UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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, 1996
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 0-11987
Krupp Realty Limited Partnership-IV
(Exact name of registrant as specified in its charter)
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)
(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 Interest
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 10-12.
The total number of pages in this document is 30.
<PAGE>
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 Limited Partnership-IV ("KRLP-IV") was formed on December
1, 1982 by filing a Certificate of Limited Partnership in The Commonwealth
of Massachusetts. The Krupp Corporation, a Massachusetts corporation, and
The Krupp Company Limited Partnership-II, a Massachusetts limited
partnership, are the General Partners of KRLP-IV. KRLP-IV has also issued
all of the Original Limited Partner Interests to The Krupp Company Limited
Partnership-II. On January 18, 1983, KRLP-IV commenced the offering of up
to 30,000 units of Investor Limited Partner Interests (the "Units"). As
of March 31, 1983, KRLP-IV received subscriptions for all 30,000 Units at
$1,000 per Unit 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.
The primary business of KRLP-IV is to acquire, operate and ultimately
dispose of real estate. KRLP-IV initially acquired six multi-family
apartment complexes (Copper Creek, Walden Pond (formerly Westbridge),
Indian Run, Fenland Field, Pavillion and Tilbury Woods Apartments), a
retail center (Lakeview Plaza) and invested in a joint venture in Lakeview
Tower (the "Joint Venture") with an affiliated limited partnership. KRLP-
IV considers itself to be engaged only in the industry segment of
investment in real estate.
KRLP-IV sold Lakeview Plaza and Tilbury Woods Apartments in 1990 and
1991, respectively. Additionally, KRLP-IV received a terminating capital
distribution from the Joint Venture with proceeds from the sale of
Lakeview Tower in 1992. In 1990, the General Partners formed three
limited partnerships: Pavillion Partners, Ltd., Copper Creek Partners,
Ltd. and Westbridge Partners, Ltd. At the same time, the General Partners
transferred ownership of Pavillion Apartments to Pavillion Partners, Ltd.,
Copper Creek Apartments to Copper Creek Partners, Ltd., and Walden Pond
Apartments to Westbridge Partners, Ltd. in exchange for a 99% Limited
Partner Interest in the new entities. Westcop Corporation, an affiliate
of KRLP-IV, contributed a total of $11,216 in exchange for a 1% General
Partner Interest in the new entities. KRLP-IV, Pavillion Partners, Ltd.,
Copper Creek Partners, Ltd. and Westbridge Partners, Ltd., are
collectively known as Krupp Realty Limited Partnership-IV and Subsidiaries
(collectively referred to herein as the "Partnership"). The Partnership
endeavored to renegotiate the debt on these properties, the negotiations
were unsuccessful and these partnerships subsequently petitioned for
relief under federal bankruptcy laws.
Pavillion Partners, Ltd. emerged from its bankruptcy proceedings with a
restructuring of its indebtedness during 1991. In 1992, the bankruptcy
court approved the plans of reorganization for Copper Creek Partners, Ltd.
and Westbridge Partners, Ltd. Under their respective plans of
reorganization, the Court allowed the lender to foreclose on Copper Creek
Apartments and the Partnership received a restructuring of Walden Pond
Apartments' indebtedness. For details see Note D to Consolidated
Financial Statements included in Item 8 (Appendix A) of this report.
The Partnership's real estate investments are subject to some seasonal
fluctuations resulting from 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 real estate
investments are located, the availability and cost of borrowed funds, 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 locations 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, increases in 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, 1996, there were 26 full and part-time on-site
personnel employed by the Partnership.
ITEM 2. PROPERTIES
As of December 31, 1996, the Partnership had an aggregate of 1,256
apartment units.
A summary of the Partnership's multi-family real estate investments is
presented below. Schedule III included in Item 8 (Appendix A) to this
report contains additional detailed information with respect to individual
properties.
<TABLE>
<CAPTION>
Average Occupancy
For the Years Ended
Year of December 31,
Description Acquisition Total Units 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Fenland Field Apartments 1983 234 98% 95% 94% 90% 91%
Columbia, Maryland
Indian Run Apartments 1983 256 96% 93% 95% 96% 95%
Abilene, Texas
Pavillion Apartments 1983 350 95% 94% 93% 90% 90%
Garland, Texas
Walden Pond Apartments 1983 416 95% 93% 97% 92% 82%
Houston, Texas
1,256 Units
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Partnership is a party or to 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, 1996 was
approximately 2,000.
The Partnership made the following distributions to its Partners during
the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
Amount Per Unit Amount Per Unit
Limited Partners:
<S> <C> <C> <C> <C>
Investor Limited Partners
(30,000 Units
outstanding) $2,419,804 $80.66 $839,859 $28.00
Original Limited Partner 47,158 35,362
General Partners 24,920 8,841
$2,491,882 $884,062
</TABLE>
The Partnership did not make any distributions during
1993. Due to improvements in the operations of the properties and the
availability of cash flow, the General Partners reinstated distributions
in August, 1994, at a rate of $4.67 per Unit. In 1995 and 1996, the
annual distribution rates were increased to $28.00 and $37.33 per Unit,
respectively. These semiannual distributions are expected to continue in
1997 at an annualized rate of $37.33 per Unit. Additionally, the
Partnership made special distributions to the General Partners and
Investor Limited Partners during the fourth quarter of 1992 and the second
quarter of 1996 with the funds received from the sale of Lakeview Tower
Apartments in 1992. Pursuant to the Partnership Agreement, distributions
from capital transactions, such as the sale of Lakeview Tower, are
allocated 99% to Investor Limited Partners and 1% to the General Partners.
