsored by Affiliates of the General Partner. Such public programs sold an aggregate of approximately $82 million of Units of limited partnership interest. From 1972 to 1978, Mr. Sullivan was the Tax Shelter coordinator for the Boston office of White, Weld & Co., Inc., an investment banking firm. Mr. Sullivan graduated from Worcester Polytechnic Institute in 1968 with a Bachelor of Science degree in mechanical engineering. He received a Masters in Business Administration degree from the University of Massachusetts (Amherst) in 1971. Mr. Sullivan serves as a general partner of BBC Restoration Properties II Limited Partnership. In addition, an entity controlled by Mr. Sullivan serves as the general partner of Institutional Credit Partners Limited Partnership (ICP), a partnership organized to invest in a diversified portfolio of properties which qualify for low income housing tax credits, Rehabilitation Tax Credits, or both. In 1989, ICP completed a private placement of $5,790,000 of limited partnership interest to corporations and other institutional investors. (f)-(g) Involvement in Certain Legal Proceedings. None Item 11. Executive Compensation. The director and executive officer of PAS II and Boston Capital Planning received no remuneration from the Partnership. Under the Partnership Agreement, the General Partner and its affiliates are entitled to receive various fees, expense reimbursements, commissions, cash distributions, allocations of taxable income or loss and tax credits from the Partnership. The amounts of these items and the times at which they are payable to the General Partner or its affiliates are described at pages 14-16 and 36-39 of the Prospectus under the captions "Management Compensation" and "Cash Distributions and Net Profits and Net Losses", respectively, which descriptions are incorporated herein by this reference. No commissions, fees, or cash distributions were paid by the Partnership to the General Partner or its affiliates for the years ended December 31, 1997, 1996 and 1995. The Partnership reimbursed an affiliate of the General Partner $65,903 for administrative expenses for the year ended December 31, 1995. No reimbursements were made for the years ended December 31, 1997 or 1996. For the year ended December 31, 1997, the Partnership allocated approximately $544 of taxable loss to the General Partner. See Note 6 to Financial Statements for additional information about transactions between the Partnership and the General Partner and its affiliates. Item 12. Unit Ownership of Certain Beneficial Owners and Management. (a) Unit Ownership of Certain Beneficial Owners. The Spiegel Corporation, 1515 West 22nd Street, Oak Brook, Illinois 60522, is known by the Partnership to be the beneficial owner of more than 5% of the outstanding Units at March 15, 1998 (2,000 units 12.22%). Under the Partnership Agreement, the voting rights of the Limited Partners are limited and, in some circumstances, are subject to the prior receipt of certain opinions of counsel or judicial decisions. Under the Partnership Agreement, the right to manage the business of the Partnership is vested solely in the General Partner, although the consent of a majority in interest of the Limited Partners is required for the sale at one time of all or substantially all of the Partnership's assets and with respect to certain other matters. See Item 1 above for a description of the General Partner and its general partners. (b) Unit Ownership of Management. No director or executive officer of BHP II Advisors, Boston Capital Planning or their affiliates had any beneficial ownership of Units as of March 15, 1998. No officer or director of BHP II Advisors or Boston Capital Planning, nor any general partner of the General Partner, nor any of their respective affiliates, possesses the right to acquire Units. (c) Change in Control. There exists no arrangement known to the Partnership which may at a subsequent date result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions. See Note 6 of Notes to Financial Statements for information about transactions between the Partnership and the General Partner and its affiliates. See Item 11 above for information concerning the fees, commissions, reimbursements and cash distributions which the Partnership paid to or accrued for the account of the General Partner and its affiliates for the years ended December 31, 1997, 1996 and 1995. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following documents are filed as part of this report: 1. Financial Statements - The Financial Statements listed on the accompanying Index to Financial Statements and Schedule are filed as a part of this Annual Report. 2. Financial Statement Schedules - The Financial Statement Schedules listed on the accompanying Index to Financial Statements and Schedules are filed as a part of this Annual Report. 3. Exhibits 3(a) Certificate of Limited Partnership of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of September 29, 1989, (filed as exhibit 3A to the Partnership's Registration Statement on Form S-11, File No. 33- 31778, and incorporated herein by this reference). 3(b) Certificate of Amendment of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of October 23, 1989, (filed as exhibit 3C to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference). 3(c) Amended and Restated Agreement of Limited Partnership of Historic Preservation Properties 1990 L.P. Tax Credit Fund dated as of March 30, 1990, as currently in effect, other than amendments thereto which provide solely for the admission or withdrawal of investors as limited partners of the Partnership (attached as Exhibit A to Prospectus of the Partnership included as part of its Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by reference). 4. See Exhibits 3(a), 3(b) and 3(c). 10(a) Escrow Deposit Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Wainwright Bank and Trust Company, (filed as exhibit 10A to the Partnership's Registration Statement of Form S-11, File No. 33-31778, and incorporated herein by this reference). 10(b) Documents relating to the acquisition of partnership interests in Henderson's Wharf Baltimore, L.P. and Henderson's Wharf Marina, L.P. and material contracts of these partnerships: I. Certificate of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 12, 1990 and filed in the Office of the Secretary of State of Delaware on July 20, 1990. (1) II. Certificate of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 12, 1990 and filed in the Office of the Secretary of State of Delaware on July 20, 1990. (1) III. Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 18, 1990. (1) IV. Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 18, 1990. (1) V. Certificate of Amendment of Certificate of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of February 14, 1991 and filed in the Office of the Secretary of State of Delaware on March 5, 1991. (2) VI. Certificate of Amendment of Certificate of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of February 14, 1991 and filed in the Office of the Secretary of State of Delaware on March 5, 1991. (2) VII. Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated as of July 31, 1990. (1) VIII. Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Baltimore, L.P. dated February 1, 1991. (2) IX. Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated as of July 31, 1990. (1) X. Second Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated February 1, 1991. (2) (1) Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. (2) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. XI. Agreement for Sale of Henderson's Wharf, the Fastlands and Marina among HWFP, Inc., Kenneth M. Stein, J.E. Robert, the United Brotherhood of Carpenters and Joiners of America and Historic Preservation Properties 1990 L.P. Tax Credit Fund dated June 19, 1990. (1) XII. Assignment and Assumption Agreement Regarding Contract Rights between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Henderson's Wharf Baltimore, L.P. dated July 31, 1990. (1) XIII. Assignment and Assumption Agreement Regarding Contract Rights between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Henderson's Wharf Marina, L.P. dated July 31, 1990. (1) XIV. Deed dated July 31, 1990 from Joseph E. Robert, Jr., Kenneth M. Stein and HWFP, Inc. to Henderson's Wharf Baltimore, L.P. (1) XV. Deed dated July 31, 1990 from Joseph E. Robert, Jr., Kenneth M. Stein and HWFP, Inc. to Henderson's Wharf Marina, L.P. (1) XVI. Assignment and Blanket Transfer from HWFP, Inc. and the United Brotherhood of Carpenters and Joiners of America to Henderson's Wharf Baltimore, L.P. dated July 31, 1990. (1) XVII. Assignment and Blanket Transfer from HWFP, Inc. and the United Brotherhood of Carpenters and Joiners of America to Henderson's Wharf Marina, L.P. dated July 31,1990. (1) XVIII. Purchase Money Promissory Note of Henderson's Wharf Baltimore, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $6,350,000. (1) XIX. Purchase Money Promissory Note of Henderson's Wharf Marina, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $1,187,500. (1) XX. Contingent Purchase Price Promissory Note of Henderson's Wharf Baltimore, L.P. to HWFP, Inc. dated July 31, 1990 in the principal amount of $1,150,000. (1) XXI. Purchase Money Deed of Trust between Henderson's Wharf Baltimore, L.P. and Kenneth M. Stein and Joseph E. Robert, Jr., Trustees, dated July 31, 1990. (1) (1) Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. XXII. Purchase Money Deed of Trust between Henderson's Wharf Marina, L.P. and Kenneth M. Stein and Joseph E. Robert, Jr., Trustees, dated July 31, 1990. (1) XXIII. First Amendment to Amended and Restated Henderson's Wharf Disposition Agreement among Henderson's Wharf Baltimore, L.P., Henderson's Wharf Marina, L.P. and the Mayor and City Council of Baltimore, Maryland dated July 31, 1990. (1) XXIV. Second Amendment to Pedestrian Promenade Easement Agreement among Henderson's Wharf Baltimore, L.P. Henderson's Wharf Marina, L.P. and the Mayor and City Council of Baltimore, Maryland dated July 31, 1990. (1) XXV. Property Management and Brokerage Agreement between Henderson's Wharf Baltimore, L.P. and Richland Management, Inc. dated as of July 31, 1990. (1) XXVI. Development Agreement between Henderson's Wharf Baltimore, L.P. and Richland #1, L.P. dated as of July 31, 1990. (1) XXVII. Inn Lease between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of July 31, 1990. (1) XXVIII. Property Management and Brokerage Agreement between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of February 1, 1991. (2) XXIX. Consulting Agreement between Henderson's Wharf Baltimore, L.P. and Hillcrest Management, Inc. dated as of February 1, 1991. (2) XXX. Settlement Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund, Henderson's Wharf Baltimore, L.P. Henderson's Wharf Marina, L.P. and Richard F. Holland, Richland #1 L.P., Richland Management, Inc., Richland Partners, Inc., Richland Construction, Inc., Richland Historic Properties, Inc. and Richland #2 L.P. dated February 1, 1991. (2) (1) Previously filed as part of exhibit 10B to the Partnership's Registration Statement on Form S-11, File No. 33-31778, and incorporated herein by this reference. (2) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. XXXI. Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership between Henderson's Wharf Development Corporation, Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Management, Inc. dated August 1, 1991. (3) XXXII. Settlement Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund, Boston Historic Partners II Limited Partnership, BHP II Advisors Limited Partnership, Terrence P. Sullivan, Portfolio Advisory Services II, Inc., Boston Capital Planning Group, Inc., Boston Bay Capital, Inc. and Daniels Printing Company dated July 6, 1992. (4) XXXIII. Second Amendment to Note 1, the Purchase Money Promissory Note, between Henderson's Wharf Baltimore, L.P. and HWFP, Inc. dated December 7, 1992. (4) XXXIV. Release of Deed of Trust securing $1,187,500 Purchase money Promissory Note between HWFP, Inc. Joseph E. Robert, Jr., S. Herbert Tinley, III and Henderson's Wharf Marina L.P. dated December 31, 1992. (4) XXXV. Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. dated December 31, 1992. (4) XXXVI. Agreement regarding refund of real estate taxes pertaining to Henderson's Wharf Baltimore L.P. and HWFP, Inc. dated December 31, 1992. (4) XXXVII. Property Management Agreement between Henderson's Wharf Marina, L.P. and Hillcrest Management, Inc. dated January 1, 1992. (4) (3) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by this reference. (4) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by this reference. XXXVIII. Property Management Agreement between Henderson's Wharf Marina L.P., Henderson's Wharf Baltimore, L.P. and the Residences and Inn at Henderson's Wharf, collectively referred to as "Henderson's Wharf" and McKenna Management Associates, Inc., dated August 23, 1993. (5) XXXIX. Third Amendment to Note 1, the Purchase Money Promissory Note, Between Henderson's Wharf Baltimore, L.P. and HWFP, Inc. dated December 31, 1993. (5) XL. Fourth Amendment to Note 1, the Purchase Money Promissory Note, between Henderson's Baltimore, L.P. and HWFP, Inc. dated February 22, 1994. (5) XLI. Promissory Note between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Lew Cohen dated July 1, 1993. (6) XLII. Settlement documents which include the Settlement Agreement and Mutual Release, Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney, Option Agreement, Maryland Residential Property Disclaimer Statement with Joseph and Eileen Mason for Unit # 433, dated June 1, 1994. (6) XLIII. Settlement documents which include the Settlement Agreement and Mutual Release, Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney, Option Agreement, Maryland Residential Property Disclaimer Statement and Lease with Colvin Ryan for Unit # 510, dated June 1, 1994. (6) XLIV. Settlement documents which include the