UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30,
1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from
to
Commission file number 0-11987
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
The total number of pages in this document
is 10.
<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,
1997 1996
Multi-family apartment complexes,
net of accumulated depreciation of
<S> <C> <C>
$25,740,286 and $24,742,332, respectively $14,887,654 $15,566,325
Cash and cash equivalents 769,654 956,012
Replacement reserve escrow 14,399 31,951
Prepaid expenses and other assets 540,259 809,579
Deferred expenses, net of accumulated
amortization of $183,542 and $156,813,
respectively 215,116 241,845
Total assets $16,427,082 $17,605,712
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $19,812,287 $20,192,138
Accounts payable 10,190 16,938
Due to affiliates (Note 3) 32,202 32,392
Other liabilities 918,920 1,206,076
Total liabilities 20,773,599 21,447,544
Partners' deficit (Note 2):
Investor Limited Partners
(30,000 Units outstanding) (2,725,762) (2,246,313)
Original Limited Partner (1,318,741) (1,298,552)
General Partners `(302,014) (296,967)
Total Partners' deficit (4,346,517) (3,841,832)
Total liabilities and Partners' deficit $16,427,082 $17,605,712
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
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,
1997 1996 1997 1996
Revenue:
<S> <C> <C> <C> <C>
Rental $1,902,205 $1,808,922 $3,791,029$3,611,131
Other income 13,656 36,931 27,489 78,872
Total revenue 1,915,861 1,845,853 3,818,518 3,690,003
Expenses:
Operating (Note 3) 531,268 534,235 1,085,536 1,100,856
Maintenance 253,304 186,050 369,491 317,027
Real estate taxes 192,410 164,686 375,364 333,399
Management fees (Note 3)80,562 71,353 154,855 139,989
General and administrative
(Note 3) 40,291 19,603 81,493 42,637
Depreciation and
amortization 517,274 521,716 1,024,683 1,035,714
Interest 319,549 324,127 640,283 649,334
Total expenses 1,934,658 1,821,770 3,731,705 3,618,956
Income (loss) before minority
interest (18,797) 24,083 86,813 71,047
Minority interest (396) (1,084) (2,073) (2,399)
Net income (loss)$ (19,193)$ 22,999 $ 84,740$ 68,648
Allocation of net income (loss)
(Note 2):
Investor Limited Partners
(30,000 Units
outstanding)$ (18,234)$ 21,849 $ 80,503 $ 65,216
Per Unit of Investor
Limited Partner Interest$ (.61)$ .72$ 2.68$ 2.17
Original Limited Partner $ (767)$ 920$ 3,390$ 2,746
General Partners $ (192)$ 230 $ 847$ 686
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
__________
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
Operating activities:
<S> <C> <C>
Net income $ 84,740 $ 68,648
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,024,683 1,035,714
Changes in assets and liabilities:
Decrease in prepaid expenses
and other assets 269,320 100,998
Decrease in other liabilities (287,156) (103,323)
Decrease in accounts payable (6,802) (49,554)
Decrease in due to affiliates (190) (79,695)
Net cash provided by operating
activities 1,084,595 972,788
Investing activities:
Deposits to replacement reserve escrow (31,430) (31,430)
Withdrawals from replacement reserve escrow 48,982 33,441
Increase in accounts payable for fixed asset
additions 54 5,146
Additions to fixed assets (319,283) (211,385)
Net cash used in investing activities (301,677) (204,228)
Financing activities:
Principal payments on mortgage notes payable(379,851)(370,801)
Distributions (589,425) (1,902,456)
Net cash used in financing
activities (969,276)(2,273,257)
Net decrease in cash and cash equivalents (186,358) (1,504,697)
Cash and cash equivalents, beginning of period 956,012 1,802,694
Cash and cash equivalents, end of period $ 769,654$1,297,997
</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, 1996
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, 1997, a minority
interest of $23,899 is included in other
assets.
In the opinion of the General Partners of the
Partnership, the accompanying unaudited
consolidated financial statements reflect all
adjustments (consisting of only normal
recurring accruals) necessary to present
fairly the Partnership's consolidated
financial position as of June 30, 1997, its
results of operations for the three and six
months ended June 30, 1997 and 1996 and its
cash flows for the six months ended June 30,
1997 and 1996. Certain prior year balances
have been reclassified to conform with current
year consolidated financial statement
presentation.
The results of operations for the three and
six months ended June 30, 1997 are not
necessarily indicative of the results which
may be expected for the full year. See
Management's Discussion and Analysis of
Financial Condition and Results of Operations
included in this report.