For details, see Note E to Consolidated Financial Statements included in
Item 8 (Appendix A) of this report.
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
Financial Statements and Supplementary Data, which are included in Items 7
and 8 of this report, respectively.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenue $7,307,643 $7,108,711 $6,810,441 $6,228,685 $6,203,999
Loss before gain
on sale of
property and
extraordinary
item (156,880) (21,628) (488,936) (1,468,566) (1,935,963)
Gain on sale of
property - - - - 3,875,915
Extraordinary
item - - - - 2,875,665
Net income
(loss) (156,880) (21,628) (488,936) (1,468,566) 4,815,617
Net income (loss)
allocated to:
Investor Limited
Partners
Income(loss)
before
extra-
ordinary
items (149,036) (20,547) (464,489) (1,395,137) 1,997,991
Per Unit (4.97) (.68) (15.48) (46.50) 66.60
Extraordinary
items - - - - 2,820,848
Per Unit - - - - 94.03
Net income
(loss) (149,036) (20,547) (464,489) (1,395,137) 4,818,839
Per Unit (4.97) (.68) (15.48) (46.50) 160.63
Original Limited
Partner
Loss before
extraordinary
items (6,275) (865) (19,558) (58,743) (77,438)
Extraordinary
items - - - - 26,060
Net loss (6,275) (865) (19,558) (58,743) (51,378)
General Partners
Income (loss)
before
extraordinary
items (1,569) (216) (4,889) (14,686) 19,399
Extraordinary
items - - - - 28,757
Net income
(loss) (1,569) (216) (4,889) (14,686) 48,156
Total assets at
December 31 $17,605,712 $20,887,877 $22,305,143 $24,218,655 $26,040,373
Long-term
obligations at
December 31 19,429,196 20,193,607 20,939,499 22,180,186 22,799,284
Distributions to:
Investor Limited
Partners 2,419,804 839,859 140,003 - 2,000,000
Per Unit 80.66 28.00 4.67 - 66.67
Original Limited
Partner 47,158 35,362 5,895 - -
General
Partners 24,920 8,841 1,474 - 20,202
</TABLE>
Operating results for 1992 are not comparable to 1993 through 1996 because
Lakeview Tower was sold on August 28, 1992, Copper Creek was foreclosed upon
on March 3, 1992 and Walden Pond's debt was restructured February 28, 1992.
Prior performance of the Partnership is not necessarily indicative of future
operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS 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 refinanced Pavillion Apartments and Indian Run Apartments
at lower interest rates during 1994. As a result of the lower rates, the
reduced mortgage payments have provided additional liquidity to the
Partnership. This additional liquidity was used by the Partnership to
partially fund approximately $531,000 of capital improvements at the
properties in 1996 for appliances, carpeting, paving and other exterior
building improvements. The Partnership expects to spend approximately
$1,492,000 for capital improvements in 1997. 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.
Due to improvements in the operations of the properties and reduced debt
service, the Partnership had sufficient cash flow in 1994 to reinstate
distributions at a rate of $4.67 per Unit. The distribution rate was
increased to $28.00 per Unit in 1995 and to $37.33 per Unit in 1996. In
addition, the Partnership made a special distribution of $1,313,031 during
the second quarter of 1996 based on the remaining proceeds from the sale of
Lakeview Tower in 1992. Distributions of net cash proceeds from a capital
transaction made by the Partnership are allocated in accordance with the
Partnership Agreement (as described in Note E to the consolidated financial
statements included in Item 8 (Appendix A) of this report).
Cash Flow
Shown below is a calculation of Cash Flow, as defined by Section 8.2(a)
of the Partnership Agreement, for the year ended December 31, 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.
Rounded to $1,000
Net loss for tax purposes $ (504,000)
Items not requiring (requiring)
the use of operating funds:
Tax basis depreciation and amortization 1,949,000
Tax basis principal payments on mortgage (240,000)
Expenditures for capital improvements (531,000)
Releases from working capital reserves 505,000
Cash Flow $1,179,000
Operations
1996 compared to 1995
Cash Flow, before amounts released from working capital reserves, decreased
as a result of both increased capital improvement expenditures and a
decrease in net income in 1996, as an increase in expenses more than offset
an increase in revenue. Increased rental rates at the Partnership's
properties were instituted at the end of 1995 and the beginning of 1996.
This increase, as well as overall increased average occupancy rates, have
resulted in the increase in rental revenue in 1996 when compared to 1995.
Other income decreased due to lower interest income earned on short-term
investments as average cash balances decreased when compared to 1995.
Total expenses, including operating, maintenance and real estate taxes, have
increased in 1996 as compared to 1995. The rise in operating expense is
attributable to increases in payroll, utility, advertising and leasing
expenses. Payroll was affected by a worker's compensation insurance refund
received by the Partnership's properties in 1995. Additionally, severe
weather contributed to the rise in operating expense as utility expense
increased with higher consumption levels. The additional consumption is
also a direct result of increased occupancy at Pavillion, Walden Pond and
Fenland Field as the Partnership's advertising and leasing efforts were
successful in 1996. Maintenance expense increased due to external wall
repairs at Indian Run, paving, landscaping and stairway repairs at both
Indian Run and Walden Pond, and snow removal expenditures at Fenland Field.
Real estate taxes increased due to increases in the assessed values of
Indian Run and Pavillion. General and administrative expense decreased as a
result of costs incurred in 1995 associated with obtaining appraisals of the
Partnership's properties.