Agreement of Purchase and Sale, Deed, Escrow Agreement, Special Power of Attorney and Option Agreement with Anne B. Cook for Unit # 409, dated October 24, 1994. (6) XLV. Promissory Note between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Asset Management, Inc. dated December 30,1994. (6) XLVI. Pledge Agreement between Historic Preservation Properties, Henderson's Wharf Baltimore, L.P., Henderson's Wharf Marina, L.P. and Hillcrest Asset Management, Inc., dated December 30, 1994. (6) (5) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by this reference. (6) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by this reference. XLVII. Property Management Agreement between Henderson's Wharf Marina L.P., Henderson's Wharf Baltimore, L.P. and the Residences and Inn at Henderson's Wharf, collectively referred to as "Henderson's Wharf" and Claremont Management Corporation, dated November 1, 1995. (7) XLVIII. Asset Management Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Claremont Management Corporation dated October 1, 1995. (7) XLIX. Deed of Trust Note between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Aid Association for Lutherans, dated February 27, 1996.(8) L. Guaranty among Historic Preservation Properties 1990 L.P. Tax Credit Fund, Henderson's Wharf Baltimore L.P. and Aid Association for Lutherans, dated February 27, 1996. (8) LI. Indemnity Deed of Trust and Security Agreement between Henderson's Wharf Baltimore L.P. and Aid Association for Lutherans, dated February 27, 1996. (8) LII. Assignment of Rents and Leases between Henderson's Wharf Baltimore L.P. and Aid Association for Lutherans, dated February 27, 1996. (8) LIII. Escrow Agreement among Henderson's Wharf Baltimore L.P., Calvin Gregg Ryan and Douglas G. Worrall, dated February 27, 1996. (8) LIV. Attorney's letter concerning purchase of condominium and parking units sold by Joseph and Eileen Mason to Henderson's Wharf Baltimore L.P., dated February 27, 1996. (8) LV. Attorney's letter concerning purchase of condo condominium and parking units sold by Anne B. Cook to Henderson's Wharf Baltimore L.P., dated February 27, 1996. (8) (7) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by this reference. (8) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by this reference. LVI. Partnership Interest Redemption Agreement among Henderson's Wharf Marina L.P., HWFP, Inc., Henderson's Wharf Development Corporation, and Historic Preservation Properties 1990 L.P. Tax Credit Fund, dated February 27, 1996. (8) LVII. Promissory Note between Henderson's Wharf Marina L.P. and HWFP, Inc., dated February 27, 1996. (8) LIX. Assignment of Leases and Rents between Henderson's Wharf Marina L.P. and HWFP, Inc., dated February 27, 1996. (8) LX. Settlement letter on prepayment of Promissory Note between Henderson's Wharf Marina L.P. and HWFP, Inc., dated September 30, 1997. 10 (c) Asset Management Agreement between Historic Preservation Properties 1990 L.P. Tax Credit Fund and Hillcrest Asset Management, Inc. dated January 1, 1992. (4) 22 List of Ventures. (2) 28 (ii) (a) Supplement No. 1 to the Partnership's Prospectus dated August 1, 1990. (9) (b) Supplement No. 2 to the Partnership's Prospectus dated December 3, 1990. (9) (c) Pages 14-16, 28-36 and 36-39 of the Partnership's Prospectus dated March 30, 1990 and filed with the Commission pursuant to Rule 424(b) on April 6, 1990. (9) (2) Previously filed as part of exhibit 22 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. (4) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by this reference. (8) Previously filed as part of exhibit 10(b) to the Partnership's Annual Report on Form 10-K for year ended December 31, 1996 and incorporated herein by this reference. (9) Previously filed as part of exhibit 28(ii) (a) to the Partnership's Annual Partnership Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by this reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND By: BOSTON HISTORIC PARTNERS II LIMITED PARTNERSHIP, GENERAL PARTNER By: BHP II ADVISORS LIMITED PARTNERSHIP By: PORTFOLIO ADVISORY SERVICES II, INC. Date: March 16, 1998 By: /s/ Terrence P. Sullivan Terrence P. Sullivan, President and Date: March 16, 1998 By: /s/ Terrence P. Sullivan Terrence P. Sullivan, General Partner Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title /s/ Terrence P. Sullivan Individual General Partner of Terrence P. Sullivan BHP II Advisors Limited Partnership and as President and Principal Date: March 16, 1998 Executive Officer of Portfolio Advisory Services II, Inc., General Partner of BHP II Advisors Limited Partnership Principal Financial and /s/ Terrence P. Sullivan Principal Accounting Officer Terrence P. Sullivan of Portfolio Advisory Services II, Inc., General Partner of BHP II Date: March 16, 1998 Advisors Limited Partnership Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act. An annual report will be furnished to Unit holders subsequent to filing of this Form 10-K. HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 TOGETHER WITH INDEPENDENT AUDITORS' REPORTS ANNUAL REPORT ON FORM 10-K ITEMS 14 (A) (1) AND (2) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Independent Auditors' Report F-3 Consolidated Balance Sheets as of December 31, 1997 and 1996 F-4 Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995 F-5 Consolidated Statements of Partners' Equity (Deficit) for the Years Ended December 31, 1997, 1996 and 1995 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995 F-7 Notes to Consolidated Financial Statements F-8 Independent Auditors' Report on Accompanying Information F-14 Consolidated Financial Statement Schedule: Schedule III - Real Estate and Accumulated Depreciation F-15 F-2 Independent Auditors' Report The Partners Historic Preservation Properties 1990 L.P. Tax Credit Fund Quincy, Massachusetts We have audited the accompanying consolidated balance sheets of Historic Preservation Properties 1990 L.P. Tax Credit Fund, a Delaware limited partnership (the "Partnership"), as of December 31, 1997 and 1996, and the related consolidated statements of operations, partners' equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 1997. 