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 September 30, 1998
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 12.
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
(Unaudited)
September 30,December 31,
1998 1997
Real estate assets:
Retail centers (Note 3) $ - $26,544,659
Mortgage-backed securities ("MBS"), net
of accumulated amortization and
unrealized holding gains (Note 6) - 3,797,789
Total real estate assets - 30,342,448
Cash and cash equivalents (Note 2) 6,865,705 1,021,686
Other assets 93,989 566,679
Total assets $ 6,959,694 $31,930,813
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses and other liabilities (Note 4)$47,966 $ 857,671
Partners' equity (deficit) (Note 5):
Unitholders (4,000,000 Units outstanding) 7,193,886 31,186,226
Corporate Limited Partner (100 Units
outstanding) 409 1,009
General Partners (282,567) (283,614)
Unrealized holding gains on MBS (Note 6) - 169,521
Total Partners' equity 6,911,728 31,073,142
Total liabilities and Partners'
equity $ 6,959,694 $31,930,813
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
Revenue:
Rental $ - $1,345,323 $ 579,497$4,250,279
Interest income - MBS
(Note 6) - 82,083 84,033 260,807
Interest income - other135,724 74,551 769,020 202,068
Total revenue 135,724 1,501,957 1,432,550 4,713,154
Expenses:
Operating (Note 7) - 225,248 410,157 841,432
Maintenance - 66,242 37,486 219,405
General and administra-
tive (Note 7) 81,215 73,600 227,336 273,217
Real estate taxes - 257,426 86,038 808,694
Management fees (Note 7) - 74,350 24,736 216,188
Depreciation - 522,376 - 1,527,788
Total expenses 81,215 1,219,242 785,753 3,886,724
Income before gain on
sale of properties and
MBS 54,509 282,715 646,797 826,430
Gain on sale of
properties (Note 3) - - 2,937,806 -
Gain on sale of
MBS (Note 6) - - 186,092 -
Net income $ 54,509 $ 282,715 $3,770,695$ 826,430
Allocation of net income
(Note 5):
Unitholders (4,000,000
Units outstanding):
Income before gain
on sale of properties
and MBS $ 53,417 $ 277,054 $ 633,845$ 809,881
Gain on sale of
properties - - 2,937,733 -
Gain on sale of MBS - - 186,087 -
Net income $ 53,417 $ 277,054 $3,757,665 $ 809,881
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
Per Unit of Depositary
Receipt:
Income before gain on sale of properties
and MBS $ .01 $ .07 $ .16 $ .20
Gain on sale of
properties - - .73 -
Gain on sale of MBS - - .05 -
Net income $ .01 $ .07 $ .94$ .20
Corporate Limited Partner
(100 Units outstanding):
Income before gain on
sale of properties
and MBS $ 1 $ 7 $ 16$ 20
Gain on sale of
properties - - 73 -
Gain on sale of MBS - - 5 -
Net income $ 1 $ 7 $ 94$ 20
General Partners:
Income before gain on
sale of properties
and MBS $ 1,091 $ 5,654 $ 12,936$ 16,529
Gain on sale of
properties - - - -
Gain on sale of MBS - - - -
Net income $ 1,091 $ 5,654 $ 12,936$ 16,529
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
1998 1997
Operating activities:
Net income $ 3,770,695 $ 826,430
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation - 1,527,788
Amortization of MBS premium, net - 1,885
Gain on sale of MBS (186,092) -
Gain on sale of properties (2,937,806) -
Changes in assets and liabilities:
Decrease (increase) in other assets 390,418 (115,716)
Decrease in due to affiliates - (26,735)
Increase (decrease) in accrued expenses
and other liabilities (809,705) 587,344
Net cash provided by operating
activities 227,510 2,800,996
Investing activities:
Additions to fixed assets (620,948) (731,821)
Decrease in accrued expenses and other
liabilities for fixed asset additions - (42,759)
Principal collections on MBS 231,292 502,081
Proceeds from sale of MBS 3,583,068 -
Proceeds from sale of properties, net 30,185,685 -
Net cash provided by (used in)
investing activities 33,379,097 (272,499)
Financing activity:
Distributions (27,762,588) (1,687,326)
Net increase in cash and cash equivalents 5,844,019 841,171
Cash and cash equivalents, beginning of period 1,021,686 4,043,066
Cash and cash equivalents, end of period $ 6,865,705 $ 4,884,237
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, 1997
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
necessary to present fairly the Partnership's
financial position as of September 30, 1998,
its results of operations for the three and
nine months ended September 30, 1998 and 1997
and its cash flows for the nine months ended
September 30, 1998 and 1997.
The results of operations for the three and
nine months ended September 30, 1998 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:
September 30, December 31,
1998 1997
Cash and money market accounts $ 893,347 $ 1,021,686
Commercial paper 5,972,358 -
$ 6,865,705 $ 1,021,686
(3)Sale of Properties
On January 30, 1998, the Partnership sold its remaining properties
to unaffiliated third parties. The Partnership's properties were
included in a package with eleven other properties owned by
affiliates of the General Partners. The total selling price of the
fourteen properties was $138,000,000, of which the Partnership
received $31,247,100, less its share of closing costs of
$1,061,415. For financial reporting purposes, the Partnership
realized a gain of $2,937,806 on the sale. The gain was calculated
as the difference between the properties' selling prices less net
book value of the properties and closing costs.
