-----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, Q5GqzY5+zMCR0S2bLE+sKZ89niltqUTTU6QM9qscgx2IKh2e4OlT7e14koxacPlO M/gZSQGE0F9fmTH9oHXiZg== 0000751570-96-000004.txt : 19960508 0000751570-96-000004.hdr.sgml : 19960508 ACCESSION NUMBER: 0000751570-96-000004 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 VII CENTRAL INDEX KEY: 0000751570 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042842924 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14377 FILM NUMBER: 96557388 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 0-14377 Krupp Realty Limited Partnership-VII Massachusetts 04-2842924 (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-VII AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 1996 1995 Multi-family apartment complexes, net of accumulated depreciation of $9,731,692 and $9,521,601, respectively $ 8,837,227 $ 9,030,289 Retail center, net of accumulated depreciation of $3,382,357 and $3,285,620, respectively 6,281,083 6,376,225 Total real estate assets 15,118,310 15,406,514 Cash and cash equivalents 1,258,868 1,311,037 Cash restricted for tenant security deposits 37,181 35,979 Cash restricted for capital improvements 53,729 57,462 Prepaid expenses and other assets 540,935 568,775 Deferred expenses, net of accumulated amortization of $64,478 and $55,514, respectively 222,816 231,780 Total assets $17,231,839 $17,611,547 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 9,699 $ 48,530 Mortgage notes payable 12,700,048 12,744,191 Accrued expenses and other liabilities 741,761 785,672 Total liabilities 13,451,508 13,578,393 Partners' equity (Note 2): Investor Limited Partners (27,184 Units outstanding) 4,379,339 4,606,880 Original Limited Partner (357,687) (337,462) General Partners (241,321) (236,264) Total Partners' equity 3,780,331 4,033,154 Total liabilities and Partners' equity $17,231,839 $17,611,547
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996 1995 Revenue: Rental $1,164,887 $1,099,574 Interest income 20,237 13,547 Total revenue 1,185,124 1,113,121 Expenses: Operating (Note 3) 284,439 242,916 Maintenance 70,226 60,434 Real estate taxes 109,963 113,571 Management fees (Note 3) 49,259 47,435 Depreciation and amortization 315,792 313,661 Interest 277,292 280,807 General and administrative (Note 3) 28,932 16,456 Total expenses 1,135,903 1,075,280 Net income $ 49,221 $ 37,841 Allocation of net income (Note 2): Investor Limited Partners (27,184 Units outstanding) $ 44,299 $ 34,057 Per Unit of Investor Limited Partner Interest $ 1.63 $ 1.25 Original Limited Partner $ 3,938 $ 3,027 General Partners $ 984 $ 757
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 1995 Operating activities: Net income $ 49,221 $ 37,841 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 315,792 313,661 Decrease (increase) in cash restricted for tenant security deposits (1,202) 14,253 Decrease in prepaid expenses and other assets 27,840 9,667 Decrease in accounts payable (40,622) (25,182) Decrease in accrued expenses and other liabilities (43,911) (55,906) Net cash provided by operating activities 307,118 294,334 Investing activities: Additions to fixed assets (18,624) (33,587) Decrease in cash restricted for capital improvements 3,733 1,405 Increase in accounts payable related to fixed asset additions 1,791 - Net cash used in investing activities (13,100) (32,182) Financing activities: Principal payments on mortgage notes payable (44,143) (40,734) Increase in deferred expenses - (5,475) Distributions (302,044) (302,044) Net cash used in financing activities (346,187) (348,253) Net decrease in cash and cash equivalents (52,169) (86,101) Cash and cash equivalents, beginning of period 1,311,037 1,021,464 Cash and cash equivalents, end of period $1,258,868 $ 935,363
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Significant 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-VII 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. 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, 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. Changes in Partners' Equity A summary of changes in partners' equity (deficit) for the three months ended March 31, 1996 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partners Equity Balance at December 31, 1995 $4,606,880 $(337,462) $(236,264) $4,033,154 Distributions (271,840) (24,163) (6,041) (302,044) Net income 44,299 3,938 984 49,221 Balance at March 31, 1996 $4,379,339 $(357,687) $(241,321) $3,780,331
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 4% of the gross receipts, net of leasing commissions, from the commercial properties under management and 5% of gross receipts from residential 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 $ 49,259 $ 47,435 Expense reimbursements 36,099 32,807 Charged to operations $ 85,358 $ 80,242
In addition to the amounts above, the following amounts relating to refinancing and disposition activities were paid to the General Partners or their affiliates.