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. Those standards 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 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 consolidated financial position of Historic Preservation Properties 1990 L.P. Tax Credit Fund as of December 31, 1997 and 1996, and the results of its operations and cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. Lefkowitz, Garfinkel, Champi & DeRienzo P.C. Providence, Rhode Island February 27, 1998 F-3 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 ASSETS 1997 1996 INVESTMENT IN REAL ESTATE Building and building improvements $ 15,178,365 $ 15,178,365 Land 97,034 97,034 Furniture and equipment 970,736 961,236 Marina - land and improvements 1,376,259 1,335,858 Deferred evaluation and acquisition costs 1,102,600 1,102,600 18,724,994 18,675,093 Less accumulated depreciation and amortization 3,830,865 3,267,294 14,894,129 15,407,799 Reserve for realization of Marina land and improvements (845,672) (845,672) 14,048,457 14,562,127 CASH AND CASH EQUIVALENTS, including security deposit cash (1997, $86,641; 1996, $94,364) 757,452 478,898 ESCROW DEPOSITS 152,212 100,204 DEFERRED COSTS, net of accumulated amortization (1997, $33,492; 1996, $16,192) 149,193 178,096 OTHER ASSETS 116,807 72,879 $ 15,224,121 $ 15,392,204 LIABILITIES AND PARTNERS' EQUITY LIABILITIES: Notes payable $ 5,767,197 $ 6,123,084 Accrued expenses and other liabilities 286,315 303,840 Security deposits 82,271 88,767 Total liabilities 6,135,783 6,515,691 COMMITMENTS (Note 5) PARTNERS' EQUITY Limited Partners' equity- Units of Investor Limited Partnership Interest, $1,000 stated value per Unit- 16,361 issued and outstanding units 9,139,816 8,930,109 General Partner's deficit (51,478) (53,596) Total partners' equity 9,088,338 8,876,513 $ 15,224,121 $ 15,392,204 The accompanying notes are an integral part of these financial statements. F-4 HISTORIC PRESERVATION PROPERTIES 1990 L. P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 1997 1996 1995 REVENUE: Rental and related income $ 3,189,786 $ 2,840,240 $ 2,706,446 Interest and other income 71,475 69,504 62,901 3,261,261 2,909,744 2,769,347 EXPENSES: Operating and administrative 245,895 244,415 220,963 Property operating expenses: Payroll services 510,085 505,988 572,506 Condominium assessments 382,632 366,156 357,060 Real estate taxes 258,426 264,104 249,994 Management fees 142,088 124,438 94,841 Other operating expenses 457,067 533,582 541,785 Depreciation and amortization 582,710 591,751 568,217 2,578,903 2,630,434 2,605,366 INCOME FROM OPERATIONS 682,358 279,310 163,981 INTEREST EXPENSE 470,533 541,643 559,394 MINORITY INTEREST IN LOSS ON MARINA VENTURE - 3,344 36,392 NET INCOME (LOSS) $ 211,825 $(258,989) $ (359,021) NET INCOME (LOSS) ALLOCATED TO GENERAL PARTNER $ 2,118 $ (2,590) $ (3,590) NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS $ 209,707 $(256,399) $ (355,431) NET INCOME (LOSS) PER UNIT OF LIMITED PARTNERSHIP INTEREST, BASED ON 16,361 UNITS OUTSTANDING $ 12.82 $ (15.67) $ (21.72) The accompanying notes are an integral part of these financial statements. F-5 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 Units of Investor Investor Limited Limited General Partnership Partners' Partner's Interest Equity Deficit Total BALANCE, December 31, 1994 16,361 $ 9,541,939 $ (47,416) $ 9,494,523 Net loss - (355,431) (3,590) (359,021) BALANCE, December 31, 1995 16,361 9,186,508 (51,006) 9,135,502 Net loss - (256,399) (2,590) (258,989) BALANCE, December 31, 1996 16,361 8,930,109 (53,596) 8,876,513 Net income - 209,707 2,118 211,825 BALANCE, December 31, 1997 16,361 $ 9,139,816 $ (51,478) $ 9,088,338 The accompanying notes are an integral part of these financial statements. F-6 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 1997 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 211,825 $ (258,989) $ (359,021) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 582,710 591,751 568,217 Gain on sale of asset - (7,000) - Minority interest in loss on Marina Venture - (3,344) (36,392) Decrease in accrued expenses and other liabilities (30,695) (96,173) (7,523) Increase in escrow deposits (52,008) (45,934) (9,971) Decrease (increase) in other assets (34,164) 134,224 (157,745) Net cash provided by (used in) operating activities 677,668 314,535 (2,435) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to building and improvements - (442,264) - Purchase of furniture & equipment (9,500) (16,658) (3,827) Additions to Marina (33,727) (23,049) - Proceeds from sale of asset - 7,000 - Net cash used in investing activities (43,227) (474,971) (3,827) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from refinancing of mortgage note payable - 6,000,000 - Payment of mortgage note payable - (5,590,418) - Principal payments of mortgage notes payable (355,887) (101,916) - Payment of deferred costs - (143,167) (24,404) Net cash provided by (used in) financing activities (355,887) 164,499 (24,404) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 278,554 4,063 (30,666) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 478,898 474,835 505,501 CASH AND CASH EQUIVALENTS, END OF YEAR $ 757,452 $ 478,898 $ 474,835 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 471,665 $ 522,522 $ 559,044 NON-CASH FINANCING ACTIVITY: On February 27, 1996, the Partnership redeemed the minority interest in the Marina Venture by issuing a $225,000 note payable. The transaction resulted in a $39,981 reduction of basis in the marina property. The accompanying notes are an integral part of these financial statements. F-7 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (1) Organization and General Partner - BHPII Historic Preservation Properties 1990 L.P. Tax Credit Fund (HPP'90) was formed on October 4, 1989 under the Delaware Revised Uniform Limited Partnership Act. The purpose of HPP'90 is to invest in a portfolio of real properties which are intended to qualify for rehabilitation tax credits (Rehabilitation Tax Credits) afforded by Section 47 of the Internal Revenue Code of 1986, as amended, to rehabilitate such properties (or acquire such properties in the process of rehabilitation and complete such rehabilitation) in a manner intended to render a portion of the costs thereof eligible for Rehabilitation Tax Credits, and to operate such properties. Boston Historic Partners II Limited Partnership (BHP II), a Delaware limited partnership, is the general partner of HPP'90. BHP II was formed in June 1989 for the purpose of organizing, syndicating, and managing publicly offered real estate limited partnerships (Public Rehabilitation Partnerships). Officers of Boston Capital Planning Group, Inc. (BCPG), an affiliate of BHP II, were the initial limited partners of HPP'90. The initial limited partners withdrew as limited partners upon the first admission of Investor Limited Partners (Limited Partners). Prior to admission of the Limited Partners, all costs incurred by HPP'90 were paid by BHP II. On June 29, 1990, the first Limited Partners were admitted to HPP'90 and operations commenced. The Amended and Restated Agreement of Limited Partnership (Partnership Agreement) of HPP'90 generally provides that all net profits, net losses, tax credits and cash distributions of HPP'90 from normal operations subsequent to admissions of Limited Partners shall be allocated 99% to the Limited Partners and 1% to BHP II. Proceeds from sales or refinancing generally will be distributed 100% to the Limited Partners until they have received an amount equal to their Adjusted Capital Contributions (as defined in the Partnership Agreement) plus priority returns and additional incentive priority returns for certain Limited Partners admitted to HPP'90 on or prior to certain specified dates. (2) Summary of Significant Accounting Policies Principles of Consolidation At December 31, 1997, HPP'90 held a 99% general partner interest and Henderson's Wharf Development Corp. (HWDC), a wholly owned subsidiary of HPP'90, held a total general and limited partner interest of 1% in Henderson's Wharf Baltimore Limited Partnership (HWB). At December 31, 1997, HPP'90 held a 98% limited partner interest and HWDC held a 2% general partner interest in Henderson's Wharf Marina Limited Partnership (HWM). All operating and financial policy decisions of HWB and HWM are controlled by HPP'90 and HWDC. The consolidated financial statements include the accounts of HPP'90, Henderson's Wharf Baltimore, L.P. and Henderson's Wharf Marina, L.P. after elimination of all intercompany transactions and accounts. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Real Estate and Depreciation Real estate is held for lease and stated at the lower of cost or net realizable value. Depreciation is provided over the estimated economic useful lives of the assets using the straight-line method. Depreciation expense for the years ended December 31, 1997, 1996 and 1995 totaled $536,007, $547,996 and $538,553, respectively. Deferred Evaluation and Acquisition Costs Expenditures related to the purchase of real estate have been capitalized and are being amortized on a straight-line basis over the estimated economic useful life of real property (40 years). Amortization expense relating to deferred evaluation and acquisition costs totaled $27,564 in each of the years ended December 31, 1997, 1996 and 1995. F-8 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (2) Summary of Significant Accounting Policies (Continued) Cash, Cash Equivalents, and Concentration of Credit Risk HPP'90 considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents at December 31, 1997 and 1996 totaled $741,318, and $456,383, respectively. At December 31, 1997 and 1996, HPP'90 had $615,312 and $274,721 of cash and cash equivalents and escrow deposits, respectively, on deposit in banks in excess of amounts insured by the Federal Deposit Insurance Corporation. Deferred Costs Deferred costs relating to HPP'90's notes payable are being amortized on a straight-line basis over the terms of the notes. Amortization expense relating to deferred costs for the years ended December 31, 1997, 1996 and 1995 totaled $19,139, $16,191 and $2,100, respectively. Revenue Recognition Revenue from residential units, principally under annual operating leases, is recorded when due. Revenue from rental of inn units is recognized when earned. Income Taxes No provision (benefit) for income taxes is reflected in the accompanying consolidated financial statements of HPP'90. All partners are required to report on their tax returns their allocable share of income, gains, losses, deductions and credits determined on a tax basis. Reclassifications Certain amounts in the 1995 and 1996 financial statements have been reclassified to conform to the 1997 presentation. (3) Investment in Real Estate During 1990, HPP'90 acquired an interest in the following entities (see below for subsequent changes in ownership): Henderson's Wharf Baltimore, L.P. (the Building Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a fee interest in a seven-story building on 1.5 acres of land and to rehabilitate the building into residential apartment units with 149 indoor parking spaces and a 38 room inn located at 1000 Fell Street, Baltimore, Maryland. In addition to the inn, the building contains a total of 137 residential units, 9 of which are owned by unrelated parties. The building has been substantially renovated and certain renovation costs qualify for Rehabilitation Tax Credits. The Building Venture purchased its interest for $6,812,500, which included seller financing of $6,350,000, and a contingent purchase price promissory note (see Note 4). Contributions by HPP'90 to the Building Venture totaled $12,214,500 as of December 31, 1997. HPP'90 has made all required capital contributions to the Building Venture in accordance with the Building Venture's partnership agreement, and is not required to make additional contributions, although at its sole discretion, may do so. The economic occupancy for the year ended December 31, 1997 for the residential units was 97% (unaudited) and the average occupancy for the inn was 71% (unaudited). On February 27, 1996, the Building Venture purchased three condominium units and parking spaces owned by unrelated parties, in conjunction with the refinancing of its note payable (see Note 4). F-9 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (3) Investment in Real Estate (Continued) HPP'90's operations, principally accounting, investor services and other general and administrative costs, are funded from distributions by the Building Venture. For the years ended December 31, 1997, 1996, and 1995, the Building Venture distributed to HPP'90, $501,000, $203,000, and $223,138, respectively. Rehabilitation Tax Credits generated by the Building Venture and previously allocated to HPP'90's Limited Partners totaled $3,174,059 since inception. As of December 31, 1996, 100% of the credits were fully vested. Henderson's Wharf Marina, L.P. (the Marina Venture) is a Delaware limited partnership formed on July 20, 1990 to acquire a fee interest in a 1.92 acre parcel of land together with a 256-slip marina located in Baltimore, Maryland. HPP'90 purchased the Marina Venture for $1,266,363, which included seller financing of $1,187,500. Contributions to the Marina Venture by HPP'90 totaled $247,219 as of December 31, 1997. HPP'90 may make additional capital contributions to the Marina Venture as provided in the Marina Venture's partnership agreement, but is not required to do so. The Marina Venture had operated a minimal number of slips from 1991 through 1995 due to the significant repairs necessary to be fully operational. During the years ended December 31, 1997 and 1996, the Marina Venture added $40,401 and $23,049, respectively, of utility, safety and other improvements, increasing the number of fully operational slips to 224. Substantial repairs are still needed to bring the entire marina to full operation. On December 31, 1992, the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina L.P. was executed. HWFP, Inc. (HWFP), a Maryland corporation and the original holder of the purchase money note relating to the purchase of the marina property, received a 50% limited partnership interest in the Marina Venture and became the holder of a minority interest (see Note 4). On February 27, 1996, the Partnership redeemed HWFP's 50% limited partnership interest in the Marina Venture by issuing a $225,000 promissory note payable secured by the marina property. As a result of this redemption, HPP'90's limited partnership interest in the Marina Venture increased to 98% and HWDC's general partnership interest in the Marina Venture increased to 2% as of the date of redemption. On September 30, 1997, the Building Venture advanced the Marina Venture $200,000, and the Marina Venture then settled in full the promissory