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, 1994
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 0-15816
Krupp Cash Plus-II Limited Partnership
Massachusetts 04-2915326
(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-II LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
June 30, December 31,
1994 1993
Real estate assets:
Multi-family apartment complex, less
accumulated depreciation of $3,452,915
and $3,240,614, respectively $ 6,554,241 $ 6,718,936
Retail centers, less accumulated depreciation
of $10,153,092 and $9,437,948, respectively 39,063,439 39,719,536
Investment in joint venture (Note 2) 21,619,286 21,737,592
Mortgage-backed securities ("MBS") (Note 5) 10,786,872 12,752,190
Total real estate assets 78,023,838 80,928,254
Cash and cash equivalents 7,341,569 5,622,515
Other assets 476,848 697,856
Total assets $85,842,255 $87,248,625
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 34,641 $ 162,516
Accrued expenses and other liabilities 670,486 586,197
Total liabilities 705,127 748,713
Partners' equity (Note 3) 85,137,128 86,499,912
Total liabilities and partners' equity $85,842,255 $87,248,625
The accompanying notes are an integral
part of the financial statements.
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1994 1993 1994 1993
Revenue:
Rental $1,481,044 1,588,245 $3,096,592 $3,125,914
Partnership's share of joint venture
net income (Note 2) 103,397 77,680 280,694 243,042
Interest income - MBS 245,152 372,360 513,750 765,576
Interest income - other 65,428 79,379 114,705 155,555
Total revenue 1,895,021 2,117,664 4,005,741 4,290,087
Expenses:
Operating (including reimbursements
to affiliates of $55,717, $55,717,
$111,435, and $111,435, respectively) 261,725 259,861 509,133 526,051
Maintenance 124,796 156,899 256,406 275,656
General and administrative (including
reimbursements to affiliates of
$90,097, $86,816, $176,837 and
$170,916, respectively) 130,581 129,445 243,131 247,297
Real estate taxes (Note 4) (39,908) 214,712 201,928 461,916
Management fees paid to an
affiliate 87,679 89,505 176,499 175,290
Depreciation 468,549 452,019 927,445 900,313
Total expenses 1,033,422 1,302,441 2,314,542 2,586,523
Net income $ 861,599 $ 815,223 $1,691,199 $1,703,564
Allocation of net income (Note 3):
Net income per Unit of Depositary
Receipt (7,499,718 Units
Outstanding) $ .11 $ .10 $ .22 $ .22
Corporate Limited Partner $ 11 $ 10 $ 22 $ 22
General Partners $ 17,232 $ 16,304 $ 33,824 $ 34,071
The accompanying notes are an integral
part of the financial statements.
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
1994 1993
Operating activities:
Net income $ 1,691,199 $ 1,703,564
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 927,445 900,313
Partnership's share of joint venture net income (280,694) (243,042)
Distributions received from joint venture 399,000 100,000
Amortization of net MBS (discount)/premium (545) 1,694
Decrease in other assets 221,008 263,331
Increase (decrease) in accounts payable (127,875) 16,441
Increase in accrued expenses and other liabilities 84,289 5,706
Net cash provided by operating activities 2,913,827 2,748,007
Investing activities:
Additions to fixed assets (106,653) (55,882)
Principal collections on MBS 1,965,863 2,830,370
Net cash provided by investing activities 1,859,210 2,774,488
Financing activity:
Distributions (3,053,983) (3,027,488)
Net increase in cash and cash equivalents 1,719,054 2,495,007
Cash and cash equivalents, beginning of period 5,622,515 8,331,685
Cash and cash equivalents, end of period $ 7,341,569 $10,826,692
The accompanying notes are an integral
part of the financial statements.
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KRUPP CASH PLUS-II 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-II 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, 1993 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, 1994 and its results of operations for
the three and six months ended June 30, 1994 and 1993 and cash
flows for the six months ended June 30, 1994 and 1993. Certain
prior year balances have been reclassified to conform with
current year financial statement presentation.
The results of operations for the three and six months ended
June 30, 1994 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) Investment in Joint Venture
Condensed financial statements of the Joint Venture are as
follows:
Brookwood Village Joint Venture
Condensed Balance Sheets
ASSETS
June 30, December 31,
1994 1993
Property, at cost $ 54,065,472 $53,961,916
Accumulated depreciation (11,668,729) (10,743,771)
42,396,743 43,218,145
Other assets 1,107,012 715,779
Total assets $ 43,503,755 $43,933,924
LIABILITIES AND PARTNERS' EQUITY
Total liabilities $ 265,183 $ 458,740
Partners' equity:
The partnership $ 21,619,286 $21,737,592
Joint venture partner 21,619,286 21,737,592
Total partners' equity 43,238,572 43,475,184
Total liabilities and partners' equity $ 43,503,755 $43,933,924
Continued
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(2) Investment in Joint Venture, Continued
Brookwood Village Joint Venture
Condensed Statements of Operations
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
Revenues $1,405,901 $1,346,422 2,928,886 $ 2,796,997
Property operating expenses (734,820) (730,095) (1,442,540) (1,398,121)
Income before
depreciation 671,081 616,327 1,486,346 1,398,876
Depreciation (464,287) (460,968) (924,958) (912,793)
Net income $ 206,794 $ 155,359 $ 561,388 486,083
Allocation of net income:
The partnership $ 103,397 $ 77,680 $ 280,694 $ 243,042
Joint venture partner 103,397 77,679 280,694 243,041
$ 206,794 $ 155,359 $ 561,388 486,083
(3) Changes in Partners' Equity (Deficit)
A summary of changes in partners' equity (deficit) for the six months
ended June 30, 1994 is as follows:
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
Balance at
December 31, 1993 $86,776,391 $1,362 $(277,841) $86,499,912
Net income 1,657,353 22 33,824 1,691,199
Distributions (3,012,209) (40) (41,734) (3,053,983)
Balance at
June 30, 1994 $85,421,535 $1,344 $(285,751) $85,137,128
(4) Real Estate Taxes
During the second quarter of 1994, the Partnership successfully
petitioned for the reassessment of the prior year real estate
taxes on Coral Plaza. The Partnership received a tax refund
for the 1987, 1988 and 1989 real estate tax years of
approximately $270,000.
