-----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, Fe/8ea6Ofc4RR8tKYP+xs0R1Awpm34kXoPwsqC884AU2nvKY51Gnh++s1AHfC45k qtLHfSWoGn1Oa2gkEgk0fg== 0000768175-97-000013.txt : 19970812 0000768175-97-000013.hdr.sgml : 19970812 ACCESSION NUMBER: 0000768175-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 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: 97655919 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 (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30,1997 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 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 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
June 30, December 31, 1997 1996 Real estate assets: Retail centers, less accumulated depreciation of $18,348,165 and $17,342,753, respectively $27,993,786 $28,908,119 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 5) 4,078,311 4,373,246 Total real estate assets 32,072,097 33,281,365 Cash and cash equivalents (Note 2) 4,774,801 4,043,066 Other assets 726,150 616,379 Total assets $37,573,048 $37,940,810 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable $ 32,376 $ 46,238 Due to affiliates (Note 6) - 26,735 Accrued expenses and other liabilities (Note 3) 1,096,060 843,385 Total liabilities 1,128,436 916,358 Partners' equity (deficit) (Note 4): Unitholders (4,000,000 Units outstanding)36,621,367 37,188,551 Corporate Limited Partner (100 Units outstanding) 1,144 1,159 General Partners (177,899) (165,258) Total Partners' equity 36,444,612 37,024,452 Total liabilities and Partners' equity $37,573,048 $37,940,810
The accompanying notes are an integral part of the financial statements. >page> KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Three Months For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996
Revenue: Rental $1,452,943 $1,471,040 $2,904,956$3,018,076 Interest income - MBS (Note 5) 86,814 100,160 178,724 206,545 Interest income - other 67,111 51,235 127,517 95,734 Total revenue 1,606,868 1,622,435 3,211,197 3,320,355 Expenses: Operating (Note 6) 335,879 332,833 616,184 594,060 Maintenance 78,867 82,361 153,163 158,193 General and administra- tive (Note 6) 101,262 27,264 199,617 71,943 Real estate taxes 246,810 293,355 551,268 588,607 Management fees (Note 6) 70,193 81,585 141,838 144,084 Depreciation 507,262 512,833 1,005,412 1,005,750 Total expenses 1,340,273 1,330,231 2,667,482 2,562,637 Net income $ 266,595 $ 292,204 $ 543,715$ 757,718 Allocation of net income (Note 4): Unitholders (4,000,000 Units outstanding)$ 261,256 $ 286,353 $ 532,827$ 742,545 Net income per Unit of Depositary Receipt$ .06 $ .08 $ .13$ .19 Corporate Limited Partner (100 Units outstanding) $ 6 $ 8 $ 13$ 19 General Partners $ 5,333 $ 5,843 $ 10,875$ 15,154
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Six Months Ended June 30,
1997 1996 Operating activities: Net income $ 543,715 $ 757,718 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,005,412 1,005,750 Amortization of MBS premium, net 961 994 Changes in assets and liabilities: Decrease (increase) in other assets (109,771) 11,324 Decrease in accounts payable (3,298) (3,558) Decrease in due to affiliates (26,735) - Increase in accrued expenses and other liabilities 252,675 224,425 Net cash provided by operating activities 1,662,959 1,996,653 Investing activities: Increase in other investments - (492,256) Additions to fixed assets (91,079) (421,274) Decrease in accounts payable for fixed asset additions (10,564) - Principal collections on MBS 293,974 453,882 Net cash provided by (used in) investing activities 192,331 (459,648) Financing activity: Distributions (1,123,555) (1,110,841) Net increase in cash and cash equivalents 731,735 426,164 Cash and cash equivalents, beginning of period 4,043,066 2,841,353 Cash and cash equivalents, end of period $ 4,774,801 $ 3,267,517
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 June 30, 1997, its results of operations for the three and six months ended June 30, 1997 and 1996 and its cash flows for the six months ended June 30, 1997 and 1996. The results of operations for the three and six months ended June 30, 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 equivalents consisted of the following:
June 30, December 31, 1997 1996 Cash and money market accounts $ 819,008 $ 579,264 Commercial paper 3,955,793 3,463,802 $4,774,801 $ 4,043,066
At June 30, 1997, commercial paper represents corporate issues complying with Section 6.2(a) of the Partnership Agreement purchased through a corporate issuer maturing in the third quarter of 1997. At June 30, 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:
June 30, December 31, 1997 1996 Accrued real estate taxes $ 802,013 $ 582,835 Deferred income and other accrued expenses 236,620 211,606 Tenant security deposits 57,427 48,944 $ 1,096,060 $ 843,385
Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - Continued (4)Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the six months ended June 30, 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 532,827 13 10,875 543,715 Distributions (1,100,011) (28) (23,516) (1,123,555) Balance at June 30, 1997$36,621,367$ 1,144$(177,899)$36,444,612
(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. Additional information on the MBS held is as follows:
June 30, December 31, 1997 1996 Face Value $4,063,988 $4,357,962 Amortized Cost $4,078,311 $4,373,246 Estimated Market Value $4,225,000 $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 $147,000 and $143,000 at June 30, 1997 and December 31, 1996, respectively. The Partnership does not expect to realize these gains as it currently 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 a 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 For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Property management fees$70,193 $81,585 $141,838 $144,084 Expense reimbursements 100,285 65,697187,605 139,477 Charged to operations $170,478 $147,282 $329,443 $283,561
