-----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, QAoibxATb0C4kgc2gSWorqh5NaeG+VaP7Uu7lcdROw4Ne+5bVtu4i4LwzsD9757c zDIiWFFvQuK9YACJB6UatQ== 0000839427-96-000002.txt : 19960401 0000839427-96-000002.hdr.sgml : 19960401 ACCESSION NUMBER: 0000839427-96-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP CASH PLUS V LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000839427 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 043021560 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18498 FILM NUMBER: 96540652 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-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESx EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-18498 Krupp Cash Plus-V Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 04-3021560 (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) (Registrant's telephone number, including area code) (617) 423-2233 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Depositary Receipts representing Units of Limited Partner Interests 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]. Aggregate market value of voting securities held by non-affiliates: Not applicable, since securities are nonvoting. Documents incorporated by reference: See Part IV, Item 14b on pages 9-10 of this report. The exhibit index is located on pages 9-10. PART I ITEM 1. BUSINESS Krupp Cash Plus-V Limited Partnership (the "Partnership") was formed on August 22, 1988 by filing a Certificate of Limited Partnership in The Commonwealth of Massachusetts. Krupp Plus Corporation and Krupp Company Limited Partnership-VI were the original General Partners of the Partnership. On March 15, 1995, Krupp Plus Corporation withdrew as General Partner from the Partnership and assigned its rights, title and interest in the Partnership to Krupp Company Limited Partnership-VI. Krupp Depositary Corporation is the Corporate Limited Partner. For details see Note A to Financial Statements included in Appendix A of this report. On March 3, 1989 the Partnership commenced the marketing and sale of Depositary Receipts ("Units") and raised $41,203,189 from this public offering. The Partnership invested the net proceeds from the offering in Spring Valley Partnership ("Joint Venture") and mortgage-backed securities ("MBS") issued or originated by the Federal Home Loan Mortgage Corporation ("FHLMC"). The Partnership considers itself to be engaged only in the industry segment of investment in real estate and related assets. The Partnership's retail real estate investment is subject to seasonal fluctuations, as net income may vary somewhat from quarter to quarter based upon changes in utility consumption, seasonal maintenance expenditures and changes in rental income which are based upon a percentage of gross receipts of retail tenants. However, the future performance of the Partnership will depend upon factors which cannot be predicted. Such factors include general economic and real estate market conditions, both on a national basis and in the area where the Partnership's real estate investment is located, real estate tax rates, operating expenses, energy costs, government regulations and federal and state income tax laws. The requirements for compliance with federal, state and local regulations have not had an adverse effect on the Partnership's operations to date, and no adverse effect therefrom is anticipated in the future. The Partnership's investment in retail real estate is also subject to such risks as (i) competition from existing and future projects held by other owners in the locations of the Partnership's properties, (ii) possible reduction in rental income due to an inability to maintain high occupancy levels, the financial failure of a tenant or the inability of retail tenants to achieve gross sales at a level sufficient to provide for additional rental income based on a percentage of sales, (iii) possible adverse changes in general economic and local conditions, such as competitive over-building, increases in unemployment, or adverse changes in real estate zoning laws, and (iv) other circumstances over which the Partnership may have little or no control. As of December 31, 1995, there were two people employed on-site by the Joint Venture. ITEM 2. PROPERTY As of December 31, 1995, the Partnership has an unleveraged joint venture investment in a shopping center with 314,673 square feet of leasable space. Additional detailed information with respect the property is contained in Note D to the Financial Statements as well as the Separate Financial Statements and Schedule III for Spring Valley Partnership which are included in Item 8 (Appendix A) to this report. A summary of the Partnership's real estate investments is presented below.
Average Occupancy Current Leasable Year Ended Year of Square Footage/ December 31, Description Acquisition Units 1995 1994 1993 1992 1991 Spring Valley Marketplace 1988 314,673 98% 96% 95% 95% 95%
There are no present plans for major improvements or developments of the unleveraged real estate. Only improvements necessary to keep the property competitive in its respective market were completed in 1995 and are expected to continue in the next year. ITEM 3. LEGAL PROCEEDINGS None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Part II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There currently is no established trading market for the Units. The number of investors holding Units as of December 31, 1995 is approximately 2,865. The Partnership made the following distributions, in quarterly installments, during the two years ended December 31, 1995 and 1994:
1995 1994 Average Average Amount Per Unit Amount Per Unit Limited Partners: Unitholders $2,060,350 $1.00 $2,064,585 $1.00 Corporate Limited Partner 100 $1.00 100 $1.00 General Partners 17,139 11,965 $2,077,589 $2,076,650
One of the objectives of the Partnership is to generate cash available for distribution. However, there is no assurance that future operations will continue to generate cash available for distribution. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial information regarding the Partnership's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Supplementary Data, which are included in Items 7 and 8 (Appendix A) of this report, respectively.
