UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-11987
Krupp Realty Limited Partnership-IV
Massachusetts 04-2772783
(State or other jurisdiction of (IRS employer
incorporation or organization) identification
no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1996 1995
Multi-family apartment complexes,
net of accumulated depreciation of
<S> <C> <C>
$23,698,185 and $22,689,200, respectively $16,291,034 $17,088,634
Cash and cash equivalents 1,297,997 2,802,694
Cash restricted for capital improvements 17,055 19,066
Prepaid expenses and other assets 552,389 653,387
Deferred expenses, net of accumulated
amortization of $130,084 and $103,355,
respectively 268,574 295,303
Total assets $18,427,049 $20,859,084
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $20,567,359 $20,938,160
Accounts payable 16,754 61,162
Due to affiliates (Note 3) 18,145 97,840
Other liabilities 851,669 954,992
Total liabilities 21,453,927 22,052,154
Partners' equity (deficit) (Note 2):
Investor Limited Partners
(30,000 Units outstanding) (1,472,109) 322,527
Original Limited Partner (1,265,952) (1,245,119)
General Partners (288,817) (270,478)
Total Partners' deficit (3,026,878) (1,193,070)
Total liabilities and Partners'
deficit $18,427,049 $20,859,084
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Revenue:
<S> <C> <C> <C> <C>
Rental $1,808,922 $1,744,810 $3,611,131 $3,446,622
Other income 36,931 43,008 78,872 79,919
Total revenue 1,845,853 1,787,818 3,690,003 3,526,541
Expenses:
Operating (Note 3) 534,235 439,133 1,100,856 884,850
Maintenance 186,050 152,110 317,027 275,400
Real estate taxes 164,686 146,869 333,399 298,806
General and administrative
(Note 3) 19,603 34,070 42,637 52,792
Management fees (Note 3) 71,353 70,335 139,989 140,099
Depreciation and
amortization 521,716 523,550 1,035,714 1,039,454
Interest 324,127 328,301 649,334 657,585
Total expenses 1,821,770 1,694,368 3,618,956 3,348,986
Income before minority
interest 24,083 93,450 71,047 177,555
Minority interest (1,084) (1,040) (2,399) (1,498)
Net income $ 22,999 $ 92,410 $ 68,648 $ 176,057
Allocation of net income (Note 2):
Investor Limited Partners
(30,000 Units
outstanding) $ 21,849 $ 87,790 $ 65,216 $ 167,254
Per Unit of Investor
Limited Partner Interest $ .72 $ 2.93 $ 2.17 $ 5.58
Original Limited Partner $ 920 $ 3,696 $ 2,746 $ 7,042
General Partners $ 230 $ 924 $ 686 $ 1,761
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
__________
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1996 1995
Operating activities:
<S> <C> <C>
Net income $ 68,648 $ 176,057
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,035,714 1,039,454
Decrease in prepaid expenses
and other assets 100,998 227,079
Decrease in other liabilities (103,323) (150,169)
Increase (decrease) in accounts payable (49,554) 17,596
Increase (decrease) in due to affiliates (79,695) 5,323
Net cash provided by operating
activities 972,788 1,315,340
Investing activities:
Decrease in cash restricted for capital
improvements 2,011 14,341
Increase in other investments - (486,995)
Increase in accounts payable for fixed asset
additions 5,146 -
Additions to fixed assets (211,385) (204,034)
Net cash used in investing activities (204,228) (676,688)
Financing activities:
Principal payments on mortgage notes payable (370,801) (362,550)
Distributions (1,902,456) (441,958)
Increase in deferred expenses - (1,941)
Net cash used in financing
activities (2,273,257) (806,449)
Net decrease in cash and cash equivalents (1,504,697) (167,797)
Cash and cash equivalents, beginning of period 2,802,694 2,500,074
Cash and cash equivalents, end of period $ 1,297,997 $2,332,277
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of the General Partners of Krupp
Realty Limited Partnership-IV and Subsidiaries (the "Partnership"), the
disclosures contained in this report are adequate to make the
information presented not misleading. See Notes to Consolidated
Financial Statements included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1995 for additional information
relevant to significant accounting policies followed by the Partnership.
The consolidated financial statements present consolidated assets,
liabilities and operations of Pavillion Partners, Ltd., Westbridge
Partners, Ltd., and Krupp Realty Limited Partnership-IV. Westcop
Corporation has a 1% interest in the operations of Westbridge Partners,
Ltd. and Pavillion Partners, Ltd. At June 30, 1996, minority interest
of $26,395 is included in other liabilities.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited consolidated financial statements reflect all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the Partnership's consolidated financial position as of
June 30, 1996, its results of operations for the three and six months
ended June 30, 1996 and 1995 and its cash flows for the six months
ended June 30, 1996 and 1995. Certain prior year balances have been
reclassified to conform with current year consolidated financial
statement presentation.
