UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30,1997
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
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
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
June 30, December 31,
1997 1996
Real estate assets:
Retail centers, less accumulated
depreciation of $18,348,165 and
$17,342,753, respectively $27,993,786 $28,908,119
Mortgage-backed securities ("MBS"), net
of accumulated amortization (Note 5) 4,078,311 4,373,246
Total real estate assets 32,072,097 33,281,365
Cash and cash equivalents (Note 2) 4,774,801 4,043,066
Other assets 726,150 616,379
Total assets $37,573,048 $37,940,810
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable $ 32,376 $ 46,238
Due to affiliates (Note 6) - 26,735
Accrued expenses and other liabilities
(Note 3) 1,096,060 843,385
Total liabilities 1,128,436 916,358
Partners' equity (deficit) (Note 4):
Unitholders (4,000,000 Units outstanding)36,621,367 37,188,551
Corporate Limited Partner (100 Units
outstanding) 1,144 1,159
General Partners (177,899) (165,258)
Total Partners' equity 36,444,612 37,024,452
Total liabilities and Partners'
equity
$37,573,048 $37,940,810
The accompanying notes are an integral
part of the financial statements.
>page>
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Revenue:
Rental $1,452,943 $1,471,040 $2,904,956$3,018,076
Interest income - MBS
(Note 5) 86,814 100,160 178,724 206,545
Interest income - other 67,111 51,235 127,517 95,734
Total revenue 1,606,868 1,622,435 3,211,197 3,320,355
Expenses:
Operating (Note 6) 335,879 332,833 616,184 594,060
Maintenance 78,867 82,361 153,163 158,193
General and administra-
tive (Note 6) 101,262 27,264 199,617 71,943
Real estate taxes 246,810 293,355 551,268 588,607
Management fees (Note 6) 70,193 81,585 141,838 144,084
Depreciation 507,262 512,833 1,005,412 1,005,750
Total expenses 1,340,273 1,330,231 2,667,482 2,562,637
Net income $ 266,595 $ 292,204 $ 543,715$ 757,718
Allocation of net income
(Note 4):
Unitholders (4,000,000
Units outstanding)$ 261,256 $ 286,353 $ 532,827$ 742,545
Net income per Unit of
Depositary Receipt$ .06 $ .08 $ .13$ .19
Corporate Limited
Partner (100 Units
outstanding) $ 6 $ 8 $ 13$ 19
General Partners $ 5,333 $ 5,843 $ 10,875$ 15,154
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
1997 1996
Operating activities:
Net income $ 543,715 $ 757,718
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,005,412 1,005,750
Amortization of MBS premium, net 961 994
Changes in assets and liabilities:
Decrease (increase) in other assets (109,771) 11,324
Decrease in accounts payable (3,298) (3,558)
Decrease in due to affiliates (26,735) -
Increase in accrued expenses and other
liabilities 252,675 224,425
Net cash provided by operating
activities 1,662,959 1,996,653
Investing activities:
Increase in other investments - (492,256)
Additions to fixed assets (91,079) (421,274)
Decrease in accounts payable for fixed
asset additions (10,564) -
Principal collections on MBS 293,974 453,882
Net cash provided by (used in)
investing activities 192,331 (459,648)
Financing activity:
Distributions
(1,123,555) (1,110,841)
Net increase in cash and cash equivalents 731,735 426,164
Cash and cash equivalents, beginning of period 4,043,066 2,841,353
Cash and cash equivalents, end of period $ 4,774,801 $ 3,267,517
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 June 30, 1997, its
results of operations for the three and six
months ended June 30, 1997 and 1996 and its
cash flows for the six months ended June 30,
1997 and 1996.
The results of operations for the three and
six months ended June 30, 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 equivalents consisted of the
following:
June 30, December 31,
1997 1996
Cash and money market accounts $ 819,008 $ 579,264
Commercial paper 3,955,793 3,463,802
$4,774,801 $ 4,043,066
At June 30, 1997, commercial paper represents
corporate issues complying with Section 6.2(a)
of the Partnership Agreement purchased through
a corporate issuer maturing in the third
quarter of 1997. At June 30, 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:
June 30, December 31,
1997 1996
Accrued real estate taxes $ 802,013 $ 582,835
Deferred income and other accrued
expenses 236,620 211,606
Tenant security deposits 57,427 48,944
$ 1,096,060 $ 843,385
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - Continued
(4)Changes in Partners' Equity
A summary of changes in Partners' equity
(deficit) for the six months ended June 30,
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 532,827 13 10,875 543,715
Distributions (1,100,011) (28) (23,516) (1,123,555)
Balance at June 30, 1997$36,621,367$ 1,144$(177,899)$36,444,612
(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.