Year ended December 31, 1995 1994 1993 1992 1991 Revenues $ 1,130,856 $ 896,048 $ 935,592 $ 1,017,946 $ 1,217,652 Net income 887,535 603,140 571,567 699,062 895,263 Net income allocated to Partners: Unitholders 878,617 597,080 565,824 692,037 886,267 (Avg. per Unit) (.43) (.29) (.27) (.34) (.43) Corporate Limited Partner 43 29 27 34 43 General Partners 8,875 6,031 5,716 6,991 8,953 Total assets at December 31, 26,240,244 27,437,104 28,896,948 30,400,262 32,402,086 Distributions to Partners: Unitholders 2,060,350 2,064,585 2,058,935 2,680,726 3,263,020 (Avg. Per Unit) (1.00)(a) (1.00)(a) (1.00)(a) (1.30)(a) (1.58)(a) Corporate Limited Partner 100 100 100 130 159 General Partners 17,139 11,965 12,999 14,366 20,132 (a) For the periods ended 1995, 1994, 1993, 1992 and 1991 the Limited Partners' Average per Unit return of capital was $.30, $.28, $.39, $.00 and $.38, respectively. The Partnership completed its public offering during the first quarter of 1991, therefore, the selected financial data for 1995, 1994, 1993 and 1992 is not comparable to prior periods. In addition, the selected financial data for 1995, 1994, 1993 and 1992 is not necessarily indicative of the Partnership's future operations. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership's sources of liquidity are derived from the distributions it receives from its investment in the Joint Venture (Spring Valley Marketplace) and the interest and principal collections on its MBS and other investments. Over the last two years, Spring Valley Marketplace has been a strong contributor to the Partnership's liquidity after experiencing some retail difficulties in 1992 and 1993. Revenues at the Marketplace have steadily increased since 1992 as strong national tenants have positively impacted the shopping center. As a result, management expects operations at the shopping center to exhibit stabilized growth for the near future. Liquidity provided by the MBS during the current year has come primarily from interest income as principal prepayments have decreased significantly from the principal amounts received in 1994 and 1993. During 1994 and 1993, prepayments were significant due to the low interest rate environment. The liquidity provided by the principal prepayments has been used to fund distributions, which has resulted in a reduction of the Partnership's capital resources. The Partnership holds MBS that are guaranteed by the Federal Home Mortgage Corporation ("FHLMC"). The principal risks with respect to MBS are the credit worthiness of 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 this risk is minimal due to the fact that the Partnership has the ability to hold these securities to maturity. The most significant demands on the Partnership's liquidity are the quarterly distributions. Distributions are funded by MBS principal prepayments, distributions received from the Joint Venture and working capital reserves. Due to the decrease in MBS principal prepayments and its effect on the Partnership's liquidity, the Partnership may need to periodically adjust the distribution rate. Therefore, sustaining the distribution rate is mainly dependent upon the future performance of the Joint Venture. Distributable Cash Flow and Net Cash Proceeds from Capital Transactions 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 flows as a measure of liquidity. 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 year ended December 31, 1995 and for the period from inception to December 31, 1995:
(Rounded to $1,000 except per Unit amounts) For the Year Inception to Ended December 31, December 31, 1995 1995 Distributable Cash Flow: Net income for tax purposes $ 1,143 $ 6,391 Items not requiring, providing or (not providing) the use of operating funds: Amortization of organization costs - 50 Distributions from S.V. Partnership 1,468 9,466 Partnership's share of S.V. Partnership taxable net income (1,163) (6,227) Total Distributable Cash Flow ("DCF") $ 1,448 $ 9,680 Limited Partners' Share of DCF $ 1,434 $ 9,584 Limited Partners' Share of DCF per Unit $ .70 $ 4.66 General Partners' Share of DCF $ 14 $ 96 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 69 $ 4,453 Distributions: Limited Partners $ 2,061(a) $15,496(b) Limited Partners' Average per Unit $ 1.00(a) $ 7.52(b)(c) General Partners $ 17(a) $ 99(b) Total Distributions 2,078(a) 15,595(b)
(a) Represents all distributions paid in 1995 except the February 1995 distribution, and includes an estimate of the distribution to be paid in February 1996. (b) Includes estimate of the distribution to be paid in February 1996. (c) Limited Partners Average per Unit return of capital as of February 1996 is $2.86 ($7.52 - $4.66) Operations 1995 compared to 1994 Overall, distributable cash flow, as defined in the Partnership Agreement, decreased from 1994 to 1995 primarily due to the decrease in distributions received from the Joint Venture. The Partnership's revenues have increased from 1994 to 1995 because of the increased net income generated by the Marketplace. MBS interest income decreased in 1995 when compared to 1994 due to the overall reduction in MBS principal. This decrease was offset by an increase in interest received from the Partnership's other short-term investments. The Marketplace experienced a significant increase in net income from 1994 to 1995. The increase in the Marketplace rental revenues from 1994 to 1995 is primarily due to an increase in reimbursable tenant billings derived from increases in real estate taxes. Also, base rent increased slightly due to the increase in rental rates and the stable occupancy maintained at the property throughout the year. Interest income increased due to the Marketplace's increased investment in commercial paper. In comparing 1995 to 1994, operating expenses at the Marketplace decreased significantly, primarily due to management's efforts to reduce general and administrative expenses. These savings were partially offset by increases in maintenance expenses primarily from the resurfacing of the parking lot, and depreciation expense, due to tenant improvements during 1995 and 1994. 