-----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, UdnU1YBKZFm1ikdU5DBvZpvuQv+TcxhNd607dshkPQCZuD88rJ2+GT8NdXlYpX01 G1u6oDCO6rtg2UyjLWRP5A== 0000702117-97-000002.txt : 19970328 0000702117-97-000002.hdr.sgml : 19970328 ACCESSION NUMBER: 0000702117-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP REALTY FUND LTD III CENTRAL INDEX KEY: 0000702117 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042763323 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11210 FILM NUMBER: 97564712 BUSINESS ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVENUE STREET 2: C/O BERKSHIRE REALTY AFFILIATES CITY: BOSTON STATE: MA ZIP: 02210 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-11210 Krupp Realty Fund, Ltd.-III (Exact name of registrant as specified in its charter) Massachusetts 04-2763323 (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) (Registrant's telephone number, including area code) (617) 423-2233 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Investor Limited Partner Interests 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. [ ]. Aggregate market value of voting securities held by non-affiliates: Not applicable. Documents incorporated by reference: Part IV, Item 14. The exhibit index is located on pages 9-12. The total number of pages in this document is 28. PART I This Form 10-K 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. ITEM 1. BUSINESS Krupp Realty Fund, Ltd.-III ("KRF-III") was formed on April 23, 1982 by filing a Certificate of Limited Partnership in The Commonwealth of Massachusetts. KRF-III issued all of the General Partner Interest to two General Partners, The Krupp Company, a Massachusetts limited partnership, and The Krupp Corporation, a Massachusetts corporation. KRF-III also issued all of the Original Limited Partner Interests to The Krupp Company. On June 4, 1982, KRF-III commenced an offering of up to 25,000 units of Investor Limited Partner Interests (the "Units") for $1,000 per Unit. As of September 29, 1982, KRF-III received subscriptions for all 25,000 Units and therefore, the public offering was successfully completed on that date. For details, see Note A to Consolidated Financial Statements included in Item 8 (Appendix A) of this report. The primary business of KRF-III is to acquire, operate, and ultimately dispose of real estate. KRF-III initially acquired five multi-family apartment complexes (Druid Valley, Willow Lake, Brookeville, Dorsey's Forge/Oakland Meadow and Hannibal Grove Apartments) and an office building (Woodlake Office Park). KRF-III considers itself to be engaged only in the industry segment of investment in real estate. KRF-III sold Druid Valley and Willow Lake in 1991 and Woodlake Office Park in 1992. On July, 1, 1993, the General Partners formed Brookeville Apartments Limited Partnership ("Brookeville L.P.") as a prerequisite for the refinancing of Brookeville Apartments ("Brookeville") with the Department of Housing and Urban Development ("HUD"). At the same time, the General Partners transferred ownership of Brookeville to Brookeville L.P.. The General Partner of Brookeville L.P. is the Westcop Corporation ("Westcop") and KRF-III is the Limited Partner of Brookeville L.P.. Westcop has beneficially assigned its interest in Brookeville L.P. to KRF- III. KRF-III and Brookeville L.P. are collectively known as Krupp Realty Fund, Ltd.-III and Subsidiary (the "Partnership"). The Partnership's real estate investments are subject to some seasonal fluctuations due to changes in utility consumption and seasonal maintenance expenditures. However, the future performance of the Partnership will depend upon factors which cannot be predicted. Such factors include general economic and real estate market conditions, both on a national basis and in those areas where the Partnership's investments are located, real estate tax rates, operating expenses, energy costs, government regulations, and federal and state income tax laws. The requirements for compliance with federal, state and local regulations to date have not had an adverse effect on the Partnership's operations, and no adverse effect therefrom is anticipated in the future. The Partnership's investments in real estate are also subject to such risks as (i) competition from existing and future projects held by other owners in the areas of the Partnership's properties, (ii) possible reduction in rental income due to an inability to maintain high occupancy levels, (iii) possible adverse changes in mortgage interest rates, (iv) possible adverse changes in general economic and local conditions, such as competitive over-building, increased unemployment or adverse changes in real estate zoning laws, (v) the possible future adoption of rent control legislation which would not permit the full amount of increased costs to be passed on to tenants in the form of rent increases, and (vi) other circumstances over which the Partnership may have little or no control. As of December 31, 1996, there were 47 full and part-time on-site personnel employed by the Partnership. ITEM 2. PROPERTIES As of December 31, 1996, the Partnership had leveraged investments in three apartment complexes having an aggregate of 990 units. A summary of the Partnership's real estate investments is presented below. Schedule III included in Item 8 (Appendix A) of this report contains additional detailed information with respect to individual properties.
