-----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, NOlME1AioUd8FxAQ0cag7KtgiYciAJ2DjTxskabfxO3YmJJ/g7EYksdXWhgsx401 N4FObJkVWif01gQDObhiyg== 0000839427-97-000002.txt : 19970401 0000839427-97-000002.hdr.sgml : 19970401 ACCESSION NUMBER: 0000839427-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 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: 97569222 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 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1996 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: Part IV, Item 14. The exhibit index is located on pages 10-11. The total number of pages in this document is 36. PART I This Form 10-K 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. 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 location of the Partnership's property, (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, 1996, there was one person employed on-site by the Joint Venture. ITEM 2. PROPERTY As of December 31, 1996, the Partnership has an unleveraged joint venture investment in a shopping center with 320,684 square feet of leasable space. Additional detailed information with respect to 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) of this report. A summary of the Partnership's real estate investment is presented below.
Average Occupancy For the Year Ended Year of Current Leasable December 31, Description Acquisition Square Footage 1996 1995 1994 1993 1992 Spring Valley Marketplace (1) 1988 320,684 98% 98% 96% 95% 95%
(1) The Partnership has a 49.9% joint venture interest in this property. Tenant buildouts and improvements planned for 1997 are those that the General Partners believe are necessary to keep the property competitive in its respective market and to maintain or increase its current occupancy level. There were four tenants at Spring Valley Marketplace that occupied greater than 10% of the Partnership's leasable space as of December 31, 1996. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Partnership is a party or to which its property is the subject. 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 public market for the Units and it is not anticipated that any such public market will develop. The transfer of Units is subject to certain limitations contained in the Partnership Agreement. The number of investors holding Units ("Unitholders") as of December 31, 1996 is approximately 2,800. The Partnership made the following distributions, in quarterly installments, during the two years ended December 31, 1996 and 1995:
1996 1995 Amount Per Unit Amount Per Unit Limited Partners: Unitholders $2,060,351 $1.00 $2,060,350 $1.00 (2,060,350 Units) Corporate Limited Partner 100 1.00 100 1.00 (100 Units) General Partners 14,625 17,139 $2,075,076 $2,077,589
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, 1996 1995 1994 1993 1992 Total revenue $1,080,428 $ 1,130,856 $ 896,048 $ 935,592 $ 1,017,946 Net income 698,265 887,535 603,140 571,567 699,062 Net income allocated to Partners: Unitholders 691,248 878,617 597,080 565,824 692,037 Per Unit .34 .43 .29 .27 .34 Corporate Limited Partner 34 43 29 27 34 General Partners 6,983 8,875 6,031 5,716 6,991 Total assets at December 31 24,916,567 26,240,244 27,437,104 28,896,948 30,400,262 Distributions: Unitholders 2,060,351 2,060,350 2,064,585 2,058,935 2,680,726 Per Unit (a) 1.00 1.00 1.00 1.00 1.30 Corporate Limited Partner 100 100 100 100 130 General Partners 14,625 17,139 11,965 12,999 14,366
(a) For the periods ended 1996, 1995, 1994, 1993 and 1992 the Limited Partners' average per Unit return of capital was $.44, $.30, $.28, $.39, and $.00, respectively. Prior performance of the Partnership is not necessarily indicative of future operations. ITEM 7. 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 sources of liquidity are derived from the distributions it receives from its interest in the Joint Venture, earnings and collections on its MBS, and interest earned on its short-term investments. Spring Valley Marketplace (the "Marketplace") is currently occupied at a rate of 98%. In order to retain or increase this level of occupancy and to remain competitive within its immediate market, the Marketplace is expected to spend approximately $625,000 for capital improvements in 1997, most of which are tenant buildouts and exterior improvements necessary to attract and retain quality tenants at the shopping center. Major capital improvements performed in 1996 included the expansion of T.J. Maxx and parking lot paving which is expected to continue into 1997. 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. 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 Loan 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 collections, distributions received from the Marketplace and working capital reserves. Due to fluctuations in MBS principal prepayments and its effect on the Partnership's liquidity, the Partnership may need to periodically adjust its distribution rate. Therefore, sustaining the distribution rate is mainly dependent upon the future performance of the Marketplace. Distributable Cash Flow and Net Cash Proceeds from Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Proceeds from Capital Transactions as defined by Section 17 of the Partnership Agreement for the year ended December 31, 1996 and the period from inception to December 31, 1996. The General Partner provides certain information below to meet requirements of the Partnership Agreement and because it believes that is an appropriate supplemental measure of operating performance. However, Distributable Cash Flow and Net Proceeds from Capital Transactions should not be considered by the reader as a substitute to net income, as an indicator of the Partnership's operating performance or to cash flow as a measure of liquidity.
