UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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.)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 523-7722
(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
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
2000 1999
----------- -----------
<S> <C> <C>
Multi-family apartment
complexes, net of
accumulated depreciation
of $25,118,714 and
$24,736,628, respectively $10,509,321 $10,774,104
Cash and cash equivalents 859,794 856,738
Prepaid expenses and other assets 488,005 901,228
Deferred expenses, net of accumulated
amortization of $307,235 and $291,101,
respectively (Note 2) 40,364 56,498
----------- -----------
Total assets $11,897,484 $12,588,568
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note 2) $16,459,634 $ 6,538,127
Due to affiliates (Note 4) - 33,723
Other liabilities 646,396 968,318
----------- -----------
Total liabilities 17,106,030 17,540,168
----------- -----------
Partners' deficit (Note 3):
Investor Limited Partners
(30,000 Units outstanding) (3,523,193) (3,279,094)
Original Limited Partner (1,374,715) (1,364,438)
General Partners (310,638) (308,068)
----------- -----------
Total Partners' deficit (5,208,546) (4,951,600)
----------- -----------
Total liabilities and Partners' $11,897,484 $ 2,588,568
deficit =========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-2-
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------
2000 1999
---------- ----------
<S> <C> <C>
Revenue:
Rental $1,784,075 $1,718,127
Other income 18,100 12,745
---------- ----------
Total revenue 1,802,175 1,730,872
---------- ----------
Expenses:
Operating (Note 4) 424,242 419,744
Maintenance 123,615 128,997
Real estate taxes 233,483 188,983
Management fees (Note 4) 73,239 65,202
General and administrative (Note 4) 34,557 30,530
Depreciation and amortization 398,220 378,182
Interest 381,176 306,293
---------- ----------
Total expenses 1,668,532 1,517,931
---------- ----------
Income before minority
interest 133,643 212,941
Minority interest (805) (1,651)
---------- ----------
Net income $ 132,838 $ 211,290
========== ==========
Allocation of net income (Note 3):
Investor Limited Partners
(30,000 Units outstanding):
Net income $ 126,196 $ 200,725
========== ==========
Investor Limited Partners
Per Unit:
Net income $ 4.21 $ 6.69
========== ==========
Original Limited Partner
(100 Units outstanding):
Net income $ 5,314 $ 8,452
========== ==========
General Partners:
Net income $ 1,328 $ 2,113
========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-3-
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 132,838 $ 211,290
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 398,220 378,182
Changes in assets and liabilities:
Decrease in prepaid expenses and
other assets 413,223 388,500
Decrease in other liabilities (317,775) (399,049)
Increase (decrease)in due to affiliates (33,723) 74,417
----------- ----------
Net cash provided by operating
activities 592,783 653,340
----------- ----------
Cash flows from investing activities:
Increase (decrease) in other liabilities for
fixed asset additions (4,147) 1,037
Additions to fixed assets (117,303) (195,978)
----------- ----------
Net cash used in
investing activities (121,450) (194,941)
----------- ----------
Cash flows from financing activities:
Principal payments on mortgage notes payable (78,493) (150,344)
Distributions (389,784) (389,783)
Increase in deferred expenses - (30,450)
----------- ----------
Net cash used in financing
activities (468,277) (570,577)
----------- ----------
Net increase (decrease)
in cash and cash equivalents 3,056 (112,178)
Cash and cash equivalents,
beginning of period 856,738 774,230
----------- ----------
Cash and cash equivalents, end of period $ 859,794 $ 662,052
=========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-4-
<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, 1999 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, 2000 and December 31,
1999, minority interest of $10,466 and $11,271, respectively, 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, 2000, its results of operations and its cash flows for the
three months ended March 31, 2000 and 1999.
The results of operations for the three months ended March 31, 2000 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) Mortgage Notes Payable
On February 28, 1999, the Partnership completed the refinancing of Walden
Pond Apartments' mortgage notes payable of $5,500,000 and $900,000.
Monthly principal payments on the new mortgage notes are $6,500 and
$1,100, respectively, with interest payments at the contract rate of
interest equal to the greater of (a) 0.5% per annum in excess of prime
rate, or (b) 8% per annum. The mortgage notes mature on February 28, 2001
and may be prepaid in whole, but not in part, without a prepayment
premium with 45 days prior written notice. During the period ended March
31, 1999 the Partnership paid closing costs of $30,450 for the
refinancing.
Continued
-5-
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(3) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the three months ended
March 31, 2000 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, 1999 $(3,279,094) $(1,364,438) $(308,068) $(4,951,600)
Net income 126,196 5,314 1,328 132,838
Distributions (370,295) (15,591) (3,898) (389,784)
----------- ----------- --------- ----------
Balance at
March 31, 2000 $(3,523,193) $(1,374,715) $(310,638) $(5,208,546)
=========== =========== ========= ===========
</TABLE>
(4) Related Party Transactions
The Partnership pays property management fees to an affiliate of the
General Partners for management services. Pursuant to the management
agreements, management fees are payable monthly at a rate of 5% of the
gross receipts from the properties under management. The Partnership also
reimburses affiliates of the General Partners for certain expenses
incurred in connection with the operation of the Partnership and its
properties, including administrative expenses.