Average Occupancy For the Year Ended Year December 31, Description Acquired Total Units 1996 1995 1994 1993 1992 Brookeville Apartments Columbus, Ohio 1983 424 Units 95% 94% 94% 93% 95% Hannibal Grove Apartments Columbia, Maryland 1983 316 Units 94% 93% 94% 88% 86% Dorsey's Forge and Oakland Meadows Apartments Columbia, Maryland 1983 250 Units 94% 94% 95% 92% 93%
ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Partnership is a party or of which any of its property is the subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The transfer of Units of Limited Partner Interest is subject to certain limitations contained in the Partnership Agreement. There is no public market for the Units and it is not anticipated that any such public market will develop. The number of Investor Limited Partners as of December 31, 1996 was approximately 1,600. One of the objectives of the Partnership is to generate cash available for distribution, however, there is no assurance that future operations will generate cash available for distribution. The Partnership discontinued distributions during 1990 because of insufficient operating cash flow. In 1994, however, property operations improved and distributions were reinstituted and paid in August, 1994. The Partnership anticipates semi-annual distributions will continue at an annual rate of $15.86 per Unit. The Partnership made the following distributions to its Partners during the years ended December 31, 1996 and 1995:
Year Ended December 31, 1996 1995 Amount Per Unit Amount Per Unit Limited Partners: Investor Limited Partners (25,000 Units outstanding) $396,500 $15.86 $297,495 $11.90 Original Limited Partner 16,697 12,526 General Partners 4,174 3,132 $417,371 $313,153
ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial information regarding the Partnership's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements which are included in Items 7 and 8 of this report, respectively.
Year Ended December 31, 1996 1995 1994 1993 1992 Total revenue $ 6,628,658 $ 6,352,337 $ 6,215,466 $ 5,757,960 $6,023,650 Loss before gain on sale of property (446,360) (547,893) (453,031) (1,521,667) (1,121,070) Gain on sale of property - - - - 222,388 Net loss (446,360) (547,893) (453,031) (1,521,667) (898,682) Net loss allocated to: Investor Limited Partners (424,042) (520,498) (430,380) (1,445,583) (853,748) Per Unit (16.96) (20.82) (17.22) (57.82) (34.15) Original Limited Partner - - (18,121) (60,867) (35,947) General Partners (22,318) (27,395) (4,530) (15,217) (8,987) Total assets at December 31 13,224,310 14,384,144 15,702,150 16,561,486 16,366,735 Long-term obligations at December 31 19,126,371 19,491,853 19,827,968 20,133,422 18,676,323 Distributions to: Investor Limited Partners 396,500 297,495 99,132 - - Per Unit 15.86 11.90 3.97 - - Original Limited Partner 16,697 12,526 4,174 - - General Partners 4,174 3,132 1,043 - -
Prior performance of the Partnership is not necessarily indicative of future operations. ITEM 7. 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 operations of its real estate investments. Such ability is also dependent upon the future availability of bank borrowings and the potential refinancing and sale of the Partnership's remaining real estate investments. These sources of liquidity will be used by the Partnership for payment of expenses related to real estate operations, capital expenditures, debt service and expenses. Cash Flow, if any, as calculated under Section 8.2(a) of the Partnership Agreement, will then be available for distribution to the Partners. Due to improvements in the operations of the properties, the Partnership had sufficient Cash Flow to increase semi-annual distributions from an annual rate of $11.90 per Unit in 1995, to an annual rate of $15.86 per Unit in 1996. The Partnership is planning to spend approximately $1,044,000 for capital improvements at its properties in 1997. The Partnership believes that the improvements are necessary to compete in its current markets, produce quality rental units and absorb excess market supply at the properties' respective locations and to both maintain and increase its current occupancy levels. Renovations include the replacement of countertops, carpeting, appliances, asphalt repairs, and both interior and exterior building improvements. Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow of the Partnership for the year ended December 31, 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 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 flow as a measure of liquidity.
Rounded to $1,000 Net loss for tax purposes $ (225,000) Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 1,646,000 Principal payments on mortgage notes payable (334,000) Expenditures for capital improvements (997,000) Releases from working capital reserves 327,000 Cash Flow $ 417,000
Operations 1996 compared to 1995 Cash flow, net of working capital reserves, increased in 1996 primarily due to a decrease in capital improvement expenditures and a reduction in net loss, as the increase in revenue more than offset the increase in expenses. Rental revenue for 1996, as compared to 1995, increased due to increased rental rates at the Partnership's properties in addition to slight increases in average occupancy rates at both Brookeville and Hannibal Grove in 1996. Total expenses increased in 1996, when compared to 1995, primarily due to increases in operating and depreciation expenses, partially offset by decreases in maintenance, real estate taxes, and general and administrative expenses. The increase in operating expense is due to a rise in payroll costs at both Brookeville and Hannibal Grove, greater utility consumption as a result of the unusually harsh winter weather in 1996, and an increase in leasing costs related to locating and retaining qualified tenants. Maintenance expense decreased due to costs incurred in 1995 in connection with a fire at Brookeville. The decrease in real estate taxes is the result of a 1995 real estate tax refund for Dorsey's Forge received in 1996. General and administrative expense decreased as a result of costs incurred in 1995 associated with obtaining appraisals of the Partnership's properties. Depreciation expense increased in 1996, as compared to 1995, in conjunction with capital improvement expenditures. 