UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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, 1997
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 8-11.
The total number of pages in this document is
28.
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.
Theprimary 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 Meadows 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, 1997, the Partnership did
not employ any personnel.
ITEM 2. PROPERTIES
As of December 31, 1997, 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>
DescriptionAcquired Total Units 1997 1996 1995 19941993
Brookeville Apartments
Columbus, Ohio 1983 424 Units 98% 95% 94% 94% 93%
Hannibal Grove Apartments
Columbia, Maryland 1983 316 Units 100% 94% 93% 94% 88%
Dorsey's Forge and Oakland
Meadows Apartments
Columbia, Maryland 1983 250 Units 99% 94% 94% 95% 92%
</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, 1997 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 at a rate of $3.97 per Unit and
increased to an annual rate of $11.90 and
$15.86 per Unit in 1995 and 1996,
respectively. Thereafter, the Partnership has
continued semiannual distributions at an
annual rate of $15.86.
The Partnership made the following distributions to its Partners
during the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
Amount Per Unit Amount Per Unit
Limited Partners:
Investor Limited Partners
(25,000 Units
<S> <C> <C> <C> <C>
outstanding) $396,500 $15.86 $396,500 $15.86
Original Limited Partner 16,697 16,697
General Partners 4,174 4,174
$417,371 $417,371
</TABLE>
<PAGE>
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>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Total revenue $7,280,181 $ 6,628,658$ 6,352,337 $6,215,466$ 5,757,960
Net loss (23,224) (446,360) (547,893) (453,031) (1,521,667)
Net loss allocated to:
Investor Limited
Partners (22,063) (424,042) (520,498) (430,380) (1,445,583)
Per Unit (.88) (16.96) (20.82) (17.22) (57.82)
Original Limited
Partner (929) - - (18,121) (60,867)
General
Partners (232) (22,318) (27,395) (4,530) (15,217)
Total assets at
December 31 12,354,768 13,224,310 14,384,144 15,702,150 16,561,486
Long-term
obligations
at December 31 18,726,677 19,126,371 19,491,853 19,827,968 20,133,422
Distributions:
Investor Limited
Partners 396,500 396,500 297,495 99,132 -
Per Unit 15.86 15.86 11.90 3.97 -
Original Limited
Partner 16,697 16,697 12,526 4,174 -
General Partners 4,174 4,174 3,132 1,043 -
</TABLE>
The per Unit distributions for the years ended December 31, 1997, 1996, 1995,
1994 and 1993 were $15.86, $15.86, $11.90, $3.97 and $0, respectively, none
of which represented a return of capital.
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. In 1994,
distributions were reinstituted and paid in
August, 1994 at a rate of $3.97 per Unit and
increased to an annual rate of $11.90 and
$15.86 per Unit in 1995 and 1996,
respectively. Thereafter, the Partnership has
continued semiannual distributions at an
annual rate of $15.86.
The Partnership is planning to spend
approximately $1,089,000 for capital
improvements at its properties in 1998. 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
current occupancy levels. Renovations include
the replacement of countertops, carpeting,
appliances, pavement upgrades and both
interior and exterior building improvements.
The Partnership expects to fund these
improvements from established reserves and
cash generated from property operations.
Operations
1997 compared to 1996
Net loss decreased in 1997 when compared with
1996, as the increase in total revenue more
than offset the increase in total expenses.
Rental revenue increased in 1997 when compared
to 1996, with substantial increases in average
occupancy rates at all the Partnership's
properties.
Total expenses increased slightly in 1997 as
compared to 1996. Maintenance expense
increased with landscaping and exterior
building repairs completed at Brookeville.
Real estate taxes increased due to a rise in
the assessed value of Dorsey's Forge in
addition to a 1995 real estate tax refund for
the property received in 1996. Management
fees increased as a result of the increases in
rental revenue, as discussed above.
Depreciation expense increased in conjunction
with capital improvement expenditures.
1996 compared to 1995
Net loss decreased in 1996, as compared to
1995, 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 was 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 was 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.
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 (51) President and Co-Chairman of the
Board
George Krupp (53) Co-Chairman of the Board
Wayne H. Zarozny (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.
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). 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.
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. Mr. Krupp
received his undergraduate education from the
University of Pennsylvania and Harvard
University Extension School and holds a
Master's degree in History from Brown
University.