Additional information on the MBS held is as
follows:
June 30, December 31,
1997 1996
Face Value $4,063,988 $4,357,962
Amortized Cost $4,078,311 $4,373,246
Estimated Market Value $4,225,000 $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
$147,000 and $143,000 at June 30, 1997 and
December 31, 1996, respectively. The
Partnership does not expect to realize these
gains as it currently 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 a 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 For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Property management fees$70,193 $81,585 $141,838 $144,084
Expense reimbursements 100,285 65,697187,605 139,477
Charged to operations $170,478 $147,282 $329,443 $283,561
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 net income, maintain high occupancy
and retain quality tenants at its retail
centers. However, to attain these objectives,
the Partnership 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
showrooms of the building were completed,
along with upgrades to the elevator system.
The refurbished showroom spaces have enabled
the property to command higher rents and
maintain 100% occupancy. In 1997, the
Partnership is planning to spend approximately
$217,000 for improvements, most of which are
enhancements to the exteriors of the building.
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
mainly 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 $120,000 for capital
improvements in 1997, most of which are tenant
build-outs which the General Partners believe
are necessary to maintain or increase its
current occupancy level.
Liquidity provided by the MBS is derived
primarily from interest income, scheduled
principal payments and prepayments of the
portfolio. The level of prepayments is
contingent upon the interest rate environment,
which in turn, affects the Partnership's
liquidity.
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
Liquidity and Capital Resources - Continued
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 market interest rate risk is minimal due
to the fact that the Partnership has the
ability to hold these securities to maturity.
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 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 six months
ended June 30, 1997 and the period from
inception through June 30, 1997. The General
Partners provide the information below to meet
requirements of the Partnership Agreement.
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 Six MonthsInception to
Ended June 30, June 30,
1997 1997
Distributable Cash Flow:
Net income for tax purposes $ 712 $ 24,368
Items providing/not requiring or
(not providing) the use of operating funds:
Tax basis depreciation and amortization 854 19,069
Interest income on note receivable - (371)
Gain on sale of assets - (1,686)
Additions to fixed assets (91) (8,861)
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") $1,475 $ 33,187
Unitholders' Share of DCF $1,445 $ 32,523
Unitholders' Share of DCF per Unit $ .36 $ 8.13 (d)
General Partners' Share of DCF $ 30 $ 664
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 295 $ 15,526
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 $ 295 $ 26,761
Distributions:
Unitholders $1,100 (a) $ 57,083 (b)(c)
Unitholders' Average per Unit $ .28 (a) $ 14.28 (b)(c)(d)
General Partners $ 30 (a) $ 663 (b)
Total Distributions $1,130 (a) $ 57,746 (b)(c)
(a) Represents distributions to be paid in 1997, including an
estimate of the distribution to be paid in August, 1997.
(b) Includes an estimate of the distribution to be paid in
August, 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 of
record on May 31, 1990.
(d) Unitholders' average per Unit return of capital as of
August, 1997 is $6.15 [$14.28-$8.13].
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
Operations
Distributable Cash Flow increased during the
six months ended June 30, 1997, as compared to
the six months ended June 30, 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 three and six months ended
June 30, 1997 when compared to the same
periods in 1996 as revenue remained stable and
expenses increased.
Total revenue for the three and six months
ended June 30, 1997 as compared to the same
periods in 1996 remained relatively stable, as
the decreases in rental revenue and MBS
interest income were offset by the increase in
interest income. The decline in rental
revenue primarily results from the spaces
which will be vacant during the expansion of
Dominicks, an anchor tenant at Tradewinds. To
facilitate the expansion of Dominicks,
management negotiated the termination of the
Walgreens's lease effective December 31, 1996.
As a result, rental revenue has decreased in
1997 as compared to 1996. The decrease in MBS
interest income is a result of repayments and
prepayments of principal which occur on the
MBS portfolio throughout the year. Interest
income increased as a result of higher cash
and cash equivalents available for
investments.
Total expenses increased for the three and six
months ended June 30, 1997 as compared to the
same periods in 1996 as the increase in
general and administrative expenses more than
offset the decrease in real estate taxes.
General and administrative expenses increased
as costs incurred in connection with the
operation of the Partnership, including the
preparation of reports and other
communications to the Unitholders, increased
as did legal costs relating to the unsolicited
tender offers made to purchase Units of
Depositary Receipts. The decrease in real
estate tax expense is due to a revised
estimate of Tradewinds's 1996 real estate
taxes.
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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting Officer of The
Krupp Corporation, a General Partner.
Date: August , 1997