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, 1995
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 0-11210
Krupp Realty Fund, Ltd.-III
Massachusetts 04-2763323
(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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1995 1994
<S> <C> <C>
Multi-family apartment complexes,
less accumulated depreciation of
$16,015,835 and $14,767,489
respectively $12,541,855 $12,958,461
Cash and cash equivalents 699,643 836,785
Required repair and
replacement reserves 339,835 609,608
Cash restricted for tenant
security deposits 201,407 194,780
Mortgage escrows and other assets 703,014 658,234
Deferred expenses, net of accumulated
amortization of $109,719 and $75,302
respectively 409,865 444,282
Total assets $14,895,619 $15,702,150
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $19,905,046 $20,131,682
Accounts payable 222,603 244,082
Accrued expenses and other liabilities 580,558 616,030
Total liabilities 20,708,207 20,991,794
Investor Limited Partners
(25,000 Units outstanding) (4,660,065) (4,163,269)
Original Limited Partner (880,220) (859,302)
General Partners (272,303) (267,073)
Total Partners' deficit (5,812,588) (5,289,644)
Total liabilities and partners' deficit $14,895,619 $15,702,150
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue:
Rental $1,555,939 $1,524,759 $4,708,791 $4,555,595
Other income 4,950 22,708 44,704 58,775
Total revenue 1,560,889 1,547,467 4,753,495 4,614,370
Expenses:
Operating (including
reimbursements to affiliates
of $39,153, $57,173, $79,946
and $171,518, respectively) 447,649 469,404 1,269,871 1,437,166
Maintenance 147,596 153,734 400,060 356,833
General and administrative
(including reimbursements of
$2,532, $14,309, $7,596
and $42,924, respectively) 64,747 43,409 91,699 88,308
Real estate taxes 127,272 124,615 385,744 384,081
Management fees to an affiliate 79,256 76,640 237,497 228,176
Depreciation and amortization 434,880 362,887 1,282,763 1,063,289
Interest 430,220 436,704 1,295,655 1,358,509
Total expenses 1,731,620 1,667,393 4,963,289 4,916,362
Net Loss $ (170,731) $ (119,926) $ (209,794) $(301,992)
Allocation of net loss (Note 2):
Per Unit of Investor Limited
Partner Interest (25,000
Units Outstanding) $ (6.49) $ (4.56) $ (7.97) $ (11.48)
Original Limited Partner $ (6,829) $ (4,797) $ (8,392) $(12,080)
General Partners $ (1,707) $ (1,199) $ (2,098) $(3,020)
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Operating activities:
Net loss $ (209,794) $ (301,992)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,282,763 1,063,289
Increase in cash restricted
for tenant security deposits (6,627) (3,761)
Decrease (increase) in mortgage escrows
and other assets (44,780) 181,483
Decrease (increase) in accounts payable (21,479) 177,615
Decrease in accrued expenses
and other liabilities (35,472) (114,778)
Net cash provided by operating
activities 964,611 1,001,856
Investing activities:
Additions to fixed assets (831,740) (994,658)
Funding of replacement reserve (46,422) -
Decrease in required repairs and replacement
reserves 316,195 295,650
Net cash used in investing
activities (561,967) (699,008)
Financing activities:
Distributions (313,150) (104,349)
Principal payments on mortgage notes payable (226,636) (207,257)
Deferred expenses - (8,088)
Net cash used in financing
activities (539,786) (319,694)
Net decrease in cash and cash equivalents (137,142) (16,846)
Cash and cash equivalents, beginning of the period 836,785 1,044,064
Cash and cash equivalents, end of the period $ 699,643 $1,027,218
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY FUND, LTD. - III 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
Realty Fund, Ltd.-III, (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, 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 consolidated financial statements reflect all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the Partnership's financial position as of September 30,
1995, its results of operations for the three and nine months ended
September 30, 1995 and 1994 and its cash flows for the nine months ended
September 30, 1995 and 1994. Certain prior year balances have been
reclassified to conform with the current year consolidated financial
statement presentation.
