UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
-------------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-11987
Krupp Realty Limited Partnership -IV
Massachusetts 04-2772783
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 523-7722
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
The total number of pages in this document is 10.
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
This form 10 - Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
June 30, December 31,
2000 1999
--------------- ---------------
Multi-family apartment complexes,
net of accumulated depreciation
of $25,505,751 and $24,736,628,
respectively $10,349,975 $10,774,104
Cash and cash equivalents 982,116 856,738
Prepaid expenses and other assets 623,715 901,228
Deferred expense, net of accumulated
amortization of $320,510
and $291,101, respectively (Note 2) 27,089 56,498
--------------- ---------------
Total assets $11,982,895 $12,588,568
=============== ===============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note 2) $16,380,039 $16,538,127
Due to affiliates (Note 4) 13,527 33,723
Other Liabilities 697,371 968,318
--------------- ---------------
Total liabilities 17,090,937 17,540,168
--------------- ---------------
Partners' deficit (Note 3):
Investor Limited Partners
(30,000 Units outstanding) (3,427,714) (3,279,094)
Original Limited Partner (1,370,695) (1,364,438)
General Partners (309,633) (308,068)
--------------- ---------------
Total Partners' deficit (5,108,042) (4,951,600)
--------------- ---------------
Total liabilities and partners' deficit $11,982,895 $12,588,568
=============== ===============
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- ----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
Revenue:
Rental $1,806,649 $1,756,054 $3,590,724 $3,474,181
Other Income 18,499 13,464 36,599 26,209
---------- ---------- ---------- ----------
Total revenue 1,825,148 1,769,518 3,627,323 3,500,390
---------- ---------- ---------- ----------
Expenses:
Operating (Note 4) 453,400 473,458 877,642 893,202
Maintenance 149,979 184,198 273,594 313,195
Real estate taxes 188,285 172,514 421,768 361,497
Management fees (Note 4) 72,136 67,052 145,375 132,254
General and administrative
(Note 4) 71,708 67,024 106,265 97,554
Depreciation and amortization 400,312 394,133 798,532 772,315
Interest 387,932 373,703 769,108 679,996
---------- ---------- ---------- ----------
Total expenses 1,723,752 1,732,082 3,392,284 3,250,013
---------- ---------- ---------- ----------
Income before minority interest 101,396 37,436 235,039 250,377
Minority interest (892) (555) (1,697) (2,206)
----------- ---------- ---------- ---------
Net income $100,504 $ 36,881 $ 233,342 $ 248,171
========== ========== ========== ==========
Allocation of net income (Note 3):
Investor Limited Partners
(30,000 Units outstanding):
Net income $ 95,479 $ 35,037 $ 221,675 $ 235,762
========== ========== ========== ==========
Investor Limited Partners
Per Unit:
Net Income $ 3.18 $ 1.17 $ 7.39 $ 7.86
========== ========== ========== ==========
Original Limited Partner
(100 Units outstanding):
Net income $ 4,020 $ 1,475 $ 9,334 $ 9,927
========== ========== ========== ==========
General Partners
Net income $ 1,005 $ 369 $ 2,333 $ 2,482
========== ========== ========== ==========
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP - IV SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
Ended June 30,
---------------------------------------
2000 1999
--------------- ---------------
Cash flows from operating activities:
Net income $ 233,342 $ 248,171
Adjustment to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 798,532 772,315
Changes in assets and liabilities:
Decrease in prepaid expenses and
other assets 277,513 250,954
Decrease in other liabilities (264,532) (243,230)
Increase (decrease) in due to
affiliates (20,196) 134,099
--------------- ---------------
Net cash provided by operating
activities 1,024,659 1,162,309
--------------- ---------------
Cash flows from investing activities:
Decrease in other liabilities for
fixed asset additions (6,415) (1,722)
Fixed asset additions (344,994) (354,226)
--------------- ---------------
Net cash used in investing
activities: (351,409) (355,948)
--------------- ---------------
Cash flows from financing activities:
Principal payments on mortgage notes
payable (158,088) (225,657)
Distributions (389,784) (389,783)
Increase in deferred expenses - (30,450)
--------------- ---------------
Net cash used in financing
activities: (547,872) (645,890)
--------------- ---------------
Net increase in cash and cash equivalents 125,378 160,471
Cash and cash equivalents, beginning of
period 856,738 774,230
--------------- ---------------
Cash and cash equivalents, end of
period $ 982,116 $ 934,701
=============== ===============
The accompanying notes are an integral
part of the consolidated financial statements
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principals have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of the General Partners of Krupp
Realty Limited Partnership -IV and Subsidiaries ( the "Partnership"),
the disclosures contained in this report are adequate to make the
information presented not misleading. See notes to Consolidated
Financial Statements included in the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1999 for additional
information relevant to significant accounting policies followed by the
Partnership.
The consolidated financial statements present consolidated assets,
liabilities and operations of Pavillion Partners, Ltd., Westbridge
Partners, Ltd., and Krupp Realty Limited Partnership-IV. Westcop
Corporation has a 1% interest in the operations of Westbridge Partners,
Ltd. and Pavillion Partners, Ltd. At June 30, 2000 and December 31,
1999, minority interest of $9,574 and $11,271, respectively, is
included in other assets.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited consolidated financial statements reflect all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the Partnership's consolidated financial position as of
June 30, 2000, it's results of operations for the three and six months
ended June 30, 2000 and 1999 and it's cash flows for the six months
ended June 30, 2000 and 1999. Certain prior period balances have been
reclassified to conform with current period consolidated financial
statement presentation.
