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, 1997
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
Masachusetts 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
The total number of pages in this document is 13.
PART I. FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS
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 CASH PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
Real estate assets:
Retail centers, less accumulated
depreciation of $17,840,903 and
$17,342,753, respectively $28,409,976 $28,908,119
Mortgage-backed securities ("MBS"),
net of accumulated amortization (Note 5) 4,318,582 4,373,246
Total real estate assets 32,728,558 33,281,365
Cash and cash equivalents (Note 2) 4,792,066 4,043,066
Other assets 619,628 616,379
Total assets $38,140,252 $37,940,810
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable $ 16,427 $ 46,238
Due to affiliates (Note 6) - 26,735
Accrued expenses and other
liabilities (Note 3) 1,380,044 843,385
Total liabilities 1,396,471 916,358
Partners' equity (deficit) (Note 4):
Limited Partners (4,000,000 Units
outstanding) 36,910,117 37,188,551
Corporate Limited Partner (100 Units
outstanding) 1,152 1,159
General Partners (167,488) (165,258)
Total Partners' equity 36,743,781 37,024,452
Total liabilities and Partners'
equity $38,140,252 $37,940,810
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,
1997 1996
Revenue:
Rental $1,452,013 $1,547,036
Interest income - MBS (Note 5) 91,910 106,385
Interest income - other 60,406 44,499
Total revenue 1,604,329 1,697,920
Expenses:
Operating (Note 6) 280,305 261,227
Maintenance 74,296 75,832
General and administrative (Note 6) 98,355 44,679
Real estate taxes 304,458 295,252
Management fees (Note 6) 71,645 62,499
Depreciation 498,150 492,917
Total expenses 1,327,209 1,232,406
Net income $ 277,120 $ 465,514
Allocation of net income (Note 4):
Unitholders (4,000,000 Units
outstanding) $ 271,571 $ 456,192
Net income per Unit of
Depositary Receipt $ .07 $ .11
Corporate Limited Partner
(100 Units outstanding) $ 7 $ 11
General Partners $ 5,542 $ 9,311
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,
1997 1996
Operating activities:
Net income $ 277,120 $ 465,514
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 498,150 492,917
Amortization of net MBS premium (discount) (150) 263
Changes in assets and liabilities:
Decrease (increase) in other assets (3,249) 54,055
Increase (decrease) in accounts payable 12,145 (6,093)
Decrease in due to affiliates (26,735) -
Increase in accrued expenses and other
liabilities 536,659 405,874
Net cash provided by operating activities 1,293,940 1,412,530
Investing activities:
Additions to fixed assets - (226,086)
Increase (decrease) in accounts payable
for fixed asset additions (41,963) 7,000
Principal collections on MBS 54,814 242,130
Net cash provided by investing activities 12,851 23,044
Financing activity:
Distributions (557,791) (549,550)
Net increase in cash and cash equivalents 749,000 886,024
Cash and cash equivalents, beginning of period 4,043,066 2,841,353
Cash and cash equivalents, end of period $4,792,066 $3,727,377
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 Annual Report on Form 10-K for the year
ended December 31, 1996 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,
1997, and its results of operations and cash flows for
the three months ended March 31, 1997 and 1996.
The results of operations for the three months ended
March 31, 1997 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)Cash and Cash Equivalents
Cash and cash equivalent consisted of the following:
March 31, December 31,
1997 1996
Cash and money market accounts $ 835,658 $ 579,264
Commercial paper 3,956,408 3,463,802
$4,792,066 $4,043,066
At March 31, 1997, commercial paper represents
corporate issues complying with Section 6.2(a) of the
Partnership Agreement purchased through a corporate
issuer maturing in the second quarter of 1997. At
March 31,1997, the carrying value of the Partnership's
investment in commercial paper approximates fair
value.
(3)Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of
the following:
March 31, December 31,
1997 1996
Accrued real estate taxes $ 553,654 $582,835
Deferred income and other accrued
expenses 770,262 211,606
Tenant security deposits 48,356 48,944
$1,372,272 $843,385
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(4)Changes in Partners' Equity
A summary of changes in Partners' equity (deficit) for
the three months ended March 31, 1997 is as follows:
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
Balance at December 31, 1996 $37,188,551 $1,159 $(165,258) $37,024,452
Net income 271,571 7 5,542 277,120
Distributions (550,005) (14) (7,772) (557,791)
Balance at March 31, 1997 $36,910,117 $1,152 $(167,488) $36,743,781
The distributions payable to the General Partners
totaled $7,772 and were included in accrued expenses
and other liabilities at March 31, 1997.
(5)Mortgage Backed Securities
The MBS held by the Partnership are issued by the
Federal Home Loan Mortgage Corporation and the
Government National Mortgage Association. The
following is additional information on the MBS held:
March 31, December 31,
1997 1996
Face Value $4,303,148 $4,357,962
Amortized Cost $4,318,582 $4,373,246
Estimated Market Value $4,415,000 $4,516,000
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 $96,000 and $143,000 at March 31,
1997 and December 31, 1996, respectively. The
Partnership does not expect to realize these gains as
it has the ability to hold the MBS until maturity.
(6)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 the rate of up
to 6% of the gross receipts, net of leasing
commissions from commercial 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.