note payable to HWFP. (see Note 4). The Building Venture and the Marina Venture are collectively referred to as "the Ventures". Generally, allocations of net profits and losses as well as cash flow of the Building Venture and Marina Venture are allocated in accordance with the Ventures' respective amended partnership agreements. (4) Notes Payable The Building Venture originally financed $6,350,000 of the purchase price of the property by issuing a purchase money note to the seller, HWFP. In conjunction with issuing a purchase money note to the seller, the Building Venture entered into a contingent purchase price promissory note with the seller for $1,250,000. Payment on the note was contingent upon the cash flow (as defined) generated from the future sale of apartment units in the Building Venture. The note was unsecured, bore no interest, and had no maturity date. On February 27, 1996, HPP'90 issued a $6,000,000 deed of trust note to a third party lender which provided funds for the Building Venture to refinance the then outstanding balance of the seller financed purchase money note totaling $5,590,418, to pay $109,582 to the seller in release of the contingent purchase price promissory note, and to purchase in part three condominium units and parking spaces owned by unrelated parties for an aggregate purchase price of $332,682. The deed of trust note bears interest at 7.85%, amortizes over a 20-year schedule and requires monthly principal and interest payments in the amount of $49,628, which commenced April 1996 with the remaining unpaid principal and interest due in March 2016. Under the deed of trust note, the lender has the option with six months written notice to call amounts outstanding under the deed of trust note at the end of ten years (February 2006) or anytime thereafter. The deed of trust note is secured by the Building Venture's property, rents and assignment of leases and is guaranteed by the Building Venture. F-10 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (4) Notes Payable (Continued) As mentioned in Note 3, on February 27, 1996, HPP'90, HWDC and HWFP entered into the First Amendment to the Third Amended and Restated Agreement of Limited Partnership of Henderson's Wharf Marina, L.P. by which the Partnership redeemed HWFP's 50% limited partnership interest in the Marina Venture by issuing a $225,000 promissory note payable secured by the marina property. The note bore interest at 7.50%, matured in March 2006, and required monthly principal and interest payments in the amount of $2,086 which commenced April 1996. The transaction resulted in a $39,981 reduction of basis in the marina property during the year ended December 31, 1996. HPP'90's limited partnership interest in the Marina Venture increased to 98% and HWDC's general partnership interest in the Marina Venture increased to 2% as of the date of the redemption. On September 30, 1997, the Building Venture advanced the Marina Venture $200,000, and the Marina Venture settled in full the remaining outstanding principal balance of $212,532 and all accrued interest due under the promissory note to HWFP. As of December 31 1997, aggregate annual maturities under the deed of trust note for each of the next five years are as follows: Year Ending December 31 Amount 1998 $ 148,063 1999 160,113 2000 173,145 2001 187,236 2002 202,475 (5) Transactions With Related Parties, Commitments and Contingencies The Building Venture entered into a consulting agreement (Consulting Agreement), which expired on December 31, 1991, that required the Building Venture to pay Hillcrest Management Inc., (HMI) a Massachusetts corporation and former limited partner of the Venture's with whom the Venture had several contracts, a $15,000 refinancing fee upon the closing of any refinancing of the existing Building Venture's financing. The Consulting Agreement also required the Building Venture to pay HMI an incentive fee equal to 1% of the gross sales proceeds resulting from the sale of the building property to an unaffiliated third party buyer. The Building Venture paid the $15,000 refinancing fee to HMI in March 1996 as a result of refinancing its purchase price promissory note as discussed in Note 4. The incentive fee commitment survives the December 31,1991 expiration date of the Consulting Agreement and the termination of all other agreements with HMI (see below). HPP'90 entered into an agreement on behalf of the Ventures to pay contract termination settlement payments (Settlement Payments) totaling $271,108 to HMI. The Settlement Payments required an initial payment of $36,000 on January 27, 1995 and require monthly payments of $3,221 through the earlier of September 2001 or the occurrence of certain events as defined in the agreement. The Settlement Payments are secured by 100% of HPP'90's economic interest as a partner in the Ventures, as defined in the agreements; net sales and refinancing proceeds; cash flow; return of capital contributions; all of HPP'90's cash and marketable securities in excess of $150,000; and all of the Ventures' cash in excess of the greater of $200,000 or reserves required by lenders. No distributions to the partners of HPP'90 are permitted until all Settlement Payments are paid in full. The Settlement Payments may be prepaid, as defined in the agreement, without penalty. As of December 31, 1997 and 1996, unpaid Settlement Payments included in accrued expenses and other liabilities totaled $144,928 and $183,576, respectively. F-11 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (5) Transactions With Related Parties, Commitments and Contingencies (Continued) The Ventures hired McKenna Management Associates, Inc. (McKenna) as the independent onsite property management company through October 31, 1995. On November 1, 1995, the Building and Marina Venture entered into property management contracts with Claremont Management Corporation (CMC), an unaffiliated Massachusetts corporation, to manage the apartment, inn and marina operations. The property management contracts provide for payment of management fees to CMC equal to 4% and 4.5% of apartment and inn gross receipts, as defined, respectively, and 9% of marina gross receipts, as defined. The agreements expire on June 30, 1998, and are extended on a year-to-year basis unless otherwise terminated as provided for in the agreements. A condition of the agreements requires the Ventures to maintain with CMC, for the benefit of the Ventures, operating cash and contingency reserves of $190,000 and $70,000, respectively. As of December 31, 1997, the Ventures' operating cash and contingency reserves totaled $318,861. To facilitate the transition of property management and through an arrangement with CMC, McKenna continued to provide management services to the apartment, inn and marina operations through December 31, 1995. Management fees paid to McKenna and CMC by the Ventures totaled $142,088, $124,438 and $94,841 for the years ended December 31, 1997, 1996 and 1995, respectively. HPP'90 engaged