Wayne H. Zarozny is Vice President of The
Berkshire Group. Mr. Zarozny has held several
positions within The Berkshire Group since
joining the company in 1986 and is currently
responsible for accounting and financial
reporting, treasury, accounts payable and
payroll activities. Prior to joining The
Berkshire Group, he was an audit supervisor
for Pannell Kerr Forster International and on
the audit staff of Deloitte, Haskins and Sells
in Boston. He received a B.S. degree from
Bryant College, a Master's degree in Business
Administration from Clark University 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, 1997, 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 BeneficialOwnership Class
Investor Equity Resource
Limited Fund XVI LP
Partner 14 Story Street
Units Cambridge, MA 02138 926 Units 3.7%
Investor Equity Resource
Limited Fund XIX LP
Partner 14 Story Street
Units Cambridge, MA 02138 333 Units 1.3%
Investor Equity Resource
Limited Cambridge Fund LP
Partner 14 Story Street
Units Cambridge, MA 02138 95 Units 0.4%
Investor Equity Resource
Limited General Fund LP
Partner 14 Story Street
Units Cambridge, MA 02138 40 Units 0.2%
Investor Equity Resource
Limited Brattle Fund LP
Partner 14 Story Street
Units Cambridge, MA 02138 30 Units 0.1%
Investor AP-GP Prom Partners
Limited Inc.
Partner 2 Manhattanville Rd.
Units Purchase, NY 10577 824 Units 3.3%
Investor Apollo Real Estate
Limited Advisors II, LP
Partner 2 Manhattanville Rd.
Units Purchase, NY 10577 824 Units 3.3%
Investor Apollo Real Estate
Limited Investment Fund II, LP
Partner 2 Manhattanville Rd.
Units Purchase, NY 10577 824 Units 3.3%
Investor
Limited Krescent Partners LLC
Partner 2 Manhattanville Rd.
Units Purchase, NY 10577 824 Units 3.3%
Total 4,720 Units 18.9%
As of December 31, 1997, 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 Consolidated 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's Registration 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) Property Management Agreement dated October 1, 1991
between Brookeville Apartments Limited Partnership,
as Owner, and BRI OP Limited Partnership, formerly
known as Berkshire Property Management, a subsidiary
of Berkshire Realty Company, Inc. [Exhibit 10.6 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 (File No. 0-11210)].*
(10.2) 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)].*
(10.3) 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)].*
(10.4) 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)].*
(10.5) 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)].*
(10.6) 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
(10.7) 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)].*
(10.8) 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)].*
(10.9) 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)].*
(10.10) 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)].*
(10.11) 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)].*
(10.12) Property Management Agreement dated, December 19,
1986, between Krupp Realty Fund, Ltd.-III (as
"Owner") and BRI OP Limited Partnership, formerly
known as Berkshire Property Management, a subsidiary
of Berkshire Realty Company, Inc., 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)].*
(10.13) Management Agreement dated December 19, 1986 between
Krupp Realty Fund, Ltd.-III (as "Owner") and BRI OP
Limited Partnership, formerly known as Berkshire
Property Management , a subsidiary of Berkshire
Realty Company, Inc., relating to Oakland Meadows
[Exhibit 10.16 to Registrant's Annual Report on Form
10-K dated December 31, 1986 (File No. 0-11210)].*
(10.14) 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)].*
(10.15) 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)].*
(10.16) 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)].*
(10.17) 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)].*
(10.18) Management Agreement dated December 19, 1986 between
Krupp Realty Fund, Ltd.-III (as "Owner") and BRI OP
Limited Partnership, formerly known as Berkshire
Property Management, a subsidiary of Berkshire Realty
Company, Inc., relating to Hannibal Grove [Exhibit
10.21 to Registrant's Annual Report on Form 10-K
dated December 31, 1986 (File No. 0-11210)].*
(10.19) 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)].*
(10.20) 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, 1997, 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 25th day of March, 1998.
KRUPP REALTY FUND, LTD.-III
By: The Krupp Corporation, a General
Partner
By: /s/ Douglas Krupp
Douglas Krupp, President, 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 25th day of March, 1998.
Signatures Titles
/s/ Douglas Krupp President, Co-Chairman (Principal
Executive Douglas Krupp Officer) and Director of The Krupp
Corporation, a General Partner.
/s/ George Krupp Co-Chairman (Principal Executive
Officer)and
George Krupp Director of The Krupp Corporation, a
General Partner.
