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 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
The total number of pages in this document is
9.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED 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 REALTY FUND, LTD. - III AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30,December 31,
1997 1996
<S> <C> <C>
Multi-family apartment complexes,
less accumulated depreciation of
$19,714,282 and $18,281,640, respectively$10,822,108 $11,505,230
Cash and cash equivalents 415,199 468,735
Replacement reserve escrow 161,189 110,994
Cash restricted for tenant security deposits 205,134 183,758
Prepaid expenses and other assets (Note 3) 543,263 603,090
Deferred expenses, net of accumulated
amortization of $201,499 and $167,081,
respectively 318,085 352,503
Total assets $12,464,978$13,224,310
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $19,220,830 19,491,853
Accrued expenses and other liabilities 699,941 746,878 8
Total liabilities 19,920,771 20,238,731
Partners' deficit (Note 2):
Investor Limited Partners
(25,000 Units outstanding) (6,221,106) (5,801,804)
Original Limited Partner (906,181) (888,525)
General Partners (328,506) (324,092)
Total Partners' deficit (7,455,793) (7,014,421)
Total liabilities and
Partners' deficit $12,464,978 $13,224,310
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY FUND, LTD. - III 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 $1,814,193 $1,642,708 $5,397,556 $4,895,567
Other income 12,893 15,061 40,055 46,805
Total revenue 1,827,086 1,657,769 5,437,611 4,942,372
Expenses:
Operating (Note 3) 522,059 516,207 1,536,108 1,468,038
Maintenance 146,519 163,400 407,286 378,602
Real estate taxes 140,059 136,452 401,225 383,335
General and administrative
(Note 3) 25,072 21,236 103,668 59,259
Management fees (Note 3) 91,176 82,819 266,327 243,711
Depreciation and amortization 504,023 477,649 1,467,060 1,370,456
Interest 424,600 432,583 1,279,939 1,303,361
Total expenses 1,853,508 1,830,346 5,461,613 5,206,762
Net loss $ (26,422) $ (172,577) $ (24,002)$ (264,390)
Allocation of net loss (Note 2):
Investor Limited Partners
(25,000 Units outstanding)$ (25,101)$ (163,949)$ (22,802) $ (251,171)
Per Unit of Investor Limited
Partner Interest $ (1.00) $ (6.56) $ (.91) $ (10.05)
Original Limited Partner $ (1,057) $ (6,902) $ (960)$ (10,575)
General Partners $ (264) $ (1,726) $ (240)$ (2,644)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Operating activities:
Net loss $ (24,002)$ (264,390)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,467,060 1,370,456
Interest earned on replacement reserve
escrow (3,774) -
Changes in assets and liabilities:
Decrease (increase) in cash restricted
for tenant security deposits (21,376) 30,835
Decrease in prepaid expenses and
other assets 59,827 47,188
Decrease in accrued expenses and
other liabilities (41,854) (43,831)
Net cash provided by operating
activities 1,435,881 1,140,258
Investing activities:
Additions to fixed assets (749,520) (692,205)
Deposits to replacement reserve escrow (46,421) (46,422)
Withdrawals from replacement reserve escrow -
40,272
Increase (decrease) in accounts payable
related to fixed asset additions (5,083) 2,744
Net cash used in investing
activities (801,024) (695,611)
Financing activities:
Distributions (417,370) (417,371)
Principal payments on mortgage notes payable (271,023) (247,834)
Net cash used in financing
activities (688,393) (665,205)
Net decrease in cash and cash equivalents (53,536) (220,558)
Cash and cash equivalents, beginning of the period 468,735 654,696
Cash and cash equivalents, end of the period $ 415,199 $ 434,138
</TABLE>
The accompanying notes are an integral
part of the consolidated 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, 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 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 the 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.
(2) 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>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<S> <C> <C> <C> <C>
Balance at
December 31, 1996 $(5,801,804)$(888,525)$(324,092) $(7,014,421)
Net loss (22,802) (960) (240) (24,002)
Distributions (396,500) (16,696) (4,174) (417,370)
Balance at
September 30,1997 $(6,221,106)$(906,181)$(328,506)$(7,455,793)
</TABLE>
Continued
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(3)Related Party Transactions
The Partnership pays property management fees
to an affiliate of the General Partners for
management services. Pursuant to the
management agreements, management fees are
payable monthly at a rate of 5% of the gross
receipts from the properties under management.
