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, 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 September 30, December 31, 1995 1994 Multi-family apartment complexes, net of accumulated depreciation of $33,920,050 and $34,905,809, respectively (Note 2) $33,892,558 $38,419,783 Cash and cash equivalents 2,135,941 598,443 Cash restricted for tenant security deposits 433,356 516,327 Cash restricted for capital improvements 735,655 919,047 Prepaid expenses and other assets 1,789,393 1,568,572 Deferred expenses, net of accumulated amortization of $385,122 and $463,623, respectively 506,041 582,008 Total assets $39,492,944 $42,604,180 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable (Note 2) $42,927,339 $47,390,488 Accounts payable 175,067 370,107 Accrued real estate taxes 2,080,688 1,895,473 Accrued expenses and other liabilities 1,113,839 1,219,501 Due to affiliates - 1,266,260 Total liabilities 46,296,933 52,141,829 Contingencies (Note 3) Partners' deficit (Note 4): Investor Limited Partners (35,200 Units outstanding) (6,197,387) (8,903,710) Original Limited Partner (234,539) (234,539) General Partners (372,063) (399,400) Total Partners' deficit (6,803,989) (9,537,649) Total liabilities and Partners' deficit $39,492,944 $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 For the Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenue: Rental $3,324,815 $3,423,538 $10,558,041 $10,104,994 Interest income 37,120 21,410 92,524 61,218 Total revenue 3,361,935 3,444,948 10,650,565 10,166,212 Expenses: Operating (including reimbursements to affiliates of $56,937, $89,859, $141,725 and $269,576, respectively) 952,338 1,035,367 2,847,456 3,127,685 Maintenance 191,707 298,232 625,373 707,633 General and administrative (including reimbursements to affiliates of $11,249, $20,843, $38,519 and $63,031, respectively) 61,338 59,097 117,677 124,100 Real estate taxes 222,850 446,572 1,405,128 1,555,962 Management fees to an affiliate 133,069 104,565 392,201 371,021 Depreciation and amortization 844,994 883,886 2,577,623 2,536,142 Interest 973,849 993,251 2,942,901 2,991,246 Total expenses 3,380,145 3,820,970 10,908,359 11,413,789 Loss before gain on sale of property (18,210) (376,022) (257,794) (1,247,577) Gain on sale of property (Note 2) 2,991,454 - 2,991,454 - Net income(loss) $2,973,244 $ (376,022) $ 2,733,660 $(1,247,577) Allocation of net income (loss) (Note 4): Per Unit of Investor Limited Partner Interest (35,200 Units outstanding) $ 83.62 $ (10.58) $ 76.88 $ (35.09) General Partners $ 29,733 $ (3,761) $ 27,337 $ (12,476) The accompanying notes are an integral part of the financial statements. KRUPP REALTY LIMITED PARTNERSHIP-V STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1995 1994 Operating activities: Net income(loss) $ 2,733,660 $(1,247,577) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,577,623 2,536,142 Gain on sale of property (2,991,454) - Decrease in cash restricted for tenant security deposits 82,971 37,392 Decrease (increase) in prepaid expenses and other assets (220,821) 363,707 Decrease in accounts payable (173,005) (51,897) Increase(decrease) in accrued real estate taxes 185,215 (500,433) Increase (decrease) in accrued expenses and other liabilities (105,662) 163,847 Increase(decrease) in payables to affiliates (1,266,260) 1,079 Net cash provided by operating activities 822,267 1,302,260 Investing activities: Additions to fixed assets (1,100,124) (2,091,664) Increase (decrease) in accounts payable related to fixed asset additions (22,035) 157,807 Decrease in cash restricted for capital improvements 183,392 1,002,209 Proceeds from sale of property 6,117,147 - Net cash provided by (used in) investing activities 5,178,380 (931,648) Financing activities: Principal payments on mortgage notes payable (412,428) (402,961) Deferred expenses - (12,138) Repayment of mortgage note payable (4,050,721) - Net cash used in financing activities (4,463,149) (415,099) Net increase (decrease) in cash and cash equivalents 1,537,498 (44,487) Cash and cash equivalents, beginning of period 598,443 713,196 Cash and cash equivalents, end of period $ 2,135,941 $ 668,709 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 September 30, 1995, its results of operations for the three and nine months ended September 30, 1995 and 1994 and its cash flows for the nine months ended September 30, 1995 and 1994. Certain prior period balances have been reclassified