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 September 30, 1994 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 0-11985 Krupp Realty Limited Partnership-V Massachusetts 04-2796207 (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. FINANCIAL STATEMENTS KRUPP REALTY LIMITED PARTNERSHIP-V BALANCE SHEETS ASSETS September 30, December 31, 1994 1993 Multi-family apartment complexes, net of accumulated depreciation of $34,041,323 and $31,569,120, respectively $38,359,156 $38,739,695 Cash and cash equivalents 668,709 713,196 Cash restricted for tenant security deposits 529,234 566,626 Cash restricted for capital improvements 1,278,133 2,280,342 Prepaid expenses and other assets 1,247,030 1,610,737 Deferred expenses, net of accumulated amortization of $442,310 and $378,371, respectively (Note 2) 603,321 655,122 Total assets $42,685,583 $44,565,718 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $47,530,366 $47,933,327 Accounts payable 365,059 259,149 Accrued real estate taxes 1,425,920 1,926,353 Accrued expenses and other liabilities 1,312,843 1,148,996 Due to affiliates 1,386,407 1,385,328 Total liabilities 52,020,595 52,653,153 Partners' deficit (Note 3) (9,335,012) (8,087,435) Total liabilities and partners' deficit $42,685,583 $44,565,718 The accompanying notes are an integral part of the financial statements. -2- KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF OPERATIONS For the Three Months Ended For the Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Revenue: Rental $3,423,538 $ 3,383,683 $10,104,994 $10,037,552 Interest income 21,410 36,316 61,218 132,128 Total Revenue 3,444,948 3,419,999 10,166,212 10,169,680 Expenses: Operating (including reimbursements to affiliates of $89,859, $89,859, $269,576 and $269,577, respectively) 1,045,441 1,124,062 3,137,759 3,309,028 Maintenance 298,232 178,018 707,633 537,306 General and administrative (including reimbursements to affiliates of $20,843, $21,740, $63,031 and $62,367, respectively) 49,023 35,505 114,026 102,944 Real estate taxes 446,572 485,792 1,555,962 1,614,758 Management fees to an affiliate 104,565 114,935 371,021 353,059 Depreciation and amortization 883,886 1,678,959 2,536,142 3,273,997 Interest 993,251 1,677,314 2,991,246 4,328,883 Total expenses 3,820,970 5,294,585 11,413,789 13,519,975 Net loss $ (376,022) $(1,874,586) $(1,247,577) $(3,350,295) Allocation of net loss (Note 3): Per Unit of Investor Limited Partner Interest (35,200 Units Outstanding) $ (10.58) $ (52.72) $ (35.09) $ (94.22) General Partners $ (3,761) $ (18,746) $ (12,476) $ (33,503) The accompanying notes are an integral part of the financial statements. -3- KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1994 1993 Operating activities: Net loss $(1,247,577) $(3,350,295) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 2,536,142 3,273,997 Amortization of mortgage premium - 326,164 Decrease (increase) in cash restricted for tenant security deposits 37,392 (15,598) Decrease (increase) in prepaid expenses and other assets 363,707 (23,876) Decrease in accounts payable (51,897) (116,229) Decrease in accrued real estate taxes (500,433) (428,077) Increase (decrease) in accrued expenses and other liabilities 163,847 (1,274,818) Increase in due to affiliates 1,079 345,499 Net cash provided by (used for) operating activities 1,302,260 (1,263,233) Investing activities: Additions to fixed assets (2,091,664) (804,462) Increase in accounts payable related to fixed asset additions 157,807 - Decrease (increase) in cash restricted for capital improvements 1,002,209 (1,420,194) Net cash used for investing activities (931,648) (2,224,656) Financing activities: Proceeds from refinancing mortgage note payable - 33,000,000 Payoff of mortgage note payable - (32,626,898) Deferred expenses (12,138) (304,663) Principal payments on mortgage notes payable (402,961) (174,914) Net cash used for financing activities (415,099) (106,475) Net decrease in cash and cash equivalents (44,487) (3,594,364) Cash and cash equivalents, beginning of the period 713,196 4,118,300 Cash and cash equivalents, end of the period $ 668,709 $ 523,936 The accompanying notes are an integral part of the financial statements. -4- KRUPP REALTY LIMITED PARTNERSHIP-V NOTES TO 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-V (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of September 30, 1994, its results of operations for the three and nine months ended September 30, 1994 and 1993 and its cash flows for the nine months ended September 30, 1994 and 1993. Certain prior year balances have been reclassified to conform with the current period financial statement presentation. The results of operations for the three and nine months ended September 30, 1994 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) Related Party Transactions In addition to the amounts presented on the face of the statement of operations, capitalized amounts paid to affiliates of the General Partners during the nine months ended September 30, 