1994 compared to 1993 The Partnership realized an increase in net income from 1993 to 1994 which can be attributed to a decrease in expenses of the Partnership. The Partnership's share of Joint Venture net income increased from 1993 to 1994. However, the Partnership realized a decrease in MBS interest income which was somewhat offset by an increase in interest received on other short-term investments. The decrease in MBS interest income is due to the high amount of principal prepayments received throughout 1993 and the first half of 1994. Expenses decreased for the Partnership from 1993 to 1994. This decrease is largely attributable to a one-time adjustment for an underaccrual of asset management fees that occurred in the first quarter of 1993. The Marketplace's increase in net income from 1993 to 1994 can be attributed to management's success in attracting strong national tenants as well as an increase in occupancy over 1993. The property also received a tax refund for prior years due to a reassessment of the property tax base by the taxing authorities. However, the decrease in taxes was somewhat offset by an increase in depreciation due to the tenant improvements which took place in 1993. General In accordance with Financial Accounting Standards 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. In assessing the impairment of the underlying real estate owned by the Joint Venture, the General Partners routinely perform market and growth studies combined with periodic appraisals of the underlying property. If the General Partners believe that there is impairment in value, a provision to write down the investment to fair value will be charged against income. At this time, the General Partners do not believe that any asset of the Partnership is significantly impaired. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Appendix A to this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Partnership has no directors or executive officers. Information as to the directors and executive officers of Krupp Company Limited Partnership- VI, which is the General Partner of the Partnership, and Krupp Plus-II Corporation, which is the General Partner of Krupp Company Limited Partnership-VI, is as follows: Position with Name and Age Krupp Plus-II Corporation Douglas Krupp (49) Co-Chairman of the Board George Krupp (51) Co-Chairman of the Board Laurence Gerber (39) President Robert A. Barrows (38) Treasurer Douglas Krupp is Co-Chairman and Co-Founder of The Berkshire Group. Established in 1969 as the Krupp Companies, this real estate-based firm expanded over the years within its areas of expertise including investment program sponsorship, property and asset management, mortgage banking, healthcare facility ownership and the management of the Company. Today, The Berkshire Group is an integrated real estate, mortgage and healthcare company which is headquartered in Boston with regional offices throughout the country. A staff of approximately 3,400 are responsible for the more than $4 billion under management for institutional and individual clients. Mr. Krupp is a graduate of Bryant College. In 1989 he received an honorary Doctor of Science in Business Administration from this institution and was elected trustee in 1990. Mr. Krupp is Chairman of the Board and a Director of Berkshire Realty Company, Inc. (NYSE-BRI). George Krupp is Douglas Krupp's brother. George Krupp is the Co-Chairman and Co-Founder of The Berkshire Group. Established in 1969 as the Krupp Companies, this real estate-based firm expanded over the years within its areas of expertise including investment program sponsorship, property and asset management, mortgage banking and healthcare facility ownership. Today, The Berkshire Group is an integrated real estate, mortgage and healthcare company which is headquartered in Boston with regional offices throughout the country. A staff of approximately 3,400 are responsible for more than $4 billion under management for institutional and individual clients. Mr. Krupp attended the University of Pennsylvania and Harvard University. Mr. Krupp also serves as Chairman of the Board and Trustee of Krupp Government Income Trust and as Chairman of the Board and Trustee of Krupp Government Income Trust II. Laurence Gerber is the President and Chief Executive Officer of The Berkshire Group. Prior to becoming President and Chief Executive Officer in 1991, Mr. Gerber held various positions with The Berkshire Group which included overall responsibility at various times for: strategic planning and product development, real estate acquisitions, corporate finance, mortgage banking, syndication and marketing. Before joining The Berkshire Group in 1984, he was a management consultant with Bain & Company, a national consulting firm headquartered in Boston. Prior to that, he was a senior tax accountant with Arthur Andersen & Co., an international accounting and consulting firm. Mr. Gerber has a B.S. degree in Economics from the University of Pennsylvania, Wharton School and an M.B.A. degree with high distinction from Harvard Business School. He is a Certified Public Accountant. Mr. Gerber also serves as President and Director of Berkshire Realty Company, Inc. (NYSE-BRI) and President and Trustee of Krupp Government Income Trust and President and Trustee of Krupp Government Income Trust II. Robert A. Barrows is Senior Vice President and Chief Financial Officer of Berkshire Mortgage Finance and Corporate Controller of The Berkshire Group. Mr. Barrows has held several positions within The Berkshire Group since joining the company in 1983 and is currently responsible for accounting and financial reporting, treasury, tax, payroll and office administrative activities. Prior to joining The Berkshire Group, he was an audit supervisor for Coopers & Lybrand L.L.P. in Boston. He received a B.S. degree from Boston College and is a Certified Public Accountant. ITEM 11. EXECUTIVE COMPENSATION The Partnership does not have any directors or executive officers. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1995 no person of record owned or was known by the General Partners to own beneficially more than 5% of the Partnership's outstanding Units. The only interests held by management or its affiliates consist of its General Partner and Corporate Limited Partner Interests. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership does not have any directors, executive offices or nominees for election as director. Additionally, as of December 31, 1995 no person of record owned or was known by the General Partners to own beneficially more than 5% of the Partnership s outstanding Units. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements - see Index to Financial Statements included under Item 8, Appendix A, on page F-2 of this report. 2. Financial Statement Schedules - all schedules are omitted as they are not applicable, not required or the information is provided in the Financial Statements or the Notes thereto. 