UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 June 30, December 31, 1995 1994 Multi-family apartment complexes, net of accumulated depreciation of $36,595,812 and $34,905,809, respectively (Note 4) $37,325,298 $38,419,783 Cash and cash equivalents 1,390,703 598,443 Cash restricted for tenant security deposits 514,198 516,327 Cash restricted for capital improvements 681,563 919,047 Prepaid expenses and other assets 1,492,534 1,568,572 Deferred expenses, net of accumulated amortization of $506,249 and $463,623, respectively 539,382 582,008 Total assets $41,943,678 $42,604,180 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable $47,102,028 $47,390,488 Accounts payable 337,846 370,107 Accrued real estate taxes 1,998,608 1,895,473 Accrued expenses and other liabilities 1,221,502 1,219,501 Due to affiliates 1,060,927 1,266,260 Total liabilities 51,720,911 52,141,829 Contingencies (Note 2) Partners' deficit (Note 3) (9,777,233) (9,537,649) Total liabilities and partners' deficit $41,943,678 $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 For the Six Months Ended June 30, Ended June 30, 1995 1994 1995 1994 Revenue: Rental $3,652,061 $3,351,793 $7,233,226 $6,681,456 Interest income 35,064 22,452 55,404 39,808 Total revenue 3,687,125 3,374,245 7,288,630 6,721,264 Expenses: Operating (including reim- bursements to affiliates of $61,698, $89,858, $84,788 and $179,717, respectively) 926,581 1,078,946 1,895,118 2,092,318 Maintenance 280,240 290,424 433,666 409,399 General and administrative (including reimbursements to affiliates of $12,972, $20,566, $27,270 and $42,188, respectively) 35,342 35,890 56,339 65,003 Real estate taxes 591,012 551,664 1,182,278 1,109,390 Management fees to an affiliate 138,975 123,316 259,132 266,456 Depreciation and amortization 875,884 837,830 1,732,629 1,652,256 Interest 980,519 999,394 1,969,052 1,997,995 Total expenses 3,828,553 3,917,464 7,528,214 7,592,817 Net loss $ (141,428) $ (543,219) $ (239,584) $ (871,553) Allocation of net loss (Note 3): Per Unit of Investor Limited Partner Interest (35,200 Units outstanding) $ (3.98) $ (15.28) $ (6.74) $ (24.51) General Partners $ (1,414) $ (5,432) $ (2,396) $ (8,715) The accompanying notes are an integral part of the financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1995 1994 Operating activities: Net loss $ (239,584) $ (871,553) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,732,629 1,652,256 Decrease in cash restricted for tenant security deposits 2,129 40,580 Decrease (increase) in prepaid expenses and other assets 76,038 (88,869) Decrease in accounts payable (112,317) (464,705) Increase in accrued real estate taxes 103,135 43,314 Increase in accrued expenses and other liabilities 2,001 65,572 Decrease in due to affiliates (205,333) (75,143) Net cash provided by operating activities 1,358,698 301,452 Investing activities: Additions to fixed assets (595,518) (1,055,188) Decrease in cash restricted for capital improvements 237,484 397,011 Increase in accounts payable related to fixed asset additions 80,056 178,441 Net cash used in investing activities (277,978) (479,736) Financing activities: Principal payments on mortgage notes payable (288,460) (265,901) Deferred expenses - (12,138) Net cash used in investing activities (288,460) (278,039) Net increase (decrease) in cash and cash equivalents 792,260 (456,323) Cash and cash equivalents, beginning of period 598,443 1,159,301 Cash and cash equivalents, end of period $1,390,703 $ 702,978 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 normal recurring accruals) necessary to present fairly the Partnership's financial position as of June 30, 1995, its results of operations for the three and six months ended June 30, 1995 and 1994 and its cash flows for the six months ended June 30, 1995 and 1994. Certain prior year balances have been reclassified to conform with the current period financial statement presentation. The results of operations for the three and six months ended June 30, 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 Proceeding 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 six months ended June 30, 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 (237,188) - (2,396) (239,584) Balance at June 30, 1995 $(9,140,898) $(234,539) $(401,796) $(9,777,233) (4)Subsequent Event On July 19, 1995, the Partnership sold Marine Terrace Apartments for $6,156,500 resulting in a gain on the sale of approximately $3 million for financial reporting purposes. Marine Terrace is a 187 unit complex located in Chicago, Illinois. The Partnership used the proceeds to satisfy the existing mortgage and pay other partnership liabilities. 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 nearing completion as of June 30, 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 both established reserves and cash generated by the property and has resulted in both increased rents and increased occupancy. On July 19, 1995, the Partnership sold Marine Terrace Apartments for $6,156,500 resulting in a gain on the sale of approximately $3 million for financial reporting purposes. The Partnership will use the proceeds to satisfy the existing mortgage and to payoff closing costs and other Partnership liabilities. Cash Flow Shown below is the calculation of Cash Flow for the six months ended June 30, 1995. Rounded to $1,000 Net loss for tax purposes $ (215,000) Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 1,708,000 Expenditures for capital improvements (596,000) Principal payments on mortgage notes payable (288,000) Working capital reserves (650,000) Cash Flow deficit $ (41,000) Continued KRUPP REALTY LIMITED PARTNERSHIP-V Operations The increase in rental revenue for the three and six months ended June 30, 1995 as compared to the same periods in 1994 is due to increases in rental rates at Park Place, Marine Terrace and Century II during the second half of 1994. Average residential occupancy for the Partnership was 94% for the six months ended June 30, 1995 and 93% for the same period in 1994. The increase in interest income for the three and six months ended June 30, 1995 as compared to 1994 is due to a rise in the short-term interest rates. Total expenses of the Partnership for the three and six months ended June 30, 1995 as compared to the same periods in 1994 have remained stable with the exception of operating expenses and real estate taxes. The decrease in operating expenses is due to management's efforts to reduce reimbursable operating costs. Certain of these cost savings are anticipated to continue throughout 1995. The increase in real estate taxes is primarily due to an increase in assessed property value at Park Place which is directly related to the capital improvement project. Depreciation expense has increased as a result of these extensive improvements. 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 of The Krupp Corporation, a General Partner. -10- DATE: July 31, 1995 -11-