UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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, 1998
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 0-11985
Krupp Realty Limited Partnership-V
(Exact name of registrant as specified in its charter)
Massachusetts 04-2796207
(State or other jurisdiction of (IRS Employer
incorporation or organization)
Identification No.)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (617) 523-7722
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units
of Investor
Limited Partner
Interest
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the
registrant was required to file such reports),
and (2) has been subject to such filing
requirements for the past 90 days. Yes X
No
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and
will not be contained, to the best of
registrant's knowledge, in definitive proxy or
information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ].
Aggregate market value of voting securities
held by non-affiliates: Not applicable.
Documents incorporated by reference: Part IV,
Item 14.
The exhibit index is located on pages 10-13.
The total number of pages in this document is
31.<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-V ("KRLP-V")
was formed on June 16, 1983 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-V. KRLP-V issued
all of the Original Limited Partner Interests
to The Krupp Company Limited Partnership-II.
On September 6, 1983, KRLP-V, pursuant to a
sales agent agreement, commenced the marketing
and sale of units of Investor Limited Partner
Interest ("Units") for $1,000 per Unit, 35,200
of which were sold. For further details, see
Note A to Consolidated Financial Statements
included in Item 8 (Appendix A) of this
report.
KRLP-V considers itself to be engaged only in
the industry segment of investment in real
estate. KRLP-V invested the net proceeds from
the offering in leveraged real estate. KRLP-V
originally invested in four multi-family
apartment complexes (Century II, Marine
Terrace, Fieldcrest Apartments and Park Place
Tower Apartments) and a joint venture in
Lakeview Tower Apartments (the "Joint
Venture") with Krupp Realty Limited
Partnership-IV, an affiliated limited
partnership. The aggregate purchase price of
the properties was approximately $67 million
and KRLP-V originally funded approximately
$2.3 million to the Joint Venture.
On March 20, 1989, the General Partners formed
Krupp Realty Park Place-Chicago Limited
Partnership ("Realty-V") as a prerequisite for
the refinancing of Park Place Tower Apartments
("Park Place"). At the same time, the General
Partners transferred ownership of Park Place
to Realty-V. The General Partner of Realty-V
is The Krupp Corporation ("Krupp Corp."). The
Limited Partner of Realty-V is KRLP-V. Krupp
Corp. has beneficially assigned its interest
in Realty-V to KRLP- V. KRLP-V and Realty-V
are collectively known as Krupp Realty Limited
Partnership-V and Subsidiary (collectively
referred to herein as the "Partnership").
The Partnership sold two of its apartment
complexes, Fieldcrest Apartments and Marine
Terrace, in 1992 and 1995, respectively. The
Partnership also received a distribution of
proceeds from the sale of the Joint Venture in
1992.
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, real estate
tax rates, operating expenses, energy costs,
government regulations and federal and state
income tax laws. The requirements for
compliance with federal, state and local
regulations to date have not had an adverse
effect on the Partnership's operations, and no
adverse effect therefrom is anticipated in the
future.
The Partnership's investments in real estate
are also subject to such risks as (i)
competition from existing and future projects
held by other owners in the locations of the
Partnership's properties, (ii) fluctuations
in rental income due to changes in 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, 1998, the Partnership did
not employ any personnel.
ITEM 2. PROPERTIES
As of December 31, 1998, the Partnership had
leveraged investments in two apartment
complexes having an aggregate of 1,369 units.
One of the complexes has an additional 18,417
square feet of leasable commercial space.
A summary of the Partnership's real estate
investments is presented below. Schedule III
included in Item 8 (Appendix A) of this report
contains additional detailed information with
respect to individual properties.
<TABLE>
<CAPTION>
Total Units/ Average Occupancy
Current For the Year Ended
Year of Leasable December 31,
<S> <C> <C> <C> <C> <C>
DescriptionAcquisition Square Footage 1998 1997 1996 19951994
Century II Apts.
Cockeysville, Maryland 1984 468 Units 100% 100% 96% 92% 92%
Park Place Tower Apts. 901 Units 99% 99% 96% 94% 94%
Chicago, Illinois 1984 18,417 Sq. Ft. 64% 64% 76% 83% 83%
</TABLE>
ITEM 3. 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 Tower Apartments and Marine
Terrace Apartments. The central issue of the
complaint is 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 and reasonable
attorneys' fees. To be eligible for such
damages plaintiffs must prove that the
defendants deliberately used a provision
prohibited by the ordinance.
During 1994, the Court ruled in favor of the
defendants, 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. During 1996, the decision was
reversed on appeal and the case remanded to
trial court for further proceedings. The
defendants intend to vigorously defend this
case.
Continued discussions with Plaintiffs' counsel
have resulted in a tentative settlement which
was presented to the court in December, 1998.
Although the settlement has not been
finalized, the Partnership recorded provisions
totaling $1,015,000 in the 1998 and 1997
consolidated financial statements of $733,000
and $282,000, respectively.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS
The transfer of Units 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, 1998 was approximately 2,100.
One of the objectives of the Partnership is to
generate cash available for distribution. The
General Partners discontinued distributions
during 1990 due to insufficient operating
cash flow. However, during 1993, the
Partnership distributed $27,888 which was
equivalent to the required withholding tax for
the state of Maryland which arose from the
sale of Fieldcrest Apartments. This amount
was paid to the state of Maryland for the
benefit of all Partners.
In 1995, the General Partners determined that
there was sufficient Cash Flow, as calculated
under section 8.2 (a) of the Partnership
Agreement ("Cash Flow"), and working capital
reserves to reinstate distributions. These
semiannual distributions, which commenced in
the first quarter of 1996, are paid at an
annual rate of $20.00 per Unit. The General
Partners believed there was sufficient Cash
Flow and working capital reserves to increase
the annual distribution rate in 1997 to the
current rate of $40.00 per Unit.
