-----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, WXSPOVLJJVDj6TcJ7qv5s9gtfiBy7M/TgzuNhmpJNpPXToFi1AXMLSRX8A90Mg4I 4wZrJ9lsbW34lSkT1aKDwQ== 0000751570-97-000004.txt : 19970515 0000751570-97-000004.hdr.sgml : 19970515 ACCESSION NUMBER: 0000751570-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97605780 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, 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 0-14377 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 The total number of pages in this document is 10. PART I. FINANCIAL INFORMATION Item 1.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-VII AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS March 31, December 31, 1997 1996 Real estate assets: Multi-family apartment complexes, net of accumulated depreciation of $10,650,461 and $10,420,771, respectively $ 8,634,192 $ 8,770,063 Retail center, net of accumulated depreciation of $3,774,266 and $3,676,352, respectively 5,941,143 6,038,521 Total real estate assets 14,575,335 14,808,584 Cash and cash equivalents 1,060,699 1,177,332 Cash restricted for tenant security deposits 36,961 36,823 Replacement reserve escrow 54,132 52,009 Prepaid expenses and other assets 545,127 584,929 Deferred expenses, net of accumulated amortization of $100,344 and $91,377, respectively 186,950 195,917 Total assets $16,459,204 $16,855,594 LIABILITIES AND PARTNERS' EQUITY Liabilities: Mortgage notes payable $12,514,323 $12,562,165 Accounts payable 5,465 7,431 Accrued expenses and other liabilities 764,277 846,419 Total liabilities 13,284,065 13,416,015 Partners' equity (deficit) (Note 2): Investor Limited Partners (27,184 Units outstanding) 3,834,667 4,072,663 Original Limited Partner (406,103) (384,948) General Partners (253,425) (248,136) Total Partners' equity 3,175,139 3,439,579 Total liabilities and Partners' equity $16,459,204 $16,855,594
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, 1997 1996 Revenue: Rental $1,196,040 $1,164,887 Interest income 15,313 20,237 Total revenue 1,211,353 1,185,124 Expenses: Operating (Note 3) 281,971 284,439 Maintenance 66,095 70,226 Real estate taxes 127,821 109,963 General and administrative (Note 3) 37,723 28,932 Management fees (Note 3) 50,088 49,259 Depreciation and amortization 336,571 315,792 Interest 273,480 277,292 Total expenses 1,173,749 1,135,903 Net income $ 37,604 $ 49,221 Allocation of net income (Note 2): Investor Limited Partners (27,184 Units outstanding) $ 33,844 $ 44,299 Per Unit of Investor Limited Partner Interest $ 1.24 $ 1.63 Original Limited Partner $ 3,008 $ 3,938 General Partners $ 752 $ 984
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, 1997 1996 Operating activities: Net income $ 37,604 $ 49,221 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 336,571 315,792 Changes in assets and liabilities: Increase in cash restricted for tenant security deposits (138) (1,202) Decrease in prepaid expenses and other assets 39,802 27,840 Decrease in accounts payable (1,123) (40,622) Decrease in accrued expenses and other liabilities (82,142) (43,911) Net cash provided by operating activities 330,574 307,118 Investing activities: Deposits to replacement reserve escrow (6,000) (6,000) Withdrawals from replacement reserve escrow 3,877 9,733 Additions to fixed assets (94,355) (18,624) Increase (decrease) in accounts payable related to fixed asset additions (843) 1,791 Net cash used in investing activities (97,321) (13,100) Financing activities: Principal payments on mortgage notes payable (47,842) (44,143) Distributions (302,044) (302,044) Net cash used in financing activities (349,886) (346,187) Net decrease in cash and cash equivalents (116,633) (52,169) Cash and cash equivalents, beginning of period 1,177,332 1,311,037 Cash and cash equivalents, end of period $1,060,699 $1,258,868
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.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, 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 normal recurring accruals) necessary to present fairly the Partnership's consolidated financial position as of March 31, 1997 and its results of operations and cash flows for the three months ended March 31, 1997 and 1996. 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, 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.Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the three months ended March 31, 1997 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partners Equity Balance at December 31, 1996 $ 4,072,663 $(384,948) $(248,136) $3,439,579 Distributions (271,840) (24,163) (6,041) (302,044) Net income 33,844 3,008 752 37,604 Balance at March 31, 1997 $ 3,834,667 $(406,103) $(253,425) $3,175,139
