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 September 30, 1996
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 0-18498
Krupp Cash Plus-V Limited Partnership
Massachusetts 04-3021560
(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
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-V LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
September 30, December 31,
1996 1995
Real estate assets:
Investment in Joint Venture, net of
accumulated amortization of
acquisition costs of $78,439
and $0, respectively (Note 2) $22,775,784 $23,187,379
Mortgage-backed securities ("MBS"), net of
accumulated amortization (Note 3) 652,726 915,554
Total real estate assets 23,428,510 24,102,933
Cash and cash equivalents 1,840,671 2,101,121
Other assets 19,102 36,190
Total assets $25,288,283 $26,240,244
LIABILITIES AND PARTNERS' EQUITY
Accrued audit liability $ 10,125 $ 9,729
Due to affiliate 152 -
Total liabilities 10,277 9,729
Partners' equity (Note 4):
Unitholders
(2,060,350 Units outstanding) 25,326,389 26,273,929
Corporate Limited Partner
(100 Units outstanding) (581) (535)
General Partners (47,802) (42,879)
Total Partners' equity 25,278,006 26,230,515
Total liabilities and Partners' equity $25,288,283 $26,240,244
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS-V LIMITED PARTNERSHIP
STATEMENTS OF INCOME
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Revenue:
Partnership's share of Joint
Venture net income
(Note 2) $321,642 $219,288 $719,734 $715,394
Interest income - MBS
(Note 3) 17,391 21,629 57,968 65,788
Interest income - other 24,313 34,108 74,338 102,598
Total revenue 363,346 275,025 852,040 883,780
Expenses:
General and administrative
(Note 5) 23,508 31,134 62,576 88,084
Asset management fees
(Note 5) 35,984 36,310 107,235 107,794
Amortization of acquisition
costs (Note 2) 26,146 - 78,439 -
Total expenses 85,638 67,444 248,250 195,878
Net income $277,708 $207,581 $603,790 $687,902
Allocation of net income
(Note 4):
Unitholders (2,060,350
Units outstanding) $274,918 $205,495 $597,723 $680,990
Net income per Unit of
Depositary Receipt $ .13 $ .10 $ .29 $ .33
Corporate Limited Partner
(100 Units outstanding) $ 13 $ 10 $ 29 $ 33
General Partners $ 2,777 $ 2,076 $ 6,038 $ 6,879
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS-V LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
1996 1995
Operating activities:
Net income $ 603,790 $ 687,902
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of acquisition costs 78,439 -
Amortization of MBS discount (4,850) (583)
Distributions from Joint Venture 719,734 715,394
Partnership's share of Joint Venture net
income (719,734) (715,394)
Decrease in other assets 17,088 10,778
Increase in audit liability 396 4,509
Increase in due to affiliate 152 36,326
Net cash provided by operating
activities 695,015 738,932
Investing activities:
Distributions from Joint Venture in excess
of net income 333,156 313,544
Principal collections on MBS 267,678 56,715
Net cash provided by investing
activities 600,834 370,259
Financing activity:
Distributions (1,556,299) (1,558,175)
Net decrease in cash and cash equivalents (260,450) (448,984)
Cash and cash equivalents, beginning of period 2,101,121 2,665,531
Cash and cash equivalents, end of period $ 1,840,671 $ 2,216,547
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS-V 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-V 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,
1995 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, 1996, its
results of operations for the three and nine months ended September 30,
1996 and 1995 and cash flows for the nine months ended September 30, 1996
and 1995.
The results of operations for the three and nine months ended September
30, 1996 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
The Partnership and an affiliate of the Partnership own a 49.9% and 50.1%
interest in Spring Valley Marketplace Joint Venture (the "Joint
Venture"), respectively. The express purpose of entering into the Joint
Venture was to acquire and operate Spring Valley Marketplace (the
"Marketplace"). The Marketplace is a shopping center containing 320,684
net leasable square feet located in Spring Valley, Rockland County, New
York.
The investment balance reflects the original cost of the investment,
acquisition costs of $1,882,546 which are being amortized over the
remaining life of the underlying asset, allocations of net income earned
by the Joint Venture and distributions received by the Joint Venture.