(In $1,000's except per Unit amounts) For the Year Inception to Ended December 31, December 31, 1996 1996 Distributable Cash Flow: Net income for tax purposes $ 1,016 $ 7,407 Items providing / not requiring or (not providing) the use of operating funds: Amortization of acquisition costs 105 105 Amortization of organization costs - 50 Distributions from Joint Venture 1,264 10,730 Partnership's share of Joint Venture taxable net income (1,229) (7,456) Total Distributable Cash Flow ("DCF") $ 1,156 $ 10,836 Unitholders' Share of DCF $ 1,144 $ 10,728 Unitholders' Share of DCF per Unit $ .56 $ 5.21(c) General Partners' Share of DCF $ 12 $ 108 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 270 $ 4,723 Distributions: Unitholders $ 2,060(a) $ 17,556(b) Unitholders' Average per Unit $ 1.00(a) $ 8.52(b)(c) General Partners $ 15(a) $ 114(b) Total Distributions $ 2,075(a) $ 17,670(b)
(a)Represents distributions paid in 1996, except the February 1996 distribution, which relates to 1995 cash flow and includes an estimate of the distribution to be paid in February 1997. (b)Includes an estimate of the distribution to be paid in February 1997. (c)Unitholders average per Unit return of capital as of February 1997 is $3.31 ($8.52 - $5.21). Operations Partnership 1996 compared to 1995 Overall, distributable cash flow, as defined in the Partnership Agreement, decreased from 1995 to 1996, primarily due to the decrease in distributions received from the Joint Venture. Net income for the Partnership decreased by $189,000 from 1995 to 1996, due to both a decline in interest income and an increase in total expenses. In 1996, as compared to 1995, total revenue decreased primarily due to a decline in other interest income as a result of lower cash and cash equivalent balances available for investment. MBS interest income decreased due to scheduled payments and prepayments of principal which occur on the MBS portfolio. This decrease is partially offset by a slight increase in net income generated by the Partnership's Joint Venture investment in the Marketplace, as discussed below. Total expenses increased in 1996, as compared to 1995. General and administrative expense increased primarily due to an increase in charges incurred in connection with the preparation and mailing of Partnership reports and other investor communications. Also, in 1996, the Partnership began amortizing costs relating to the investment in the Joint Venture which will continue to be amortized over the remaining life of the underlying asset. 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 as a result of the Joint Venture's desire to increase working capital reserves. Net income for the Partnership increased by $284,000 from 1994 to 1995 primarily due to an increase in revenue. Revenue increased as a result of an increase in net income generated by the Marketplace. MBS interest income decreased in 1995 when compared to 1994 due to an overall reduction in the average MBS principal balance outstanding during 1995. This decrease was offset by an increase in interest received from the Partnership's short-term investments. Joint Venture 1996 compared to 1995 Net income for the Marketplace experienced a slight increase when comparing 1995 to 1996. Revenue increased primarily due to higher tenant billings at the Marketplace based upon greater reimbursable expenses, including snow removal costs from the stormy winter season, and real estate taxes. During 1996, total expenses increased, as compared to 1995, primarily due to significant increases in maintenance expense and real estate taxes. Maintenance expense increased due to a rise in snow removal expenditures as a result of the adverse winter weather conditions. The increase in real estate taxes is due to both a rise in the assessed value of the Marketplace and an increase in the school tax rate by the local taxing authority. Operating expense increased due to an increase in expenses relating to the operation of the property including computer, accounting, travel, insurance, legal and payroll costs. Management fees also increased in conjunction with the rise in revenue. Depreciation expense increased in 1996, as compared to 1995, as a result of continued capital improvement expenditures. 1995 compared to 1994 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 reduced general and administrative expenses. These savings were partially offset by increases in maintenance expenses primarily from the resurfacing of the parking lot, real estate taxes due to an increase in the assessed value of the Marketplace, and depreciation expense due to tenant improvements during 1995 and 1994. 