1995 compared to 1994
Cash Flow, before additions to working capital reserves, increased due to a
4% increase in rental revenues and a decrease in interest expense of
$168,000 as a result of the 1994 refinancings of Pavillion and Indian Run.
The refinancings of Pavillion and Indian Run have provided additional
liquidity to the Partnership which assisted the funding of additional
capital improvements in 1995 and allowed the Partnership to command higher
rental rates in the properties' prospective markets.
Other income increased due to an increase in interest income on cash and
cash equivalents as a result of higher average cash balances.
The Partnership realized a reduction in operating expense due to
management's efforts to reduce reimbursable costs and a decrease in payroll
as a result of a worker's compensation insurance refund received by the
Partnership's properties in 1995. Real estate tax expense 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.
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 KRLP-IV and The Krupp Company Limited Partnership-
II, the other General Partner of KRLP-IV, is as follows:
Position with
Name and Age The Krupp Corporation
Douglas Krupp (50) Co-Chairman of the Board
George Krupp (52) Co-Chairman of the Board
Laurence Gerber (40) President
Robert A. Barrows (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. Today, The
Berkshire Group is an integrated real estate, mortgage and healthcare
company which is headquartered in Boston with regional offices throughout
the country. A staff of approximately 3,400 are responsible for the more
than $4 billion under management for institutional and individual clients.
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). 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. Today, The Berkshire Group is an integrated
real estate, mortgage and healthcare company which is headquartered in
Boston with regional offices throughout the country. A staff of
approximately 3,400 are responsible for more than $4 billion under
management for institutional and individual clients. Mr. Krupp attended the
University of Pennsylvania and Harvard University. 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.
Laurence Gerber is the President and Chief Executive Officer of The
Berkshire Group. Prior to becoming President and Chief Executive Officer in
1991, Mr. Gerber held various positions with The Berkshire Group which
included overall responsibility at various times for: strategic planning
and product development, real estate acquisitions, corporate finance,
mortgage banking, syndication and marketing. Before joining The Berkshire
Group in 1984, he was a management consultant with Bain & Company, a
national consulting firm headquartered in Boston. Prior to that, he was a
senior tax accountant with Arthur Andersen & Co., an international
accounting and consulting firm. Mr. Gerber has a B.S. degree in Economics
from the University of Pennsylvania, Wharton School and an M.B.A. degree
with high distinction from Harvard Business School. He is a Certified
Public Accountant. Mr. Gerber also serves as Director of Berkshire Realty
Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR) as
well as President and Trustee of Krupp Government Income Trust and
President and Trustee of Krupp Government Income Trust II.
Robert A. Barrows is the Senior Vice President and Chief Financial
Officer of The Berkshire Group. Mr. Barrows has held several positions
within The Berkshire Group since joining the company in 1983 and is
currently responsible for accounting and financial reporting, treasury, tax,
payroll and office administrative activities. Prior to joining The
Berkshire Group, he was an audit supervisor for Coopers & Lybrand L.L.P. in
Boston. He received a B.S. degree from Boston College 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, 1996, beneficial owners of record owning more than 5%
of the Partnerships 30,000 outstanding Units are as follows:
Title Name and Address Amount and Nature Percent
of of of of
Class Beneficial Owner Beneficial Ownership Class
Investor Mark S. Thompson 1,694.5 Units 5.65%
Limited c/o Equity Resources
Partner Group, Inc.
Units 14 Story Street
Cambridge, MA 02138
The only interests held by management or its affiliates consist of its
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 SCHEDULES 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 or 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) Amended Agreement of Limited Partnership dated as of January
12, 1983 [Exhibit A to Prospectus included in Registrant's
Registration Statement on Form S-11 (File 2-80650)].*
(4.2) Amended Certificate of Limited Partnership filed with the
Massachusetts Secretary of State on March 31, 1983 [Exhibit
4.2 to Registrant's Annual Report on Form 10-K dated December
31, 1983 (File No. 2-80650)].*
(10) Material Contracts
Fenland Field Apartments
(10.1) Management Agreement dated December 19, 1986 between Krupp Realty
Limited Partnership-IV, as Owner, and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent. [Exhibit 10.3 to Registrant's Annual Report on Form 10-K
dated December 31, 1986 (File No. 0-11987)].*
(10.2) Modification and Restatement of Promissory Note dated April 28,
1993 between Krupp Realty Limited Partnership-IV and John Hancock
Mutual Life Insurance Company [Exhibit 10.2 to Registrant's Annual
Report on Form 10-K dated December 31, 1993 (File No. 0-11987)].*
(10.3) Modification and Restatement of Indemnity Deed of Trust and
Security Agreement dated April 28, 1993 between Krupp Realty
Limited Partnership-IV and John Hancock Mutual Life Insurance
Company [Exhibit 10.3 to Registrant's Annual Report on Form 10-K
dated December 31, 1993 (File No. 0-11987)].*
Indian Run Apartments
(10.4) Management Agreement dated June 2, 1983 between Krupp Realty
Limited Partnership-IV, as Owner, and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent [Exhibit 10.16 to Registrant's Annual Report on Form 10-K
dated December 31, 1983 (File No. 2-80650)].*
(10.5) Multifamily Note, dated October 25, 1994 between Bank United of
Texas FSB and Krupp Realty Limited Partnership-IV, a Massachusetts
limited partnership. (File No. 0-11987).*
(10.6) Multifamily Deed of Trust, dated October 25, 1994 by Krupp Realty
Limited Partnership-IV, a Massachusetts limited partnership and
Randolph C. Henson, as Trustee, and Bank United of Texas FSB.