to conform with current period financial statement presentation. The results of operations for the three and nine months ended September 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) Sale of Marine Terrace Apartments On July 19, 1995, the Partnership sold Marine Terrace Apartments, a 187 unit apartment complex located in Chicago, Illinois, for $6,156,500. Proceeds from the sale were used to pay closing costs of $39,353, to repay the existing mortgage note on the property of $4,050,721 and to satisfy other Partnership liabilities. The property had a net book value of $3,125,693 which resulted in a gain of $2,991,454, for financial reporting purposes. (3) 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 violated a Chicago municipal ordinance relating to late fee charges because it allowed tenants a discount if rent was paid on or before the first day of the month. 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 the Defendant deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendant, and accepted the Partnership's Motion to Dismiss the Plaintiffs' 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 Defendant 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 (4) Changes in Partners' Deficit A summary of changes in Partners' Deficit for the nine months ended September 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 income 2,706,323 - 27,337 2,733,660 Balance at September 30, 1995 $(6,197,387) $(234,539) $(372,063) $(6,803,989) 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 September 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 $6,117,147, net of closing costs, resulting in a gain on the sale of $2,991,454, for financial reporting purposes. The Partnership used the proceeds to satisfy the existing mortgage and other Partnership liabilities. Cash Flow Shown below, as required by the Partnership Agreement, is the calculation of Cash Flow for the nine months ended September 30, 1995. Rounded to $1,000 Net income for tax purposes $ 3,988,000 Items not requiring (requiring) the use of operating funds: Tax basis depreciation and amortization 2,574,000 Tax gain on sale of Marine Terrace (4,242,000) Expenditures for capital improvements (1,100,000) Principal payments on mortgage notes payable (412,000) Working capital reserves (820,000) Cash Flow Deficit $ (12,000) Continued KRUPP REALTY LIMITED PARTNERSHIP-V Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Operations The following discussion relates to the operations of the Partnership and its properties (Park Place, Marine Terrace and Century II) for the three and nine months ended September 30, 1995 and 1994. The results of operations of the Partnership are not comparable due to the sale of Marine Terrace on July 19, 1995. The increase in rental revenue, net of Marine Terrace's revenues, for the three and nine months ended September 30, 1995, as compared to the same periods in 1994, is due to the impact of rental rate increases at Park Place and Century II during the second half of 1994. Average residential occupancy for the Partnership was 94% for the nine months September 30, 1995 and 93% for the same period in 1994. The increase in interest income for the three and nine months ended September 30, 1995, as compared to 1994, is due to a rise in short-term interest rates. Total expenses of the Partnership, net of Marine Terrace's expenses, for the three and nine months ended September 30, 1995, as compared to the same periods in 1994, have remained stable with the exception of operating expense and real estate taxes. The decrease in operating expense is primarily 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 violated a Chicago municipal ordinance relating to late fee charges because it allowed tenants a discount if rent was paid on or before the first day of the month. 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 the Defendant deliberately used a provision prohibited by the ordinance. During 1994, the Court ruled in favor of the Defendant, and accepted the Partnership's Motion to Dismiss the Plaintiffs' 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 (a) Exhibits Marine Terrace Apartments (10.1) Real Estate Sale Contract and Agreement to Purchase Personal Property dated May 9, 1995 by and between the Seller, Krupp Realty Limited Partnership V and the Purchaser, Harry Langer. (b) 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: November 3, 1995