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