The Partnership made the following
distributions to its Partners during the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
Amount Per Unit Amount Per Unit
Limited Partners:
Investor Limited Partners
(35,200 Units
<S> <C> <C> <C> <C>
outstanding) $1,408,000 $ 40.00 $1,408,000$ 40.00
Original Limited Partner 90,839 90,839
General Partners 15,140 15,140
$1,513,979 $1,513,979
</TABLE>
<page<
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected
financial information regarding the
Partnership's consolidated financial position
and operating results. This information
should be used in conjunction with
Management's Discussion and Analysis of
Financial Condition and Results of Operations
and the Consolidated Financial Statements and
Supplementary Data, which are included in
Items 7 and 8 of this report, respectively.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Total revenue$15,100,395 $14,523,598$13,660,261$13,839,760$13,652,413
Income (loss) before
gain from capital
transactions 692,911 (304,383)(119,075) (795,377) (1,450,214)
Gain on sale of
property - - - 3,265,789 -
Income (loss) before
extraordinary loss692,911 (304,383)(119,075) 2,470,412 (1,450,214)
Extraordinary loss - (288,156) - (93,215) -
Net income (loss) 692,911(592,539)(119,075)2,377,197 (1,450,214)
Net income (loss)
allocated to:
Investor Limited
Partners 644,407 (586,614) (117,884) 2,353,425 (1,435,712)
Per Unit 18.31 (16.67) (3.35) 66.86 (40.79)
Original Limited
Partner 41,575 - - - -
General Partners 6,929 (5,925) (1,191) 23,772 (14,502)
Total assets at
December 31, 34,721,709 35,457,032 37,162,269 38,555,732 42,604,180
Long-term obligations
at December 31, 41,235,548 41,848,811 41,700,453 42,273,669 46,805,538
Distributions:
Investor Limited
Partners 1,408,000 1,408,000 704,000 - -
Per Unit 40.00 40.00 20.00 - -
Original
Limited Partner 90,839 90,839 45,419 - -
General Partners 15,140 15,140 7,570 - -
</TABLE>
The Selected Financial Data results for the
periods presented are not comparable due to
the sale of Marine Terrace on July 19, 1995.
The per Unit distributions for the years ended
December 31, 1998, 1997, 1996, 1995 and 1994
were $40.00, $40.00, $20.00, $0 and $0,
respectively, none of which 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 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, 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. In 1995, the General Partners determined
that there was sufficient Cash Flow and working capital reserves to
reinstate distributions. These semiannual distributions commenced in the
first quarter of 1996 at an annual rate of $20.00 per Unit. Beginning with
the distribution paid in February 1997, the annual distribution rate was
increased from $20.00 per Unit, to the current rate of $40.00 per Unit,
based on sufficient Cash Flow and working capital reserves.
On December 10, 1997, the Partnership completed the refinancing of the
Century II Apartments ("Century") mortgage note. The property was
refinanced with a $11,000,000 non-recourse mortgage note payable at the
rate of 6.75% per annum with monthly principal and interest payments of
$71,346. The Partnership used the majority of the proceeds from the
refinancing to repay the existing mortgage note on the property of
$10,309,332, pay closing costs of $236,763, to pay a prepayment premium of
$210,825 and to establish various escrows.
The Partnership's properties, Century and Park Place, have spent
approximately $1,490,000 in 1998 and are expected to spend approximately
$2,036,000 for capital improvements in 1999 in order to remain competitive
in their respective markets. These improvements include floor covering,
pavement upgrades and appliance replacements, as well as interior
improvements at the Partnership's properties. The Partnership expects to
fund these improvements from established reserves and cash generated from
property operations.
Financial Accounting Standards Board Statement
No. 131 ("FAS 131") "Disclosures about
Segments of an Enterprise and Related
Information' establishes standards for
disclosing measures for profit or loss and
total assets for each reportable segment. FAS
131 is effective for fiscal years beginning
after December 15, 1997. Financial
Accounting Standards Board Statement No. 133
("FAS 133") "Accounting for Derivatives" is
effective for fiscal years beginning after
June 15, 1999. FAS 133 establishes standards
related to the accounting and disclosure
requirements of derivative financial
instruments. Emerging Issues Task Force
ruling 97-11 ("EITF 97-11") entitled
"Accounting For Real Estate Property
Acquisitions", is effective March 19, 1998.
EITF 97-11 provides that real estate companies
must expense, as incurred, the internal costs
of identifying and acquiring operating
property. The General Partners believe that
the implementation of FAS 131 and EITF 97-11
do not have a material impact on the
Partnership's financial statements, nor will
the implementation of FAS 133.
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 further
necessary steps to understand the nature and
extent of the work required to make its
systems Year 2000 ready in those situations in
which it is required to do so. The Year 2000
readiness issue concerns the inability of
computerized information systems to accurately
calculate, store or use a date after 1999.
This could result in a system failure or
miscalculations causing disruptions of
operations. The Year 2000 issue affects
virtually all companies and all organizations.
In this regard, the General Partners of the
Partnership, along with certain affiliates,
began a computer systems project in 1997 to
significantly upgrade its existing hardware
and software. The General Partners completed
the testing and conversion of the 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. Costs incurred by the
Partnership are not significant to date.
There are no other systems or software that
the Partnership is using at the present time.
The General Partners of the Partnership are
currently in the process of identifying,
evaluating and remedying the Partnership's
Year 2000 compliance issues with respect to
its non-financial systems, such as computer
controlled elevators, boilers, chillers or
other miscellaneous systems. The General
Partners are in the process of completing the
Partnership's Year 2000 compliance initiatives
at its properties. Based on their
identification and assessment efforts to date,
the General Partners believe that certain of
the computer equipment and software the
Partnership currently uses will require
modification or replacement. However, the
General Partners do not believe that the
future efforts to achieve the Partnership's
Year 2000 compliance initiatives will result
in material cost to the Partnership or
significantly interrupt services or
operations.
The General Partners of the Partnership are in
the process of evaluating the potential
adverse impact that could result from the
failure of material third-party service
providers (including but not limited to its
banks and telecommunications providers) and
significant vendors to be Year 2000 ready. No
estimate can be made at this time as to the
impact of the readiness of such third parties.
