UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(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
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
Multi-family apartment complexes,
net of accumulated depreciation of
$23,189,833 and $22,689,200, respectively $16,642,562 $17,088,634
Cash and cash equivalents 2,405,593 2,802,694
Cash restricted for capital improvements 16,595 19,066
Prepaid expenses and other assets 426,074 653,387
Deferred expenses, net of accumulated
amortization of $116,720 and $103,355,
respectively 281,938 295,303
Total assets $19,772,762 $20,859,084
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $20,753,300 $20,938,160
Accounts payable 27,233 61,162
Due to affiliates (Note 3) 37,528 97,840
Other liabilities 691,547 954,992
Total liabilities 21,509,608 22,052,154
Partners' equity (deficit) (Note 2):
Investor Limited Partners
(30,000 Units outstanding) (194,060) 322,527
Original Limited Partner (1,266,870) (1,245,119)
General Partners (275,916) (270,478)
Total Partners' deficit (1,736,846) (1,193,070)
Total liabilities and Partners'
deficit $19,772,762 $20,859,084
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
1996 1995
Revenue:
Rental $1,802,209 $1,701,812
Other Income 41,941 36,911
Total revenue 1,844,150 1,738,723
Expenses:
Operating (Note 3) 566,621 445,717
Maintenance 130,977 123,290
Real estate taxes 168,713 151,937
General and administrative (Note 3) 23,034 18,722
Management fees (Note 3) 68,636 69,764
Depreciation and amortization 513,998 515,904
Interest 325,207 329,284
Total expenses 1,797,186 1,654,618
Income before minority interest 46,964 84,105
Minority interest (1,315) (458)
Net income $ 45,649 $ 83,647
Allocation of net income (Note 2):
Investor Limited Partner
Interest (30,000 Units outstanding) $ 43,367 $ 79,465
Per Unit of Investor Limited
Partner $ 1.45 $ 2.65
Original Limited Partner $ 1,826 $ 3,346
General Partners $ 456 $ 836
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
__________
For the Three Months
Ended March 31,
1996 1995
Operating activities:
Net income $ 45,649 $ 83,647
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 513,998 515,904
Decrease in prepaid expenses and
other assets 227,313 332,354
Decrease in other liabilities (263,445) (237,283)
Increase (decrease) in accounts payable (40,095) 14,232
Increase (decrease) in due to
affiliates (60,312) 106,095
Net cash provided by operating
activities 423,108 814,949
Investing activities:
Decrease in cash restricted for capital
improvements 2,471 4,333
Increase in other investments - (486,995)
Increase in accounts payable for fixed
asset additions 6,166 -
Additions to fixed assets (54,561) (43,916)
Net cash used in investing activities (45,924) (526,578)
Financing activities:
Principal payments on mortgage notes
payable (184,860) (180,783)
Distributions (589,425) (441,958)
Increase in deferred expenses - (1,826)
Net cash used in financing activities (774,285) (624,567)
Net decrease in cash and cash equivalents (397,101) (336,196)
Cash and cash equivalents, beginning of period 2,802,694 2,500,074
Cash and cash equivalents, end of period $2,405,593 $2,163,878
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 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, 1995 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 Westbridge Partners,
Ltd. and Pavillion Partners, Ltd. At March 31, 1996, minority interest
of $27,478 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, 1996 and its results of operations and cash flows for the
three months ended March 31, 1996 and 1995. Certain prior year balances
have been reclassified to conform with the current year consolidated
financial statement presentation.
The results of operations for the three months ended March 31, 1996 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' equity (deficit) for the three months
ended March 31, 1996 is as follows:
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
December 31, 1995 $ 322,527 $(1,245,119) $(270,478) $(1,193,070)
Net income 43,367 1,826 456 45,649
Distributions (559,954) (23,577) (5,894) (589,425)
Balance at
March 31, 1996 $(194,060) $(1,266,870) $(275,916) $(1,736,846)
(3) Related Party Transactions
Commencing with the date of acquisition of the Partnership's properties,
the Partnership
entered into agreements under which property management fees are paid to
an affiliate of the General Partners for services as management agent.
Such agreements provide for management fees 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 accounting, computer,
insurance, travel, legal and payroll; and with the preparation and
mailing of reports and other communications to the Limited Partners.
Amounts accrued or paid to the General Partners or their affiliates were
as follows:
For the Three Months
Ended March 31,
1996 1995
Property management
fees $ 68,636 $69,764
Expense
reimbursements 63,236 12,350
Charged to
operations $131,872 $82,114
Due to affiliates consists of the following:
March 31, December 31,
1996 1995
Expense reimbursements $37,528 $ 97,840
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily on the operations of its remaining real estate
investments. Such ability would also be impacted by the future
availability of bank borrowings, and upon future refinancing and sale of
the Partnership's real estate investments and the collection of any
mortgage receivables which may result from such sales. These sources of
liquidity will be used by the Partnership for payment of expenses related
to real estate operations, capital improvements, refinancing and expenses.
Cash Flow, if any, is calculated under Section 8.2(a) of the Partnership
Agreement, will then be available for distribution to the Partners. Due to
improvements in the operations of the properties and reduced debt service,
the Partnership has been able to increase semi-annual distributions from an
annual rate of $28.00 per Unit in 1995, to approximately $37.33 per Unit in
1996.
In the first quarter of 1996, the Partnership continued capital
improvements at its properties and anticipates that these improvements will
continue throughout the year. These improvements consist of interior
enhancements which include replacement of appliances, carpeting and vinyl
flooring. The Partnership believes that these improvements are necessary
to compete with current market conditions, produce quality rental units and
absorb excess market supply at the properties' respective locations.
Cash Flow
Shown below is the calculation of Cash Flow as defined by Section 8.2(a) of
the Partnership Agreement for the three months ended March 31, 1996. The
General Partners provide certain of the information below to meet
requirements of the Partnership Agreement and because they believe that it
is an appropriate supplemental measure of operating performance. However,
Cash Flow should not be considered by the reader as a substitute to net
income (loss), as an indicator of the Partnership's operating performance
or to cash flows as a measure of liquidity.
Rounded to $1,000
Net loss for tax purposes $ (46,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 479,000
Tax basis principal payments on mortgage (58,000)
Expenditures for capital improvements (55,000)
Working capital reserves (25,000)
Cash Flow $ 295,000
Operations
Cash Flow, net of working capital reserves, decreased in the first quarter
of 1996, as compared to the first quarter of 1995, as a result of both
increased capital improvement expenditures and increased operating and
maintenance expenses. Revenue increased in the first three months of
1996, as compared to the first three months of 1995, as a result of
increased rental rates implemented in 1995 at the Partnerships'
properties.
In the first three months of 1996, as compared to the first three months of
1995, operating and maintenance expenses increased due to both a rise in
utility consumption at all the Partnership's properties, combined with an
increase in snow removal expenditures
at Fenland Field as a result of the harsh weather conditions. Real estate
taxes increased due to an increase in the assessed value of Walden Pond.
Depreciation expense increased in conjunction with fixed asset expenditures
in 1995, and the first three months of 1996.
General
In accordance with Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which is effective for fiscal years beginning after December
15, 1995, the Partnership has implemented policies and practices for
assessing impairment of its real estate assets.
The investments in properties are carried at cost less accumulated
depreciation unless the General Partners believe there is a significant
impairment in value, in which case a provision to write down investments in
properties to fair value will be charged against income. At this time, the
General Partners do not believe that any assets of the Partnership are
significantly impaired.
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/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of
the Krupp Corporation, a General Partner.
DATE: May 7, 1996