/s/ Wayne H. Zarozny Treasurer of the Krupp
Corporation, a
Wayne H. Zarozny 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, 1997
<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,
1997 and December 31, 1996 F-4
Consolidated Statements of Operations For the
Years Ended
December 31, 1997, 1996 and 1995 F-5
Consolidated Statements of Changes in
Partners' Deficit
For the Years Ended December 31, 1997, 1996
and
1995 F-6
Consolidated Statements of Cash Flows For the
Years Ended
December 31, 1997, 1996 and 1995 F-7
Notes to Consolidated Financial StatementsF-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
and Subsidiary:
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, 1997 and
1996, and the consolidated results of its
operations and its cash flows for each of the
three years in the period ended December 31,
1997 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 2, 1998
<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
1997 1996
Multi-family apartment complexes,
less accumulated depreciation of
<S> <C> <C>
$20,216,642 and $18,281,640,
respectively (Note C) $10,519,769 $11,505,230
Cash and cash equivalents 552,221 468,735
Replacement reserve and repair escrows
(Note C) 177,778 110,994
Cash restricted for tenant
security deposits 202,691 183,758
Prepaid expenses and other assets 595,696 603,090
Deferred expenses, less accumulated
amortization of $212,971 and $167,081,
respectively 306,613 352,503
Total assets $12,354,768 $13,224,310
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note C) $19,126,371 $19,491,853
Accounts payable - 22,397
Accrued expenses and other liabilities 683,413 724,481
Total liabilities 19,809,784 20,238,731
Partners' deficit (Note D):
Investor Limited Partners
(25,000 Units outstanding) (6,220,367) (5,801,804)
Original Limited Partner (906,151) (888,525)
General Partners (328,498) (324,092)
Total Partners' deficit (7,455,016) (7,014,421)
Total liabilities and Partners' deficit$12,354,768 $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
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
Revenue:
<S> <C> <C> <C>
Rental $7,224,085 $6,568,309 $ 6,284,399
Other income 56,096 60,349 67,938
Total revenue 7,280,181 6,628,658 6,352,337
Expenses:
Operating (Note E) 2,041,820 1,991,923 1,747,005
Maintenance 578,869 556,909 672,020
Real estate taxes 539,978 504,867 517,945
Management fees
(Note E) 357,766 326,363 315,695
General and administrative
(Note E) 101,687 93,995 145,488
Depreciation and amortization 1,980,892 1,866,979 1,738,951
Interest (Note C) 1,702,393 1,733,982 1,763,126
Total expenses 7,303,405 7,075,018 6,900,230
Net loss (Note F)$ (23,224) $ (446,360) $ (547,893)
Allocation of net loss (Note D):
Investor Limited Partners
(25,000 Units outstanding) $ (22,063)$ (424,042)$ (520,498)
Investor Limited Partners
Per Unit $ (.88)$ (16.96)$ (20.82)
Original Limited Partner $ (929)$ - $ -
General Partners $ (232)$ (22,318)$ (27,395)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
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 (424,042) - (22,318) (446,360)
Distributions (396,500) (16,697) (4,174) (417,371)
Balance at
December 31, 1996 (5,801,804) (888,525) (324,092) (7,014,421)
Net loss (Note D) (22,063) (929) (232) (23,224)
Distributions (Note D) (396,500) (16,697) (4,174) (417,371)
Balance at
December 31, 1997 $(6,220,367)$(906,151)$(328,498)$(7,455,016)
</TABLE>
The per Unit distributions for the years ended December 31, 1997,
1996 and 1995 were $15.86, $15.86 and $11.90, respectively, none
of which represented a return of capital.
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
For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
Operating activities:
<S> <C> <C> <C>
Net loss $ (23,224) $ (446,360)$ (547,893)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 1,980,892 1,866,979 1,738,951
Interest earned on replacement reserve
and repair escrows (4,889) - (3,018)
Changes in assets and liabilities:
Decrease (increase) in cash
restricted for tenant security
deposits (18,933) 19,192 (8,170)
Decrease (increase) in prepaid
expenses and other assets 7,394 (6,836) 61,980
Decrease in accounts payable(13,397) (40,773) (189,912)
Increase (decrease) in due to
affiliate - (10,790) 10,790
Increase (decrease) in accrued
expenses and other liabilities (41,068) 80,668 27,783
Net cash provided by
operating activities 1,886,775 1,462,080 1,090,511
Investing activities:
Additions to fixed assets (949,541) (996,817) (1,064,103)
Increase (decrease) in accounts
payable related to fixed
asset additions (9,000) 9,000 -
Withdrawals from replacement reserve
and repair escrows - 153,250 472,172
Deposits to replacement reserve and
repair escrows (61,895) (61,895) (61,895)
Net cash used in investing
activities (1,020,436) (896,462) (653,826)
Financing activities:
Principal payments on mortgage
notes payable (365,482) (334,208) (305,621)
Distributions (417,371) (417,371) (313,153)
Net cash used in
financing activities (782,853) (751,579) (618,774)
Net increase (decrease) in cash and
cash equivalents 83,486 (185,961) (182,089)
Cash and cash equivalents, beginning
of the year 468,735 654,696 836,785
Cash and cash equivalents, end of the year$ 552,221$ 468,735$ 654,696
</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.
