UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-11210
Krupp Realty Fund, Ltd.-III
(Exact name of registrant as specified in its charter)
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)
(Registrant's telephone number, including area code) (617) 423-2233
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of
Investor Limited Partner Interests
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ].
Aggregate market value of voting securities held by non-affiliates: Not
applicable.
Documents incorporated by reference: Part IV, Item 14.
The exhibit index is located on pages 9-12.
The total number of pages in this document is 28.
<PAGE>
PART I
This Form 10-K 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.
ITEM 1. BUSINESS
Krupp Realty Fund, Ltd.-III ("KRF-III") was formed on April 23, 1982 by
filing a Certificate of Limited Partnership in The Commonwealth of
Massachusetts. KRF-III issued all of the General Partner Interest to two
General Partners, The Krupp Company, a Massachusetts limited partnership,
and The Krupp Corporation, a Massachusetts corporation. KRF-III also
issued all of the Original Limited Partner Interests to The Krupp Company.
On June 4, 1982, KRF-III commenced an offering of up to 25,000 units of
Investor Limited Partner Interests (the "Units") for $1,000 per Unit. As
of September 29, 1982, KRF-III received subscriptions for all 25,000 Units
and therefore, the public offering was successfully completed on that
date. For details, see Note A to Consolidated Financial Statements
included in Item 8 (Appendix A) of this report.
The primary business of KRF-III is to acquire, operate, and ultimately
dispose of real estate. KRF-III initially acquired five multi-family
apartment complexes (Druid Valley, Willow Lake, Brookeville, Dorsey's
Forge/Oakland Meadow and Hannibal Grove Apartments) and an office building
(Woodlake Office Park). KRF-III considers itself to be engaged only in
the industry segment of investment in real estate.
KRF-III sold Druid Valley and Willow Lake in 1991 and Woodlake Office
Park in 1992. On July, 1, 1993, the General Partners formed Brookeville
Apartments Limited Partnership ("Brookeville L.P.") as a prerequisite for
the refinancing of Brookeville Apartments ("Brookeville") with the
Department of Housing and Urban Development ("HUD"). At the same time,
the General Partners transferred ownership of Brookeville to Brookeville
L.P.. The General Partner of Brookeville L.P. is the Westcop Corporation
("Westcop") and KRF-III is the Limited Partner of Brookeville L.P..
Westcop has beneficially assigned its interest in Brookeville L.P. to KRF-
III. KRF-III and Brookeville L.P. are collectively known as Krupp Realty
Fund, Ltd.-III and Subsidiary (the "Partnership").
The Partnership's real estate investments are subject to some seasonal
fluctuations due to changes in utility consumption and seasonal
maintenance expenditures. However, the future performance of the
Partnership will depend upon factors which cannot be predicted. Such
factors include general economic and real estate market conditions, both
on a national basis and in those areas where the Partnership's investments
are located, real estate tax rates, operating expenses, energy costs,
government regulations, and federal and state income tax laws. The
requirements for compliance with federal, state and local regulations to
date have not had an adverse effect on the Partnership's operations, and
no adverse effect therefrom is anticipated in the future.
The Partnership's investments in real estate are also subject to such
risks as (i) competition from existing and future projects held by other
owners in the areas of the Partnership's properties, (ii) possible
reduction in rental income due to an inability to maintain high occupancy
levels, (iii) possible adverse changes in mortgage interest rates, (iv)
possible adverse changes in general economic and local conditions, such as
competitive over-building, increased unemployment or adverse changes in
real estate zoning laws, (v) the possible future adoption of rent control
legislation which would not permit the full amount of increased costs to
be passed on to tenants in the form of rent increases, and (vi) other
circumstances over which the Partnership may have little or no control.
As of December 31, 1996, there were 47 full and part-time on-site
personnel employed by the Partnership.
ITEM 2. PROPERTIES
As of December 31, 1996, the Partnership had leveraged investments in
three apartment complexes having an aggregate of 990 units.
A summary of the Partnership's real estate investments is presented
below. Schedule III included in Item 8 (Appendix A) of this report
contains additional detailed information with respect to individual
properties.
<TABLE>
<CAPTION>
Average Occupancy
For the Year Ended
Year December 31,
<S> <C> <C> <C> <C> <C>
Description Acquired Total Units 1996 1995 1994 1993 1992
Brookeville Apartments
Columbus, Ohio 1983 424 Units 95% 94% 94% 93% 95%
Hannibal Grove Apartments
Columbia, Maryland 1983 316 Units 94% 93% 94% 88% 86%
Dorsey's Forge and Oakland
Meadows Apartments
Columbia, Maryland 1983 250 Units 94% 94% 95% 92% 93%
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Partnership is a party or of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The transfer of Units of Limited Partner Interest is subject to certain
limitations contained in the Partnership Agreement. There is no public
market for the Units and it is not anticipated that any such public market
will develop.
The number of Investor Limited Partners as of December 31, 1996 was
approximately 1,600.
One of the objectives of the Partnership is to generate cash available
for distribution, however, there is no assurance that future operations
will generate cash available for distribution. The Partnership
discontinued distributions during 1990 because of insufficient operating
cash flow. In 1994, however, property operations improved and
distributions were reinstituted and paid in August, 1994. The Partnership
anticipates semi-annual distributions will continue at an annual rate of
$15.86 per Unit.
