-----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, JHwJ88PTdoHa9ahFbZ25KTyMJnNc6AuuDasP6q97rT2wM7U6MLlmPpX5qPu444pg sG30CAfteiiWIlmKU5gYOw== 0000318526-97-000004.txt : 19970515 0000318526-97-000004.hdr.sgml : 19970515 ACCESSION NUMBER: 0000318526-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97605673 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 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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 The total number of pages in this document is 10. 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
March 31, December 31, 1997 1996 Multi-family apartment complex, net of accumulated depreciation of $2,774,040 and $2,730,441, respectively $ 2,056,853 $ 2,093,819 Cash and cash equivalents 72,891 75,012 Cash restricted for tenant security deposits 38,194 38,004 Replacement reserve escrow 40,259 49,030 Prepaid expenses and other assets 122,643 86,267 Deferred expenses, net of accumulated amortization of $38,402 and $37,355, respectively 108,223 109,270 Total assets $ 2,439,063 $ 2,451,402 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage note payable $ 2,211,456 $ 2,215,574 Notes payable 1,257,385 1,257,385 Accounts payable 73,002 93,704 Accrued expenses and other liabilities 268,112 242,244 Accrued interest due to an affiliate (Note 3) 666,919 637,842 Total liabilities 4,476,874 4,446,749 Partners' deficit (Note 2): Class A Limited Partners (4,000 Units outstanding) (310,874) (272,656) Original Limited Partner (440,038) (436,216) General Partners (1,286,899) (1,286,475) Total Partners' deficit (2,037,811) (1,995,347) Total liabilities and Partners' deficit $ 2,439,063 $ 2,451,402
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 Ended March 31, 1997 1996 Revenue: Rental $264,455 $273,981 Other income 1,088 433 Total revenue 265,543 274,414 Expenses: Operating 98,258 101,580 Maintenance 15,038 10,234 Real estate taxes 34,500 35,178 Management fees (Note 3) 13,504 - General and administrative 12,091 16,719 Depreciation and amortization 44,646 44,117 Interest (Note 3) 89,970 90,993 Total expenses 308,007 298,821 Net loss $(42,464) $(24,407) Allocation of net loss (Note 2): Class A Limited Partners $(38,218) $(21,966) Per Unit of Class A Limited Partner Interest (4,000 Units outstanding) $ (9.55) $ (5.49) Original Limited Partner $ (3,822) $ (2,197) General Partners $ (424) $ (244)
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 Three Months Ended March 31, 1997 1996 Operating activities: Net loss $(42,464) $(24,407) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 44,646 44,117 Changes in assets and liabilities: Decrease (increase) in cash restricted for tenant security deposits (190) 2,813 Increase in prepaid expenses and other assets (36,376) (39,911) Decrease in accounts payable (18,534) (2,536) Increase in accrued expenses and other liabilities 25,868 30,795 Increase in interest due to an affiliate 29,077 29,671 Net cash provided by operating activities 2,027 40,542 Investing activities: Deposits to replacement reserve escrow (12,109) (12,109) Withdrawals from replacement reserve escrow 20,880 - Additions to fixed assets (6,633) (12,904) Increase (decrease) in accounts payable related to fixed asset additions (2,168) 4,325 Net cash used in investing activities (30) (20,688) Financing activity: Principal payments on mortgage notes payable (4,118) (3,709) Net increase (decrease) in cash and cash equivalents (2,121) 16,145 Cash and cash equivalents, beginning of period 75,012 11,153 Cash and cash equivalents, end of period $ 72,891 $ 27,298
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, 1996 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 March 31, 1997 and its results of operations and cash flows for the three months ended March 31, 1997 and 1996. The results of operations for the three months ended March 31, 1997 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 three months ended March 31, 1997 is as follows:
Class A Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1996 $(272,656) $(436,216) $(1,286,475) $(1,995,347) Net loss (38,218) (3,822) (424) (42,464) Balance at March 31, 1997 $(310,874) $(440,038) $(1,286,899) $(2,037,811)
