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, 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
September 30, December 31,
1994 1993
Real estate assets:
Multi-family apartment complex, less
accumulated depreciation of $3,563,144
and $3,240,614, respectively $ 6,501,638 $ 6,718,936
Retail centers, less accumulated depreciation
of $10,533,515 and $9,437,948, respectively 38,811,394 39,719,536
Investment in joint venture (Note 2) 21,478,147 21,737,592
Mortgage-backed securities ("MBS") (Note 5) 10,368,687 12,752,190
Total real estate assets 77,159,866 80,928,254
Cash and cash equivalents 7,411,342 5,622,515
Other assets 462,169 697,856
Total assets $85,033,377 $87,248,625
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 33,801 $ 162,516
Accrued expenses and other liabilities 769,781 586,197
Total liabilities 803,582 748,713
Partners' equity (Note 3) 84,229,795 86,499,912
Total liabilities and partners' equity $85,033,377 $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 Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Revenue:
Rental $1,541,131 $1,604,378 $4,637,723 $4,730,292
Partnership's share of joint
venture net income (Note 2) 133,861 167,906 414,555 410,948
Interest income - MBS 232,702 321,756 746,452 1,087,332
Interest income - other 82,575 93,367 197,280 248,922
Total revenue 1,990,269 2,187,407 5,996,010 6,477,494
Expenses:
Operating (including reimbursements
to affiliates of $56,692,
$56,354, $172,070 and
$168,523, respectively) 289,102 248,945 798,235 775,144
Maintenance 174,800 109,814 431,206 385,322
General and administrative
(including reimbursements to
affiliates of $86,377, $86,377,
$259,271 and $256,559,
respectively) 108,050 118,098 351,181 365,395
Real estate taxes (Note 4) 222,461 253,096 424,389 715,012
Management fees paid to
affiliates 85,557 90,583 262,056 265,873
Depreciation 490,653 456,583 1,418,098 1,356,896
Total expenses 1,370,623 1,277,119 3,685,165 3,863,642
Net income $ 619,646 $ 910,288 $2,310,845 $2,613,852
Allocation of net income (Note 3):
Net income per Unit of
Depository Receipt (7,499,818
Units outstanding) $ .08 $ .12 $ .30 $ .34
Corporate Limited Partner $ 8 $ 12 $ 30 $ 34
General Partners $ 12,393 $ 18,206 $ 46,217 $ 52,277
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 Nine Months Ended
September 30,
1994 1993
Operating activities:
Net income $2,310,845 $2,613,852
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,418,098 1,356,896
Partnership's share of joint venture net income (414,555) (410,948)
Distributions received from joint venture 674,000 325,000
Amortization of MBS (discount)/premium, net (1,704) 2,084
Decrease in other assets 235,687 192,737
Decrease in accounts payable (128,715) (113,432)
Increase in accrued expenses and other liabilities 183,584 157,138
Net cash provided by operating activities 4,277,240 4,123,327
Investing activities:
Additions to fixed assets (292,658) (154,178)
Principal collections on MBS 2,385,207 4,840,914
Net cash provided by investing activities 2,092,549 4,686,736
Financing activity:
Distributions (4,580,962) (4,546,503)
Net increase in cash and cash equivalents 1,788,827 4,263,560
Cash and cash equivalents, beginning of period 5,622,515 8,331,685
Cash and cash equivalents, end of period $7,411,342 $12,595,245
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 only of normal recurring accruals) necessary to present
fairly the Partnership's financial position as of September 30,
1994, its results of operations for the three and nine months ended
September 30, 1994 and 1993 and its cash flows for the nine months
ended September 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 nine months ended
September 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
September 30, December 31,
1994 1993
Property, at cost $ 54,611,119 $53,961,916
Accumulated depreciation (12,167,340) (10,743,771)
42,443,779 43,218,145
Other assets 1,185,385 715,779
Total assets $ 43,629,164 $43,933,924
LIABILITIES AND PARTNERS' EQUITY
Total liabilities $ 672,870 $ 458,740
Partners' equity:
The Partnership 21,478,147 21,737,592
Joint venture partner 21,478,147 21,737,592
Total partners' equity 42,956,294 43,475,184
Total liabilities and partners' equity $ 43,629,164 $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 Month For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Revenues $1,537,758 $1,560,356 $ 4,466,644 $ 4,357,353
Property operating expenses (771,426) (749,843) (2,213,966) (2,147,964)
Income before
depreciation 766,332 810,513 2,252,678 2,209,389
Depreciation (498,611) (474,700) (1,423,569) (1,387,493)
Net income $ 267,721 $ 335,813 $ 829,109 $ 821,896
Allocation of net income:
The Partnership $ 133,861 $ 167,907 $ 414,555 $ 410,948
Joint venture partner 133,860 167,906 414,554 410,948
$ 267,721 $ 335,813 $ 829,109 $ 821,896
(3) Changes in Partners' Equity
A summary of changes in partners' equity (deficit) for the nine months
ended September 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 2,264,598 30 46,217 2,310,845
Distributions (4,512,153) (60) (68,749) (4,580,962)
Balance at
September 30, 1994 $84,528,836 $ 1,332 $(300,373) $84,229,795
(4) Real Estate Taxes
During the second quarter of 1994, the Partnership successfully
petitioned for the reassessment of prior years' 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.
