-----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, D+ybLxXwHgTezXs5le8rGYv4DFhoyuiD3FHLqUzIhhOhJdJyj/f9Bi0zsLWtdPg/ mFlD8ctKaSRznz9sWSrKSg== 0000768175-97-000006.txt : 19970515 0000768175-97-000006.hdr.sgml : 19970515 ACCESSION NUMBER: 0000768175-97-000006 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 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: 97605030 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 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 0-14393 Krupp Cash Plus Limited Partnership Masachusetts 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 The total number of pages in this document is 13. 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
March 31, December 31, 1997 1996 Real estate assets: Retail centers, less accumulated depreciation of $17,840,903 and $17,342,753, respectively $28,409,976 $28,908,119 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 5) 4,318,582 4,373,246 Total real estate assets 32,728,558 33,281,365 Cash and cash equivalents (Note 2) 4,792,066 4,043,066 Other assets 619,628 616,379 Total assets $38,140,252 $37,940,810 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable $ 16,427 $ 46,238 Due to affiliates (Note 6) - 26,735 Accrued expenses and other liabilities (Note 3) 1,380,044 843,385 Total liabilities 1,396,471 916,358 Partners' equity (deficit) (Note 4): Limited Partners (4,000,000 Units outstanding) 36,910,117 37,188,551 Corporate Limited Partner (100 Units outstanding) 1,152 1,159 General Partners (167,488) (165,258) Total Partners' equity 36,743,781 37,024,452 Total liabilities and Partners' equity $38,140,252 $37,940,810
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 1996 Revenue: Rental $1,452,013 $1,547,036 Interest income - MBS (Note 5) 91,910 106,385 Interest income - other 60,406 44,499 Total revenue 1,604,329 1,697,920 Expenses: Operating (Note 6) 280,305 261,227 Maintenance 74,296 75,832 General and administrative (Note 6) 98,355 44,679 Real estate taxes 304,458 295,252 Management fees (Note 6) 71,645 62,499 Depreciation 498,150 492,917 Total expenses 1,327,209 1,232,406 Net income $ 277,120 $ 465,514 Allocation of net income (Note 4): Unitholders (4,000,000 Units outstanding) $ 271,571 $ 456,192 Net income per Unit of Depositary Receipt $ .07 $ .11 Corporate Limited Partner (100 Units outstanding) $ 7 $ 11 General Partners $ 5,542 $ 9,311
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 1996 Operating activities: Net income $ 277,120 $ 465,514 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 498,150 492,917 Amortization of net MBS premium (discount) (150) 263 Changes in assets and liabilities: Decrease (increase) in other assets (3,249) 54,055 Increase (decrease) in accounts payable 12,145 (6,093) Decrease in due to affiliates (26,735) - Increase in accrued expenses and other liabilities 536,659 405,874 Net cash provided by operating activities 1,293,940 1,412,530 Investing activities: Additions to fixed assets - (226,086) Increase (decrease) in accounts payable for fixed asset additions (41,963) 7,000 Principal collections on MBS 54,814 242,130 Net cash provided by investing activities 12,851 23,044 Financing activity: Distributions (557,791) (549,550) Net increase in cash and cash equivalents 749,000 886,024 Cash and cash equivalents, beginning of period 4,043,066 2,841,353 Cash and cash equivalents, end of period $4,792,066 $3,727,377
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, 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 financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's 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. 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)Cash and Cash Equivalents Cash and cash equivalent consisted of the following:
March 31, December 31, 1997 1996 Cash and money market accounts $ 835,658 $ 579,264 Commercial paper 3,956,408 3,463,802 $4,792,066 $4,043,066
At March 31, 1997, commercial paper represents corporate issues complying with Section 6.2(a) of the Partnership Agreement purchased through a corporate issuer maturing in the second quarter of 1997. At March 31,1997, the carrying value of the Partnership's investment in commercial paper approximates fair value. (3)Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following:
March 31, December 31, 1997 1996 Accrued real estate taxes $ 553,654 $582,835 Deferred income and other accrued expenses 770,262 211,606 Tenant security deposits 48,356 48,944 $1,372,272 $843,385
Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (4)Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the three months ended March 31, 1997 is as follows:
Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1996 $37,188,551 $1,159 $(165,258) $37,024,452 Net income 271,571 7 5,542 277,120 Distributions (550,005) (14) (7,772) (557,791) Balance at March 31, 1997 $36,910,117 $1,152 $(167,488) $36,743,781
The distributions payable to the General Partners totaled $7,772 and were included in accrued expenses and other liabilities at March 31, 1997. (5)Mortgage Backed Securities The MBS held by the Partnership are issued by the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. The following is additional information on the MBS held:
March 31, December 31, 1997 1996 Face Value $4,303,148 $4,357,962 Amortized Cost $4,318,582 $4,373,246 Estimated Market Value $4,415,000 $4,516,000
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 $96,000 and $143,000 at March 31, 1997 and December 31, 1996, respectively. The Partnership does not expect to realize these gains as it has the ability to hold the MBS until maturity. (6)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 the rate of up to 6% of the gross receipts, net of leasing commissions from commercial 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. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS, Continued (6)Related Party Transactions, Continued 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 $ 71,645 $ 62,499 Expense reimbursements 87,320 73,780 Charged to operations $158,965 $136,279