3. Separate Financial Statements - as required by Rule 3-09 of Regulation S-X the financial statements and schedule for Spring Valley Marketplace (Joint Venture) are included under Item 8, Appendix A on pages F-13 through F-24. (b)Exhibits: Number and Description Under Regulation S-K The following reflects all applicable Exhibits required under Item 601 of Regulation S-K: (4) Instruments defining the rights of security holders including indentures: (4.1) Agreement of Limited Partnership dated as of February 23, 1989 [Exhibit A to Prospectus included in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* (4.2) Subscription Agreement Specimen [Exhibit D to Prospectus included in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* (4.3) First Amendment to and Restatement of Certificate of Limited Partnership filed with the Massachusetts Secretary of State on February 22, 1989 [Exhibit 4.4 to Prospectus included in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* (4.4) Krupp Sponsored IRA New Investor Application [Exhibit 4.5 to Prospectus included in Amendment No. 1 of Registrant's Registration Statement on Form S-11 dated November 30, 1988] (File No. 33- 24181).* (10) Material Contracts: Spring Valley Marketplace (10.1) Purchase and Sale Agreement dated November 14, 1988 between Krupp Realty Company Limited Partnership, now known as Berkshire Realty Enterprises L.P. ("BRE"), ("Buyer") and Valley Associates, Ltd. ("Seller"). [Exhibit 10.1 to Registrant's Report of Form 10-Q for the Quarter Ended September 30, 1989 (File No. 33-24181)].* (10.2) Assignment of Agreement dated December 13, 1988 by and between Spring Valley Partnership ("Assignee") and BRE ("Assignor"). [Exhibit 10.2 to Registrant's Report on Form 10-Q for the Quarter Ended September 30, 1989 (File No. 33- 24181)].* (10.3) Spring Valley Partnership - Partnership Agreement dated December 13, 1988 by and among Krupp Cash Plus-V Limited Partnership and BRE [Exhibit 10.5 to Prospectus in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* (10.4) Bargain and Sale Deed dated December 13, 1988 between Spring Valley Partnership ("Grantee") and BRE ("Grantor") [Exhibit 10.3 to Registrant's Report on Form 10-Q for the Quarter Ended September 30, 1989 (File No. 33-24181)].* (10.5) Additional Sales Price Agreement dated December 13, 1988 between Krupp Cash Plus-V Limited Partnership and BRE [Exhibit 10.6 to Prospectus in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* (10.6) Property Management Agreement dated December 16, 1988 between Spring Valley Partnership ("Owner") and BRE ("Agent") [Exhibit 10.7 to Prospectus in Amendment No. 2 of Registrant's Registration Statement on Form S-11 dated March 1, 1989 (File No. 33-24181)].* * Incorporated by reference. (c) Reports on Form 8-K During the last quarter of the fiscal year ended December 31, 1995, the Partnership filed no reports on Form 8-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on the 21st day of March, 1996. KRUPP CASH PLUS-V LIMITED PARTNERSHIP By: Krupp Company Limited Partnership-VI, the General Partner, by Krupp Plus-II Corporation, the General Partner of Krupp Company Limited Partnership-VI By: /s/ Douglas Krupp Douglas Krupp, Co-Chairman (Principal Executive Officer) and Director of Krupp Plus-II Corporation Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the 21st day of March, 1996. Signatures Title(s) /s/ Douglas Krupp Co-Chairman (Principal Executive Officer) Douglas Krupp and Director of Krupp Plus-II Corporation, the General Partner of Krupp Company Limited Partnership-VI /s/ George Krupp Co-Chairman (Principal Executive Officer) George Krupp and Director of Krupp Plus-II Corporation, the General Partner of Krupp Company Limited Partnership-VI /s/ Laurence Gerber President of Krupp Plus-II Corporation, Laurence Gerber the General Partner of Krupp Company Limited Partnership-VI /s/Robert A. Barrows Treasurer of Krupp Plus-II Corporation, Robert A. Barrows the General Partner of Krupp Company Limited Partnership-VI APPENDIX A KRUPP CASH PLUS-V LIMITED PARTNERSHIP FINANCIAL STATEMENTS ITEM 8 of FORM 10-K REPORT TO THE SECURITIES AND EXCHANGE COMMISSION For the Year Ended December 31, 1995 KRUPP CASH PLUS-V LIMITED PARTNERSHIP INDEX TO FINANCIAL STATEMENTS Report of Independent Accountants F-3 Balance Sheets at December 31, 1995 and 1994 F-4 Statements of Income For the Years Ended December 31, 1995, 1994 and 1993 F-5 Statements of Changes in Partners' Equity for the Years Ended December 31, 1995, 1994 and 1993 F-6 Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 F-7 Notes to Financial Statements F-8 - F-12 Separate Financial Statements - Spring Valley Marketplace F-13 - F-24 All schedules are omitted as they are not applicable or not required, or the information is provided in the financial statements or the notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Krupp Cash Plus-V Limited Partnership: We have audited the financial statements of Krupp Cash Plus-V Limited Partnership (the "Partnership") listed in the index on page F-2 of this Form 10-K. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Krupp Cash Plus-V Limited Partnership as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Boston, Massachusetts COOPERS & LYBRAND L.L.P. January 31, 1996 KRUPP CASH PLUS-V LIMITED PARTNERSHIP BALANCE SHEETS December 31, 1995 and 1994 ASSETS
1995 1994 Real estate assets: Investment in Joint Venture (Note D) $23,187,379 $23,748,539 Mortgage-backed securities ("MBS"), net of amortization (Note C) 915,554 984,565 Total real estate assets 24,102,933 24,733,104 Cash and cash equivalents 2,101,121 2,665,531 Interest receivable and other assets 36,190 38,469 Total assets $26,240,244 $27,437,104 LIABILITIES AND EQUITY Liabilities $ 9,729 $ 16,535 Partners' equity (Note E): Unitholders (2,060,350 Units outstanding) 26,273,929 27,455,662 Corporate Limited Partner (100 Units outstanding) (535) (478) General Partners (42,879) (34,615) Total Partners' equity 26,230,515 27,420,569 Total liabilities and Partners' equity $26,240,244 $27,437,104
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP STATEMENTS OF INCOME For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993 Revenue: Partnership's share of Joint Venture (Note D) $ 906,900 $674,187 $ 646,761 Interest income - MBS (Note C) 86,939 122,957 219,446 Interest income - other 137,017 98,904 69,385 Total revenue 1,130,856 896,048 935,592 Expenses: General and administrative (including reimbursements to affiliates of $53,519, $88,291 and $98,344, respectively) (Note F) 99,239 143,932 161,199 Asset management fees to an affiliate (Note F) 144,082 145,643 192,826 Amortization of organization cost - 3,333 10,000 Total expenses 243,321 292,908 364,025 Net income (Notes E and G) $ 887,535 $603,140 $ 571,567 Allocation of net income (Note E): Unitholders (2,060,350 Units outstanding) $ 878,617 $597,080 $ 565,824 Net income per Unit of Depositary Receipt $ .43 $ .29 $ .27 Corporate Limited Partner $ 43 $ 29 $ 27 General Partners $ 8,875 $ 6,031 $ 5,716