(File No. 0-11987).*
Walden Pond Apartments
(10.7) Management Agreement dated June 2, 1983 between Krupp Realty
Limited Partnership-IV, as Owner, and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent [Exhibit 10.19 to Registrant's Annual Report on Form 10-K
dated December 31, 1983 (File No. 2-80650)].*
(10.8) Certificate of Limited Partnership of Westbridge Partners, Ltd.,
executed March 1, 1990. [Exhibit 19.9 to Registrant's Report on
Form 10-Q dated June 30, 1990 (File No. 0-11987)].*
(10.9) Westbridge Partners, Ltd. Agreement of Limited Partnership
executed March 1, 1990. [Exhibit 20.1 to Registrant's Report on
Form 10-Q dated June 30, 1990 (File No. 0-11987)].*
(10.10) Bill of Sale Agreement between Krupp Realty Limited Partnership-IV
and Westbridge Partners, Ltd., executed March 1, 1990. [Exhibit
20.2 to Registrant's Report on Form 10-Q dated June 30, 1990 (File
No. 0-11987)].*
(10.11) Westbridge Partners, Ltd. First Amendment to Agreement of Limited
Partnership, executed April 9, 1990. [Exhibit 20.3 to
Registrant's Report on Form 10-Q dated June 30, 1990 (File No. 0-
11987)].*
(10.12) Order Granting Motion of First Boston Mortgage Capital Corp. for
Relief from the Automatic Stay dated January 28, 1992. [Exhibit C
to Registrant's Report on Form 8-K dated March 3, 1992 (File No.
0-11987)].*
(10.13) Modification Agreement dated February 28, 1992 between Westbridge
Partners, Ltd. and University Mortgage Acquisition Corp. [Exhibit
10.14 to Registrant's Annual Report on Form 10-K dated December
31, 1993 (File No. 0-11987)].*
(10.14) Renewal Multifamily Note dated February 28, 1992 between
Westbridge Partners, Ltd. and University Mortgage Acquisition
Corp. [Exhibit 10.15 to Registrant's Annual Report on Form 10-K
dated December 31, 1993 (File No. 0-11987)].*
(10.15) Renewal Multifamily Deed of Trust, Assignment of Rents and
Security Agreement dated February 28, 1992 by Westbridge Partners,
Ltd. and John M. Walker, Jr., as Trustee, and University Mortgage
Acquisition Corp. [Exhibit 10.16 to Registrant's Annual Report on
Form 10-K dated December 31, 1993 (File No. 0-11987)].*
Pavillion Apartments
(10.16) Management Agreement dated June 2, 1983 between Krupp Realty
Limited Partnership-IV, as Owner, and Krupp Asset Management
Company, now known as Berkshire Property Management ("BPM"), as
Agent [Exhibit 10.25 to Registrant's Annual Report on Form 10-K
dated December 31, 1983 (File No. 2-80650)].*
(10.17) Certificate of Limited Partnership of Pavillion Partners, Ltd.,
executed March 1, 1990. [Exhibit 19.1 to Registrant's Report on
Form 10-Q dated June 30, 1990 (File No. 0-11987)].*
(10.18) Pavillion Partners, Ltd. Agreement of Limited Partnership executed
March 1, 1990. [Exhibit 19.2 to Registrant's Report on Form 10-Q
dated June 30, 1990 (File No. 0-11987)].*
(10.19) Bill of Sale Agreement between Krupp Realty Limited Partnership-IV
and Pavillion Partners, Ltd., executed March 1, 1990. [Exhibit
19.3 to Registrant's Report on Form 10-Q dated June 30, 1990 (File
No. 0-11987)].*
(10.20) Pavillion Partners, Ltd. First Amendment to Agreement of Limited
Partnership, executed April 9, 1990. [Exhibit 19.4 to Registrant's
Report on Form 10-Q dated June 30, 1990 (File No. 0-11987)].*
(10.21) Pavillion Partners, Ltd. Chapter 11 Voluntary Petition executed
June 4, 1990 in The United States Bankruptcy Court for the
Northern District of Texas, Dallas Division. [Exhibit 10.51 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990 (File No. 0-11987)].*
(10.22) Pavillion Partners, Ltd., Debtor's First Amended Plan of
Reorganization executed January 16, 1991 in The United States
Bankruptcy Court for the Northern District of Texas, Dallas
Division. [Exhibit 10.52 to Registrant's Annual Report on Form 10-
K for the year ended December 31, 1990 (File No. 0-11987)].*
(10.23) Promissory Note dated April 13, 1994 by and between Pavillion
Partners, Ltd. and Sunlife Insurance Company of America. [Exhibit
10.1 to Registrant's Report on Form 10-Q dated June 30, 1994 (File
No. 0-11987)].*
(10.24) Deed of Trust and Security Agreement dated April 13, 1994 between
Pavillion Partners, Ltd. and Sunlife Insurance Company of America.
[Exhibit 10.2 to Registrant's Report on Form 10-Q dated June 30,
1994 (File No. 0-11987)].*
* Incorporated by reference.
c) Reports on Form 8-K
During the last quarter of the year ended December 31, 1996 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 27th day of March, 1997.
KRUPP REALTY LIMITED PARTNERSHIP-IV
By: The Krupp Corporation, a General Partner
By: /s/ Douglas Krupp
Douglas Krupp, 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 27th day of March, 1997.
Signatures Titles
/s/ Douglas Krupp Co-Chairman (Principal Executive
Douglas Krupp Officer) and Director of The Krupp
Corporation, a General Partner.
/s/ George Krupp Co-Chairman (Principal Executive
George Krupp Officer) and Director of The Krupp
Corporation, a General Partner.