Continued
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(5) MBS
At June 30, 1994, the Partnership's MBS Portfolio had a market
value of $11,083,000 and unrealized gains of $385,000 and
unrealized losses of $88,000. At December 31, 1993 the
Partnership's MBS Portfolio had a market value of $13,646,000.
The Partnership does not expect to realize these gains or
losses as it has the intention and ability to hold the MBS
until maturity.
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's liquidity is derived from the operations of the
Partnership's properties (Encino Oaks, Alderwood, Canyon Place, Coral
Plaza and Cumberland Glen), distributions from the Partnerships
interest in Brookwood Village Joint Venture, earnings and collections
on MBS and interest earned on its short-term investments. The source
of future liquidity to pay distributions to partners is expected to be
cash flow generated by the Partnership's MBS and real estate
investments. Sustaining the distribution rate is largely dependent
upon these items.
Management has found it necessary in recent years to pay a larger
share of tenant buildouts to attract quality tenants to our retail
centers. This policy has proven to be successful in increasing
occupancy and rental income at properties where it has been undertaken
and is expected to continue in 1994. In fact, two of the Partnership's
real estate investments are currently at full capacity and are expected
to remain so in 1994. In order to remain competitive in their
respective markets the Partnership's properties are budgeted to spend
$735,000 for capital improvements in 1994, while the Joint Venture is
scheduled to perform $1.1 million for capital renovations this year.
Principal collections on MBS continued at a high level for the
first half of 1994 because the mortgage interest rate environment has
increased refinancing activity, which in turn has led to prepayments
of the mortgages underlying the MBS. However, the present rise in
interest rates may result in a reduction in MBS principal prepayments
in the near future. For this reason, management will continue to
monitor liquidity levels to assure that acceptable working capital
levels are being maintained.
Continued
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
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 for the six months ended June 30, 1994 and the
period from inception to June 30, 1994.
(Rounded to $1,000 except per Unit amounts)
For the six months Inception to
Ended June 30, June 30,
1994 1994
Distributable Cash Flow:
Net income for tax purposes $ 1,839 $38,897
Items not requiring or
(not providing) the use of
operating funds:
Tax basis depreciation and
amortization 833 12,255
Acquisition expenses paid from
offering proceeds charged
to operations - 248
Partnership's share of joint venture
taxable net income (356) (4,316)
Distributions from Brookwood
Village Joint Venture 399 6,607
Additions to fixed assets (107) (1,452)
Amounts released from reserves
for capital improvements - 1,020
Total Distributable Cash Flow ("DCF") $ 2,608 $53,259
Limited Partners' Share of DCF $ 2,556 $52,194
Limited Partners' Share of DCF
per Unit $ .34 $ 6.96 (c)
General Partners' Share of DCF $ 52 $ 1,065
Net Proceeds from Capital
Transactions:
Principal collections on MBS 1,965 34,347
Reinvestment of MBS principal
collections $ - $(3,687)
Total Net Proceeds from Capital
Transactions $ 1,965 $30,660
Distributions:
Limited Partners $ 2,996(a) $84,815(b)
Limited Partners' Average
per Unit $ .40(a) $ 11.31(b)(c)
General Partners 52(a) 1,065(b)
Total Distributions $ 3,048(a) $85,880(b)
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
(a) Represents distributions paid in 1994, except the February
1994 distribution, which relates to 1993 cash flows and
includes an estimate of the distribution to be paid in August,
1994.
(b) Includes estimate of the distribution to be paid in August,
1994.
(c) Limited Partners average per Unit return of capital as of
August, 1994 is $4.35 [$11.31 - $6.96].
Operations
A. Partnership
Rental revenues decreased for the three and six months ended
June 30, 1994 as compared to the same period in 1993 due to a
bankruptcy filing of a tenant at Canyon Place in May. Currently
the plan of action by management at Canyon Place is to rearrange
some smaller tenants and allow the larger tenants to expand.
MBS interest income decreased for the three and six months ended
June 30, 1994 as compared to the same period in 1993 due to
scheduled and prepaid principal collections on the outstanding
principal balance which occurred throughout 1993 and 1994.
Other interest income has decreased for the three and six months
ended June 30, 1994 as compared to the same period in 1993 due
to lower average cash balances.
Total expenses for the three and six months ended June 30, 1994
as compared to the same period in 1993 remained relatively
stable with the exception of real estate taxes. Real estates
taxes decreased due to a refund of prior years real estate taxes
at Coral Plaza of approximately $270,000.
B. Joint Venture
Brookwood's revenues increased for the three and six months
ended June 30, 1994 as compared to the same period in 1993 due
to increases in occupancy. Revenues also increased due to
higher tenant reimbursements caused by the increase in operating
expenses which were associated with the increase in occupancy.
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KRUPP CASH PLUS-II LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Change 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
its behalf by the undersigned, thereunto duly authorized.
Krupp Cash Plus-II Limited Partnership
(Registrant)
BY: /s/Marianne Pritchard
Marianne Pritchard
Treasurer of The Krupp Corporation,
a General Partner
DATE: July 29, 1994
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