However, if any of the third party service
providers cease to conduct business due to
Year 2000 related problems, the General
Partners expect to be able to contract with
alternate providers without experiencing any
material adverse effects on the Partnership's
financial condition and results of operations.
The Partnership is in the process of
coordinating their contingency plan with the
property manager, in charge of operations.
Operations
The following discussion relates to the
operations of the Partnership and its
properties (Park Place Tower and Century II
Apartments) for the years ended December 31,
1998, 1997 and 1996.
1998 compared to 1997
Net income increased in 1998 as compared to
1997, as rental revenue increased and expenses
decreased.
In comparing 1998 to 1997, the increase in
rental revenue is attributable to residential
rental rate increases implemented at Park
Place and Century.
Total expenses decreased when comparing 1998
to 1997, primarily due to decreases in
operating, maintenance, real estate taxes and
interest expenses, partially offset by an
increase in general and administrative and
depreciation expenses. The decrease in
operating expense is mainly a result of
decreases in utilities and insurance expenses.
Lower gas expenditures are attributable to a
more energy efficient system at Park Place.
The decrease in insurance expense is due to a
reduction in liability and workers
compensation expense at the Partnership's
properties, due to lower claims experience.
Maintenance expense decreased primarily due to
payment of an insurance deductible in 1997 for
flood damage at Park Place. Real estate taxes
decreased due to actual 1997 tax bills for Park Place
lower than estimated. Interest
expense decreased as a result of the
refinancing of Century's mortgage note in
December, 1997. The increase in general and
administrative expense is due to an increase
in legal expense related to the litigation
discussed in Note F to Consolidated Financial
Statements included in Item 8 (Appendix A) of
this report. Depreciation expense increased
in conjunction with capital improvement
expenditures.
1997 compared to 1996
Net loss, before extraordinary loss, increased
in 1997 when compared to 1996 as the increase
in total expenses more than offset the
increase in revenue.
Total revenue increased in 1997 when compared
to 1996, primarily due to increases in average
occupancy at both Park Place and Century, as
well as increased rental rates at Park Place.
Average occupancy rates at Century increased
from 96% to 100% in 1996 and 1997,
respectively. Average residential occupancy
rates at Park Place rose from 96% to 99% in
1996 and 1997, respectively. The
Partnership's properties enjoy strong
occupancy as capital improvements, including
an appliance replacement program at Century
and a new fitness center at Park Place, have
strengthened leasing efforts at the
properties. Interest income decreased as
investments in commercial paper declined as a
direct result of the 100% increase in the
semiannual distributions paid in 1997.
Total expenses increased in 1997 when compared
to 1996 as a result of increases in
maintenance, real estate tax and depreciation
expenses. Maintenance expense increased due
to payment of the insurance deductible for
flood damage at Park Place, repairs to the
heating and air conditioning system at Park
Place and other preventive maintenance at both
of the Partnership's properties, including
interior painting and drainage upgrades. The
increase in real estate tax expense was due to
refunds of prior years' real estate taxes
received in 1996 for Park Place toward the
1986, 1987, 1988 and 1990 tax years totaling
approximately $325,000. Additionally, 1997
real estate tax expense increased due to an
increase in the assessed value of Park Place.
Depreciation expense increased in conjunction
with capital improvement expenditures.
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 KRLP-V and The
Krupp Company Limited Partnership-II, the
other General Partner of KRLP-V, is as
follows:
Position with
Name and Age The Krupp Corporation
Douglas Krupp (52) President and Co-Chairman of the Board
George Krupp (54) Co-Chairman of the Board
Wayne H. Zarozny (40)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
acquisition, 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 Chairman of the Board and Director
of Berkshire Realty Company, Inc. (NYSE-BRI)
and he is also 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.
George Krupp is the Co-Founder and Co-
Chairman of The Berkshire Group, an integrated
real estate financial services firm engaged in
real estate acquisition, 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 Panell 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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1998, beneficial owners of record owning more than 5%
of the Partnership's 35,200 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
Investor Equity Resource Fund XIX L.P.
Limited 14 Story Street
Partner Cambridge, MA 02138
<S> <C> <C>
Units 225.00 Units .64%
InvestorEquity Resource General Fund L.P.
Limited 14 Story Street
Partner Cambridge, MA 02138
Units 20.00 Units .06%
InvestorEquity Resource Fund XVII L.P.
Limited 14 Story Street
Partner Cambridge, MA 02138 1,599.50 Units 4.54%
Units
Investor Equity Resource Boston Fund
Limited 14 Story Street
Partner Cambridge, MA 02138 205.00 Units .58%
Units
Investor Equity Resource Cambridge Fund
Limited 14 Story Street
Partner Cambridge, MA 02138
Units 125.00 Units .36%
Investor Equity Resource Fund XXI L.P.
Limited 14 Story Street
Partner Cambridge, MA 02138
Units 887.00 Units 2.52%
Total 3,061.50 Units 8.70%
</TABLE>
On that date, the General Partners or their
affiliates owned 106 Units (.30% of the total
outstanding) of the Partnership in addition to
their General and Original Limited Partner
Interests.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Partnership does not have any directors,
executive officers or nominees for election as
director.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Consolidated Financial Statements -
see Index to Consolidated Financial
Statements and Schedule included
under Item 8 (Appendix A), on page
F-2 of this Report.
2. Consolidated Financial Statement
Schedule - see Index to Consolidated
Financial Statements and Schedule
included under Item 8 (Appendix A),
on page F-2 of this Report. All
other schedules are omitted as they
are not applicable, not required or
the information is provided in the
Consolidated Financial Statements or
the Notes thereto.
(b) Exhibits:
Number and Description Under Regulation S-K
The following reflects all applicable Exhibits
required under Item 601 of Regulation S-K.