The Partnership made the following distributions to its Partners during
the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
Amount Per Unit Amount Per Unit
<S> <C> <C> <C> <C>
Limited Partners:
Investor Limited Partners
(25,000 Units
outstanding) $396,500 $15.86 $297,495 $11.90
Original Limited Partner 16,697 12,526
General Partners 4,174 3,132
$417,371 $313,153
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial information regarding
the Partnership's financial position and operating results. This
information should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements which are included in Items 7 and 8 of
this report, respectively.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenue $ 6,628,658 $ 6,352,337 $ 6,215,466 $ 5,757,960 $6,023,650
Loss before gain on
sale of property (446,360) (547,893) (453,031) (1,521,667) (1,121,070)
Gain on sale of
property - - - - 222,388
Net loss (446,360) (547,893) (453,031) (1,521,667) (898,682)
Net loss allocated to:
Investor Limited
Partners (424,042) (520,498) (430,380) (1,445,583) (853,748)
Per Unit (16.96) (20.82) (17.22) (57.82) (34.15)
Original Limited
Partner - - (18,121) (60,867) (35,947)
General
Partners (22,318) (27,395) (4,530) (15,217) (8,987)
Total assets at
December 31 13,224,310 14,384,144 15,702,150 16,561,486 16,366,735
Long-term
obligations
at December 31 19,126,371 19,491,853 19,827,968 20,133,422 18,676,323
Distributions to:
Investor Limited
Partners 396,500 297,495 99,132 - -
Per Unit 15.86 11.90 3.97 - -
Original Limited
Partner 16,697 12,526 4,174 - -
General
Partners 4,174 3,132 1,043 - -
</TABLE>
Prior performance of the Partnership is not necessarily indicative of
future operations.
ITEM 7. 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. Due to improvements in
the operations of the properties, the Partnership had sufficient Cash Flow
to increase semi-annual distributions from an annual rate of $11.90 per
Unit in 1995, to an annual rate of $15.86 per Unit in 1996.
The Partnership is planning to spend approximately $1,044,000 for
capital improvements at its properties in 1997. The Partnership believes
that the improvements are necessary to compete in its current markets,
produce quality rental units and absorb excess market supply at the
properties' respective locations and to both maintain and increase its
current occupancy levels. Renovations include the replacement of
countertops, carpeting, appliances, asphalt repairs, and both interior and
exterior building improvements.
Cash Flow
Shown below, as required by the Partnership Agreement, is the
calculation of Cash Flow of the Partnership for the year ended December 31,
1996. The General Partners provide certain of the information below to
meet requirements of the Partnership Agreement and because they believe
that it is an appropriate supplemental measure of operating performance.
However, Cash Flow should not be considered by the reader as a substitute
to net income (loss), as an indicator of the Partnership's operating
performance or to cash flow as a measure of liquidity.
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net loss for tax purposes $ (225,000)
Items not requiring or (requiring) the use
of operating funds:
Tax basis depreciation and amortization 1,646,000
Principal payments on mortgage notes payable (334,000)
Expenditures for capital improvements (997,000)
Releases from working capital reserves 327,000
Cash Flow $ 417,000
</TABLE>
Operations
1996 compared to 1995
Cash flow, net of working capital reserves, increased in 1996
primarily due to a decrease in capital improvement expenditures and a
reduction in net loss, as the increase in revenue more than offset the
increase in expenses.
Rental revenue for 1996, as compared to 1995, increased due to
increased rental rates at the Partnership's properties in addition to
slight increases in average occupancy rates at both Brookeville and
Hannibal Grove in 1996.
Total expenses increased in 1996, when compared to 1995, primarily due
to increases in operating and depreciation expenses, partially offset by
decreases in maintenance, real estate taxes, and general and
administrative expenses. The increase in operating expense is due to a
rise in payroll costs at both Brookeville and Hannibal Grove, greater
utility consumption as a result of the unusually harsh winter weather in
1996, and an increase in leasing costs related to locating and retaining
qualified tenants. Maintenance expense decreased due to costs incurred
in 1995 in connection with a fire at Brookeville. The decrease in real
estate taxes is the result of a 1995 real estate tax refund for Dorsey's
Forge received in 1996. General and administrative expense decreased as
a result of costs incurred in 1995 associated with obtaining appraisals
of the Partnership's properties. Depreciation expense increased in
1996, as compared to 1995, in conjunction with capital improvement
expenditures.
1995 compared to 1994
In comparing 1995 to 1994, cash flow improved primarily as a result of
a reduction in capital expenditures and increased rental revenue. The
increase in rental revenue during 1995 as compared to 1994 is due to
increases in rental rates at all the Partnership's properties. The
increase in rental rates is related to the capital improvement programs
undertaken at the properties. Average occupancy at Hannibal Grove and
Dorsey's remained relatively stable during 1995 at 93% and 94%,
respectively. Occupancy remained stable at Brookeville despite a fire
during 1995.
Total expenses of the Partnership, net of depreciation, decreased
slightly in 1995, as compared to 1994. Savings in operating expenses
are due to management's efforts in reducing reimbursable costs. These
savings are offset by an increase in maintenance expenses due to minor
fire damage at Brookeville.
Depreciation increased in 1995, as compared to 1994, as a result of
capital improvement programs at the properties.
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.
The investments in properties are carried at cost less accumulated
depreciation unless the General Partners believe there is a significant
impairment in value, in which case a provision to write down investments in
properties to fair value will be charged against income. At this time, the
General Partners do not believe that any assets of the Partnership are
significantly impaired.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Appendix A to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no directors or executive officers. Information as
to the directors and executive officers of the Krupp Corporation, which is
a General Partner of both the Partnership and the Krupp Company, the other
General Partner of the Partnership, is as follows:
Position with
Name and Age The Krupp Corporation
Douglas Krupp (50) Co-Chairman of the Board
George Krupp (52) Co-Chairman of the Board
Laurence Gerber (40) President
Robert A. Barrows (39) Treasurer
Douglas Krupp is Co-Chairman and Co-Founder of The Berkshire Group.
