UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X 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, 1999
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 Identification No.)
incorporation or organization)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 523-7722
(Registrant's telephone number, including area code)
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 11-14.
The total number of pages in this document is 33.
<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 in only
one industry segment, 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.
On March 31, 1998, the Partnership sold Indian Run Apartments, a 256-unit
multi-family apartment complex, located in Abilene, Texas, to an unaffiliated
third party (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.
<PAGE>
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, 1999, the Partnership did not employ any personnel.
ITEM 2. PROPERTIES
As of December 31, 1999, the Partnership had an aggregate of 1,000
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
December 31,
Year of ------------------------
Description Acquisition Total Units 1999 1998 1997 1996 1995
- ----------- ----------- ------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fenland Field Apartments 1983 234 97% 99% 100% 98% 95%
Columbia, Maryland
Pavillion Apartments 1983 350 95% 96% 95% 95% 94%
Garland, Texas
Walden Pond Apartments 1983 416 94% 97% 98% 95% 93%
Houston, Texas
------
1,000 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.
<PAGE>
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, 1999 was
approximately 1,692.
The Partnership made the following distributions to its Partners during the
years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1999 1998
----------------- -----------------
Amount Per Unit Amount Per Unit
Limited Partners:
<S> <C> <C> <C> <C>
Investor Limited Partners
(30,000 Units
outstanding) $ 740,590 $24.69 $2,853,592 $95.12
Original Limited Partner 31,183 35,369
General Partners 7,796 29,182
---------- ----------
$ 779,569 $2,918,143
========== ==========
</TABLE>
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 continued in 1997 and the first half of 1998 at
an annualized rate of $37.33 per Unit. As a result of the sale of Indian Run
Apartments, the General Partners reduced the distribution rate to $9.33 per Unit
for the distribution paid in August, 1998. However, the General Partners
increased the distribution rate to $24.69 per Unit beginning with the
distribution payable in February, 1999 due to improved operations.
The Partnership made special capital distributions of $67.12 and $43.33 per
Unit during the second quarter of 1998 and the second quarter of 1996,
respectively, with the funds received from the sale of Indian Run Apartments in
1998 and the sale of Lakeview Tower Apartments in 1992, respectively. Pursuant
to the Partnership Agreement, distributions from capital transactions, such as
the sale of a property, are allocated 99% to Investor Limited Partners and 1% to
the General Partners. For details, see Note G to Consolidated Financial
Statements included in Item 8 (Appendix A) of this report.
<PAGE>
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>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenue $ 7,052,216 $7,169,243 $7,721,285 $7,307,643 $7,108,711
Income (loss) befor
gain on sale of
property and
extraordinary
loss 464,369 574,090 157,116 (156,880) (21,628)
Gain on sale of
property - 2,960,743 - - -
Extraordinary loss - (389,523) - - -
Net income (loss) 464,369 3,145,310 157,116 (156,880) (21,628)
Net income (loss) alocated to:
Investor Limited
Partners 441,150 3,090,894 149,260 (149,306) (20,547)
Per Unit 14.71 103.03 4.98 (4.97) (.68)
Original Limited
Partner 18,575 22,964 6,285 (6,275) (865)
General Partners 4,644 31,452 1,571 (1,569) (216)
Total assets at
December 31, 12,588,568 13,245,952 16,718,318 17,605,712 20,887,877
Long-term
obligations at
December 31, 12,496,331 10,552,809 19,544,471 19,429,196 20,193,607
Distributions:
Investor Limited
Partners 740,590 2,853,592 1,119,903 2,419,804 839,859
Per Unit 24.69 95.12 37.33 80.66 28.00
Original Limited
Partner 31,183 35,369 47,158 47,158 35,362
General Partners 7,796 29,182 11,790 24,920 8,841
</TABLE>
Operating results for the periods presented are not comparable due to the sale
of Indian Run Apartments on March 31, 1998.
The per Unit distributions for the years ended December 31, 1999, 1998, 1997,
1996 and 1995 were $24.69, $95.12, $37.33, $80.66 and $28.00, respectively, of
which $0, $67.12, $0, $43.33 and $0 represented a return of capital.
Prior performance of the Partnership is not necessarily indicative of future
operations.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements including those
concerning Management's expectations regarding the future financial performance
and future events. These forward-looking statements involve significant risk and
uncertainties, including those described herein. Actual results may differ
materially from those anticipated by such forward-looking statements.
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily upon the operations of its remaining real estate
investments. Such ability would also be impacted by the future availability of
bank borrowings, and upon the future refinancing and sale of the Partnership's
real estate investments. These sources of liquidity will be used by the
Partnership for payment of expenses related to real estate operations, capital
improvements, debt service and other expenses. Cash Flow, if any, as calculated
under Section 8.2(a) of the Partnership Agreement, will then be available for
distribution to the Partners.
The Partnership funded approximately $661,000 of capital improvements at
the properties in 1999 for appliances, carpeting and other interior and exterior
building improvements. The Partnership expects to spend approximately $1,191,000
for capital improvements in 2000 consisting of internal enhancements which
include the painting and replacement of cabinets at the properties as well as
exterior improvements, including entrance rehab, replacement of sewer pipes, new
signage, and window replacement at Fenland Apartments. The Partnership expects
to fund these improvements from established reserves and operations. The General
Partner may need to suspend distributions and/or borrow additional funds to pay
for future capital expenditures.