1995 compared to 1994 In comparing 1995 to 1994, cash flow improved primarily as a result of a reduction in capital expenditures and increased rental revenue. The increase in rental revenue during 1995 as compared to 1994 is due to increases in rental rates at all the Partnership's properties. The increase in rental rates is related to the capital improvement programs undertaken at the properties. Average occupancy at Hannibal Grove and Dorsey's remained relatively stable during 1995 at 93% and 94%, respectively. Occupancy remained stable at Brookeville despite a fire during 1995. Total expenses of the Partnership, net of depreciation, decreased slightly in 1995, as compared to 1994. Savings in operating expenses are due to management's efforts in reducing reimbursable costs. These savings are offset by an increase in maintenance expenses due to minor fire damage at Brookeville. Depreciation increased in 1995, as compared to 1994, as a result of capital improvement programs at the properties. 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 assets. The investments in properties are 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 investments in properties 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Appendix A to this report. 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 The Partnership has no directors or executive officers. Information as to the directors and executive officers of the Krupp Corporation, which is a General Partner of both the Partnership and the Krupp Company, the other General Partner of the Partnership, is as follows: Position with Name and Age The Krupp Corporation Douglas Krupp (50) Co-Chairman of the Board George Krupp (52) Co-Chairman of the Board Laurence Gerber (40) President Robert A. Barrows (39) Treasurer Douglas Krupp is Co-Chairman and Co-Founder of The Berkshire Group. Established in 1969 as the Krupp Companies, this real estate-based firm expanded over the years within its areas of expertise including investment program sponsorship, property and asset management, mortgage banking, healthcare facility ownership and the management of the Company. Today, The Berkshire Group is an integrated real estate, mortgage and healthcare company which is headquartered in Boston with regional offices throughout the country. A staff of approximately 3,400 are responsible for the more than $4 billion under management for institutional and individual clients. Mr. Krupp is a graduate of Bryant College. In 1989 he received an honorary Doctor of Science in Business Administration from this institution and was elected trustee in 1990. Mr. Krupp is Chairman of the Board and a Director of both Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare (NYSE-HBR). George Krupp is Douglas Krupp's brother. George Krupp is the Co-Chairman and Co-Founder of The Berkshire Group. Established in 1969 as the Krupp Companies, this real estate-based firm expanded over the years within its areas of expertise including investment program sponsorship, property and asset management, mortgage banking and healthcare facility ownership. Today, The Berkshire Group is an integrated real estate, mortgage and healthcare company which is headquartered in Boston with regional offices throughout the country. A staff of approximately 3,400 are responsible for more than $4 billion under management for institutional and individual clients. Mr. Krupp attended the University of Pennsylvania and Harvard University. Mr. Krupp also serves as Chairman of the Board and Trustee of Krupp Government Income Trust and as Chairman of the Board and Trustee of Krupp Government Income Trust II. Laurence Gerber is the President and Chief Executive Officer of The Berkshire Group. Prior to becoming President and Chief Executive Officer in 1991, Mr. Gerber held various positions with The Berkshire Group which included overall responsibility at various times for: strategic planning and product development, real estate acquisitions, corporate finance, mortgage banking, syndication and marketing. Before joining The Berkshire Group in 1984, he was a management consultant with Bain & Company, a national consulting firm headquartered in Boston. Prior to that, he was a senior tax accountant with Arthur Andersen & Co., an international accounting and consulting firm. Mr. Gerber has a B.S. degree in Economics from the University of Pennsylvania, Wharton School and an M.B.A. degree with high distinction from Harvard Business School. He is a Certified Public Accountant. Mr. Gerber also serves as Director of Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR) as well as President and Trustee of Krupp Government Income Trust and President and Trustee of Krupp Government Income Trust II. Robert A. Barrows is Senior Vice President and Chief Financial Officer of The Berkshire Group. Mr. Barrows has held several positions within The Berkshire Group since joining the company in 1983 and is currently responsible for accounting and financial reporting, treasury, tax, payroll and office administrative activities. Prior to joining The Berkshire Group, he was an audit supervisor for Coopers & Lybrand L.L.P. in Boston. He received a B.S. degree from Boston College and is a Certified Public Accountant. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no directors or executive officers. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1996, beneficial owners of record owning more than 5% of the Partnership's 25,000 Units of Investor Limited Partner Interests outstanding are as follows: Title Name and Address Amount and Nature Percent of of of of Class Beneficial Owner Beneficial Ownership Class Investor Mark S. Thompson 1,469 Units 5.9% Limited c/o Equity Resources Partner Group, Inc. Units 14 Story Street Cambridge, MA 02138 As of December 31, 1996, the General Partners or their affiliates owned 80 Units (.3% of the total outstanding) of the Partnership in addition to their General Partner and Original Limited Partner Interests. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership does not have any directors, executive officers or nominees for election as director. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (a) 1. Consolidated Financial Statements - see Index to Consolidated Financial Statements and Schedule included under Item 8 (Appendix A) on page F-2 of this Report. 2. Consolidated Financial Statement Schedule - see Index to Consolidated Financial Statements and Schedule included under Item 8 (Appendix A) on page F-2 of this Report. All other schedules are omitted as they are not applicable, not required or the information is provided in the financial statements or the notes thereto. (b) Exhibits: Number and Description Under Regulation S-K The following reflects all applicable Exhibits required under Item 601 of Regulation S-K. (4) Instruments defining the rights of security holders including indentures: (4.1) Agreement of Limited Partnership dated as of April 23, 1982 [Exhibit A to Prospectus included in Registrant'sRegistration Statement on Form S-11 (File 2-77155)].* (4.2) Amended Certificate of Limited Partnership filed with the Massachusetts Secretary of State on September 29, 1982 [Exhibit 4.2 to Registrant's Report on Form 10-K dated December 31, 1982 (File No. 2-77155)].* (10) Material Contracts: Brookeville Apartments (10.1) Contract of Limited Partnership and Certificate of Limited Partnership of Brookeville Apartments Limited Partnership [Exhibit 10.5 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-11210)].* (10.2) Agreement to Hold Title dated July 20, 1993 by and between Brookeville Apartments Limited Partnership and Krupp Realty Fund, Ltd. - III. [Exhibit 10.6 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-11210)].* (10.3) Quitclaim deed dated July 20, 1993 between Krupp Realty Fund, Ltd.-III and Brookeville Apartments Limited Partnership. [Exhibit 10.7 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0- 11210)].* (10.4) Open-End Mortgage Note dated July 20, 1993 by and between Brookeville Apartments Limited Partnership and Sussex Mortgage Company. [Exhibit 10.8 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-11210)].* (10.5) Open-End Mortgage Deed dated July 20, 1993 by and between Brookeville Apartments Limited Partnership and Sussex Mortgage Company. [Exhibit 10.9 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-11210)].* Dorsey's Forge, Oakland Meadows and Hannibal Grove Apartments (10.6) Agreements dated as of November 30, 1982, and related supplemental Agreement dated as of November 30, 1982 between George Krupp and Douglas Krupp, on behalf of themselves and others, and Shelter Corporation of Canada, Limited and Metropolitan Properties Co. Limited [Exhibit to Registrant's Report on Form 8-K dated January 10, 1983 (File 2-77155)].* (10.7) Deed dated April 25, 1983 between Dorsey's Properties, Ltd. and D.O.H., Inc. relating to Dorsey's Forge [Exhibit 1 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* (10.8) Deed dated April 25, 1983 between D.O.H., Inc. and Krupp Realty Fund, Ltd.-III relating to Dorsey's Forge [Exhibit 2 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* (10.9) Modification and Restatement of Promissory Note dated April 28, 1993 by and between Krupp Realty Fund - III, Ltd. and John Hancock Mutual Life Insurance Company relating to Dorsey's Forge. [Exhibit 10.1 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993. (File No. 0-11210)].* (10.10) Modification and Restatement of Indemnity Deed of Trust and Security Agreement dated April 28, 1993 between Krupp Realty Fund, Ltd.-III and John Hancock Mutual Life Insurance Company relating to Dorsey's Forge [Exhibit 10.2 to Registrant's Report on Form 10-Q dated September 30, 1993. (File No. 0-11210)].* (10.11) Management Agreement dated December 19, 1986 between Krupp Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management Company, now known as Berkshire Property Management ("BPM"), as Agent, relating to Dorsey's Forge [Exhibit 10.15 to Registrant's Annual Report on Form 10-K dated December 31, 1986 (File No. 0-11210)].* (10.12) Management Agreement dated December 19, 1986 between Krupp Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management Company, now known as Berkshire Property Management ("BPM"), as agent, relating to Oakland Meadows [Exhibit 10.16 to Registrant's Annual Report on Form 10-K dated December 31, 1986 (File No. 0-11210)].* (10.13) Deed dated April 25, 1983 between Dorsey Properties Ltd., and D.O.H., Inc., relating to Oakland Meadows [Exhibit 4 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* (10.14) Deed dated April 25, 1983 between D.O.H., Inc., and Krupp Realty Fund, Ltd.-III relating to Oakland Meadows [Exhibit 5 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* (10.15) Modification and Restatement of Promissory Note dated April 28, 1993 between Krupp Realty Fund, Ltd.-III and John Hancock Mutual Life Insurance Company relating to Hannibal Grove. [Exhibit 10.3 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 0-11210)].* (10.16) Modification and Restatement of Indemnity Deed of Trust and Security Agreement dated April 28, 1993 between Krupp Realty Fund, Ltd.-III and John Hancock Mutual Life Insurance Company relating to Hannibal Grove [Exhibit 10.4 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1993. (File No. 0-11210)].* (10.17) Management Agreement dated December 19, 1986 between Krupp Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management Company, now known as Berkshire Property Management ("BPM"), as Agent, relating to Hannibal Grove [Exhibit 10.21 to Registrant's Annual Report on Form 10-K dated December 31, 1986 (File No. 0-11210)].