Established in 1969 as the Krupp Companies, this real estate-based firm
expanded over the years within its areas of expertise including investment
program sponsorship, property and asset management, mortgage banking,
healthcare facility ownership and the management of the Company. Today,
The Berkshire Group is an integrated real estate, mortgage and healthcare
company which is headquartered in Boston with regional offices throughout
the country. A staff of approximately 3,400 are responsible for the more
than $4 billion under management for institutional and individual clients.
Mr. Krupp is a graduate of Bryant College. In 1989 he received an honorary
Doctor of Science in Business Administration from this institution and was
elected trustee in 1990. Mr. Krupp is Chairman of the Board and a Director
of both Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare
(NYSE-HBR). George Krupp is Douglas Krupp's brother.
George Krupp is the Co-Chairman and Co-Founder of The Berkshire Group.
Established in 1969 as the Krupp Companies, this real estate-based firm
expanded over the years within its areas of expertise including investment
program sponsorship, property and asset management, mortgage banking and
healthcare facility ownership. Today, The Berkshire Group is an integrated
real estate, mortgage and healthcare company which is headquartered in
Boston with regional offices throughout the country. A staff of
approximately 3,400 are responsible for more than $4 billion under
management for institutional and individual clients. Mr. Krupp attended
the University of Pennsylvania and Harvard University. Mr. Krupp also
serves as Chairman of the Board and Trustee of Krupp Government Income
Trust and as Chairman of the Board and Trustee of Krupp Government Income
Trust II.
Laurence Gerber is the President and Chief Executive Officer of The
Berkshire Group. Prior to becoming President and Chief Executive Officer
in 1991, Mr. Gerber held various positions with The Berkshire Group which
included overall responsibility at various times for: strategic planning
and product development, real estate acquisitions, corporate finance,
mortgage banking, syndication and marketing. Before joining The Berkshire
Group in 1984, he was a management consultant with Bain & Company, a
national consulting firm headquartered in Boston. Prior to that, he was a
senior tax accountant with Arthur Andersen & Co., an international
accounting and consulting firm. Mr. Gerber has a B.S. degree in Economics
from the University of Pennsylvania, Wharton School and an M.B.A. degree
with high distinction from Harvard Business School. He is a Certified
Public Accountant. Mr. Gerber also serves as Director of Berkshire Realty
Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR)
as well as President and Trustee of Krupp Government Income Trust and
President and Trustee of Krupp Government Income Trust II.
Robert A. Barrows is Senior Vice President and Chief Financial Officer of
The Berkshire Group. Mr. Barrows has held several positions within The
Berkshire Group since joining the company in 1983 and is currently
responsible for accounting and financial reporting, treasury, tax, payroll
and office administrative activities. Prior to joining The Berkshire
Group, he was an audit supervisor for Coopers & Lybrand L.L.P. in Boston.
He received a B.S. degree from Boston College and is a Certified Public
Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors or executive officers.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1996, beneficial owners of record owning more than 5%
of the Partnership's 25,000 Units of Investor Limited Partner Interests
outstanding are as follows:
Title Name and Address Amount and Nature Percent
of of of of
Class Beneficial Owner Beneficial Ownership Class
Investor Mark S. Thompson 1,469 Units 5.9%
Limited c/o Equity Resources
Partner Group, Inc.
Units 14 Story Street
Cambridge, MA 02138
As of December 31, 1996, the General Partners or their affiliates owned
80 Units (.3% of the total outstanding) of the Partnership in addition to
their General Partner and Original Limited Partner Interests.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership does not have any directors, executive officers or
nominees for election as director.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) 1. Consolidated Financial Statements - see Index to Consolidated
Financial Statements and Schedule included under Item 8
(Appendix A) on page F-2 of this Report.
2. Consolidated Financial Statement Schedule - see Index to
Consolidated Financial Statements and Schedule included under
Item 8 (Appendix A) on page F-2 of this Report. All other
schedules are omitted as they are not applicable, not required
or the information is provided in the financial statements or
the notes thereto.
(b) Exhibits:
Number and Description
Under Regulation S-K
The following reflects all applicable Exhibits required under Item
601 of Regulation S-K.
(4) Instruments defining the rights of security holders including
indentures:
(4.1) Agreement of Limited Partnership dated as of April 23, 1982
[Exhibit A to Prospectus included in Registrant'sRegistration
Statement on Form S-11 (File 2-77155)].*
(4.2) Amended Certificate of Limited Partnership filed with the
Massachusetts Secretary of State on September 29, 1982 [Exhibit
4.2 to Registrant's Report on Form 10-K dated December 31, 1982
(File No. 2-77155)].*
(10) Material Contracts:
Brookeville Apartments
(10.1) Contract of Limited Partnership and Certificate of Limited
Partnership of Brookeville Apartments Limited Partnership
[Exhibit 10.5 to Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993 (File No. 0-11210)].*
(10.2) Agreement to Hold Title dated July 20, 1993 by and between
Brookeville Apartments Limited Partnership and Krupp Realty
Fund, Ltd. - III. [Exhibit 10.6 to Registrant's Report on
Form 10-Q for the quarter ended September 30, 1993 (File No.
0-11210)].*
(10.3) Quitclaim deed dated July 20, 1993 between Krupp Realty
Fund, Ltd.-III and Brookeville Apartments Limited
Partnership. [Exhibit 10.7 to Registrant's Report on Form
10-Q for the quarter ended September 30, 1993 (File No. 0-
11210)].*
(10.4) Open-End Mortgage Note dated July 20, 1993 by and between
Brookeville Apartments Limited Partnership and Sussex
Mortgage Company. [Exhibit 10.8 to Registrant's Report on
Form 10-Q for the quarter ended September 30, 1993 (File No.
