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 March 31, 2002
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11987
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Krupp Realty Limited Partnership - IV
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Massachusetts 04-2772783
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(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
One Beacon Street, Boston, Massachusetts 02108
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(Address of principal executive offices) (Zip Code)
(617) 523-7722
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(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 9.
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
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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 (In Liquidation)
ASSETS
(Unaudited)
March 31, December 31,
2002 2001
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Cash and cash equivalents $ 10,311,521 $ 11,068,529
Real estate tax escrows 32,399 32,399
Prepaid expenses and other assets 126,452 19,190
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Total assets $ 10,470,372 $ 11,120,118
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LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Due to affiliates - 25,115
Other liabilities 465,929 506,925
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Total liabilities 465,929 532,040
Partners' equity (Note 2):
Investor Limited Partners (30,000
Units outstanding) 9,904,399 10,482,197
Original Limited Partner - -
General Partners 100,044 105,881
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Total partners' equity 10,004,443 10,588,078
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Total liabilities and partners'
equity $ 10,470,372 $ 11,120,118
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The accompanying notes are an integral
part of the consolidated financial statements.
2
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In Liquidation)
(Unaudited)
For the Three Months
Ended March 31,
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2002 2001
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Revenue:
Rental $ - $ 1,796,106
Other income 2,345 -
Interest income 50,760 18,222
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Total revenue 53,105 1,814,328
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Expenses:
Operating (Note 3) 23,596 512,105
Maintenance - 118,599
Real estate taxes - 184,035
Management fees (Note 3) 5,670 75,404
General and administrative 3,040 122,824
Depreciation and amortization - 406,725
Interest - 394,689
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Total expenses 32,306 1,814,381
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Income (loss) before minority interest 20,799 (53)
Minority interest 125 (421)
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Net income (loss) $ 20,924 $ (474)
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Allocation of net income (loss):
Investor Limited Partners
(30,000 Units outstanding):
Net income (loss) $ 20,715 $ (450)
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Investor Limited Partners
Per Unit:
Net income (loss) $ .69 $ (.02)
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Original Limited Partner
(100 Units outstanding):
Net loss $ - $ (19)
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General Partners:
Net income (loss) $ 209 $ (5)
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The accompanying notes are an integral
part of the consolidated financial statements.
3
KRUPP REALTY LIMITED
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Liquidation)
(Unaudited)
For the Three Months
Ended March 31,
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2001 2001
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Cash flows from operating activities:
Net income (loss) $ 20,924 $ (474)
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization - 406,725
Changes in assets and liabilities:
Increase in prepaid expenses
and other assets (107,262) 468,917
Decrease in other liabilities (40,996) (428,135)
Decrease in due to affiliates (25,115) 20,749
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Net cash (used in) provided by
operating activities (152,449) 467,782
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Cash flows from investing activities:
Decrease in other liabilities for
fixed asset additions - 377
Fixed asset additions - (110,597)
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Net cash used in investing
activities - (110,220)
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Cash flows from financing activities:
Principal payments on mortgage notes
payable - (91,051)
Distributions (604,559) (389,784)
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Net cash used in financing
activities (604,559) (480,835)
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Net decrease in cash and cash
equivalents (757,008) (123,273)
Cash and cash equivalents,
beginning of period 11,068,529 740,853
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Cash and cash equivalents,
end of period $ 10,311,521 $ 617,580
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The accompanying notes are an integral
part of the consolidated financial statements
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KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation)
(1) Accounting Policies
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this report on Form 10-Q
pursuant to the Rules and Regulations of the Securities and Exchange
Commission. In the opinion of the General Partners of Krupp 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,
2001 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 Pavillion Partners, Ltd. At
March 31, 2001 and December 31, 2000, minority interest of $203,873 and
$203,998, respectively is included in other liabilities.
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 March 31, 2002, its
results of operations and cash flows for the three months ended March 31,
2002 and 2001.
During 2001, the Partnership sold its remaining real estate investments and
interests to liquidate the Partnership's remaining assets, distribute its
remaining cash and dissolve the Partnership in 2002.
The results of operations for the three months ended March 31, 2002 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) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the three months ended March
31, 2002 is as follows:
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
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Balance at
December 31, 2001 $10,482,197 $ - $ 105,881 $10,588,078
Net income 20,715 - 209 20,924
Distributions (598,513) - (6,046) (604,559)
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Balance at
March 31, 2002 $ 9,904,399 $ - 100,044 $10,044,443
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Continued
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KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation), Continued
(3) 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 its properties,
including administrative expenses.
Amounts accrued or paid to the General Partners' affiliates were as
follows:
For the Three Months Ended
March 31,
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2002 2001
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Property management fees $ 5,670 $ 75,404
Expenses reimbursement 8,130 165,361
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Charged to operations $ 13,800 $ 240,765
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Due from affiliates consisted of expense reimbursements of $34,328 and $0
and is included in prepaid expenses and other assets at March 31, 2002 and
December 31, 2001, respectively.
Continued
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KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
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 contain 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
On August 1, 2001, the Partnership sold Fenland Field to an unaffiliated third
party. The Partnership received $14,443,077, net of closing costs of $56,923 and
repaid the mortgage note payable of $3,637,387 and accrued interest of $28,793.
On November 14, 2001, the Partnership sold Walden Pond to a related party, KR 5
Acquisition, LLC. The Partnership received $12,521,805, net of closing costs of
$278,195 and repaid the mortgage note payable of $5,819,727 and accrued interest
of $16,824.
On November 20, 2001, the Partnership sold Pavillion Apartments to an
unaffiliated third party. The Partnership received $15,485,089, net of closing
costs of $87,850 and repaid the mortgage note payable of $6,531,153 and accrued
interest of $35,109.
As of December 31, 2001, the Partnership had no investment in any multi-family
apartment communities.
Operations
The following discussion relates to the operations of the Partnership and its
properties (Fenland Field, Walden Pond and Pavillion Apartments) for the three
months ended March 31, 2002 and 2001. The sale of Fenland Field, Walden Pond and
Pavillion Apartments as of December 31, 2001 significantly impacts the
comparability of these Partnerships operations between these periods.
Net loss decreased during the three months ended March 31, 2002 when compared to
the same period in 2001 due to sale of the Partnership's remaining real estate
assets in August and November of 2001.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's future earnings, cash flows and fair values relevant to
financial instruments are dependent upon prevalent market rates. Market risk is
the risk of loss from adverse changes in market prices and interest rates. The
Partnership manages its market risk by matching projected cash inflows from
operating activities, investing activities and financing activities with
projected cash outflows to fund debt payments, acquisitions, capital
expenditures, distributions and other cash requirements.
A detailed analysis of quantitative and qualitative market risk exposures was
provided in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 2001. There have been no material changes in market risk subsequent
to that date.
All of the Partnership's mortgage debt was repaid as of December 31, 2001.
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KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
None
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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
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(Registrant)
BY: /s/ David C. Quade
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Treasurer (Principal Financial and Accounting
Officer) of The Krupp Corporation, a General
Partner
DATE: May 15, 2002
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