PART I. FINANCIAL INFORMATION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from To
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Commission File number 0-14377
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Krupp Realty Limited Partnership-VII
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Massachusetts 04-2842924
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(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization
One Beacon Street, Boston, Massachusetts 02108
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(Address of principal executive (Zip code)
offices)
(617) 523-7722
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(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 preceeding 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 [ ]
The total number of pages in this document is 9.
Item 1. FINANCIAL STATEMENTS
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This form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In Liquidation)
ASSETS
(Unaudited)
March 31, December 31,
2002 2001
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Cash and cash equivalents $ 1,363,043 $ 8,968,487
Due from affiliates 23,732 28,737
Prepaid expenses and other assets 48,497 48,499
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Total assets $ 1,435,272 $ 9,045,723
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LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued expenses and other liabilities $ 82,381 $ 103,342
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Total liabilities 82,381 103,342
Partners' equity (Note 2):
Investor Limited Partners (27,184 units
outstanding) 1,339,362 8,852,957
Original Limited Partner - -
General Partners 13,529 89,424
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Total partners' equity 1,352,891 8,942,381
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Total liabilities and partners' equity $ 1,435,272 $ 9,045,723
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The accompanying notes are an integral part of the
consolidated financial statements.
2
KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In Liquidation)
(Unaudited)
For the Three Months Ended
March 31,
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2002 2001
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Revenue:
Rental $ 1,556 $ 1,058,303
Interest income 38,003 3,369
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Total revenue 39,559 1,061,672
Expenses:
Operating (Note 3) 7,293 299,525
Maintenance 1,196 87,447
Real estate taxes - 108,003
General and administrative (Note 3) 305 99,819
Management fees (Note 3) 7,794 47,112
Depreciation and amortization - 340,401
Interest - 241,109
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Total expenses 16,588 1,223,416
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Net loss $ 22,971 $ (161,744)
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Allocation of net income (loss) (Note 2):
Investor Limited Partners (27,184 units
outstanding):
Net loss $ 22,741 $ (160,127)
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Investor Limited Partners,
Per Unit:
Net loss $ 0.84 $ (5.89)
============ ============
Original Limited Partner:
Net loss $ - $ -
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General Partners:
Net loss $ 230 $ (1,617)
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The accompanying notes are an integral part of the
consolidated financial statements.
3
KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Liquidation)
(Unaudited)
For the Three Months Ended
March 31,
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2002 2001
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Cash flows from operating activities:
Net loss $ 22,971 $ (161,744)
Adjustment to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization - 340,401
Changes in assets and liabilities:
Increase in restricted cash for
tenant security deposits - (193)
Decrease in prepaid expenses and
other assets 5,007 156,386
Decrease in accrued expenses and
other liabilities (20,961) (104,190)
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Net cash (used in) provided by
operating activities 7,017 230,660
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Cash flows from investing activities:
Deposits to replacement reserve escrow - (8,400)
Additions to fixed assets - (72,714)
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Net cash used in investing
activities - (81,114)
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Cash flows from financing activities:
Principal payments on mortgage notes
payable - (29,565)
Distributions (7,612,461) (275,938)
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Net cash used in financing
activities (7,612,461) (305,503)
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Net decrease in cash and cash equivalents (7,605,444) (155,957)
Cash and cash equivalents,
beginning of period 8,968,487 456,851
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Cash and cash equivalents,
end of period $ 1,363,043 $ 300,894
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The accompanying notes are an integral part of the
consolidated financial statements.
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KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation)
(1) Accounting Policies
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principals 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-VII and Subsidiaries (the "Partnership"), the disclosures
contained in this report are adequate to make the information presented not
misleading. See notes to the Consolidated Financial Statements included in
the Partnership's Annual Report on Form 10-K for the year ended December
31, 2001 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 consolidated financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the Partnership's consolidated financial position as of March 31, 2002 and
its results of operation and cash flows for the three months ended March
31, 2002 and 2001.
During 2001, the Partnership sold its remaining real estate investments and
intends to liquidate the Partnership's remaining assets, distribute its
remaining cash and dissolve the Partnership in 2002.