0-11210)].*
(10.5) Open-End Mortgage Deed dated July 20, 1993 by and between
Brookeville Apartments Limited Partnership and Sussex
Mortgage Company. [Exhibit 10.9 to Registrant's Report on
Form 10-Q for the quarter ended September 30, 1993 (File No.
0-11210)].*
Dorsey's Forge, Oakland Meadows and Hannibal Grove Apartments
(10.6) Agreements dated as of November 30, 1982, and related
supplemental Agreement dated as of November 30, 1982 between
George Krupp and Douglas Krupp, on behalf of themselves and
others, and Shelter Corporation of Canada, Limited and
Metropolitan Properties Co. Limited [Exhibit to Registrant's
Report on Form 8-K dated January 10, 1983 (File 2-77155)].*
(10.7) Deed dated April 25, 1983 between Dorsey's Properties, Ltd. and
D.O.H., Inc. relating to Dorsey's Forge [Exhibit 1 to
Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983
(File No. 2-77155)].*
(10.8) Deed dated April 25, 1983 between D.O.H., Inc. and Krupp Realty
Fund, Ltd.-III relating to Dorsey's Forge [Exhibit 2 to
Registrant's Amendment No. 1 to Form 8-K dated January 18,
1983 (File No. 2-77155)].*
(10.9) Modification and Restatement of Promissory Note dated April 28,
1993 by and between Krupp Realty Fund - III, Ltd. and John
Hancock Mutual Life Insurance Company relating to Dorsey's
Forge. [Exhibit 10.1 to Registrant's Report on Form 10-Q for
the quarter ended September 30, 1993. (File No. 0-11210)].*
(10.10) Modification and Restatement of Indemnity Deed of Trust and
Security Agreement dated April 28, 1993 between Krupp Realty
Fund, Ltd.-III and John Hancock Mutual Life Insurance Company
relating to Dorsey's Forge [Exhibit 10.2 to Registrant's Report
on Form 10-Q dated September 30, 1993. (File No. 0-11210)].*
(10.11) Management Agreement dated December 19, 1986 between Krupp
Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent, relating to Dorsey's Forge [Exhibit 10.15 to
Registrant's Annual Report on Form 10-K dated December 31, 1986
(File No. 0-11210)].*
(10.12) Management Agreement dated December 19, 1986 between Krupp
Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
agent, relating to Oakland Meadows [Exhibit 10.16 to
Registrant's Annual Report on Form 10-K dated December 31, 1986
(File No. 0-11210)].*
(10.13) Deed dated April 25, 1983 between Dorsey Properties Ltd., and
D.O.H., Inc., relating to Oakland Meadows [Exhibit 4 to
Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983
(File No. 2-77155)].*
(10.14) Deed dated April 25, 1983 between D.O.H., Inc., and Krupp
Realty Fund, Ltd.-III relating to Oakland Meadows [Exhibit 5 to
Registrant's Amendment No. 1 to Form 8-K dated January 18,
1983 (File No. 2-77155)].*
(10.15) Modification and Restatement of Promissory Note dated April 28,
1993 between Krupp Realty Fund, Ltd.-III and John Hancock
Mutual Life Insurance Company relating to Hannibal Grove.
[Exhibit 10.3 to Registrant's Report on Form 10-Q for the
quarter ended September 30, 1993 (File No. 0-11210)].*
(10.16) Modification and Restatement of Indemnity Deed of Trust and
Security Agreement dated April 28, 1993 between Krupp Realty
Fund, Ltd.-III and John Hancock Mutual Life Insurance Company
relating to Hannibal Grove [Exhibit 10.4 to Registrant's Report
on Form 10-Q for the quarter ended September 30, 1993. (File
No. 0-11210)].*
(10.17) Management Agreement dated December 19, 1986 between Krupp
Realty Fund, Ltd.-III (as "Owner") and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent, relating to Hannibal Grove [Exhibit 10.21 to
Registrant's Annual Report on Form 10-K dated December 31, 1986
(File No. 0-11210)].*
(10.18) Deed dated April 25, 1983 between Dorsey Properties, Ltd., and
D.O.H., Inc., relating to Hannibal Grove [Exhibit 7 to
Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983
(File No. 2-77155)].*
(10.19) Deed dated April 25, 1983 between D.O.H., Inc., and Krupp
Realty Fund, Ltd.-III relating to Hannibal Grove [Exhibit 8 to
Registrant's Amendment No. 1 to Form 8-K dated January 18, 1983
(File No. 2-77155)].*
* Incorporated by reference.
(b) Reports on Form 8-K
During the quarter ended December 31, 1996, the Partnership did
not file any reports on Form 8-K.
<PAGE> SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the
st day of March, 1997.
KRUPP REALTY FUND, LTD.-III
By:The Krupp Corporation, a General Partner
By:/s/ Douglas Krupp
Douglas Krupp, Co-Chairman (Principal Executive
Officer) and Director of The Krupp Corporation
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the st day of March, 1997.
Signatures Titles
/s/ Douglas Krupp Co-Chairman (Principal Executive Officer) and
Douglas Krupp Director of The Krupp Corporation, a General
Partner.
/s/ George Krupp Co-Chairman (Principal Executive Officer)
George Krupp and Director of The Krupp Corporation, a General
Partner.
/s/ Laurence Gerber President of The Krupp Corporation, a
Laurence Gerber General Partner.
/s/ Robert A. Barrows Treasurer of the Krupp Corporation, a
Robert A. Barrows a General Partner.
