-----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, StF0BhJP0+S7+/gUabWHRgbfB+iqSrkvot4Q0Y7QRcwdp6p1hA7m9Mth3Y3Ew7k7 Q0QuDHXIY0VlCXvtHSDk6A== 0000318526-96-000007.txt : 19960807 0000318526-96-000007.hdr.sgml : 19960807 ACCESSION NUMBER: 0000318526-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960806 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP ASSOCIATES 1980-1 CENTRAL INDEX KEY: 0000318526 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042708956 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-68727 FILM NUMBER: 96604348 BUSINESS ADDRESS: STREET 1: C/O BERKSHIRE REALITY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 2-68727 Krupp Associates 1980-1 Massachusetts 04-2708956 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 470 Atlantic Avenue, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip Code) (617) 423-2233 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS
June 30, December 31, 1996 1995 Multi-family apartment complex, net of accumulated depreciation of $2,636,598 and $2,549,375, respectively $ 2,125,002 $ 2,180,147 Cash 78,859 11,153 Cash restricted for tenant security deposits 34,657 37,288 Escrow for property replacements 49,110 45,427 Prepaid expenses and other assets 92,869 79,852 Deferred expenses, net of accumulated amortization of $35,260 and $33,165, respectively 111,365 113,460 Total assets $ 2,491,862 $ 2,467,327 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $ 2,223,493 $ 2,231,009 Notes payable 1,257,385 1,257,385 Accounts payable 110,320 117,977 Accrued expenses and other liabilities 238,119 230,299 Accrued interest due to affiliate (Note 3) 578,396 519,325 Total liabilities 4,407,713 4,355,995 Partners' deficit (Note 2): Class A Limited Partners (4,000 Units outstanding) (201,110) (176,645) Original Limited Partner (429,061) (426,615) General Partners (1,285,680) (1,285,408) Total Partners' deficit (1,915,851) (1,888,668) Total liabilities and Partners' deficit $ 2,491,862 $ 2,467,327
The accompanying notes are an integral part of the consolidated financial statements. KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Revenue: Rental $282,092 $259,133 $556,073 $509,972 Other income 843 536 1,276 728 Total revenue 282,935 259,669 557,349 510,700 Expenses: Operating 93,131 81,139 194,711 174,805 Maintenance 19,365 18,103 29,599 30,696 Real estate taxes 34,523 23,679 69,701 58,713 Depreciation and amortization 45,201 45,487 89,318 89,517 General and administrative 2,881 15,706 19,600 22,001 Interest (Note 3) 90,610 93,392 181,603 185,992 Total expenses 285,711 277,506 584,532 561,724 Net loss $ (2,776) $(17,837) $(27,183) $(51,024) Allocation of net loss (Note 2): Class A Limited Partners $ (2,499) $(16,054) $(24,465) $(45,922) Per Unit of Class A Limited Partner Interest (4,000 Units outstanding) $ (0.63) $ (4.01) $ (6.12) $ (11.48) Original Limited Partner $ (249) $ (1,605) $ (2,446) $ (4,592) General Partners $ (28) $ (178) $ (272) $ (510)
The accompanying notes are an integral part of the consolidated financial statements. KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 1995 Operating activities: Net loss $(27,183) $ (51,024) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 89,318 89,517 Decrease in cash restricted for tenant security deposits 2,631 2,342 Increase in prepaid expenses and other assets (13,017) (5,984) Increase (decrease) in accounts payable (7,657) 13,334 Increase (decrease) in accrued expenses and other liabilities 7,820 (9,391) Increase in interest due to affiliate 59,071 62,678 Net cash provided by operating activities 110,983 101,472 Investing activities: Additions to fixed assets (32,078) (31,384) Decrease (increase) in escrow for property replacements (3,683) 131 Net cash used in investing activities (35,761) (31,253) Financing activity: Principal payments on mortgage notes payable (7,516) (6,770) Net increase in cash 67,706 63,449 Cash, beginning of period 11,153 44,832 Cash, end of period $ 78,859 $ 108,281
The accompanying notes are an integral part of the consolidated financial statements. KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Accounting Policies Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this report on Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. In the opinion of the General Partners of Krupp Associates 1980-1 and Subsidiary (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Consolidated Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's consolidated financial position as of June 30, 1996, its results of operations for the three and six months ended June 30, 1996 and 1995, and its cash flows for the six months ended June 30, 1996 and 1995. Certain prior year balances have been reclassified to conform with current year consolidated financial statement presentation. The results of operations for the three and six months ended June 30, 1996 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. (2) Summary of Changes in Partners' Deficit A summary of changes in Partners' deficit for the six months ended June 30, 1996 is as follows:
Class A Original Total General Limited Limited Partners' Partners Partners Partner Deficit Balance at December 31, 1995 $(1,285,408) $(176,645) $(426,615) $(1,888,668) Net loss (272) (24,465) (2,446) (27,183) Balance at June 30, 1996 $(1,285,680) $(201,110) $(429,061) $(1,915,851)
