-----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, IlwR2oeqenoCsndVzcxUs3UKTPmI8Z6T5epNNvTY3ScbBH2C9AkN2VbzGcl2U1Pg WTp4H4Bm1YBl+FeBlSAjSg== 0000318526-97-000011.txt : 19971117 0000318526-97-000011.hdr.sgml : 19971117 ACCESSION NUMBER: 0000318526-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 002-68727 FILM NUMBER: 97722069 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 September 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 September 30,December 31, 1997 1996 Multi-family apartment complex, net of accumulated depreciation of $0 and $2,730,441, respectively (Note 2) $ - $ 2,093,819 Cash and cash equivalents 1,296,259 75,012 Cash restricted for tenant security deposits 41,579 38,004 Replacement reserve escrow 41,251 49,030 Prepaid expenses and other assets 5,514 86,267 Deferred expenses, net of accumulated amortization of $0 and $37,355, respectively - 109,270 Total assets $ 1,384,603 $ 2,451,402 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage note payable (Note 2) $ - $ 2,215,574 Notes payable to affiliates (Note 3) 1,167,998 1,257,385 Accounts payable 74,436 93,704 Accrued expenses and other liabilities 142,169 242,244 Accrued interest due to affiliates (Note 5) - 637,842 Total liabilities 1,384,603 4,446,749 Partners' deficit (Note 4): Class A Limited Partners (4,000 Units outstanding) - (272,656) Original Limited Partner - (436,216) General Partners - (1,286,475) Total Partners' deficit - (1,995,347) Total liabilities and Partners' deficit $ 1,384,603 $ 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 Nine Months Ended September 30, Ended September 30, 1997 1996 1997 1996 Revenue: Rental $ 173,929 $275,187 $ 710,747 $831,260 Other income 4,156 608 6,541 1,884 Total revenue 178,085 275,795 717,288 833,144 Expenses: Operating 90,434 97,929 285,503 292,640 Maintenance 14,141 29,953 61,195 59,552 Real estate taxes 137,547 32,683 202,727 102,384 Management fees (Note 5) 9,515 - 36,282 - General and administrative19,405 8,664 41,378 28,264 Depreciation and amortization 140,592 46,691 231,896 136,009 Interest (Note 5) 70,979 90,833 251,967 272,436 Total expenses 482,613 306,753 1,110,948 891,285 Loss before extinguishment of debt and gain on sale of property (304,528) (30,958) (393,660) (58,141) Extinguishment of debt (Note 3) 817,080 - 817,080 - Gain on sale of property (Note 2) 1,571,927 - 1,571,927 - Net income (loss) $2,084,479 $(30,958)$1,995,347 $(58,141) Allocation of loss before extinguishment of debt and gain on sale of property (Note 4): Class A Limited Partners$ (274,075)$(27,862) $ (354,294)$(52,327) Class A Limited Partners Per Unit (4,000 Units outstanding) $ (68.55)$ (6.96)$ (88.57)$ (13.08) Original Limited Partner$ (27,407)$ (2,787)$ (35,429)$ (5,233) General Partners $ (3,046)$ (309)$ (3,937)$ (581) Allocation of extinguishment of debt and gain on sale of property (Note 4): Class A Limited Partners$ 626,950 $ - $ 626,950$ - Class A Limited Partners Per Unit (4,000 Units outstanding) $ 156.74 $ - $ 156.74$ - Original Limited Partner$ 471,645 $ - $ 471,645$ - General Partners $1,290,412 $ - $1,290,412$ -
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 Nine Months Ended September 30, 1997 1996 Operating activities: Net income (loss) $1,995,347 $ (58,141) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 231,896 136,009 Interest earned on replacement reserve escrow (230) - Gain on sale of property (1,571,927) - Extinguishment of debt (817,080) - Changes in assets and liabilities: Decrease (increase) in cash restricted for tenant security deposits (3,575) 2,457 Decrease (increase) in prepaid expenses and other assets 7,984 (54,924) Decrease in accounts payable (17,100) (59,362) Increase (decrease) in accrued expenses and other liabilities (100,075) 48,943 Increase in interest due to affiliates 89,851 88,794 Releases from real estate tax and insurance escrows due to sale of property 72,769 - Net cash provided by (used in) operating activities (112,140) 103,776 Investing activities: Additions to fixed assets (59,562) (58,575) Increase (decrease) in accounts payable related to fixed asset additions (2,168) 1,213 Deposits to replacement reserve escrow (28,254) (36,326) Withdrawals from replacement reserve escrow 36,263 27,168 Proceeds from sale of property, net 3,602,682 - Net cash provided by (used in) investing activities 3,548,961 (66,520) Financing activities: Principal payments on mortgage note payable (9,779) (11,424) Repayment of mortgage note payable (2,205,795) - Net cash used in financing activities (2,215,574) (11,424) Net increase in cash and equivalents 1,221,247 25,832 Cash and cash equivalents, beginning of period 75,012 11,153 Cash and cash equivalents, end of period $1,296,259 $ 36,985