Continued
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
B.Significant Accounting Policies, Continued
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
Real estate assets and equipment are stated at
depreciated cost. Pursuant to Statement of
Financial Accounting Standards Opinion No. 121
"Accounting or the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed
of", impairment losses are recorded on long-
lived assets used in operations on a property
by property basis, when events and
circumstances indicate that the assets might be
impaired and the estimated undiscounted cash
flows to be generated by those assets are less
than the carrying amount of those assets. Upon
determination that an impairment has occurred,
those assets shall be reduced to fair value.
Deferred Expenses
Costs of obtaining and recording mortgages are
amortized over the life of the related mortgage
notes using the straight-line method which
approximates the effective interest 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.
Continued
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
C. Mortgage Notes Payable
The properties owned by the Partnership are pledged as collateral
for the non-recourse mortgage notes outstanding at December 31,
1997 and 1996. Mortgage notes payable consisted of the
following:
<TABLE>
<CAPTION>
Annual
Principal Interest
Property 1997 1996 Rate Maturity Date
Brookeville
<S> <C> <C> <C> <C> >
Apartments $ 8,499,549 $ 8,565,244 7.75% August 1, 2028
Dorsey's Forge
Apartments and
Oakland Meadows
Apartments 4,502,891 4,629,919 9.25% May 3, 2000
Hannibal Grove
Apartments 6,123,931 6,296,690 9.25% May 3, 2000
Total $19,126,371$19,491,853
</TABLE>
Brookeville Apartments
The property is subject to a non-recourse
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.
Since the mortgage note cannot be prepaid prior
to August 1, 1998, the fair market value cannot
be determined.
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 in the
original amounts 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.
Continued
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,
Continued
C.Mortgage Notes Payable, Continued
Since the mortgage notes cannot be prepaid
prior to June 1, 1998, the fair market value
cannot be determined.
The aggregate scheduled principal amounts of
long-term borrowings due during the five years
ending December 31, 2002 are $399,694,
$437,124, $10,020,473,
$89,480 and $96,667.
During 1997, 1996 and 1995 the Partnership paid
$1,659,719, $1,690,992 and $1,719,579 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.
Continued
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
D.Partners' Deficit, Continued
For income tax purposes, the allocation of
Partnership items is determined according to
the Partnership Agreement, to the extent that
each allocation has "substantial economic
effect" pursuant to the Internal Revenue Code,
Section 704. In the event that an allocation
does not meet these statutory requirements,
Partnership items will be reallocated according
to these provisions. For the years 1995 and
1996, reallocation was necessary. The
consolidated financial statements presented
herein reflect the allocation of net loss in
accordance with the rules of the Internal
Revenue Code for the years ended December 31,
1995 and 1996.
As of December 31, 1997 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 (10,112,121) (425,768) (106,440) (10,644,329)
Cash distributions from
refinancing proceeds (5,173,000) - (52,252) (5,225,252)
Net loss from operations (21,851,313) (880,284) (269,782) (23,001,379)
Net income from capital
transaction 9,402,667 395,901 98,976 9,897,544
Balance at
December 31, 1997$ (6,220,367)$(906,151)$(328,498)$ (7,455,016)
</TABLE>
E.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.
