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, 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 11.
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 (In Liquidation)
ASSETS
(Unaudited)
June 30, December 31,
2002 2001
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Cash and cash equivalents $ 1,587,023 $ 11,068,529
Real estate tax escrows 32,399 32,399
Prepaid expenses and other assets 90,620 19,190
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Total assets $ 1,710,042 $ 11,120,118
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LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Due to affiliates 9,631 25,115
Other liabilities 426,495 506,925
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Total liabilities 436,126 532,040
Partners' equity (Note 2):
Investor Limited Partners (30,000 Units
outstanding) 1,261,176 10,482,197
Original Limited Partner - -
General Partners 12,740 105,881
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Total partners' equity 1,273,916 10,588,078
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Total liabilities and partners'
equity $ 1,710,042 $ 11,120,118
============ ============
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 For the Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenue:
Rental $ - $ 1,849,081 $ - $ 3,645,187
Interest Income 6,299 - 57,059 -
Other Income 5,095 10,497 7,440 28,719
----------- ----------- ----------- -----------
Total revenue 11,394 1,859,578 64,499 3,673,906
----------- ----------- ----------- -----------
Expenses:
Operating (Note 5) (682) 481,755 22,914 993,860
Maintenance - 154,819 - 273,418
Real estate taxes - 195,279 - 379,314
Management fees
(Note 5) 5,334 78,265 11,004 153,669
General and
administrative (Note 5) 2,696 72,074 5,736 194,898
Depreciation and
amortization - 407,570 - 814,295
Interest - 355,503 - 750,192
----------- ----------- ----------- -----------
Total expenses 7,348 1,745,265 39,654 3,559,646
----------- ----------- ----------- -----------
Income before minority
interest 4,046 114,313 24,845 114,260
Minority interest - (1,030) 125 (1,451)
----------- ----------- ----------- -----------
Net income $ 4,046 $ 113,283 $ 24,970 $ 112,809
=========== =========== =========== ===========
Allocation of net income
(Note 4):
Investor Limited Partners
(30,000 Units
outstanding):
Net income $ 4,006 $ 107,619 $ 24,720 $ 107,169
=========== =========== =========== ===========
Investor Limited Partners
Per Unit:
Net Income $ 0.13 $ 3.59 $ 0.82 $ 3.57
=========== =========== =========== ===========
Original Limited Partner
(100 Units outstanding):
Net income $ - $ 4,531 $ - $ 4,512
=========== =========== =========== ===========
General Partners:
Net income $ 40 $ 1,133 $ 250 $ 1,128
=========== =========== =========== ===========
The accompanying notes are an integral
part of the consolidated financial statements.
3
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Liquidation)
(Unaudited)
For the Six Months
Ended June 30,
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2002 2001
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Cash flows from operating activities:
Net income $ 24,970 $ 112,809
Adjustment to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization - 814,295
Changes in assets and liabilities:
(Increase) decrease in prepaid
expenses and other assets (71,430) 324,213
Decrease in other liabilities (80,430) (270,492)
Decrease (increase) in due to
affiliates (15,484) 38,789
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Net cash (used in) provided by
operating activities (142,374) 1,019,614
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Cash flows from investing activities:
Increase in other liabilities related to
fixed asset additions - 2,364
Fixed asset additions - (193,055)
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Net cash used in investing
activities - (190,691)
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Cash flows from financing activities:
Principal payments on mortgage notes
payable - (176,155)
Distributions (9,339,132) (389,784)
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Net cash used in financing
activities (9,339,132) (565,939)
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Net (decrease) increase in cash and cash
equivalents (9,481,506) 262,984
Cash and cash equivalents,
beginning of period 11,068,529 740,853
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Cash and cash equivalents, end of period $ 1,587,023 $ 1,003,837
============ ============
The accompanying notes are an integral
part of the consolidated financial statements
4
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
June 30, 2002 and December 31, 2001, 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 June 30, 2002, its
results of operations for the three and six months ended June 30, 2002 and
2001, and cash flows for the six months ended June 30, 2002 and 2001.
During 2001, the Partnership sold its remaining real estate investments,
and its intention is to liquidate the Partnership's remaining assets,
distribute its remaining cash and dissolve the Partnership in 2002.
The results of operations for the three and six months ended June 30, 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' Equity
A summary of changes in Partners' equity for the six months ended June 30,
2002 is as follows:
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Equity
----------- ----------- ----------- -----------
Balance at
December 31, 2001 $10,482,197 $ - $ 105,881 $10,588,078
Net income 24,720 - 250 24,970
Distributions (9,245,741) - (93,391) (9,339,132)
----------- ----------- ----------- -----------
Balance at June 30, 2002 $ 1,261,176 $ - 12,740 $ 1,273,916
=========== =========== =========== ===========
Continued
5
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation), Continued
(3) Related Party Transactions
During 2001, the Partnership paid 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 For the Six Months
Ended June 30, Ended June 30,
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2002 2001 2002 2001
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Property management
fees $ 5,334 $ 78,265 $ 11,004 $ 153,669
Expenses reimbursement 207 104,627 8,337 269,988
----------- ----------- ----------- -----------
Charged to operations $ 5,541 $ 182,892 $ 19,341 $ 423,657
=========== =========== =========== ===========
Due from affiliates consisted of expense reimbursements of $0 and $0 and is
included in prepaid expenses and other assets at June 30, 2002 and December
31, 2001, respectively.
Continued
6
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 June 30, 2002 and 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 and six months ended June 30, 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 income decreased during the three and six months ended June 30, 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.
Total revenue for the six months ended June 30, 2002 decreased when
compared to the six months ended June 30, 2001. Interest income earned
increased substantially from the cash proceeds received from the sale of
the Partnership's real estate properties.
Total expenses for the quarter ended June 30, 2002 decreased significantly
when compared to the same period in 2001 since the Partnership no longer
has ownership in any real estate properties as of December 31, 2001.
7
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
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 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 June 30, 2002 and
December 31, 2001.
8
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
None
9
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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David C. Quade
Treasurer (Principal Financial and Accounting
Officer) of The Krupp Corporation, a General
Partner
DATE: August 14, 2002
10
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Krupp Realty Limited Partnership-IV
(the "Partnership") on Form 10-Q for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, David C. Quade, Principal Financial and Accounting Officer of The Krupp
Corporation, a General Partner of the Partnership, certify, pursuant to U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition of the Partnership as of June 30, 2002
and the results of operations of the Partnership for the three months
period then ended.
/s/ David C. Quade
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David C. Quade
Principal Financial and Accounting Officer
11