-----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, E/DzyMgDkoy13v71+dLl0HE9H5U2hSnio/4RYMP+yTdxZMu3+gay8R4jPE5ROu9d qsbI7NQVnsdnc2cXrTbbTw== 0000785988-96-000009.txt : 19960806 0000785988-96-000009.hdr.sgml : 19960806 ACCESSION NUMBER: 0000785988-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960805 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP CASH PLUS II LTD PARTNERSHIP CENTRAL INDEX KEY: 0000785988 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042915326 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15816 FILM NUMBER: 96603814 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERSHIRE 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 June 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 0-15816 Krupp Cash Plus-II Limited Partnership Massachusetts 04-2915326 (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-II LIMITED PARTNERSHIP BALANCE SHEETS ASSETS
June 30, December 31, 1996 1995 Real estate assets: Multi-family apartment complex, less accumulated depreciation of $4,372,965 and $4,137,678, respectively $ 5,911,507 $ 6,119,113 Retail centers, less accumulated depreciation of $13,292,174 and $12,489,601, respectively 36,945,083 37,613,542 Investment in Joint Venture (Note 2) 20,036,909 20,411,464 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 3) 7,806,545 8,501,911 Total real estate assets 70,700,044 72,646,030 Cash and cash equivalents 6,071,235 8,065,906 Other investments (Note 3) 2,755,238 - Other assets 591,515 711,172 Total assets $80,118,032 $81,423,108 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 2,560 $ 23,879 Accrued expenses and other liabilities (Note 4) 727,312 657,032 Total liabilities 729,872 680,911 Commitments and contingencies (Note 2) Partners' equity (Note 5): Unitholders (7,499,718 Units outstanding) 79,754,276 81,088,463 Corporate Limited Partner (100 Units outstanding) 1,268 1,286 General Partners (367,384) (347,552) Total Partners' equity 79,388,160 80,742,197 Total liabilities and Partners' equity $80,118,032 $81,423,108
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenue: Rental $1,617,923 $1,606,838 $3,301,234 $3,246,166 Partnership's share of Joint Venture net income (Note 2) 67,651 115,003 257,945 304,783 Interest income - MBS (Note 3) 176,982 207,446 361,192 422,660 Interest income - other 113,920 116,010 228,083 223,055 Total revenue 1,976,476 2,045,297 4,148,454 4,196,664 Expenses: Operating (Note 6) 243,008 198,808 459,774 405,098 Maintenance 134,120 124,493 236,275 196,882 General and administrative (Note 6) 43,844 88,998 124,367 160,846 Real estate taxes 199,195 209,635 399,061 428,434 Management fees (Note 6) 97,293 92,281 191,400 183,424 Depreciation 523,001 496,069 1,037,860 990,922 Total expenses 1,240,461 1,210,284 2,448,737 2,365,606 Net income $ 736,015 $ 835,013 $1,699,717 $1,831,058 Allocation of net income (Note 5): Unitholders (7,499,718 Units outstanding) $ 721,286 $ 818,302 $1,665,701 $1,794,413 Net income per Unit of Depositary Receipt $ .09 $ .11 $ .22 $ .24 Corporate Limited Partner (100 Units outstanding) $ 9 $ 11 $ 22 $ 24 General Partners $ 14,720 $ 16,700 $ 33,994 $ 36,621
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 1995 Operating activities: Net income $ 1,699,717 $ 1,831,058 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,037,860 990,922 Partnership's share of Joint Venture net income (257,945) (304,783) Distributions received from Joint Venture 257,945 304,783 Amortization of MBS discount, net (3,440) (1,539) Decrease in other assets 119,657 313,556 Decrease in accounts payable (21,319) (186,708) Increase in accrued expenses and other liabilities 70,280 81,519 Net cash provided by operating activities 2,902,755 3,028,808 Investing activities: Additions to fixed assets (161,770) (107,035) Settlement of land easement (25) (239) Principal collections on MBS 698,806 613,828 Increase in other investments (2,755,238) (3,222,357) Distributions received from Joint Venture in excess of its earnings 374,555 402,717 Net cash used in investing activities (1,843,672) (2,313,086) Financing activity: Distributions (3,053,754) (3,047,808) Net decrease in cash and cash equivalents (1,994,671) (2,332,086) Cash and cash equivalents, beginning of period 8,065,906 7,072,127 Cash and cash equivalents, end of period $ 6,071,235 $ 4,740,041