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(6)Related Party Transactions, Continued
Amounts accrued or paid to the General Partners or
their affiliates were as follows:
For the Three Months
Ended March 31,
1997 1996
Property management
fees $ 71,645 $ 62,499
Expense
reimbursements 87,320 73,780
Charged to
operations $158,965 $136,279
Due to affiliates consisted of expense reimbursements
of $26,735 at December 31, 1996.
KRUPP CASH PLUS LIMITED PARTNERSHIP
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
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'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 continuously strives to improve
occupancy and retain quality tenants at its retail
centers. However, to attain these objectives,
management has found it necessary to fund a
significant portion of tenant build-outs.
The Partnership completed improvements at High Point
National Furniture Mart ("High Point") which were
necessary to reconfigure space for new tenants and
comply with present building code standards. In 1996,
renovations to show rooms of the building were
completed, along with upgrades to the elevator system.
The refurbished show room spaces have enabled the
property to command higher rents and maintain 100%
occupancy.
At Tradewinds Shopping Center ('Tradewinds'),
management has negotiated the expansion of an anchor
tenant from its existing 50,181 square foot space to
66,000 square feet. The Partnership and the tenant
each intend to spend approximately $4,200,000 for the
buildout. The Partnership's portion will primarily
fund exterior improvements, while the tenant's portion
will mainly fund interior renovation specifications.
Completion of the project is scheduled for the fourth
quarter of 1997. The new lease agreement with the
anchor tenant includes a significant increase in lease
rent which will favorably impact Partnership
liquidity. In order to fund the expansion, the
Partnership plans to utilize its cash reserves as well
as any proceeds received from the possible financing
of its mortgage backed securities portfolio in 1997.
At Luria's Plaza, the Partnership is planning to spend
approximately $116,000 for capital improvements in
1997, most of which are tenant buildouts which the
General Partners believe are necessary to maintain or
increase its current occupancy level.
The Partnership holds MBS that are guaranteed by the
Government National Mortgage Association ("GNMA") and
the Federal Home Loan Mortgage Corporation ("FHLMC").
The principal risks with respect to 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. Currently, 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.
In order to fund the capital improvements noted above,
the General Partners, on an ongoing basis, assess the
current and future liquidity needs in determining
the levels of working capital reserves the Partnership
should maintain. Adjustments to distributions are
made when appropriate to reflect such assessments.
Based on current assessments, the General Partners
have determined
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
Liquidity and Capital Resources, Continued
that retaining the current annualized distribution
rate of $0.55 per Unit will allow the Partnership to
maintain adequate reserves.
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
Distributable Cash Flow and Net Proceeds from Capital
Transactions
Shown below is the calculation of Distributable Cash
Flow and Net Proceeds from Capital Transactions as
defined by Section 17 of the Partnership Agreement for
the three months ended March 31, 1997 and the period
from inception through March 31, 1997. The General
Partners provide 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 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,
1997 1997
Distributable Cash Flow:
Net income for tax purposes $ 360 $ 24,016
Items providing / not requiring or
(not providing)the use of
operating funds:
Tax basis depreciation and
amortization 427 18,642
Interest income on note receivable - (371)
Gain on sale of assets - (1,686)
Additions to fixed assets - (8,770)
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") $ 787 $ 32,499
Unitholders' Share of DCF $ 771 $ 31,849
Unitholders' Share of DCF per Unit $ .19 $ 7.96(d)
General Partners' Share of DCF $ 16 $ 650
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 55 $ 15,286
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 $ 55 $ 26,521
Distributions:
Unitholders $ 550(a) $ 56,533(b)(d)
Unitholders' Average per Unit $ .14(a) $ 14.13(b)(c)(d)
General Partners $ 16(a) $ 649(b)
Total Distributions $ 566(a) $ 57,182(b)(c)
(a)Represents an estimate of the distribution to be
paid in May, 1997.
(b)Includes an estimate of the distribution to be paid
in May, 1997.
(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, 1997 is $6.17 [$14.13 - $7.96].
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
Operations
Distributable Cash Flow increased during the three
months ended March 31, 1997, as compared to the three
months ended March 31, 1996, due to a decrease in
capital improvements partially offset by a decrease in
net income.
The Partnership experienced a decrease in net income
during the first three months of 1997, as compared to
the same period in 1996, due to a decrease in revenue
and an increase in expenses. Rental revenue decreased
primarily due to the decline in average occupancy at
Tradewinds, from 93% to 80% for the first quarter of
1996 and 1997, respectively. The decline in occupancy
primarily relates to the spaces which will be vacant
during the expansion of the anchor tenant. MBS
interest income decreased due to the repayment and
prepayments of principal which occur on the MBS
portfolio. These decreases are partially offset by an
increase in interest income as a result of higher cash
and cash equivalents available for investment.
In comparing the three months ended March 31, 1997 to
the same period in 1996, general and administrative
expense increased due to the increase in legal,
mailing and printing costs relating to the
Partnership's response to the recent unsolicited
tender offer made to purchase Partnership Units. In
addition, increased charges were incurred in
connection with the preparation and mailing of
Partnership reports and other investor communications.
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
SeniorSecurities
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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of The Krupp Corporation, a
General Partner.
Date: April 29, 1997