<PAGE>
APPENDIX A
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
ITEM 8 OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1996
<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Accountants F-3
Consolidated Balance Sheets for December 31, 1996 and December 31, 1995 F-4
Consolidated Statements of Operations For the Years Ended
December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Changes in Partners' Deficit
For the Years Ended December 31, 1996, 1995 and 1994 F-6
Consolidated Statements of Cash Flows For the Years Ended
December 31, 1996, 1995 and 1994 F-7
Notes to Consolidated Financial Statements F-8 - F-13
Schedule III - Real Estate and Accumulated Depreciation F-14 - F-15
All other schedules are omitted as they are not applicable or not required,
or the information is provided in the consolidated financial statements or
the notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Krupp Realty Fund, Ltd.-III:
We have audited the consolidated financial statements and the financial
statement schedule of Krupp Realty Fund, Ltd.-III and Subsidiary (the
"Partnership") listed in the index on page F-2 of this Form 10-K . These
financial statements and financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Krupp Realty Fund, Ltd.-III and Subsidiary at December 31, 1996 and 1995,
and the consolidated results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Boston, Massachusetts COOPERS & LYBRAND, L.L.P.
February 1, 1997
<PAGE>
<TABLE>
<CAPTION>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
<S> <C> <C>
Multi-family apartment complexes,
less accumulated depreciation of
$18,281,640 and $16,460,550,
respectively (Note C) $11,505,230 $12,329,503
Cash and cash equivalents 468,735 654,696
Required repair and
replacement reserves (Note C) 110,994 202,349
Cash restricted for tenant
security deposits 183,758 202,950
Prepaid expenses and other assets 603,090 596,254
Deferred expenses, less accumulated
amortization of $167,081 and $121,192,
respectively (Note E) 352,503 398,392
Total assets $13,224,310 $14,384,144
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note C) $19,491,853 $19,826,061
Accounts payable 22,397 54,170
Due to affiliates (Note E) - 10,790
Accrued expenses and other liabilities 724,481 643,813
Total liabilities 20,238,731 20,534,834
Partners' deficit (Note D):
Investor Limited Partners
(25,000 Units outstanding) (5,801,804) (4,981,262)
Original Limited Partner (888,525) (871,828)
General Partners (324,092) (297,600)
Total Partners' deficit (7,014,421) (6,150,690)
Total liabilities and Partners' deficit $13,224,310 $14,384,144
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
Revenue:
Rental $6,568,309 $6,284,399 $ 6,142,098
Other income 60,349 67,938 73,368
Total revenue 6,628,658 6,352,337 6,215,466
Expenses:
Operating (Note E) 1,991,923 1,747,005 1,922,068
Maintenance 556,909 672,020 567,972
Real estate taxes 504,867 517,945 506,420
Management fees (Note E) 326,363 315,695 305,599
General and administrative (Note E) 93,995 145,488 102,925
Depreciation and amortization 1,866,979 1,738,951 1,452,182
Interest (Note C) 1,733,982 1,763,126 1,811,331
Total expenses 7,075,018 6,900,230 6,668,497
Net loss (Note F) $ (446,360) $ (547,893) $ (453,031)
Allocation of net loss (Note D):
Investor Limited Partners
(25,000 Units outstanding) $ (424,042) $ (520,498) $ (430,380)
Per Unit of Investor Limited
Partner Interest $ (16.96) $ (20.82) $ (17.22)
Original Limited Partner $ - $ - $ (18,121)
General Partners $ (22,318) $ (27,395) $ (4,530)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the Years Ended December 31, 1996, 1995 and 1994
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<S> <C> <C> <C> <C>
Balance at
December 31, 1993 $(3,633,757) $(837,007) $(261,500) $(4,732,264)
Net loss (430,380) (18,121) (4,530) (453,031)
Distributions (99,132) (4,174) (1,043) (104,349)
Balance at
December 31, 1994 (4,163,269) (859,302) (267,073) (5,289,644)
Net loss (520,498) - (27,395) (547,893)
Distributions (297,495) (12,526) (3,132) (313,153)
Balance at
December 31, 1995 (4,981,262) (871,828) (297,600) (6,150,690)
Net loss (Note D) (424,042) - (22,318) (446,360)
Distributions (Note D) (396,500) (16,697) (4,174) (417,371)
Balance at
December 31, 1996 $(5,801,804) $(888,525) $(324,092) $(7,014,421)
</TABLE>
The per Unit distributions for the years 1994 through 1996 were $3.97,
$11.90 and $15.86, respectively.
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
Operating activities:
Net loss $ (446,360) $ (547,893) $(453,031)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 1,866,979 1,738,951 1,452,182
Decrease (increase) in cash restricted
for tenant security deposits 19,192 (8,170) (5,129)
Decrease (increase) in prepaid expenses
and other assets (6,836) 61,980 92,566
Increase (decrease) in accounts payable (40,773) (189,912) 84,807
Increase (decrease) in due to
affiliates (10,790) 10,790 -
Increase (decrease) in accrued expenses
and other liabilities 80,668 27,783 (107,275)
Net cash provided by
operating activities 1,462,080 1,093,529 1,064,120
Investing activities:
Additions to fixed assets (996,817) (1,064,103) (1,415,488)
Increase in accounts payable related to
fixed asset additions 9,000 - -
Decrease in cash reserved for repair
and replacement reserves 91,355 407,259 536,014
Net cash used in investing
activities (896,462) (656,844) (879,474)
Financing activities:
Deferred expenses - - (8,088)
Principal payments on mortgage
notes payable (334,208) (305,621) (279,488)
Distributions (417,371) (313,153) (104,349)
Net cash used in
financing activities (751,579) (618,774) (391,925)
Net decrease in cash and cash equivalents (185,961) (182,089)(207,279)
Cash and cash equivalents, beginning
of the year 654,696 836,785 1,044,064
Cash and cash equivalents, end of
the year $ 468,735 $ 654,696 $ 836,785
</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
A. Organization
Krupp Realty Fund, Ltd.-III ("KRF-III") was formed on April 23, 1982 by
filing a Certificate of Limited Partnership in The Commonwealth of
Massachusetts. KRF-III terminates on December 31, 2020, unless earlier
terminated upon the sale of the last of KRF-III's properties or the
occurrence of certain other events as set forth in the Partnership
Agreement.