The results of operations for the three and nine months ended September
30, 1995 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) Summary of Changes in Partners' Deficit
A summary of changes in Partners' Deficit for the nine months ended
September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<C> <C> <C> <C> <C>
Balance at
December 31, 1994 $(4,163,269) $(859,302) $(267,073) $(5,289,644)
Net Loss (199,304) (8,392) (2,098) (209,794)
Distributions (297,492) (12,526) (3,132) (313,150)
Balance at
September 30, 1995 $(4,660,065) $(880,220) $(272,303) $(5,812,588)
</TABLE>
<PAGE>
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily upon the successful operations of its real estate
investments. Such ability is also dependent upon the future availability of
bank borrowings and the potential refinancing and sale of the Partnership's
remaining real estate investments. These sources of liquidity will be used by
the Partnership for payment of expenses related to real estate operations,
capital expenditures, debt service and expenses. Cash Flow, if any, as
calculated under Section 8.2(a) of the partnership agreement, will then be
available for distribution to the Partners. There is sufficient Cash Flow
during the current year to distribute at a rate of 1 1/2% of remaining
invested capital. The General Partners plan to review the Partnership's
distribution policy semi-annually, and will increase the rate if Cash Flow is
available after adequate reserves.
The Partnership has spent approximately $448,000 on improvements at
Brookeville Apartments ("Brookeville") during 1995, of which a significant
portion has been funded from the replacement reserve escrow. Ongoing
renovations include the replacement of cabinets, countertops, carpeting, and
most of the units appliances. Dorsey's/Oakland Apartments and Hannibal Grove
Apartments have funded $168,000 and $212,000, respectively, of improvements in
1995.
The Partnership expects the occupancy of its properties to remain
stable in 1995, with the opportunity for a slight increase. The renovations
at Brookeville have been completed and the improved physical condition should
increase the occupancy level at Brookeville.
Cash Flow
Shown below, as required by the Partnership Agreement, is the calculation
of Cash Flow for the nine months ended September 30, 1995.
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net income for tax purposes $ 69,000
Items not requiring or providing (requiring)
the use of operating funds:
Tax basis depreciation and amortization 1,004,000
Principal payments on mortgages (227,000)
Expenditures for capital improvements (832,000)
Amounts released from working capital reserve 299,000
Cash flow $ 313,000
</TABLE>
Continued
<PAGE>
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
Operations
The increase in rental revenue during the three and nine months ended
September 30, 1995 as compared to the same period in 1994, was due to
increases in rental rates at all the Partnerships properties. The increase in
the rental rates is directly related to the capital improvement programs
undertaken at the properties. Occupancy at the properties has remained
stable. In August, Brookeville completed the process of rebuilding seven
units destroyed by fire during the first quarter of 1995. The property was
fully covered by insurance.
Total expenses were relatively stable during the three and nine months
ended September 30, 1995 as compared to the same period in 1994 with the
exception of operating and depreciation expenses. The decrease in operating
expenses was due to management's efforts to reduce reimbursable costs.
Certain of these cost savings are anticipated to continue throughout the
fourth quarter of 1995. Depreciation expense increased during the three and
nine months ended September 30, 1995 as compared to the same periods in 1994
as a result of the ongoing renovations at the Partnerships properties.
<PAGE>
KRUPP REALTY FUND, LTD. - III
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
<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 Realty Fund, Ltd. - III
(Registrant)
BY: /s/Marianne Pritchard
Marianne Pritchard
Treasurer and Chief Accounting Officer
of The Krupp Corporation, a General
Partner of the registrant.
DATE: November 2, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Krupp
Realty Fund 3 financial statement for the nine months ended September 30, 1995
and is qualified in its entirety by reference to funds financial statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,240,885
<SECURITIES> 0
<RECEIVABLES> 185,229
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 517,785
<PP&E> 29,077,274<F1>
<DEPRECIATION> (16,125,554)<F2>
<TOTAL-ASSETS> 14,895,619
<CURRENT-LIABILITIES> 803,161
<BONDS> 19,905,046<F3>
<COMMON> (5,812,588)<F4>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,895,619
<SALES> 4,753,495
<TOTAL-REVENUES> 4,753,495
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,667,634<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,295,655
<INCOME-PRETAX> (209,794)
<INCOME-TAX> 0
<INCOME-CONTINUING> (209,794)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (209,794)
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Includes apartment complexes of $28,557,690 and deferred expenses of $519,589.
<F2>Includes depreciation of $16,015,835 and amortization of deferred expenses of
$109,719.
<F3>Represents mortgage notes payable.
<F4>Represents total equity of general partners ($272,303) and limited partners
($5,540,285).
<F5>Includes operating expenses of $1,999,127, real estate taxes of $385,744 and
depreciation/amortization of $1,282,763.
<F6>Net loss allocated ($2,098) to general partners and ($207,696) to limited
partners for the nine months ended 9/30/95. Average net loss (7.97) per unit
for 25,00 units outstanding.
</FN>
</TABLE>