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP STATEMENTS OF CHANGES IN PARTNERS' EQUITY For the Years Ended December 31, 1995, 1994 and 1993
Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1992 $30,416,278 $(334) $(21,398) $30,394,546 Distributions (2,058,935) (100) (12,999) (2,072,034) Net income 565,824 27 5,716 571,567 Balance at December 31, 1993 28,923,167 (407) (28,681) 28,894,079 Distributions (2,064,585) (100) (11,965) (2,076,650) Net income 597,080 29 6,031 603,140 Balance at December 31, 1994 27,455,662 (478) (34,615) 27,420,569 Distributions (2,060,350) (100) (17,139) (2,077,589) Net income 878,617 43 8,875 887,535 Balance at December 31, 1995 $26,273,929 $(535) $(42,879) $26,230,515
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993 Operating activities: Net income $ 887,535 $ 603,140 $ 571,567 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of organization costs - 3,333 10,000 Amortization of MBS discount (669) (13,194) (20,177) Distributions from Joint Venture 906,898 674,187 646,761 Partnership's share of Joint Venture net income (906,898) (674,187) (646,761) Decrease (increase) in interest receivable and other assets 2,279 (6,655) 19,123 Increase (decrease) in total liabilities (6,806) 13,666 (2,847) Net cash provided by operating activities 882,339 600,290 577,666 Investing activity: Distributions from Joint Venture in excess of net income 561,160 903,153 685,569 Principal collections on MBS 69,680 778,941 1,313,917 Net cash provided by investing activities 630,840 1,682,094 1,999,486 Financing activity: Distributions (2,077,589) (2,076,650) (2,072,034) Net (decrease) increase in cash and cash equivalents (564,410) 205,734 505,118 Cash and cash equivalents, beginning of year 2,665,531 2,459,797 1,954,679 Cash and cash equivalents, end of year $ 2,101,121 $2,665,531 $2,459,797
The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS A. Organization Krupp Cash Plus-V Limited Partnership (the "Partnership") was formed on August 22, 1988 by filing a Certificate of Limited Partnership in The Commonwealth of Massachusetts. The Partnership originally issued all of the General Partner Interests to Krupp Plus Corporation and The Krupp Company Limited Partnership-VI in exchange for capital contributions aggregating $3,000. Except under certain limited circumstances upon termination of the Partnership, the General Partners are not required to make any additional capital contributions. On March 15, 1995, Krupp Plus Corporation withdrew as General Partner from the Partnership and assigned its rights, title and interest in the Partnership to Krupp Company Limited Partnership-VI. The Partnership will continue in existence until December 31, 2028, unless earlier terminated upon the occurrence of certain events as set forth in the Partnership Agreement. The Partnership has issued all of the Corporate Limited Partner Interests to Krupp Depositary Corporation (the "Corporate Limited Partner") in exchange for a capital contribution of $2,000. The Corporate Limited Partner, in turn, has issued Depositary Receipts (the "Units") to the investors and has assigned all of its rights and interest in the Limited Partner Interests (except for its $2,000 Limited Partner's interest) to the holders of the Units (the "Unitholders"). As of March 1, 1991, the Partnership completed its public offering having sold 2,060,350 Units for $41,203,189, net of purchase volume discounts of $3,811. B. Significant Accounting Policies The Partnership uses the following accounting policies for financial reporting purposes: Risks and Uncertainties The Partnership invests its cash primarily in deposits and money market funds with commercial banks. The Partnership has not experienced any losses to date on its invested cash. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Partnership includes all short-term investments with maturities of three months or less from the date of acquisition in cash and cash equivalents. Cash equivalents are recorded at cost, which approximates current market values. Deferred Costs Costs incurred in connection with the acquisition of computer software are being amortized over a five year period using the straight-line method. Costs incurred in connection with the organization of the Partnership were amortized over a five year period using the straight-line method. Investment in Joint Venture The Partnership has a 49.9% interest in Spring Valley Partnership ("Joint Venture"). This investment was recorded at cost and is accounted for by the equity method since the Partnership Agreement requires a two-thirds majority for all major decisions regarding the Joint Venture. As such, the Partnership does not have control of the operations of the underlying assets. Under the equity method of accounting, the Partnership's equity investment in the net income of the Joint Venture is included currently in the Partnership's net income. Cash distributions received from the Joint Venture reduce the Partnership's investment (see Note D). MBS The Partnership carries its MBS at amortized cost as the Partnership has both the intention and ability to hold its MBS until maturity. Premiums or discounts are amortized over the life of the underlying mortgages using the effective yield method. The market value of MBS is determined based on quoted market prices. Income Taxes The Partnership is not liable for federal or state income taxes as Partnership income or loss is allocated to the partners for income tax purposes. In the event that the Partnership's tax returns are examined by the Internal Revenue Service or state taxing authority and the examination results in a change in the Partnership's taxable income or loss, such change will be reported to the partners. Impairment of Long Lived Assets In accordance with Financial Accounting Standards 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. In assessing the impairment of the Joint Venture investment, the General Partners routinely perform market and growth studies combined with periodic appraisals of the underlying property. If the General Partners believe there is impairment in value, a provision to write down the investment to fair value will be charged against income. At this time, the General Partners do not believe that any asset of the Partnership is impaired. Reclassifications Certain prior year balances have been reclassified to conform with current year financial statement presentation. C. Mortgage-Backed Securities All of the MBS held by the Partnership are issued by the Federal Home Loan Mortgage Corporation. The following is additional information on the MBS held as of December 31, 1995 and 1994: 1995 1994 Face Value $931,197 $1,000,877 Amortized cost $915,554 $ 984,565 