UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
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 0-11985
Krupp Realty Limited Partnership-V
Massachusetts 04-2796207
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. 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-V AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1996 1995
Multi-family apartment complexes, net of
accumulated depreciation of $36,339,535
and $34,745,814, respectively $32,475,436 $33,505,527
Cash and cash equivalents 2,267,736 2,022,328
Cash restricted for tenant security deposits 418,208 438,249
Cash restricted for capital improvements 644,556 729,508
Prepaid expenses and other assets 1,406,376 1,370,882
Deferred expenses, net of accumulated
amortization of $435,529 and $401,925,
respectively 455,634 489,238
Total assets $37,667,946 $38,555,732
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable $42,540,740 $42,800,954
Accounts payable 5,050 37,435
Accrued real estate taxes 1,675,344 1,660,000
Accrued expenses and other liabilities 1,180,500 1,183,468
Due to affiliates (Note 4) - 34,327
Total liabilities 45,401,634 45,716,184
Commitments and contingencies (Note 2)
Partners' deficit (Note 3):
Investor Limited Partners
(35,200 Units outstanding) (7,095,080) (6,550,285)
Original Limited Partner (257,249) (234,539)
General Partners (381,359) (375,628)
Total Partners' deficit (7,733,688) (7,160,452)
Total liabilities and Partners' deficit $37,667,946 $38,555,732
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Rental $3,391,375 $3,652,061 $6,636,185 $7,233,226
Interest income 40,553 35,064 80,380 55,404
Total revenue 3,431,928 3,687,125 6,716,565 7,288,630
Expenses:
Operating (Note 4) 926,581 926,613 1,907,196 1,900,138
Maintenance 257,370 280,240 393,391 433,666
General and administrative (Note 4) 11,374 37,392 47,036 60,514
Real estate taxes 483,811 591,012 967,634 1,182,278
Management fees (Note 4) 124,749 138,975 242,695 259,132
Depreciation and amortization 823,510 875,884 1,627,325 1,732,629
Interest 861,676 978,437 1,726,030 1,959,857
Total expenses 3,489,071 3,828,553 6,911,307 7,528,214
Net loss $ (57,143) $ (141,428) $ (194,742) $ (239,584)
Allocation of net loss (Note 3):
Investor Limited Partners
(35,200 Units outstanding) $ (56,572) $ (140,014) $ (192,795) $ (237,188)
Per Unit of Investor Limited
Partner Interest $ (1.61) $ (3.98) $ (5.48) $ (6.74)
Original Limited Partner $ - $ - $ - $ -
General Partners $ (571) $ (1,414) $ (1,947) $ (2,396)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1996 1995
<S> <C> <C>
Operating activities:
Net loss $ (194,742) $ (239,584)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,627,325 1,732,629
Decrease in cash restricted for tenant
security deposits 20,041 2,129
Decrease (increase) in prepaid expenses
and other assets (35,494) 76,038
Decrease in accounts payable (35,409) (112,317)
Increase in accrued real estate taxes 15,344 103,135
Increase (decrease) in accrued expenses and
other liabilities (2,968) 2,001
Decrease in due to affiliates (34,327) (205,333)
Net cash provided by operating activities 1,359,770 1,358,698
Investing activities:
Additions to fixed assets (563,630) (595,518)
Decrease in cash restricted for capital
improvements 84,952 237,484
Increase in accounts payable
related to fixed asset additions 3,024 80,056
Net cash used in investing activities (475,654) (277,978)
Financing activities:
Principal payments on mortgage notes payable (260,214) (288,460)
Distribution (378,494) -
Net cash used in financing activities (638,708) (288,460)
Net increase in cash and cash equivalents 245,408 792,260
Cash and cash equivalents, beginning of period 2,022,328 598,443
Cash and cash equivalents, end of period $2,267,736 $1,390,703
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
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-V and Subsidiary (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, 1995 for additional
information relevant to significant accounting policies followed by the
Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited consolidated financial statements reflect all
adjustments (consisting of only recurring accruals) necessary to present
fairly the Partnership's consolidated financial position as of June 30,
1996, its results of operations for the three and six months ended June
30, 1996 and 1995 and its cash flows for the six months ended June 30,
1996 and 1995. Certain prior year balances have been reclassified to
conform with current period financial statement presentation.
The results of operations for the three and six months ended June 30,
1996 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) Legal Proceeding
The Partnership is a defendant in a class action suit related to the
practice of giving discounts for the early or timely payments of rent at
Park Place. The central issue of the complaint was whether the
operative lease violated a Chicago municipal ordinance relating to late
fee charges because it allowed tenants a discount if rent was paid on
or before the first of the month. The allegation was that,
notwithstanding the stated rental rate and printed discount, the
practice represented an unlawful means of exacting late fee charges. In
addition to seeking damages for any "forfeited" discounts, Plaintiffs
seek statutory damages of two months rent per lease violation plus
reasonable attorneys' fees. To be eligible for punitive damages
Plaintiffs must prove that the Defendant deliberately used a provision
prohibited by the ordinance.