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 necessary to present fairly the Partnership's consolidated financial position as of September 30, 1997, its results of operations for the three and nine months ended September 30, 1997 and 1996, and its cash flows for the nine months ended September 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 nine months ended September 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. The Partnership sold its remaining real estate asset on August 28, 1997 and is the process of liquidating its assets and settling its liabilities. Based on the Partnership's financial position after the sale of Riverside, the Partnership expects to be released from certain obligations in excess of its available assets. Consequently, the Partnership has presented its consolidated balance sheet as of September 30, 1997 on the liquidation basis of accounting. This basis is different from the historical basis of accounting used in the preparation of the Partnership's consolidated balance sheet as of December 31, 1996. As a result comparisons between the September 30, 1997 and December 31, 1996 consolidated balance sheets would not be meaningful. (2)Disposition of Property On August 28, 1997, the Partnership sold Riverside I Apartments ("Riverside"), a 140- unit multi-family apartment complex with approximately 30,000 square feet of commercial retail space, located in Evansville, Indiana, to an unaffiliated third party for a sales price of $3,750,000. Proceeds from the sale, net of closing costs of $147,318, were used to repay the outstanding principal on the mortgage note payable of $2,205,795. The remaining proceeds will be applied toward other Partnership liabilities, including partial payment of affiliated debt. The property had a net book value of $2,030,755 which resulted in a gain of $1,571,927 for financial reporting purposes. (3)Notes Payable The Partnership had demand notes outstanding with the General Partners and and affiliate of the General Partners at August 28, 1997 and December 31, 1996, totaling $1,257,385. Interest was accrued monthly at the prime rate of an unaffiliated bank (8.5% at September 30, 1997) plus one percent per annum. As discussed in Note 1, the Partnership adopted the liquidation basis of accounting as of September 30, 1997. Accordingly, the Partnership expects to be released from approximately $817,080 of obligations with respect to the affiliated demand notes payable. The Partnership recorded a gain on extinguishment of debt of $817,080 which was equivalent to the estimated releases. Continued KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (4)Summary of Changes in Partners' Deficit A summary of changes in Partners' deficit for the nine months ended September 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)$(1,995,347) Loss before gain on sale of property (354,294) (35,429) (3,937) (393,660) Allocation of extinguishment of debt and gain on sale of property 626,950 471,645 1,290,412 2,389,007 Balance at September 30, 1997$ - $ - $ - $ -
The Partnership allocated the gain on sale of property in accordance with the Partnership Agreement. Pursuant to the Partnership Agreement, profits from Terminating Capital Transactions are allocated, without preference over any class of Partners, first to each class equal to the excess of aggregate losses and distributions over aggregate profits and capital contributions to the respective capital accounts. (5)Related Party Transactions The Partnership paid property management fees to an affiliate of the General Partners for management services. Pursuant to the management agreement, management fees were payable monthly at a rate of 5% of the gross receipts from the property under management. The 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 reimbursed affiliates of the General Partners for certain expenses incurred in connection with the operation of the Partnership and its property including administrative expenses. From 1991 through 1996, the General Partners arranged with the management agent for the annual waivers of management fees and expense reimbursements.For the three and nine months ended September 30, 1996, management fee and expense waivers totaled approximately $21,000 and $64,000, respectively. 