10-Q 1 realyt4_q1.txt KRUPP REALTY LIMITED PARTNERSHIP - IV 03/31/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 ------------------------------------ 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 0-11987 ------------- Krupp Realty Limited Partnership - IV ------------------------------------------------------------------------------- Massachusetts 04-2772783 ------------------------------------------------- ---------------------------- (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) One Beacon Street, Boston, Massachusetts 02108 ----------------------------------------------------------------- ----------- (Address of principal executive offices) (Zip Code) (617) 523-7722 ------------------------------------------------------------------------------- (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 9. PART I. FINANCIAL INFORMATION Item 1. CONSOLIDATED 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 REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Liquidation) ASSETS (Unaudited) March 31, December 31, 2002 2001 ------------ ------------ Cash and cash equivalents $ 10,311,521 $ 11,068,529 Real estate tax escrows 32,399 32,399 Prepaid expenses and other assets 126,452 19,190 ------------ ------------ Total assets $ 10,470,372 $ 11,120,118 ============ ============ LIABILITIES AND PARTNERS' EQUITY Liabilities: Due to affiliates - 25,115 Other liabilities 465,929 506,925 ------------ ------------ Total liabilities 465,929 532,040 Partners' equity (Note 2): Investor Limited Partners (30,000 Units outstanding) 9,904,399 10,482,197 Original Limited Partner - - General Partners 100,044 105,881 ------------ ------------ Total partners' equity 10,004,443 10,588,078 ------------ ------------ Total liabilities and partners' equity $ 10,470,372 $ 11,120,118 ============ ============ The accompanying notes are an integral part of the consolidated financial statements. 2 KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Liquidation) (Unaudited) For the Three Months Ended March 31, ----------------------------- 2002 2001 ------------ ------------ Revenue: Rental $ - $ 1,796,106 Other income 2,345 - Interest income 50,760 18,222 ------------ ------------ Total revenue 53,105 1,814,328 ------------ ------------ Expenses: Operating (Note 3) 23,596 512,105 Maintenance - 118,599 Real estate taxes - 184,035 Management fees (Note 3) 5,670 75,404 General and administrative 3,040 122,824 Depreciation and amortization - 406,725 Interest - 394,689 ------------ ------------ Total expenses 32,306 1,814,381 ------------ ------------ Income (loss) before minority interest 20,799 (53) Minority interest 125 (421) ------------ ------------ Net income (loss) $ 20,924 $ (474) ============ ============ Allocation of net income (loss): Investor Limited Partners (30,000 Units outstanding): Net income (loss) $ 20,715 $ (450) ============ ============ Investor Limited Partners Per Unit: Net income (loss) $ .69 $ (.02) ============ ============ Original Limited Partner (100 Units outstanding): Net loss $ - $ (19) ============ ============ General Partners: Net income (loss) $ 209 $ (5) ============ ============ The accompanying notes are an integral part of the consolidated financial statements. 3 KRUPP REALTY LIMITED KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Liquidation) (Unaudited) For the Three Months Ended March 31, ----------------------------- 2001 2001 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 20,924 $ (474) Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization - 406,725 Changes in assets and liabilities: Increase in prepaid expenses and other assets (107,262) 468,917 Decrease in other liabilities (40,996) (428,135) Decrease in due to affiliates (25,115) 20,749 ------------ ------------ Net cash (used in) provided by operating activities (152,449) 467,782 ------------ ------------ Cash flows from investing activities: Decrease in other liabilities for fixed asset additions - 377 Fixed asset additions - (110,597) ------------ ------------ Net cash used in investing activities - (110,220) ------------ ------------ Cash flows from financing activities: Principal payments on mortgage notes payable - (91,051) Distributions (604,559) (389,784) ------------ ------------ Net cash used in financing activities (604,559) (480,835) ------------ ------------ Net decrease in cash and cash equivalents (757,008) (123,273) Cash and cash equivalents, beginning of period 11,068,529 740,853 ------------ ------------ Cash and cash equivalents, end of period $ 10,311,521 $ 617,580 ============ ============ The accompanying notes are an integral part of the consolidated financial statements 4 KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation) (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 Realty Limited Partnership - IV and Subsidiaries ( 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, 2001 for additional information relevant to significant accounting policies followed by the Partnership. The consolidated financial statements present consolidated assets, liabilities and operations of Pavillion Partners, Ltd., Westbridge Partners, Ltd., and Krupp Realty