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 March 31, 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 0-18498
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
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-V LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
Real estate assets:
Investment in Joint Venture, net of
accumulated amortization of
acquisition costs of $130,732
and $104,586, respectively (Note 2) $22,391,244 $22,729,660
Mortgage-backed securities ("MBS"), net of
accumulated amortization (Note 3) 633,197 645,762
Total real estate assets 23,024,441 23,375,422
Cash and cash equivalents 1,454,535 1,524,048
Other assets 16,328 17,097
Total assets $24,495,304 $24,916,567
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued expenses and other liabilities $ 7,276 $ 13,500
Due to affiliates (Note 5) 35,799 49,363
Total liabilities 43,075 62,863
Partners' equity (deficit) (Note 4):
Unitholders
(2,060,350 Units outstanding) 24,503,626 24,904,826
Corporate Limited Partner
(100 Units outstanding) (620) (601)
General Partner (50,777) (50,521)
Total Partners' equity 24,452,229 24,853,704
Total liabilities and Partners' equity $24,495,304 $24,916,567
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS-V LIMITED PARTNERSHIP
STATEMENTS OF INCOME
For the Three Months
Ended March 31,
1997 1996
Revenue:
Partnership's share of Joint Venture
net income (Note 2) $186,731 $206,240
Interest income - MBS (Note 3) 14,679 20,406
Interest income - other 18,296 26,812
Total revenue 219,706 253,458
Expenses:
General and administrative (Note 5) 43,367 23,987
Asset management fees (Note 5) 35,149 35,457
Amortization of acquisition costs (Note 2) 26,146 26,146
Total expenses 104,662 85,590
Net income $115,044 $167,868
Allocation of net income (Note 4):
Unitholders
(2,060,350 Units outstanding) $113,888 $166,181
Net income per Unit of
Depositary Receipt $ .06 $ .08
Corporate Limited Partner
(100 Units outstanding) $ 6 $ 8
General Partner $ 1,150 $ 1,679
The accompanying notes are an integral
part of the financial statements.
KRUPP CASH PLUS-V LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
1997 1996
Operating activities:
Net income $ 115,044 $ 167,868
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of MBS discount, net (131) (569)
Amortization of acquisition costs 26,146 26,146
Partnership's share of Joint Venture net
income (186,731) (206,240)
Distributions from Joint Venture 186,731 206,240
Changes in assets and liabilities:
Decrease in other assets 769 2,996
Decrease in accrued expenses and other
liabilities (6,224) (4,891)
Decrease in due to affiliates (13,564) -
Net cash provided by operating
activities 122,040 191,550
Investing activities:
Distributions from Joint Venture in excess
of net income 312,270 13,320
Principal collections on MBS 12,696 42,966
Net cash provided by investing
activities 324,966 56,286
Financing activity:
Distributions (516,519) (519,585)
Net decrease in cash and cash equivalents (69,513) (271,749)
Cash and cash equivalents, beginning of period 1,524,048 2,101,121
Cash and cash equivalents, end of period $1,454,535 $1,829,372
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 Partner 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,
1996 for additional information relevant to significant accounting
policies followed by the Partnership.
In the opinion of the General Partner 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 March 31, 1997, and its
results of operations and cash flows for the three months ended March 31,
1997 and 1996.
The results of operations for the three months ended March 31, 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) Investment in Joint Venture
The Partnership and an affiliate of the Partnership own a 49.9% and 50.1%
interest in Spring Valley Partnership (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 320,684 square foot shopping center located in
Spring Valley, Rockland County, New York.
The Partnership's 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 from the
Joint Venture. For the quarter ended March 31, 1997, the Partnership
recognized amortization of acquisition costs of $26,146.
Condensed financial statements of the Joint Venture are as follows:
Spring Valley Partnership
Condensed Balance Sheets
ASSETS
March 31, December 31,
1997 1996
Real estate asset, at cost $ 53,828,648 $ 53,828,582
Accumulated depreciation (14,463,561) (13,983,325)
Total real estate asset 39,365,087 39,845,257
Other assets 2,112,346 2,252,800
Total assets $ 41,477,433 $ 42,098,057
LIABILITIES AND PARTNERS' EQUITY
Total liabilities $ 227,693 $ 222,527
Partners' equity:
The Partnership 20,639,431 20,951,700
Joint Venture partner 20,610,309 20,923,830
Total Partners' equity 41,249,740 41,875,530
Total liabilities and
Partners' equity $ 41,477,433 $ 42,098,057
Spring Valley Partnership
Condensed Statements of Operations
For the Three Months
Ended March 31,
1997 1996
Revenue $ 1,711,492 $ 1,831,357
Property operating expenses (857,046) (952,636)
Depreciation (480,236) (465,415)
Net income $ 374,210 $ 413,306
(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:
March 31, December 31,
1997 1996
Face Value $ 643,862 $ 656,558
Amortized Cost $ 633,197 $ 645,762
Estimated Market Value $ 676,000 $ 694,000
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 $43,000 and $48,000 at March 31, 1997
and December 31, 1996, 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 (deficit) for the three months
ended March 31, 1997 is as follows:
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
Balance at
December 31, 1996 $24,904,826 $(601) $(50,521) $24,853,704
Net income 113,888 6 1,150 115,044
Distributions (515,088) (25) (1,406) (516,519)
Balance at March 31, 1997 $24,503,626 $(620) $(50,777) $24,452,229
The distribution payable to the General Partner of $1,406 was included in
accrued expenses and other liabilities at March 31, 1997.
