-----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, VtHrbh3I41zeLanfGxS8FKhpuXBxbBKhsJWV/srZ9jIryTeDD985FPhETkJMPxP2 bFruX1kx3MmmVkrZCH+Ftw== 0000721799-97-000010.txt : 19970815 0000721799-97-000010.hdr.sgml : 19970815 ACCESSION NUMBER: 0000721799-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97660346 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 (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 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 The total number of pages in this document is 11. 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-V AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ASSETS
June 30, December 31, 1997 1996 Multi-family apartment complexes, net of accumulated depreciation of $39,759,785 and $38,066,263, respectively $31,369,816 $32,598,192 Cash and cash equivalents (Note 2) 2,261,051 1,767,094 Cash restricted for tenant security deposits 305,297 307,908 Replacement reserve escrow 669,260 689,656 Prepaid expenses and other assets 1,415,733 1,377,390 Deferred expenses, net of accumulated amortization of $502,738 and $469,134, respectively 388,425 422,029 Total assets $36,409,582 $37,162,269 LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable $41,989,073 $42,270,255 Accounts payable 38,439 83 Accrued real estate taxes 1,664,042 1,660,000 Accrued expenses and other liabilities 1,359,446 1,241,967 Due to affiliates (Note 5) 18,521 26,480 Total liabilities 45,069,521 45,198,785 Commitments and contingencies (Note 3) Partners' deficit (Note 4): Investor Limited Partners (35,200 Units outstanding) (7,951,953) (7,372,169) Original Limited Partner (317,363) (279,958) General Partners (390,623) (384,389) Total Partners' deficit (8,659,939) (8,036,516) Total liabilities and Partners' deficit $36,409,582 $37,162,269
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 For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Revenue: Rental $3,647,118 $3,391,375 $7,190,303$6,636,185 Interest income 37,826 40,553 70,935 80,380 Total revenue 3,684,944 3,431,928 7,261,238 6,716,565 Expenses: Operating (Note 5) 1,028,834 926,581 1,940,143 1,907,196 Maintenance 258,997 257,370 407,998 393,391 General and administrative (Note 5)56,754 11,374 133,621 47,036 Real estate taxes 485,379 483,811 973,292 967,634 Management fees (Note 5) 115,894 124,749 241,412 242,695 Depreciation and amortization 867,704 823,510 1,727,126 1,627,325 Interest 850,589 861,676 1,704,080 1,726,030 Total expenses 3,664,151 3,489,071 7,127,672 6,911,307 Net income (loss) $ 20,793 $ (57,143)$ 133,566 $ (194,742) Allocation of net income (loss) (Note 4): Investor Limited Partners (35,200 Units outstanding) $ 19,337 $ (56,572)$ 124,216 $ (192,795) Per Unit of Investor Limited Partner Interest $ .55 $ (1.61)$ 3.53 $ (5.48) Original Limited Partner $ 1,248 $ - $ 8,014 $ - General Partners $ 208 $ (571)$ 1,336 $ (1,947)
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 Six Months Ended June 30, 1997 1996 Operating activities: Net income (loss) $ 133,566 $(194,742) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Interest earned on replacement reserve escrow(12,300) (7,906) Depreciation and amortization 1,727,126 1,627,325 Changes in assets and liabilities: Decrease in cash restricted for tenant security deposits 2,611 20,041 Increase in prepaid expenses and other assets (38,343) (35,494) Increase (decrease) in accounts payable 9,026 (35,409) Increase in accrued real estate taxes 4,042 15,344 Increase (decrease) in accrued expenses and other liabilities 117,479 (2,968) Decrease in due to affiliates (7,959) (34,327) Net cash provided by operating activities 1,935,248 1,351,864 Investing activities: Deposits to replacement reserve escrow (106,456) (106,456) Withdrawals from replacement reserve escrow 139,152 199,314 Additions to fixed assets (465,146) (563,630) Increase in accounts payable related to fixed asset additions 29,330 3,024 Net cash used in investing activities (403,120) (467,748) Financing activities: Principal payments on mortgage notes payable (281,182)(260,214) Distributions (756,989) (378,494) Net cash used in financing activities (1,038,171) (638,708) Net increase in cash and cash equivalents 493,957 245,408 Cash and cash equivalents, beginning of period 1,767,094 2,022,328 Cash and cash equivalents, end of period $2,261,051 $2,267,736
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, 1996 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of only recurring accruals) necessary to present fairly the Partnership's consolidated financial position as of June 30, 1997, its results of operations for the three and six months ended June 30, 1997 and 1996 and its cash flows for the six months ended June 30, 1997 and 1996. Certain prior year balances have been reclassified to conform with current period financial statement presentation. The results of operations for the three and six months ended June 30, 1997 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. (2) Cash and Cash Equivalents Cash and cash equivalents consisted of the following:
June 30, December 31, 1997 1996 Cash and money market accounts $1,891,721 $ 1,484,612 Commercial paper 369,330 282,482 $2,261,051 $ 1,767,094
At June 30, 1997, commercial paper represents corporate issues complying with Section 6.2(a) of the Partnership Agreement purchased through a corporate issuer maturing in the third quarter of 1997. At June 30, 1997, the carrying value of the Partnership's investment in commercial paper approximates fair value. Continued KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (3)Legal Proceeding 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 Apartments ("Park Place") and Marine Terrace Apartments. 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 of the month. 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 and reasonable attorneys' fees. To be eligible for such damages, plaintiffs must prove that the defendants deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the defendants, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The plaintiffs filed an appeal with the Appellate Court of Illinois, First District. During 1996, the decision was reversed on appeal and the case remanded to trial court for further proceedings. The defendants intend to vigorously defend this case. However, the Partnership has recorded a provision of $282,000, representing its share of the discounts and late fees and other fees and costs in the consolidated financial statements as of June 30, 1997. The ultimate outcome of the potential punitive damages award related to this litigation, including an estimate of potential loss, cannot presently be determined. (4)Changes in Partners' Deficit A summary of changes in Partners' deficit for the six months ended June 30, 1997 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1996 $(7,372,169) $(279,958) $(384,389) $(8,036,516) Net income 124,216 8,014 1,336 133,566 Distributions (704,000) (45,419) (7,570) (756,989) Balance at June 30, 1997 $(7,951,953)$(317,363)$(390,623)$(8,659,939)
Continued KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (5)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. These management agreements were sold to BRI OP Limited Partnership, a subsidiary of Berkshire Realty Company Inc., a publicly traded real estate investment trust and an affiliate of the General Partners, on February 28, 1997. The Partnership also 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 For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Property management fees $115,894 $124,749 $241,412 $242,695 Expense reimbursements 79,458 64,696 163,185 139,293 Charged to operations $195,352 $189,445 $404,597 $381,988
Due to affiliates consisted of expense reimbursements of $18,521 and $26,480 at June 30, 1997 and December 31, 1996, respectively. KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including those concerning Management's expectations regarding the future financial performance and future events. These forward-looking statements involve significant risk and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources The Partnership's ability to generate cash adequate to meet its needs 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, capital improvements, debt service and other 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. Beginning with the distribution paid in February, 1997, the annual distribution rate was increased from $20.00 per Unit, to $40.00 per Unit, based on sufficient Cash Flow and working capital reserves. The Partnership's properties, Century II Apartments ("Century") and Park Place, are anticipated to spend approximately $2,060,000 for capital improvements in 1997 to remain competitive in their respective markets. These improvements include catwalk and pavement upgrades and replacement of fitness equipment at Century, refurbishment of the elevator and interior improvements at Park Place, and new appliances at both properties. 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 six months ended June 30, 1997. The General Partners provide 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 income for tax purposes $ 151,000 Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 1,709,000 Principal payments on mortgage notes payable (281,000) Expenditures for capital improvements (465,000) Accrued legal expenses (114,000) Additions to working capital reserves (243,000) Cash Flow $ 757,000