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 $9,515 and $36,282 for the three and nine months ended September 30, 1997, respectively. Interest accrued on borrowings from the General Partners or their affiliates was $30,527 and $89,851 for the three and nine months ended September 30, 1997, respectively, and $29,723 and $88,794 for the three and nine months ended September 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 has been dependent primarily upon the operating performance of Riverside I Apartments ("Riverside"). Such ability is also dependent upon the 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 Terminating Capital Transaction Proceeds, if any, as calculated under Section 8.2(a) ("Cash Flow") and 8.1(c) 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 as a result of consecutive years of net losses and capital improvements in prior years. These losses are a result of depressed market conditions which hindered the Partnership's ability to increase rental rates as required to support the operating expenses, capital improvements and debt service. Consequently, the General Partners closely monitored all expenditures and completed capital improvements at the property on an as-needed basis only. The General Partners arranged financing through borrowings from an affiliate of the General Partners to cover a substantial portion of the 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. On August 28, 1997, the Partnership sold Riverside for a sales price of $3,750,000. Proceeds from the sale, net of closing costs of $147,318, were used to repay the existing mortgage note on the property of $2,205,795. The remaining proceeds will be applied toward other Partnership liabilities, including partial payment of affiliated debt. Consequently, there will be no funds available to investors for distribution. For financial reporting purposes, the Partnership realized a gain of $1,462,466 on the sale. The gain was calculated as the difference between net consideration received, less net book value of the property. As a result of the sale of the Partnership's only real estate asset, the Partnership will be liquidated. Continued KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY Operations Net loss, before the gain on the sale of property and extinguishment of debt, increased for the three and nine months ended September 30, 1997 when compared to the same periods in 1996, as total revenue decreased and total expenses increased. The decrease in revenue is directly related to the sale of Riverside Apartments in the third quarter of 1997. Total expenses, increased for the three and nine months ended September 30, 1997 as compared to the same periods in 1996, due to increases in management fees, real estate taxes and depreciation and amortization expense. 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 increase in real estate taxes is due to a reassessment of prior years' taxes billed in the third quarter of 1997. Depreciation and amortization increased due to the acceleration of deferred mortgage costs due to the repayment of the mortgage note from the sales proceeds. 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 (a) Exhibits Response: None (b) Reports on Form 8-K Date Event Reported Financial Statements Filed August 28, Disposition of Riverside I Pro Forma Consolidated Balance 1997 Apartments Sheet at June 30, 1997. Pro Forma Consolidated Statements of Operations for the six months ended June 30, 1997 and for the year ended December 31, 1996. 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: November 14, 1997 EX-27 2
5 This summary contains summary financial information extracted from Cash Plus V Financial Statements for the nine months ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 1,296,259 0 0 0 0 88,344 0 0 1,384,603 216,605 1,167,998 0 0 0 0 1,384,603 0 717,288 0 0 858,280 0 251,967 0 0 0 0 2,389,007 0 1,995,347 0 0 Represents note payable to an affiliate. Includes all revenue of the Partnership. Includes operating expenses of $424,358 Real Estate Taxes of $202,727 and depreciation and amortization of $231,896. Represents a gain on the sale of property of $1,571,927 and extinguishment of debt of $817,080. Net income allocated $1,286,475 to General Partners and $708,872 to Limited Partners.
-----END PRIVACY-ENHANCED MESSAGE-----