On March 31, 1998, the Partnership sold Indian Run Apartments to an
unaffiliated third party. The Partnership received $5,850,000, less repayment of
the mortgage note payable and interest of $2,658,664 and closing costs of
$138,518. For further details, see Note D to the Consolidated Financial
Statements included in Item 8 (Appendix A) of this report.
Due to improvements in the operations of the properties and reduced debt
service, the Partnership had sufficient cash flow in 1995 to increase the annual
distribution rate to $28.00 per Unit and to $37.33 per Unit in 1996. As a result
of the sale of Indian Run Apartments, the General Partners reduced the
distribution rate to $9.33 per Unit for the distribution paid in August, 1998.
However, the General Partners increased the distribution rate to $24.69 per Unit
beginning with the distribution payable in February, 1999 due to improved
operations during the year.
The Partnership made special distributions of $2,034,000, $67.12 per Unit,
and $1,313,031, $43.33 per Unit, during the second quarter of 1998 and the
second quarter of 1996, respectively, based on the remaining proceeds from the
sale of Indian Run Apartments in 1998 and Lakeview Tower Apartments in 1992,
respectively. Distributions of net cash proceeds from capital transactions are
allocated in accordance with the Partnership Agreement (as described in Note G
to the Consolidated Financial Statements included in Item 8 (Appendix A) of this
report).
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.
On July 31, 1997, the General Partners obtained an additional $900,000 note for
Walden Pond Apartments. The note bears interest at a rate of 9.5% per annum and
matured on February 28, 1999, simultaneous with the first mortgage note. The
<PAGE>
proceeds from the note were placed in escrow and were used to fund capital
improvements at the property. The Partnership paid closing costs of $33,082 to
secure the note. (For further details, see Note E to Consolidated Financial
Statements included in Item 8 (Appendix A) of this report.)
On February 28, 1999 the General Partners refinanced the Walden Pond
mortgage notes of $5,500,000 and $900,000 with monthly principal payments of
$6,500 and $1,100, respectively, and interest payments at the Contract rate of
interest equal to the greater of (a) 0.5% per annum in excess of the prime rate,
or (b) 8% per annum. The notes mature on February 28, 2001. The Partnership paid
closing costs of $30,450 for the refinancing.
Financial Accounting Standards Board Statement No. 137. ("FAS 137")
"Accounting for Derivative Instuments and Hedging Activities-deferral of the
Effective Date of the Statement of Financial Accounting Standards No.133." FAS
137 amended FAS 133 by deferrng the effective date to fiscal quarters of all
fiscal years beginning after June 15, 2000. The General Partners believe that
the implemented of FAS 137 will not have a material impact on the Partnership's
financial statements.
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 incurred, and does not expect to incur,
any significant cost associated with being Year 2000 compliant.
To date, the Partnership has not had, and does not expect to have, any Year
2000 related problems.
Operations
The following discussion relates to the operations of the Partnership and
its properties (Fenland Field, Pavillion and Walden Pond Apartments) for the
years ended December 31, 1999, 1998 and 1997. The sale of Indian Run Apartments
in March, 1998, significantly impacts the comparability of the Partnership's
operations among the three years.
1999 compared to 1998
Net income, net of Indian Run's activity, decreased during 1999 when
compared to 1998 as the increase in total expenses more than offset the increase
in total revenue. The increase in total revenue is a result of rental rate
increases implemented at all the Partnership's properties at the end of first
quarter. Interest income decreased due to lower average cash and cash equivalent
balances available for investment in 1999, as a result of the sale of Indian Run
Apartments in 1998.
Total expenses in 1999, net of Indian Run's activity increased as compared
to 1998 with increases in general and administrative and interest expense. These
<PAGE>
increases were partially offset by a decrease in depreciation and amortization
expenses. General and administrative expenses increased due to higher expenses
incurred in connection with preparation and mailing of Partnership reports and
other investor communications. Interest expense increased with the refinancing
of Walden Pond Apartments' mortgage notes payable. Depreciation and amortization
expense decreased as fixed asset additions purchased in previous years became
fully depreciated. For further discussion of this note, see Note E to the
Consolidated Financial Statements included in Item 8 (Appendix A) of this
report.
1998 compared to 1997
Net income, net of Indian Run's activity, increased during 1998 when
compared to 1997 with an increase in total revenue and a decrease in total
expenses. The increase in total revenue is a result of rental rate increases
implemented at all the Partnership's properties in 1998. Interest income also
increased due to higher cash and cash equivalent balances available for
investment.
Total expenses in 1998, net of Indian Run's activity, decreased as compared
to 1997, with decreases in operating and depreciation and amortization expenses,
partially offset by a rise in real estate taxes and interest expense. Operating
expense decreased as a result of a reduction in liability and workers
compensation expense at the Partnership's properties, due to lower claims
experience. Depreciation and amortization expense decreased as fixed asset
additions purchased in previous years became fully depreciated. Real estate
taxes increased due to an increase in the assessed values of the Partnership's
properties. Interest expense increased as a result of the Walden Pond additional
note. For further discussion of this note, see Note E to the Consolidated
Financial Statements included in Item 8 (Appendix A) of this report.
