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 March 31, 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
March 31, December 31,
1997 1996
<S> <C> <C>
Multi-family apartment complexes,
net of accumulated depreciation of
$25,236,376 and $24,742,332, respectively $15,202,721 $15,566,325
Cash and cash equivalents 640,022 956,012
Replacement reserve escrow 20,254 31,951
Prepaid expenses and other assets 396,321 809,579
Deferred expenses, net of accumulated
amortization of $170,178 and $156,813,
respectively 228,480 241,845
Total assets $16,487,798 $17,605,712
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $20,002,805 $20,192,138
Accounts payable 20,249 16,938
Due to affiliates (Note 3) 40,504 32,392
Other liabilities 751,564 1,206,076
Total liabilities 20,815,122 21,447,544
Partners' deficit (Note 2):
Investor Limited Partners
(30,000 Units outstanding) (2,707,528) (2,246,313)
Original Limited Partner (1,317,974) (1,298,552)
General Partners (301,822) (296,967)
Total Partners' deficit (4,327,324) (3,841,832)
Total liabilities and Partners' deficit $16,487,798 $17,605,712
</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
Ended March 31,
1997 1996
<S> <C> <C>
Revenue:
Rental $1,888,824 $1,802,209
Other income 13,833 41,941
Total revenue 1,902,657 1,844,150
Expenses:
Operating (Note 3) 554,268 566,621
Maintenance 116,187 130,977
Real estate taxes 182,954 168,713
Management fees (Note 3) 74,293 68,636
General and administrative (Note 3) 41,202 23,034
Depreciation and amortization 507,409 513,998
Interest 320,734 325,207
Total expenses 1,797,047 1,797,186
Income before minority interest 105,610 46,964
Minority interest (1,677) (1,315)
Net income $ 103,933 $ 45,649
Allocation of net income (Note 2):
Investor Limited Partner
Interest (30,000 Units outstanding) $ 98,737 $ 43,367
Per Unit of Investor Limited
Partner Interest $ 3.29 $ 1.45
Original Limited Partner $ 4,157 $ 1,826
General Partners $ 1,039 $ 456
</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 Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Operating activities:
Net income $ 103,933 $ 45,649
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 507,409 513,998
Changes in assets and liabilities:
Decrease in prepaid expenses and other
assets 413,258 228,628
Decrease in other liabilities (454,512) (264,760)
Increase (decrease) in accounts payable 4,110 (40,095)
Increase (decrease) in due to affiliates 8,112 (60,312)
Net cash provided by operating activities 582,310 423,108
Investing activities:
Deposits to replacement reserve escrow (15,715) (15,715)
Withdrawals from replacement reserve escrow 27,412 18,186
Increase (decrease) in accounts payable for fixed
asset additions (799) 6,166
Additions to fixed assets (130,440) (54,561)
Net cash used in investing activities (119,542) (45,924)
Financing activities:
Principal payments on mortgage notes payable (189,333) (184,860)
Distributions (589,425) (589,425)
Net cash used in financing activities (778,758) (774,285)
Net decrease in cash and cash equivalents (315,990) (397,101)
Cash and cash equivalents, beginning of period 956,012 2,802,694
Cash and cash equivalents, end of period $ 640,022 $2,405,593
</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 March 31, 1997, minority interest
of $24,294 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
March 31, 1997 and its results of operations and cash flows for the
three months ended March 31, 1997 and 1996. Certain prior period
balances have been reclassified to conform with current period financial
statement presentation.
The results of operations for the three months ended March 31, 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 three months ended
March 31, 1997 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, 1996 $(2,246,313) $(1,298,552) $(296,967) $(3,841,832)
Net income 98,737 4,157 1,039 103,933
Distributions (559,952) (23,579) (5,894) (589,425)
Balance at
March 31, 1997 $(2,707,528) $(1,317,974) $(301,822) $(4,327,324)
</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. These
management agreements were sold to BRI OP Limited Partnership, 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
Ended March 31,
1997 1996
<S> <C> <C>
Property management fees $ 74,293 $ 68,636
Expense reimbursements 62,337 63,236
Charged to operations $136,630 $131,872
</TABLE>
Due to affiliates consisted of expense reimbursements of $40,504 and
$32,392 at March 31, 1997 and December 31, 1996, respectively.
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 $1,492,000 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 compete with current market conditions,
produce quality rental units and absorb excess market demand at the
properties' respective locations and to both maintain and increase its
current occupancy levels.
Currently, the General Partners are reviewing refinancing options for the
Walden Pond mortgage note. Increased liquidity which may result from this
refinancing 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 three months ended March 31, 1997. The
General Partners provide 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 $ (1,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 486,000
Tax basis principal payments on mortgage (64,000)
Expenditures for capital improvements (130,000)
Releases from working capital reserves 298,000
Cash Flow $ 589,000
</TABLE>
Operations
In comparing the first quarter of 1997 as compared to the same period in
1996, Cash Flow, as calculated by Section 8.2(a) of the Partnership
Agreement, before releases from working capital reserves, decreased, as the
increase in capital improvements more than offset the increase in net
income.
Total revenue increased for the three months ended March 31, 1997, as
compared to the same period in 1996, as a result of rental rate increases
implemented at all of 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 remained stable for the three months ended March 31, 1997,
as compared to the three months ended March 31, 1996, with increases in
real estate taxes, management fees, and general and administrative expense
offset by decreases in operating and maintenance expenses. Real estate
taxes increased due to increased property value assessments for Indian Run
Apartments and Pavillion Apartments. Management fees increased in
conjunction with the rise in rental revenue. General and administrative
expense increased with the increase in legal, mailing and printing costs
related to the Partnership's response to the recent unsolicited tender
offer to purchase Partnership Units. In addition, increased charges were
incurred in connection with the preparation and mailing of Partnership
reports and other investor communications. These increases are offset by
decreases in operating expense, due to lower advertising and leasing
expenses, and maintenance expense, as a result of external wall repairs,
stairway repairs, paving and landscaping completed in 1996, and increased
snow removal expenditures incurred in 1996.
<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.
DATE: May 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial extracted from the financial statements
for the quarter ended March 31, 1997 and is qualifed in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 640,022<F1>
<SECURITIES> 0
<RECEIVABLES> 20,296
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 396,279
<PP&E> 40,837,755<F2>
<DEPRECIATION> (25,406,554)<F3>
<TOTAL-ASSETS> 16,487,798
<CURRENT-LIABILITIES> 812,317
<BONDS> 20,002,805<F4>
0
0
<COMMON> (4,327,324)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 16,487,798
<SALES> 0
<TOTAL-REVENUES> 1,902,657<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,477,990<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 320,734
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,933<F8>
<EPS-PRIMARY> 0<F8>
<EPS-DILUTED> 0<F8>
<FN>
<F1>Represents all receivables included in "prepaid expenses and other assets" on
the consolidated balance sheet.
<F2>Multi-family complexes of $40,439,097 and deferred expenses of $398,658.
<F3>Accumulated depreciation of ($25,236,376) and accumulated amortization
($170,178).
<F4>Represents mortgage notes payable.
<F5>Total deficit of the General Partners ($301,822) and the limited partners
($4,025,502).
<F6>Represents total revenue of the Partnership.
<F7>Includes operating expenses of $785,950, real estate taxes of $182,954,
depreciation and amortization of $507,409 and minority interest of $1,677.
<F8>Net income allocated $1,039 to the General Partners and $102,894 to the Limited
Partners. Average net income per Unit is $3.29. Partnership Units outstanding
totaled 30,000 units.
</FN>
</TABLE>
