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, 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 2-68727
Krupp Associates 1980-1
Massachusetts
04-2708956
(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
10.
<PAGE>
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 ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30,December 31,
1997 1996
<S> <C> <C>
Multi-family apartment complex, net of
accumulated depreciation of $0
and $2,730,441, respectively (Note 2) $ - $ 2,093,819
Cash and cash equivalents 1,296,259 75,012
Cash restricted for tenant security deposits 41,579 38,004
Replacement reserve escrow 41,251 49,030
Prepaid expenses and other assets 5,514 86,267
Deferred expenses, net of accumulated
amortization of $0 and $37,355,
respectively - 109,270
Total assets $ 1,384,603 $ 2,451,402
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage note payable (Note 2) $ - $ 2,215,574
Notes payable to affiliates (Note 3) 1,167,998 1,257,385
Accounts payable 74,436 93,704
Accrued expenses and other liabilities 142,169 242,244
Accrued interest due to affiliates (Note 5) - 637,842
Total liabilities 1,384,603 4,446,749
Partners' deficit (Note 4):
Class A Limited Partners
(4,000 Units outstanding) - (272,656)
Original Limited Partner - (436,216)
General Partners - (1,286,475)
Total Partners' deficit - (1,995,347)
Total liabilities and Partners' deficit $ 1,384,603 $ 2,451,402
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenue:
Rental $ 173,929 $275,187 $ 710,747 $831,260
Other income 4,156 608 6,541 1,884
Total revenue 178,085 275,795 717,288 833,144
Expenses:
Operating 90,434 97,929 285,503 292,640
Maintenance 14,141 29,953 61,195 59,552
Real estate taxes 137,547 32,683 202,727 102,384
Management fees (Note 5) 9,515 - 36,282 -
General and administrative19,405 8,664 41,378 28,264
Depreciation and
amortization 140,592 46,691 231,896 136,009
Interest (Note 5) 70,979 90,833 251,967 272,436
Total expenses 482,613 306,753 1,110,948 891,285
Loss before extinguishment
of debt and gain on sale
of property (304,528) (30,958) (393,660) (58,141)
Extinguishment of debt
(Note 3) 817,080 - 817,080 -
Gain on sale of property
(Note 2) 1,571,927 - 1,571,927 -
Net income (loss) $2,084,479 $(30,958)$1,995,347 $(58,141)
Allocation of loss before
extinguishment of debt
and gain on sale of
property (Note 4):
Class A Limited Partners$ (274,075)$(27,862) $ (354,294)$(52,327)
Class A Limited Partners
Per Unit (4,000 Units
outstanding) $ (68.55)$ (6.96)$ (88.57)$ (13.08)
Original Limited Partner$ (27,407)$ (2,787)$ (35,429)$ (5,233)
General Partners $ (3,046)$ (309)$ (3,937)$ (581)
Allocation of extinguishment
of debt and gain on sale of property
(Note 4):
Class A Limited Partners$ 626,950 $ - $ 626,950$ -
Class A Limited Partners
Per Unit (4,000 Units
outstanding) $ 156.74 $ - $ 156.74$ -
Original Limited Partner$ 471,645 $ - $ 471,645$ -
General Partners $1,290,412 $ - $1,290,412$ -
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
<S> <C> <C>
Operating activities:
Net income (loss) $1,995,347 $ (58,141)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 231,896 136,009
Interest earned on replacement reserve
escrow (230) -
Gain on sale of property (1,571,927) -
Extinguishment of debt (817,080) -
Changes in assets and liabilities:
Decrease (increase) in cash restricted
for tenant security deposits (3,575) 2,457
Decrease (increase) in prepaid expenses
and other assets 7,984 (54,924)
Decrease in accounts payable (17,100) (59,362)
Increase (decrease) in accrued
expenses and other liabilities (100,075) 48,943
Increase in interest due to
affiliates 89,851 88,794
Releases from real estate tax and
insurance escrows due to sale of
property 72,769 -
Net cash provided by (used in)
operating activities (112,140) 103,776
Investing activities:
Additions to fixed assets (59,562) (58,575)
Increase (decrease) in accounts payable
related to fixed asset additions (2,168) 1,213
Deposits to replacement reserve escrow (28,254) (36,326)
Withdrawals from replacement reserve escrow 36,263 27,168
Proceeds from sale of property, net 3,602,682 -
Net cash provided by (used in)
investing activities 3,548,961 (66,520)
Financing activities:
Principal payments on mortgage note payable (9,779) (11,424)
Repayment of mortgage note payable (2,205,795) -
Net cash used in financing
activities (2,215,574) (11,424)
Net increase in cash and equivalents 1,221,247 25,832
Cash and cash equivalents, beginning of period 75,012 11,153
Cash and cash equivalents, end of period $1,296,259 $ 36,985
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
NOTES TO CONSOLIDATED 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 Associates 1980-
1 and Subsidiary (the "Partnership"), the
disclosures contained in this report are
adequate to make the information presented not
misleading. See Notes to Consolidated
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 Partners of the
Partnership, the accompanying unaudited
consolidated financial statements reflect all
adjustments necessary to present fairly the
Partnership's consolidated financial position
as of September 30, 1997, its results of
operations for the three and nine months ended
September 30, 1997 and 1996, and its cash
flows for the nine months ended September 30,
1997 and 1996. Certain prior year balances
have been reclassified to conform with current
year consolidated financial statement
presentation.