(2)Changes in Partners' Deficit
A summary of changes in Partners' deficit for
the six months ended June 30, 1997 is as
follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1996$(2,246,313)$(1,298,552)$(296,967)$(3,841,832)
Net income 80,503 3,390 847 84,740
Distributions (559,952) (23,579) (5,894) (589,425)
Balance at
June 30, 1997 $(2,725,762)$(1,318,741)$(302,014)$(4,346,517)
</TABLE>
Continued
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. These management agreements
were sold to BRI OP Limited Partnership, a
subsidiary of Berkshire Realty Company Inc., a
publicly traded real estate investment trust
and an affiliate of the General Partners, on
February 28, 1997. The Partnership also
reimburses affiliates of the General Partners
for certain expenses incurred in connection
with the operation of the Partnership and its
properties including 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 were as follows:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Property management
<S> <C> <C> <C> <C>
fees $ 80,562 $ 71,353 $154,855 $139,989
Expense reimbursements 68,177 62,466 130,514 125,702
Charged to operations$148,739 $133,819 $285,369 $265,691
</TABLE>
Due to affiliates consisted of expense
reimbursements of $32,202 and $32,392 at June
30, 1997 and December 31, 1996, respectively.
<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 upon the operations of its remaining
real estate investments. Such ability would
also be impacted by the future availability of
bank borrowings, and upon the future
refinancing and sale of the Partnership's real
estate investments. These sources of
liquidity will be used by the Partnership for
payment of expenses related to real estate
operations, capital improvements, debt service
and other expenses. Cash Flow, if any, as
calculated under Section 8.2(a) of the
Partnership Agreement, will then be available
for distribution to the Partners.
The Partnership expects to spend approximately
$1,484,000 for capital improvements in 1997.
In order to fund the improvements, the
Partnership will use its existing cash
reserves, reserve for replacement, cash flow
from operations as well as any proceeds
received from refinancing. These improvements
consist of internal and external enhancements
which include the replacement of appliances,
carpeting and vinyl flooring at various
properties as well as extensive painting of
the building exteriors at Walden Pond
Apartments ("Walden Pond"). The Partnership
believes that the improvements are necessary
to improve the quality of rental units and
to compete in the properties current market
conditions
The General Partners are in the process of
acquiring an additional loan for Walden Pond
and expect to close in August 1997. It is
expected that the new $900,000 note will bear
interest at a rate of 9.5% and will mature in
February 1999 in conjunction with the first
mortgage note. Increased liquidity will be
used to fund capital improvements at the
Partnership's properties.
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,
1997. The General Partners provide the
information below to meet requirements of the
Partnership Agreement. 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 $(114,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 973,000
Tax basis principal payments on mortgage (129,000)
Expenditures for capital improvements (319,000)
Amounts released from working capital reserves 178,000
Cash Flow $ 589,000
</TABLE>
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Operations
Cash Flow, before additions to working capital
reserves, increased during the six months
ended June 30, 1997, as compared to the six
months ended June 30, 1996, as the increase in
net income, plus depreciation and
amortization, more than offset the increase in
capital improvements.
Total revenue increased for the three and six
months ended June 30, 1997, as compared to the
three and six months ended June 30, 1996, as a
result of rental rate increases implemented at
all the Partnership's properties. This
increase is partially offset by a decrease in
interest income due to lower cash and cash
equivalents available for investment.
Total expenses increased for the three and six
months ended June 30, 1997 as compared to the
three and six months ended June 30, 1996,
primarily due to increases in maintenance,
real estate taxes, management fees and general
and administrative expenses. Maintenance
expense increased due to paving repairs at
Pavillion, Walden Pond and Indian Run
Apartments along with additional landscaping
work at Pavillion and Fenland Field
Apartments. Real estate taxes increased due
to greater property value assessments for
Indian Run and Pavillion Apartments.
Management fees increased in conjunction with
the rise in rental revenue. General and
administrative expense increased as a result
of legal, mailing and printing costs related
to the Partnership's response to the
unsolicited tender offers to purchase
Partnership Units. In addition, increased
charges were incurred in connection with the
preparation and mailing of Partnership reports
and other investor communications.
<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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting Officer of the
Krupp Corporation, a General Partner
<PAGE>
DATE: August 11, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Fund 4 financial statements for the six months ending June 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> 12-31-97
<PERIOD-END> 06-30-97
<CASH> 769,654
<SECURITIES> 0
<RECEIVABLES> 16,007<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 538,651
<PP&E> 41,026,598<F2>
<DEPRECIATION> (25,923,828)<F3>
<TOTAL-ASSETS> 16,427,082
<CURRENT-LIABILITIES> 961,312
<BONDS> 19,812,287<F4>
0
0
<COMMON> (4,346,517)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,427,082
<SALES> 0
<TOTAL-REVENUES> 3,818,518<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,091,422<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 640,283
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,740<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 $40,627,940 and Deferred Expenses of $398,658.
<F3>Includes Depreciation of $25,740,286 and amortization of Deferred Expenses
of $183,542.
<F4>Represents mortgage notes payable of $19,812,287.
<F5>Represents total deficit of the general partners ($302,014) and the
Limited Partners ($4,044,503).
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $1,691,375, real estate taxes of $375,364
and depreciation and amortization of $1,024,683.
<F8>Net income allocated $847 to general partners and $847 to general partners
and $83,893 to limited partners. Average net income of $2.68 per unit
on 30,000 units outstanding.
</FN>
</TABLE>