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 (53) President and Co-Chairman of the Board
George Krupp (55) Co-Chairman of the Board
Wayne H. Zarozny (41) Treasurer
Douglas Krupp co-founded and serves as Co-Chairman and Chief Executive
Officer of The Berkshire Group, an integrated real estate financial services
firm engaged in real estate acquisitions, property management, mortgage banking,
investment sponsorship, venture capital investing and financial management. Mr.
Krupp has held the position of Co-Chairman since The Berkshire Group was
established as The Krupp Companies in 1969 and he has served as the Chief
Executive Officer since 1992. Mr. Krupp serves as a member of the Board of
Trustees at Brigham & Women's Hospital. He is a graduate of Bryant College where
he received an honorary Doctor of Science in Business Administration in 1989 and
was elected trustee in 1990.
<PAGE>
George Krupp is the Co-Founder and Co-Chairman of The Berkshire Group, an
integrated real estate financial services firm engaged in real estate
acquisitions, property management, mortgage banking, investment sponsorship,
venture capital investing and financial management. Mr. Krupp has held the
position of Co- Chairman since The Berkshire Group was established as The Krupp
Companies in 1969. Mr. Krupp has been an instructor of history at the New Jewish
High School in Waltham, Massachusetts since September of 1997. Mr. Krupp
attended the University of Pennsylvania and Harvard University and holds a
Master's Degree in History from Brown University.
Wayne H. Zarozny is Vice President of The Berkshire Group. Mr. Zarozny has
held several positions within The Berkshire Group since joining the company in
1986 and is currently responsible for asset management, accounting, financial
reporting and treasury activities. Prior to joining The Berkshire Group, he was
an audit supervisor for Pannell Kerr Forster International and on the audit
staff of Deloitte, Haskins and Sells in Boston. He received a B.S. degree from
Bryant College, a Master's degree in Business Administration from Clark
University and is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors or executive officers.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 11, 2000, beneficial owners of record owning more than 5% of
the Partnership's 30,000 outstanding Units were as follows:
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature Percent
of of of of
Class Beneficial Owner Beneficial Ownership Class
------- -------------------- -------------------- -------
<S> <C> <C> <C>
Investor Madison Avenue Investment
Limited Partners, LLC
Partner P.O. Box 7533
Units Incline Village, NV 89452 1,671.38 Units(1)(2) 5.6%
Investor First Equity Realty, LLC
Limited
Partner 555 Fifth Avenue, 9th Floor
Units New York, NY 10017 1,671.38 Units(1)(3) 5.6%
Investor The Harmony Group II, LLC
Limited
Partner P.O. Box 7533
Units Incline Village, NV 89452 1,671.38 Units(1)(4) 5.6%
Investor Ronald M. Dickerman
Limited
Partner 555 Fifth Avenue, 9th Floor
Units New York, NY 10017 1,671.38 Units(1)(5) 5.6%
Investor Bryan E. Gordon
Limited
Partner P.O. Box 7533
Units Incline Village, NV 89452 1,671.38 Units(1)(6) 5.6%
Investor Equity Resources Group,
Limited Incorporated
Partner 14 Story Street
Units Cambridge, MA 02138 1,704.50 Units(7) 5.7%
<FN>
(1)According to the statement on Schedule 13G originally filed on December
6, 1999 by Madison Avenue Investment Partners, LLC("MAIP"), First Equity
Realty , LLC ("First Equity"), The Harmony Group II, LLC ("Harmony Group"),
Ronald M. Dickerman and Bryan E. Gordon (collectively, the "Reporting
Persons"), as amended by Amendment No. 1 thereto dated February 11, 2000
(as amended, the "Madison Schedule 13G"), each of MAIP, First Equity,
Harmony Group and Reporting Persons may be deemed to constitute a "group"
within the meaning of Section 13(d)(3) of the Exchange Act. According to
the Madison Schedule 13D, MAIP is the controlling person of various
entities which are the nominee owners of, or the successors by merger to
the assets of nominee owners of, Limited Partner Interest (the "Units") of
the Issuer. As stated in the Madison Schedule 13D, these nominees, none of
which beneficially own 5% or more of the Units, are ISA Partnerhip
Liquidity Investors, Madison/AG Partnership Value Partners III and Cobble
Hill Investments, LP.
According to the Madison Schedule 13D, the controlling members of MAIP are
The Harmony Group II, LLC, a Delaware limited liability company of which
Bryan E. Gordon is the Managing Member, and First Equity Realty, LLC, a New
York limited liability company of which Ronald M. Dickerman is the Managing
Member.
<PAGE>
(2)According to the Madison Schedule 13G, Madison Avenue Investment
Partners, LLC has sole voting and dispositive power with respect to
1,671.38 units of the Partnership.
(3)According to the Madison Schedule 13G, First Equity Realty, LLC has
shared voting and dispositive power with respect to 1,671.38 units of the
Partnership.
(4)According to the Madison Schedule 13G, The Harmony Group II, LLC has
shared voting and dispositive power with respect to 1,671.38 units of the
Partnership.
(5)According to the Madison Schedule 13G, Ronald M. Dickerman has shared
voting and dispositive power with respect to 1,671.38 units of the
Partnership.
