-----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, Nf8sdZwfMvCkCA6K9o4eMh5S6tzjHyV+pIRX4aSk5sF2nwPnDHdGZyC4IhqP8NDD ZQ62qEAKLmQGzG/iUPeTBw== 0000318526-97-000006.txt : 19970815 0000318526-97-000006.hdr.sgml : 19970815 ACCESSION NUMBER: 0000318526-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97661825 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 THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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
June 30, December 31, 1997 1996 Multi-family apartment complex, net of accumulated depreciation of $2,819,651 and $2,730,441, respectively $ 2,046,606 $ 2,093,819 Cash and cash equivalents 62,810 75,012 Cash restricted for tenant security deposits 29,585 38,004 Replacement reserve escrow 52,598 49,030 Prepaid expenses and other assets 93,395 86,267 Deferred expenses, net of accumulated amortization of $39,449 and $37,355, respectively 107,176 109,270 Total assets $ 2,392,170 $ 2,451,402 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage note payable $ 2,207,229 $ 2,215,574 Notes payable 1,257,385 1,257,385 Accounts payable 77,592 93,704 Accrued expenses and other liabilities 237,277 242,244 Accrued interest due to an affiliate (Note 3) 697,166 637,842 Total liabilities 4,476,649 4,446,749 Partners' deficit (Note 2): Class A Limited Partners (4,000 Units outstanding) (352,875) (272,656) Original Limited Partner (444,238) (436,216) General Partners (1,287,366) (1,286,475) Total Partners' deficit (2,084,479) (1,995,347) Total liabilities and Partners' deficit $2,392,170 $ 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 For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Revenue: Rental $272,363 $282,092 $536,818 $556,073 Other income 1,297 843 2,385 1,276 Total revenue 273,660 282,935 539,203 557,349 Expenses: Operating 96,811 93,131 195,069 194,711 Maintenance 32,016 19,365 47,054 29,599 Real estate taxes 30,680 34,523 65,180 69,701 Management fees (Note 3) 13,263 - 26,767 - General and administrative 9,882 2,881 21,973 19,600 Depreciation and amortization46,658 45,201 91,304 89,318 Interest (Note 3) 91,018 90,610 180,988 181,603 Total expenses 320,328 285,711 628,335 584,532 Net loss $(46,668) $ (2,776) $(89,132) $(27,183) Allocation of net loss (Note 2): Class A Limited Partners $(42,001) $ (2,499) $(80,219) $(24,465) Per Unit of Class A Limited Partner Interest (4,000 Units outstanding) $ (10.50) $ (.63) $ (20.05) $ (6.12) Original Limited Partner $ (4,200) $ (249) $ (8,022) $ (2,446) General Partners $ (467) $ (28)$ (891) $ (272)
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, 1997 1996 Operating activities: Net loss $(89,132) $ (27,183) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 91,304 89,318 Interest earned on replacement reserve escrow (230) - Changes in assets and liabilities: Decrease in cash restricted for tenant security deposits 8,419 2,631 Increase in prepaid expenses and other assets (7,128) (13,017) Decrease in accounts payable (14,394) (7,657) Increase (decrease) in accrued expenses and other liabilities (4,967) 7,820 Increase in interest due to an affiliate 59,324 59,071 Net cash provided by operating activities 43,196 110,983 Investing activities: Additions to fixed assets (41,997) (32,078) Decrease in accounts payable related to fixed asset additions (1,718) - Deposits to replacement reserve escrow (24,218) (24,218) Withdrawals from replacement reserve escrow 20,880 20,535 Net cash used in investing activities (47,053) (35,761) Financing activity: Principal payments on mortgage note payable (8,345) (7,516) Net increase (decrease) in cash and cash equivalents (12,202) 67,706 Cash and cash equivalents, beginning of period 75,012 11,153 Cash and cash equivalents, end of period $ 62,810 $ 78,859
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 June 30, 1997, its results of operations for the three and six months ended June 30, 1997 and 1996, and its cash flows for the six months ended June 30, 1997 and 1996. 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, 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 six months ended June 30, 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 (80,219) (8,022) (891) (89,132) Balance at June 30, 1997 $ (352,875)$(444,238)$(1,287,366) $(2,084,479)