Continued KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY Operations The following discussion relates to the operations of the Partnership and its properties (Park Place and Century Apartments) for the three and six months ended June 30, 1997 and 1996. Cash Flow, before additions to working capital reserves, increased for the six months ended June 30, 1997 as compared to the same period in 1996 due to both an increase in the Partnership's net income and a decrease in capital improvements at the Partnership's properties. The increase in net income was primarily due to an increase in rental revenue. Capital improvements decreased for the first half of 1997 when compared to the first half of 1996 as a result of extensive improvements completed on the model unit and pool at Park Place in 1996. In comparing the three and six months ended June 30, 1997 to the same periods in 1996, the increases in rental revenue are attributable to increases in average occupancy at both Park Place and Century. Average occupancy rates increased at Century from 97% and 93% for the three and six months ended June 30, 1996, respectively, to 100% for both the three and six months ended June 30, 1997. At Park Place, occupancy rose from an average of 96% to an average of 99% for both the three and six months ended June 30, 1996 and 1997, respectively. The Partnership's properties continue to enjoy strong occupancy as capital improvements, including an appliance replacement program, have strengthened leasing efforts at the properties. Interest income for the Partnership decreased as investments in commercial paper declined as a direct result of the 100% increase in the semiannual distribution paid in February, 1997. Total expenses increased for the three and six months ended June 30, 1997 when compared to the second quarter of 1996 primarily due to general and administrative and depreciation expenses. Costs incurred in connection with the operation of the Partnership, including the preparation and mailing of reports and other communications to the investors increased. This coupled with an increase in Partnership legal costs relating to the unsolicited tender offers made to purchase Partnership Units, caused the increase in general and administrative expense. Depreciation expense increased in conjunction with the extensive capital improvement programs completed at the end of 1996. KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY PART II - OTHER INFORMATION Item 1.Legal Proceeding 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 Apartments ("Park Place") and Marine Terrace Apartments. 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 of the month. 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 and reasonable attorneys' fees. To be eligible for such damages, plaintiffs must prove that the defendants deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the defendants, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The plaintiffs filed an appeal with the Appellate Court of Illinois, First District. During 1996, the decision was reversed on appeal and the case remanded to trial court for further proceedings. The defendants intend to vigorously defend this case. However, the Partnership has recorded a provision of $282,000, representing its share of the discounts and late fees and other fees and costs in the consolidated financial statements as of June 30, 1997. The ultimate outcome of the potential punitive damages award related to this litigation, including an estimate of potential loss, cannot presently be determined. 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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner. DATE: August 12, 1997 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from Krupp Realty Fund 5 financial statements for the six months ending June 30, 1997 and is qualified in its entirety by reference to such financial statements. 6-MOS 12-31-97 06-30-97 2,261,051 0 75,450 0 0 2,314,840 72,020,764 (40,262,523) 36,409,582 3,080,448 41,989,073 0 0 (8,659,939) 0 36,409,582 0 7,261,238 0 0 5,423,592 0 1,704,080 0 0 0 0 0 0 133,566 0 0 Includes all receivables grouped in "Prepaid expenses and other assets" on the balance sheet. Includes apartment complexes of $71,129,601 and deferred expenses of $891,163. Represents depreciation of $39,759,785 and accumulated amortization on deferred expenses $502,738. Represents mortgage note payable. Represents total deficits of the General Partners and Limited Partners of (390,623) and ($8,269,316), respectively. Includes all revenue of the Partnership. Operating expenses of $2,723,174 real estate tax expense of $973,292 and depreciation and amortization of $1,727,126. Net income allocated $1,336 to the General Partners and $132,230 to the Limited Partners. Average net income per unit of Limited Partners interest is $3.53 on 35,200 units.
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