Condensed financial statements of the Joint Venture are as follows:
Spring Valley Partnership
Condensed Balance Sheets
ASSETS
September 30, December 31,
1996 1995
Property, at cost $ 53,789,298 $ 53,409,298
Accumulated depreciation (13,489,679) (12,084,310)
40,299,619 41,324,988
Other assets 1,834,421 1,491,737
Total assets $ 42,134,040 $ 42,816,725
LIABILITIES AND PARTNERS' EQUITY
Total liabilities $ 218,471 $ 233,513
Partners' equity:
The Partnership 20,971,677 21,304,833
Joint Venture partner 20,943,892 21,278,379
Total Partners' equity 41,915,569 42,583,212
Total liabilities and
Partners' equity $ 42,134,040 $ 42,816,725
Spring Valley Partnership
Condensed Statements of Operations
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Revenue $1,826,598 $1,702,500 $ 5,265,675 $ 4,906,370
Property operating
expenses (704,553) (797,736) (2,417,953) (2,099,774)
Depreciation (477,473) (465,310) (1,405,369) (1,372,941)
Net income $ 644,572 $ 439,454 $ 1,442,353 $ 1,433,655
(3) Mortgage Backed Securities
The MBS held by the Partnership are issued by the Federal Home Loan
Mortgage Corporation. The following is additional information on the MBS
held:
September 30, December 31,
1996 1995
Face Value $ 663,519 $ 931,197
Amortized Cost $ 652,726 $ 915,554
Estimated Market Value $ 694,000 $ 940,000
Coupon rates of the MBS range from 9.0% to 9.5% per annum and mature in
the years 2016 and 2017. The Partnership's MBS portfolio had gross
unrealized gains of approximately $41,000 and $24,000 at September 30,
1996 and December 31, 1995, respectively. The Partnership does not
expect to realize these gains as it has the intention and ability to hold
the MBS until maturity.
(4) Changes in Partners' Equity
A summary of changes in Partners' Equity for the nine months ended
September 30, 1996 is as follows:
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
Balance at
December 31, 1995 $26,273,929 $ (535) $(42,879) $26,230,515
Net income 597,723 29 6,038 603,790
Distributions (1,545,263) (75) (10,961) (1,556,299)
Balance at
September 30, 1996 $25,326,389 $ (581) $(47,802) $25,278,006
(5) Related Party Transactions
Under the terms of the Partnership Agreement, the General Partners or
their affiliates are entitled to an Asset Management Fee for the
management of the Partnership's business equal to .5% per annum of the
Total Invested Assets of the Partnership (as defined in the prospectus),
payable quarterly. The Partnership also reimburses affiliates of the
General Partners for certain expenses incurred in connection with the
preparation and mailing of reports and other communications to the
Unitholders.
Amounts paid or accrued to the General Partners or their affiliates are
as follows:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Asset management fees $35,984 $36,310 $107,235 $107,794
Expense reimbursements 12,294 14,646 30,744 43,937
Charged to operations $48,278 $50,956 $137,979 $151,731
KRUPP CASH PLUS-V 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 sources of liquidity are derived from the distributions it
receives from its interest in the Joint Venture, earnings and collections on
its MBS, and interest earned on its short-term investments.
The Marketplace is currently occupied at a rate of 98%. In order to retain or
increase this level of occupancy and to remain competitive within its
immediate market, the Marketplace is expected to spend approximately $630,000
for capital improvements in 1996, most of which are tenant buildouts to
attract and retain quality tenants at the shopping center. Major capital
improvements performed in 1996 include the expansion of T.J. Maxx and parking
lot paving with additional improvements expected to continue throughout the
remainder of the year.
Liquidity provided by the MBS is derived primarily from interest income and
principal repayments and prepayments of the portfolio. The level of
prepayments are contingent upon the interest rate environment, which in turn,
affects the Partnership's liquidity. The liquidity provided by the principal
prepayments has been used to fund distributions, which has resulted in a
reduction of the Partnership's capital resources.
The Partnership holds MBS that are guaranteed by the Federal Home Loan
Mortgage Corporation ("FHLMC"). The principal risks with respect to MBS are
the credit worthiness of FHLMC and the risk that the current value of any MBS
may decline as a result of changes in market interest rates. The General
Partners believe that this risk is minimal due to the fact that the
Partnership has the ability to hold these securities to maturity.
The most significant demands on the Partnership's liquidity are the quarterly
distributions. Distributions are funded by MBS principal prepayments,
distributions received from the Marketplace and working capital reserves. Due
to fluctuations in MBS principal prepayments and its effect on the
Partnership's liquidity, the Partnership may need to periodically adjust the
distribution rate. Therefore, sustaining the distribution rate is mainly
dependent upon the future performance of the Marketplace.