(4) Instruments defining the rights of
security holders including indentures:
(4.1)Amended Agreement of Limited Partnership
dated as of July 27, 1983 [Exhibit A to
Prospectus included in Registrant's
Registration Statement on Form S-11 (File
2-84645)].*
(4.2)Amended Certificate of Limited
Partnership filed with the Massachusetts
Secretary of State on December 16, 1983
[Exhibit 4.2 to Registrant's Report on Form
10-K for 1983 (File 2-84645)].*
(10) Material Contracts:
Park Place Apartments
(10.1) Purchase and Sale Agreement dated April 24, 1984 between
Douglas Krupp and Sheldon J. Mandell, Howard J. Mandell,
Jerome W. Mandell and Norman Mandell [Exhibit 1 to
Registrant's Report on Form 8-K dated May 4, 1984 (File
No. 2-84645)].*
(10.2) Assignment of Beneficial Interest in Land Trust dated May
1, 1984 by Sheldon J. Mandell, Howard J. Mandell, Jerome
W. Mandell and Norman Mandell to Krupp Realty Limited
Partnership-V. [Exhibit 10.9 to Registrant's Report on
Form 10-K for the year ended November 30, 1984 (File No.
0-11985)].*
(10.3) Addendum to Management Agreement between Krupp Realty
Park Place - Chicago Limited Partnership and Krupp Asset
Management Company, now known as Berkshire Property
Management [Exhibit 2 to Registrant's Report on Form 8-K
dated April 27, 1989 (File No. 0-11985)].*
(10.4) Agreement of Limited Partnership of Krupp Realty Park
Place - Chicago Limited Partnership dated March 15, 1989
[Exhibit 5 to Registrant's Report on Form 8-K dated April
27, 1989 (File No. 0-11985)].*
(10.5) Assignment of General Partners interests in Krupp Realty
Park Place - Chicago Limited Partnership by The Krupp
Corporation to Krupp Realty Limited Partnership-V dated
March 15, 1989 [Exhibit 6 to Registrant's Report on Form
8-K dated April 27, 1989 (File No. 0-11985)].*
(10.6) Written Consent of Directors of The Krupp Corporation
dated April 18, 1989 assigning beneficial interest in
Park Place Apartments to Krupp Realty Park Place -
Chicago Limited Partnership [Exhibit 7 to Registrant's
Report on Form 8-K dated April 27, 1989 (File No. 0-
11985)].*
(10.7) Property Management Agreement, dated May 4, 1984 between
Krupp Realty Limited Partnership-V, as Owner, and BRI OP
Limited Partnership, formerly known as Berkshire Property
Management, a subsidiary of Berkshire Realty Company,
Inc. [Exhibit 10.18 to Registrant's Report on Form 10-K
for the year ended November 30, 1984 (File No.
0-11985)].*
(10.8) Loan Modification/Cancellation Agreement dated September
14, 1993 between South Chicago Bank, as Trustee, and
Krupp Realty Park Place - Chicago Limited Partnership
(File No. 0-11985).*
(10.9) Modification to mortgage note dated September 14, 1993
between South Chicago Bank, as Trustee, and Government
National Mortgage Association (File No. 0-11985).*
(10.10) Modification of mortgage dated September 14, 1993
between South Chicago Bank, as Trustee, and Government
National Mortgage Association (File No. 0-11985).*
(10.11) Regulatory Agreement for Multifamily Housing Projects
dated September 14, 1993, between South Chicago Bank,
as Trustee, and Krupp Realty Park Place - Chicago
Limited Partnership (File No. 0-11985).*
Century II Apartments
(10.12) Agreement of Sale, dated September 18, 1984 between the
Partners of Century III Associates and Douglas Krupp
and related exhibits including Mortgage Notes and
Related Mortgages [Exhibit 1 to Registrant's Report on
Form 8-K dated October 11, 1984 (File No. 0-11985)].*
(10.13) Assignment of Partnership Interest in Century III
Associates dated October 10, 1984 by the Partners of
Century III Associates to The Krupp Company Limited
Partnership-II, The Krupp Corporation and Krupp Realty
Limited Partnership-V [Exhibit 2 to Registrant's Report
on Form 8-K dated October 11, 1984 (File No.
0-11985)].*
(10.14) Fifth, Sixth and Seventh Amended and Restated Limited
Partnership Agreement of Century III Associates Limited
Partnership [Exhibit 3 to Registrant's Report on Form
8-K dated October 11, 1984 (File No. 0-11985)].*
(10.15) Assignment of Beneficial Interest in Century III
Associates from The Krupp Company Limited
Partnership-II and The Krupp Corporation to Krupp
Realty Limited Partnership-V. [Exhibit 10.32 to
Registrant's Report on Form 10-K for the year ended
November 30, 1984 (File No. 0-11985)].*
(10.16) Property Management Agreement, dated October 11, 1984
between Krupp Realty Limited Partnership-V, as Owner,
and BRI OP Limited Partnership, formerly known as
Berkshire Property Management, an affiliate of
Berkshire Realty Company, Inc. [Exhibit 10.33 to
Registrant's Report on Form 10-K for the year ended
November 30, 1984 (File No. 0-11985)].*
(10.17) Third Amended and Restated Promissory Note dated April
27, 1989 between Century III Associates Limited
Partnership and Bankers United Life Assurance Company.
[Exhibit 8 to Registrant's Report on Form 8-K dated
April 27, 1989 (File No. 0-11985)].*
(10.18) Third Amended and Restated Deed of Trust dated April
27, 1989 between Century III Associates Limited
Partnership and Bankers United Life Assurance Company.
[Exhibit 9 to Registrant's Report on Form 8-K dated
April 27, 1989 (File No. 0-11985)].*
(10.19) Multifamily Note dated December 10, 1997 between
Century III Associates Limited Partnership and Reilly
Mortgage Group, Inc.*
(10.20) Multifamily Deed of Trust, Assignment of Rents, and
Security Agreement dated December 8, 1997 between
Century III Associates Limited Partnership and Trust
Company of Chicago and Reilly Mortgage Group, Inc.*
* Incorporated by reference.
(c) Reports on Form 8-K
During the last quarter of the fiscal year ended December 31, 1998,
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 3Oth day of March, 1999.
KRUPP REALTY LIMITED PARTNERSHIP-V
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, 1999.