Amounts accrued or paid to the General Partners' affiliates were as
follows:
For the Three Months
Ended March 31,
2000 1999
-------- -------
Property management fees $ 73,239 $ 65,202
Expense reimbursements 57,180 27,795
-------- ---------
Charged to operations $130,419 $ 92,997
======== ========
Due to affiliates consisted of expense reimbursements of $0 and $33,723
at March 31, 2000 and December 31, 1999, respectively.
-6-
<PAGE>
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 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 General Partners, on an ongoing basis, assess the current and future
liquidity needs in determining the levels of working capital reserves the
Partnership should maintain. Adjustments to distributions are made when
appropriate to reflect such assessments. The current annual distribution rate is
$24.69 per Unit, and is paid semiannually in February and August.
Year 2000
The General Partners of the Partnership have conducted an assessment of the
Partnership's core internal and external computer information systems and have
taken the necessary steps to understand the nature and extent of the work
required to make its systems Year 2000 ready. They have evaluated Year 2000
compliance issues with respect to its non-financial systems and have received
assurances from third-party service providers (including but not limited to its
telecommunications providers and banks) with regard to their Year 2000
readiness.
The General Partners completed the testing and conversion of the Partnerships
financial accounting operating systems in February 1998. As a result, the
General Partners have generated operating efficiencies and believe their
financial accounting operating systems are Year 2000 ready. The General Partners
incurred hardware costs as well as consulting and other expenses related to the
infrastructure and facilities enhancements necessary to complete the upgrade and
prepare for the Year 2000. There are no other significant internal systems or
software that the Partnership is using at the present time.
To date, the Partnership has not had, and does not expect to have, any Year 2000
related problems.
Continued
-7-
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Operations
The following discussion relates to the operations of the Partnership and its
properties (Fenland Field, Pavillion and Walden Pond Apartments) for the three
months ended March 31, 2000 and 1999.
Net income decreased during the three months ended March 31, 2000 when compared
to the three months ended March 31, 1999, as the increase in total expenses more
than offset the increase in total revenue. The increase in total revenue is
primarily a result of rental rate increases implemented at all of the
Partnership's properties at the end of the first quarter of 1999. Interest
income increased due to higher cash and cash equivalent balances available for
investment when compared to 1999.
Total expenses for the three months ended March 31, 2000 increased when compared
to the three months ended March 31, 1999 with increases in real estate taxes,
depreciation and interest expense. Real estate tax expense increased as a result
of a reassessment of property values at Walden by the local taxing authority.
Depreciation expense increased in conjunction with increased capital
improvements completed at the properties, particularly interior improvements
which included new carpet, tile, lighting, appliances and mirrors. Interest
expense increased as a result of the refinancing of Walden Pond Apartments'
mortgages in February 1999.
-8-
<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
-9-
<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 15, 2000
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp Realty
Fund 4 Financial Statements for the three months ended March 31, 2000 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 859,794
<SECURITIES> 0
<RECEIVABLES> 37,069 <F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,310,730
<PP&E> 35,975,633 <F2>
<DEPRECIATION> (25,425,948) <F3>
<TOTAL-ASSETS> 11,897,484
<CURRENT-LIABILITIES> 646,396
<BONDS> 16,459,634
0
0
<COMMON> 0
<OTHER-SE> (5,208,546) <F5>
<TOTAL-LIABILITY-AND-EQUITY> 11,897,484
<SALES> 0
<TOTAL-REVENUES> 1,802,175 <F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,287,356 <F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 381,176
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 805 <F8>
<CHANGES> 0
<NET-INCOME> 132,838 <F9>
<EPS-BASIC> 0 <F9>
<EPS-DILUTED> 0 <F9>
<FN>
<F1> Includes all receivables grouped in "prepaid expenses and other assets" on
the Balance Sheet.
<F2> Multi-family complexes of $35,628,034 and deferred expenses of $347,599.
<F3> Accumulated depreciation of $25,118,713 and accumulated amortization of
deferred expenses of $307,235.
<F4> Represents mortgage notes payble.
<F5> Represents total deficit of the General Partners and Limited Partners of
($310,638) and ($4,897,908), respectively.
<F6> Includes all revenue of Partnership.
<F7> Includes operating expenses of $655,653, real estate taxes of $233,483 and
depreciation and amortization of $398,220.
<F8> Includes minority interest of ($805).
<F9> Net income allocated $1,328 to the General Partners and $130,510 to the
Limited Partners. Average net income per Unit of Limited Partner interest
is $4.21 on 30,000 Units outstanding.
</FN>
</TABLE>