KRF-III issued all of the General Partner Interests to The Krupp
Company, a Massachusetts limited partnership, and The Krupp Corporation,
a Massachusetts corporation, in exchange for capital contributions
aggregating $1,000. Except under certain limited circumstances upon
termination of KRF-III, the General Partners are not required to make
any additional capital contributions. KRF-III also issued all of the
Original Limited Partner Interests to The Krupp Company in exchange for
a capital contribution of $4,000. The Original Limited Partner is not
required to make any additional capital contributions to KRF-III.
On June 4, 1982, KRF-III commenced an offering of up to 25,000 units of
Investor Limited Partner Interests (the "Units") for $1,000 per Unit.
As of September 29, 1982, KRF-III received subscriptions for all 25,000
Units and therefore, the public offering was successfully completed on
that date.
In 1993, the General Partners formed Brookeville Apartments Limited
Partnership ("Brookeville L.P.") as a prerequisite for the refinancing
of Brookeville Apartments ("Brookeville") with the Department of Housing
and Urban Development ("HUD"). At the same time, the General Partners
transferred ownership of Brookeville to Brookeville L.P.. The General
Partner of Brookeville L.P. is the Westcop Corporation ("Westcop") and
KRF-III is the Limited Partner in Brookeville L.P.. Westcop has
beneficially assigned its interest in Brookeville L.P. to KRF-III. KRF-
III and Brookeville L.P. are collectively known as Krupp Realty Fund
Ltd. -III and Subsidiary (the "Partnership").
B. Significant Accounting Policies
The Partnership uses the following accounting policies for financial
reporting purposes, which may differ in certain respects from those used
for federal income tax purposes (see Note F).
Basis of Presentation
The consolidated financial statements present the consolidated
assets, liabilities and operations of the Partnership. All
intercompany balances and transactions have been eliminated.
Risks and Uncertainties
The Partnership invests its cash primarily in deposits and money
market funds with commercial banks. The Partnership has not
experienced any losses to date on its invested cash.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities, contingent assets and liabilities and revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Partnership includes all short-term investments with maturities
of three months or less from the date of acquisition in cash and cash
equivalents. The cash investments are recorded at cost, which
approximates current market values.
Rental Revenues
Leases require the payment of rent monthly in advance. Rental
revenues are recorded on the accrual basis.
Depreciation
Depreciation is provided for by the use of the straight-line method
over estimated useful lives as follows:
Buildings and improvements 5 to 25 years
Appliances, carpeting and equipment 3 to 8 years
Impairment of Long-Lived Assets
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.
The investments in properties are carried at cost less accumulated
depreciation unless the General Partners believe there is a
significant impairment in value, in which case a provision to write
down investments in properties to fair value will be charged against
income. At this time, the General Partners do not believe that any
assets of the Partnership are significantly impaired.
Deferred Expenses
Costs of obtaining and recording mortgages are amortized over the
life of the related mortgage notes using the straight-line method.
Income Taxes
The Partnership is not liable for federal or state income taxes as
Partnership income or loss is allocated to the Partners for income
tax purposes. In the event the Partnership's tax returns are
examined by the Internal Revenue Service or state taxing authority
and the examination results in a change in Partnership taxable income
or loss, such change will be reported to the Partners.
Reclassifications
Certain prior year balances have been reclassified to conform with
current year financial statement presentation.
C. Mortgage Notes Payable
The properties owned by the Partnership are pledged as collateral for
the non-recourse mortgage notes outstanding at December 31, 1996 and
1995. Mortgage notes payable consist of the following:
<TABLE>
<CAPTION>
Annual
Principal Interest
Property 1996 1995 Rate Maturity Date
<S> <C> <C> <C> <C>
Brookeville
Apartments $ 8,565,244 $ 8,626,055 7.75% August 1, 2028
Dorsey's Forge
Apartments and
Oakland Meadows
Apartments 4,629,919 4,745,765 9.25% May 3, 2000
Hannibal Grove
Apartments 6,296,690 6,454,241 9.25% May 3, 2000
Total $19,491,853 $19,826,061
</TABLE>
Brookeville Apartments
The property is subject to a non-recourse first mortgage note in the
original amount of $8,755,000 payable to the Department of Housing
and Urban Development ("HUD"). The mortgage note requires monthly
payments of $60,600 consisting of principal and interest at the rate
of 7.75% per annum. In addition, the Partnership is required to fund
a monthly deposit of $5,158 to an escrow account to be used for
future property replacements and improvements and a mortgage
insurance premium deposit equal to .5% per annum of the outstanding
principal balance. The note matures on August 1, 2028. In
accordance with HUD regulations, distributions are limited to the
extent of Surplus Cash, as defined by the Regulatory Agreement. The
mortgage note payable is collateralized by the property and may not
be prepaid for a period of five years and, thereafter, during the
next five years beginning August 1, 1998, may be prepaid subject to a
declining prepayment penalty of 5% to 1%, respectively. After August
1, 2003, there is no prepayment penalty.