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 asset. In assessing the impairment of the underlying real estate owned by the Joint Venture, the General Partner routinely performs market and growth studies combined with periodic appraisals of the underlying property. If the General Partner believes that there is a material impairment in value, a provision to write down the investment to fair value will be charged against income. At this time, the General Partner does not believe that the asset of the Partnership is materially 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 (50) Co-Chairman of the Board George Krupp (52) Co-Chairman of the Board Laurence Gerber (40) President Robert A. Barrows (39) 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 both Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR). 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 Director of Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR), as well as 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 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, 1996 no person of record owned or was known by the General Partners to own beneficially more than 5% of the Partnership's outstanding 2,060,350 Depositary Receipts. 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, 1996 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 (the "Joint Venture") are included under Item 8 (Appendix A) on pages F-13 through F-24 of this report. (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 Registrants'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, 1996, 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 27th day of March, 1997. 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 27th day of March, 1997. Signatures Titles /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) and George Krupp 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 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION For the Year Ended December 31, 1996 KRUPP CASH PLUS-V LIMITED PARTNERSHIP INDEX TO FINANCIAL STATEMENTS Report of Independent Accountants F-3 Balance Sheets at December 31, 1996 and December 31, 1995 F-4 Statements of Income For the Years Ended December 31, 1996, 1995 and 1994 F-5 Statements of Changes in Partners' Equity for the Years Ended December 31, 1996, 1995 and 1994 F-6 Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 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, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. Boston, Massachusett COOPERS & LYBRAND L.L.P. January 31, 1997
KRUPP CASH PLUS-V LIMITED PARTNERSHIP BALANCE SHEETS December 31, 1996 and 1995 ASSETS 1996 1995 Real estate assets: Investment in Joint Venture, net of accumulated amortization of $104,586, and $0, respectively (Note D) $22,729,660 $23,187,379 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note C) 645,762 915,554 Total real estate assets 23,375,422 24,102,933 Cash and cash equivalents 1,524,048 2,101,121 Interest receivable and other assets 17,097 36,190 Total assets $24,916,567 $26,240,244 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accrued audit liability $ 13,500 $ 9,729 Due to affiliates (Note F) 49,363 - Total liabilities 62,863 9,729 Partners' equity (deficit) (Note E): Unitholders (2,060,350 Units outstanding) 24,904,826 26,273,929 Corporate Limited Partner (100 Units outstanding) (601) (535) General Partners (50,521) (42,879) Total Partners' equity 24,853,704 26,230,515 Total liabilities and Partners' equity $24,916,567 $26,240,244
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, 1996, 1995 and 1994 1996 1995 1994 Revenue: Partnership's share of Joint Venture net income (Note D) $ 910,834 $ 906,900 $ 674,187 Interest income - MBS (Note C) 72,801 86,939 122,957 Interest income - other 96,793 137,017 98,904 Total revenue 1,080,428 1,130,856 896,048 Expenses: General and administrative (Note F) 134,399 99,239 143,932 Asset management fees (Note F) 143,178 144,082 145,643 Amortization of organization costs - - 3,333 Amortization of acquisition costs (Note D) 104,586 - - Total expenses 382,163 243,321 292,908 Net income (Note G) $ 698,265 $ 887,535 $ 603,140 Allocation of net income (Note E): Unitholders (2,060,350 Units outstanding) $ 691,248 $ 878,617 $ 597,080 Net income per Unit of Depositary Receipt $ .34 $ .43 $ .29 Corporate Limited Partner (100 Units outstanding) $ 34 $ 43 $ 29 General Partners $ 6,983 $ 8,875 $ 6,031
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, 1996, 1995 and 1994 Corporate Total Limited General Partners' Unitholders Partner Partners Equity 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 Distributions (Note E) (2,060,351) (100) (14,625) (2,075,076) Net income (Note E) 691,248 34 6,983 698,265 Balance at December 31, 1996 $24,904,826 $ (601) $(50,521) $24,853,704
