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, 1995 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 March 31, December 31, 1995 1994 Multi-family apartment complexes, net of accumulated depreciation of $35,741,241 and $34,905,809, respectively $37,707,892 $38,419,783 Cash and cash equivalents 1,209,916 598,443 Cash restricted for tenant security deposits 516,239 516,327 Cash restricted for capital improvements 687,103 919,047 Prepaid expenses and other assets 1,061,418 1,568,572 Deferred expenses, net of accumulated amortization of $484,936 and $463,623, respectively 560,695 582,008 Total assets $41,743,263 $42,604,180 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $47,247,729 $47,390,488 Accounts payable 211,956 370,107 Accrued real estate taxes 1,489,358 1,895,473 Accrued expenses and other liabilities 1,199,184 1,219,501 Due to affiliates 1,230,841 1,266,260 Total liabilities 51,379,068 52,141,829 Commitments and contingencies (Note 2) Partners' deficit (Note 3) (9,635,805) (9,537,649) Total liabilities and partners' deficit $41,743,263 $42,604,180 The accompanying notes are an integral part of the financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1995 1994 Revenue: Rental $3,581,165 $3,329,663 Interest income 20,340 17,356 Total revenue 3,601,505 3,347,019 Expenses: Operating (including reimbursements to affiliates of $23,091 and $91,195, respectively) 968,537 1,013,372 Maintenance 153,426 118,975 General and administrative (including reimbursements to affiliates of $14,298 and $20,286, respectively) 20,997 29,113 Real estate taxes 591,266 557,726 Management fees to an affiliate 120,157 143,140 Depreciation and amortization 856,745 814,426 Interest 988,533 998,601 Total expenses 3,699,661 3,675,353 Net loss $ (98,156) $ (328,334) Allocation of net loss (Note 3): Per Unit of Investor Limited Partner Interest (35,200 units outstanding) $ (2.76) $ (9.23) General Partners $ (982) $ (3,283) The accompanying notes are an integral part of the financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 1994 Operating activities: Net loss $ (98,156) $ (328,334) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 856,745 814,426 Decrease (increase) in cash restricted for tenant security deposits 88 (2,690) Decrease in prepaid expenses and other assets 507,154 405,200 Decrease in accrued real estate taxes (406,115) (428,247) Decrease in accounts payable (102,662) (537,449) Increase (decrease) in accrued expenses and other liabilities (20,317) 8,640 Decrease in due to affiliates (35,419) (67,735) Net cash provided by (used in) operating activities 701,318 (136,189) Investing activities: Additions to fixed assets (123,541) (327,928) Decrease in cash restricted for capital improvements 231,944 221,514 Increase (decrease) in accounts payable related to fixed asset additions (55,489) 21,423 Net cash provided by (used in) investing activities 52,914 (84,991) Financing activities: Principal payments on mortgage notes payable (142,759) (131,600) Deferred expenses - (694) Net cash used in financing activities (142,759) (132,294) Net increase (decrease) in cash and cash equivalents 611,473 (353,474) Cash and cash equivalents, beginning of period 598,443 1,159,301 Cash and cash equivalents, end of period $1,209,916 $ 805,827 The accompanying notes are an integral part of the financial statements. 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, 1994 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 recurring accruals) necessary to present fairly the Partnership's financial position as of March 31, 1995, and its results of operations and cash flows for the three months ended March 31, 1995 and 1994. Certain prior year balances have been reclassified to conform with the current period consolidated financial statement presentation. The results of operations for the three months ended March 31, 1995 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) Legal Proceedings The Partnership is a defendant in a class action suit related to the practice of giving discounts for the early or timely payments of rent at Park Place. The central issue of the complaint was whether the operative lease, by allowing tenants a discount, of typically $30, if rent was paid on or before the first day of the month, violated a Chicago municipal ordinance relating to late fee charges. The ordinance in question limited late fee charges to $10 per month if the rent was more than 5 days late. The allegation was that, notwithstanding the stated rental rate and printed discount, the practice represented an unlawful means of exacting late fee charges. In addition to seeking damages for any "forfeited" discounts, plaintiffs seek statutory damages of two months rent per lease violation plus reasonable attorneys' fees. To be eligible for such punitive damages plaintiffs must prove that defendants deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendants, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The Plaintiffs have filed an appeal with the Appellate Court of Illinois, First District, which is pending. Although management believes that the defendants will prevail on the issue of statutory damages, the ultimate outcome of this litigation, including an estimate of any potential loss, cannot be presently determined and accordingly no provision for loss has been made in the accompanying financial statements. Continued KRUPP REALTY LIMITED PARTNERSHIP-V NOTES TO FINANCIAL STATEMENTS - Continued (3) Changes in Partners' Deficit A summary of changes in Partners' deficit for the three months ended March 31, 1995 is as follows: Investor Original Total Limited Limited General Partners' Partners Partner Partners Deficit Balance at December 31, 1994 $(8,903,710) $(234,539) $(399,400) $(9,537,649) Net loss (97,174) - (982) (98,156) Balance at March 31, 1995 $(9,000,884) $(234,539) $(400,382) $(9,635,805) 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 borrowing sources as current debt matures. These sources of liquidity will be 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 and after paying off any existing obligations. The Partnership's major capital improvement project, the repair of Park Place's building facade, is approximately 95% complete as of March 31, 1995. The Partnership anticipates that the restoration project will be completed in 1995, and will greatly enhance the appearance of the property. This improvement, along with extensive interior improvements, is being funded from established reserves and has resulted in both increased rents and increased occupancy. Prior to Park Place's refinancing on September 15, 1993, management suspended payment of property management fees and expense reimbursements to an affiliate. At March 31, 1995, past due fees and reimbursements totalled approximately $1,300,000. Subsequent to the refinancing, the Partnership resumed current payments of property management fees and expense reimbursements and expects to generate sufficient cash flow to begin to repay the accrued obligation. Currently, Marine Terrace is being marketed for sale in 1995. If the property is sold, the proceeds from the sale will be used to repay the mortgage on Marine Terrace, closing costs, and other Partnership liabilities. The General Partners are in the process of reviewing liquidity options for the limited partners in the Partnership. After falling precipitously during the recession, real estate values have recently begun to recover. Typically, the only option available to a limited partner to liquidate his or her partnership interest has been to sell partnership units in the thinly-traded secondary market or directly to a small number of "vulture funds" seeking to purchase units at very low prices. While the Partnership may not be a target, some speculators have made offers to partnerships to acquire all or a significant portion of the outstanding partnership units at prices substantially below net asset value. The General Partners are exploring other options in an effort to provide the Partnership's with an opportunity to liquidate their partnership interests on reasonable terms giving due regard to property values and tax consequences. Continued KRUPP REALTY LIMITED PARTNERSHIP-V Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow for the three months ended March 31, 1995. Rounded to $1,000 Net loss for tax purposes $ (95,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 854,000 Expenditures for capital improvements (124,000) Principal payments on mortgage notes payable (143,000) Working capital reserves (550,000) Cash Flow Deficit $ (58,000) Operations The increase in rental revenue for the three months ended March 31, 1995 as compared to the same period in 1994 is due to increases in rental rates at Park Place and Marine Terrace during the second half of 1994. In addition, average residential occupancy for the Partnership was 94% for the three months ended March 31, 1995 and 93% for the same period in 1994. The increase in interest income is due to a rise in the short-term interest rates. In comparing the first quarter of 1995 with the same period in 1994, total expenses remained relatively stable during the period with the exception of operating and maintenance expenses. The decrease in operating expenses was due to management's efforts to reduce reimbursable operating costs. Certain of these cost savings are anticipated to continue throughout 1995. The increase in maintenance expenses is primarily for the painting of the interior units and the installation of window dressings at Park Place. KRUPP REALTY LIMITED PARTNERSHIP-V PART II - OTHER INFORMATION Item 1. Legal Proceedings The Partnership is a defendant in a class action suit related to the practice of giving discounts for the early or timely payments of rent at Park Place. The central issue of the complaint was whether the operative lease, by allowing tenants a discount, of typically $30, if rent was paid on or before the first day of the month, violated a Chicago municipal ordinance relating to late fee charges. The ordinance in question limited late fee charges to $10 per month if the rent was more than 5 days late. The allegation was that, notwithstanding the stated rental rate and printed discount, the practice represented an unlawful means of exacting late fee charges. In addition to seeking damages for any "forfeited" discounts, plaintiffs seek statutory damages of two months rent per lease violation plus reasonable attorneys' fees. To be eligible for such punitive damages plaintiffs must prove that defendants deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendants, and accepted the Partnership's Motion to Dismiss the Plaintiff's Third Amended Complaint. The Plaintiffs have filed an appeal with the Appellate Court of Illinois, First District, which is pending. 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 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: May 4, 1995