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, 1996
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 0-14393
Krupp Cash Plus Limited Partnership
Massachusetts 04-2865878
(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 CASH PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
Real estate assets:
Retail centers, less accumulated
depreciation of $15,791,185 and
$15,298,268, respectively $29,815,640 $30,082,471
Mortgage-backed securities ("MBS")
(Note 4) 4,909,303 5,151,696
Total real estate assets 34,724,943 35,234,167
Cash and cash equivalents 3,727,377 2,841,353
Other assets 727,945 782,000
Total assets $39,180,265 $38,857,520
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Accounts payable $ 7,335 $ 6,428
Accrued expenses and other liabilities
(Note 2) 1,369,683 963,809
Total liabilities 1,377,018 970,237
Partners' equity (deficit) (Note 3):
Limited Partners (4,000,000 Units
outstanding) 37,942,109 38,032,296
Corporate Limited Partner (100 Units
outstanding) 1,177 1,180
General Partners (140,039) (146,193)
Total Partners' equity (deficit) 37,803,247 37,887,283
Total liabilities and Partners'
equity (deficit) $39,180,265 $38,857,520
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
1996 1995
Revenue:
Rental $1,547,036 $1,509,244
Interest income - MBS (Note 4) 106,385 120,621
Interest income - other 44,499 27,930
Total revenue 1,697,920 1,657,795
Expenses:
Operating (Note 5) 261,227 238,517
Maintenance 75,832 67,051
General and administrative (Note 5) 44,679 41,430
Real estate taxes 295,252 300,472
Management fees (Note 5) 62,499 62,091
Depreciation 492,917 478,792
Total expenses 1,232,406 1,188,353
Net income $ 465,514 $ 469,442
Allocation of net income (Note 3):
Unitholders (4,000,000 Units
outstanding) $ 456,192 $ 460,042
Net income per Unit of
Depositary Receipt $ .11 $ .12
Corporate Limited Partner
(100 Units outstanding) $ 11 $ 12
General Partners $ 9,311 $ 9,388
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
1996 1995
Operating activities:
Net income $ 465,514 $ 469,442
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 492,917 478,792
Amortization of net MBS premium 263 22
Decrease (increase) in other assets 54,055 (75,739)
Decrease in accounts payable (6,093) (31,575)
Increase in accrued expenses and other
liabilities 405,874 404,170
Net cash provided by operating
activities 1,412,530 1,245,112
Investing activities:
Increase in other investments - (975,636)
Additions to fixed assets (226,086) (179,440)
Increase in accounts payable for fixed
asset additions 7,000 -
Principal collections on MBS 242,130 52,104
Net cash provided by (used in)
investing activities 23,044 (1,102,972)
Financing activity:
Distributions (549,550) (551,908)
Net increase (decrease) in cash and
cash equivalents 886,024 (409,768)
Cash and cash equivalents, beginning of
period 2,841,353 2,319,369
Cash and cash equivalents, end of period $3,727,377 $1,909,601
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
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
Cash Plus Limited Partnership (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 Report on Form 10-K for the year ended December
31, 1995 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 March 31, 1996, and
its results of operations and cash flows for the three months ended
March 31, 1996 and 1995. Certain prior year balances have been
reclassified to conform with the current year financial statement
presentation.
The results of operations for the three months ended March 31, 1996
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) Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following at
March 31, 1996 and December 31, 1995:
March 31, December 31,
1996 1995
Accrued real estate taxes $ 622,709 $685,370
Accrued insurance 125,128 114,397
Prepaid rent 552,772 84,065
Tenant security deposits 48,707 48,707
Other accrued expenses 20,367 31,270
$1,369,683 $963,809
(3) Changes in Partners' Equity (Deficit)
A summary of changes in Partners' Equity (Deficit) for the three
months ended March 31, 1996 is as follows:
Corporat Total
Limited General Partners'
Unitholders Partner Partners Equity
Balance at
December 31, 1995 $38,032,296 $1,180 $(146,193) $37,887,283
Net income 456,192 11 9,311 465,514
Distribution (546,379) (14) (3,157) (549,550)
Balance at
March 31, 1996 $37,942,109 $1,177 $(140,039) $37,803,24
(4) Mortgage Backed Securities
The MBS held by the Partnership are issued by the Federal Home Loan
Mortgage Corporation and the Government National Mortgage Association.
