-----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, J8MFMwC5/X1QQjjAGWX3MEGi9azKKmEeRJQKOxNHhDrxBw3akIxjI2cBqO8kblsk krOoIhEQQmqvnJAJonsQ2g== 0000768175-97-000016.txt : 19971113 0000768175-97-000016.hdr.sgml : 19971113 ACCESSION NUMBER: 0000768175-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-14393 FILM NUMBER: 97716436 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 September 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 12. 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, 1997 1996 Real estate assets: Retail centers, less accumulated depreciation of $18,870,541 and $17,342,753, respectively $28,112,152 $28,908,119 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 5) 3,869,280 4,373,246 Total real estate assets 31,981,432 33,281,365 Cash and cash equivalents (Note 2) 4,884,237 4,043,066 Other assets 732,095 616,379 Total assets $37,597,764 $37,940,810 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable $ 6,622 $ 46,238 Due to affiliates (Note 6) - 26,735 Accrued expenses and other liabilities (Note 3) 1,427,586 843,385 Total liabilities 1,434,208 916,358 Partners' equity (deficit) (Note 4): Unitholders (4,000,000 Units outstanding) 36,348,416 37,188,551 Corporate Limited Partner (100 Units outstanding) 1,138 1,159 General Partners (185,998) (165,258) Total Partners' equity 36,163,556 37,024,452 Total liabilities and Partners' equity $37,597,764 $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 For the Nine Months Ended September 30, Ended September 30, 1997 1996 1997 1996 Revenue: Rental $1,345,323 $1,291,131 $4,250,279 $4,309,207 Interest income - MBS (Note 5) 82,083 96,716 260,807 303,261 Interest income - other 74,551 57,247 202,068 152,981 Total revenue 1,501,957 1,445,094 4,713,154 4,765,449 Expenses: Operating (Note 6) 225,248 250,964 841,432 845,024 Maintenance 66,242 57,953 219,405 216,146 General and adminis- trative (Note 6) 73,600 44,763 273,217 116,706 Real estate taxes 257,426 90,662 808,694 679,269 Management fees (Note 6) 74,350 70,462 216,188 214,546 Depreciation 522,376 506,194 1,527,788 1,511,944 Total expenses 1,219,242 1,020,998 3,886,724 3,583,635 Net income $ 282,715 $ 424,096 $ 826,430$1,181,814 Allocation of net income (Note 4): Unitholders (4,000,000 Units outstanding)$ 277,054 $ 415,604 $ 809,881$1,158,149 Net income per Unit of Depositary Receipt$ .07 $ .10 $ .20$ .29 Corporate Limited Partner (100 Units outstanding) $ 7 $ 10 $ 20 $ 29 General Partners $ 5,654 $ 8,482 $ 16,529 $ 23,636
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, 1997 1996 Operating activities: Net income $ 826,430 $ 1,181,814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,527,788 1,511,944 Amortization of MBS premium, net 1,885 1,012 Changes in assets and liabilities: Decrease (increase) in other assets (115,716) 63,332 Increase (decrease) in accounts payable 3,143 (6,093) Decrease in due to affiliates (26,735) - Increase in accrued expenses and other liabilities 584,201 398,914 Net cash provided by operating activities 2,800,996 3,150,923 Investing activities: Additions to fixed assets (731,821) (552,220) Decrease in accounts payable for fixed asset additions (42,759) - Principal collections on MBS 502,081 630,799 Net cash provided by (used in) investing activities (272,499) 78,579 Financing activity: Distributions (1,687,326) (1,669,585) Net increase in cash and cash equivalents 841,171 1,559,917 Cash and cash equivalents, beginning of period 4,043,066 2,841,353 Cash and cash equivalents, end of period $ 4,884,237 $ 4,401,270
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 necessary to present fairly the Partnership's financial position as of September 30, 1997, its results of operations for the three and nine months ended September 30, 1997 and 1996 and its cash flows for the nine months ended September 30, 1997 and 1996. The results of operations for the three and nine months ended September 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:
September 30, December 31, 1997 1996 Cash and money market accounts $ 928,834$ 579,264 Commercial paper 3,955,403 3,463,802 $ 4,884,237$ 4,043,066
At September 30, 1997, commercial paper represents corporate issues maturing in the fourth quarter of 1997. At September 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 consist of the following:
September 30, December 31, 1997 1996 Accrued real estate taxes $ 609,750 $ 582,835 Deferred income and other accrued expenses 163,689 159,426 Prepaid rent 595,884 52,180 Tenant security deposits 58,263 48,944 $ 1,427,586 $ 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 nine months ended September 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 809,881 20 16,529 826,430 Distributions (1,650,016) (41) (37,269) (1,687,326) Balance at September 30, 1997$36,348,416 $ 1,138 $(185,998) $36,163,556