/s/ Laurence Gerber President of The Krupp Corporation,
Laurence Gerber a General Partner.
/s/Robert A. Barrows Treasurer of the Krupp Corporation,
Robert A. Barrows a General Partner.
<PAGE>
APPENDIX A
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
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, 1996
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Accountants F-3
Consolidated Balance Sheets at December 31, 1996 and
December 31, 1995 F-4
Consolidated Statements of Operations For the Years Ended
December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Changes in Partners' Equity (Deficit)
For the Years Ended December 31, 1996, 1995 and 1994 F-6
Consolidated Statements of Cash Flows For the Years Ended
December 31, 1996, 1995 and 1994 F-7
Notes to Consolidated Financial Statements F-8 - F-14
Schedule III - Real Estate and Accumulated Depreciation F-15 - F-16
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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Krupp Realty Limited Partnership-IV and Subsidiaries:
We have audited the consolidated financial statements and the financial
statement schedule of Krupp Realty Limited Partnership-IV and Subsidiaries
(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 Limited Partnership-IV and Subsidiaries as of December 31, 1996 and
1995, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996 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.
January 31, 1997
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
<S> <C> <C>
Multi-family apartment complexes,
net of accumulated depreciation of
$24,742,332 and $22,689,200,
respectively (Note D) $15,566,325 $17,088,634
Cash and cash equivalents (Note C) 956,012 2,802,694
Replacement reserve escrow 31,951 19,066
Prepaid expenses and other assets 809,579 682,180
Deferred expenses, net of accumulated
amortization of $156,813 and $103,355,
respectively (Note F) 241,845 295,303
Total assets $17,605,712 $20,887,877
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage notes payable (Note D) $20,192,138 $20,938,160
Accounts payable 16,938 61,162
Due to affiliates (Note F) 32,392 97,840
Other liabilities 1,206,076 983,785
Total liabilities 21,447,544 22,080,947
Partners' equity (deficit) (Note E):
Investor Limited Partners
(30,000 Units outstanding) (2,246,313) 322,527
Original Limited Partner (1,298,552) (1,245,119)
General Partners (296,967) (270,478)
Total Partners' deficit (3,841,832) (1,193,070)
Total liabilities and Partners' deficit $17,605,712 $20,887,877
</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
For the Years Ended December 31, 1996, 1995 and 1994
[CAPTION]
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Revenue:
Rental $ 7,195,526 $ 6,939,316 $ 6,685,659
Other income (Note C) 112,117 169,395 124,782
Total revenue 7,307,643 7,108,711 6,810,441
Expenses:
Operating (Note F) 2,204,240 2,011,396 2,148,096
Maintenance 722,959 630,222 637,806
Real estate taxes 743,584 630,957 535,665
General and administrative
(Note F) 120,653 166,730 117,709
Management fees (Note F) 269,428 272,061 250,025
Depreciation and amortization 2,106,590 2,106,589 2,131,973
Interest (Note D) 1,294,247 1,311,140 1,479,559
Total expenses 7,461,701 7,129,095 7,300,833
Loss before minority interest (154,058) (20,384) (490,392)
Minority interest (2,822) (1,244) 1,456
Net loss (Note G) $ (156,880) $ (21,628) $ (488,936)
Allocation of net loss (Note E):
Investor Limited Partners
(30,000 Units outstanding) $ (149,036) $ (20,547) $ (464,489)
Per Unit of Investor Limited
Partner Interest $ (4.97) $ (.68) $ (15.48)
Original Limited Partner $ (6,275) $ (865) $ (19,558)
General Partners $ (1,569) $ (216) $ (4,889)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Total
Investor Original Partners'
Limited Limited General Equity
Partners Partner Partners (Deficit)
<S> <C> <C> <C> <C>
Balance at
December 31, 1993 $ 1,787,421 $(1,183,439) $ (255,058) $ 348,928
Distributions (140,003) (5,895) (1,474) (147,372)
Net loss (464,489) (19,558) (4,889) (488,936)
Balance at
December 31, 1994 1,182,933 (1,208,892) (261,421) (287,380)
Distributions (839,859) (35,362) (8,841) (884,062)
Net loss (20,547) (865) (216) (21,628)
Balance at
December 31, 1995 322,527 (1,245,119) (270,478) (1,193,070)
Distributions
(Note E) (2,419,804) (47,158) (24,920) (2,491,882)
Net loss (Note E) (149,036) (6,275) (1,569) (156,880)
Balance at
December 31, 1996 $(2,246,313) $(1,298,552) $ (296,967) $(3,841,832)
</TABLE>
The per Unit distributions for the years ended December 31, 1996, 1995
and 1994 were $80.66, $28.00 and $4.67, respectively.