The results of operations for the three and
nine months ended September 30, 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.
The Partnership sold its remaining real estate
asset on August 28, 1997 and is the process of
liquidating its assets and settling its liabilities.
Based on the Partnership's financial position after
the sale of Riverside, the Partnership expects to be
released from certain obligations in excess of its
available assets. Consequently, the Partnership has
presented its consolidated balance sheet as of
September 30, 1997 on the liquidation basis of accounting.
This basis is different from the historical basis of
accounting used in the preparation of the Partnership's
consolidated balance sheet as of December 31, 1996.
As a result comparisons between the September 30, 1997 and
December 31, 1996 consolidated balance sheets would not be meaningful.
(2)Disposition of Property
On August 28, 1997, the Partnership sold
Riverside I Apartments ("Riverside"), a 140-
unit multi-family apartment complex with
approximately 30,000 square feet of commercial
retail space, located in Evansville, Indiana,
to an unaffiliated third party for a sales
price of $3,750,000. Proceeds from the sale,
net of closing costs of $147,318, were used to
repay the outstanding principal on the
mortgage note payable of $2,205,795. The
remaining proceeds will be applied toward
other Partnership liabilities, including
partial payment of affiliated debt. The
property had a net book value of $2,030,755
which resulted in a gain of $1,571,927 for
financial reporting purposes.
(3)Notes Payable
The Partnership had demand notes outstanding
with the General Partners and and affiliate of
the General Partners at August 28, 1997 and
December 31, 1996, totaling $1,257,385.
Interest was accrued monthly at the prime rate
of an unaffiliated bank (8.5% at September 30,
1997) plus one percent per annum.
As discussed in Note 1, the Partnership
adopted the liquidation basis of accounting
as of September 30, 1997. Accordingly,
the Partnership expects to be released from
approximately $817,080 of obligations with
respect to the affiliated demand notes payable.
The Partnership recorded a gain on
extinguishment of debt of $817,080 which was
equivalent to the estimated releases.
Continued
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4)Summary of Changes in Partners' Deficit
A summary of changes in Partners' deficit for the nine months
ended September 30, 1997 is as follows:
<TABLE>
<CAPTION>
Class A Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<S> <C> <C> <C> <C>
Balance at
December 31, 1996 $ (272,656)$(436,216)$(1,286,475)$(1,995,347)
Loss before gain on
sale of property (354,294) (35,429) (3,937) (393,660)
Allocation of
extinguishment of debt
and gain on sale of property
626,950 471,645 1,290,412 2,389,007
Balance at
September 30, 1997$ - $ - $ - $ -
</TABLE>
The Partnership allocated the gain on sale of
property in accordance with the Partnership
Agreement. Pursuant to the Partnership
Agreement, profits from Terminating Capital
Transactions are allocated, without preference
over any class of Partners, first to each
class equal to the excess of aggregate losses
and distributions over aggregate profits and
capital contributions to the respective
capital accounts.
(5)Related Party Transactions
The Partnership paid property management fees
to an affiliate of the General Partners for
management services. Pursuant to the
management agreement, management fees were
payable monthly at a rate of 5% of the gross
receipts from the property under management.
The management agreement was sold to BRI OP
Limited Partnership, a subsidiary
of Berkshire Realty Company Inc., a publicly
traded real estate investment trust and an
affiliate of the General Partners, on February
28, 1997. The Partnership also reimbursed
affiliates of the General Partners for certain
expenses incurred in connection with the
operation of the Partnership and its property
including administrative expenses. From 1991
through 1996, the General Partners arranged
with the management agent for the annual
waivers of management fees and expense
reimbursements.For the three and nine months
ended September 30, 1996, management fee and
expense waivers totaled approximately $21,000
and $64,000, respectively. As a result of the
sale of the management agreement, monthly
payments of management fees were reinstituted
in 1997. Property management fees paid to an
affiliate of the General Partners were $9,515
and $36,282 for the three and nine months
ended September 30, 1997, respectively.
Interest accrued on borrowings from the
General Partners or their affiliates was
$30,527 and $89,851 for the three and nine
months ended September 30, 1997, respectively,
and $29,723 and $88,794 for the three and nine
months ended September 30, 1996, respectively.