(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:
September 30, December 31, 1997 1996 Face Value $ 3,855,881 $ 4,357,962 Amortized Cost $ 3,869,280 $ 4,373,246 Estimated Market Value $ 4,035,000 $ 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 $166,000 and $143,000 at September 30, 1997 and December 31, 1996, respectively. The Partnership does not expect to realize these gains in the near future as it currently has the intent and ability to hold the MBS until maturity. (6)Related Party Transactions The Partnership pays property management fees to an affiliate of the General Partners for management services. Pursuant to the agreements, management fees are 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 administrative expenses. Continued KRUPP CASH PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS - Continued (6) Related Party Transactions, Continued Amounts accrued or paid to the General Partners' affiliates were as follows:
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1997 1996 1997 1996 Property management fees $ 74,350 $ 70,462 $216,188 $214,546 Expense reimbursements 96,490 74,685 284,095 214,162 Charged to operations $170,840 $145,147 $500,283 $428,708
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 1997, the Partnership is planning to spend approximately $230,000 for improvements at High Point, 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 first quarter of 1998. 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 $105,000 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 Operations The Partnership experienced a decrease in net income during the three and nine months ended September 30, 1997 when compared to the same periods in 1996, as revenue remained stable and expenses increased. Total revenue for the three month period ended September 30, 1997 as compared to the same period in 1996, slightly increased due to increases in rental revenue and interest income, partially offset by a decrease in MBS interest income. The increase in rental revenue is due to the newly refurbished showroom spaces at High Point, which have enabled the property to command higher rents. These higher rents have been partially offset by the decrease in rent revenue at Tradewinds due to the Dominicks expansion, discussed below. Interest income increased as a result of higher cash and cash equivalents available for investment. The decrease in MBS interest income is a result of repayments of principal on the MBS portfolio throughout the year. Total revenue for the nine months ended September 30, 1997 as compared to the same period in 1996, slightly decreased due to decreases in rental revenue and MBS interest income partially offset by an increase in interest income. The decline in rental revenue primarily results from the spaces which have been 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 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 investment. Total expenses increased for the three and nine months ended September 30, 1997 as compared to the three and nine months ended September 30, 1996, due to increased general and administrative, real estate tax and depreciation expenses. 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 increase in real estate tax expense is due to a refund of real estate taxes received in the third quarter of 1996, as a result of the reassessment of Tradewinds's property value by the local taxing authority, which was reflected as a reduction in the real estate tax expense in the third quarter of 1996. Depreciation expense increased as a result of continued capital improvement expenditures. 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: November 12, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Cash Plus I Financial Statements for the nine months ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 4,884,237 3,869,280 571,260 0 0 160,835 46,982,693 (18,870,541) 37,597,764 1,434,208 0 0 0 36,163,556 0 37,597,764 0 4,713,154 0 0 3,886,724 0 0 0 0 0 0 0 0 826,430 0 0 Includes all receivables included in "other assets" on the Balance Sheet. Retail centers of $46,982,693. Deficit of the General Partners of ($185,998) and equity of Limited Partners of $35,977,558. Includes all revenue of the Partnership. Includes all expenses of the Partnership. Net income allocated $16,529 to the General Partners and $809,901 to the Limited Partners.
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