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 net income, maintain high occupancy and retain quality tenants at its retail centers. However, to attain these objectives, the Partnership 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 showrooms of the building were completed, along with upgrades to the elevator system. The refurbished showroom spaces have enabled the property to command higher rents and maintain 100% occupancy. In 1997, the Partnership is planning to spend approximately $217,000 for improvements, most of which are enhancements to the exteriors of the building. 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 mainly 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 $120,000 for capital improvements in 1997, most of which are tenant build-outs which the General Partners believe are necessary to maintain or increase its current occupancy level. Liquidity provided by the MBS is derived primarily from interest income, scheduled principal payments and prepayments of the portfolio. The level of prepayments is contingent upon the interest rate environment, which in turn, affects the Partnership's liquidity. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP Liquidity and Capital Resources - Continued 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 market interest rate risk is minimal due to the fact that the Partnership has the ability to hold these securities to maturity. 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 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 six months ended June 30, 1997 and the period from inception through June 30, 1997. The General Partners provide the information below to meet requirements of the Partnership Agreement. 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 Six MonthsInception to Ended June 30, June 30, 1997 1997 Distributable Cash Flow: Net income for tax purposes $ 712 $ 24,368 Items providing/not requiring or (not providing) the use of operating funds: Tax basis depreciation and amortization 854 19,069 Interest income on note receivable - (371) Gain on sale of assets - (1,686) Additions to fixed assets (91) (8,861) 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") $1,475 $ 33,187 Unitholders' Share of DCF $1,445 $ 32,523 Unitholders' Share of DCF per Unit $ .36 $ 8.13 (d) General Partners' Share of DCF $ 30 $ 664 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 295 $ 15,526 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 $ 295 $ 26,761 Distributions: Unitholders $1,100 (a) $ 57,083 (b)(c) Unitholders' Average per Unit $ .28 (a) $ 14.28 (b)(c)(d) General Partners $ 30 (a) $ 663 (b) Total Distributions $1,130 (a) $ 57,746 (b)(c)
(a) Represents distributions to be paid in 1997, including an estimate of the distribution to be paid in August, 1997. (b) Includes an estimate of the distribution to be paid in August, 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 of record on May 31, 1990. (d) Unitholders' average per Unit return of capital as of August, 1997 is $6.15 [$14.28-$8.13]. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP Operations Distributable Cash Flow increased during the six months ended June 30, 1997, as compared to the six months ended June 30, 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 three and six months ended June 30, 1997 when compared to the same periods in 1996 as revenue remained stable and expenses increased. Total revenue for the three and six months ended June 30, 1997 as compared to the same periods in 1996 remained relatively stable, as the decreases in rental revenue and MBS interest income were offset by the increase in interest income. The decline in rental revenue primarily results from the spaces which will be vacant during the expansion of Dominicks, an anchor tenant at Tradewinds. To facilitate the expansion of Dominicks, management negotiated the termination of the Walgreens's lease effective December 31, 1996. As a result, rental revenue has decreased in 1997 as compared to 1996. The decrease in MBS interest income is a result of repayments and prepayments of principal which occur on the MBS portfolio throughout the year. Interest income increased as a result of higher cash and cash equivalents available for investments. Total expenses increased for the three and six months ended June 30, 1997 as compared to the same periods in 1996 as the increase in general and administrative expenses more than offset the decrease in real estate taxes. General and administrative expenses increased as costs incurred in connection with the operation of the Partnership, including the preparation of reports and other communications to the Unitholders, increased as did legal costs relating to the unsolicited tender offers made to purchase Units of Depositary Receipts. The decrease in real estate tax expense is due to a revised estimate of Tradewinds's 1996 real estate taxes. 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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. Date: August , 1997 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 6-MOS 12-31-1997 06-30-1997 4,774,801 4,078,311 596,490 0 0 129,660 46,341,951 <18,348,165> 37,573,048 1,128,436 0 0 0 36,444,612 0 37,573,048 0 3,211,197 0 0 2,667,482 0 0 0 0 0 0 0 0 543,715 0 0 Includes all receivables in "other assets" on the balance sheet. Represents deficit of the General Partners of <$177,899> and total equity of the Limited Partners of $36,622,511. Includes all revenues of the Partnership. Includes all expenses of the Partnership. net income allocated $10,875 to the General Partners and $532,840 to the Limited Partners. Average net income is $.13 per unit. 4,000,100 units outstanding.
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