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(4) Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the
following:
September 30, December 31,
1998 1997
Accrued real estate taxes $ - $ 588,000
Deferred income and other accrued
expenses 47,841 214,043
Tenant security deposits - 55,293
Accounts payable 125 335
$ 47,966 $ 857,671
(5) Changes in Partners' Equity
A summary of changes in Partners' equity (deficit) for the nine
months ended September 30, 1998 is as follows:
Unrealized
Corporate Holding
Limited General Gains
Unitholders Partner Partners on MBS Total
Balance at
December 31, 1997 $31,186,226 $ 1,009 $(283,614)$169,521 $31,073,142
Income before gains on
sale of properties
and MBS 633,845 16 12,936 - 646,797
Unrealized holding
gains on MBS - - - (169,521) (169,521)
Gain on sale of
properties 2,937,733 73 - - 2,937,806
Gain on sale of MBS 186,087 5 - - 186,092
Distributions:
Operations (550,004) (14) (11,889) - (561,907)
Capital Transaction (27,200,001) (680) - - (27,200,681)
Balance at
September 30, 1998 $ 7,193,886 $ 409 $(282,567) - $ 6,911,728
Continued
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(6)Mortgage Backed Securities
On April 29, 1998, the General Partners sold
the Partnership's MBS portfolio to
unaffiliated third parties for $3,583,068.For
financial reporting purposes, the Partnership
recognized a gain of $186,092 on the sale.
The gain was calculated as the difference
between the selling price and net book value
of the MBS.
The MBS held by the Partnership were issued by
the Federal Home Loan Mortgage Corporation and
the Government National Mortgage Association.
At December 31, 1997, the MBS had a total face
value, amortized cost and estimated market
value of $3,785,509, $3,628,268 and
$3,798,000, respectively. Coupon rates of the
MBS ranged from 8.5% to 9.0% per annum and
were scheduled to mature in the years 2008
through 2017. At December 31, 1997, the
Partnership's MBS portfolio had unrealized
holding gains of $169,521 on its MBS
investments to adjust to market value, based
on quoted market prices.
(7)Related Party Transactions
The Partnership paid property management fees
to an affiliate of the General Partners for
management services. Payment of these fees
ended in conjunction with the sale of the
Partnership's properties on January 30, 1998
(see Note 3). Pursuant to the agreements,
management fees were payable monthly at a rate
of up to 6% of the gross receipts, net of
leasing commissions, from commercial
properties under management. The Partnership
continues to reimburse affiliates of the
General Partners for certain expenses incurred
in connection with the operation of the
Partnership, including administrative
expenses.
Amounts accrued or paid to the General
Partners' affiliates were as follows:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
Property management fees$ - $ 74,350 $ 24,736 $216,188
Expense reimbursements 60,756 96,490 214,911 284,095
Charged to operations $ 60,756 $170,840 $239,647 $500,283
In addition to the amounts above, costs
paid to the General Partners'
affiliates associated with the sale of the
Partnership's remaining
properties were $250,667 during the nine
months ended September 30, 1998.
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
Based upon the General Partners' assessment of
the current and future market conditions, the
capital improvements necessary to remain
competitive in the properties' markets and the
Partnership's capital resources, the General
Partners determined that it was in their best
interests, and that of their respective
investors, to sell all the Partnership's
properties. On January 30, 1998, the
Partnership sold all of its properties to
unaffiliated third parties. The properties
were included in a package with eleven other
properties owned by affiliates of the General
Partners. The total selling price of the
fourteen properties was $138,000,000, of which
the Partnership received $31,247,100 for the
sale of its properties, less its share of the
closing costs of $1,061,415 (see Note 3). The
sale of the properties is considered a
Terminating Capital Transaction, as defined by
the Partnership Agreement.
On May 15, 1998, the Partnership made a
special distribution of $6.80 per Unit based
upon approximately 80% of the proceeds of the
sale and estimated liquidation value of
remaining Partnership assets. Once all
necessary reserves and contingent liabilities
are funded, the remaining proceeds will be
distributed. All Partnership affairs are
expected to be completed by year-end.
The Partnership held MBS that were guaranteed
by the Government National Mortgage
Association and the Federal Home Loan Mortgage
Corporation. On April 29, 1998, the General
Partners sold the Partnership's MBS portfolio
to unaffiliated third parties. For financial
reporting purposes, the Partnership recognized
a gain of $186,092 from the sale. At December
31, 1997, the Partnership recorded unrealized
holding gains on its MBS of $169,521 to adjust
the investments to market value (see Note 6).
KRUPP CASH PLUS LIMITED PARTNERSHIP
Operations
The following discussion relates to the
operations of the Partnership for the three
and nine months ended September 30, 1998 and
1997. The sale of the Partnership's
properties (High Point National Furniture
Mart, Tradewinds Shopping Center and Luria's
Plaza) on January 30, 1998, and the sale of
the Partnerships' MBS portfolio on April 29,
1998, significantly impacts the comparability
of the Partnership's operations between the
periods.
Net income for the three and nine months ended
September 30, 1998 as compared to the three
and nine months ended September 30, 1997, net
of activity of the Partnership's sold
properties and MBS portfolio, increased as
total revenue increased and total expenses
decreased. Total revenue increased due to
higher average cash and cash equivalent
balances available for investment, as a result
of proceeds received from the sale of the
Partnership's properties and MBS portfolio.
Total expenses for the three and nine months
ended September 30, 1998, net of activity of
the Partnership's sold properties, decreased
when compared to the same periods in 1997, due
to a decrease in general and administrative
expense. This decrease is primarily the
result of legal costs incurred in 1997 which
related to unsolicited tender offers to
purchase Units of Depositary Receipts.
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: November 10, 1998