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 September 30, 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)
September 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
Multi-family apartment complexes,
net of accumulated depreciation
of $25,935,707 and $24,736,628,
respectively $ 10,195,466 $ 10,774,104
Cash and cash equivalents 886,322 856,738
Prepaid expenses and other assets 796,380 901,228
Deferred expense, net of accumulated
amortization of $332,354 and
$291,101, respectively (Note 2) 15,247 56,498
------------- -------------
Total assets $ 11,893,415 $ 12,588,568
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note 2) $ 16,299,219 $ 16,538,127
Due to affiliates (Note 4) 52,474 33,723
Other liabilities 969,252 968,318
------------- -------------
Total liabilities 17,320,945 17,540,168
------------- -------------
Partners' deficit (Note 3):
Investor Limited Partners
(30,000 Units outstanding) (3,731,228) (3,279,094)
Original Limited Partner (1,383,474) (1,364,438)
General Partners (312,828) (308,068)
------------- -------------
Total partners' deficit (5,427,530) (4,951,600)
------------- -------------
Total liabilities and partners' deficit $ 11,893,415 $ 12,588,568
============= =============
</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
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental $1,817,770 $1,755,053 $5,408,494 $5,229,234
Other income 17,238 13,934 53,837 40,143
---------- ---------- ---------- ----------
Total revenue 1,835,008 1,768,987 5,462,331 5,269,377
---------- ---------- ---------- ----------
Expenses:
Operating (Note 4) 453,183 484,092 1,330,825 1,377,294
Maintenance 149,500 150,955 423,094 464,150
Real estate taxes 196,697 174,368 618,465 535,865
Management fees (Note 4) 68,463 79,081 213,838 211,335
General and administrative
(Note 4) 61,306 65,111 167,571 162,665
Depreciation and amortization 441,801 403,009 1,240,333 1,175,324
Interest 393,137 362,132 1,162,245 1,042,128
---------- ---------- ---------- ----------
Total expenses 1,764,087 1,718,748 5,156,371 4,968,761
---------- ---------- ---------- ----------
Income before minority interest 70,921 50,239 305,960 300,616
Minority interest (626) (834) (2,323) (3,040)
---------- ---------- ---------- ----------
Net income $ 70,295 $ 49,405 $ 303,637 $ 297,576
========== ========== ========== ==========
Allocation of net income
(Note 3):
Investor Limited Partners
(30,000 Units outstanding):
Net income $ 66,780 $ 46,935 $ 288,455 $ 282,697
========== ========== ========== ==========
Investor Limited Partners
Per Unit:
Net Income $ 2.23 $ 1.56 $ 9.62 $ 9.42
========== ========== ========== ==========
Original Limited Partner
(100 Units outstanding):
Net income $ 2,812 $ 1,976 $ 12,146 $ 11,903
========== ========== ========== ==========
General Partners
Net income $ 703 $ 494 $ 3,036 $ 2,976
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP - IV SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 303,637 $ 297,576
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,240,333 1,175,324
Changes in assets and liabilities:
Decrease (increase) in prepaid
expenses and other assets 104,845 (15,150)
Increase (decrease) in other
liabilities 8,039 (58,773)
Increase in due to affiliates 18,751 199,745
---------- ----------
Net cash provided by operating
activities 1,675,605 1,598,722
---------- ----------
Cash flows from investing activities:
Decrease in other liabilities for
fixed asset additions (7,105) (1,473)
Fixed asset additions (620,441) (527,271)
---------- ----------
Net cash used in investing
activities (627,546) (528,744)
---------- ----------
Cash flows from financing activities:
Principal payments on mortgage notes
payable (238,908) (317,698)
Distributions (779,567) (779,571)
Increase in deferred expenses - (30,450)
---------- ----------
Net cash used in financing
activities (1,018,475) (1,127,719)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 29,584 (57,741)
Cash and cash equivalents, beginning
of period 856,738 774,230
---------- ----------
Cash and cash equivalents, end of
period $ 886,322 $ 716,489
========== ==========
</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 principals
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
September 30, 2000 and December 31, 1999, minority interest of $8,948 and
$11,271, respectively, is included in prepaid and 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 September 30, 2000, its results of
operations for the three and nine months ended September 30, 2000 and 1999 and
its cash flows for the nine months ended September 30, 2000 and 1999.
The results of operations for the three and nine months ended September 30, 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
Apartment' 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
<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 nine months ended September
30, 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 288,455 12,146 3,036 303,637
Distributions (740,589) (31,182) (7,796) (779,567)
----------- ----------- ---------- -----------
Balance at September 30, 2000 $(3,731,228) $(1,383,474) $ (312,828) $(5,427,530)
=========== =========== ========== ===========
</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:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------ -----------------------
2000 1999 2000 1999
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Property management fees $ 68,463 $ 79,081 $ 213,838 $ 211,335
Expense reimbursements 79,279 80,418 216,226 188,670
----------- ----------- ---------- -----------
Charge to operations $ 147,742 $ 159,499 $ 430,064 $ 400,005
=========== =========== ========== ===========
</TABLE>
Due to the affiliates consisted of expense reimbursements of $52,474 and $33,723
at September 30, 2000 and December 31, 1999, respectively.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning
management's expectations regarding the future financial performance and future
events. These forward looking statements involve significant risks 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 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.
Over the past several years real estate markets in general have improved, and
the General Partners feel this is an opportune time to formulate a liquidation
strategy for the Partnership. As such, the General Partners intend to begin the
process of more thoroughly assessing the property sales market in the
Partnership's market areas and developing a disposition strategy which will
yield the highest value to investors through an efficient and orderly
liquidation of the Partnership. In keeping with this strategy, the General
Partners intend to refinance mortgage loans which mature in the next 6 months
with financing that leaves flexibility for the property sales.
Assuming market conditions do not change, the assessment of the property sales
market is consistent with the General Partners' expectations, and an acceptable
disposition plan can be implemented the General Partners expect to complete the
liquidation process over the next 15 months. However, there can be no assurance
that such liquidation will occur, or what amounts may be realized by the
Partnership.
The General Partners, on an ongoing basis, assess the current and future
liquidity needs in determining the level of working capital reserves the
Partnership should maintain. Adjustments to the distribution 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.
Operations
The following discussion relates to the operation of the Partnership and its
properties (Fenland Field, Pavillion and Walden Pond Apartments) for the three
and nine months ended September 30, 2000 and 1999.
Net income increased during the three and nine months ended September 30, 2000
when compared to the three and nine months ended September 30, 1999 with
increases in total revenue more than offsetting increases in total expenses. The
increase in total revenue is primarily as a result of rental rate increases
implemented at all of the Partnership's properties at the end of the first
quarter of 2000. Other income increased due to increases in interest income
resulting from higher average cash and cash equivalent balances available for
investment when compared to 1999.
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP - IV AND SUBSIDIARIES
Operations, Continued
Total expenses for the three and nine months ended September 30, 2000 increased
when compared to the three and nine months ended September 30, 1999 with
increases in real estate tax, depreciation and interest expenses offset by
decreases in operating and maintenance expenses. Real estate tax expense
increased as a result of a reassessment of property values at Walden Pond and
Pavillion by the local tax authority. Depreciation expense increased in
conjunction with increased capital improvements completed at the properties.
Interest expense increased as a result of increases in the prime lending rate.
Operating expense decreased primarily as a result of reductions in salary and
payroll expense. Maintenance expense decreased as a result of improvements
completed during the year.
<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: November 14, 2000