* (10.18) Deed dated April 25, 1983 between Dorsey Properties, Ltd., and D.O.H., Inc., relating to Hannibal Grove [Exhibit 7 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* (10.19) Deed dated April 25, 1983 between D.O.H., Inc., and Krupp Realty Fund, Ltd.-III relating to Hannibal Grove [Exhibit 8 to Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983 (File No. 2-77155)].* * Incorporated by reference. (b) Reports on Form 8-K During the quarter ended December 31, 1996, the Partnership did not file any reports on Form 8-K. 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, on the st day of March, 1997. KRUPP REALTY FUND, LTD.-III By:The Krupp Corporation, a General Partner By:/s/ Douglas Krupp Douglas Krupp, Co-Chairman (Principal Executive Officer) and Director of The Krupp Corporation Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the st day of March, 1997. Signatures Titles /s/ Douglas Krupp Co-Chairman (Principal Executive Officer) and Douglas Krupp Director of The Krupp Corporation, a General Partner. /s/ George Krupp Co-Chairman (Principal Executive Officer) George Krupp and Director of The Krupp Corporation, a General Partner. /s/ Laurence Gerber President of The Krupp Corporation, a Laurence Gerber General Partner. /s/ Robert A. Barrows Treasurer of the Krupp Corporation, a Robert A. Barrows a General Partner. APPENDIX A KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE ITEM 8 OF FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION For the Year Ended December 31, 1996 KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE Report of Independent Accountants F-3 Consolidated Balance Sheets for December 31, 1996 and December 31, 1995 F-4 Consolidated Statements of Operations For the Years Ended December 31, 1996, 1995 and 1994 F-5 Consolidated Statements of Changes in Partners' Deficit For the Years Ended December 31, 1996, 1995 and 1994 F-6 Consolidated Statements of Cash Flows For the Years Ended December 31, 1996, 1995 and 1994 F-7 Notes to Consolidated Financial Statements F-8 - F-13 Schedule III - Real Estate and Accumulated Depreciation F-14 - F-15 All other schedules are omitted as they are not applicable or not required, or the information is provided in the consolidated financial statements or the notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Krupp Realty Fund, Ltd.-III: We have audited the consolidated financial statements and the financial statement schedule of Krupp Realty Fund, Ltd.-III and Subsidiary (the "Partnership") listed in the index on page F-2 of this Form 10-K . These financial statements and financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule 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 Krupp Realty Fund, Ltd.-III and Subsidiary at December 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Boston, Massachusetts COOPERS & LYBRAND, L.L.P. February 1, 1997
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31, 1996 and 1995 ASSETS 1996 1995 Multi-family apartment complexes, less accumulated depreciation of $18,281,640 and $16,460,550, respectively (Note C) $11,505,230 $12,329,503 Cash and cash equivalents 468,735 654,696 Required repair and replacement reserves (Note C) 110,994 202,349 Cash restricted for tenant security deposits 183,758 202,950 Prepaid expenses and other assets 603,090 596,254 Deferred expenses, less accumulated amortization of $167,081 and $121,192, respectively (Note E) 352,503 398,392 Total assets $13,224,310 $14,384,144 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable (Note C) $19,491,853 $19,826,061 Accounts payable 22,397 54,170 Due to affiliates (Note E) - 10,790 Accrued expenses and other liabilities 724,481 643,813 Total liabilities 20,238,731 20,534,834 Partners' deficit (Note D): Investor Limited Partners (25,000 Units outstanding) (5,801,804) (4,981,262) Original Limited Partner (888,525) (871,828) General Partners (324,092) (297,600) Total Partners' deficit (7,014,421) (6,150,690) Total liabilities and Partners' deficit $13,224,310 $14,384,144
The accompanying notes are an integral part of the consolidated financial statements.
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 1996, 1995 and 1994 1996 1995 1994 Revenue: Rental $6,568,309 $6,284,399 $ 6,142,098 Other income 60,349 67,938 73,368 Total revenue 6,628,658 6,352,337 6,215,466 Expenses: Operating (Note E) 1,991,923 1,747,005 1,922,068 Maintenance 556,909 672,020 567,972 Real estate taxes 504,867 517,945 506,420 Management fees (Note E) 326,363 315,695 305,599 General and administrative (Note E) 93,995 145,488 102,925 Depreciation and amortization 1,866,979 1,738,951 1,452,182 Interest (Note C) 1,733,982 1,763,126 1,811,331 Total expenses 7,075,018 6,900,230 6,668,497 Net loss (Note F) $ (446,360) $ (547,893) $ (453,031) Allocation of net loss (Note D): Investor Limited Partners (25,000 Units outstanding) $ (424,042) $ (520,498) $ (430,380) Per Unit of Investor Limited Partner Interest $ (16.96) $ (20.82) $ (17.22) Original Limited Partner $ - $ - $ (18,121) General Partners $ (22,318) $ (27,395) $ (4,530)
The accompanying notes are an integral part of the consolidated financial statements.
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT For the Years Ended December 31, 1996, 1995 and 1994 Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1993 $(3,633,757) $(837,007) $(261,500) $(4,732,264) Net loss (430,380) (18,121) (4,530) (453,031) Distributions (99,132) (4,174) (1,043) (104,349) Balance at December 31, 1994 (4,163,269) (859,302) (267,073) (5,289,644) Net loss (520,498) - (27,395) (547,893) Distributions (297,495) (12,526) (3,132) (313,153) Balance at December 31, 1995 (4,981,262) (871,828) (297,600) (6,150,690) Net loss (Note D) (424,042) - (22,318) (446,360) Distributions (Note D) (396,500) (16,697) (4,174) (417,371) Balance at December 31, 1996 $(5,801,804) $(888,525) $(324,092) $(7,014,421)
The per Unit distributions for the years 1994 through 1996 were $3.97, $11.90 and $15.86, respectively. The accompanying notes are an integral part of the consolidated financial statements.
