-----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, NNyHNoTTzcxmPbyqFToHYkN6sNkl/Rj/DL4ZGYEz/4Zlu1/oMNtYnOJ/C6O4VSBm Vi1b5R5xqoUQFxpTWb4ODQ== 0000721799-96-000004.txt : 19960508 0000721799-96-000004.hdr.sgml : 19960508 ACCESSION NUMBER: 0000721799-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960507 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP REALTY LTD PARTNERSHIP V CENTRAL INDEX KEY: 0000721799 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042796207 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11985 FILM NUMBER: 96557311 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 0-11985 Krupp Realty Limited Partnership-V Massachusetts 04-2796207 (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. FINANCIAL STATEMENTS KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 1996 1995 Multi-family apartment complexes, net of accumulated depreciation of $35,532,827 and $34,745,814, respectively $32,939,732 $33,505,527 Cash and cash equivalents 1,923,068 2,022,328 Cash restricted for tenant security deposits 434,353 438,249 Cash restricted for capital improvements 784,247 729,508 Prepaid expenses and other assets 936,612 1,370,882 Deferred expenses, net of accumulated amortization of $418,727 and $401,925, respectively 472,436 489,238 Total assets $37,490,448 $38,555,732 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $42,672,105 $42,800,954 Accounts payable 32,849 37,435 Accrued real estate taxes 1,260,344 1,660,000 Accrued expenses and other liabilities 1,178,729 1,183,468 Due to affiliates (Note 4) 22,966 34,327 Total liabilities 45,166,993 45,716,184 Commitments and contingencies (Note 2) Partners' deficit (Note 3): Investor Limited Partners (35,200 Units outstanding) (7,038,508) (6,550,285) Original Limited Partner (257,249) (234,539) General Partners (380,788) (375,628) Total Partners' deficit (7,676,545) (7,160,452) Total liabilities and Partners' deficit $37,490,448 $38,555,732
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996 1995 Revenue: Rental $3,244,810 $3,581,165 Interest income 39,827 20,340 Total revenue 3,284,637 3,601,505 Expenses: Operating (Note 4) 980,615 973,525 Maintenance 136,021 153,426 General and administrative (Note 4) 35,662 23,122 Real estate taxes 483,823 591,266 Management fees (Note 4) 117,946 120,157 Depreciation and amortization 803,815 856,745 Interest 864,354 981,420 Total expenses 3,422,236 3,699,661 Net loss $ (137,599) $ (98,156) Allocation of net loss (Note 3): Investor Limited Partners (35,200 Units outstanding) $ (136,223) $ (97,174) Per Unit of Investor Limited Partner Interest $ (3.87) $ (2.76) Original Limited Partner $ - $ - General Partners $ (1,376) $ (982)
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 1995 Operating activities: Net loss $ (137,599) $ (98,156) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 803,815 856,745 Decrease in cash restricted for tenant security deposits 3,896 88 Decrease in prepaid expenses and other assets 434,270 507,154 Decrease in accrued real estate taxes (399,656) (406,115) Decrease in accounts payable (25,941) (102,662) Decrease in accrued expenses and other liabilities (4,739) (20,317) Decrease in due to affiliates (11,361) (35,419) Net cash provided by operating activities 662,685 701,318 Investing activities: Additions to fixed assets (221,218) (123,541) Decrease (increase) in cash restricted for capital improvements (54,739) 231,944 Increase (decrease) in accounts payable related to fixed asset additions 21,355 (55,489) Net cash provided by (used in) investing activities (254,602) 52,914 Financing activities: Principal payments on mortgage notes payable (128,849) (142,759) Distributions (378,494) - Net cash used in financing activities (507,343) (142,759) Net increase (decrease) in cash and cash equivalents (99,260) 611,473 Cash and cash equivalents, beginning of period 2,022,328 598,443 Cash and cash equivalents, end of period $1,923,068 $1,209,916
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V 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 Realty Limited Partnership-V 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, 1995 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only recurring accruals) necessary to present fairly the Partnership's consolidated financial position as of March 31, 1996, and its results of operations and cash flows for the three months ended March 31, 1996 and 1995. Certain prior period balances have been reclassified to conform with current period consolidated financial statement presentation. The results of operations for the three months ended March 31, 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) Legal Proceedings The Partnership is a defendant in a class action suit related to the practice of giving discounts for the early or timely payments of rent at Park Place. The central issue of the complaint was whether the operative lease violated a Chicago municipal ordinance relating to late fee charges because it allowed tenants a discount if rent was paid on or before the first day of the month. The ordinance in question limited late fee charges to $10 per month if the rent was more than 5 days late. The allegation was that, notwithstanding the stated rental rate and printed discount, the practice represented an unlawful means of exacting late fee charges. In addition to seeking damages for any "forfeited" discounts, Plaintiffs seek statutory damages of two months rent per lease violation plus reasonable attorneys' fees. To be eligible for such punitive damages Plaintiffs must prove that the Defendant deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendant, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The Plaintiffs have filed an appeal with the Appellate Court of Illinois, First District, which is pending. Although management believes that the Defendant will prevail on the issue of statutory damages, the ultimate outcome of this litigation, including an estimate of any potential loss, cannot be presently determined and accordingly no provision for loss has been made in the accompanying consolidated financial statements. (3) Changes in Partners' Deficit A summary of changes in Partners' deficit for the three months ended March 31, 1996 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1995 $(6,550,285) $(234,539) $(375,628) $(7,160,452) Net loss (136,223) - (1,376) (137,599) Distributions (352,000) (22,710) (3,784) (378,494) Balance at March 31, 1996 $(7,038,508) $(257,249) $(380,788) $(7,676,545)
(4) 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 were as follows:
For the Three Months Ended March 31, 1996 1995 Property management fees $117,946 $120,157 Expense reimbursements 74,597 37,389 Charged to operations $192,543 $157,546
Due to affiliates consists of the following:
March 31, December 31, 1996 1995 Property management fees $ 2,494 $ 15,774 Expense reimbursements 20,472 18,553 $ 22,966 $ 34,327
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership's ability to generate cash adequate to meet its needs is dependent primarily upon the operating performance of its real estate investments. Such ability would also be impacted by the future availability of bank borrowing sources as current debt matures. These sources of liquidity will be used by the Partnership for payment of expenses related to real estate operations, debt service, capital improvements 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. In 1995, the General Partners determined that there was sufficient Cash Flow and working capital reserves to reinstate semi-annual distributions. These distributions commenced in the first quarter of 1996 at an annual rate of $20.00 per Unit. The Partnership's major capital improvement project, the repair of Park Place's building facade, was completed in the fourth quarter of 1995. The external improvements, along with extensive interior improvements, were funded from established reserves and cash generated by the property. The completion of these improvements has greatly enhanced the appearance of the property and has resulted in both increased rents and occupancy. The Partnership's properties, Century and Park Place, are anticipated to spend approximately $2,280,000 for capital improvements in 1996 to remain competitive in their respective markets. Again, the Partnership expects to fund these improvements from established reserves and cash generated from the properties. Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow of the Partnership for the three months ended March 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 flows as a measure of liquidity.