Additional information on the MBS held is approximated as follows:
March 31, December 31,
1996 1995
Face Value $4,892,886 $5,135,017
Amortized Cost $4,909,303 $5,151,696
Estimated Market Value $5,099,000 $5,435,000
Coupon rates of the MBS range from 8.5% to 9.0% per annum and
mature in the years 2008 through 2017. The Partnership's MBS
portfolio had gross unrealized gains of approximately $190,000
and $283,500 at March 31, 1996 and December 31, 1995,
respectively and no unrealized losses. The Partnership does not
expect to realize these gains as it has the intention and
ability to hold the MBS until maturity.
(5) Related Party Transactions
Commencing with the date of acquisition of the Partnership's
properties, the Partnership entered into agreements under which
property management fees are paid to an affiliate of the General
Partners for services as management agent. Such agreements provide
for management fees payable monthly at a rate of 5% of the gross
receipts from the 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 accounting, computer, insurance, travel, legal
and payroll; and with the preparation and mailing of reports and other
communications to the Unitholders.
Amounts accrued or paid to the General Partners or their affiliates
were as follows:
For the Three Months
Ended March 31,
1996 1995
Property management
fees $ 62,499 $ 62,091
Expense
reimbursements 73,780 43,729
Charged to
operations $136,279 $105,820
KRUPP CASH PLUS LIMITED PARTNERSHIP
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 operations of its real estate investments.
Liquidity is also generated by the MBS portfolio. The Partnership holds
MBS that are guaranteed by Government National Mortgage Association
("GNMA") and Federal Home Loan Mortgage Corporation ("FHLMC"). The
principal risks in respect of MBS are the credit worthiness of GNMA and
FHLMC and the risk that the current value of any MBS may decline as a
result of changes in market interest rates. The General Partners believe
that the risk is minimal due to the fact that the Partnership has the
ability to hold these securities to maturity. The Partnership's sources
of future liquidity will be used for payment of expenses related to real
estate operations, capital expenditures including tenant build-outs to
secure quality tenants, and other administrative expenses. Cash Flow, if
any, as calculated under Section 17 of the Partnership Agreement will then
be available for distribution to the Partners.
The Partnership's retail centers continue to have a relatively consistent
level of operating results. However, to attain these results, management
has found it necessary to fund a significant portion of tenant build-outs
to secure quality tenants in the Partnership's retail centers.
The Partnership has ongoing improvements which are necessary at High Point
National Furniture Mart to reconfigure space for new tenants and comply
with present building code standards. Renovations to an additional floor
began in the first quarter of 1996 and are anticipated to be completed in
mid-1996. The refurbished show-room spaces have enabled the Partnership
to command higher rents and achieve 100% occupancy.
Management is currently evaluating leasing issues at Tradewinds. One
17,770 square foot tenant's lease will be terminated as of December 31,
1996. Management is working on finding a new tenant for this space and is
negotiating with one of the anchor tenants regarding a possible expansion
in 1996. Improvements to the facade at Tradewinds continue in 1996, in
order to remain competitive against newer centers.
In order to continue to fund the capital improvements noted above, the
General Partners have determined that retaining the current annualized
distribution rate of approximately $0.55 per Unit will allow the
Partnership to maintain adequate reserves to fund the necessary capital
improvements.