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-II 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-II 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 June 30, 1996, its results of operations for the three and six months ended June 30, 1996 and 1995, and cash flows for the six months ended June 30, 1996 and 1995. Certain prior period balances have been reclassified to conform with current period financial statement presentation. The results of operations for the three and six months ended June 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) Investment in Joint Venture The Partnership and an affiliate of the Partnership each have a 50% interest in the Brookwood Village Joint Venture (the "Joint Venture"). The express purpose of entering into the Joint Venture was to acquire and operate Brookwood Village Mall and Convenience Center ("Brookwood Village"). Brookwood Village is a shopping center containing 474,138 net leasable square feet located in Birmingham, Alabama. Under the purchase and sale agreement entered into by the Partnership, its affiliates and the previous owner, the previous owner retained an interest related to the future development at Brookwood Village. The seller is entitled to receive up to $5,000,000 of proceeds from the sale of Brookwood Village and potentially additional amounts related to expansion and development. The Joint Venture holds title to Brookwood Village free and clear from all other material liens or encumbrances. (2) Investment in Joint Venture, Continued Condensed financial statements of the Joint Venture are as follows: Brookwood Village Joint Venture Condensed Balance Sheets ASSETS
June 30, December 31, 1996 1995 Property, at cost $ 55,799,649 $ 55,478,818 Accumulated depreciation (16,159,133) (15,164,143) 39,640,516 40,314,675 Other assets 981,598 867,242 Total assets $ 40,622,114 $ 41,181,917 LIABILITIES AND PARTNERS' EQUITY Total liabilities $ 548,296 $ 358,989 Partners' equity The Partnership 20,036,909 20,411,464 Joint Venture Partner 20,036,909 20,411,464 Total Partners' equity 40,073,818 40,822,928 Total liabilities and Partners' equity $ 40,622,114 $ 41,181,917
Brookwood Village Joint Venture Condensed Statements of Operations
For the Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Revenue $1,401,853 $1,470,629 $ 2,947,457 $ 3,056,497 Property operating expenses (764,429) (731,135) (1,436,577) (1,446,579) Depreciation (502,122) (509,488) (994,990) (1,000,352) Net income $ 135,302 $ 230,006 $ 515,890 $ 609,566
(3) Mortgage Backed Securities and Other Investments The MBS held by the Partnership are issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Government National Mortgage Association. Additional information on the MBS held is as follows:
June 30, December 31, 1996 1995 Face Value $7,796,166 $8,494,972 Amortized Cost $7,806,545 $8,501,911 Estimated Market Value $8,120,000 $9,004,000
Coupon rates of the MBS range from 8.0% to 10.0% per annum and mature in the years 2008 through 2017. The Partnership's MBS portfolio had gross unrealized gains of approximately $340,000 and $542,000 at June 30, 1996 and December 31, 1995, respectively and unrealized losses of approximately $27,000 and $0, respectively. The Partnership does not expect to realize these gains or losses as it has the intention and ability to hold the MBS until maturity. At June 30, 1996, the Partnership held investments in commercial paper maturing within one year. The cost approximates the market value. (4) Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following:
June 30, December 31, 1996 1995 Accrued real estate taxes $336,173 $264,996 Other accrued expenses 208,939 194,249 Tenant security deposits 174,987 186,242 Prepaid rent 7,213 11,545 $727,312 $657,032
(5) Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the six months ended June 30, 1996 is as follows:
Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1995 $81,088,463 $ 1,286 $(347,552) $80,742,197 Net income 1,665,701 22 33,994 1,699,717 Distributions (2,999,888) (40) (53,826) (3,053,754) Balance at June 30, 1996 $79,754,276 $ 1,268 $(367,384) $79,388,160
(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 up to 6% of the gross receipts net of leasing commissions from commercial properties under management and up to 5% of the 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 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 Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Property management fees $ 97,293 $ 92,281 $191,400 $183,424 Expense reimbursements 63,532 82,819 145,994 152,633 Charged to operations $160,825 $175,100 $337,394 $336,057
