-----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, ONC3EIQT3Sy7tVMEzUPcsggq30v5L07AaaZkdw4Xcr/1vdPWgM2bP5Aro65JbvGm v40nSniB8S5wIndg+Szorw== 0000768175-96-000014.txt : 19961106 0000768175-96-000014.hdr.sgml : 19961106 ACCESSION NUMBER: 0000768175-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961104 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP CASH PLUS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000768175 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042865878 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14393 FILM NUMBER: 96653602 BUSINESS ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE 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 September 30, 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 0-14393 Krupp Cash Plus Limited Partnership Massachusetts 04-2865878 (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 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 CASH PLUS LIMITED PARTNERSHIP BALANCE SHEETS ASSETS
September 30, December 31, 1996 1995 Real estate assets: Retail centers, less accumulated depreciation of $16,810,212 and $15,298,268, respectively $29,122,747 $30,082,471 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 4) 4,519,885 5,151,696 Total real estate assets 33,642,632 35,234,167 Cash and cash equivalents 4,401,270 2,841,353 Other assets 718,668 782,000 Total assets $38,762,570 $38,857,520 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 335 $ 6,428 Accrued expenses and other liabilities (Note 2) 1,362,723 963,809 Total liabilities 1,363,058 970,237 Partners' equity (deficit) (Note 3): Unitholders (4,000,000 Units outstanding) 37,551,307 38,032,296 Corporate Limited Partner (100 Units outstanding) 1,168 1,180 General Partners (152,963) (146,193) Total Partners' equity 37,399,512 37,887,283 Total liabilities and Partners' equity $38,762,570 $38,857,520
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Revenue: Rental $1,291,131 $1,415,939 $4,309,207 $4,406,111 Interest income - MBS (Note 4) 96,716 113,783 303,261 353,493 Interest income - other 57,247 57,056 152,981 146,129 Total revenue 1,445,094 1,586,778 4,765,449 4,905,733 Expenses: Operating (Note 5) 250,964 261,302 845,024 779,634 Maintenance 57,953 69,098 216,146 203,272 General and adminis- trative (Note 5) 44,763 48,089 116,706 140,782 Real estate taxes 90,662 281,776 679,269 883,713 Management fees (Note 5) 70,462 95,726 214,546 230,098 Depreciation 506,194 463,215 1,511,944 1,430,302 Total expenses 1,020,998 1,219,206 3,583,635 3,667,801 Net income $ 424,096 $ 367,572 $1,181,814 $1,237,932 Allocation of net income (Note 3): Unitholders (4,000,000 Units outstanding) $ 415,604 $ 360,212 $1,158,149 $1,213,144 Net income per Unit of Depositary Receipt $ .10 $ .09 $ .29 $ .30 Corporate Limited Partner (100 Units outstanding) $ 10 $ 9 $ 29 $ 30 General Partners $ 8,482 $ 7,351 $ 23,636 $ 24,758
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 1995 Operating activities: Net income $ 1,181,814 $ 1,237,932 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,511,944 1,430,302 Amortization of MBS premium, net 1,012 1,231 Decrease (increase) in other assets 63,332 (130,700) Decrease in accounts payable (6,093) (103,785) Increase in accrued expenses and other liabilities 398,914 914,898 Net cash provided by operating activities 3,150,923 3,349,878 Investing activities: Additions to fixed assets (552,220) (429,024) Principal collections on MBS 630,799 376,097 Net cash provided by (used in) investing activities 78,579 (52,927) Financing activity: Distributions (1,669,585) (1,671,553) Net increase in cash and cash equivalents 1,559,917 1,625,398 Cash and cash equivalents, beginning of period 2,841,353 2,319,369 Cash and cash equivalents, end of period $ 4,401,270 $ 3,944,767
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO 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 Cash Plus Limited Partnership (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to 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 financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of September 30, 1996, its results of operations for the three and nine months ended September 30, 1996 and 1995 and its cash flows for the nine months ended September 30, 1996 and 1995. Certain prior year balances have been reclassified to conform with current year financial statement presentation. The results of operations for the three and nine months ended September 30, 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) Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following:
September 30, December 31, 1996 1995 Accrued real estate taxes $ 594,626 $685,370 Accrued insurance 140,394 114,397 Prepaid rent 545,618 84,065 Tenant security deposits 52,394 48,707 Other accrued expenses 29,691 31,270 $1,362,723 $963,809