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996, 1995 and 1994 1996 1995 1994 Operating activities: Net loss $ (446,360) $ (547,893) $(453,031) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,866,979 1,738,951 1,452,182 Decrease (increase) in cash restricted for tenant security deposits 19,192 (8,170) (5,129) Decrease (increase) in prepaid expenses and other assets (6,836) 61,980 92,566 Increase (decrease) in accounts payable (40,773) (189,912) 84,807 Increase (decrease) in due to affiliates (10,790) 10,790 - Increase (decrease) in accrued expenses and other liabilities 80,668 27,783 (107,275) Net cash provided by operating activities 1,462,080 1,093,529 1,064,120 Investing activities: Additions to fixed assets (996,817) (1,064,103) (1,415,488) Increase in accounts payable related to fixed asset additions 9,000 - - Decrease in cash reserved for repair and replacement reserves 91,355 407,259 536,014 Net cash used in investing activities (896,462) (656,844) (879,474) Financing activities: Deferred expenses - - (8,088) Principal payments on mortgage notes payable (334,208) (305,621) (279,488) Distributions (417,371) (313,153) (104,349) Net cash used in financing activities (751,579) (618,774) (391,925) Net decrease in cash and cash equivalents (185,961) (182,089)(207,279) Cash and cash equivalents, beginning of the year 654,696 836,785 1,044,064 Cash and cash equivalents, end of the year $ 468,735 $ 654,696 $ 836,785
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. Organization Krupp Realty Fund, Ltd.-III ("KRF-III") was formed on April 23, 1982 by filing a Certificate of Limited Partnership in The Commonwealth of Massachusetts. KRF-III terminates on December 31, 2020, unless earlier terminated upon the sale of the last of KRF-III's properties or the occurrence of certain other events as set forth in the Partnership Agreement. KRF-III issued all of the General Partner Interests to The Krupp Company, a Massachusetts limited partnership, and The Krupp Corporation, a Massachusetts corporation, in exchange for capital contributions aggregating $1,000. Except under certain limited circumstances upon termination of KRF-III, the General Partners are not required to make any additional capital contributions. KRF-III also issued all of the Original Limited Partner Interests to The Krupp Company in exchange for a capital contribution of $4,000. The Original Limited Partner is not required to make any additional capital contributions to KRF-III. On June 4, 1982, KRF-III commenced an offering of up to 25,000 units of Investor Limited Partner Interests (the "Units") for $1,000 per Unit. As of September 29, 1982, KRF-III received subscriptions for all 25,000 Units and therefore, the public offering was successfully completed on that date. In 1993, the General Partners formed Brookeville Apartments Limited Partnership ("Brookeville L.P.") as a prerequisite for the refinancing of Brookeville Apartments ("Brookeville") with the Department of Housing and Urban Development ("HUD"). At the same time, the General Partners transferred ownership of Brookeville to Brookeville L.P.. The General Partner of Brookeville L.P. is the Westcop Corporation ("Westcop") and KRF-III is the Limited Partner in Brookeville L.P.. Westcop has beneficially assigned its interest in Brookeville L.P. to KRF-III. KRF- III and Brookeville L.P. are collectively known as Krupp Realty Fund Ltd. -III and Subsidiary (the "Partnership"). B. Significant Accounting Policies The Partnership uses the following accounting policies for financial reporting purposes, which may differ in certain respects from those used for federal income tax purposes (see Note F). Basis of Presentation The consolidated financial statements present the consolidated assets, liabilities and operations of the Partnership. All intercompany balances and transactions have been eliminated. Risks and Uncertainties The Partnership invests its cash primarily in deposits and money market funds with commercial banks. The Partnership has not experienced any losses to date on its invested cash. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and liabilities and revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Partnership includes all short-term investments with maturities of three months or less from the date of acquisition in cash and cash equivalents. The cash investments are recorded at cost, which approximates current market values. Rental Revenues Leases require the payment of rent monthly in advance. Rental revenues are recorded on the accrual basis. Depreciation Depreciation is provided for by the use of the straight-line method over estimated useful lives as follows: Buildings and improvements 5 to 25 years Appliances, carpeting and equipment 3 to 8 years Impairment of Long-Lived Assets 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 assets. The investments in properties are 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 investments in properties 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. Deferred Expenses Costs of obtaining and recording mortgages are amortized over the life of the related mortgage notes using the straight-line method. Income Taxes The Partnership is not liable for federal or state income taxes as Partnership income or loss is allocated to the Partners for income tax purposes. In the event the Partnership's tax returns are examined by the Internal Revenue Service or state taxing authority and the examination results in a change in Partnership taxable income or loss, such change will be reported to the Partners. Reclassifications Certain prior year balances have been reclassified to conform with current year financial statement presentation. C. Mortgage Notes Payable The properties owned by the Partnership are pledged as collateral for the non-recourse mortgage notes outstanding at December 31, 1996 and 1995. Mortgage notes payable consist of the following:
Annual Principal Interest Property 1996 1995 Rate Maturity Date Brookeville Apartments $ 8,565,244 $ 8,626,055 7.75% August 1, 2028 Dorsey's Forge Apartments and Oakland Meadows Apartments 4,629,919 4,745,765 9.25% May 3, 2000 Hannibal Grove Apartments 6,296,690 6,454,241 9.25% May 3, 2000 Total $19,491,853 $19,826,061