The results of operations for the three and six months ended June 30,
1996 are not necessarily indicative of the results which may be expected
for the full year. See Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
(2) Changes in Partners' Deficit
A summary of changes in Partners' equity (deficit) for the six months
ended June 30, 1996 is as follows:
<PAGE>
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1995 $ 322,527 $(1,245,119) $(270,478) $(1,193,070)
Net income 65,216 2,746 686 68,648
Distributions:
Operations (559,951) (23,579) (5,895) (589,425)
Capital transaction (1,299,901) - (13,130) (1,313,031)
Balance at
June 30, 1996 $(1,472,109) $(1,265,952) $(288,817) $(3,026,878)
</TABLE>
(3) 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 are as follows:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Property management
<S> <C> <C> <C> <C>
fees $ 71,353 $ 70,335 $139,989 $140,099
Expense reimbursements 62,466 43,639 125,702 55,989
Charged to operations $133,819 $113,974 $265,691 $196,088
</TABLE>
<TABLE>
<CAPTION>
Due to affiliates consists of the following:
June 30, December 31,
1996 1995
<S> <C> <C>
Expense reimbursements $ 18,145 $ 97,840
</TABLE>
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management s Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements including those
concerning Management s expectations regarding the future financial
performance and future events. These forward-looking statements involve
significant risk and uncertainties, including those described herein.
Actual results may differ materially from those anticipated by such
forward-looking statements.
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily on the operations of its remaining real estate
investments. Such ability would also be impacted by the future
availability of bank borrowings, and upon future refinancing and sale of
the Partnership's real estate investments and the collection of any
mortgage receivables which may result from such sales. These sources of
liquidity will be used by the Partnership for payment of expenses related
to real estate operations, capital improvements, refinancing 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 and reduced debt service,
the Partnership has been able to increase semi-annual distributions from an
annual rate of $28.00 per Unit in 1995, to approximately $37.33 per Unit in
1996. In addition, the Partnership made a special distribution of
$1,313,031 during the second quarter of 1996, representing a capital
distribution, based on the remaining proceeds from the sale of Lakeview
Tower in 1992. In accordance with Section 8.3 (a) of the Partnership
Agreement, the distribution was allocated 99% to the Investor Limited
Partners and 1% to the General Partners.
In the second quarter of 1996, the Partnership continued capital
improvements at its properties and anticipates that these improvements will
continue throughout the year. These improvements consist of interior
enhancements which include replacement of appliances, carpeting and vinyl
flooring as well as exterior improvements consisting of painting, roof
repair and the building of perimeter walls and fences. The Partnership
believes that these improvements are necessary to compete with current
market conditions, produce quality rental units and absorb excess market
supply at the properties' respective locations.
Cash Flow
Shown below is the calculation of Cash Flow as defined by Section 8.2(a) of
the Partnership Agreement for the six months ended June 30, 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 flows as a measure of liquidity.
<PAGE>
Rounded to $1,000
Net loss for tax purposes $(108,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 958,000
Tax basis principal payments on mortgage (117,000)
Expenditures for capital improvements (211,000)
Amounts released from working capital reserves 67,000
Cash Flow $ 589,000
<PAGE>
Operations
Cash Flow, before additions to working capital reserves, decreased in the
first half of 1996 as compared to the same period in 1995 as a result of
both increased capital improvement expenditures and a decrease in net
income, as the increase in expenses more than offset the increase in
revenue. Rental revenue during the three and six months ended June 30,
1996, as compared to the same time period in 1995, increased as a result of
increased rental rates at the Partnership's properties instituted in 1995.
For the three and six months ended June 30, 1996 as compared with the same
period in 1995, the Partnership experienced increases in operating,
maintenance and real estate tax expenses. Operating expense increased due
to both higher insurance expense, attributable to prior years' insurance
refunds received in 1995, and greater utility rates and consumption levels
at Pavillion and Fenland Field. The increase in operating expense also is
due to a rise in reimbursable expenses incurred in connection with the
operation of the Partnership and its properties, including computer,
accounting, travel, insurance, legal and payroll costs. Maintenance
expense increased due to external wall repairs and landscaping at Indian
Run, driveway, siding and stairway repairs at Walden Pond and snow removal
expenditures at Fenland Field as a result of the harsh winter weather
conditions. Real estate taxes increased due to an increase in the assessed
value of Walden Pond.
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.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response: None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Krupp Realty Limited Partnership-IV
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of the Krupp
Corporation, a General Partner.
DATE: July , 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Fund IV
Financial Statements for the six months ended June 30, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,315,052
<SECURITIES> 0
<RECEIVABLES> 30,225
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 522,164
<PP&E> 40,387,877<F1>
<DEPRECIATION> 23,828,269<F2>
<TOTAL-ASSETS> 18,427,049
<CURRENT-LIABILITIES> 886,568
<BONDS> 20,567,359<F3>
0
0
<COMMON> 3,026,878<F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,427,049
<SALES> 3,690,003
<TOTAL-REVENUES> 3,690,003
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,972,021<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 649,334
<INCOME-PRETAX> 68,648
<INCOME-TAX> 0
<INCOME-CONTINUING> 68,648
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,648<F6>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes apartment complexes of $39,989,219 and deferred expenses of $398,658.
<F2>Includes depreciation of $23,698,185 and amortization of deferred expenses of
$130,084.
<F3>Represents mortgage notes payable.
<F4>Represents total deficit of General and Limited Partners of ($288,817) and
($2,738,061), respectively.
<F5>Includes operating expenses of $1,600,509, real estate tax expenses of $333,399
and depreciation and amortization of $1,035,714 and minority interest of
$2,399.
<F6>Net income allocated $686 General Partners, $2,746 Original Limited Partners
and $65,216 to the Investor Limited Partners, for the six months ended June 30,
1996. Average net income per Unit of Limited Partners Interest is $2.17 on
30,000 Units outstanding.
</FN>
</TABLE>
