-----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, ClFGwStDwJOby8ueFfAvcWdN+PQ3T8LIdttPPG10xuh+HIuQJtbnA7w+USovE2w5 T1EXIDuYa1n6s35ctrEVfw== 0000751570-01-500003.txt : 20010516 0000751570-01-500003.hdr.sgml : 20010516 ACCESSION NUMBER: 0000751570-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 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: SEC FILE NUMBER: 000-14377 FILM NUMBER: 1634862 BUSINESS ADDRESS: STREET 1: ONE BEACON STREET STREET 2: SUITE 1500 CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6175237722 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 realty7_10q.txt KRUPP REALTY LIMITED PARTNERSHIP - VII 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 --------------------------------------- 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 identification no.) incorporation or organization One Beacon Street, Boston, Massachusetts 02108 - --------------------------------------------- ------------------------------- (Address of principal executive (Zip code) offices) (617) 523-7722 - -------------------------------------------------------------------------------- (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 preceeding 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. 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
(Unaudited) March 31, December 31, 2001 2000 ------------ ------------ Multi-family apartment communities, net of accumulated depreciation of $16,002,001 and $15,671,250, respectively $ 7,508,260 $ 7,766,297 Cash and cash equivalents 300,894 456,851 Cash restricted for tenant security deposits 27,993 27,800 Replacement reserve escrow 64,443 56,043 Due from affiliates 28,062 31,115 Prepaid expenses and other assets 322,681 476,014 Investment in securities (Note 3) 65,340 65,340 Deferred expenses, net of accumulated amortization of $219,670 and $210,020, respectively 95,982 105,632 ------------ ------------ Total assets $ 8,413,655 $ 8,985,092 ============ ============ LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable $ 10,077,881 $ 10,107,446 Accrued expenses and other liabilities 613,347 717,537 ------------ ------------ Total liabilities 10,691,228 10,824,983 Partners' deficit (Note 2): Investor Limited Partners (27,184 units outstanding) (1,354,649) (946,178) Original Limited Partner (592,006) (569,931) General Partners (330,918) (323,782) ------------ ------------ Total partners' deficit (2,277,573) (1,839,891) ------------ ------------ Total liabilities and partners' deficit $ 8,413,655 $ 8,985,092 ============ ============
The accompanying notes are an integral part of the consolidated financial statements. KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31, -------------------------- 2001 2000 ----------- ----------- Revenue: Rental $ 1,058,303 $ 1,035,012 Interest income 3,369 4,810 ----------- ----------- Total revenue 1,061,672 1,039,822 ----------- ----------- Expenses: Operating (Note 5) 299,525 246,781 Maintenance 87,447 64,614 Real estate taxes 108,003 110,757 General and administrative (Note 5) 99,819 34,881 Management fees (Note 5) 47,112 54,922 Depreciation and amortization 340,401 354,534 Interest 241,109 218,456 ----------- ----------- Total expenses 1,223,416 1,084,945 ----------- ----------- Net loss $ (161,744) $ (45,123) =========== =========== Allocation of net loss: Investor Limited Partners (27,184 units outstanding): Net loss $ (160,127) $ (44,672) =========== =========== Investor Limited Partners, Per Unit: Net loss $ (5.89) $ (1.64) =========== =========== Original Limited Partner: Net loss $ - $ - =========== =========== General Partners: Net loss $ (1,617) $ (451) =========== ===========
The accompanying notes are an integral part of the consolidated financial statements KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31, ------------------------- 2001 2000 ----------- ---------- Cash flows from operating activities: Net loss $ (161,744) $ (45,123) Adjustment to reconcile net loss to net cash provided by operating activities: Interest earned on replacement reserve escrow - (179) Depreciation and amortization 340,401 354,534 Changes in assets and liabilities: Increase in restricted cash for tenant securit (193) (148) Decrease in prepaid expenses and other assets 156,386 234,418 Decrease in accrued expenses and other liabili (104,190) (120,510) ----------- ---------- Net cash provided by operating activities 230,660 422,992 ----------- ---------- Cash flows from investing activities: Deposits to replacement reserve escrow (8,400) (12,600) Withdrawals from replacement reserve escrow - 67,522 Additions to fixed assets (72,714) (86,111) Decrease in accrued expenses and other liabilities related to fixed assets additions - (2,204) ----------- ---------- Net cash used in investing activities (81,114) (33,393) ----------- ---------- Cash flows from financing activities: Principal payments on mortgage notes payable (29,565) (27,255) Distributions (275,938) (276,029) ----------- ---------- Net cash used in financing activities (305,503) (303,284) ----------- ---------- Net (decrease) increase in cash and cash equivalents (155,957) 86,315 Cash and cash equivalents, beginning of period 456,851 120,525 ----------- ---------- Cash and cash equivalents, end of period $ 300,894 $ 206,840 =========== ==========
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 principals 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 the Consolidated Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2000 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, 2001 and its results of operation and cash flows for the three months ended March 31, 2001 and 2000. The results of operations for the three months ended March 31, 2001 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' deficit for the three months ended March 31, 2001 is as follows:
Investor Original Total Limited Limited General Partners' Partners Partner Partner Deficit ----------- ----------- ----------- ----------- Balance at December 31, 2000 $ (946,178) $ (569,931) $ (323,782) $(1,839,891) Net loss (160,127) -- (1,617) (161,744) Distributions (248,344) (22,075) (5,519) (275,938) ----------- ----------- ----------- ----------- Balance at March 31, 2001 $(1,354,649) $ (592,006) $ (330,918) $(2,277,573) =========== =========== =========== ===========