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
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 ability to generate cash
adequate to meet its needs has been dependent
primarily upon the operating performance of
Riverside I Apartments ("Riverside"). Such
ability is also dependent upon the sale of the
asset. These sources of liquidity could be
used by the Partnership for payment of
expenses related to real estate operations,
debt service and expenses. Cash Flow and
Terminating Capital Transaction Proceeds, if
any, as calculated under Section 8.2(a) ("Cash
Flow") and 8.1(c) of the Partnership Agreement
would then be available for distribution to
the Partners. The Partnership has
discontinued distributions due to insufficient
operating Cash Flow.
The Partnership has experienced cash flow
deficiencies for several years as a result of
consecutive years of net losses and capital
improvements in prior years. These losses are
a result of depressed market conditions which
hindered the Partnership's ability to increase
rental rates as required to support the
operating expenses, capital improvements and
debt service. Consequently, the General
Partners closely monitored all expenditures
and completed capital improvements at the
property on an as-needed basis only. The
General Partners arranged financing through
borrowings from an affiliate of the General
Partners to cover a substantial portion of the
cash flow deficiencies. Also, one of the
General Partners, The Krupp Company Limited
Partnership ("The Krupp Company"), contributed
an additional $100,000 to the Partnership
during 1991. In January 1993, The Krupp
Company loaned an additional $135,000 to the
Partnership in the form of a demand note to
payoff a demand note from an unaffiliated
bank. In addition, the affiliate lender has
been willing to defer interest payments on the
borrowings since late 1990. Furthermore, the
General Partners, through annual negotiations
from 1991 through 1996, have arranged for the
waiver of property management fees and expense
reimbursements payable to the management
agent, also an affiliate of the General
Partners. Monthly payments of management fees
were reinstituted in 1997 as a result of the
sale of the property management contract to an
affiliate of the General Partners.
On August 28, 1997, the Partnership sold
Riverside for a sales price of $3,750,000.
Proceeds from the sale, net of closing costs
of $147,318, were used to repay the existing
mortgage note on the property of $2,205,795.
The remaining proceeds will be applied toward
other Partnership liabilities, including
partial payment of affiliated debt.
Consequently, there will be no funds available
to investors for distribution. For financial
reporting purposes, the Partnership realized a
gain of $1,462,466 on the sale. The gain was
calculated as the difference between net
consideration received, less net book value of
the property. As a result of the sale of the
Partnership's only real estate asset, the
Partnership will be liquidated.
Continued
<PAGE>
KRUPP ASSOCIATES 1980-1 AND SUBSIDIARY
Operations
Net loss, before the gain on the sale of
property and extinguishment of debt,
increased for the three and nine
months ended September 30, 1997 when compared
to the same periods in 1996, as total revenue
decreased and total expenses increased. The
decrease in revenue is directly related to the
sale of Riverside Apartments in the third
quarter of 1997.
Total expenses, increased for the three and
nine months ended September 30, 1997 as
compared to the same periods in 1996, due to
increases in management fees, real estate
taxes and depreciation and amortization expense.
Monthly payments of management fees were
reinstituted in 1997 as a result of the
sale of the property management contract to an
affiliate of the General Partners. The
increase in real estate taxes is due to a
reassessment of prior years' taxes billed in
the third quarter of 1997. Depreciation and
amortization increased due to the acceleration
of deferred mortgage costs due to the
repayment of the mortgage note from the sales
proceeds.
KRUPP ASSOCIATES 1980 -1 AND SUBSIDIARY
<PAGE>
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
(a) Exhibits
Response: None
(b) Reports on Form 8-K
Date Event Reported Financial
Statements Filed
August 28, Disposition of Riverside I Pro
Forma Consolidated Balance 1997 Apartments
Sheet at June 30, 1997.
Pro Forma Consolidated Statements of
Operations for the six months ended June 30,
1997 and for the year ended December 31, 1996.
<PAGE>
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 Associates 1980-1
(Registrant)
BY:/s/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting Officer of The
Krupp Corporation, a General Partner.
DATE: November 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This summary contains summary financial information extracted from Cash Plus V
Financial Statements for the nine months ended September 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,296,259
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 88,344
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,384,603
<CURRENT-LIABILITIES> 216,605
<BONDS> 1,167,998<F1>
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,384,603
<SALES> 0
<TOTAL-REVENUES> 717,288<F2>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 858,280<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251,967
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 2,389,007<F4>
<CHANGES> 0
<NET-INCOME> 1,995,347<F5>
<EPS-PRIMARY> 0<F5>
<EPS-DILUTED> 0<F5>
<FN>
<F1>Represents note payable to an affiliate.
<F2>Includes all revenue of the Partnership.
<F3>Includes operating expenses of $424,358 Real Estate Taxes of $202,727 and
depreciation and amortization of $231,896.
<F4>Represents a gain on the sale of property of $1,571,927 and extinguishment of
debt of $817,080.
<F5>Net income allocated $1,286,475 to General Partners and $708,872 to Limited
Partners.
</FN>
</TABLE>