Distributable Cash Flow and Net Cash Proceeds from Capital Transactions
Shown below is the calculation of Distributable Cash Flow and Net Cash
Proceeds from Capital Transactions as defined by Section 17 of the
Partnership Agreement, and the source of cash distributions for the three
months ended March 31, 1996 and from the Partnership's inception through
March 31, 1996. The General Partners provide certain of the information
below to meet requirements of the Partnership Agreement and because they
believe that it is an appropriate supplemental measure of operating
performance. However, Distributable Cash Flow and Net Cash Proceeds From
Capital Transactions should not be considered by the reader as a
substitute to net income, as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
(In $1,000's except per Unit amounts)
For the Three Months Inception to
Ended March 31, March 31,
1996 1996
Distributable Cash Flow:
Net income for tax purposes $ 552 $ 22,492
Items not requiring or (not providing)
the use of operating funds:
Tax basis depreciation and amortization 420 16,928
Interest income on note receivable - (371)
Gain on sale of assets - (1,686)
Additions to fixed assets (226) (8,126)
Cash from vacancy guarantee on
Luria's Plaza - 873
Fixed asset additions funded from cash
reserves - 865
Operating reserve for fixed asset
additions - (1,070)
Total Distributable Cash Flow ("DCF") $ 746 $ 29,905
Limited Partners' Share of DCF $ 731 $ 29,306
Limited Partners' Share of DCF per Unit $ .18 $ 7.32
General Partners' Share of DCF $ 15 $ 598
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 242 $ 14,695
Proceeds from sale of MBS - 19,018
Net proceeds from sale of property
including interest on mortgage
note receivable - 1,208
Mortgage note - 7,150
Reinvestment of MBS principal
collections - (16,141)
Total Net Proceeds from Capital
Transactions $ 242 $ 25,930
Distributions:
Limited Partners $ 546(a) $ 54,343(b)(d)
Limited Partners' Average per Unit $ .14(a) $ 13.59(b)(c)(d)
General Partners $ 15(a) $ 597(b)
Total Distributions $ 561(a) $ 54,940(b)
(a) Represents an estimate of the distribution to be paid in May, 1996.
(b) Includes an estimate of the distribution to be paid in May, 1996.
(c) Includes a $7,150,000 note which was distributed from the
Partnership to the Evergreen Plaza Note-Holding Trust whose
beneficiaries were the Partnership's Unitholders on record on May
31, 1990.
(d) Limited Partners' average per Unit return of capital as of May, 1996
is $6.27 [$13.59 - $7.32].
Operations
Distributable Cash Flow decreased for the three months ended March 31,
1996, as compared to the first three months in 1995, due to an increase in
capital improvements at the Partnership's properties.
The Partnership experienced increased rental revenues during the first
three months of 1996, as compared to the same period in 1995. The
increase is attributable to increased occupancy rates at all the
Partnership's properties. At High Point, refurbished showroom spaces
allow for higher rents in 1996 as additional floors are renovated.
Exterior improvements at Luria's Plaza have made it more attractive to new
tenants, increasing occupancy as compared to first quarter of 1995.
Occupancy at Tradewinds has also increased as compared to the first
quarter of 1995, due to a new tenant lease in late 1995.
MBS interest income decreased during the first quarter of 1996, as
compared the first quarter of 1995 due to large prepayments of principal
which took place through the first half of 1995. As interest rates rose
in 1995, these prepayments declined. During the same time period,
interest income earned on commercial paper investments has increased due
to higher average cash and cash equivalent balances.
In the first quarter of 1996, as compared to the first quarter of 1995,
operating and maintenance expenses increased due to adverse weather
conditions at the Partnership's properties increasing both utility
consumption and snow removal expenditures.
Depreciation expense increased in conjuction with the fixed assets
expenditures in 1995 and the first three months of 1996.
General
In accordance with Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which is effective for fiscal years beginning after December
15, 1995, the Partnership has implemented policies and practices for
assessing impairment of its real estate assets.
The investments in properties are carried at cost less accumulated
depreciation unless the General Partners believe there is a significant
impairment in value, in which case a provision to write down investments
in properties to fair value will be charged against income. At this time,
the General Partners do not believe that any assets of the Partnership are
significantly impaired.
KRUPP CASH PLUS LIMITED PARTNERSHIP
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
SIGNATURE
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 Cash Plus Limited Partnership
(Registrant)
By: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of The
Krupp Corporation, a General Partner.
Date: April 29, 1996