Hannibal Grove Apartments ("Hannibal") and Dorsey's Forge and Oakland
Meadows Apartments ("Dorsey's")
The properties are subject to non-recourse mortgage notes for
Hannibal and Dorsey's of $6,800,000 and $5,000,000, respectively,
payable at a rate of 9.25% per annum. Monthly principal and interest
payments are $62,333 for Hannibal and $45,833 for Dorsey's. The notes
mature on May 3, 2000 at which time all unpaid principal, $5,653,175
(Hannibal) and $4,156,746 (Dorsey's), and any accrued interest are
due. The mortgage notes payable are collateralized by the respective
properties and the notes may not be prepaid prior to June 1, 1998 and
thereafter, may be prepaid subject to a prepayment penalty. The
prepayment penalty will be the greater of 1) the principal balance
multiplied by the difference between 9.4301% and the yield rate on
publicly traded U.S. Treasury Securities having the closest matching
maturity date as reported in the Wall Street Journal, or 2) one
percent of the then outstanding principal.
The above mortgage notes cannot be prepaid prior to the dates
specified in the loan agreements. As a result, fair market values
cannot be determined.
The annual required principal payments on the mortgage notes payable due
in the five years 1997 through 2001 are $365,482, $399,694, $437,124,
$10,020,473 and $89,480, respectively.
During 1996, 1995 and 1994, the Partnership paid $1,690,992, $1,719,579
and $1,745,712 of interest, respectively, on its mortgage notes.
D. Partners' Deficit
Under the terms of the Partnership Agreement, profits and losses from
operations are allocated 95% to the Investor Limited Partners, 4% to the
Original Limited Partner and 1% to the General Partners until such time
that the Investor Limited Partners have received a return of their total
invested capital plus a 9% per annum Cumulative Return on Investment
thereon and thereafter, 65% to the Investor Limited Partners, 28% to the
Original Limited Partner and 7% to the General Partners.
Also, under the Partnership Agreement, cash distributions from
operations are generally made on the same basis as the allocations of
profits and losses described above. Net cash proceeds, as determined by
the General Partners, resulting from transactions such as refinancing or
sale of a property, are to be distributed as follows: 1) to the
Investor Limited Partners until they have received a return of their
total Invested Capital; 2) to the Investor Limited Partners until they
have received an amount equal to their Cumulative Return on Investment
in respect of all fiscal years of the Partnership; 3) to the Original
Limited Partner and General Partners until they have received a return
of their total Invested Capital; 4) to an unaffiliated brokerage firm
(the "Sales Agent") to the extent of any subordinated Financial
Consulting Fee then due, and; 5) any remaining Cash Proceeds shall be
distributed 65% to the Investor Limited Partners, 28% to the Original
Limited Partner and 7% to the General Partners. Notwithstanding
anything above, the General Partners shall, under all circumstances,
receive at least 1% of all distributions of net cash proceeds from a
capital transaction.
Per the Partnership Agreement, profits from capital transactions are to
be allocated to the extent of cash distributions described above, first
to the Investor Limited Partners until they have received a return of
their total Invested Capital. Losses from capital transactions are to
be allocated to the extent of cash distributions described above, first
to the Investor Limited Partners until they have received a return of
their total Invested Capital plus their Cumulative Return on Investment.
Thereafter, profits and losses from capital transactions are to be
allocated in accordance with the Partnership Agreement. Notwithstanding
anything above, the General Partners shall be allocated, under all
circumstances, at least 1% of all profits and losses from capital
transactions.
In general, the allocation of profits and losses are calculated based on
the terms of the Partnership Agreement, as described above. However,
the Internal Revenue Code contains rules which govern the allocation of
tax losses among partners. For 1995 and 1996, the allocation of tax
losses were calculated based on these rules. Pursuant to this section
of the code, tax losses are not allocated to a limited partner if a
general partner bears the economic risk of loss. Due to tax losses
incurred during 1995 and 1996, the Partnership allocated additional tax
losses to the General Partners. In conjunction with the tax election
referred to above, the consolidated financial statements presented
herein reflect the allocation of net loss in accordance with the rules
of the Internal Revenue Code.
As of December 31, 1996 the following cumulative partner contributions
and allocations have been made since the inception of the Partnership:
<TABLE>
<CAPTION>
Investor Original
Limited Limited General
Partners Partner Partners Total
<S> <C> <C> <C> <C>
Capital contributions $ 25,000,000 $ 4,000 $ 1,000 $ 25,005,000
Syndication costs (3,486,600) - - (3,486,600)
Cash distributions
from operations (9,715,621) (409,071) (102,266) (10,226,958)
Cash distributions from
refinancing proceeds (5,173,000) - (52,252) (5,225,252)
Net loss from
operations (21,829,250) (879,355) (269,550) (22,978,155)
Net income from capital
transaction 9,402,667 395,901 98,976 9,897,544
Balance at
December 31, 1996 $ (5,801,804) $(888,525) $(324,092) $ (7,014,421)
</TABLE>
E. Related Party Transactions
Commencing with the date of acquisition of the Partnership's properties,
the Partnership entered into agreements under which property management
fees are paid to an affiliate of the General Partners for services as
management agent. Such agreements provide for management fees payable
monthly at a rate of 5% of the gross receipts from the properties under
management. 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 accounting, computer,
insurance, travel, legal and payroll; and with the preparation and
mailing of reports and other communications to the Limited Partners.