1994 and for the year ended December 31, 1993 for costs related to refinancing activities of the Partnership's mortgage notes were $11,444 and $27,658, respectively. (3) Changes in Partners' Deficit A summary of changes in Partners' Deficit for the nine months ended September 30, 1994 is as follows: Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1993 $(7,467,998) $(234,539) $(384,898) $(8,087,435) Net Loss (1,235,101) - (12,476) (1,247,577) Balance at September 30, 1994 $(8,703,099) $(234,539) $(397,374) $(9,335,012) -5- KRUPP REALTY LIMITED PARTNERSHIP-V 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 upon the successful operations of its real estate investments. Such ability is also dependent upon the future availability of bank borrowings, the potential refinancing and sale of the Partnership's remaining real estate investments. These sources of liquidity will be first used by the Partnership for payment of expenses related to real estate operations, debt service, capital improvements and expenses. Cash flow, if any, as calculated under Section 8.2(a) of the Partnership Agreement ("Cash Flow"), will then be available for distribution to the Partners. The General Partners discontinued distributions during 1990 due to insufficient operating cash flow. The Partnership will resume distributions when the properties generate sustainable cash flow in excess of operating and capital improvement needs to provide for such distributions. The Partnership's major capital improvement project, the repair of Park Place's building facade, is approximately 85% complete as of September 30, 1994. The Partnership anticipates that the restoration project will be completed in early 1995, and will greatly enhance the appearance of the property. This improvement, along with extensive interior improvements, is being funded from established reserves and is expected to result in both increased rents and increased occupancy. Prior to Park Place's refinancing, management suspended payment of property management fees and expense reimbursements to an affiliate. At September 30, 1994, past due fees and reimbursements totalled approximately $1,300,000. Subsequent to the refinancing, the Partnership resumed regular payment of property management fees and expense reimbursements and expects to generate sufficient cash flow to begin to repay the accrued obligation. Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow for the nine months ended September 30, 1994. Rounded to $1,000 Net loss for tax purposes $(1,155,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 2,444,000 Expenditures for capital improvements (2,092,000) Principal payments on mortgage notes payable (403,000) Cash Flow Deficit $(1,206,000) Continued -6- KRUPP REALTY LIMITED PARTNERSHIP-V Operations Rental revenue increased by $67,000 during the nine months ended September 30, 1994, as compared to the same period in 1993. The increase in rental revenue is primarily due to an increase in rental rates at Park Place and Marine Terrace, and increased occupancy at Century II. Interest income for the three and nine months ended September 30, 1994, as compared to the same period in 1993 decreased due to funds previously invested in short term investments being used for the refinancing of Park Place's mortgage during the third quarter of 1993. Operating expenses for the three and nine months ended September 30, 1994, as compared to the same period in 1993 decreased due to savings in parking garage expenses as a result of management subcontracting the parking garage operations at Park Place. These savings were partially offset by an increase in maintenance expense, primarily for the painting of the interior units and the installation of window dressings at Park Place. Real Estate taxes decreased for the three and nine months ended September 30, 1994, as compared to the same period in 1993 at Park Place due to a prior year revaluation by the taxing authority. As a result of the refinancing of Park Place's first mortgage from an interest rate of 10.75% to 6.75% per annum during the third quarter of 1993, interest expense decreased by $684,000 and $1,338,000 for the three and nine months ended September 30, 1994, as compared to the same period in 1993. Depreciation and amortization decreased by approximately $738,000 for the nine months ended September 30, 1994 as compared to the same period in 1993. The decrease in depreciation and amortization is primarily due to fully amortized deferred mortgage costs as a result of Park Place's refinanced mortgage. The decrease was slightly offset by an increase in depreciation expense related to Park Place's capital improvement program. -7- KRUPP REALTY LIMITED PARTNERSHIP-V 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 -8- SIGNATURES 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-V (Registrant) BY: /s/Marianne Pritchard Marianne Pritchard Treasurer and Chief Accounting Officer The Krupp Corporation, a General Partner DATE: November 3, 1994 -9-