The affiliate of the General Partners sold its
management agreements 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 paid to the General Partners'
affiliates during the years ended December 31,
1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Property management fees $357,766 $326,363 $315,695
Expense reimbursements 179,032 173,132 156,319
Charged to operations $536,798 $499,495 $472,014
</TABLE>
Continued
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
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 income loss)
reported in the accompanying Consolidated
Statement of Operations with the net loss
reported in the Partnership's 1997, 1996 and
1995 federal income tax returns is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
Net loss per Consolidated Statement
<S> <C> <C> <C>
of Operations $ (23,224) $(446,360) $(547,893)
Difference in book to tax
depreciation and amortization 557,885 221,435 347,827
Net income (loss) for federal
income tax purposes$ 534,661$ (224,925) $(200,066)
The allocation of the net income for federal income tax purposes
for the year ended December 31, 1997 is as follows:
Portfolio Passive
Income Income Total
Investor Limited Partners$ 52,748 $ 455,181 $ 507,929
Original Limited Partner 2,221 19,165 21,386
General Partners 555 4,791 5,346
$ 55,524 $ 479,137 $ 534,661
</TABLE>
During the years ended December 31, 1997, 1996
and 1995 the per Unit net income (loss) to the
Investor Limited Partners for federal income
tax purposes was $21.17, $(8.55) and $(7.60),
respectively.
The basis of the Partnership's assets for
financial reporting purposes exceeds its tax
basis by approximately $3,451,000 and
$4,010,000 at December 31, 1997 and 1996,
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, 1997
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent to
Initial Costs to Partnership Acquisition
Buildings Buildings
and and Depreciable
Description Encumbrances Land Improvements Improvements Life
Brookeville
Apartments
<S> <C> <C> <C> <C> <C>
Columbus, OH $ 8,499,549 $ 623,126 $ 8,312,134 $3,822,800 3 to 25 years
Hannibal Grove
Apartments
Columbia, MD 4,502,891 518,519 6,883,945 3,803,869 3 to 25 years
Dorsey's Forge &
Oakland Meadows
Apartments
Columbia, MD 6,123,931 340,956 4,521,895 1,909,167 3 to 25 years
Total $19,126,371 $1,482,601 $19,717,974 $ 9,535,836
Gross Amounts Carried at
End of Year
Buildings Year
and Accumulated Year
Construction
Description Land Improvements Total Depreciation Acquired Completed
Brookeville
Apartments
Columbus, OH $ 623,126 $12,134,934 $12,758,060 $ 8,213,896 1983 1975
Hannibal Grove
Apartments
Columbia, MD 518,519 10,687,814 11,206,333 7,615,275 1983 1970
Dorsey's Forge &
Oakland Meadows
Apartments
Columbia, MD 340,956 6,431,062 6,772,018 4,387,471 1983 1970
Total $1,482,601 $29,253,810 $30,736,411 $20,216,642
</TABLE>
Continued<PAGE>
KRUPP REALTY FUND, LTD.-III AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued
December 31, 1997
Reconciliation of Real Estate and Accumulated Depreciation for each
of the three years in the period ended December 31, 1997:
<TABLE>
<CAPTION>
1997 1996 1995
Real Estate
<S> <C> <C> <C>
Balance at beginning of year$29,786,870$28,790,053 $27,725,950
Acquisition and improvements 949,541 996,817 1,064,103
Balance at end of year $30,736,411 $29,786,870 $28,790,053
Accumulated Depreciation 1997 1996 1995
Balance at beginning of year$18,281,640$16,460,550 $14,767,489
Depreciation expense 1,935,002 1,821,090 1,693,061
Balance at end of year $20,216,642 $18,281,640 $16,460,550
</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, 1997 is
$30,736,411, and the aggregate accumulated depreciation for federal
income tax purposes is $23,667,444.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cash Plus V
Financial Statements for the year ended December 31, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 552,221
<SECURITIES> 0
<RECEIVABLES> 39,568<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 936,597
<PP&E> 31,255,995<F2>
<DEPRECIATION> (20,429,613)<F3>
<TOTAL-ASSETS> 12,354,768
<CURRENT-LIABILITIES> 683,413
<BONDS> 19,126,371<F4>
0
0
<COMMON> (7,455,016)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,354,768
<SALES> 0
<TOTAL-REVENUES> 7,280,181<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,601,012<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,702,393
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,224)<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 $30,736,411 and deferred expenses of $519,584.
<F3>Includes depreciation of $20,216,642 and amortization of deferred expenses of
$212,971.
<F4>Represents mortgage note payable.
<F5>Represents total deficit of the General Partners ($328,498) and the Limited
Partners ($7,126,518).
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $3,080,142, real estate taxes of $539,978 anf
depreciation and amortization of $1,980,892.
<F8>Net Loss allocated ($232) to the General Partners and ($22,992) to Limited
Partners. Net Loss of ($.92) per unit on 25,000 units outstanding.
</FN>
</TABLE>