Amounts accrued or paid to the General Partners or their affiliates
during the years ended December 31, 1996, 1995 and 1994 were as follows:
1996 1995 1994
Property management fees $326,363 $315,695 $305,599
Expense reimbursements 173,132 156,319 280,198
Charged to operations $499,495 $472,014 $585,797
Due to affiliates consists of the following at December 31, 1996 and
1995:
1996 1995
Expense reimbursements $ - $ 10,790
F. Federal Income Taxes
For federal income tax purposes, the Partnership is depreciating
property under the Accelerated Cost Recovery System ("ACRS") and the
Modified Accelerated Cost Recovery System ("MACRS"), depending on which
is applicable.
The reconciliation of the net loss reported in the accompanying
Consolidated Statement of Operations with the net loss reported in the
Partnership's 1996, 1995 and 1994 federal income tax returns is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net loss per Consolidated Statement
of Operations $ (446,360) $(547,893) $(453,031)
Add: Difference in book to tax
depreciation and amortization 221,435 347,827 114,104
Net loss for federal income
tax purposes $ (224,925) $(200,066) $(338,927)
</TABLE>
The allocation of the net loss for federal income tax purposes for the
year ended December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Portfolio Passive
Income Loss Total
<S> <C> <C> <C>
Investor Limited Partners $ 56,790 $(270,469) $(213,679)
Original Limited Partner - - -
General Partners 2,989 (14,235) (11,246)
$ 59,779 $(284,704) $(224,925)
</TABLE>
During the years ended December 31, 1996, 1995 and 1994 the per Unit net
loss to the Investor Limited Partners for federal income tax purposes
was ($8.55), ($7.60) and ($12.88), respectively.
The basis of the Partnership's assets for financial reporting purposes
exceeds its tax basis by approximately $4,010,000 and $5,721,000 at
December 31, 1996 and 1995, respectively. The tax and book basis of the
Partnership's liabilities are the same.
<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
Original Limited Partner and 1% to the General Partners until such time
that the Investor Limited Partners have received a return of their total
invested capital plus a 9% per annum Cumulative Return on Investment
thereon and thereafter, 65% to the Investor Limited Partners, 28% to the
Original Limited Partner and 7% to the General Partners.
<TABLE>
<CAPTION>
Costs to Partnership Acquisition
Buildings Buildings
and and
Depreciable
Description Encumbrances Land Improvements Improvements Life
<S> <C> <C> <C> <C> <C>
Brookeville
Apartments
Columbus, OH $ 8,565,244 $ 623,126 $ 8,312,134 $3,537,500 3 to 25
years
Hannibal Grove
Apartments
Columbia, MD 6,296,690 518,519 6,883,945 3,443,350 3 to 25
years
Dorsey's Forge &
Oakland Meadows
Apartments
Columbia, MD 4,629,919 340,956 4,521,895 1,605,445 3 to 25
years
Total $19,491,853 $1,482,601 $19,717,974 $8,586,295
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts Carried at
End of Year Year
Buildings Accumu- Constr-
and lated Year uction
Improve- Depreic- Acqu- com-
Description Land ments Total ation ired pleted
<S> <C> <C> <C> <C> <C> <C>
Brookeville
Apartments
Columbus, OH $ 623,126 $11,849,634 $12,472,760 $ 7,328,949 1983 1975
Hannibal Grove
Apartments
Columbia, MD 518,519 10,327,295 10,845,814 6,935,037 1983 1970
Dorsey's Forge &
Oakland Meadows
Apartments
Columbia, MD 340,956 6,127,340 6,468,296 4,017,654 1983 1970
Total $1,482,601 $28,304,269 $29,786,870 $18,281,640
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation for each of the
three years in the period ended December 31, 1996:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Real Estate
Balance at beginning of year $28,790,053 $27,725,950 $26,310,462
Acquisition and improvements 996,817 1,064,103 1,415,488
Balance at end of year $29,786,870 $28,790,053 $27,725,950
Accumulated Depreciation 1996 1995 1994
Balance at beginning of year $16,460,550 $14,767,489 $13,361,312
Depreciation expense 1,821,090 1,693,061 1,406,177
Balance at end of year $18,281,640 $16,460,550 $14,767,489
</TABLE>
Note: The Partnership uses the cost basis for property valuation for both
income tax and financial statement purposes. The aggregate cost for
federal income tax purposes at December 31, 1996 is $29,786,870, and
the aggregate accumulated depreciation for federal income tax
purposes is $22,290,334.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund III financial Statement for the year ended December 31, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 763,487
<SECURITIES> 0
<RECEIVABLES> 44,687
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 558,403
<PP&E> 30,306,454<F1>
<DEPRECIATION> 18,448,721<F2>
<TOTAL-ASSETS> 13,224,310
<CURRENT-LIABILITIES> 746,878
<BONDS> 19,491,853<F3>
0
0
<COMMON> (7,014,421)<F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,224,310
<SALES> 6,628,658
<TOTAL-REVENUES> 6,628,658
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,341,036<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,733,982
<INCOME-PRETAX> (446,360)
<INCOME-TAX> 0
<INCOME-CONTINUING> (446,360)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,360)
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F6>Net loss allocated ($22,318) to general partners and ($424,042) to limited
partners for the year ended. Average net loss ($16.96) per unit for 25,000
units outstanding.
<F5>Includes operating expenses of $2,969,190, real estate taxes of $504,867 and
depreciation/amortization of $1,866,979.
<F4>Represents total equity of general partners ($324,092) and limited partners
($6,690,329).
<F3>Represents mortgage note payable.
<F2>Includes depreciation of $18,281,640 and amortization of deferred
expenses of $167,081.
<F1>Includes apartment complexes of $29,786,870 and deferred expenses of
$519,584.
</FN>
</TABLE>