Continued KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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 residential management agreements were sold to BRI OP Limited Partnership, 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 Ended March 31, 1997 1996 Property management fees $ 50,088 $ 49,259 Expense reimbursements 37,561 36,099 Charged to operations $ 87,649 $ 85,358
KRUPP REALTY LIMITED PARTNERSHIP-VII 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 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 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. Currently, management is reviewing refinancing options for the Courtyards Village mortgage note. Increased liquidity which may result from this refinancing will be used to fund capital improvements at the Partnership's properties, Courtyards Village, Nora Corners and Windsor Apartments. Approximately $1,240,000 in fixed asset expenditures are anticipated in 1997 in order to improve the appearance of the properties and allow them to remain competitive in their respective markets. These improvements include sign replacements at Windsor Apartments and interior improvements and appliance replacements at both Courtyards Village and Windsor Apartments. 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, 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 $ 35,000 Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 341,000 Principal payments on mortgage notes payable (48,000) Expenditures for capital improvements (94,000) Releases from working capital reserves 68,000 Cash Flow $ 302,000
Continued KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES Operations Cash Flow, as calculated by Section 8.2(a) of the Partnership Agreement, for the first three months of 1997, before releases from capital reserves, decreased when compared to the same period in 1996 due primarily to increased capital improvements at the Partnership's two residential properties, Courtyards Village ("Courtyards") and Windsor Apartments ("Windsor"). Improvements, including new signs at Windsor and pool upgrades at Courtyards, were completed in the first quarter of 1997. Overall, net income decreased in the first quarter of 1997 when compared to the first quarter of 1996 as the increase in total expenses more than offset the increase in total revenue. While occupancy remained relatively stable, rental revenue increased as a result of moderate rental rate increases beginning in the second quarter of 1996 at the Partnership's residential properties. Interest income decreased due to lower average cash and cash equivalent balances. Total expenses remained relatively stable for the three months ended March 31, 1997 when compared to the same period in 1996 with the exception of increases in general and administrative, real estate tax and depreciation expenses. Legal costs related to the recent unsolicited tender offer to purchase Partnership Units resulted in the rise in general and administrative expense, while a reassessment of Windsor Apartments property value in the third quarter of 1996 increased real estate tax expense. Depreciation expense increased in conjunction with the increase in capital improvements. 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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner. DATE: May 13, 1997
EX-27 2
5 This schedule for Fund 7 contains financial information extracted from the financial statements for the quarter ended March 31, 1997 andis qualified in its entirety by reference to such finanical statements. 3-MOS DEC-31-1997 MAR-31-1997 1,060,699 0 181,358 0 0 454,862 29,287,356 (14,525,071) 16,459,204 769,742 12,514,323 0 0 3,175,139 0 16,459,204 0 1,211,353 0 0 900,269 0 273,480 0 0 0 0 0 0 37,604 0 0 Includes all receivables included in prepaid expenses and other assets on the balance sheet. Includes apartment complexes of $19,284,653, retail center of $9,715,409 and deferred expenses of $287,294. Accumulated depreciation of ($14,424,727) and accumulated amortization of ($100,34) Represents mortgage notes payable. Total deficit for General Partners ($253,425) and total equity of limted partners is $3,428,564. Represents all revenue of the Partnership. Includes operating expenses of $435,877, real estate taxes of $127,821 and depreciation and amortization of $336,571. Net income allocated &752 to the General partners and $36,852 to the limited partners. Average net income per unit of limited partner interest is $1.24.
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