UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 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
September 30, December 31,
1996 1995
<S> <C> <C>
Multi-family apartment complexes,
net of accumulated depreciation of
$24,219,252 and $22,689,200, respectively $ 15,967,267 $17,088,634
Cash and cash equivalents 794,799 2,802,694
Cash restricted for capital improvements 16,236 19,066
Prepaid expenses and other assets 637,603 653,387
Deferred expenses, net of accumulated
amortization of $143,449 and $103,355,
respectively 255,209 295,303
Total assets $ 17,671,114 $20,859,084
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $ 20,380,314 $20,938,160
Accounts payable 11,066 61,162
Due to affiliates (Note 3) 16,295 97,840
Other liabilities 1,025,889 954,992
Total liabilities 21,433,564 22,052,154
Partners' equity (deficit) (Note 2):
Investor Limited Partners
(30,000 Units outstanding) (2,170,900) 322,527
Original Limited Partner (1,295,377) (1,245,119)
General Partners (296,173) (270,478)
Total Partners' deficit (3,762,450) (1,193,070)
Total liabilities and Partners'
deficit $ 17,671,114 $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 Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Revenue:
<S> <C> <C> <C> <C>
Rental $1,803,079 $1,726,117 $5,414,210 $5,172,739
Other income 18,740 43,634 97,612 123,553
Total revenue 1,821,819 1,769,751 5,511,822 5,296,292
Expenses:
Operating (Note 3) 589,301 512,217 1,690,157 1,397,067
Maintenance 202,736 177,516 519,763 452,916
Real estate taxes 224,773 184,993 558,172 483,799
General and adminis-
trative (Note 3) 22,670 44,344 65,307 97,136
Management fees (Note 3) 71,196 75,161 211,185 215,260
Depreciation and
amortization 534,432 528,846 1,570,146 1,568,300
Interest 323,022 327,293 972,356 984,878
Total expenses 1,968,130 1,850,370 5,587,086 5,199,356
Income (loss) before minority
interest (146,311) (80,619) (75,264) 96,936
Minority interest 165 481 (2,234) (1,017)
Net income (loss) $ (146,146) $ (80,138) $ (77,498) $ 95,919
Allocation of net income (loss)
(Note 2):
Investor Limited Partners
(30,000 Units
outstanding) $ (138,839) $ (76,131) $ (73,623) $ 91,123
Per Unit of Investor Limited
Partner Interest $ (4.62) $ (2.54) $ (2.45) $ 3.04
Original Limited Partner $ (5,846) $ (3,206) $ (3,100) $ 3,836
General Partners $ (1,461) $ (801) $ (775) $ 960
</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 Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
Operating activities:
Net income (loss) $ (77,498) $ 95,919
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,570,146 1,568,300
Decrease in prepaid expenses and
other assets 15,784 87,105
Increase in other liabilities 70,897 13,035
Increase (decrease) in accounts payable (52,083) 29,593
Increase (decrease) in due to affiliates (81,545) 39,433
Net cash provided by operating
activities 1,445,701 1,833,385
Investing activities:
Decrease (increase) in cash restricted for
capital improvements 2,830 (1,374)
Increase in other investments - (246,429)
Additions to fixed assets (408,685) (302,435)
Increase in accounts payable for fixed asset
additions 1,987 -
Net cash used in investing
activities (403,868) (550,238)
Financing activities:
Principal payments on mortgage notes payable (557,846) (545,324)
Distributions (2,491,882) (884,062)
Increase in deferred expenses - (1,941)
Net cash used in financing
activities (3,049,728) (1,431,327)
Net decrease in cash and cash equivalents (2,007,895) (148,180)
Cash and cash equivalents, beginning of period 2,802,694 2,500,074
Cash and cash equivalents, end of period $ 794,799 $ 2,351,894
</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. 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 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 September 30, 1996, minority
interest of $26,560 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
September 30, 1996, its results of operations for the three and nine
months ended September 30, 1996 and 1995 and its cash flows for the nine
months ended September 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 nine months ended September
30, 1996 are not necessarily indicative of the results which may be
expected for the full year. See Partnership Operations included in this
report.
(2) Changes in Partners' Deficit
A summary of changes in Partners' equity (deficit) for the nine months
ended September 30, 1996 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 $ 322,527 $(1,245,119) $(270,478) $(1,193,070)
Net income (73,623) (3,100) (775) (77,498)
Distributions:
Operations (1,119,903) (47,158) (11,790) (1,178,851)
Capital transaction (1,299,901) - (13,130) (1,313,031)
Balance at
September 30, 1996 $(2,170,900) $(1,295,377) $(296,173) $(3,762,450)
</TABLE>
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(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 Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Property management
fees $ 71,196 $ 75,161 $211,185 $215,260
Expense reimbursements 64,030 43,078 189,732 99,067
Charged to operations $135,226 $118,239 $400,917 $314,327
</TABLE>
Due to affiliates consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C> <C> <C>
Expense reimbursements $ 16,295 $ 97,840
</TABLE>
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Item 2. PARTNERSHIP 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 third 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 repairs, paving of
parking lots 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 nine months ended September 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.
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net loss for tax purposes $ (325,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 1,437,000
Tax basis principal payments on mortgage (178,000)
Expenditures for capital improvements (409,000)
Releases from working capital reserves 654,000
Cash Flow $ 1,179,000
</TABLE>
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Operations
Cash Flow, before additions to working capital reserves, decreased in the
first three quarters 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 nine months ended September 30,
1996, as compared to the same periods in 1995, increased as a result of
increased rental rates at the Partnership's properties instituted in 1995.
For the three and nine months ended September 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, Walden Pond and Fenland Field. The increase in operating expense
is also due to an adjustment of 1994 reimbursable expenses recorded in 1995,
relating to the operation of the Partnership and its properties. Maintenance
expense increased due to external wall repairs, paving and landscaping at
Indian Run, driveway, siding and stairway repairs at Walden Pond, roof repairs
at Pavillion, and snow removal expenditures at Fenland Field as a result of
the harsh winter weather conditions. Real estate taxes increased due to
increases in the assessed values of Walden Pond, Indian Run and Pavillion.
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
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: November 5, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund IV Financial Statements for the nine months ended September 30, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 811,035
<SECURITIES> 0
<RECEIVABLES> 38,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 599,436
<PP&E> 40,585,177<F1>
<DEPRECIATION> 24,362,701<F2>
<TOTAL-ASSETS> 17,671,114
<CURRENT-LIABILITIES> 1,053,250
<BONDS> 20,380,314<F3>
0
0
<COMMON> (3,762,450)<F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,671,114
<SALES> 5,511,822
<TOTAL-REVENUES> 5,511,822
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,616,964<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 972,356
<INCOME-PRETAX> (77,498)
<INCOME-TAX> 0
<INCOME-CONTINUING> (77,498)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,498)<F6>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes apartment complexes of $40,186,519 and deferred expenses
of $398,658.
<F2>Includes depreciation of $24,219,252 and amortization of deferred expenses o
$143,449.
<F3>Represents morgage notes payable.
<F4>Represents total deficit of General and Limited Partners of ($296,173) and
($3,466,277), respectively.
<F5>Includes operating expenses of $2,486,412, real estate tax expenses of
$558,172 and depreciation and amortization of $1,570,146 and minority
interest of $2,234.
<F6>Net loss allocated ($775) General Partners, ($3,100) Original Limited
Partners and ($73,623) to the Investor Limited Partners, for the nine months
ended September 30, 1996. Average net loss per Unit of Limited Partners
Interest is ($2.45) on 30,000 Units outstanding.
</FN>
</TABLE>