(6)According to the Madison Schedule 13G, Bryan E. Gordon has shared voting
and dispositive power with respect to 1,671.38 units of the Partnership.
(7)According to the statement on Schedule 13D originally filed on December
12, 1996 by Equity Resources Group, Incorporated, Equity Resource Cambridge
Fund Limited Partnership, Equity Resource General Fund Limited Partnership,
Equity Resource Fund XVI Limited Partnership, Equity Resource Fund XVII
Limited Partnership, Equity Resource Fund XIX Limited Partnership, James E.
Brooks, Marks S. Thompson and Eggert Dagbjartsson as amended by Amendment
No. 1 thereto dated April 14, 1997 (as amended, the "Equity Resources
Schedule 13D"), Equity Resources Group, Incorporated, James E. Brooks, Mark
S. Thompson and Eggert Dagbjartsson, in their capacities as general
partners of each of Equity Resource Cambridge Fund Limited Partnership,
Equity Resource General fund Limited Partnership, Equity Resource Fund XVI
Limited Partnership, Equity Resource Fund XVII Limited Partnership and
Equity Resource Fund XIX Limited Partnership, respectively, share the power
to vote or direct the vote and to dispose of or direct the disposition of
1,704.5 units.
</FN>
</TABLE>
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. Please see Note H to the Consolidated Financial
Statements.
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:
<PAGE>
(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 BRI OP Limited Partnership, formerly
known as Berkshire Property Management, a
subsidiary of Berkshire Realty Company, Inc.
[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)].*
Walden Pond Apartments
(10.4) Management Agreement dated June 2, 1983 between
Krupp Realty Limited Partnership-IV, as Owner, and
BRI OP Limited Partnership, formerly known as
Berkshire Property Management, a subsidiary of
Berkshire Realty Company, Inc. [Exhibit 10.19 to
Registrant's Annual Report on Form 10-K dated
December 31, 1983 (File No. 2-80650)].*
(10.5) 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)].* (10.6)
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)].*
(10.7) 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)].*
(10.8) 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)].*
(10.9) Order Granting Motion of First Boston Mortgage
Capital Corp. for Relief from the Automatic Stay
dated January 28, 1992.
<PAGE>
[Exhibit C to Registrant's
Report on Form 8-K dated March 3, 1992 (File No.
0-11987)].*
(10.10) 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)].*
(10.11) 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)].*
(10.12) 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)].*
(10.13) First Renewal, Extension and Modification
Argreements dated February 28, 1999 between
Westbridge Partners, Ltd. and FirstTrust Savings
Bank. [Exhibit 10.1 to Registrant's Report on Form
10-Q dated March 31, 1999 (File No. 0-11987)].
Pavillion Apartments
(10.14) Management Agreement dated June 2, 1983 between
Krupp Realty Limited Partnership-IV, as Owner, and
BRI OP Limited Partnership, formerly known as
Berkshire Property Management, a subsidiary of
Berkshire Realty Company, Inc. [Exhibit 10.25 to
Registrant's Annual Report on Form 10-K dated
December 31, 1983 (File No. 2-80650)].*
(10.15) 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)].*
(10.16) 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)].*
(10.17) 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)].*
(10.18) 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)].*
(10.19) 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)].*
(10.20) 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
<PAGE>
Form 10-K for the year ended December 31, 1990
(File No. 0- 11987)].*
(10.21) 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)].*
(10.22) 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, 1999
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 30th day of March, 2000.
KRUPP REALTY LIMITED PARTNERSHIP-IV
By: The Krupp Corporation, a General Partner
By: /s/ Douglas Krupp
Douglas Krupp, President, 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 30th day of
March, 2000.
Signatures Titles
---------- ----------------------------------
/s/ Douglas Krupp President, Co-Chairman (Principal
Douglas Krupp Executive 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/ Wayne H. Zarozny Treasurer (Principal Financial and
Wayne H. Zarozny Accounting Officer) of the Krupp
Corporation, 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, 1999
F-1
<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, 1999 and
December 31, 1998 F-4
Consolidated Statements of Operations For the Years Ended
December 31, 1999, 1998 and 1997 F-5 - F-6
Consolidated Statements of Changes in Partners' Deficit
For the Years Ended December 31, 1999, 1998 and 1997 F-7
Consolidated Statements of Cash Flows For the Years Ended
December 31, 1999, 1998 and 1997 F-8
Notes to Consolidated Financial Statements F-9 - F-16
Schedule III - Real Estate and Accumulated Depreciation F-17 - F-18
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.