(5) Related Party Transactions
Under the terms of the Partnership Agreement, the General Partner or its
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
Partner 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 Partner or its affiliates were as
follows:
For the Three Months
Ended March 31,
1997 1996
Asset management fees $35,149 $35,457
Expense reimbursements 25,923 12,294
Charged to operations $61,072 $47,751
Due to affiliates consisted of expense reimbursements of $35,799 and
$49,363 at March 31, 1997 and December 31, 1996, respectively.
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 had an occupancy rate of 97% as of March 31, 1997. The
Marketplace will make capital improvements, as necessary, in order to maintain
or increase this level of occupancy and to remain competitive within its
immediate market. The Marketplace is expected to spend approximately $447,000
for capital improvements in 1997, most of which are tenant buildouts and
exterior improvements necessary to attract and retain quality tenants at the
shopping center. Parking lot paving which began in 1996 is expected to be
completed in 1997.
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. 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
Partner believes 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 collections,
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 its
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 three months ended March 31, 1997 and the period from
inception to March 31, 1997. The General Partner provides certain of the
information below to meet requirements of the Partnership Agreement and
because it is believed to be 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 Three Months Inception to
Ended March 31, March 31,
1997 1997
Distributable Cash Flow:
Net income for tax purposes $ 201 $ 7,608
Items providing / not requiring or
(not providing) the use of
operating funds:
Amortization of acquisition costs 26 131
Amortization of organization costs - 50
Distributions from Joint Venture 499 11,229
Partnership's share of Joint Venture
taxable net income (273) (7,729)
Total Distributable Cash Flow ("DCF") $ 453 $11,289
Unitholders' Share of DCF $ 448 $11,176
Unitholders' Share of DCF
per Unit $ .21 $ 5.42
General Partner's Share of DCF $ 5 $ 113
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 13 $ 4,736
Distributions:
Unitholders $ 515(a) $18,071(b)
Unitholders' Average
per Unit $ .25(a) $ 8.77(b)(c)
General Partner $ 5(a) $ 119(b)
Total Distributions $ 520(a) $18,190(b)
(a) Represents an estimate of the distribution to be paid in May, 1997.
(b) Includes an estimate of the distribution to be paid in May, 1997.
(c) Limited Partners average per Unit return of capital as of May, 1997 is
$3.35 ($8.77 - $5.42).
Operations
Partnership
Distributable Cash Flow increased during the three months ended March 31,
1997, as compared to the three months ended March 31, 1996, primarily due
to the increase in distributions received from the Joint Venture.
Net income for the Partnership decreased for the three months ended March
31, 1997, as compared to the three months ended March 31, 1996, due to a
decline in revenue and an increase in expenses. Total revenue decreased as
a result of a decrease in net income generated by the Partnership's Joint
Venture investment in the Marketplace, as discussed below. 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 for the three months ended March 31, 1997 increased, as
compared to the same period in 1996, as a result of an increase in charges
incurred in connection with the preparation and mailing of Partnership
reports and other investor communications.
Joint Venture
The Marketplace experienced a slight decrease in net income for the three
months ended March 31, 1997, as compared to the three months ended March
31, 1996, as the decrease in revenue was greater than the decrease in
operating expenses. Rental revenue decreased primarily as a result of
lower reimbursable tenant billings derived from lower reimbursable
operating expenses. Interest income, however, increased slightly due to
the Marketplace's higher average cash and cash equivalent balances.
Total expenses at the Marketplace decreased for the three months ended
March 31, 1997, as compared to the three months ended March 31, 1996, due
to a decrease in maintenance expense partially offset by an increase in
real estate taxes. Maintenance expense decreased significantly as a result
of an unusual amount of snow removal costs during the first quarter of
1996. The increase in real estate taxes is 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. Depreciation expense increased as a result of
continued capital improvement expenditures.
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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of the Krupp Corporation,
an affiliate of the General
Partner.
DATE: April 29, 1997