(3) Related Party Transactions Interest on borrowings accrued to the General Partners or their affiliates was $29,400 and $59,071 for the three and six months ended June 30, 1996, respectively, and $31,785 and $62,678 for the three and six months ended June 30, 1995, respectively. KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including those concerning Management s expectations regarding the future financial performance and future events. These forward-looking statements involve significant risk and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources The Partnership's ability to generate cash adequate to meet its needs is dependent primarily upon the operating performance of Riverside Apartments ("Riverside"). Such ability is also dependent upon the future sale of the asset. These sources of liquidity could be used by the Partnership for payment of expenses related to real estate operations, debt service and expenses. Cash Flow and Capital Transaction Proceeds, if any, as calculated under Section 8.2(a) ("Cash Flow") and 8.3(a) of the Partnership Agreement would then be available for distribution to the Partners. The Partnership has discontinued distributions due to insufficient operating Cash Flow. The Partnership has experienced Cash Flow deficiencies for several years and currently has very limited liquidity. Expenditures are being monitored closely and capital improvements are made on an as-needed basis. To date, the General Partners have been able to arrange financing through borrowings, from an affiliate of the General Partners, to cover a substantial portion of these cash flow deficiencies. Also, one of the General Partners, The Krupp Company Limited Partnership ("The Krupp Company"), contributed an additional $100,000 to the Partnership during 1991. In January 1993, The Krupp Company loaned an additional $135,000 to the Partnership in the form of a demand note to payoff a demand note from an unaffiliated bank. In addition, the affiliate lender has been willing to defer interest payments on the borrowings since late 1990. Furthermore, the General Partners, through annual negotiations, have continued to arrange for the waiver of property management fees and expense reimbursements payable to the management agent, also an affiliate of the General Partners. The General Partners anticipate operating deficits to continue and cannot guarantee that they will be able to take actions that will cover any future deficits. If the property is unable to generate funds sufficient to cover these deficits, the Partnership could default on its mortgage payments and become subject to foreclosure proceedings. However, the Partnership is current on its mortgage payments. In January 1996, the General Partners entered into a purchase and sale agreement for the sale of Riverside to an unaffiliated buyer scheduled in the second quarter of 1996 for the selling price of $4,500,000. Two weeks before the scheduled sale date, the buyer rescinded his offer. The General Partners continue to actively pursue other opportunities for the sale of the property. Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow of the Partnership for the six months ended June 30, 1996. The General Partners provide certain of the information below to meet requirements of the Partnership Agreement and because they believe that it is an appropriate supplemental measure of operating performance. However, Cash Flow (Deficit) should not be considered by the reader as a substitute to net income (loss), as an indicator of the Partnership's operating performance or to cash flows as a measure of liquidity. Rounded to $1,000 Net loss for tax purposes $(27,000) Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 90,000 Principal payments on mortgage (8,000) Expenditures for capital improvements (32,000) Additions to working capital reserves (23,000) Cash Flow $ -0- Operations Cash Flow, before additions to working capital reserves, increased in the first half of 1996 as compared to the same period in 1995. The increase is attributable to improvements in net loss, as increases in revenue more than offset the increase in expenses. In comparing the increase in revenue for the three and six months ended June 30, 1995 to 1996, Riverside experienced an 8% increase in rental revenue due to a rise in commercial occupancy from an occupancy rate of 90% to 100% at June 30, 1995 and 1996, respectively. For the three and six months ended June 30, 1996, total expenses increased due to increases in operating and real estate tax expenses. The increase in operating expense is related to an increase in utility expense. Real estate tax expense increased due to an adjustment of 1994 taxes recorded in the second quarter of 1995. General In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which is effective for fiscal years beginning after December 15, 1995, the Partnership has implemented policies and practices for assessing impairment of its real estate asset. The investment in the property is carried at cost less accumulated depreciation unless the General Partners believe there is a significant impairment in value, in which case a provision to write down investment in the property to fair value will be charged against income. At this time, the General Partners do not believe that any assets of the Partnership are significantly impaired. KRUPP ASSOCIATES 1980 -1 AND SUBSIDIARY PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Changes in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: None SIGNATURE Pursuant to the requirements 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. Krupp Associates 1980-1 (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. DATE: July , 1996 EX-27 2
5 This schedule contains summary financial information extracted from Krupp Associates 1980-1 Financial Statements for the six months ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 78,859 0 1,040 0 0 175,596 4,908,225 (2,671,858) 2,491,862 926,835 3,480,878 0 0 (1,915,851) 0 2,491,862 0 557,349 0 0 402,929 0 181,603 0 0 0 0 0 0 (27,183) 0 0 Includes multi-family complex of $4,761,600 and deferred expenses of $146,625. Includes depreciation of $2,636,598 and amortization of deferred expenses of $35,260. Represents mortgage note payable of $2,223,493 and notes to an affiliated party of $1,257,385. Deficit of General Partners ($1,285,680) and Limited Partners ($630,171). Includes all revenue of the Partnership. Includes operating expenses of $243,910, real estate tax expense of $69,701 and depreciation and amortization expense of $89,318. Net loss allocated ($272) to the General Partners, ($2,446) to the Original Limited Partner and ($24,465) to the Investor Limited Parters. Average net loss is ($6.12) per Unit of Investor Limited Partner interest for 4,000 Units outstanding.
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