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Krupp Realty Limited Partnership-IV and Subsidiaries:
In our opinion, the consolidated financial statements and the
financial statement schedule listed in the index on page F-2 present
fairly, in all material respects, the financial position of Krupp Realty
Limited Partnership- IV and Subsidiaries (the "Partnership") at December
31, 1999 and December 31, 1998, and the results of their operations and
their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in
the United States. 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
of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
February 25, 2000
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
ASSETS
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Multi-family apartment complexes,
net of accumulated depreciation of
$24,736,628 and $23,263,961, respectively
(Notes D and E) $10,774,104 $11,585,489
Cash and cash equivalents (Note C) 856,738 774,230
Prepaid expenses and other assets 901,228 795,705
Deferred expenses, net of accumulated
amortization of $291,101 and $256,510,
respectively 56,498 90,528
----------- -----------
Total assets $12,588,568 $13,245,952
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note E) $16,538,127 $16,933,049
Due to affiliates (Note H) 33,723 10,734
Other liabilities (Note F) 968,318 938,569
----------- -----------
Total liabilities 17,540,168 17,882,352
----------- -----------
Partners' deficit (Note G):
Investor Limited Partners
(30,000 Units outstanding) (3,279,094) (2,979,654)
Original Limited Partner (1,364,438) (1,351,830)
General Partners (308,068) (304,916)
----------- -----------
Total Partners' deficit (4,951,600) (4,636,400)
----------- -----------
Total liabilities and Partners' deficit $12,588,568 $13,245,952
=========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-4
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS For
the Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
Revenue:
<S> <C> <C> <C>
Rental $ 6,989,114 $ 7,066,401 $ 7,667,293
Other income (Note C) 63,102 102,842 53,992
----------- ----------- -----------
Total revenue 7,052,216 7,169,243 7,721,285
----------- ----------- -----------
Expenses:
Operating (Note H) 1,830,422 1,916,491 2,169,020
Maintenance 594,780 606,271 677,491
Real estate taxes 701,956 724,018 759,158
Management fees (Note H) 271,555 287,049 308,841
General and administrative (Note H) 225,045 138,201 153,734
Depreciation and amortization 1,537,145 1,762,642 2,179,399
Interest (Note E) 1,422,506 1,154,453 1,312,291
----------- ----------- -----------
Total expenses 6,583,409 6,589,125 7,559,934
----------- ----------- -----------
Income before minority
interest, gain on sale of property
and extraordinary loss 468,807 580,118 161,351
Minority interest (4,438) (6,028) (4,235)
Gain on sale of property (Note D) - 2,960,743 -
----------- ----------- -----------
Income before extraordinary
loss 464,369 3,534,833 157,116
Extraordinary loss from early
extinguishment of debt (Note D) - (389,523) -
----------- ----------- -----------
Net income (Note I) $ 464,369 $ 3,145,310 $ 157,116
=========== =========== ===========
Allocation of net income (loss) (Note G):
Investor Limited Partners
(30,000 Units outstanding):
Income before gain on
sale of property and
extraordinary loss $ 441,150 $ 545,386 $ 149,260
Gain on sale of property - 2,931,136 -
Extraordinary loss - (385,628) -
----------- ----------- -----------
Net income $ 441,150 $ 3,090,894 $ 149,260
=========== =========== ===========
Investor Limited Partners
Per Unit:
Income before gain on
sale of property and
extraordinary loss $ 14.71 $ 18.18 $ 4.98
Gain on sale of property - 97.70 -
Extraordinary loss - (12.85) -
----------- ----------- -----------
Net income $ 14.71 $ 103.03 $ 4.98
=========== =========== ===========
</TABLE>
Continued
F-5
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
For the Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Original Limited Partner
(100 Units outstanding):
Income before gain on
sale of property and
extraordinary loss $ 18,575 $ 22,964 $ 6,285
Gain on sale of property - - -
Extraordinary loss - - -
----------- ----------- -----------
Net income $ 18,575 $ 22,964 $ 6,285
=========== =========== ===========
General Partners:
Income before gain on
sale of property and
extraordinary loss $ 4,644 $ 5,740 $ 1,571
Gain on sale of property - 29,607 -
Extraordinary loss - (3,895) -
----------- ----------- -----------
Net income $ 4,644 $ 31,452 $ 1,571
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
F-6
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
------------ ----------- ----------- -----------
Balance at
<S> <C> <C> <C> <C>
December 31, 1996 $ (2,246,313) $(1,298,552) $ (296,967) $(3,841,832)
Distributions (1,119,903) (47,158) (11,790) (1,178,851)
Net income 149,260 6,285 1,571 157,116
------------ ----------- ----------- -----------
Balance at
December 31, 1997 (3,216,956) (1,339,425) (307,186) (4,863,567)
Distributions (2,853,592) (35,369) (29,182) (2,918,143)
Net income 3,090,894 22,964 31,452 3,145,310
------------ ----------- ----------- -----------
Balance at
December 31, 1998 (2,979,654) (1,351,830) (304,916) (4,636,400)
Distributions
(Note G) (740,590) (31,183) (7,796) (779,569)
Net income (Note G) 441,150 18,575 4,644 464,369
------------ ----------- ----------- -----------
Balance at
December 31, 1999 $ (3,279,094) $(1,364,438) $ (308,068) $(4,951,600)
============ =========== =========== ===========
</TABLE>
The per Unit distributions for the years ended December 31, 1999, 1998 and 1997
were $24.69, $95.12 and $37.33, respectively, of which $0, $67.12 and $0
represented a return of capital, respectively.
The accompanying notes are an integral
part of the consolidated financial statements.