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 nine months ended September 30, 1996 and the period from
inception to September 30, 1996. The General Partners provide certain of the
information below to meet requirements of the Partnership Agreement and
because they believe that 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
flow as a measure of liquidity.
(In $1,000's except per Unit amounts)
For the Nine Months Inception to
Ended September 30, September 30,
1996 1996
Distributable Cash Flow:
Net income for tax purposes $ 835 $ 7,226
Items providing / not requiring or
(not providing) the use of
operating funds:
Amortization of acquisition costs 78 78
Amortization of organization costs - 50
Distributions from Joint Venture 1,053 10,519
Partnership's share of Joint Venture
taxable net income (951) (7,178)
Total Distributable Cash Flow ("DCF") $1,015 $10,695
Unitholders' Share of DCF $1,005 $10,589
Unitholders' Share of DCF per Unit $ .49 $ 5.15(c)
General Partners' Share of DCF $ 10 $ 106
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 263 $ 4,716
Distributions:
Unitholders $1,545(a) $17,041(b)
Unitholders' Average per Unit .75(a) $ 8.27(b)(c)
General Partners $ 10(a) $ 109(b)
Total Distributions $1,555(a) $17,150(b)
(a) Represents distributions paid in 1996, except the February, 1996
distribution, which relates to 1995 cash flow and includes an estimate
of the distribution to be paid in November, 1996.
(b) Includes an estimate of the distribution to be paid in November, 1996.
(c) Unitholders average per Unit return of capital as of November, 1996
is $3.12 ($8.27 - $5.15).
Operations
Partnership
Distributable Cash Flow, increased during the nine months ended September
30, 1996, as compared to the nine months ended September 30, 1995. This
increase is primarily due to an increase in distributions received from
the Joint Venture.
Total revenue for the three months ended September 30, 1996, increased as
compared to the three months ended September 30, 1995, as a result of an
increase in net income generated by the Partnership's Joint Venture
investment in the Marketplace, as discussed below.
For the nine months ended September 30, 1996, total revenue decreased as
compared to the same time period in 1995, primarily due to a decrease in
interest income earned on the Partnership's investments. MBS interest
income decreased due to repayment and prepayments of principal which occur
on the MBS portfolio. Interest income on other investments also decreased
as a result of lower cash and cash equivalent balances available for
investment.
Total expenses increased for the three and nine month periods ended
September 30, 1996, as compared to the same periods in 1995, as a result
of the amortization of costs relating to the investment in the Marketplace
which will continue to be amortized over the remaining life of the
Marketplace. This increase was partially offset by a decrease in general
and administrative expenses incurred with the preparation and mailing of
reports and other investor communications.
Joint Venture
Overall, net income increased for the three and nine months ended
September 30, 1996, as compared to the three and nine months ended
September 30, 1995. Revenue increased during the same periods, due to
higher tenant billings at the Marketplace based upon greater reimbursable
operating expenses, including snow removal costs from the stormy winter
season, and real estate taxes.
Property operating expenses for the three months ended September 30, 1996,
as compared to the three months ended 1995, decreased as a result of a
refund received in the third quarter of 1996, relating to a prior year
real estate tax appeal.
For the nine months ended September 30, 1996 property operating expenses
increased, as compared to the nine months ended September 30, 1995, due to
increased real estate tax and maintenance expenses. Real estate taxes
increased due to both a rise in the assessed value of the Marketplace and an
increase in the school tax rate by the local taxing authority. The increase
in maintenance expense was due to snow removal expenditures as result of
adverse winter weather conditions.
Depreciation expense increased for the three and nine month periods ended
September 30, 1996, as compared to the three and nine month periods ended
September 30, 1995, as a result of continued capital improvement
expenditures.
General
In accordance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
which is effective for fiscal years beginning after December 15, 1995, the
Partnership has implemented policies and practices for assessing impairment of
its real estate assets.
In assessing the impairment of the underlying real estate owned by the Joint
Venture, the General Partners routinely perform market and growth studies
combined with periodic appraisals of the underlying property. If the General
Partners believe that there is a significant impairment in value, a provision
to write down the investment to fair value will be charged against income. At
this time, the General Partners do not believe that any asset of the
Partnership is significantly impaired.
KRUPP CASH PLUS-V 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 had duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Krupp Cash Plus-V Limited Partnership
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer
of Krupp Plus-II Corporation, the
General Partner of Krupp Company
Limited Partnership-VI
DATE: October 30,1996