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 liquidity is derived from the operations of the Partnership's properties (Encino Oaks, Alderwood Towne Center, Canyon Place, Coral Plaza and Cumberland Glen), distributions from the Partnership's interest in the Joint Venture, earnings and collections on MBS, and interest earned on its short-term investments. The Partnership's liquidity is utilized to pay operating costs and to fund distributions to the partners. Management has found it necessary in recent years to have the Partnership pay a large share of tenant buildouts to attract quality tenants to our retail centers. This policy has proven to be successful in attracting tenants and maintaining high occupancies at properties where it has been undertaken and is expected to continue in 1996. In order to remain competitive in their respective markets, the Partnership's properties are anticipated to spend approximately $722,000 for fixed assets in 1996, most of which are tenant buildouts at retail centers. The Joint Venture is expected to spend approximately $846,000 for capital improvements. The Partnership holds MBS that are guaranteed by Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC"). The principal risks in respect to MBS are the credit worthiness of GNMA, FNMA, or 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 the interest rate risk is minimal due to the fact that the Partnership has the ability to hold these securities to maturity. The Partnership currently enjoys significant liquidity. 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. Distributable Cash Flow and Net Cash Proceeds from Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Cash Proceeds from Capital Transactions as defined by Section 17 of the Partnership Agreement for the six months ended June 30, 1996 and the period from inception to June 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 Cash 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 flow as a measure of liquidity.
(In $1,000's except per Unit amounts) For the Six Months Inception to Ended June 30, June 30, 1996 1996 Distributable Cash Flow: Net income for tax purposes $2,150 $47,226 Items providing/not requiring or (not providing) the use of operating funds: Tax basis depreciation and amortization 863 15,692 Acquisition expenses paid from offering proceeds charged to operations - 248 Partnership's share of Joint Venture taxable net income (512) (6,576) Distributions from Joint Venture 633 9,165 Additions to fixed assets (162) (2,749) Amounts released from reserves for capital improvements - 1,020 Total Distributable Cash Flow ("DCF") $2,972 $64,026 Unitholders' Share of DCF $2,913 $62,746 Unitholders' Share of DCF per Unit $ .39 $ 8.37 (c) General Partners' Share of DCF $ 59 $ 1,280 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 695 $37,327 Reinvestment of MBS principal collections - (3,687) Total Net Proceeds from Capital Transactions $ 695 $33,640 Distributions: Unitholders $3,000 (a) $96,818 (b) Unitholders' Average per Unit $ .40 (a) $ 12.91(b)(c) General Partners $ 59 (a) $ 1,280 (b) Total Distributions $3,059 (a) $98,098 (b)
(a) Represents distributions paid in 1996, except the February, 1996 distribution, which relates to 1995 cash flows and includes an estimate of the distribution to be paid in August, 1996. (b) Includes an estimate of the distribution to be paid in August, 1996. (c) Unitholders' average per Unit return of capital as of August, 1996 is $4.54 [$12.91-$8.37]. Operations Partnership Distributable Cash Flow decreased $106,000 for the six months ended June 30, 1996 as compared to the same period in 1995 as a result of decreased distributions received from the Joint Venture and an increase in capital improvements at the Partnership's properties. Net income of the Partnership decreased for the three and six months ended June 30, 1996 as compared to the same periods in 1995 as a rise in total expenses offset relatively stable revenue. Alderwood Towne Center ("Alderwood") and Canyon Place ("Canyon") experienced swings in occupancy during these three and six month periods. Alderwood's decrease in occupancy was a result of the eviction and write off of Abodio, a 9,742 square foot tenant, in the second quarter of 1996. At Canyon, the 14,833 square foot Jo-Ann Fabrics opened late in the first quarter of 1996, favorably impacting revenue for the remainder of 1996. Rental revenue at Cumberland Glen remained relatively stable during the three and six months ended June 30, 1996 as compared to the same periods in 1995. A strong demand for