The per Unit distributions for the years ended December 31, 1996, 1995, and 1994 were $1.00, $1.00 and $1.00, respectively. 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, 1996, 1995 and 1994 1996 1995 1994 Operating activities: Net income $ 698,265 $ 887,535 $ 603,140 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of acquisition costs 104,586 - - Amortization of organization costs - - 3,333 Amortization of MBS discount (4,847) (669) (13,194) Partnership's share of Joint Venture net income (910,834) (906,900) (674,187) Distributions from Joint Venture 910,834 906,900 674,187 Decrease (increase) in interest receivable and other assets 19,093 2,279 (6,655) Increase in due to affiliates 49,363 - - Increase (decrease) in accrued audit liability 3,771 (6,806) 13,666 Net cash provided by operating activities 870,231 882,339 600,290 Investing activities: Distributions from Joint Venture in excess of net income 353,133 561,160 903,153 Principal collections on MBS 274,639 69,680 778,941 Net cash provided by investing activities 627,772 630,840 1,682,094 Financing activity: Distributions (2,075,076) (2,077,589) (2,076,650) Net increase (decrease) in cash and cash equivalents (577,073) (564,410) 205,734 Cash and cash equivalents, beginning of year 2,101,121 2,665,531 2,459,797 Cash and cash equivalents, end of year $ 1,524,048 $ 2,101,121 $2,665,531
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 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, issued Depositary Receipts (the "Units") to the investors and 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, which may differ in certain respects from those used for federal income tax purposes (see Note G): 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, contingent assets and liabilities and revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and 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. Costs incurred in connection with the acquisition of the Partnership's Joint Venture are amortized over the remaining life of the underlying asset. Investment in Joint Venture The Partnership has a 49.9% interest in the Spring Valley Partnership (the "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 Partner routinely performs market and growth studies combined with periodic appraisals of the underlying property. If the General Partner believes there is a material impairment in value, a provision to write down the investment to fair value will be charged against income. At this time, the General Partner does not believe that any asset of the Partnership is materially 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, 1996 and 1995:
1996 1995 Face Value $656,558 $931,197 Amortized cost $645,762 $915,554 Estimated Market Value $694,000 $940,000
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 $48,407 and $24,446 at December 31, 1996 and 1995, 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 320,684 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. Additionally, the Joint Venture executed a Net Operating Income Guaranty Agreement ("NOI Guaranty Agreement") with the seller, by which, the seller would reimburse the Joint Venture if the net operating income from the Marketplace did not meet or exceed $4.3 million annually. In accordance with the 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 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 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, acquisition costs of $1,882,546 which are being amortized over the remaining life of the underlying asset, allocations of net income earned by the Joint Venture and distributions received by the Joint Venture. For the year ended December 31, 1996, the Partnership recognized amortization of acquisition costs of $104,586. 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 manner as net cash proceeds (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 Partner, until it has received a return of its 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 Partner until it has 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 Partner. As of December 31, 1996, 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 (17,036,541) (929) (106,756) (17,144,226) Net income (loss) 5,564,244 (1,672) 53,235 5,615,807 Balance at December 31, 1996 $ 24,904,826 $ (601) $(50,521) $ 24,853,704
F.Related Party Transactions Under the terms of the Partnership Agreement, the General Partner or its 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 Partner for certain expenses incurred in connection with the preparation and mailing of reports and other communications to the Unitholders. Amounts paid to the General Partners or their affiliates were as follows:
1996 1995 1994 Asset management fees $143,178 $144,082 $145,643 Expense reimbursements 92,401 53,519 88,291 Charged to operations $235,579 $197,601 $233,934
Due to affiliates consists of expense reimbursements of $49,363 and $0 as of December 31, 1996 and 1995, respectively. G.Federal Income Taxes The reconciliation of net income reported in the accompanying Statements of Income with the net income reported in the Partnership's 1996, 1995 and 1994 federal income tax returns is as follows:
1996 1995 1994 Net income per Statement of Income $ 698,265 $ 887,535 $603,140 Difference in Partnership's share of Joint Venture taxable net income due to book to tax difference in depreciation 296,811 264,724 248,722 Difference in Partnership's share of Joint Venture taxable net income due to book to tax difference in bad debt 7,767 - - Difference in Partnership's share of difference due to rental adjustment required by Generally Accepted Accounting Principles 13,120 (9,071) (17,757) Net income for federal income tax purposes $1,015,963 $1,143,188 $834,105
The allocation of the 1996 net income for federal income tax purposes is as follows:
Portfolio Passive Income Income Total Unitholders $ 184,452 $821,303 $1,005,755 Corporate Limited Partner 9 40 49 General Partners 1,863 8,296 10,159 $ 186,324 $829,639 $1,015,963
For the years ended December 31, 1996, 1995 and 1994 the average per Unit income to the Unitholders for federal income tax purposes was $.49, $.55 and $.40, respectively. The basis of the Partnership's assets for financial reporting purposes is less than its tax basis by approximately $1,840,000 and $1,470,000 at December 31,1996 and 1995, respectively. The tax and book bases of the Partnership's liabilities are the same. SPRING VALLEY PARTNERSHIP FINANCIAL STATEMENTS AND SCHEDULE For the Year Ended December 31, 1996 SPRING VALLEY PARTNERSHIP INDEX TO FINANCIAL STATEMENTS AND SCHEDULE Report of Independent Accountants F-15 Balance Sheets at December 31, 1996 and December 31, 1995 F-16 Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 F-17 Statements of Changes in Partners' Equity for the Years Ended December 31, 1996, 1995 and 1994 F-18 Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 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 the financial statements and financial statement schedule of Spring Valley Partnership (the "Joint Venture") 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 Joint Venture'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, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 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, 1997
SPRING VALLEY PARTNERSHIP BALANCE SHEETS December 31, 1996 and 1995 ASSETS 1996 1995 Real estate assets: Land $ 10,403,471 $ 10,403,471 Building and improvements 43,425,111 43,005,827 53,828,582 53,409,298 Less accumulated depreciation (13,983,325) (12,084,310) Total real estate assets 39,845,257 41,324,988 Cash and cash equivalents 1,153,075 575,566 Other assets 1,099,725 916,171 Total assets $ 42,098,057 $ 42,816,725 LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable $ 30,044 $ 45,576 Accrued expenses and other liabilities (Note C) 185,163 185,215 Due to affiliates (Note F) 7,320 2,722 Total liabilities 222,527 233,513 Partners' equity (Note D) 41,875,530 42,583,212 Total liabilities and Partners' equity $ 42,098,057 $ 42,816,725
The accompanying notes are an integral part of the financial statements.
SPRING VALLEY PARTNERSHIP STATEMENTS OF OPERATIONS For the Years Ended December 31, 1996, 1995 and 1994 1996 1995 1994 Revenue: Rental (Note E) $6,938,222 $6,544,064 $5,994,653 Other income 33,438 35,233 26,811 Total revenue 6,971,660 6,579,297 6,021,464 Expenses: Operating (Note F) 376,480 350,023 496,641 Maintenance 649,491 511,014 487,766 Management fees (Note F) 416,414 398,642 344,760 Real estate taxes 1,804,942 1,661,539 1,543,217 Depreciation 1,899,015 1,840,644 1,798,003 Total expenses 5,146,342 4,761,862 4,670,387 Net income (Note G) $1,825,318 $1,817,435 $1,351,077 Allocation of net income (Note D): Cash Plus-V Limited Partnership $ 910,834 $ 906,900 $ 674,187 Berkshire Realty Company, Inc. $ 914,484 $ 910,535 $ 676,890
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, 1996, 1995, and 1994 Berkshire Cash Plus-V Realty Total Limited Company, Partners' Partnership Inc. Equity 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 Distributions (Note D) (1,263,967) (1,269,033) (2,533,000) Net income (Note D) 910,834 914,484 1,825,318 Balance at December 31, 1996 $20,951,700 $20,923,830 $41,875,530
The accompanying notes are an integral part of the financial statements.