(5) MBS
At September 30, 1994, the Partnership's MBS portfolio had a
market value of $10,638,224 and unrealized gains and losses of
approximately $380,000 and $111,000, respectively and with
maturity dates ranging from 2008 to 2017. 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, and
earnings and collections on MBS and interest earned on its short-
term investments. The Partnership's liquidity is utilized to pay
operating costs and to fund distributions to the partners. The
source of future liquidity to pay operating costs and distributions
to partners is expected to be cash flow generated by the
Partnership's MBS and real estate investments.
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 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
anticipated to spend $701,000 for capital improvements in 1994,
while the Joint Venture is scheduled to perform $1 million for
capital renovations this year.
The present rise in interest rates have resulted in a reduction
in principal collections on MBS in the third quarter of 1994.
Currently, management considers there to be sufficient levels of
working capital.
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 nine months ended September
30, 1994 and the period from inception to September 30, 1994.
(In $1,000's except per Unit amounts)
For the nine months Inception to
Ended September 30, September 30,
1994 1994
Distributable Cash Flow:
Net income for tax purposes $ 2,635 $39,693
Items not requiring or
(not providing) the use of
operating funds:
Tax basis depreciation and
amortization 1,250 12,672
Acquisition expenses paid from
offering proceeds charged
to operations - 248
Partnership's share of joint venture
taxable net income (609) (4,568)
Distributions from Brookwood
Village Joint Venture 674 6,882
Additions to fixed assets (293) (1,638)
Amounts released from reserves
for capital improvements - 1,020
Total Distributable Cash Flow ("DCF") $ 3,657 $54,309
Limited Partners' Share of DCF $ 3,584 $53,223
Limited Partners' Share of DCF
per Unit $ .48 $ 7.10 (c)
General Partners' Share of DCF $ 73 $ 1,086
Net Proceeds from Capital
Transactions:
Principal collections on MBS 2,383 34,765
Reinvestment of MBS principal
collections $ - $(3,687)
Total Net Proceeds from Capital
Transactions $ 2,383 $31,078
Distributions:
Limited Partners $ 4,512(a) $86,330(b)
Limited Partners' Average
per Unit $ .60(a) $ 11.51(b)(c)
General Partners 73(a) 1,086(b)
Total Distributions $ 4,585(a) $87,416(b)
Continued
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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
November, 1994.
(b) Includes estimate of the distribution to be paid in November,
1994.
(c) Limited Partners average per Unit return of capital as of
November, 1994 is $4.41 [$11.51 - $7.10].
Operations
A. Partnership
Rental revenues for the three and nine months ended September
30, 1994 as compared to the same periods in 1993 have decreased
slightly despite a promising performance by Cumberland Glen so
far in 1994. The decrease in revenues is primarily due to a
bankruptcy filing of a 15,000 square foot national tenant at
Canyon Place in the third quarter of 1993 and a reduction in
rental rates at Encino as market conditions have tightened.
Management's plan of action for Canyon since the bankruptcy has
been to rearrange some smaller tenants and allow the larger
tenants to expand. As a result, occupancy at Canyon for the
nine months ended September 30, 1994 as compared to the same
period in 1993 has increased from 83% to 85%. Currently, both
Alderwood and Encino are at full occupancy and are expected to
stay at full occupancy for the remainder of the year.
MBS interest income decreased for the three and nine months
ended September 30, 1994 as compared to the same periods in 1993
due to large prepayments of principal which occurred throughout
1993 and 1994. These prepayments were due to a decline in
interest rates in 1993 and through the first half of 1994.
Interest earned on other investments has decreased due to lower
average cash balances.
Total expenses for the three months ended September 30, 1994 as
compared to the same periods in 1993 have remained relatively
stable with the exception of maintenance. The increase in
maintenance is primarily due to the repair of damage caused by
frozen pipes at Cumberland Glen and insurance deductibles for
minor earthquake damage at Encino Oaks. Cumberland Glen has
also made improvements in the third quarter to the parking lot
in order to enhance the property's appearance and help the
property remain competitive in a strong multi-family
marketplace.
Total expenses for the nine months ended September 30, 1994 as
compared to the same period in 1993 have remained relatively
stable with the exception of real estate taxes. Real estate
taxes decreased due to a refund of prior years' real estate
taxes at Coral Plaza of approximately $270,000 recorded in the
second quarter of 1994.
B. Joint Venture
Brookwood's revenues and expenses have remained relatively
stable for the three months ended September 30, 1994 as compared
to the same periods in 1993.
Brookwood's revenues for the nine months ended September 30,
1994 as compared to the same periods in 1993 have increased due
to an increase in occupancy from 93% to 95%. Total expenses for
the same period have remained relatively stable.
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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: October 29, 1994
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