(3) Related Party Transactions Commencing with the date of acquisition of the Partnership's property, the Partnership entered into an agreement under which property management fees are paid to an affiliate of the General Partners for services as management agent. Such agreement provides for management fees payable monthly at a rate of 5% of the gross receipts from the property under management. These manaagement agreements were sold to BRI OP Limited Partnership, a publicly traded real estate investment trust and an affiliate of the General Partners, on February 28, 1997. The Partnership also reimburses affiliates of the General Partners for certain expenses incurred in connection with the operation of the Partnership and its property including accounting, computer, insurance, travel, legal and payroll costs relating to the preparation and mailing of reports and other communications to the Limited Partners. From 1991 through 1996, the General Partners arranged with the management agent for the annual waivers of management fees and expense reimbursements. As a result of the sale of the management agreements, effective January 1, 1997, monthly payment of management fees were reinstituted. The management agreement was sold to BRI OP Limited Partnership, a publicly traded real estate investment trust and an affiliate of the General Partners, on February 28, 1997. The General Partners will continue to negotiate for the waiver of expense reimbursements. Property management fees paid to an affiliate of the General Partners were $13,504 and $0 for the three months ended March 31, 1997 and 1996, respectively. Interest accrued on borrowings to the General Partners or their affiliates was $29,077 and $29,671 for the three months ended March 31, 1997 and 1996, respectively. 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) 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 when necessary. 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 from 1991 through 1996, have arranged for the waiver of property management fees and expense reimbursements payable to the management agent, also an affiliate of the General Partners. Effective January 1, 1997, monthly payment of management fees were reinstituted as a result of the sale of the property management contract to an affiliate of the General Partners. The General Partners will continue to negotiate for the waiver of expense reimbursements. 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, as of March 31, 1997, the Partnership is current on its mortgage payments. The General Partners continue to actively pursue the sale of Riverside Apartments. In the event the property is sold, the Partnership will be liquidated. It is anticipated that all sale proceeds will be used to satisfy Partnership obligations and no funds will be available to investors for distribution. Cash Flow (Deficit) Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow Deficit of the Partnership for the three months ended March 31, 1997. The General Partners provide 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 $(15,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 17,000 Principal payments on mortgage (4,000) Expenditures for capital improvements (7,000) Cash Flow (Deficit) $ (9,000)
Operations In comparing the first quarter of 1997 as compared to the same period in 1996, the decrease in Cash Flow, is attributable to a decrease in net income, as revenue decreased and expenses increased. Rental revenue decreased due a decline Riverside's average commercial occupancy from being fully occupied at 100% during the first quarter of 1996, to an average occupancy of 85% during the first quarter of 1997. Total expenses increased slightly for the three months ended March 31, 1997, as compared to the three months ended March 31, 1996, with increases in management fees and maintenance expense partially offset by decreases in operating and general and administrative expenses. Effective January 1, 1997, monthly payment of management fees were reinstituted as a result of the sale of the property management contract to an affiliate of the General Partners. Maintenance expense increased due to contracted cleaning services which were previously provided by salaried employees. Thus, the increase in maintenance expense is directly offset by a decrease in operating expense. General and administrative expense decreased due to lower audit expenditures. 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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. DATE: May 13, 1997 EX-27 2
5 This schedule for Krupp Associate 1980-1 contains summary financial extracted from teh financial statements for the quarter ended March 31, 1997 and is qualified in its entirety be reference to such finanical. 3-MOS DEC-31-1997 MAR-31-1997 72,891 0 3,603 0 0 197,493 4,977,518 (2,812,442) 2,439,063 1,008,033 3,468,841 0 0 (2,037,811) 0 2,439,063 0 265,543 0 0 218,037 0 89,970 0 0 0 0 0 0 (42,464) 0 0 Net loss allocated ($424) to the General Partners and ($42,040) to the Limited Partners. Total operating expenses of $138,891, real estate taxes of $34,500 and depreciation and amortization of $44,646. Represents total revenue of the Parntership. Total deficit of General Partners ($1,286,899) and Limited Partners ($750,912). Includes depreciation of ($2,774,040) and amortization of deferred expenses of ($38,402). Includes multi-family complex of $4,830,893 and deferred expenses of $146,625. Represents mortgage note payable of $2,211,456 and notes to an affiliated party of $1,257,385.
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