F-7
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 464,369 $ 3,145,310 $ 157,116
Adjustment to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 1,537,145 1,762,642 2,179,399
Interest earned on repair escrow - (12,898) -
Gain on sale of property - (2,960,743) -
Extraordinary loss from early
extinguishment of debt - 389,523 -
Changes in assets and liabilities:
Decrease (increase) in prepaid
expenses and other assets (105,521) 23,019 (42,867)
Increase (decrease) in other
liabilities 23,850 (276,153) (3,997)
Increase (decrease) in due to
affiliates 22,989 (30,837) 9,179
Releases from real estate tax
and insurance escrows due to
sale of property - 33,722 -
----------- ----------- -----------
Net cash provided by
operating activities 1,942,832 2,073,585 2,298,830
----------- ----------- -----------
Cash flows from investing activities:
Deposits to replacement reserve and
repair escrows - (10,769) (962,861)
Withdrawals from replacement reserve
and repair escrows - 315,159 691,827
Release from replacement reserve
escrow due to sale of property - 11,493 -
Additions to fixed assets (661,282) (1,085,983) (1,498,413)
Increase (decrease) in other
liabilities for fixed asset
additions 5,899 1,994 (6,289)
Proceeds from sale of property, net - 5,711,482 -
----------- ----------- -----------
Net cash used in (provided
by) investing activities (655,383) 4,943,376 (1,775,736)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from note payable - - 900,000
Principal payments on mortgage
notes payable (394,922) (756,495) (764,552)
Repayment of mortgage note payable - (2,638,042) -
Decrease (increase) in deferred
expenses (30,450) 3,191 (33,082)
Payment of prepayment premium - (335,863) -
Distributions (779,569) (2,918,143) (1,178,851)
----------- ----------- -----------
Net cash used in financing
activities (1,204,941) (6,645,352) (1,076,485)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents 82,508 371,609 (553,391)
Cash and cash equivalents,
beginning of year 774,230 402,621 956,012
----------- ----------- -----------
Cash and cash equivalents, end of year $ 856,738 $ 774,230 $ 402,621
=========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
F-8
<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, an affiliate of the General Partners, 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, 1999,
the Partnership owned three 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 I).
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, 1999 and 1998, minority interest of $11,271 and
$15,709, respectively, was included in 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.
Continued
F-9
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
B. Significant Accounting Policies, Continued
Risks and Uncertainties, Continued
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
Real estate assets and equipment are stated at depreciated cost.
Pursuant to Statement of Financial Accounting Standards Opinion
No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of", impairment losses are
recorded on long-lived assets used in operations on a property by
property basis, when events and circumstances indicate that the
assets might be impaired and the estimated undiscounted cash flows
to be generated by those assets are less than the carrying amount
of those assets. Upon determination that an impairment has
occurred, those assets shall be reduced to fair value.
Depreciation
Depreciation is provided for by the use of the straight-line
method over estimated useful lives of the related assets as
follows:
Buildings and improvements 3 to 25 years
Appliances, carpeting and equipment 3 to 8 years
Deferred Expenses
Costs of obtaining and recording mortgages on the properties are
amortized over the term of the related mortgage notes using the
straight-line method which approximates the effective interest
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.
Continued
F-10
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
B. Significant Accounting Policies, Continued
Descriptive Information About Reportable Segments
The Partnership operates and develops apartment communities which
generate rental and other income through the leasing of apartment
units. The General Partners separately evaluate the performance of
each of the Partnership's apartment communities. However, because
each of the apartment communities have similar economic
characteristics, facilities, services and tenants, the apartment
communities have been aggregated into a single dominant apartment
communities segment.
All revenues are from external customers and no revenues are
generated from transactions with other segments. There are no
tenants which contributed 10% or more of the Partnership's total
revenue during 1999, 1998 or 1997.
C. Cash and Cash Equivalents
Cash and cash equivalents consisted of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash and money market accounts $ 856,738 $ 774,230
============ ============
</TABLE>
D. Sale of Indian Run Apartments
On March 31, 1998, the Partnership sold Indian Run Apartments ("Indian
Run"), a 256-unit multi-family apartment complex, located in Abilene,
Texas, to an unaffiliated third party. The Partnership received
$5,850,000, less repayment of the mortgage note payable and interest of
$2,658,664 and closing costs of $138,518. For financial reporting
purposes, the Partnership realized a gain of $2,960,743 on the sale.
The gain was calculated as the difference between the property's
selling price less net book value of the property and closing costs.
In conjunction with the sale of the property on March 31, 1998, the
Partnership prepaid the mortgage note. As a result of the retirement of
debt, the Partnership incurred a prepayment premium of $335,863. The
prepayment premium, as well as unamortized deferred mortgage costs of
$53,660, are reported in the Consolidated Statement of Operations as an
extraordinary loss from early extinguishment of debt.
Continued
F-11
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
E. 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, 1999 and 1998. Mortgage notes payable consisted of the
following:
<TABLE>
<CAPTION>
Principal Annual
--------------------- Interest
Property 1999 1998 Rate Maturity Date
------------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Fenland Field
Apartments $ 3,873,996 $ 4,014,512 9.25% June 1, 2000
Walden Pond
Apartments 5,986,927 6,171,477 see below February 28, 2001
Pavillion
Apartments 6,677,204 6,747,060 9.25% May 1, 2001
----------- -----------
Total $16,538,127 $16,933,049
=========== ===========
</TABLE>
Fenland Field Apartments
The property is subject to a non-recourse mortgage note 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 are
due. The note may be prepaid subject to certain prepayment
premiums. The mortgage note is collateralized by the property.