Limited Partnership - IV. Westcop Corporation has a 1% interest in the operations Pavillion Partners, Ltd. At March 31, 2001 and December 31, 2000, minority interest of $203,873 and $203,998, respectively is included in other liabilities. In the opinion of the General Partners of the Partnership, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's consolidated financial position as of March 31, 2002, its results of operations and cash flows for the three months ended March 31, 2002 and 2001. During 2001, the Partnership sold its remaining real estate investments and interests to liquidate the Partnership's remaining assets, distribute its remaining cash and dissolve the Partnership in 2002. The results of operations for the three months ended March 31, 2002 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) Changes in Partners' Deficit A summary of changes in Partners' deficit for the three months ended March 31, 2002 is as follows: Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit ----------- ----------- ----------- ----------- Balance at December 31, 2001 $10,482,197 $ - $ 105,881 $10,588,078 Net income 20,715 - 209 20,924 Distributions (598,513) - (6,046) (604,559) ----------- ----------- ----------- ----------- Balance at March 31, 2002 $ 9,904,399 $ - 100,044 $10,044,443 =========== =========== =========== =========== Continued 5 KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation), Continued (3) Related Party Transactions The Partnership pays property management fees to an affiliate of the General Partners for management services. Pursuant to the management agreements, management fees are 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 administrative expenses. Amounts accrued or paid to the General Partners' affiliates were as follows: For the Three Months Ended March 31, ----------------------------- 2002 2001 ------------ ------------ Property management fees $ 5,670 $ 75,404 Expenses reimbursement 8,130 165,361 ------------ ------------ Charged to operations $ 13,800 $ 240,765 ============ ============ Due from affiliates consisted of expense reimbursements of $34,328 and $0 and is included in prepaid expenses and other assets at March 31, 2002 and December 31, 2001, respectively. Continued 6 KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES 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 contain forward-looking statements including those concerning management's expectations regarding the future financial performance and future events. These forward-looking statements involve significant risks and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources On August 1, 2001, the Partnership sold Fenland Field to an unaffiliated third party. The Partnership received $14,443,077, net of closing costs of $56,923 and repaid the mortgage note payable of $3,637,387 and accrued interest of $28,793. On November 14, 2001, the Partnership sold Walden Pond to a related party, KR 5 Acquisition, LLC. The Partnership received $12,521,805, net of closing costs of $278,195 and repaid the mortgage note payable of $5,819,727 and accrued interest of $16,824. On November 20, 2001, the Partnership sold Pavillion Apartments to an unaffiliated third party. The Partnership received $15,485,089, net of closing costs of $87,850 and repaid the mortgage note payable of $6,531,153 and accrued interest of $35,109. As of December 31, 2001, the Partnership had no investment in any multi-family apartment communities. Operations The following discussion relates to the operations of the Partnership and its properties (Fenland Field, Walden Pond and Pavillion Apartments) for the three months ended March 31, 2002 and 2001. The sale of Fenland Field, Walden Pond and Pavillion Apartments as of December 31, 2001 significantly impacts the comparability of these Partnerships operations between these periods. Net loss decreased during the three months ended March 31, 2002 when compared to the same period in 2001 due to sale of the Partnership's remaining real estate assets in August and November of 2001. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership's future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. The Partnership manages its market risk by matching projected cash inflows from operating activities, investing activities and financing activities with projected cash outflows to fund debt payments, acquisitions, capital expenditures, distributions and other cash requirements. A detailed analysis of quantitative and qualitative market risk exposures was provided in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2001. There have been no material changes in market risk subsequent to that date. All of the Partnership's mortgage debt was repaid as of December 31, 2001. 7 KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K Exhibits: None 8 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 Realty Limited Partnership - IV --------------------------------------------- (Registrant) BY: /s/ David C. Quade --------------------------------------------- Treasurer (Principal Financial and Accounting Officer) of The Krupp Corporation, a General Partner DATE: May 15, 2002 9