Portfolio Advisory Services, Inc. (PAS), a Massachusetts corporation, which is related to BHP II through certain common ownership and management, to provide accounting, asset management and investor services through September 30, 1995. PAS received no fee for its services, however it was reimbursed for all operating costs of providing these services. Expense reimbursements to PAS for the period January 1, 1995 through September 30, 1995 totaled $65,903. On October 1, 1995, HPP'90 engaged CMC to provide accounting, asset management and investor services. CMC provides such services for an annual management fee of $38,400, plus reimbursement of all its costs of providing these services. The agreement expires on June 30, 1998, and is automatically extended on a year-to-year basis unless otherwise terminated as provided for in the agreement. Expense reimbursements to CMC for the years ended December 31, 1997, 1996 and for the period October 1, 1995 through December 31, 1995 totaled $127,075, $136,654 and $40,336, respectively. According to a provision in one purchase and sale contract of one of three condominiums purchased on February 27, 1996, the purchase price for that condominium is the greater of the seller's outstanding mortgage balance as of the date of purchase or the fair market value of the property determined by independent appraisal through a period extending through June 1, 1999. At the February 27, 1996 closing, the purchase price paid was the then outstanding balance of the seller's mortgage. If, through June 1, 1999, the fair market value is determined to be greater than the amount paid at the closing, HWB will be required to pay the excess of the determined fair market value over the purchase price paid at the closing to the seller. As a part of the purchase agreement, HWB has established a $25,000 collateral escrow in the event that an additional payment has to be made to the seller. During 1997, the Building Venture and the condominium association to which it belongs filed suit against one unit owner for failure to pay condominium assessments and nuisance. The suit asks for actual damages as well as compensatory and punitive damages totaling $120,000. The case is currently not yet in the discovery stage and no estimate can be made as to the time or the amount, if any, of ultimate recovery. The unit owner filed a counterclaim against the Building Venture, the condominium association to which it belongs, and other third parties for alleged breach of contract and related counts. The counterclaim asks for compensatory and punitive damages totaling $3,901,000. The Building Venture believes that the counterclaim is completely without merit and intends to vigorously defend its position The case relating to the counterclaim also is currently not yet in the discovery stage and the Building Venture's legal counsel is unable to determine the likelihood of an unfavorable outcome or the amount or range of potential loss. It is reasonably possible that the outcome of this uncertainty might be determined in the near term. Within the next several years, significant repairs are needed to maintain the Marina Venture's land which provides parking to the marina and inn. In October 1997, the Marina Venture entered into a letter of intent with a third party real estate developer to form an entity whose purpose would include repairing the land and the developing of the marina. The letter of intent expired on January 10, 1998. The Marina Venture estimates the cost of repairs to maintain the land to be approximately $1,500,000. The Partnership anticipates that capital resources to fund the repairs could be obtained from additional financing sources and/or additional capital investment. Also, the Partnership is investigating other potential sources of available parking for the marina and inn. It is reasonably possible that the outcome of this uncertainty might be determined in the near term. F-12 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (6) Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, escrow deposits, accrued expenses and other liabilities, and security deposits at December 31, 1997 and 1996 approximate their fair values due to their short maturities. The fair value of the notes payable at December 31, 1997 and 1996 approximate their carrying amounts based on the interest rates currently available to HPP'90 for similar financing arrangements. All financial instruments are held for non- trading purposes. F-13 Independent Auditors' Report on Accompanying Information The Partners Historic Preservation Properties 1990 L.P. Tax Credit Fund Quincy, Massachusetts We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Historic Preservation Properties 1990 L.P. Tax Credit Fund as of December 31, 1997 and 1996, and for each of the years in the three- year period ended December 31, 1997 included in this Form 10-K and have issued our report thereon dated February 27, 1998. Our audits were made for the purpose of forming an opinion on the 1997 and 1996 basic consolidated financial statements taken as a whole. The supplemental schedule is the responsibility of the Partnership's management and is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. The information included in this schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements, and in our opinion fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements as a whole. Lefkowitz, Garfinkel, Champi & DeRienzo P.C. Providence, Rhode Island February 27, 1998 F-14 HISTORIC PRESERVATION PROPERTIES 1990 L.P. TAX CREDIT FUND SCHEDULE REAL ESTATE & ACCUMULATED DEPRECIATION DECEMBER 31, 1997 IN THOUSANDS Costs Capitalized Initial Costs Subsequent to Acquisition Building & Description and Encum- Improve- Improve- Carrying Ownership Percentage brances Land ments ments Costs Residential/Building/ Inn Henderson's Wharf Baltimore L.P. Baltimore, Maryland 99.9% (Note 5) $ 5,767 $ 97 $ 6,715 $ 8,113 $ 350 Marina Henderson's Wharf Marina L.P. Baltimore, Maryland 98%(Notes 6 and 7) $ 0 1,187 0 150 79 $ 5,767 $ 1,284 $ 6,715 $ 8,263 $ 429 Gross Amounts Date of Building & Accumulated Construct Description and Improve- Total Depreciation Ownership Percentage Land ments/CC (Note 2) (Note 3) Residential/Building/Inn Henderson's Wharf Baltimore L.P. Baltimore, Maryland 99.9% (Note 5) $ 97 $ 15,178 $ 15,295 $ 2,574 Marina Henderson's Wharf Marina L.P. Baltimore, Maryland 98%(Notes 6 and 7) 301 229 530 187 $ 398 $ 15,407 $ 15,825 $2,761 Date of Construct Date Depreciable Decription and Rehabili- Interest Life Ownership Percentage tation Account (years) Residential/Builing/ Inn Henderson's Wharf Baltimore L.P. Baltimore, Maryland 99.9% Note (5) 9/90 7/20/90 40 Marina Henderson's Wharf Marina L.P. Baltimore, Maryland 98% (notes 6 and 7) N/A 7/20/90 34 Note 1: The aggregate cost of each property on a tax basis net of the reduction due to rehabilitation tax credits. 