Estimated Market Value $940,000 $1,001,000 Coupon rates of the MBS range from 9.0% to 9.5% per annum and mature in the years 2016 and 2017. The Partnership's MBS portfolio had gross unrealized gains of approximately $24,446 and $16,435 at December 31, 1995 and 1994, respectively. The Partnership does not expect to realize these gains as it has the intention and ability to hold the MBS until maturity. D. Investment in Joint Venture On December 14, 1988, the Joint Venture acquired Spring Valley Marketplace (the "Marketplace"), a 314,673 square foot shopping center located on 30 acres of land in Spring Valley, Rockland County, New York. The Joint Venture acquired the Marketplace for $50,000,000 and incurred closing costs of $359,408 related to the acquisition. In conjunction with a Net Operating Income Guaranty Agreement the Joint Venture has collected $1,000,000, the maximum obligation due from the seller, and has therefore reduced the cost basis of the Marketplace by these amounts for financial reporting purposes. The Marketplace, built in 1987, consists of one structure anchored by five major tenants and is connected by five sections occupied by smaller tenants. The Joint Venture owns the Marketplace free and clear from all material liens or encumbrances. The Partnership holds a 49.9% joint venture interest. The investment balance reflects the original cost of the investment, including $1,882,546 of acquisition costs, as well as allocations of net income earned by the Joint Venture and distributions received from the Joint Venture. Separate financial statements for the Joint Venture are included on pages F-13 through F-24 of this report. E. Partners' Equity Under the Partnership Agreement, profits or losses from Partnership operations and Distributable Cash Flow are allocated 99% to the Unitholders and Corporate Limited Partner (the "Limited Partners") based on Units held, and 1% to the General Partners. Profits arising from a capital transaction will be allocated in the same manner as cash distributions (described below). Losses from a capital transaction will be allocated 99% to the Limited Partners and 1% to the General Partners. Upon the occurrence of a capital transaction, as defined in the Partnership Agreement, proceeds will be applied to the payment of all debts and liabilities of the Partnership then due; any reserves for contingent liabilities will then be funded. Remaining net cash proceeds will then be distributed first to the Limited Partners, until they have received a return of their total invested capital; second to the General Partners, until they have received a return of their total invested capital; third, to the Limited Partners until they have received any deficiency in the 12% cumulative return on invested capital through fiscal years prior to the date of the capital transaction; fourth, to the General Partners until they have received an amount necessary so that the amounts of net cash proceeds whenever allocated under the third and fourth clauses are in the ratio of 90 to 10; and fifth, 90% to the Limited Partners and 10% to the General Partners. As of December 31, 1995, the following cumulative partner contributions and allocations have been made since inception of the Partnership:
Corporate Limited General Unitholders Partner Partners Total Capital Contributions $ 41,203,189 $ 2,000 $ 3,000 $ 41,208,189 Syndication Costs (4,826,066) - - (4,826,066) Distributions (14,976,190) (829) (92,131) (15,069,150) Net Income (Loss) 4,872,996 (1,706) 46,252 4,917,542 Balance at December 31, 1995 $ 26,273,929 $ (535) $(42,879) $ 26,230,515
F. Related Party Transactions Under the terms of the Partnership Agreement, the General Partners or their affiliates are entitled to an Asset Management Fee for the management of the Partnership's business equal to .5% per annum of the Total Invested Assets of the Partnership (as defined in the prospectus), payable quarterly. The Partnership also reimburses affiliates of the General Partners for certain expenses incurred in connection with the preparation and mailing of reports and other communications to the Limited Partners. All amounts paid or accrued to the General Partners or their affiliates during the three years ended December 31, 1995 are presented on the Statements of Income. G. Income Taxes The reconciliations of net income reported in the accompanying Statements of Income with the income reported in the Partnership's 1995, 1994 and 1993 federal income tax returns are as follows:
1995 1994 1993 Net income per statement of income $ 887,535 $603,140 $571,567 Add: Difference in Partnership's share of Joint Venture taxable net income due to book to tax difference in depreciation 264,724 248,722 213,702 Less: Partnership's share of difference due to rental adjustment required by Generally Accepted Accounting Principles (9,071) (17,757) (17,087) Net income for federal income tax purposes $1,143,188 $834,105 $768,182
The allocation of the 1995 net income for federal income tax purposes is as follows:
Portfolio Passive Income Income Total Unitholders $239,112 $892,590 $1,131,702 Corporate Limited Partner 12 43 55 General Partners 2,415 9,016 11,431 $241,539 $901,649 $1,143,188
For the years ended December 31, 1995, 1994 and 1993 the Average per Unit income to the Unitholders for federal income tax purposes was $.55, $.40 and $.37, respectively. SPRING VALLEY PARTNERSHIP FINANCIAL STATEMENTS AND SCHEDULE For the Year Ended December 31, 1995 SPRING VALLEY PARTNERSHIP INDEX TO FINANCIAL STATEMENTS AND SCHEDULE Report of Independent Accountants F-15 Balance Sheets at December 31, 1995 and 1994 F-16 Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993 F-17 Statements of Changes in Partners' Equity for the Years Ended December 31, 1995, 1994 and 1993 F-18 Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 F-19 Notes to Financial Statements F-20 - F-23 Schedule III - Real Estate and Accumulated Depreciation F-24 All other schedules are omitted as they are not applicable or not required, or the information is provided in the financial statements or the notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Spring Valley Partnership: We have audited of financial statements and financial statement schedule of Spring Valley Partnership ("the Partnership") listed in the index on page F- 14 of these Financial Statements. These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Spring Valley Partnership as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Boston, Massachusetts January 31, 1996 SPRING VALLEY PARTNERSHIP BALANCE SHEETS December 31, 1995 and 1994 ASSETS