(3) Investment in Securities On October 5, 2000, the Partnership, as a member of an alliance of major multi-family real estate companies, executed a master lease agreement ("MLA") with a provider of high-speed internet, video and voice services to multi-family communities. Pursuant to the MLA, the Partnership granted the provider preferred lease, license and access rights to provide data services, consisting of high-speed broadband internet access and video services, to the residents at some of its multi-family communities for a ten-year period. In exchange for these rights, the Partnership received 250,843 shares of common stock which were valued at $.2285 per share or $57,341. In addition, the Partnership will receive 7.5% of the gross revenues that the provider obtains from providing its services as well as a fixed amount for each resident that executes a subscriber agreement. In conjunction with the execution of the MLA, the Partnership made an investment of $5,751 in exchange for 25,164 additional shares of common stock also valued at $.2285 per share. The Partnership incurred approximately $2,248 in closing costs related to the acquisition by the Partnership and the closing costs incurred were recorded as an investment in securities in the financial statements as of December 31, 2000. (4) Mortgage Notes Payable On April 27, 2001, the General Partners signed an agreement extending the mortgage notes payable on Windsor Apartments, under the original terms, until May 1, 2002. The Partnership paid an extension fee of $24,962 for this privilege. (5) Related Party Transactions The Partnership pays property management fees to an affiliate of the General Partners for management services. Pursuant to the management agreements, management fees are payable monthly at a rate of 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 administrative expenses. Amounts accrued or paid to the General Partners' affiliates were as follows:
For the Three Months Ended March 31, -------------------------------- 2001 2000 --------------- --------------- Property management fees $ 47,112 $ 54,922 Expenses reimbursement 117,687 41,734 --------------- --------------- Charged to operations $ 164,799 $ 96,656 =============== ===============
Expense reimbursements due from affiliates of $28,062 and $31,115 were included in due from affiliates at March 31, 2001 and December 31, 2000, respectively. 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. Over the past several years, real estate markets in general have improved, and the General Partners feel it is an opportune time to formulate a liquidation strategy for the Partnership. As previously disclosed, the General Partners have begun the process of more thoroughly assessing the real estate sales market in the Partnership's market areas and developing a disposition strategy which will yield the highest value to investors through an efficient and orderly liquidation of the Partnership. In keeping with this strategy, the General Partners have extended the term of the mortgage loan which would have matured in the next 2 months with financing that leaves flexibility for the property sales. Assuming market conditions do not change, the assessment of the real estate sales market is consistent with the General Partners' expectations, and an acceptable disposition plan can be implemented, the General Partners expect to complete the liquidation process over the next 12 months. However, there can be no assurance that such a liquidation will occur, or what amounts may be realized by the Partnership. On April 27, 2001, the General Partners signed an agreement extending the mortgage notes payable on Windsor Apartments, under the original terms, until May 1, 2002. The Partnership paid an extension fee of $24,962 for this privilege. The General Partners, on an ongoing basis, assess the current and future liquidity needs in determining the level of working capital reserves the Partnership should maintain. Adjustments to distributions are made when appropriate to reflect such assessment. The current annual distribution rate is $18.28 per Investor Limited Partner Unit, and is paid semi-annually in February and August. Operations The following discussion relates to the operations of the Partnership and its properties (Courtyards Village and Windsor Apartments) for the three months ended March 31, 2001 and 2000. Net loss increased during the three months ended March 31, 2001 when compared to same period in 2000, as the increase in total expenses exceeded the increase in total revenue. The increase in total revenue was primarily a result of rental rate increases implemented at all of the Partnership's properties at the end of the first quarter of 2000. KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES Total expenses for the three months ended March 31, 2001 increased when compared to the three months ended March 31, 2000. Operating expenses increased as a result of increases in payroll, utilities and rubbish removal costs. Maintenance expenses increased due to increases in recurring repair and maintenance costs. General and administrative expenses also increased as a result of increases in investor communications costs including the annual look-back adjustment which totaled approximately $43,000. Depreciation expense decreased as fixed asset additions purchased in the previous years became fully depreciated. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership's future earnings, cash flows and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. The Partnership manages its market risk by matching projected cash inflows from operating activities, investing activities and financing activities with projected cash outflows to fund debt payments, acquisitions, capital expenditures, distributions and other cash requirements. All of the Partnership's debt (maturing at various times through 2007) has a fixed interest rate, which minimizes the interest rate risk. A detailed analysis of quantitative and qualitative market risk exposures was provided in the in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2000. There have been no material changes in market risk subsequent to that date 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 it's behalf by the undersigned, thereunto duly authorized. Krupp Realty Limited Partnership-VII ------------------------------------ (Registrant) BY: /s/ David C. Quade ------------------------------------ David C. Quade Treasurer (Principal Financial and Accounting Officer) of The Krupp Corporation, a General Partner DATE: May 15, 2001 -----END PRIVACY-ENHANCED MESSAGE-----