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
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Operating activities:
Net loss $ (156,880) $ (21,628) $ (488,936)
Adjustment to reconcile net
loss to net cash provided by
operating activities:
Depreciation and
amortization 2,106,590 2,106,589 2,131,973
Decrease (increase) in
prepaid expenses and
other assets (127,399) 71,364 119,281
Increase in other liabilities 222,291 43,640 50,689
Increase (decrease) in
accounts payable (50,513) 55,353 (104,617)
Increase (decrease) in due
to affiliates (65,448) 88,523 9,318
Net cash provided by
operating activities 1,928,641 2,343,841 1,717,708
Investing activities:
Additions to fixed assets (530,823) (427,362) (399,171)
Decrease (increase) in replacement
reserve escrow (12,885) 1,274 128,634
Increase in accounts payable related
to fixed asset additions 6,289 - -
Net cash used in investing
activities (537,419) (426,088) (270,537)
Financing activities:
Proceeds from mortgage
notes payable - - 9,747,000
Repayment of mortgage
notes payable - - (10,273,840)
Principal payments on mortgage
notes payable (746,022) (729,129) (704,299)
Increase in deferred expenses - (1,942) (287,487)
Distributions (2,491,882) (884,062) (147,372)
Net cash used in financing
activities (3,237,904) (1,615,133) (1,665,998)
Net increase (decrease) in cash
and cash equivalents (1,846,682) 302,620 (218,827)
Cash and cash equivalents,
beginning of year 2,802,694 2,500,074 2,718,901
Cash and cash equivalents,
end of year $ 956,012 $ 2,802,694 $ 2,500,074
</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
A. Organization
Krupp Realty Limited Partnership-IV ("KRLP-IV") was formed on December 1,
1982 by filing a Certificate of Limited Partnership in The Commonwealth
of Massachusetts. KRLP-IV terminates on December 31, 2020, unless
earlier terminated upon the sale of the last of KRLP-IV and Subsidiaries'
properties or the occurrence of certain other events as set forth in the
Partnership Agreement.
KRLP-IV issued all of the General Partner Interests to The Krupp
Corporation, a Massachusetts corporation, and The Krupp Company Limited
Partnership-II, a Massachusetts limited partnership, in exchange for
capital contributions aggregating $1,000. Except under certain limited
circumstances upon termination of KRLP-IV, the General Partners are not
required to make any additional capital contributions. KRLP-IV also
issued all of the Original Limited Partner Interests to The Krupp Company
Limited Partnership-II in exchange for a capital contribution of $4,000.
The Original Limited Partner is not required to make any additional
capital contributions to KRLP-IV. On January 18, 1983, KRLP-IV commenced
the offering of up to 30,000 Units of Investor Limited Partner Interests
(the "Units"). As of March 31, 1983, KRLP-IV received subscriptions for
all 30,000 Units at $1,000 per Unit and therefore, the public offering
was successfully completed on that date.
In 1990, the General Partners on behalf of KRLP-IV formed three limited
partnerships: Pavillion Partners, Ltd., Copper Creek Partners, Ltd. and
Westbridge Partners, Ltd. At the same time, the General Partners
transferred ownership of Pavillion Apartments to Pavillion Partners,
Ltd., Copper Creek Apartments to Copper Creek Partners, Ltd., and Walden
Pond Apartments to Westbridge Partners, Ltd. in exchange for KRLP-IV's
99% Limited Partner Interest in the new entities. Westcop Corporation
contributed a total of $11,216 in cash to the entities and is the General
Partner in each, with a 1% interest. On March 3, 1992, Copper Creek was
foreclosed upon by the holder of the first and second mortgage notes
pursuant to an agreement approved by the Bankruptcy Court.
KRLP-IV, Pavillion Partners, Ltd., and Westbridge Partners, Ltd. are
collectively known as Krupp Realty Limited Partnership-IV and
Subsidiaries (collectively the "Partnership").
As of December 31, 1996, the Partnership owns four multi-family apartment
complexes.
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 G).
Basis of Presentation
The consolidated financial statements present the consolidated assets,
liabilities and operations of Pavillion Partners, Ltd., Westbridge
Partners, Ltd. and KRLP-IV (see Note A). All intercompany balances
and transactions have been eliminated. At December 31, 1996 and 1995,
a minority interest of $25,971 and $28,793, respectively, is included
in prepaid and other assets.
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.
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 base rent monthly in advance. Rental
revenues are recorded on the accrual basis.
Impairment of Long-Lived Assets
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.
Depreciation
Depreciation is provided for by the use of the straight-line method
over estimated useful lives of the related asset, as follows:
Buildings and improvements 3 to 25 years
Appliances, carpeting and equipment 3 to 5 years
Deferred Expenses
The Partnership amortizes the costs incurred in connection with the
organization of its subsidiaries over a 5-year period using the
straight-line method.
The Partnership amortizes the costs incurred to obtain the financing
of Partnership's properties over the term of the related mortgage
note, using the straight-line method.
Income Taxes
The Partnership is not liable for federal or state income taxes as
Partnership's income or loss is allocated to the Partners for income
tax purposes. In the event that 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 consolidated financial statement presentation.
C. Cash and Cash Equivalents
Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
<S> <C> <C>
Cash and money market accounts $ 458,337 $ 818,058
Commercial paper 497,675 1,984,636
$ 956,012 $ 2,802,694
</TABLE>
At December 31, 1996, commercial paper represents an investment which
matures on January 15, 1997 and has an effective yield of 5.58% per annum.
D. Mortgage Notes Payable
The properties owned by the Partnership are pledged as collateral for the
respective non-recourse mortgage notes payable outstanding at December
31, 1996 and 1995. Mortgage notes payable consist of the following:
<TABLE>
<CAPTION>
Principal Annual Interest
Property 1996 1995 Rate Maturity Date
<S> <C> <C> <C> <C> <C>
Fenland Field
Apartments $ 4,259,525 $ 4,366,104 9.25% June 1, 2000
Indian Run
Apartments 2,682,342 2,713,836 9.51% October 1, 2004
Walden Pond
Apartments 6,381,404 6,936,368 see below February 28, 1999
Pavillion
Apartments 6,868,867 6,921,852 9.25% May 1, 2001
Total $20,192,138 $20,938,160
</TABLE>
Fenland Field Apartments
The non-recourse mortgage note is payable, based on a 20-year
amortization, in equal monthly installments of principal and interest
of $42,167. At maturity, all unpaid principal ($3,824,206) and any
accrued and unpaid interest is due. The note may not be prepaid prior
to June 1, 1998 and thereafter, may be prepaid subject to certain
prepayment premiums. The mortgage note is collateralized by the
property.