1995 1994 Fixed assets, at cost Land $ 10,403,471 $ 10,403,471 Building and improvements 43,005,827 42,726,512 53,409,298 53,129,983 Less: Accumulated depreciation (12,084,310) (10,243,666) Total fixed assets 41,324,988 42,886,317 Cash and cash equivalents 575,566 252,502 Other assets 916,171 772,544 Total assets $ 42,816,725 $ 43,911,363 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 45,576 $ 8,532 Accrued expenses and other liabilities (Note C) 187,937 195,054 Total liabilities 233,513 203,586 Partners' equity (Note D) 42,583,212 43,707,777 Total liabilities and Partners' equity $ 42,816,725 $ 43,911,363
The accompanying notes are an integral part of the financial statements. SPRING VALLEY PARTNERSHIP STATEMENTS OF OPERATIONS For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993 Rental revenue $6,544,064 $5,994,653 $5,840,455 Other income 35,233 26,811 20,871 Total revenues 6,579,297 6,021,464 5,861,326 Expenses: Operating (Note F) 350,023 496,641 511,473 Maintenance 511,014 487,766 381,847 Management fees (Note F) 398,642 344,760 354,948 Real estate taxes 1,661,539 1,543,217 1,599,226 Depreciation 1,840,644 1,798,003 1,717,710 Total expenses 4,761,862 4,670,387 4,565,204 Net income (Note G) $1,817,435 $1,351,077 $1,296,122
The accompanying notes are an integral part of the financial statements. SPRING VALLEY PARTNERSHIP STATEMENTS OF CHANGES IN PARTNERS' EQUITY For the Years Ended December 31, 1995, 1994, and 1993
Berkshire Cash Plus V Realty Total Limited Company, Partners' Partnership Inc. Equity Balance at December 31, 1992 $23,454,712 $23,436,870 $46,891,582 Distributions (1,332,330) (1,337,670) (2,670,000) Net income 646,761 649,357 1,296,118 Balance at December 31, 1993 22,769,143 22,748,557 45,517,700 Distributions (1,577,339) (1,583,661) (3,161,000) Net income 674,187 676,890 1,351,077 Balance at December 31, 1994 21,865,991 21,841,786 43,707,777 Distributions (1,468,058) (1,473,942) (2,942,000) Net income 906,900 910,535 1,817,435 Balance at December 31, 1995 $21,304,833 $21,278,379 $42,583,212
The accompanying notes are an integral part of the financial statements. SPRING VALLEY PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993 Operating activities: Net income $ 1,817,435 $1,351,077 $ 1,296,122 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,840,644 1,798,003 1,717,710 (Increase) decrease in other assets (143,627) 119,721 66,224 Increase (decrease) in accounts payable 37,044 (126,252) 34,906 Decrease in other liabilities (7,117) (5,574) (5,848) Net cash provided by operating activities 3,544,379 3,136,975 3,109,114 Investing activities: Additions to fixed assets (279,315) (294,922) (421,520) Net cash used in investing activities (279,315) (294,922) (421,520) Financing activity: Distributions (2,942,000) (3,161,000) (2,670,000) Net cash used in financing activities (2,942,000) (3,161,000) (2,670,000) Net increase (decrease) in cash 323,064 (318,947) 17,594 Cash and cash equivalents, beginning of year 252,502 571,449 553,855 Cash and cash equivalents, end of year $ 575,566 $ 252,502 $ 571,449
The accompanying notes are an integral part of the financial statements. SPRING VALLEY PARTNERSHIP NOTES TO FINANCIAL STATEMENTS A. Organization Spring Valley Partnership was formed on December 13, 1988 by filing a Business Certificate in the Commonwealth of Massachusetts. The Partnership shall continue until December 31, 2027 unless earlier terminated per the Partnership Agreement or by law. The original General Partner interests were issued to Krupp Cash Plus-IV Limited Partnership ("Cash Plus-IV"), 50.1%; Krupp Cash Plus-V Limited Partnership ("Cash Plus-V"), .01%; and Krupp Realty Company Limited Partnership ("Krupp Realty Company"), 49.89%. Pursuant to the original Partnership Agreement, Cash Plus-V purchased Krupp Realty Company's interest in the Partnership and succeeded to its capital contributions and its share of profit and loss allocations and distributions. On June 25, 1991, The Partnership executed an Amended and Restated Partnership Agreement, whereby Cash Plus-IV assigned its rights, title and interest in the Partnership to Berkshire Realty Company, Inc. ("Berkshire"), a Delaware Corporation. Pursuant to the Assignment and First Amendment to Spring Valley Partnership Amended and Restated Partnership Agreement dated May 1, 1995, Berkshire assigned 49.1% of its rights, title and interest in the Partnership to BRI OP Limited Partnership ("BRI OP LP"), its majority owned subsidiary. As of December 31, 1995, the General Partners of the Partnership are BRI OP LP (49.1%) and Berkshire (1%), collectively, "Berkshire Realty Company, Inc." (50.1%) and Cash Plus-V Limited Partnership (49.9%). Profits and losses and distributions will continue to be allocated to the General Partners based on the percentage of their respective capital contributions to total partners' capital contributions. On December 14, 1988, the Partnership acquired Spring Valley Marketplace (the "Marketplace"), a 314,673 square foot shopping center located on 30 acres of land in Spring Valley, Rockland County, New York. The Partnership acquired the Marketplace for $50,000,000 and incurred closing costs of $359,408 related to the acquisition. Additionally, the Partnership executed a Net Operating Guaranty Agreement ("NOI Guaranty Agreement") with the seller, by which, the seller would reimburse the Partnership if the net operating income from the Marketplace did not meet or exceed $4.3 million annually. Per the NOI Guaranty Agreement, which expired on December 13, 1990, the seller's obligation was limited to $1,000,000 on a cumulative basis. As a result of the NOI Guaranty Agreement, the Partnership has collected $1,000,000, the maximum obligation due from the seller, and has therefore reduced the cost basis of the Marketplace by this amount for financial reporting purposes. The Marketplace, built in 1987, consists of one structure anchored by five major tenants and is connected by five sections occupied by smaller tenants. The Partnership owns the Marketplace free and clear from all material liens or encumbrances. B. Significant Accounting Policies The Partnership uses the following accounting policies for financial reporting purposes, which may differ in certain respects from those used for federal income tax purposes: Risks and Uncertainties The Partnership invests its cash primarily in deposits and money market funds with commercial banks. The Partnership has not experienced any losses to date on its invested cash. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Partnership includes all short-term investments with maturities of three months or less from the date of acquisition in cash and cash equivalents. Cash equivalents are recorded at cost, which approximates current market value. Rental Revenues Leases require the payment of base rent monthly in advance. Rental revenues are recorded on the accrual basis. Leases generally contain provisions for additional rent based on a percentage of tenant sales and other provisions which are also recorded on the accrual basis, but are billed in arrears. Minimum rental revenue for long term commercial leases is recognized on a straight-line basis over the life of the related lease. Depreciation Depreciation of building and improvements is provided for by the use of the straight-line method over estimated useful lives of 3-25 years. Tenant improvements are depreciated over the life of the lease. Impairment of Long-Lived Assets In accordance with Financial Accounting Standards 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 General Partners routinely perform market and growth studies combined with periodic appraisals of their unleveraged real estate. The property is carried at cost less accumulated depreciation unless the General Partners believe there is significant impairment in value, in which case a provision to write down the investment in property to fair value will be charged against income. At this time, the General Partners do not believe that any assets of the Partnership are impaired. Leasing Commissions The Partnership amortizes leasing commissions over the life of the lease. Income Taxes The Partnership is not liable for federal or state income taxes because Partnership income or loss is allocated to the partners for income tax purposes. In the event the Partnership's tax returns are examined by the Internal Revenue Service or state taxing authority and such an examination results in a change in Partnership taxable income or loss, such change will be reported to the partners. C. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following at December 31, 1995 and 1994: 1995 1994 Accrued insurance $109,593 $106,504 Tenant security deposits 73,442 86,267 Other accrued expenses 4,902 2,283 $187,937 $195,054 D. Partner's Equity Under the terms of the Partnership Agreement, profits, losses and distributions are allocated 49.9% to Cash Plus V Limited Partnership and 50.1% to Berkshire Realty Company, Inc. As of December 31, 1995, the following cumulative partner contributions and allocations had been made since inception of the Partnership:
50.1% 49.9% Berkshire Cash Plus V Realty Total Limited Company, Partners' Partnership Inc. Equity Capital contributions $ 26,379,755 $ 26,373,641 $ 52,753,396 Distributions (10,415,947) (10,457,696) (20,873,643) Allocation of net income 5,341,025 5,362,434 10,703,459 Total Partners' Equity at December 31, 1995 $ 21,304,833 $ 21,278,379 $ 42,583,212
E. Future Base Rents Due Under Commercial Operating Leases Future base rents due under commercial operating leases in the five years 1996 through 2000 are as follows: 1996 4,119,800 1997 4,206,900 1998 3,854,000 1999 3,441,700 2000 3,089,600 Thereafter 16,381,300 F. Related Party Transactions Property management fees are paid to an affiliate of the General Partners monthly at the rate of up to 6% of rentals and other operating income received by the Marketplace. The Partnership also reimburses affiliates for certain expenses incurred in connection with operations of the Partnership and its property including accounting, computer, insurance, travel legal and payroll. Amounts paid to affiliates of the General Partners included in the accompanying financial statements were as follows:
1995 1994 1993 Property management fees $398,642 $344,760 $354,948 Expense reimbursements 58,284 147,914 147,891 Charged to operations $456,926 $492,674 $502,839
G. Federal Income Taxes The reconciliation of the net income reported in the accompanying statement of operations with the net income reported in the Partnership's federal income tax returns is as follows:
1995 1994 1993 Net income per statement of operations $1,817,435 $1,351,077 $1,296,122 Add: Book to tax depreciation difference 573,232 540,438 468,932 Less: Rental adjustment required by Generally Accepted Accounting Principles (18,176) (35,585) (34,243) Net income for federal income tax purposes $2,372,491 $1,855,930 $1,730,811
The allocation of the 1995 net income for federal income tax purposes is as follows:
Passive Portfolio Income Income Total Cash Plus V Limited Partnership $1,144,970 $ 17,581 $1,162,551 Berkshire Realty Company, Inc. 1,192,288 17,652 1,209,940 $2,337,258 $ 35,233 $2,372,491
The allocation of passive income differs due to individual Joint Venture Partner depreciation elections. SPRING VALLEY PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1995
Costs Capitalized Subsequent to Initial Cost to Partnership Acquisition Buildings & Buildings & Depreciable Description Encumbrances Land Improvements Improvements Life Spring Valley Marketplace $ - $10,403,471 $41,613,880 $1,391,947 3 to 25 Yrs
Gross Amounts Carried at End of Year Buildings Year and Accumulated Construction Year Description Land Improvements Total Deprecation Completed Acquired Spring Valley Marketplace $10,403,471 $43,005,827 $53,409,298 $12,084,310 1987 1988
Reconciliation of Real Estate and Accumulated Depreciation for each of the three years in the period ended December 31, 1995:
1995 1994 1993 Real Estate Balance at beginning of year $53,129,983 $52,835,061 $52,413,541 Acquisition and improvements 279,315 294,922 421,520 Balance at end of year $53,409,298 $53,129,983 $52,835,061 Accumulated Depreciation Balance at beginning of year $10,243,666 $ 8,445,663 $ 6,727,953 Depreciation expense 1,840,644 1,798,003 1,717,710 Balance at end of year $12,084,310 $10,243,666 $ 8,445,663
Note: The aggregate cost of the Partnership's real estate for federal income tax purposes was $52,545,169 and the aggregate accumulated depreciation for federal income tax purposes was $5,686,280 for the year ended December 31, 1995. EX-27 2
5 This schedule contains summary financial information extracted from Cash Plus V Financial Statements for the year ended December 31, 1995 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1995 DEC-31-1995 2,101,121 915,554 33,261 0 0 2,929 23,187,379 0 26,240,244 9,729 0 26,230,515 0 0 0 26,240,244 0 1,130,856 0 0 243,321 0 0 0 0 0 0 0 0 887,535 0 0 Includes all receivables of teh Partnership included in "other assets" on the balance sheet. Represents the Partnership's investment in Joint Venture. Equity of General Partners ($42,879) and Limited Partners of $26,273,394. Includes all revenue of the Partnership. Includes all expenses of the Partnership. Net income allocated $8,875 to the General Partners and $878,660 to the Limited Partners. Average net income is $.42 on 2,060,450 units outstanding.
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