Signatures Titles
/s/ Douglas Krupp President, Co-Chairman (Principal
Executive Douglas Krupp Officer) and Director of The Krupp
Corporation, a General Partner.
/s/ George Krupp Co-Chairman (Principal Executive
Officer) and George Krupp Director of The Krupp Corporation, a
General Partner.
/s/ Wayne H. Zarozny Treasurer of The Krupp Corporation, a
General Wayne H. Zarozny Partner.
<PAGE>
APPENDIX A
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
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, 1998
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Accountants F-3
Consolidated Balance Sheets at December 31,
1998 and
December 31, 1997 F-4
Consolidated Statements of Operations for the
years ended December 31, 1998, 1997 and 1996F-5
Consolidated Statements of Changes in
Partners' Deficit
for the years ended December 31, 1998, 1997
and 1996 F-6
Consolidated Statements of Cash Flows for the
years ended December 31, 1998, 1997 and 1996F-7
Notes to Consolidated Financial StatementsF-8 - F-15
Schedule III - Real Estate and Accumulated
Depreciation F-16 - F-17
All other schedules are omitted as they are
not applicable, not required, or the
information is provided in the consolidated
financial statements or the notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Krupp Realty Limited Partnership-V and Subsidiary:
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-V and Subsidiary (the
"Partnership") at December 31, 1998 and
December 31, 1997, and the results of their
operations and their cash flows for each of
the three years in the period ended December
31, 1998, in conformity with generally
accepted accounting principles. 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
generally accepted auditing standards, 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.
Boston, Massachusetts /s/ PricewaterhouseCoopers
LLP
February 10, 1999
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS
1998 1997
Multi-family apartment complexes, net of
accumulated depreciation of $45,292,687
<S> <C> <C>
and $41,602,481, respectively (Note D) $ 28,589,655$ 30,790,070
Cash and cash equivalents (Note C) 2,101,415 802,726
Cash restricted for tenant security deposits 311,432 294,572
Replacement reserve escrows (Note D) 664,186 399,771
Prepaid expenses and other assets (Note E) 2,572,492 2,662,138
Deferred expenses, net of accumulated
amortization of $82,843 and $48,332,
respectively (Note E) 482,529 507,755
Total assets $ 34,721,709$ 35,457,032
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Note D) $ 41,836,237$ 42,400,979
Accrued real estate taxes 2,008,500 1,950,000
Accrued expenses and other liabilities 1,841,074 1,249,087
Total liabilities 45,685,811 45,600,066
Contingency (Note F)
Partners' deficit (Note G):
Investor Limited Partners
(35,200 Units outstanding) (10,130,376) (9,366,783)
Original Limited Partner (420,061) (370,797)
General Partners (413,665) (405,454)
Total Partners' deficit (10,964,102) (10,143,034)
Total liabilities and Partners' deficit $ 34,721,709$ 35,457,032
</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
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
Revenue:
<S> <C> <C> <C>
Rental (Note H) $14,987,931$14,395,306$13,489,627
Interest income 112,464 128,292 170,634
Total revenue 15,100,395 14,523,598 13,660,261
Expenses:
Operating (Note E) 3,205,429 3,629,513 3,635,470
Maintenance 961,085 1,136,671 927,736
General and administrative
(Notes E and F) 891,841 324,660 323,652
Real estate taxes (Note I) 2,117,434 2,280,910 1,621,545
Management fees (Note E) 506,198 475,569 442,295
Depreciation and amortization 3,724,717 3,600,639 3,387,658
Interest (Note D) 3,000,780 3,380,019 3,440,980
Total expenses 14,407,484 14,827,981 13,779,336
Income (loss) before
extraordinary loss 692,911 (304,383) (119,075)
Extraordinary loss (Note D) - (288,156) -
Net income (loss) (Note J) $ 692,911$ (592,539)$ (119,075)
Allocation of net income (loss)(Note G):
Investor Limited Partners
(35,200 Units outstanding):
Income (loss) before
extraordinary loss $ 644,407$ (301,339)$ (117,884)
Extraordinary loss - (285,275) -
Net income (loss) $ 644,407$ (586,614)$ (117,884)
Investor Limited Partners Per Unit:
Income (loss) before
extraordinary loss $ 18.31 $ (8.56) $ (3.35)
Extraordinary loss - (8.11) -
Net income (loss) $ 18.31 $(16.67) $ (3.35)
Original Limited Partner:
Income (loss) before
extraordinary loss $41,575 $ - $ -
Extraordinary loss - - -
Net income (loss) $ 41,575$ - $ -
General Partners:
Income (loss) before
extraordinary loss $ 6,929 $ (3,044) $ (1,191)
Extraordinary loss - (2,881) -
Net income (loss) $6,929 $ (5,925)$ (1,191)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1995$ (6,550,285)$(234,539) $(375,628) $(7,160,452)
Distributions (704,000) (45,419) (7,570) (756,989)
Net loss (117,884) - (1,191) (119,075)
Balance at
December 31, 1996 (7,372,169) (279,958) (384,389) (8,036,516)
Distributions (1,408,000) (90,839) (15,140) (1,513,979)
Early extinguishment
of debt (285,275) - (2,881) (288,156)
Loss before
extraordinary loss (301,339) - (3,044) (304,383)
Balance at
December 31, 1997 (9,366,783) (370,797) (405,454) (10,143,034)
Net income (Note G) 644,407 41,575 6,929 692,911
Distributions (Note G) (1,408,000)(90,839) (15,140) (1,513,979)
Balance at
December 31, 1998$(10,130,376)$(420,061)$(413,665)$(10,964,102)
</TABLE>
The per Unit distributions for the years ended
December 31, 1998, 1997 and 1996 were $40.00,
$40.00 and $20.00, respectively, none of which
represents a return of capital for tax
purposes.