During 1994, the Court ruled in favor of the Defendant, and accepted
the Partnership's Motion to Dismiss the Plaintiff's Third Amended
Complaint. The Plaintiffs filed an appeal with the Appellate Court of
Illinois, First District, which reversed the trial court in July, 1996,
remanding the case to the lower court for trial. Although management
believes that the Defendant will prevail on the issue of statutory
damages, the ultimate outcome of this litigation, including an estimate
of any potential loss, cannot be presently determined and accordingly no
provision for loss has been made in the accompanying consolidated
financial statements.
(3) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the six months ended June
30, 1996 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
<C> <C> <C> <C> <C>
Balance at
December 31, 1995 $(6,550,285) $(234,539) $(375,628) $(7,160,452)
Net loss (192,795) - (1,947) (194,742)
Distribution (352,000) (22,710) (3,784) (378,494)
Balance at
June 30, 1996 $(7,095,080) $(257,249) $(381,359) $(7,733,688)
</TABLE>
(4) Related Party Transactions
Commencing with the date of acquisition of the Partnership's
properties, the Partnership entered into agreements under which
property management fees are paid to an affiliate of the General
Partners for services as management agent. Such agreements provide for
management fees payable monthly at a rate of 5% of the gross receipts
from the properties under management. The Partnership also reimburses
affiliates of the General Partners for certain expenses incurred in
connection with the operation of the Partnership and its properties
including accounting, computer, insurance, travel, legal and payroll;
and with the preparation and mailing of reports and other
communications to the Limited Partners.
Amounts accrued or paid to the General Partners or their affiliates
were as follows:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Property management fees $124,749 $138,975 $242,695 $259,132
Expense reimbursements 64,696 74,670 139,293 112,058
Charged to operations $189,445 $213,645 $381,988 $371,190
</TABLE>
Due to affiliates consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Property management fees $ - $ 15,774
Expense reimbursements - 18,553
$ - $ 34,327
</TABLE>
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
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 operating performance of its real estate
investments. Such ability would also be impacted by the future
availability of bank borrowing sources as current debt matures. These
sources of liquidity will be used by the Partnership for payment of
expenses related to real estate operations, debt service, capital
improvements and 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. In 1995, the General Partners determined
that there was sufficient Cash Flow and working capital reserves to
reinstate semi-annual distributions. These distributions commenced in the
first quarter of 1996 at an annual rate of $20.00 per Unit.
The Partnership's major capital improvement project, the repair of Park
Place's building facade, was completed in the fourth quarter of 1995. The
external improvements, along with extensive interior improvements, were
funded from established reserves and cash generated by the property. The
completion of these improvements has greatly enhanced the appearance of the
property and has resulted in both increased rents and occupancy. The
Partnership's properties, Century II and Park Place, are anticipated to
spend approximately $2,272,000 for capital improvements in 1996 to remain
competitive in their respective markets. Again, the Partnership expects to
fund these improvements from established reserves and cash generated from
the properties.
Cash Flow
Shown below, as required by the Partnership Agreement, is the calculation
of Cash Flow of the Partnership for the six months ended June 30, 1996.
The General Partners provide certain of the information below to meet
requirements of the Partnership Agreement and because they believe that it
is an appropriate supplemental measure of operating performance. However,
Cash Flow should not be considered by the reader as a substitute to net
income (loss), as an indicator of the Partnership's operating performance
or to cash flows as a measure of liquidity.
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net loss for tax purposes $ (185,000)
Items not requiring or (requiring)
the use of operating funds:
Tax basis depreciation and amortization 1,617,000
Principal payments on mortgage notes payable (260,000)
Expenditures for capital improvements (564,000)
Additions to working capital reserves (230,000)
Cash Flow $ 378,000
</TABLE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
Operations
The following discussion relates to the operations of the Partnership and
its properties (Park Place and Century II Apartments) for the three and six
months ended June 30, 1996 and 1995. The sale of Marine Terrace in July,
1995, significantly impacts the comparability of the Partnership's
operations between the three and six month periods.
Cash flow, before additions to working capital reserves and after giving
affect to the sale of Marine Terrace Apartments, has increased for the six
months ended June 30, 1996 as compared to the same period in 1995 due to
increased capital improvements at Park Place in 1995. Net loss decreased
for the three and six months ended June 30, 1996 as compared to the same
period in 1995, as an increase in total revenue more than offset the
increase in total expenses. Strong occupancy at Park Place along with
steady market conditions in Chicago have favorably impacted the
Partnership's revenue throughout the first half of 1996. This, along with
a rise in rental rates at Park Place during the second half of 1995
resulted in an increase in total revenue for the three and six months ended
June 30, 1996 as compared to the same period in 1995. Interest income for
the Partnership increased in 1996 due to a rise in short-term interest
rates coupled with an increase in investments in cash and cash equivalents
as a result of the sale of Marine Terrace in the third quarter of 1995.