SPRING VALLEY PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1996, 1995 and 1994 1996 1995 1994 Operating activities: Net income $ 1,825,318 $ 1,817,435 $ 1,351,077 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,899,015 1,840,644 1,798,003 Decrease in due from affiliates - - 379 Decrease (increase) in other assets (183,554) (143,627) 119,342 Increase (decrease) in accounts payable (22,532) 37,044 (126,252) Increase in due to affiliates 4,598 2,722 - Decrease in other liabilities (52) (9,839) (5,574) Net cash provided by operating activities 3,522,793 3,544,379 3,136,975 Investing activities: Increase in accounts payable related to fixed asset additions 7,000 - - Additions to fixed assets (419,284) (279,315) (294,922) Net cash used in investing activities (412,284) (279,315) (294,922) Financing activity: Distributions (2,533,000) (2,942,000) (3,161,000) Net increase (decrease) in cash 577,509 323,064 (318,947) Cash and cash equivalents, beginning of year 575,566 252,502 571,449 Cash and cash equivalents, end of year $ 1,153,075 $ 575,566 $ 252,502
The accompanying notes are an integral part of the financial statements. SPRING VALLEY PARTNERSHIP NOTES TO FINANCIAL STATEMENTS A.Organization Spring Valley Partnership (the "Joint Venture") was formed on December 13, 1988 by filing a Business Certificate in the Commonwealth of Massachusetts. The Joint Venture 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"), at 50.1%; Krupp Cash Plus-V Limited Partnership ("Cash Plus-V"), at .01%; and Krupp Realty Company Limited Partnership ("Krupp Realty Company"), at 49.89%. Pursuant to the original Partnership Agreement, Cash Plus-V purchased Krupp Realty Company's interest in the Joint Venture and succeeded to its capital contributions and its share of profit and loss allocations and distributions. On June 25, 1991, The Joint Venture 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 Joint Venture Partners of Spring Valley 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 Joint Venture Partners based on the percentage of their respective capital contributions to total Partners' capital contributions. On December 14, 1988, the Joint Venture acquired Spring Valley Marketplace (the "Marketplace"), a 320,684 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. Additionally, the Joint Venture executed a Net Operating Income Guaranty Agreement ("NOI Guaranty Agreement") with the seller, by which, the seller would reimburse the Joint Venture 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 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 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 Joint Venture owns the Marketplace free and clear from all material liens or encumbrances. B.Significant Accounting Policies The Joint Venture uses the following accounting policies for financial reporting purposes, which may differ in certain respects from those used for federal income tax purposes (see Note G): Risks and Uncertainties The Joint Venture invests its cash primarily in deposits and money market funds with commercial banks. The Joint Venture 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 and Cash Equivalents The Joint Venture 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 Commercial leases require 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 Joint Venture has implemented policies and practices for assessing impairment of its real estate assets. The Joint Venture 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 Joint Venture Partners believe there is a material 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 Joint Venture Partners do not believe its real estate asset is materially impaired. Leasing Commissions Leasing commissions are deferred and amortized over the life of the related lease. Income Taxes The Joint Venture is not liable for federal or state income taxes because Joint Venture income or loss is allocated to the Partners for income tax purposes. In the event the Joint Venture's tax returns are examined by the Internal Revenue Service or state taxing authority and such an examination results in a change in Joint Venture 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, 1996 and 1995:
1996 1995 Accrued insurance $110,846 $109,593 Tenant security deposits 71,614 73,442 Other accrued expenses 2,703 2,180 $185,163 $185,215
D.Partners' 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, 1996, the following cumulative Partner contributions and allocations had been made since inception of the Joint Venture:
Berkshire Cash Plus-V Realty Total Limited Company, Partners' Partnership Inc. Equity Capital contributions $ 26,379,755 $ 26,373,641 $ 52,753,396 Net income 6,251,859 6,276,918 12,528,777 Distributions (11,679,914) (11,726,729) (23,406,643) Total at December 31, 1996 $ 20,951,700 $ 20,923,830 $ 41,875,530