The results of operations for the three and six months ended June 30,
2000 are not necessarily indicative of the results which may be
expected for the full year. See Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
(2) Mortgage Notes Payable
On February 28, 1999, the Partnership completed the refinancing of
Walden Pond Apartments' mortgage notes payable of $5,500,000 and
$900,000. Monthly principal payments on the new mortgage notes are
$6,500 and $1,100, respectively, with interest payments at the contract
rate of interest equal to the greater of (a) 0.5% per annum in excess
of prime rate, or (b) 8% per annum. The mortgage notes mature on
February 28, 2001 and may be prepaid in whole, but not in part, without
a prepayment premium with 45 days prior written notice. During the
period ended March 31, 1999 the Partnership paid closing costs of
$30,450 for the refinancing.
Continued
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(3) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the six months ended June
30, 2000 is as follows:
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
---------- ----------- ---------- ----------
Balance at December 31, 1999 $(3,279,094) $(1,364,438) $(308,068) $(4,951,600)
Net income 221,675 9,334 2,333 233,342
Distributions (370,295) (15,591) (3,898) (389,784)
---------- ---------- ---------- ----------
Balance at June 30, 2000 $(3,427,714) $(1,370,695) $(309,633) $(5,108,042)
========== =========== ========== ==========
(4) Related Party Transactions
The Partnership pays property management fees to an affiliate of the
General Partners for management services. Pursuant to the management
agreements, management fees are payable monthly at a rate of 5% of the
gross receipts from the properties under management. The Partnership
also reimburses affiliates of the General Partners for certain expenses
incurred in connection with the operation of the Partnership and it's
properties, including administrative expenses.
Amounts accrued or paid to the General Partners' affiliates were as
follows:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- ---------------------
2000 1999 2000 1999
--------- -------- -------- ---------
Property management fees $ 72,136 $ 67,052 $145,375 $132,254
Expense reimbursements 79,767 80,457 136,947 108,252
--------- -------- -------- ---------
Charge to operations $151,903 $147,509 $282,322 $240,506
========= ======== ======== =========
Due to the affiliates consisted of expense reimbursements of $13,527
and $33,723 at June 30, 2000 and December 31, 1999, respectively.
Continued
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This management's Discussion and Analysis of Financial Condition and
Results of Operations Contains forward-looking statements including
those concerning Management's expectations regarding the future
financial performance and future events. These forward looking
statements involve significant risks and uncertainties, including those
described herein. Actual results may differ materially from those
anticipated by such forward-looking statements.
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs
is dependent primarily upon the operations of its real estate
investments. Such ability would also be impacted by the future
availability of bank borrowings, and upon the future refinancing and
sale of The Partnership's real estate investments. These sources of
liquidity will be used by Partnership for payment of expenses related
to real estate operations, capital improvements, debt service and other
expenses. Cash flow, if any as calculated under Section 8.2 (a) of the
Partnership Agreement, will then be available for distribution to the
Partners.
The General Partners, on an ongoing basis, assess the current and
future liquidity needs in determining the level of working capital
reserves the Partnership should maintain. Adjustments to the
distribution are made when appropriate to reflect such assessments. The
current annual distribution rate is $24.69 per Unit, and is paid
semiannually in February and August.
Operations
The following discussion relates to the operation of the Partnership
and it's properties (Fenland Field, Pavillion and Walden Pond
Apartments) for the three and six months ended June 30, 2000 and 1999.
Net income increased during the three months ended June 30, 2000 when
compared to the three months ended June 30, 1999 with an increase in
total revenue and a decrease in total expenses. The increase in total
revenue is primarily as a result of rental rate increases implemented
at all of the Partnership's properties at the end of the first quarter
of 2000. Interest income increased due to higher cash and cash
equivalent balances available for investment when compared to 1999.
Total expenses for the three months ended June 30, 2000 decreased when
compared to the three months ended June 30, 1999, with decreases in
operating and maintenance expense offset by an increase in real estate
tax, depreciation and interest expenses. Operating expense decreased as
a result of a reduction in salary and payroll. Maintenance expense
decreased as a result of improvements completed during the first
quarter. Real estate tax expense increased as a result of a
reassessment of property values at Walden Pond by the local tax
authority. Depreciation expense increased in conjunction with increased
capital improvements completed at properties. Interest expense
increased as a result of the refinancing of Walden Pond Apartments'
mortgages in February 1999.
Continued
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
Net income decreased during the six months ended June 30, 2000 when
compared to the six months ended June 30, 1999 with an increase in
total revenue offset by an increase in total expenses. The increase in
total revenue is primarily as a result of rental rate increases
implemented at all of the Partnership's properties at the end of the
first quarter of 2000. Interest income increased due to higher cash and
cash equivalent balances available for investment when compared to
1999.
Total expenses for the six months ended June 30, 2000 increased when
compared to the six months ended June 30, 1999, with increases in real
estate tax, depreciation and interest expenses more than offset by
decreases in operating and maintenance expense. Real estate tax expense
increased as a result of a reassessment of property values at Walden
Pond by the local tax authority. Depreciation expense increased in
conjunction with increased capital improvements completed at
properties. Interest expense increased as a result of the refinancing
of Walden Pond Apartments' mortgages in February 1999. Operating
expense decreased as a result of a reduction in salary and payroll.
Maintenance expense decreased as a result of improvements completed
during the first quarter.
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response: None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Krupp Realty Limited Partnership - IV
-------------------------------------
(Registrant)
BY: /s/Wayne H. Zarozny
------------------------------------
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of the Krupp Corporation,
a General Partner
DATE: August 14, 2000