Since the mortgage note cannot be prepaid prior to June 1, 1998, the
fair market value cannot be determined.
Indian Run Apartments
Effective October 26, 1994, the Partnership refinanced Indian Run's
first mortgage note in the amount of $2,747,000. The mortgage note is
payable, based on a 25-year amortization, in equal monthly
installments of principal and interest of $24,021. At maturity, all
unpaid principal ($2,298,949) and any accrued and unpaid interest is
due. The note may be prepaid at any time, subject to certain
prepayment premiums.
Based on the borrowing rates currently available to the Partnership
for bank loans with similar terms and average maturities, the fair
value of long-term debt is approximately $3,200,000 and 3,300,000 for
the years ended December 31, 1996 and 1995, respectively.
Walden Pond Apartments
On February 28, 1992, the prior wrap-around mortgage note was
modified in bankruptcy court. The modified principal balance of
$5,500,000, which has a stated rate of 9.5%, is being amortized
over a 30-year period and requires monthly payments of $46,247.
For financial reporting purposes, generally accepted accounting
principles required the Partnership to increase the outstanding
principal balance of the mortgage to the sum of the future cash
flow payments required under the terms of the mortgage, including a
final payment on February 28, 1999 of approximately $5,200,000.
All cash payments made subsequent to the restructure are recorded
as a reduction of the principal balance with no interest expense
recognized by the Partnership.
Since the mortgage note cannot be prepaid prior to March 1, 1997,
the fair market value cannot be determined.
Pavillion Apartments
Effective April 13, 1994, the Partnership refinanced Pavillion's first
mortgage note in the amount of $7,000,000. The Partnership paid a
$76,188 prepayment penalty to the previous mortgage holder. The
mortgage note is payable, based on a 30-year amortization, in equal
monthly installments of principal and interest of $57,587. At
maturity, all unpaid principal ($6,580,326) and any accrued and unpaid
interest is due. The note may not be prepaid until October 13, 1997
and thereafter, may be prepaid subject to certain prepayment premiums.
Since the mortgage note cannot be prepaid until October 13, 1997, the
fair market value cannot be determined.
The aggregate scheduled principal amounts of long-term borrowings due
during the five years ending December 31, 2001 are $762,942, $783,115,
$5,521,757, $4,007,863 and 6,657,438, respectively.
The Partnership paid interest of $1,294,247, $1,311,140 and $1,376,867
during the years ended December 31, 1996, 1995 and 1994, respectively.
E. Partners' Equity (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 thereon. There-
after, profits and losses will be allocated 65% to the Investor Limited
Partners, 28% to the Original Limited Partner and 7% to the General
Partners.
In accordance with the Partnership Agreement, distributions are generally
made on the same basis as the allocations of profits and losses described
above. Upon the occurrence of a capital transaction, as defined in the
Partnership Agreement, proceeds will be applied to the payment of all
debts and liabilities of the Partnership then due and then fund any
reserves for contingent liabilities. Remaining net cash proceeds will
then be distributed 99% to the Invested Limited Partners until they have
received a return of their total invested capital and 1% to the General
Partners, thereafter net cash proceeds will be distributed in accordance
with the Partnership Agreement.
As of December 31, 1996, the following cumulative partner contributions
and allocations have been made since inception of KRLP-IV:
<TABLE>
<CAPTION>
Investor Original
Limited Limited General
Partners Partner Partners Total
<S> <C> <C> <C> <C>
Capital contributions $ 30,000,000 $ 4,000 $ 1,000 $ 30,005,000
Syndication costs (4,050,000) - - (4,050,000)
Cash distributions:
Operations (6,014,213) (253,235) (63,306) (6,330,754)
Capital
transactions (3,299,900) - (33,333) (3,333,233)
Income (loss):
Operations (28,159,784) (1,347,239) (298,051) (29,805,074)
Capital
transactions 9,277,584 297,922 96,723 9,672,229
(2,246,313) $(1,298,552) $(296,967) $(3,841,832)
</TABLE>
F. 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 residential properties
under management. The Partnership also reimburses affiliates of the
General Partners for certain expenses incurred in the operation of the
Partnership and its properties including accounting, computer, insurance,
travel, legal, payroll; and with the preparation and mailing of reports
and other communications to the Limited Partners.
Amounts paid to the General Partners or their affiliates for the years
ended December 31, 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Property management fees $269,428 $272,061 $250,025
Expense reimbursements 256,144 225,694 351,249
Charged to operations $525,572 $497,755 $601,274
</TABLE>
In addition to the amounts above, the following amounts relating to
refinancing and disposition activities were paid to the General Partners or
their affiliates:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cost reimbursements $ - $ 1,942 $ 22,050
</TABLE>
Due to affiliates consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
<S> <C> <C>
Expense reimbursements $ 32,392 $ 97,840
</TABLE>
G. Federal Income Taxes
For federal income tax purposes, the Partnership is depreciating property
using the Accelerated Cost Recovery System ("ACRS") and the Modified
Accelerated Cost Recovery System ("MACRS") depending on which is
applicable.