Due to affiliates consisted of expense reimbursements of $26,735 at December 31, 1996. 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'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 continuously strives to improve occupancy and retain quality tenants at its retail centers. However, to attain these objectives, management has found it necessary to fund a significant portion of tenant build-outs. The Partnership completed improvements at High Point National Furniture Mart ("High Point") which were necessary to reconfigure space for new tenants and comply with present building code standards. In 1996, renovations to show rooms of the building were completed, along with upgrades to the elevator system. The refurbished show room spaces have enabled the property to command higher rents and maintain 100% occupancy. At Tradewinds Shopping Center ('Tradewinds'), management has negotiated the expansion of an anchor tenant from its existing 50,181 square foot space to 66,000 square feet. The Partnership and the tenant each intend to spend approximately $4,200,000 for the buildout. The Partnership's portion will primarily fund exterior improvements, while the tenant's portion will mainly fund interior renovation specifications. Completion of the project is scheduled for the fourth quarter of 1997. The new lease agreement with the anchor tenant includes a significant increase in lease rent which will favorably impact Partnership liquidity. In order to fund the expansion, the Partnership plans to utilize its cash reserves as well as any proceeds received from the possible financing of its mortgage backed securities portfolio in 1997. At Luria's Plaza, the Partnership is planning to spend approximately $116,000 for capital improvements in 1997, most of which are tenant buildouts which the General Partners believe are necessary to maintain or increase its current occupancy level. The Partnership holds MBS that are guaranteed by the Government National Mortgage Association ("GNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). The principal risks with respect to 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. Currently, 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. In order 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 reserves the Partnership should maintain. Adjustments to distributions are made when appropriate to reflect such assessments. Based on current assessments, the General Partners have determined Continued KRUPP CASH PLUS LIMITED PARTNERSHIP Liquidity and Capital Resources, Continued that retaining the current annualized distribution rate of $0.55 per Unit will allow the Partnership to maintain adequate reserves. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP 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 for the three months ended March 31, 1997 and the period from inception through 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, 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 Three Months Inception to Ended March 31, March 31, 1997 1997 Distributable Cash Flow: Net income for tax purposes $ 360 $ 24,016 Items providing / not requiring or (not providing)the use of operating funds: Tax basis depreciation and amortization 427 18,642 Interest income on note receivable - (371) Gain on sale of assets - (1,686) Additions to fixed assets - (8,770) 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") $ 787 $ 32,499 Unitholders' Share of DCF $ 771 $ 31,849 Unitholders' Share of DCF per Unit $ .19 $ 7.96(d) General Partners' Share of DCF $ 16 $ 650 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 55 $ 15,286 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 $ 55 $ 26,521 Distributions: Unitholders $ 550(a) $ 56,533(b)(d) Unitholders' Average per Unit $ .14(a) $ 14.13(b)(c)(d) General Partners $ 16(a) $ 649(b) Total Distributions $ 566(a) $ 57,182(b)(c)
(a)Represents an estimate of the distribution to be paid in May, 1997. (b)Includes an estimate of the distribution to be paid in May, 1997. (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)Limited Partners' average per Unit return of capital as of May, 1997 is $6.17 [$14.13 - $7.96]. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP Operations Distributable Cash Flow increased during the three months ended March 31, 1997, as compared to the three months ended March 31, 1996, due to a decrease in capital improvements partially offset by a decrease in net income. The Partnership experienced a decrease in net income during the first three months of 1997, as compared to the same period in 1996, due to a decrease in revenue and an increase in expenses. Rental revenue decreased primarily due to the decline in average occupancy at Tradewinds, from 93% to 80% for the first quarter of 1996 and 1997, respectively. The decline in occupancy primarily relates to the spaces which will be vacant during the expansion of the anchor tenant. MBS interest income decreased due to the repayment and prepayments of principal which occur on the MBS portfolio. These decreases are partially offset by an increase in interest income as a result of higher cash and cash equivalents available for investment. In comparing the three months ended March 31, 1997 to the same period in 1996, general and administrative expense increased due to the increase in legal, mailing and printing costs relating to the Partnership's response to the recent unsolicited tender offer made to purchase Partnership Units. In addition, increased charges were incurred in connection with the preparation and mailing of Partnership reports and other investor communications. 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 SeniorSecurities 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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. Date: April 29, 1997 EX-27 2
5 This schedule contains summary financial information extracted from the financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 MAR-31-1997 4,792,066 4,318,582 481,867 0 0 137,761 46,250,879 (17,840,903) 38,140,252 1,396,471 0 0 0 36,743,781 0 38,140,252 0 1,604,329 0 0 1,327,209 0 0 0 0 0 0 0 0 277,120 0 0 Includes all receivables included in "other assets" on the balance sheet. Represents total deficit of the General Partners (167,488) and equity of the Limited Partners $36,911,269. Includes all revenue of the Partnership. Includes operating expenses $524,601, real estate taxes of $304,458 and depreciation expense of$498,150. Net income allocated $5,542 to the General Partners and $271,578 to the Limited Partners for the three months ended March, 31, 1997. Average net income is $.07 per unit 4,000,000 units outstanding.
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