1997 1996 1995 Henderson's Wharf Baltimore $ 14,075 $ 14,075 $ 14,141 Henderson's Wharf Marina 589 549 527 Total $ 14,664 $ 14,621 14,668 Note 2: The changes in total costs of land, building and improvements at December 31 are as follows: 1997 1996 1995 Balance at the beginning of period $ 15,785 $ 15,320 $15,320 Additions: Land, Building & Improvements 40 465 0 $ 15,825 $ 15,785 $ 15,320 Note 3: The changes in accumulated depreciation for the years ended December 31 are as follows: 1997 1996 1995 Balance at beginning of period $ 2,396 $ 1,987 $ 1,448 Depreciation during the year Buildings & Improvements 396 409 539 $ 2,761 $ 2,396 $ 1,987 Note 4: This schedule excludes furniture and equipment with a cost of approximately $971,000 and $961,000 and accumulated depreciation of approximately $876,000 and $737,000 at December 31, 1997 and 1996 respectively. Note 5: In 1996, the Partnership refinanced the seller financing on the Henderson's Wharf Baltimore property with third party financing of $6,000,000. For additional information, see the footnotes to financial statements. Note 6: In 1996, the minority interest holder in the Henderson's Wharf Marina property redeemed its interest for a $225,000 mortgage on the property. The transaction resulted in a reduction of basis of approximately $40,000. For additional information. see the footnotes to the financial statements. Note 7: The Partnership has provided for a reserve for realization of Marina Land and Improvements of approximately $846,000 net of accumulated depreciation, based on fair market determined by independent appraisal and priority distribution of proceeds from capital transactions as provided for in The Third Amended and Restated Agreement of Limited Partnership. EX-27 2
5 12-MOS DEC-31-1997 DEC-31-1997 757,452 0 0 0 0 0 18,724,994 3,830,865 15,224,121 0 5,767,197 0 0 0 0 15,224,121 0 3,261,261 0 2,578,903 0 0 470,533 211,825 0 0 0 0 0 211,825 12.82 12.82
EX-99.1 3 J.E. ROBERT COMPANIES 1650 Tysons Boulevard, Suite 1600 McLean, Virginia 22102 September 29, 1997 BY FACSIMILE Henderson's Wharf Marina, L.P. c/o Claremont Management Corporation Batterymarch Park II Quincy, Massachusetts 02160 Attn: Terrence P. Sullivan Re: $225,000.00 loan (the "Loan") from HWFP, Inc. a Maryland corporation ("HWFP") to Henderson's Wharf Marina, L.P., a Delaware limited partnership (the "Partnership") Dear Mr. Sullivan: This letter shall confirm our agreement that HWFP shall accept from the Partnership a discounted payoff of the Loan, subject to the terms and conditions set forth In this letter. 1. Loan. The Loan is evidenced by a Promissory Note dated February 27,1996 (the "Note"), in the principal amount of Two Hundred Twenty-five Thousand Dollars ($225,000.00). The Note is secured by, among other things, a certain Deed of Trust dated February 27, 1996 (the "Deed of Trust"), encumbering premises known as Henderson's Wharf Marina, located in Baltimore, Maryland (the "Property"). 2. Current Outstanding Principal Balance. As of the date hereof, the outstanding principal balance of the Note is Two Hundred Twelve Thousand Five Hundred Thirty-one and 62/100 Dollars ($212,531.62). 3. Discounted Payoff. Provided that the Partnership is not in default under the Note, Deed of Trust or any other document or instrument evidencing or securing the Loan (collectively, the "Loan Documents"), the Partnership shall have the option, on or before 5:00 p.m. on Tuesday, September 30, 1997 (the " Payoff Date"), te deliver to HWFP, at the address set forth below, by certified check or wired funds, an amount equal to Two Hundred Thousand Dollars ($200,000.00) (the "Discounted Payoff Amount"), plus accrued interest in the amount of Seven Hundred Eight and 48/100 Dollars ($708.48) (the "Accrued Interest"), which Discounted Payoff Amount and Accrued Interest HWFP agrees to accept on or before the Payoff Date as full satisfaction of the Henderson's Wharf Marina, L.P. September 29, 1997 Page 2 Loan. Upon receipt of the Discounted Payoff Amount and Accrued Interest, HWFP shall deliver to the Partnership (a) the original Note marked "Paid" (or an original executed lost note affidavit if the original Note is unavailable) and (b) a satisfaction of the Deed of Trust in a form suitable for recording. 4. Legal Fees and Expenses. The Partnership shall pay all attorneys' fees and expneses of HWFP's counsel, Dicstein Shapiro Morin & Oshinsky LLP, incurred in connection with the Discounted Payoff and this letter agreement, and all title and recording charges. 5. Release. In consideration of HWFP agreeing to accept the discounted payoff of the Loan, the Partnership, on its own behalf and on behalf of its successors and assigns, does hereby release, acquit, exonerate and forever discharge HWFP and its officers,directors, agents, contractors, employees, affiliates and each of their respective officers, directors, successors and assigns (collectively, the "Released Parties"), from all claims, demands, losses, costs, obligations, liabilities and expenses of every kind and nature whatsoever, whether now existing or hereafter arising, known or unknown, fixed or contingent, which the Partnership may at any time have against the Released Parties by reason of, resulting from or relating in any way, directly or indirectly, to the Loan or the Property. The foregoing release is an express condition of HWFP's obligation to accept the discounted payoff of the Loan and shall become effective at such time as HWFP accepts the Discounted Payoff Amount and Accrued Interest. 6. Miscellaneous. (a) Time is of the essence with respect to this letter agreement. (b) All payments hereunder shall be payable at HWFP, Inc., c/o J.E. Robert Companies, 1650 Tysons Boulevard, Suite 1600, McLean, Virginia 22102, Attention: Stephen E. Cox, or, at HWFP's option, in accordance with HWFP's wire instructions. (c) In the event the Partnership fails to pay the Discounted Payoff Amount and Accrued Interest, and comply with all of the other terms and conditions of this letter agreement, on or before the Payoff Date, this letter agreement shall be null and void and of no further force or effect. (d) This letter agreement contains the entire understanding of the parties hereto with respect to the subject matter hereof. (e) This letter agreement shall be governed by and construed in accordance with the laws of the State of Maryland and shall be binding on the parties hereto and their respective successors and assigns. Henderson's Wharf Marina, L.P. September 29, 1997 Page 3 If the foregoing terms and conditions are satisfactory, please sign and date this letter where indicated below and return to the undersigned one (1) original executed copy on or before 5:00 p.m. on Tuesday, September 30, 1997. Very truly yours, HWFP, INC. By: ____________________________ Stephen E. Cox ACCEPTED AND AGREED TO THIS 30TH DAY OF SEPTEMBER, 1997: HENDERSON'S WHARF MARINA, L.P., a Delaware limited partnership By: Henderson's Wharf Development Corporation. a Delaware corporation, its sole general partner By: ________________________________ Terrence P. Sullivan -----END PRIVACY-ENHANCED MESSAGE-----