The reconciliation of the net loss for each year reported in the
accompanying Consolidated Statement of Operations with the net loss
reported in the Partnership's federal income tax return for the years
ended December 31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net loss per Consolidated
Statement of Operations $(156,880) $ (21,628) $(488,936)
Add: Difference in book to tax
depreciation for Fenland
Field and Indian Run 90,299 90,581 73,092
Difference in Partnership's
share of Pavillion Partners
net loss for tax purposes 31,598 37,923 35,153
Difference in Partnership's
share of Westbridge Partners
net income for tax purposes (468,815) (448,394) (448,610)
Net loss for federal income
tax purposes $(503,798) $(341,518) $(829,301)
</TABLE>
The allocation of the net loss for federal income tax purposes for 1996
is as follows:
<TABLE>
<CAPTION>
Portfolio Passive
Income Loss Total
<S> <C> <C> <C>
Investor Limited
Partners $ 106,394 $(585,002) $(478,608)
Original Limited
Partner 4,480 (24,632) (20,152)
General Partners 1,120 (6,158) (5,038)
$ 111,994 $(615,792) $(503,798)
</TABLE>
During the years ended December 31, 1996, 1995 and 1994 the per Unit net
loss to the Investor Limited Partners for federal income tax purposes was
$15.95, $10.81 and $26.26, respectively.
The basis of the Partnership's assets for financial reporting purposes
exceeded its tax basis by approximately $8,151,000 and $8,306,000 at
December 31, 1996 and 1995, respectively. The tax and book basis of the
Partnership's liabilities are the same.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
<TABLE>
<CAPTION>
Costs
Capitalized
Subsequent to
Initial cost to Partnersip Acquisition Depre-
Buildings/ Buildings/ ciable
Description Encumbrances Land Improvements Land Improvment Life
<S> <C> <C> <C> <C> <C> <C>
Fenland Field
Apartments
Columbia, MD $ 4,259,525 $ 365,262 $ 4,852,767 $ 407 $2,128,784 3 to
25
Years
Indian Run Apts.
Abilene, TX 2,682,342 503,574 6,690,341 902 693,695 3 to
25
Years
Walden Pond Apts.
Houston, TX (a) 5,297,562 906,253 12,040,211 1,211 1,246,409 3 to
25
Years
Pavillion Apts.
Garland, TX 6,868,867 680,621 9,042,535 1,199 1,154,480 3 to
25
Years
Total $19,108,296 $2,455,710 $32,625,860 $3,719 $5,223,368
</TABLE>
<TABLE>
<CAPTION>
Gross amounts carried at
End of Year Year
Constr-
Buildings ruction Yr
and Accumulated Compl- Acq-
Description Land improvement total Depreication eted uired
<S> <C> <C> <C> <C> <C> <C>
Fenland Field
Apartments
Columbia, MD $ 365,669 $ 6,981,551 $ 7,347,220 $ 4,718,211 1970 1983
Indian Run Apts.
Abilene, TX 504,476 7,384,036 7,888,512 4,812,886 1982 1983
Walden Pond Apts.
Houston, TX 907,464 13,286,626 14,194,090 8,653,180 1982 1983
Pavillion Apts.
Garland, TX 681,820 10,197,015 10,878,835 6,558,055 1983 1983
Total $2,459,429 $37,849,228 $ 40,308,657 $ 24,742,332
</TABLE>
(a) The mortgage note payable balance per the Consolidated Balance Sheets
includes all
interest payable through maturity (see Note D).
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued
December 31, 1996
Reconciliation of Real Estate and Accumulated Depreciation for each of the
three years in the period ended December 31, 1996:
<TABLE>
<CAPTION>
1996 1995 1994
Real Estate
<S> <C> <C> <C>
Balance at beginning
of year $ 39,777,834 $ 39,350,472 $ 38,951,301
Acquisition
and improvements 530,823 427,362 399,171
Balance at end of year $ 40,308,657 $ 39,777,834 $ 39,350,472
1996 1995 1994
Accumulated Depreciation
Balance at beginning
of year $ 22,689,200 $ 20,636,291 $ 18,613,263
Depreciation expense 2,053,132 2,052,909 2,023,028
Balance at end of year $ 24,742,332 $ 22,689,200 $ 20,636,291
</TABLE>
The Partnership uses the cost basis for property valuation for both
income tax and financial statement purposes. The aggregate cost of the
Partnership's real estate for federal income tax purposes at December 31,
1996 is $40,308,657 and the aggregate accumulated depreciation for
federal income tax purposes is $32,892,839.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 4 financial statements for the year ended December 31, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 956,012
<SECURITIES> 0
<RECEIVABLES> 31,311
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 810,219
<PP&E> 40,707,315<F1>
<DEPRECIATION> (24,899,145)<F2>
<TOTAL-ASSETS> 17,605,712
<CURRENT-LIABILITIES> 1,255,406
<BONDS> 20,192,138<F3>
0
0
<COMMON> 3,841,832<F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,605,712
<SALES> 0
<TOTAL-REVENUES> 7,307,643
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,170,276<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,294,247
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (156,880)<F6>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes apartment complexes of $40,308,657 and deferred expenses of $398,658.
<F2>Includes depreciation of ($24,742,332) and amortization of deferred expenses of
($156,813).
<F3>Represents mortgage notes payable.
<F4>Represents total deficit of general and limited partners of ($296,967) and
($3,544,865), respectively.
<F5>Includes operating expenses of $3,317,280, real estate tax expenses of
$743,584, depreicaiton and amortization of $2,106,590 and minority interest of
$2,822.
<F6>Net loss allocated (1,569) general partners, ($6,275) original limited partners
and ($149,036) to the investor limited partners, for the year ended December
31, 1996. Average net loss per unit of limited partners interest is ($4.97) on
30,000 units outstanding.
</FN>
</TABLE>