Total expenses for the three and six months ended June 30, 1996 as compared
to the same period in 1995, after giving affect to the sale of Marine
Terrace Apartments, have remained relatively stable with the exception of
operating, maintenance, and real estate tax expenses. The increase in
operating expense in comparing the two periods is attributable to increased
utility usage due to adverse weather conditions in the first quarter of
1996 as well as increases in occupancy at Park Place and Century, causing
higher gas consumption. Additionally, operating expense increased as a
result of prior years' insurance refunds received in the second quarter of
1995, along with a rise in expenses incurred in connection with the
operation of the Partnership and its properties, including computer,
accounting, travel, insurance, legal and payroll costs. Catwalk repairs
were completed at Century during the second quarter of 1995 resulting in a
decrease in maintenance expense for the Partnership in 1996. Real estate
taxes decreased for the three and six months ended June 30, 1996 as
compared to the same period in 1995 as a result of refunds on Park Place's
prior years' real estate tax bill received in the first and second
quarters of 1996. The increase in depreciation expense is directly related
to the extensive capital improvement program at Park Place which was
completed in the fourth quarter of 1995.
General
In accordance with Financial Accounting Standard No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which is effective for fiscal years beginning after December
15, 1995, the Partnership has implemented policies and practices for
assessing impairment of its real estate assets.
The Partnership's investments in properties are carried at cost less
accumulated depreciation, unless the General Partners believe there is a
significant impairment in value, in which case a provision to write down
investments in properties to fair value will be charged against income. At
this time, the General Partners do not believe that any assets of the
Partnership are significantly impaired.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is a defendant in a class action suit related to the
practice of giving discounts for the early or timely payments of rent at
Park Place. The central issue of the complaint was whether the
operative lease violated a Chicago municipal ordinance relating to late
fee charges because it allowed tenants a discount if rent was paid on or
before the first day of the month. The allegation was that,
notwithstanding the stated rental rate and printed discount, the
practice represented an unlawful means of exacting late fee charges. In
addition to seeking damages for any "forfeited" discounts, Plaintiffs
seek statutory damages of two months rent per lease violation plus
reasonable attorneys' fees. To be eligible for punitive damages
Plaintiffs must prove that the Defendant deliberately used a provision
prohibited by the ordinance.
During 1994, the Court ruled in favor of the Defendant, and accepted
the Partnership's Motion to Dismiss the Plaintiff's Third Amended
Complaint. The Plaintiffs filed an appeal with the Appellate Court of
Illinois, First District, which reversed the trial court in July, 1996,
remanding the case to the lower court for trial. Although management
believes that the Defendant will prevail on the issue of statutory
damages, the ultimate outcome of this litigation, including an estimate
of any potential loss, cannot be presently determined and accordingly no
provision for loss has been made in the accompanying consolidated
financial statements.
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-V
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of the Krupp
Corporation, a General Partner.
DATE: July , 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 5 financial statements for the six months ending June 30, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,267,736
<SECURITIES> 0
<RECEIVABLES> 70,646<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,398,494
<PP&E> 69,706,134<F2>
<DEPRECIATION> (36,775,064)<F3>
<TOTAL-ASSETS> 37,667,946
<CURRENT-LIABILITIES> 2,860,894
<BONDS> 42,540,740<F4>
0
0
<COMMON> (7,733,688)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 37,667,946
<SALES> 0
<TOTAL-REVENUES> 6,716,565<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,185,277<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,726,030
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (192,795)<F8>
<EPS-PRIMARY> 0<F8>
<EPS-DILUTED> 0<F8>
<FN>
<F1>Includes all receivables grouped in "prepaid expenses and other assets"
on balance sheet.
<F2>Includes apartment complexes of $68,814,971 and deferred expenses of
$891,163.
<F3>Represents depreciation of $36,339,535 and accumulated amortization on
deferred expenses of $435,529.
<F4>Represents mortgage notes payable.
<F5>Represents total deficit of the general partners and limited partners of
($381,359) and ($7,352,329), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Operating expenses of $2,590,318, real estate tax expense of $967,634
and depreciation and amoritzation of $1,627,325.
<F8>Net loss allocated ($1,947) to the general partner and ($192,795) to the
limited partners. Average net loss per unit of limited partners interest
is ($5.48) on 35,200 units outstanding.
</FN>
</TABLE>