The results of operations for the three months ended March 31, 2002 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) Changes in Partners' Equity
A summary of changes in Partners' equity for the three months ended March
31, 2002 is as follows:
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Equity
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Balance at
December 31, 2001 $ 8,852,957 $ - $ 89,424 $ 8,942,381
Net loss 22,741 - 230 22,971
Distributions (7,536,336) - (76,125) (7,612,461)
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Balance at
March 31, 2002 $ 1,339,362 $ - $ 13,529 $ 1,352,891
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Continued
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KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Liquidation), Continued
(3) Related Party Transactions
The Partnership pays property management fees to an affiliate of the
General Partners for management services. Pursuant to the management
agreements, management fees are payable monthly at a rate of 5% of gross
receipts from residential properties under management. The Partnership also
reimburses affiliates of the General Partners for certain expenses incurred
in connection with the operation of the Partnership and its properties,
including administrative expenses.
Amounts accrued or paid to the General Partners' affiliates were as
follows:
For the Three Months Ended
March 31,
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2002 2001
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Property management fees $ 7,794 $ 47,112
Expenses reimbursement 175 117,687
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Charged to operations $ 7,969 $ 164,799
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Expense reimbursements due from affiliates of $23,732 and 28,737 were
included in due from affiliates at March 31, 2002 and December 31, 2001,
respectively.
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KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning
management's expectations regarding the future financial performance and future
events. These forward-looking statements involve significant risk and
uncertainties, including those described herein. Actual results may differ
materially from those anticipated by such forward-looking statements.
Liquidity and Capital Resources
On November 20, 2001, the Partnership sold Windsor Apartments, a 300-unit
multi-family apartment community to an unaffiliated third party. The Partnership
received $12,235,336, net of closing costs of $80,518 and payoff of mortgage
payable and accrued interest of $4,971,598.
On August 29, 2001, the Partnership sold Courtyards Village, a 224-unit
multi-family apartment complex to an unaffiliated third party. The Partnership
received $7,608,399 for the sale, net of closing costs of $83,648 and debt of
$5,075,953 assumed by the buyer, and repaid the mortgage note payable and
accrued interest of $30,106.
As of December 31, 2001, the Partnership has no investment in any multi-family
apartment communities.
Operations
The following discussion relates to the operations of the Partnership and its
properties (Courtyards Village and Windsor Apartments) for the three months
ended March 31, 2002 and 2001.
Net income increased during the three months ended March 31, 2002 when compared
to the same period in 2001 due to sale of the Partnership's remaining real
estate assets in August and November of 2001.
Total revenue for the three months ended March 31, 2002 decreased when compared
to the three months ended March 31, 2001. Rental income decreased due to the
sale of the Partnership's remaining real estate assets in 2001. Interest income
earned increased substantially from the cash proceeds received from the sale of
the Partnership's real estate properties.
Total expenses for the quarter ended March 31, 2002 decreased significantly when
compared to the same period in 2001 since the Partnership no longer has
ownership in any real estate properties as of December 31, 2001.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's future earnings, cash flows and fair values relevant to
financial instruments are dependent upon prevalent market rates. Market risk is
the risk of loss from adverse changes in market prices and interest rates. The
Partnership manages its market risk by matching projected cash inflows from
operating activities, investing activities and financing activities with
projected cash outflows to fund debt payments, acquisitions, capital
expenditures, distributions and other cash requirements.
A detailed analysis of quantitative and qualitative market risk exposures was
provided in the in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 2001. There have been no material changes in market risk
subsequent to that date.
All of the Partnership's mortgage debt was repaid as of December 31, 2001.
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KRUPP REALTY LIMITED PARTNERSHIP - VII AND SUBSIDIARIES
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
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned, thereunto duly authorized.
Krupp Realty Limited Partnership-VII
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(Registrant)
BY: /s/ David C. Quade
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David C. Quade
Treasurer (Principal Financial and
Accounting Officer) of The Krupp
Corporation, a General Partner
DATE: May 15, 2002
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