multi-family housing as a result of a rise in population and jobs in Atlanta, allowed management to increase rents during the first quarter of 1996. These rental increases were offset, however, by a 2% decrease in occupancy during the second quarter of 1996. MBS interest income decreased for the three and six months ended June 30, 1996 as compared to the same period in 1995 due to the large prepayments and repayments of principal. Interest income on short-term investments remained relatively stable during these same periods as cash balances begin to level off. Total expenses increased for the three and six months ended June 30, 1996 as compared to the same periods in 1995. The increase in total expenses is attributable to a rise in operating and maintenance expenses offset by a decline in general and administrative expense. Operating expense increased as a result of prior years' insurance refunds received in the second quarter of 1995. Maintenance expense increased due to landscaping work at Alderwood, Canyon and Encino completed in the first and second quarters of 1996 and electrical repairs to install display lights at Alderwood in the first quarter of 1996. Joint Venture Joint Venture net income decreased for the three and six months ended June 30, 1996 as compared to the same periods in 1995, as the Joint Venture experienced both a decrease in revenue and an increase in property operating expenses within these two periods. The decrease in revenue is due to lower occupancy as a result of the move out of The Ox Restaurant, a 13,484 square foot tenant, in the second quarter of 1996, which more than offset the increase in rental rates on certain lease renewals. Additionally, revenue was impacted by a decrease in reimbursable tenant billings derived from lower reimbursable operating expenses between the two periods. Property operating expenses for the three months ended June 30, 1996 increased when compared to the same period of 1995, as operating and maintenance expense increases more than offset a decrease in real estate taxes. The increase in operating expense is due to prior years' insurance refunds received in the second quarter of 1995 and increased reimbursable expenses incurred in connection with the operation of the Joint Venture, including computer, accounting, travel, insurance, legal and payroll costs. Maintenance expense increased as the Joint Venture performed preventive maintenance in the second quarter of 1996, including repairs to the mall parking lot. Real estate taxes decreased as a result of a revaluation of the Joint Venture by the local taxing authority in the third quarter of 1995. This decrease is expected to make a positive impact for the remainder of 1996. For the six months ended June 30, 1996, property operating expenses decreased as compared to the same period in 1995. These expenses changed for the same reasons as discussed above. However, the decrease in real estate taxes more than offset the increase in operating and maintenance expenses. 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 Partnership's investments in properties and the Joint Venture 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 and the Joint Venture 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-II LIMITED PARTNERSHIP PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Change 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-II Limited Partnership (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner DATE: July , 1996 EX-27 2
5 This schedule contains summary financial information extracted from Cash Plus II financial statemnts for the six months ending June 30, 1996 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 8,826,473 7,806,545 349,578 0 0 241,937 80,558,638 (17,665,139) 80,118,032 729,872 0 0 0 79,388,160 0 80,118,032 0 4,196,664 0 0 2,448,737 0 0 0 0 0 0 0 0 1,699,717 0 0 Includes cash in bank accounts of $6,071,235 and short-term (other) investments of $2,755,238. Includes all receivables included in "other assets" on the balance sheet. Mult-family complex of $10,284,472, retail centers of $50,237,257 and investment in J.V. of $20,036,909. Deficit of the general partners ($367,384) and equity of the limited partners 79,755,544. Includes all revenue of the Partnership. Includes all expenses of the Partnership. Net income allocated $33,994 to the General Partners and $1,665,723 to the Limited Partners. Average net income is $.22 on 7,499,818 units outstanding.
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