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
$3,903,000 and $4,157,000 at December 31, 1999 and 1998,
respectively.
Indian Run Apartments
In conjunction with the sale of the property on March 31, 1998,
the Partnership prepaid the mortgage note. As a result of the
retirement of debt, the Partnership incurred a prepayment premium
of $335,863. The prepayment premium, as well as unamortized
deferred mortgage costs of $53,660, are reported in the
Consolidated Statement of Operations as an extraordinary loss from
early extinguishment of debt (see Note D).
Continued
F-12
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
E. Mortgage Notes Payable, Continued
Walden Pond Apartments
On February 28, 1992, the prior wrap-around mortgage note was modified
in bankruptcy court. The modified first mortgage note with a 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 reduce 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. The note may be prepaid at any time, subject to
certain prepayment premiums.
On July 31, 1997, the General Partners obtained a $900,000 non-recourse
note (the "Note") for Walden Pond Apartments from the same lender that
holds the first mortgage note. The Note bears interest at a rate of
9.5% per annum and, commencing September 1, 1997, requires monthly,
interest-only payments until the maturity date. The Note matures on
February 28, 1999, simultaneous with the first mortgage note, at which
time all outstanding principal and any accrued interest are due. The
Note may be prepaid in its entirety without penalty, upon 90 days
written notice, and simultaneous payment of the first mortgage note.
Proceeds from the Note were deposited into an escrow account and will
be used to fund capital improvements at the property. The Partnership
paid closing costs of $33,082 to obtain the Note.
On February 28, 1999 the General Partners refinanced the Walden Pond
mortgage notes of $5,500,000 and $900,000 with monthly principal
payments of $6,500 and $1,100, respectively, and interest payments at
the Contract rate of interest equal to the greater of (a) 0.5% per
annum in excess of the prime rate, or (b) 8% per annum. The notes
mature on February 28, 2001.
Because the interest rate on Walden Pond's debt fluctuates with market
rates, the book value of the mortgages approximates fair market value.
The fair value of long-term debt is approximately $5,234,000 at
December 31, 1998.
Pavillion Apartments
The property is subject to a non-recourse mortgage note 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 are 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 $6,771,000 and $7,109,000 at December
31, 1999 and 1998, respectively.
Due to restrictions on transfers and prepayment, the Partnership may be
unable to refinance certain mortgage notes payable at such calculated
fair value.
Continued
F-13
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
E. Mortgage Notes Payable, Continued
The aggregate scheduled principal amounts of long-term borrowings due
during the five years ending December 31, 2003 are $4,041,797,
$12,496,330, $0 and $0, $0 respectively.
The Partnership paid interest on its mortgage notes of $1,422,506,
$1,154,453 and $1,304,929 during the years ended December 31, 1999,
1998 and 1997, respectively.
F. Other Liabilities
Other liabilities consisted of the following at December 31, 1999 and
1998:
<TABLE>
<CAPTION>
1999 1998
-------- ----------
<S> <C> <C>
Accounts payable $ 39,845 $ 2,802
Accrued real estate taxes 523,496 521,196
Other liabilities 255,300 258,203
Tenant security deposits 149,677 156,368
-------- ----------
$968,318 $ 938,569
======== ==========
</TABLE>
G. Partners' 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.
Thereafter, 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 Investor 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.
Continued
F-14
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
G. Partners' Deficit, Continued
As of December 31, 1999, 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 (8,714,638) (366,945) (91,734) (9,173,317)
Capital
transactions (5,313,560) - (53,673) (5,367,233)
Income (loss):
Operations (27,023,988) (1,299,415) (286,096) (28,609,499)
Capital
transactions 11,823,092 297,922 122,435 12,243,449
------------ ----------- --------- ------------
Balance at
December 31, 1999 $ (3,279,094)$(1,364,438)$(308,068)$ (4,951,600)
============ =========== ========= ============
</TABLE>
H. 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 for the
years ended December 31, 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Property management fees $271,555 $287,049 $308,841
Expense reimbursements 269,037 275,788 268,443
-------- -------- --------
Charged to operations $540,592 $562,837 $577,284
======== ======== ========
</TABLE>
Due to affiliates consisted of expense reimbursements of $33,723 and
$10,734 at December 31, 1999 and 1998, respectively.
I. 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.
Continued
F-15
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
I. Federal Income Taxes, Continued
The reconciliation of the net income (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, 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net income per Consolidated
Statement of Operations $ 464,369 $3,145,310 $ 157,116
Difference in book to tax
depreciation for Fenland Field
and Indian Run 172,556 200,671 59,156
Difference in Partnership's
share of Pavillion Partners
net loss for tax purposes 255,803 172,490 17,560
Difference in Partnership's
share of Westbridge Partners
net income for tax purposes 390,020 (128,156) (401,876)
Difference between book and tax
gain on sale of property - 1,742,577 -
---------- ---------- ----------
Net income (loss) for federal
income tax purposes $1,282,748 $5,132,892 $ (168,044)
========== ========== ==========
</TABLE>
The allocation of the net income for federal income tax purposes for
1999 is as follows:
<TABLE>
<CAPTION>
Portfolio Passive
Income Income Total
---------- ---------- -----------
<S> <C> <C> <C>
Investor Limited
Partners $ 58,583 $1,160,028 $ 1,218,611
Original Limited
Partner 2,467 48,843 51,310
General Partners 617 12,210 12,827
---------- ---------- -----------
$ 61,667 $1,221,081 $ 1,282,748
========== ========== ===========
</TABLE>
During the years ended December 31, 1999, 1998 and 1997 the per Unit
net income (loss) to the Investor Limited Partners for federal income
tax purposes was $40.62, $168.82 and $(5.32), respectively.