(3) Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the nine months ended September 30, 1996 is as follows:
Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1995 $38,032,296 $ 1,180 $(146,193) $37,887,283 Net income 1,158,149 29 23,636 1,181,814 Distributions (1,639,138) (41) (30,406) (1,669,585) Balance at September 30, 1996 $37,551,307 $ 1,168 $(152,963) $37,399,512
(4) Mortgage Backed Securities The MBS held by the Partnership are issued by the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Additional information on the MBS held is as follows:
September 30, December 31, 1996 1995 Face Value $ 4,504,217 $ 5,135,017 Amortized Cost $ 4,519,885 $ 5,151,696 Estimated Market Value $ 4,637,000 $ 5,435,000
Coupon rates of the MBS range from 8.5% to 9.0% per annum and mature in the years 2008 through 2017. The Partnership's MBS portfolio had gross unrealized gains of approximately $117,000 and $284,000 at September 30, 1996 and December 31, 1995, respectively, and no unrealized losses. The Partnership does not expect to realize these gains as it currently has the intention and ability to hold the MBS until maturity. (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. 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 Unitholders. Amounts accrued or paid to the General Partners or their affiliates are as follows:
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Property management fees $ 70,462 $ 95,726 $214,546 $230,098 Expense reimbursements 74,685 74,922 214,162 192,926 Charged to operations $145,147 $170,648 $428,708 $423,024
KRUPP CASH PLUS LIMITED PARTNERSHIP 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 operations of its real estate investments. Liquidity is also generated by the MBS portfolio. The Partnership holds MBS that are guaranteed by Government National Mortgage Association ("GNMA") and Federal Home Loan Mortgage Corporation ("FHLMC"). The principal risks in respect of MBS are the credit worthiness of GNMA and FHLMC and the risk that the current value of any MBS may decline as a result of changes in market interest rates. The General Partners believe that the risk is minimal due to the fact that the Partnership has the ability to hold these securities to maturity. The Partnership's sources of future liquidity will be used for payment of expenses related to real estate operations, capital expenditures including tenant build-outs to secure quality tenants, and other administrative expenses. Cash Flow, if any, as calculated under Section 17 of the Partnership Agreement, will then be available for distribution to the Partners. The Partnership's retail centers continue to have a relatively consistent level of operating results. However, to attain these results, management has found it necessary to fund a significant portion of tenant build-outs to secure quality tenants in the Partnership's retail centers. The Partnership has ongoing improvements which are necessary at High Point National Furniture Mart to reconfigure space for new tenants and comply with present building code standards. Renovations to the three floors of the building were completed during the second quarter of 1996, while renovations to the elevator system which began in the second quarter of 1996, were completed in the third quarter of 1996. The refurbished show-room spaces have enabled the property to command higher rents and maintain 99% occupancy. Management is currently evaluating leasing issues at Tradewinds. One 17,770 square foot tenant's lease will be terminated as of December 31, 1996. Management is working on finding a new tenant for this space and is negotiating with one of the anchor tenants regarding possible expansion. Improvements to the facade at Tradewinds were completed during the second quarter of 1996 in order to remain competitive against newer centers. In order to continue to fund the capital improvements noted above, the General Partners, on an ongoing basis, assess the current and future liquidity needs in determining the levels of working capital the Partnership should maintain. Adjustments to distributions are made when appropriate to reflect such assessments. Based on current assessments, the General Partners have determined that retaining the current annualized distribution rate of approximately $0.55 per Unit will allow the Partnership to maintain adequate reserves to fund the necessary capital improvements. Distributable Cash Flow and Net Proceeds from Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Proceeds from Capital Transactions as defined by Section 17 of the Partnership Agreement, and the source of cash distributions for the nine months ended September 30, 1996 and from the Partnership's inception through September 30, 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, Distributable Cash Flow and Net Proceeds from Capital Transactions 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.