Rounded to $1,000 Net loss for tax purposes $(142,000) Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 809,000 Principal payments on mortgage notes payable (129,000) Expenditures for capital improvements (221,000) Working capital reserves (128,000) Cash Flow $ 189,000
Operations The following discussion relates to the operations of the Partnership and its properties (Park Place and Century II Apartments) for the three months ended March 31, 1996 and 1995. The sale of Marine Terrace in July, 1995, significantly impacts the comparability of the Partnership's operations between the two three-month periods. Cash Flow, net of working capital reserves and Marine Terrace, has decreased for the three months ended March 31, 1996 as compared to the same period in 1995 due to an increase in capital improvements at Park Place. Net loss also increased within these two periods as the increase in total expenses more than offset the increase in total revenue. Rental rates at Park Place increased during the second half of 1995 and rental rates at Century are anticipated to increase during the second quarter of 1996. These increases in rental rates as well as higher occupancy at Park Place in 1996 continue to favorably impact rental revenues of the Partnership. Interest income for the Partnership increased in 1996 due to a rise in short-term interest rates coupled with an increase in investments in cash and cash equivalents as a result of the sale of Marine Terrace in the third quarter of 1995. Total expenses, net of expenses relating to Marine Terrace, have remained relatively stable with the exception of operating and real estate tax expenses. The increase in operating expense is attributable to both increased leasing and advertising at Park Place and an increase in utilities due to higher gas consumption at Park Place and Century as a result of adverse weather conditions in 1996. Real estate taxes decreased for the three months ended March 31, 1996 as compared to the same period in 1995 as a result of a refund on Park Place's prior year's real estate tax bill received in the first quarter of 1996. The increase in depreciation expense is directly related to the extensive capital improvement program at Park Place which was completed in the fourth quarter of 1995. General In accordance with Financial Accounting Standards 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 Partnership's 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-V AND SUBSIDIARY PART II - OTHER INFORMATION Item 1. Legal Proceedings The Partnership is a defendant in a class action suit related to the practice of giving discounts for the early or timely payments of rent at Park Place. The central issue of the complaint was whether the operative lease violated a Chicago municipal ordinance relating to late fee charges because it allowed tenants a discount if rent was paid on or before the first day of the month. The ordinance in question limited late fee charges to $10 per month if the rent was more than 5 days late. The allegation was that, notwithstanding the stated rental rate and printed discount, the practice represented an unlawful means of exacting late fee charges. In addition to seeking damages for any "forfeited" discounts, Plaintiffs seek statutory damages of two months rent per lease violation plus reasonable attorneys' fees. To be eligible for such punitive damages Plaintiffs must prove that the Defendant deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendant, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The Plaintiffs have filed an appeal with the Appellate Court of Illinois, First District, which is pending. Although management believes that the Defendant will prevail on the issue of statutory damages, the ultimate outcome of this litigation, including an estimate of any potential loss, cannot be presently determined and accordingly no provision for loss has been made in the accompanying consolidated financial statements. 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-V (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner. DATE: May 1, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Krupp Realty Fund 5 the financial statements for the quarter ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1996 MAR-31-1996 1,923,068 0 63,619 0 0 2,091,593 69,363,722 (35,951,554) 37,490,448 2,494,888 42,672,105 0 0 (7,676,545) 37,490,448 3,284,637 0 3,284,637 0 2,557,882 0 864,354 0 0 0 0 0 0 0 (137,599) 0 0 Includes all receivables grouped in "Other Assets" on the balance sheet. Includes apartment complexes of $68,472,559 and deferred expenses of $891,163. Depreciation of $35,532,827 and amortization of $418,727. Represents mortgage note payable. Represents total deficit of the General Partners and Limited Partners of ($380,788) and ($7,295,757). Includes all revenue of the Partnership. Includes operating expenses of $1,270,244, real estate tax expense of $483,823 and depreciation and amortization of $803,815. Net loss allocated (1,376) to the General Partners and (136,223) to the limited partners. Average net loss per unit of limited partners interest is ($3.87) on 35,200 Units outstanding.
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