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
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) $ 692,911 $ (592,539) $ (119,075)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Interest earned on replacement
reserve escrows (14,933) (17,068) (27,713)
Depreciation and amortization 3,724,717 3,600,639 3,387,658
Extraordinary loss from early
extinguishment of debt - 288,156 -
Changes in assets and liabilities:
Decrease (increase) in cash
restricted for tenant
security deposits (16,860) 13,336 130,341
Decrease (increase) in prepaid
expenses and other assets 89,646 (1,284,748) (6,508)
Increase in accrued real estate
taxes 58,500 290,000 -
Increase in accrued expenses
and other liabilities 591,492 7,037 21,147
Decrease in due to affiliates - (26,480) (7,847)
Net cash provided by
operating activities 5,125,473 2,278,333 3,378,003
Cash flow from investing activities:
Deposits to replacement reserve
escrows (306,512) (212,912) (212,912)
Withdrawals from replacement
reserve escrows 57,030 519,865 280,477
Additions to fixed assets (1,489,791) (1,728,096) (2,413,114)
Increase in accrued expenses and
other liabilities related to
fixed asset additions 495 - -
Net cash used in investing
activities (1,738,778) (1,421,143) (2,345,549)
Cash flow from financing activities:
Proceeds from mortgage note payable - 11,000,000 -
Repayment of mortgage notes payable - (10,309,332) -
Payment of prepayment premium - (210,825) -
Principal payments on mortgage
notes payable (564,742) (559,944) (530,699)
Increase in deferred expenses (9,285) (227,478) -
Distributions (1,513,979) (1,513,979) (756,989)
Net cash used in
financing activities (2,088,006)(1,821,558) (1,287,688)
Net increase (decrease) in
cash and cash equivalents 1,298,689 (964,368) (255,234)
Cash and cash equivalents,
beginning of year 802,726 1,767,094 2,022,328
Cash and cash equivalents,
end of year $ 2,101,415$ 802,726 $ 1,767,094
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Organization
Krupp Realty Limited Partnership-V ("KRLP-V")
was formed on June 16, 1983 by filing a
Certificate of Limited Partnership in The
Commonwealth of Massachusetts. KRLP-V
terminates on December 31, 2020, unless
earlier terminated upon the sale of the last
of KRLP-V's properties or the occurrence of
certain other events as set forth in the
Partnership Agreement.
KRLP-V issued all of the General Partner
Interests to The Krupp Corporation ("Krupp
Corp.") (a Massachusetts corporation) and The
Krupp Company Limited Partnership-II ("KCLP-
II") (a Massachusetts limited partnership), in
exchange for capital contributions aggregating
$1,000. Except under certain limited
circumstances upon termination of KRLP-V, the
General Partners are not required to make any
additional capital contributions. KRLP-V also
issued all of the Original Limited Partner
Interests to KCLP-II in exchange for a capital
contribution of $4,000.
On September 6, 1983, KRLP-V commenced the
marketing and sale of units of Investor
Limited Partner Interest ("Units") for $1,000
per Unit. The public offering was closed on
December 2, 1983 at which time a total of
35,200 Units had been sold for $35,200,000.
On March 20, 1989, the General Partners formed
Krupp Realty Park Place-Chicago Limited
Partnership ("Realty-V") as a prerequisite for
the refinancing of Park Place Tower Apartments
("Park Place"). At the same time, the General
Partners transferred ownership of Park Place
to Realty-V. The General Partner of Realty-V
is Krupp Corp. The Limited Partner of Realty-
V is KRLP-V. Krupp Corp. has beneficially
assigned its interest in Realty-V to KRLP-V.
KRLP-V and Realty-V are collectively known as
Krupp Realty Limited Partnership-V and
Subsidiary (collectively referred to herein as
the "Partnership").
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 J).
Basis of Presentation
The consolidated financial statements present
the consolidated assets, liabilities and
operations of the Partnership. All
intercompany balances and transactions have
been eliminated.
Risks and Uncertainties
The Partnership invests its cash primarily in
deposits and money market funds with
commercial banks. The Partnership has not
experienced any losses to date on its invested
cash.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions that affect the
reported amount of assets and liabilities,
contingent assets and liabilities and revenues
and expenses during the reporting period.
Actual results could differ from those
estimates.
Continued<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
B.Significant Accounting Policies, Continued
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.
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 improvements5 to 25 years
Appliances, carpeting and equipment 3 to 8 years
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.
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 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 the Partnership's taxable income or
loss, such change will be reported to the
Partners.
Continued<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
B. Significant Accounting Policies,
Continued
Descriptive Information About
Reportable Segments
During the fourth quarter of 1998,
the Partnership adopted the
Financial Accounting Standards
Board's Statement of Financial
Accounting Standards No. 131,
"Disclosures About Segments of an
Enterprise and Related Information
("Statement No. 131"). Statement
No. 131 superseded FASB Statement
No. 14, "Financial Reporting for
Segments of a Business Enterprise".
Statement No. 131 establishes
standards for the way that public
business enterprises report
information regarding reportable
operating segments. The adoption of
Statement No. 131 did not affect the
results of operations or financial
position of the Partnership.
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 1998, 1997 or 1996.
Reclassifications
Certain prior year balances have
been reclassified to conform with
current year consolidated financial
statement
presentation.
C. Cash and Cash Equivalents
Cash and cash equivalents consisted of the following:
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Cash and money market accounts$ 405,431$ 802,726
Treasury bills 1,695,984 -
$ 2,101,415$ 802,726
</TABLE>
D. Mortgage Notes Payable
The properties owned by the Partnership are pledged as
collateral for the non-recourse mortgage notes outstanding at
December 31, 1998 and 1997. Mortgage notes payable consisted
of the following:
<TABLE>
<CAPTION>
Annual
Principal Interest
Property 1998 1997 Rate
Maturity Date
Century II
<S> <C> <C> <C>
Apartments $10,882,768 $11,000,000 6.75%
January 1, 2008
Park Place
Tower Apartments 30,953,469 31,400,979 6.75% May 1, 2024
Total $41,836,237 $42,400,979
</TABLE>
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
D. Mortgage Notes Payable, Continued
Century II Apartments
On December 10, 1997, the Partnership
completed the refinancing of the Century II
Apartments mortgage note. The property was
refinanced with a $11,000,000 non-recourse
mortgage note payable at the rate of 6.75% per
annum with monthly principal and interest
payments of $71,346. The mortgage note, which
is collateralized by the property, matures on
January 1, 2008 at which time the remaining
principal (approximately $9,401,537) and
accrued interest are due. The note may be
prepaid, subject to a prepayment penalty, at
any time with 30 days notice. The Partnership
used the majority of the proceeds from the
refinancing to repay the existing mortgage
note on the property of $10,309,332, pay
closing costs of $236,763, to pay a prepayment
premium of $210,825 and to establish various
escrows. The prepayment premium as well as
unamortized deferred mortgage costs of
$77,331, are reported in the Statement of
Operations as an extraordinary loss from early
extinguishment of debt for the year ended
December 31, 1997.