E.Future Base Rents Due Under Commercial Operating Leases Future base rents due under commercial operating leases in the five years 1997 through 2001 are as follows: 1997 $ 4,232,100 1998 4,093,800 1999 3,693,100 2000 3,375,600 2001 3,124,200 Thereafter 15,001,300 F. Related Party Transactions Property management fees are paid to an affiliate of the Joint Venture Partners monthly at the rate of up to 6% of rentals and other operating income received by the Marketplace. The Joint Venture also reimburses affiliates for certain expenses incurred in connection with operations of the Joint Venture and its property including accounting, computer, insurance, travel legal and payroll. Amounts paid to affiliates of the Joint Venture Partners during the years ended December 31, 1996, 1995 and 1994 were as follows:
1996 1995 1994 Property management fees $416,414 $398,642 $344,760 Expense reimbursements 87,766 58,284 147,914 Charged to operations $504,180 $456,926 $492,674 Due to affiliates consists of expense reimbursements of $7,320 and $2,722 as of December 31, 1996 and 1995, respectively. G. Federal Income Taxes The reconciliation of the net income for each year reported in the accompanying Statement of Operations with the net income reported in the Joint Venture's federal income tax returns is as follows:
1996 1995 1994 Net income per Statement of Operations $1,825,318 $1,817,435 $1,351,077 Difference in book to tax depreciation 624,845 573,232 540,438 Difference in book to tax bad debt 15,566 - - Rental adjustment required by Generally Accepted Accounting Principles 26,293 (18,176) (35,585) Net income for federal income tax purposes $2,492,022 $2,372,491 $1,855,930
The allocation of the 1996 net income for federal income tax purposes is as follows:
Passive Portfolio Income Income Total Cash Plus-V Limited Partnership $1,211,802 $ 16,730 $1,228,532 Berkshire Realty Company, Inc. 1,246,782 16,708 1,263,490 $2,458,584 $ 33,438 $2,492,022
The allocation of passive income differs due to individual Joint Venture Partner depreciation elections. The basis of the Joint Venture's assets for financial reporting purposes is less than its tax basis by approximately $6,157,000 and $5,533,000 at December 31, 1996 and 1995, respectively. The tax and book bases for the Joint Venture's liabilities are the same.
SPRING VALLEY PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1996 Costs Capitalized Subsequent to Initial Cost to Joint Venture Acquisition Buildings & Buildings & Depreciable Description Land Improvements Improvements Life Spring Valley Marketplace $10,403,471 $ 41,613,880 $ 1,811,231 3 to 25 years
Gross Amounts Carriat At Year End of Year Const- Buildings Accum- ruction And ulated Aqu- Description Land Improvements Total(a) Depreciation Completed ired Spring Valley Marketplace $10,403,471 $ 43,425,111 $53,828,582 $ 13,983,325 1987 1988
Reconciliation of Real Estate and Accumulated Depreciation for each of the three years in the period ended December 31, 1996:
1996 1995 1994 Real Estate Balance at beginning of year $53,409,298 $53,129,983 $52,835,061 Improvements 419,284 279,315 294,922 Balance at end of year $53,828,582 $53,409,298 $53,129,983 Accumulated Depreciation 1996 1995 1994 Balance at beginning of year $12,084,310 $10,243,666 $ 8,445,663 Depreciation expense 1,899,015 1,840,644 1,798,003 Balance at end of year $13,983,325 $12,084,310 $10,243,666
(a)The Joint Venture uses the cost basis for both income tax and financial statement purposes. The Joint Venture holds title to its property free and clear from all mortgage indebtedness or other material liens or encumbrances. The aggregate cost of the Partnership's real estate for federal income tax purposes was $52,963,179 and the aggregate accumulated depreciation for federal income tax purposes was $6,960,450 for the year ended December 31, 1996. EX-27 2
5 This schedule contains summary finanical information extracted from Cash Plus 5 financial statements for the year ended December 31, 1996 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1996 DEC-31-1996 1,524,048 645,762 17,097 0 0 0 22,834,246 (104,586) 24,916,567 62,863 0 24,853,704 0 0 0 24,916,567 0 1,080,428 0 0 382,163 0 0 0 0 0 0 0 0 698,265 0 20,951,700 Includes all receivables included in "other assets" on the Balance Sheet. Includes investment in J.V. of $20,951,700 and costs related to the acquisition of the asset underlying the investment $1,882,546. Represents amortization of costs related to the acquisition of the asset underlying the investment. Deficit of General Partners (50,521), limited Partners of $24,904,225. Includes all revenues of the Partnership. Includes all revenues of the Partnership. Net income allocated $6,983 to the General Partners and $691,282 to the Limited Partners. Average net income is $.34 on 2,060,450 Units outstanding.
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