The basis of the Partnership's assets for financial reporting purposes
exceeded its tax basis by approximately $3,594,000 and $3,789,000 at
December 31, 1999 and 1998, respectively. The basis of the
Partnership's liabilities for financial reporting purposes is less than
its tax basis by approximately $5,868,000 and $7,580,000 at December
31, 1999 and 1998, respectively.
Continued
F-16
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES SCHEDULE III -
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Costs Capitalized
Intitial Cost Subsequent to
to Partnership Acquisition
---------------------- -------------------
Buildings & Buildings & Depreciable
Description Encumbrances Land Improvements Land Improvements Life
- ----------- ------------ --------- ------------ ------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Fenland Field
Apartments
Columbia, MD $ 3,873,996 $ 365,262 $ 4,852,767 $ 407 $2,902,623 3 to 25 Years
Walden Pond
Apartments
Houston, TX(a) 5,986,927 906,253 12,040,217 1,211 2,701,441 3 to 25 Years
Pavillion
Apartments
Garland, TX 6,677,204 680,621 9,042,535 1,199 2,016,196 3 to 25 Years
----------- ---------- ----------- ------ ----------
Total $16,538,127 $1,952,136 $25,935,519 $2,817 $7,620,260
=========== ========== =========== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts Carried at
End of Year
----------------------------------
Buildings Year
and Accumulated Construction Year
Description Land Improvements Total Depreciation Completed Acquired
- ----------- ---------- ------------ ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Fenland Field
Apartments
Columbia, MD $ 365,669 $ 7,755,390 $ 8,121,059 $ 5,906,106 1970 1983
Walden Pond
Apartments
Houston, TX 907,464 14,741,658 15,649,122 10,799,030 1982 1983
Pavillion
Apartments
Garland, TX 681,820 11,058,731 11,740,551 8,031,492 1983 1983
---------- ----------- ----------- -----------
Total $1,954,953 $33,555,779 $35,510,732 $24,736,628
========== =========== =========== ===========
</TABLE>
(a) The mortgage note payable balance per the Consolidated Balance
Sheets includes all interest payable through maturity (see Note E).
Continued
F-17
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued
December 31, 1999
Reconciliation of Real Estate and Accumulated Depreciation for each of
the three years in the period ended December 31, 1999:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
Real Estate
-----------
<S> <C> <C> <C>
Balance at beginning
of year $ 34,849,450 $ 41,807,070 $ 40,308,657
Acquisition
and improvements 661,282 1,085,983 1,498,413
Sale of property - (8,043,603) -
------------ ------------ ------------
Balance at end of year $ 35,510,732 $ 34,849,450 $ 41,807,070
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
Accumulated Depreciation
------------------------
<S> <C> <C> <C>
Balance at beginning
of year $ 23,263,961 $ 26,859,567 $ 24,742,332
Depreciation expense 1,472,667 1,697,258 2,117,235
Sale of property - (5,292,864) -
------------ ------------ ------------
Balance at end of year $ 24,736,628 $ 23,263,961 $ 26,859,567
============ ============ ============
</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, 1999 is $35,515,681 and the aggregate accumulated depreciation for
federal income tax purposes is $29,305,219.
F-18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp Realty
Fund 4 Financial Statements for the twelve months ended December 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 856,738
<SECURITIES> 0
<RECEIVABLES> 18,159<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 883,069
<PP&E> 35,858,331<F2>
<DEPRECIATION> (25,027,729)<F3>
<TOTAL-ASSETS> 12,588,568
<CURRENT-LIABILITIES> 1,002,041
<BONDS> 16,538,127<F4>
0
0
<COMMON> 0
<OTHER-SE> (4,951,600)<F5>
<TOTAL-LIABILITY-AND-EQUITY> 12,588,568
<SALES> 0
<TOTAL-REVENUES> 7,052,216<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,160,903<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,422,506
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 4,438<F8>
<CHANGES> 0
<NET-INCOME> 464,369<F9>
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes all receivables grouped in "prepaid expenses and other assets" on
the Balance Sheet.
<F2>Multi-family complexes of $35,510,732 and deferred expenses of $347,599.
<F3>Accumulated depreciation of $24,736,628 and accumulated amortization of
deferred expenses of $291,101.
<F4>Represents mortgage notes payable.
<F5>Represents total deficit of the General Partners and Limited Partners of
($308,068) and ($4,643,532), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $2,921,802, real estate taxes of $701,956 and
depreciation and amortization of $1,537,145.
<F8>Includes minority interest of $4,438.
<F9>Net income allocated $4,644 to the General Partners and $459,725 to Limited
Partners. Average net income per Unit of Limited Partners interest is $14,71 on
30,000 Units outstanding.
</FN>
</TABLE>