At December 31, 1996, the property was subject
to a non-recourse first mortgage note of
$11,000,000, which was payable in equal
monthly installments of principal and interest
of $104,844, based on a 25-year amortization
schedule.
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
$10,898,000 and $10,470,000 for the years
ended December 31, 1998 and 1997,
respectively.
Park Place Tower Apartments
The property is subject to a non-recourse
mortgage note in the original amount of
$33,000,000, dated September 15, 1993, held by
the U.S. Department of Housing and Urban
Development ("HUD"). The note is payable in
equal monthly installments of principal and
interest of $212,783, based on a 31-year
amortization. At maturity, all unpaid
principal (approximately $1,457,000) and any
accrued interest are due. The note may be
prepaid subject to a prepayment premium. In
the event prepayment of principal occurs, a
prepayment premium shall be due, based on a
declining premium rate of 5% to 0% of the
outstanding principal balance over a period
of 5 years. As stipulated in the Regulatory
Agreement with HUD, the Partnership makes
monthly deposits of $17,743 in an established
reserve for replacements to be used for
improvements. Under the terms of the loan,
HUD restricts the distribution of funds to
Surplus Cash, as defined by HUD in the
Regulatory Agreement.
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
$31,766,000 at December 31, 1998. At December
31, 1997, the fair market value could not be
determined since the mortgage note could not
be prepaid until 1998.
Due to restrictions on transfers and
prepayment, the Partnership may be unable to
refinance certain mortgage notes payable at
such calculated fair value.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
D.Mortgage Notes Payable, Continued
The aggregate scheduled principal amounts of
long-term borrowings due during the five years
ending December 31, 2003 are $600,689,
$642,513, $687,250, $735,102 and $786,286.
During the years ended December 31, 1998, 1997
and 1996, the Partnership paid $2,844,807,
$3,221,886 and $3,280,828 of interest on its
mortgage notes, respectively.
E.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
during the years ended December 31, 1998, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Property management fees $506,198 $475,569 $442,295
Expense reimbursements 307,468 317,432 288,226
Charged to operations $813,666 $793,001 $730,521
</TABLE>
Expense reimbursements due from affiliates
of $1,456 were included in prepaid expenses
and other assets for the year ended
December 31, 1998.
In addition to the amounts above,
refinancing costs of $110,000 were paid to
the General Partners' affiliates during the
year ended December 31, 1997.
F. 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 Apartments
("Park Place") and Marine Terrace
Apartments, a previously owned property.
The central issue of the complaint is
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 and
reasonable attorneys' fees. To be eligible
for such damages plaintiffs must prove that
the defendants deliberately used a
provision prohibited by the ordinance.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND
SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,
Continued
F. Legal Proceeding, Continued
During 1994, the Court ruled in
favor of the defendants, 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.
During 1996, the decision was
reversed on appeal and the case
remanded to trial court for
further proceedings. The
defendants intend to vigorously
defend this case.
Continued discussions with
Plaintiffs' counsel have resulted
in a tentative settlement which
was presented to the court in
December, 1998. Although the
settlement has not been finalized,
the Partnership recorded
provisions totaling $1,015,000 in
the 1998 and 1997 consolidated
financial statements of $733,000
and $282,000, respectively.
G. Partners' Deficit
Under the terms of the Partnership Agreement,
losses from operations are allocated 99% to
the Investor Limited Partners and 1% to the
General Partners and profits from operations
are allocated 93% to the Investor Limited
Partners, 6% to the Original Limited Partner
and 1% to the General Partners until such time
that the Investor Limited Partners have
received a return of their total invested
capital plus a 9% per annum cumulative return
thereon and thereafter, 65% to the Investor
Limited Partners, 28% to the Original Limited
Partner and 7% to the General Partners.
Profits from Capital Transactions are
allocated first, to the Investor Limited
Partners until they have received a return of
their total invested capital. Thereafter,
profits from Capital Transactions are
allocated in accordance with the Partnership
Agreement. Losses from Capital Transactions
are allocated 99% to the Investor Limited
Partners and 1% to the General Partners.
Notwithstanding anything above, the General
Partners shall be allocated at least 1% of all
profits and losses from Capital Transactions.
Under the Partnership Agreement, cash
distributions are made on the same basis as
the allocations of profits described above.
Pursuant to the Partnership Agreement,
proceeds from Capital Transactions shall first
be applied to the payment of all debts and
liabilities of the Partnership and second to
fund reserves for contingent liabilities. The
remaining net cash proceeds shall then be
distributed in accordance with the Partnership
Agreement.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
G. Partners' Deficit, Continued
As of December 31, 1998, the following cumulative partner
contributions and allocations have been made since inception of
the Partnership:
<TABLE>
<CAPTION>
Investor Original
Limited Limited General
Partners Partner Partners Total
<S> <C> <C> <C>
Capital contributions$ 35,200,000$4,000 $1,000 $ 35,205,000
Syndication costs (4,501,000) - - (4,501,000)
Distributions (7,619,303)(478,576) (79,762) (8,177,641)
Net income (loss)
before capital
transactions (39,885,037) 54,515 (402,327) (40,232,849)
Net gains on capital
transactions 6,674,964 - 67,424 6,742,388
Balance at
December 31, 1998$(10,130,376)$(420,061)$(413,665)$(10,964,102)
</TABLE>
H. Future Base Rents Due Under Commercial Operating Leases
Future base rent receivable under commercial operating leases
for the years 1999 through 2003 and thereafter is as follows:
<TABLE>
<CAPTION>
<C> <C>
1999 $149,330
2000 93,989
2001 81,653
2002 82,361
2003 71,177
Thereafter 155,981
</TABLE>
I. Real Estate Taxes
During the third quarter of 1996, the
Partnership successfully petitioned for the
reassessment of prior years' real estate taxes
on Park Place Tower Apartments. The
Partnership received tax refunds toward the
1986, 1987, 1988 and 1990 real estate taxes
totaling approximately $325,000, which was
reflected as a reduction in the 1996 real
estate tax expense.