(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. This management agreement was sold to BRI OP Limited Partnership, a subsidiary of Berkshire Realty Company Inc., 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 Continued KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued (3)Related Party Transactions, Continued its property, including computer, insurance, travel, legal and payroll costs, and with the 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 agreement, monthly payments of management fees were reinstituted in 1997. Property management fees paid to an affiliate of the General Partners were $13,262 and $26,767 for the three and six months ended June 30, 1997, respectively, and $0 for both the three and six months ended June 30, 1996. Interest accrued on borrowings from the General Partners or their affiliates was $30,247 and $59,324 for the three and six months ended June 30, 1997,respectively, and $29,400 and $59,071 for the three and six months ended June 30, 1996, 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) 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. Monthly payments of management fees were reinstituted in 1997 as a result of the sale of the property management contract to 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, as of June 30, 1997, the Partnership is current on its mortgage payments. Subsequent to the end of the second quarter of 1997, on July 10, 1997, the General Partners entered into a purchase and sale agreement for the sale of Riverside to an unaffiliated buyer, for the selling price of $3,750,000. It is is expected that the sale will be consummated during the third quarter of 1997. It is anticipated that all sale proceeds will be used to satisfy Partnership obligations and no funds will be available to investors for distribution. In the event the property is sold, the Partnership will be liquidated. Continued KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY Cash Flow (Deficit) Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow (Deficit) of the Partnership for the six months ended June 30, 1997. The General Partners provide the information below to meet requirements of the Partnership Agreement. 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 $ (32,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 34,000 Principal payments on mortgage (8,000) Expenditures for capital improvements (42,000) Cash Flow (Deficit) $ (48,000)
Operations In comparing the three and six months ended June 30, 1997 and 1996, the decrease in cash flow is attributable to an increase in net loss, as revenue decreased and expenses increased. Rental revenue decreased for the three and six months ended June 30, 1997 and June 30, 1996 due to a decline in the average occupancy of Riverside's commercial space from being fully occupied at 100% during both the first and second quarters of 1996, to an average occupancy of 85% and 88% during the first and second quarters of 1997, respectively. Total expenses increased for the three and six months ended June 30, 1997 as compared to the same period in 1996, with increases in maintenance expense, management fees and general and administrative expenses. Maintenance expense increased due to an increase in cleaning services. Monthly payments of management fees were reinstituted in 1997 as a result of the sale of the property management contract to an affiliate of the General Partners. 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: August 12, 1997 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from Krupp Associates 1980-1 Financial Statements for the six months ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 6-MOS 12-31-97 06-30-97 62,810 0 2,217 0 0 172,861 5,012,882 (2,859,100) 2,392,170 1,012,035 3,464,614 0 0 (2,084,479) 0 2,392,170 0 539,203 0 0 447,347 0 180,988 0 0 0 0 0 0 (89,132) 0 0 Includes all receivables grouped in "Prepaid Expenses and Other Assets" on the balance sheet. Includes apartment complexes of $4,866,257 and deferred expenses of $146,625. Included depreciations of $2,819,651 and amortization of deferred expenses of $39,449. Represents mortgage note payable of $2,207,229 and note payable to affiliate of $1,257,385. Represents total deficit of the general partners (1,287,366) and limited partners (797,113). Includes all revenue of the Partnership. Includes operating expenses of $290,863 real estate taxes of $65,180 and depreciation and amortization of $91,304. Net loss allocated (8,022) to general partners and (88,246) to limited partners. Average net loss of ($20.05) per unit on 4,000 units outstanding.
-----END PRIVACY-ENHANCED MESSAGE-----