Brookeville Apartments The property is subject to a non-recourse first mortgage note in the original amount of $8,755,000 payable to the Department of Housing and Urban Development ("HUD"). The mortgage note requires monthly payments of $60,600 consisting of principal and interest at the rate of 7.75% per annum. In addition, the Partnership is required to fund a monthly deposit of $5,158 to an escrow account to be used for future property replacements and improvements and a mortgage insurance premium deposit equal to .5% per annum of the outstanding principal balance. The note matures on August 1, 2028. In accordance with HUD regulations, distributions are limited to the extent of Surplus Cash, as defined by the Regulatory Agreement. The mortgage note payable is collateralized by the property and may not be prepaid for a period of five years and, thereafter, during the next five years beginning August 1, 1998, may be prepaid subject to a declining prepayment penalty of 5% to 1%, respectively. After August 1, 2003, there is no prepayment penalty. Hannibal Grove Apartments ("Hannibal") and Dorsey's Forge and Oakland Meadows Apartments ("Dorsey's") The properties are subject to non-recourse mortgage notes for Hannibal and Dorsey's of $6,800,000 and $5,000,000, respectively, payable at a rate of 9.25% per annum. Monthly principal and interest payments are $62,333 for Hannibal and $45,833 for Dorsey's. The notes mature on May 3, 2000 at which time all unpaid principal, $5,653,175 (Hannibal) and $4,156,746 (Dorsey's), and any accrued interest are due. The mortgage notes payable are collateralized by the respective properties and the notes may not be prepaid prior to June 1, 1998 and thereafter, may be prepaid subject to a prepayment penalty. The prepayment penalty will be the greater of 1) the principal balance multiplied by the difference between 9.4301% and the yield rate on publicly traded U.S. Treasury Securities having the closest matching maturity date as reported in the Wall Street Journal, or 2) one percent of the then outstanding principal. The above mortgage notes cannot be prepaid prior to the dates specified in the loan agreements. As a result, fair market values cannot be determined. The annual required principal payments on the mortgage notes payable due in the five years 1997 through 2001 are $365,482, $399,694, $437,124, $10,020,473 and $89,480, respectively. During 1996, 1995 and 1994, the Partnership paid $1,690,992, $1,719,579 and $1,745,712 of interest, respectively, on its mortgage notes. D. Partners' Deficit Under the terms of the Partnership Agreement, profits and losses from operations are allocated 95% to the Investor Limited Partners, 4% to the Original Limited Partner and 1% to the General Partners until such time that the Investor Limited Partners have received a return of their total invested capital plus a 9% per annum Cumulative Return on Investment thereon and thereafter, 65% to the Investor Limited Partners, 28% to the Original Limited Partner and 7% to the General Partners. Also, under the Partnership Agreement, cash distributions from operations are generally made on the same basis as the allocations of profits and losses described above. Net cash proceeds, as determined by the General Partners, resulting from transactions such as refinancing or sale of a property, are to be distributed as follows: 1) to the Investor Limited Partners until they have received a return of their total Invested Capital; 2) to the Investor Limited Partners until they have received an amount equal to their Cumulative Return on Investment in respect of all fiscal years of the Partnership; 3) to the Original Limited Partner and General Partners until they have received a return of their total Invested Capital; 4) to an unaffiliated brokerage firm (the "Sales Agent") to the extent of any subordinated Financial Consulting Fee then due, and; 5) any remaining Cash Proceeds shall be distributed 65% to the Investor Limited Partners, 28% to the Original Limited Partner and 7% to the General Partners. Notwithstanding anything above, the General Partners shall, under all circumstances, receive at least 1% of all distributions of net cash proceeds from a capital transaction. Per the Partnership Agreement, profits from capital transactions are to be allocated to the extent of cash distributions described above, first to the Investor Limited Partners until they have received a return of their total Invested Capital. Losses from capital transactions are to be allocated to the extent of cash distributions described above, first to the Investor Limited Partners until they have received a return of their total Invested Capital plus their Cumulative Return on Investment. Thereafter, profits and losses from capital transactions are to be allocated in accordance with the Partnership Agreement. Notwithstanding anything above, the General Partners shall be allocated, under all circumstances, at least 1% of all profits and losses from capital transactions. In general, the allocation of profits and losses are calculated based on the terms of the Partnership Agreement, as described above. However, the Internal Revenue Code contains rules which govern the allocation of tax losses among partners. For 1995 and 1996, the allocation of tax losses were calculated based on these rules. Pursuant to this section of the code, tax losses are not allocated to a limited partner if a general partner bears the economic risk of loss. Due to tax losses incurred during 1995 and 1996, the Partnership allocated additional tax losses to the General Partners. In conjunction with the tax election referred to above, the consolidated financial statements presented herein reflect the allocation of net loss in accordance with the rules of the Internal Revenue Code. As of December 31, 1996 the following cumulative partner contributions and allocations have been made since the inception of the Partnership:
Investor Original Limited Limited General Partners Partner Partners Total Capital contributions $ 25,000,000 $ 4,000 $ 1,000 $ 25,005,000 Syndication costs (3,486,600) - - (3,486,600) Cash distributions from operations (9,715,621) (409,071) (102,266) (10,226,958) Cash distributions from refinancing proceeds (5,173,000) - (52,252) (5,225,252) Net loss from operations (21,829,250) (879,355) (269,550) (22,978,155) Net income from capital transaction 9,402,667 395,901 98,976 9,897,544 Balance at December 31, 1996 $ (5,801,804) $(888,525) $(324,092) $ (7,014,421)
E. Related Party Transactions Commencing with the date of acquisition of the Partnership's properties, the Partnership entered into agreements under which property management fees are paid to an affiliate of the General Partners for services as management agent. Such agreements provide for management fees payable monthly at a rate of 5% of the gross receipts from the properties under management. The Partnership also reimburses affiliates of the General Partners for certain expenses incurred in connection with the operation of the Partnership and its properties including accounting, computer, insurance, travel, legal and payroll; and with the preparation and mailing of reports and other communications to the Limited Partners. Amounts accrued or paid to the General Partners or their affiliates during the years ended December 31, 1996, 1995 and 1994 were as follows: 1996 1995 1994 Property management fees $326,363 $315,695 $305,599 Expense reimbursements 173,132 156,319 280,198 Charged to operations $499,495 $472,014 $585,797 Due to affiliates consists of the following at December 31, 1996 and 1995: 1996 1995 Expense reimbursements $ - $ 10,790 F. Federal Income Taxes For federal income tax purposes, the Partnership is depreciating property under the Accelerated Cost Recovery System ("ACRS") and the Modified Accelerated Cost Recovery System ("MACRS"), depending on which is applicable. The reconciliation of the net loss reported in the accompanying Consolidated Statement of Operations with the net loss reported in the Partnership's 1996, 1995 and 1994 federal income tax returns is as follows:
1996 1995 1994 Net loss per Consolidated Statement of Operations $ (446,360) $(547,893) $(453,031) Add: Difference in book to tax depreciation and amortization 221,435 347,827 114,104 Net loss for federal income tax purposes $ (224,925) $(200,066) $(338,927)
The allocation of the net loss for federal income tax purposes for the year ended December 31, 1996 is as follows:
Portfolio Passive Income Loss Total Investor Limited Partners $ 56,790 $(270,469) $(213,679) Original Limited Partner - - - General Partners 2,989 (14,235) (11,246) $ 59,779 $(284,704) $(224,925)
During the years ended December 31, 1996, 1995 and 1994 the per Unit net loss to the Investor Limited Partners for federal income tax purposes was ($8.55), ($7.60) and ($12.88), respectively. The basis of the Partnership's assets for financial reporting purposes exceeds its tax basis by approximately $4,010,000 and $5,721,000 at December 31, 1996 and 1995, respectively. The tax and book basis of the Partnership's liabilities are the same. KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1996 Original Limited Partner and 1% to the General Partners until such time that the Investor Limited Partners have received a return of their total invested capital plus a 9% per annum Cumulative Return on Investment thereon and thereafter, 65% to the Investor Limited Partners, 28% to the Original Limited Partner and 7% to the General Partners.
Costs to Partnership Acquisition Buildings Buildings and and Depreciable Description Encumbrances Land Improvements Improvements Life Brookeville Apartments Columbus, OH $ 8,565,244 $ 623,126 $ 8,312,134 $3,537,500 3 to 25 years Hannibal Grove Apartments Columbia, MD 6,296,690 518,519 6,883,945 3,443,350 3 to 25 years Dorsey's Forge & Oakland Meadows Apartments Columbia, MD 4,629,919 340,956 4,521,895 1,605,445 3 to 25 years Total $19,491,853 $1,482,601 $19,717,974 $8,586,295
Gross Amounts Carried at End of Year Year Buildings Accumu- Constr- and lated Year uction Improve- Depreic- Acqu- com- Description Land ments Total ation ired pleted Brookeville Apartments Columbus, OH $ 623,126 $11,849,634 $12,472,760 $ 7,328,949 1983 1975 Hannibal Grove Apartments Columbia, MD 518,519 10,327,295 10,845,814 6,935,037 1983 1970 Dorsey's Forge & Oakland Meadows Apartments Columbia, MD 340,956 6,127,340 6,468,296 4,017,654 1983 1970 Total $1,482,601 $28,304,269 $29,786,870 $18,281,640
Reconciliation of Real Estate and Accumulated Depreciation for each of the three years in the period ended December 31, 1996:
1996 1995 1994 Real Estate Balance at beginning of year $28,790,053 $27,725,950 $26,310,462 Acquisition and improvements 996,817 1,064,103 1,415,488 Balance at end of year $29,786,870 $28,790,053 $27,725,950 Accumulated Depreciation 1996 1995 1994 Balance at beginning of year $16,460,550 $14,767,489 $13,361,312 Depreciation expense 1,821,090 1,693,061 1,406,177 Balance at end of year $18,281,640 $16,460,550 $14,767,489
Note: The Partnership uses the cost basis for property valuation for both income tax and financial statement purposes. The aggregate cost for federal income tax purposes at December 31, 1996 is $29,786,870, and the aggregate accumulated depreciation for federal income tax purposes is $22,290,334. EX-27 2
5 This schedule contains summary financial information extracted from Krupp Realty Fund III financial Statement for the year ended December 31, 1996 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1996 DEC-31-1996 763,487 0 44,687 0 0 558,403 30,306,454 18,448,721 13,224,310 746,878 19,491,853 0 0 (7,014,421) 0 13,224,310 6,628,658 6,628,658 0 0 5,341,036 0 1,733,982 (446,360) 0 (446,360) 0 0 0 (446,360) 0 0 Net loss allocated ($22,318) to general partners and ($424,042) to limited partners for the year ended. Average net loss ($16.96) per unit for 25,000 units outstanding. Includes operating expenses of $2,969,190, real estate taxes of $504,867 and depreciation/amortization of $1,866,979. Represents total equity of general partners ($324,092) and limited partners ($6,690,329). Represents mortgage note payable. Includes depreciation of $18,281,640 and amortization of deferred expenses of $167,081. Includes apartment complexes of $29,786,870 and deferred expenses of $519,584.
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