(In $1,000's except per Unit amounts) For the Nine Months Inception to Ended September 30, September 30, 1996 1996 Distributable Cash Flow: Net income for tax purposes $1,456 $ 23,396 Items not requiring or (not providing) the use of operating funds: Tax basis depreciation and amortization 1,261 17,769 Interest income on note receivable - (371) Gain on sale of assets - (1,686) Additions to fixed assets (552) (8,452) Cash from vacancy guarantee on Luria's Plaza - 873 Fixed asset additions funded from cash reserves - 865 Operating reserve for fixed asset additions - (1,070) Total Distributable Cash Flow ("DCF") $2,165 $ 31,324 Unitholders' Share of DCF $2,122 $ 30,698 Unitholders' Share of DCF per Unit $ .53 $ 7.67 (d) General Partners' Share of DCF $ 43 $ 626 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 632 $ 15,085 Proceeds from sale of MBS - 19,018 Net proceeds from sale of property including interest on mortgage note receivable - 1,208 Mortgage note - 7,150 Reinvestment of MBS principal collections - (16,141) Total Net Proceeds from Capital Transactions $ 632 $ 26,320 Distributions: Unitholders $1,639 (a) $ 55,436 (b)(c) Unitholders' Average per Unit $ .41 (a) $ 13.86 (b)(c)(d) General Partners $ 43 (a) $ 625 (b) Total Distributions $1,682 (a) $ 56,061 (b)(c)
(a) Represents distributions paid in 1996, except the February, 1996 distribution, which relates to 1995 cash flow, and includes an estimate of the distribution to be paid in November, 1996. (b) Includes an estimate of the distribution to be paid in November, 1996. (c) Includes a $7,150,000 note which was distributed from the Partnership to the Evergreen Plaza Note-Holding Trust whose beneficiaries were the Partnership's Unitholders on record on May 31, 1990. (d) Unitholders' average per Unit return of capital as of November, 1996 is $6.19 [$13.86-$7.67]. Operations Distributable Cash Flow decreased for the nine months ended September 30, 1996, as compared to the nine months ended September 30, 1995, due to an increase in capital improvements at the Partnership's properties and a decrease in net income. Rental revenue decreased for the three and nine months ended September 30, 1996, as compared to the same periods in 1995. The decrease in rental revenue is due to lower tenant billings as a result of the decline in reimbursable real estate taxes. MBS interest income also decreased due to repayment and prepayments of principal which occur on the MBS portfolio. The decrease was partially offset by an increase in other interest income as a result of higher cash and cash equivalent balances available for investment. Total expenses decreased for the three months ended September 30, 1996, as compared to the same period in 1995, due to decreases in maintenance, real estate tax and management fee expenses. The decline in maintenance expense is a result of lower preventative maintenance performed at the Partnership's properties in the third quarter of 1996, as compared to the third quarter of 1995. The decrease in real estate taxes is a result of a reassessment of Tradewinds by the local taxing authority. Management fees also decreased in conjunction with the decline in revenue. During the nine months ended September 30, 1996, total expenses decreased primarily due to a decrease in real estate taxes, as discussed above. However, this decrease was partially offset by an increase in both operating and maintenance expenses. Operating expense increased due to prior years' insurance refunds received in 1995, and increased utility consumption as a result of the unusually harsh winter weather conditions at the properties. The increase in maintenance expense is due to increased snow removal and exterior repair expenditures as result of the adverse weather conditions. Depreciation expense increased for the three and nine months ended September 30, 1996, as compared to the same periods in 1995, in conjunction with the increase in capital improvement expenditures. General In accordance with Financial Accounting Standard 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 CASH PLUS LIMITED PARTNERSHIP 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 Cash Plus Limited Partnership (Registrant) By: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. Date: October 30, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Cash Plus I Financial Statements for the nine months ended September 30, 1996 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1996 SEP-30-1996 4,401,270 4,519,885 512,408 0 0 206,260 45,932,959 (16,810,212) 38,762,570 1,363,058 0 0 0 37,399,512 0 38,762,570 0 4,765,449 0 0 3,583,635 0 0 0 0 0 0 0 0 1,181,814 0 0 Includes all receivables included in "other assets" on the balance sheet. Represents total deficit of the General Partners ($152,963) and equity of the Limited Partners $37,552,475. Includes operating expenses of $1,392,422, real estate taxes of $679,269 and depreciation expense of $1,511,944. Net income allocated $23,636 to General Partners $1,158,178 for the nine months ended September 30, 1996. Average net income is $.29 per unit. 4,000,000 Units outstanding.
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