-----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, PWNLO5CRdcnQAEo6Hc2VYBxcALg+arBg2za1W8XSMbzs/19N2I+ID5gZsAytMei8 9pNY3/wwQolmJhybyQRs+w== 0000768175-96-000008.txt : 19960807 0000768175-96-000008.hdr.sgml : 19960807 ACCESSION NUMBER: 0000768175-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960806 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP REALTY LTD PARTNERSHIP IV CENTRAL INDEX KEY: 0000710389 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042772783 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11987 FILM NUMBER: 96604367 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: C/O BERKSHIRE REALTY AFFILIATES 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 THEx SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 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.) 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 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
ASSETS June 30, December 31, 1996 1995 Multi-family apartment complexes, net of accumulated depreciation of $23,698,185 and $22,689,200, respectively $16,291,034 $17,088,634 Cash and cash equivalents 1,297,997 2,802,694 Cash restricted for capital improvements 17,055 19,066 Prepaid expenses and other assets 552,389 653,387 Deferred expenses, net of accumulated amortization of $130,084 and $103,355, respectively 268,574 295,303 Total assets $18,427,049 $20,859,084 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $20,567,359 $20,938,160 Accounts payable 16,754 61,162 Due to affiliates (Note 3) 18,145 97,840 Other liabilities 851,669 954,992 Total liabilities 21,453,927 22,052,154 Partners' equity (deficit) (Note 2): Investor Limited Partners (30,000 Units outstanding) (1,472,109) 322,527 Original Limited Partner (1,265,952) (1,245,119) General Partners (288,817) (270,478) Total Partners' deficit (3,026,878) (1,193,070) Total liabilities and Partners' deficit $18,427,049 $20,859,084
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Revenue: Rental $1,808,922 $1,744,810 $3,611,131 $3,446,622 Other income 36,931 43,008 78,872 79,919 Total revenue 1,845,853 1,787,818 3,690,003 3,526,541 Expenses: Operating (Note 3) 534,235 439,133 1,100,856 884,850 Maintenance 186,050 152,110 317,027 275,400 Real estate taxes 164,686 146,869 333,399 298,806 General and administrative (Note 3) 19,603 34,070 42,637 52,792 Management fees (Note 3) 71,353 70,335 139,989 140,099 Depreciation and amortization 521,716 523,550 1,035,714 1,039,454 Interest 324,127 328,301 649,334 657,585 Total expenses 1,821,770 1,694,368 3,618,956 3,348,986 Income before minority interest 24,083 93,450 71,047 177,555 Minority interest (1,084) (1,040) (2,399) (1,498) Net income $ 22,999 $ 92,410 $ 68,648 $ 176,057 Allocation of net income (Note 2): Investor Limited Partners (30,000 Units outstanding) $ 21,849 $ 87,790 $ 65,216 $ 167,254 Per Unit of Investor Limited Partner Interest $ .72 $ 2.93 $ 2.17 $ 5.58 Original Limited Partner $ 920 $ 3,696 $ 2,746 $ 7,042 General Partners $ 230 $ 924 $ 686 $ 1,761
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS __________
For the Six Months Ended June 30, 1996 1995 Operating activities: Net income $ 68,648 $ 176,057 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,035,714 1,039,454 Decrease in prepaid expenses and other assets 100,998 227,079 Decrease in other liabilities (103,323) (150,169) Increase (decrease) in accounts payable (49,554) 17,596 Increase (decrease) in due to affiliates (79,695) 5,323 Net cash provided by operating activities 972,788 1,315,340 Investing activities: Decrease in cash restricted for capital improvements 2,011 14,341 Increase in other investments - (486,995) Increase in accounts payable for fixed asset additions 5,146 - Additions to fixed assets (211,385) (204,034) Net cash used in investing activities (204,228) (676,688) Financing activities: Principal payments on mortgage notes payable (370,801) (362,550) Distributions (1,902,456) (441,958) Increase in deferred expenses - (1,941) Net cash used in financing activities (2,273,257) (806,449) Net decrease in cash and cash equivalents (1,504,697) (167,797) Cash and cash equivalents, beginning of period 2,802,694 2,500,074 Cash and cash equivalents, end of period $ 1,297,997 $2,332,277
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES 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 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, 1995 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 of Westbridge Partners, Ltd. and Pavillion Partners, Ltd. At June 30, 1996, minority interest of $26,395 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 June 30, 1996, its results of operations for the three and six months ended June 30, 1996 and 1995 and its cash flows for the six months ended June 30, 1996 and 1995. 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, 1996 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' equity (deficit) for the six months ended June 30, 1996 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1995 $ 322,527 $(1,245,119) $(270,478) $(1,193,070) Net income 65,216 2,746 686 68,648 Distributions: Operations (559,951) (23,579) (5,895) (589,425) Capital transaction (1,299,901) - (13,130) (1,313,031) Balance at June 30, 1996 $(1,472,109) $(1,265,952) $(288,817) $(3,026,878)
(3) 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 are as follows:
For the Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Property management fees $ 71,353 $ 70,335 $139,989 $140,099 Expense reimbursements 62,466 43,639 125,702 55,989 Charged to operations $133,819 $113,974 $265,691 $196,088
Due to affiliates consists of the following: June 30, December 31, 1996 1995 Expense reimbursements $ 18,145 $ 97,840
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 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 on the operations of its remaining real estate investments. Such ability would also be impacted by the future availability of bank borrowings, and upon future refinancing and sale of the Partnership's real estate investments and the collection of any mortgage receivables which may result from such sales. These sources of liquidity will be used by the Partnership for payment of expenses related to real estate operations, capital improvements, refinancing 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 and reduced debt service, the Partnership has been able to increase semi-annual distributions from an annual rate of $28.00 per Unit in 1995, to approximately $37.33 per Unit in 1996. In addition, the Partnership made a special distribution of $1,313,031 during the second quarter of 1996, representing a capital distribution, based on the remaining proceeds from the sale of Lakeview Tower in 1992. In accordance with Section 8.3 (a) of the Partnership Agreement, the distribution was allocated 99% to the Investor Limited Partners and 1% to the General Partners. In the second quarter of 1996, the Partnership continued capital improvements at its properties and anticipates that these improvements will continue throughout the year. These improvements consist of interior enhancements which include replacement of appliances, carpeting and vinyl flooring as well as exterior improvements consisting of painting, roof repair and the building of perimeter walls and fences. The Partnership believes that these improvements are necessary to compete with current market conditions, produce quality rental units and absorb excess market supply at the properties' respective locations. Cash Flow Shown below is the calculation of Cash Flow as defined by Section 8.2(a) of the Partnership Agreement for the six months ended June 30, 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 flows as a measure of liquidity. Rounded to $1,000 Net loss for tax purposes $(108,000) Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 958,000 Tax basis principal payments on mortgage (117,000) Expenditures for capital improvements (211,000) Amounts released from working capital reserves 67,000 Cash Flow $ 589,000 Operations Cash Flow, before additions to working capital reserves, decreased in the first half of 1996 as compared to the same period in 1995 as a result of both increased capital improvement expenditures and a decrease in net income, as the increase in expenses more than offset the increase in revenue. Rental revenue during the three and six months ended June 30, 1996, as compared to the same time period in 1995, increased as a result of increased rental rates at the Partnership's properties instituted in 1995. For the three and six months ended June 30, 1996 as compared with the same period in 1995, the Partnership experienced increases in operating, maintenance and real estate tax expenses. Operating expense increased due to both higher insurance expense, attributable to prior years' insurance refunds received in 1995, and greater utility rates and consumption levels at Pavillion and Fenland Field. The increase in operating expense also is due to a rise in reimbursable expenses incurred in connection with the operation of the Partnership and its properties, including computer, accounting, travel, insurance, legal and payroll costs. Maintenance expense increased due to external wall repairs and landscaping at Indian Run, driveway, siding and stairway repairs at Walden Pond and snow removal expenditures at Fenland Field as a result of the harsh winter weather conditions. Real estate taxes increased due to an increase in the assessed value of Walden Pond. 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. KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES 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 Realty Limited Partnership-IV (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner. DATE: July , 1996 EX-27 2
5 This schedule contains summary financial information extracted from Fund IV Financial Statements for the six months ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 1,315,052 0 30,225 0 0 522,164 40,387,877 23,828,269 18,427,049 886,568 20,567,359 0 0 3,026,878 0 18,427,049 3,690,003 3,690,003 0 0 2,972,021 0 649,334 68,648 0 68,648 0 0 0 68,648 0 0 Includes apartment complexes of $39,989,219 and deferred expenses of $398,658. Includes depreciation of $23,698,185 and amortization of deferred expenses of $130,084. Represents mortgage notes payable. Represents total deficit of General and Limited Partners of ($288,817) and ($2,738,061), respectively. Includes operating expenses of $1,600,509, real estate tax expenses of $333,399 and depreciation and amortization of $1,035,714 and minority interest of $2,399. Net income allocated $686 General Partners, $2,746 Original Limited Partners and $65,216 to the Investor Limited Partners, for the six months ended June 30, 1996. Average net income per Unit of Limited Partners Interest is $2.17 on 30,000 Units outstanding.
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