J. 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
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
J.Federal Income Taxes, Continued
The reconciliation of the net income (loss)
reported in the accompanying Consolidated
Statement of Operations with the net income
(loss) reported in the Partnership's federal
income tax return for the years ended December
31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
Net income (loss) per Consolidated
<S> <C> <C> <C>
Statement of Operations $ 692,911$ (592,539) $ (119,075)
Difference between book and tax
depreciation and
amortization 414,641 317,863 (30,155)
Difference between book and tax
legal adjustment 733,000 113,526 168,474
Net income (loss) for federal
income tax purposes $ 1,840,552$(161,150) $ 19,244
</TABLE>
The allocation of the net income for federal income tax purposes
for 1998 is as follows:
<TABLE>
<CAPTION>
Portfolio Passive
Income Income Total
<S> <C> <C> <C>
Investor Limited Partners$ 101,864 $1,609,849 $ 1,711,713
Original Limited Partner 6,572 103,861 110,433
General Partners 1,096 17,310 18,406
$ 109,532 $1,731,020 $ 1,840,552
</TABLE>
During the years ended December 31, 1998, 1997
and 1996 the per Unit net income (loss) to the
Investor Limited Partners for federal income
tax purposes were $48.63, $(4.58) and $.54,
respectively.
The basis of the Partnership's assets for
financial reporting purposes exceeded its tax
basis by approximately $7,651,000 and
$8,063,500 at December 31, 1998 and 1997,
respectively. The basis of the Partnership's
liabilities for financial reporting purposes
exceeded its tax basis by approximately
$1,015,000 and $282,000 at December 31, 1998
and 1997, respectively.<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1998
<TABLE>
<CAPTION>
Costs
Capitalized
Subsequent to
Initial Cost to Partnership Acquisition
Buildings & Buildings & Depreciable
Description Encumbrances Land Improvements Improvements Life
Century II
Apartments
Cockeysville,
<S> <C> <C> <C> <C> <C>
Maryland $ 10,882,768 $1,049,868 $ 13,948,246 $ 5,333,8393 to 25 Yrs.
Park Place Tower
Apartments
Chicago, Illinois 30,953,469 2,877,561 38,230,448 12,442,3803 to 25 Yrs.
Total $ 41,836,237 $3,927,429 $ 52,178,694 $17,776,219
Gross Amounts Carried at
End of Year
Buildings Year
and Accumulated Construction Year
Description Land Improvements TotalDepreciation Completed Acquired
Century II
Apartments
Cockeysville,
Maryland $1,049,868 $19,282,085 $20,331,953 $12,758,634 1971 1984
Park Place Tower
Apartments
Chicago, Illinois 2,877,561 50,672,828 53,550,389 32,534,053 1973 1984
Total $3,927,429 $ 69,954,913$73,882,342$ 45,292,687
</TABLE>
Continued<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION,
Continued
December 31, 1998
Reconciliation of Real Estate and Accumulated Depreciation for
each of the three years in the period ended December 31, 1998:
<TABLE>
<CAPTION>
1998 1997 1996
Real Estate
Balance at beginning of
<S> <C> <C> <C>
year $72,392,551 $70,664,455 $68,251,341
Acquisitions and
improvements 1,489,791 1,728,096 2,413,114
Balance at end of year$73,882,342 $72,392,551 $70,664,455
1998 1997 1996
Accumulated Depreciation
Balance at beginning of
year $41,602,481 $38,066,263 $34,745,814
Depreciation expense 3,690,206 3,536,218 3,320,449
Balance at end of year$45,292,687 $41,602,481 $38,066,263
</TABLE>
Note: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 was $73,894,392
and the aggregate accumulated depreciation for
federal income tax purposes was $52,945,211,
at December 31, 1998.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 5 Financial Statements for the twelve months ended December
31, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,101,415
<SECURITIES> 0
<RECEIVABLES> 780,538<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,767,572
<PP&E> 74,447,714<F2>
<DEPRECIATION> (45,375,530)<F3>
<TOTAL-ASSETS> 34,721,709
<CURRENT-LIABILITIES> 3,849,574
<BONDS> 41,836,237<F4>
0
0
<COMMON> (10,964,102)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,721,709
<SALES> 0
<TOTAL-REVENUES> 15,100,395<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,406,704<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,000,780
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 692,911<F8>
<EPS-PRIMARY> 0<F8>
<EPS-DILUTED> 0<F8>
<FN>
<F1>Includes all receivables grouped in "prepaid expenses and other assets" on
the Balance Sheet.
<F2>Multi-family complexes of $73,882,342 and deferred expenses of $565,372.
<F3>Accumulated depreciaton of $45,292,687 and accumulated amortization of
deferred expenses of $82,843.
<F4>Represents mortgage notes payable.
<F5>Represents total deficit of the General Partners and Limited Partners of
($413,665) and ($10,550,437), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $5,564,553, real estate taxes of $2,117,434
and depreciaton and amortization of $3,724,717.
<F8>Net income allocated $6,929 to the General Partners and $685,982 to the
Limited Partners. Average net income per Unit Of Limited Partners interest
is $18.31 on 35,200 Units outstanding.
</FN>
</TABLE>