March 31, December 31, 1996 1995 Cost reimbursements $ - $ 3,793
KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES 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 successful operations of its real estate investments. Such ability would also be impacted by the future availability of bank borrowings and the future 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. In 1994, the General Partners determined that there was sufficient cash flow to reinstate semi-annual distributions. These distributions commenced in August 1994 at a rate of $5.00 per Unit and increased in February 1995 to an annual rate of $20.00 per Unit. The Partnership's properties (Courtyards Village, Nora Corners and Windsor Apartments) have generated increased liquidity due to increased occupancy and higher rental rates in 1996, as compared to 1995. Furthermore, the Partnership has increased availability of funds due to reduced mortgage payments resulting from the 1994 refinancings of mortgage notes payable at Nora Corners and Windsor Apartments. In 1996, Courtyards, Nora Corners and Windsor have scheduled capital improvement expenditures totaling $312,000, $86,000 and $340,000, respectively. The General Partners believe these improvements will improve the appearance of the properties and allow the properties to remain competitive in their respective real estate markets. 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, 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 $ 30,000 Items not requiring or (requiring) the use of operating funds: Tax basis depreciation and amortization 337,000 Principal payments on mortgage notes payable (44,000) Expenditures for capital improvements (19,000) Working capital reserves (153,000) Cash Flow $ 151,000
Operations Cash Flow for the first three months of 1996, net of working capital reserves, has increased when compared to the same period in 1995 due primarily to decreased capital improvements and increased net income. The Partnership experienced a 30% increase in net income as the increase in total revenue more than offset the increase in total expenses. The increase in rental revenue is attributable to rises in occupancy and rental rates at Courtyards and Windsor in the first quarter of 1996 as compared to the same period in 1995. Interest income increased due to additional investments in commercial paper yielding a higher rate of return. Total expenses for the three months ended March 31, 1996 when compared to the same period in 1995 have remained relatively stable with the exception of operating expense. Operating expense increased between the two periods due primarily to a rise in utility expense in the first three months of 1996 as compared to the first three months of 1995. Although rates remained the same in 1996, higher utility consumption at Courtyards is attributable to the severe weather experienced in the Chicago area during the first quarter of 1996. 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 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-VII 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-VII (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 7 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 1,258,868 0 211,766 0 0 420,079 28,519,650 (13,178,524) 17,231,839 751,460 12,700,048 0 0 3,780,331 0 17,231,839 0 1,185,124 0 0 858,611 0 277,292 0 0 0 0 0 0 49,221 0 0 Includes all receivables included in "Prepaid Expenses and Other Assets" on the balance sheet. Accumulated depreciation of $13,114,049 and accumulated amortization of deferred expenses of $64,475. Includes apartment complexes of $18,568,919, retail center of $9,663,440 and deferred expenses of $287,294. Represents mortgage notes payable. Total equity of General Partners of ($241,321) and the Limited Partners of $4,021,652. Represents total revenues of the Partnership. Includes operating expenses of $432,856 real estate taxes of $109,963, and depreciation and amortization of $315,792. Net income allocated $984 to the General Partners and $48,237 to the Limited Partners. Average net income per Unit of Limited Partner interest is $1.63 on 27,184 Units outstanding.
-----END PRIVACY-ENHANCED MESSAGE-----