These management agreements were 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 reimburses
affiliates of the General Partners for certain
expenses incurred in connection with the
operation of the Partnership and its
properties including administrative expenses.
Amounts accrued or paid to the General Partners' affiliates
were as follows:
<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>
Property management fees$ 91,176 $ 82,819 $266,327 $243,711
Expense reimbursements 42,655 48,456 136,478 145,936
Charged to operations $133,831 $131,275 $402,805 $389,647
</TABLE>
Expense reimbursements due from affiliates of $5,949 and $0 are
included in prepaid expenses and other assets at September 30,
1997 and December 31, 1996, respectively.
<PAGE>
KRUPP REALTY FUND, LTD. - III 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 is dependent
primarily upon the 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.
The Partnership has spent approximately
$750,000 to date and is expected to spend
approximately $1,083,000 for capital
improvements at its properties in 1997. In
order to fund the improvements, the
Partnership will use its existing cash
reserves, reserves for replacement and cash
flow from operations. The Partnership
believes that the improvements are necessary
to compete in the current market. Renovations
include the replacement of countertops,
carpeting, appliances, asphalt repairs, and
both interior and exterior building
improvements.
Operations
Net loss decreased for the three and nine
months ended September 30, 1997, as compared
to the three and nine months ended September
30, 1996, as the increase in revenue more than
offset the increase in expenses.
Rental revenue increased for the three and
nine months ended September 30, 1997, as
compared to the three and nine months ended
September 30, 1996, as a result of increased
rental rates and average occupancy rates at
all three of the Partnership's properties.
Occupancy rates at Brookeville Apartments
("Brookeville") averaged 98% and 95% for the
nine months ended September 30, 1997 and
September 30, 1996, respectively. At Hannibal
Grove ("Hannibal"), occupancy rates averaged
99% and 94% for the nine months ended
September 30, 1997 and September 30, 1996,
respectively. Occupancy rates at Dorsey's
Forge Apartments ("Dorsey's") averaged 99% and
95% for the nine months ended September 30,
1997 and September 30, 1996, respectively.
During the three and nine months ended
September 30, 1997 as compared to the three
and nine months ended September 30, 1996, total
expenses increased, primarily due to
operating, general and administrative and
depreciation expenses. Operating expenses
increased due to increased salary and payroll
expense along with increases in advertising
and leasing expenses,which have contributed
to the higher occupancy rates discussed above.
General and administrative expense increased as
a result of legal costs related to the unsolicited
tender offers made to purchased Partnership Units.
Depreciation expense increased in conjunction with
capital improvement expenditures. Maintenance
expense increased during the nine months ended
September 30, 1997 as compared to the nine months
ended September 30, 1996, due to increases in
landscaping, parking lot repairs,and interior
building repairs at the Partnership's properties.
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting Officer of The
Krupp Corporation, a General Partner.
DATE: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule 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> 415,199
<SECURITIES> 0
<RECEIVABLES> 34,316<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 875,270
<PP&E> 31,055,974<F2>
<DEPRECIATION> (19,915,781)<F3>
<TOTAL-ASSETS> 12,464,978
<CURRENT-LIABILITIES> 699,941
<BONDS> 19,220,830<F4>
0
0
<COMMON> (7,455,793)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,464,978
<SALES> 0
<TOTAL-REVENUES> 5,437,611<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,181,674<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,279,939
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,002)<F8>
<EPS-PRIMARY> 0<F8>
<EPS-DILUTED> 0<F8>
<FN>
<F1>Includes all receivables grouped in "Prepaid Expenses and Other Assets" on the
Balance Sheet.
<F2>Includes apartment complexes of $30,536,390 and deferred expenses of $519,584.
<F3>Includes depreciation of $19,714,282 and amortization of deferred expenses of
$201,499.
<F4>Represents mortgage note payable.
<F5>Represents total deficit of the General Partners ($328,506) and the Limited
Partners ($7,127,287).
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $2,313,389, real estate taxes of $401,225 and
depreciation and amortization of $1,467,060.
<F8>Net Loss allocated ($240) to General Partners and ($23,762) to Limited
Partners. Average net Loss of ($.91) per unit on 25,000 units outstanding.
</FN>
</TABLE>
