UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1999
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.)
One Beacon Street, Boston, Massachusetts
02108
(Address of principal executive offices)
(Zip Code)
(617) 523-7722
(Registrant's telephone number, including
area code)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the
registrant was required to file such reports),
and (2) has been subject to such filing
requirements for the past 90 days. Yes X
No
The total number of pages in this document is
11.<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
This Form 10-Q contains forward-looking
statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
Actual results could differ materially from
those projected in the forward-looking
statements as a result of a number of factors,
including those identified herein.
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
September 30,
December 31,
1999 1998
Multi-family apartment complexes, net of
accumulated depreciation of $47,876,135
<S> <C> <C>
and $45,292,687, respectively $27,214,103$28,589,655
Cash and cash equivalents (Note 2) 3,806,917 2,101,415
Cash restricted for tenant security deposits 320,149 311,432
Replacement reserve escrows 750,758 664,186
Prepaid expenses and other assets (Note 5) 1,465,716 2,572,492
Deferred expenses, net of accumulated amortization
of $108,668 and $82,843, respectively 456,704 482,529
Total assets $34,014,347$34,721,709
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $41,387,023$41,836,237
Accrued real estate taxes 1,504,557 2,008,500
Accrued expenses and other liabilities (Note 3)2,026,803 1,841,074
Total liabilities 44,918,383 45,685,811
Contingency (Note 3)
Partners' deficit (Note 4):
Investor Limited Partners
(35,200 Units outstanding) (10,074,515)(10,130,376)
Original Limited Partner (416,456) (420,061)
General Partners (413,065) (413,665)
Total Partners' deficit (10,904,036)(10,964,102)
Total liabilities and Partners' deficit$34,014,347$34,721,709
</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
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
Revenue:
<S> <C> <C> <C> <C>
Rental $3,922,597 $3,807,018 $11,634,413$11,193,425
Interest income 53,528 28,705 129,135 84,026
Total revenue 3,976,125 3,835,723 11,763,548 11,277,451
Expenses:
Operating (Note 5) 961,011 652,721 2,652,161 2,351,381
Maintenance 292,786 291,869 705,272 658,108
General and administrative(Note5) 76,592 43,876 196,675 125,223
Real estate taxes 189,102 572,843 1,334,783 1,728,890
Management fees (Note 5) 178,426 140,224 467,815 395,309
Depreciation and amortization 894,245 967,685 2,609,273 2,751,909
Interest 738,374 748,796 2,223,525 2,254,400
Total expenses 3,330,536 3,418,014 10,189,504 10,265,220
Net income $645,589 $417,709 $1,574,044$1,012,231
Allocation of net income (Note 4):
Investor Limited Partners
(35,200 Units outstanding) $600,398 $388,469 $1,463,861$ 941,375
Investor Limited Partner Per Unit$ 17.06$ 11.03 $ 41.59 $ 26.74
Original Limited Partner $ 38,735 $ 25,063 $ 94,443 $ 60,734
General Partners $ 6,456 $ 4,177 $ 15,740 $ 10,122
</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
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $1,574,044 $1,012,231
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest earned on replacement reserve escrows (8,842) (9,521)
Depreciation and amortization 2,609,273 2,751,909
Changes in assets and liabilities:
Increase in cash restricted for tenant
security deposits (8,717) (18,382)
Decrease (Increase) in prepaid expenses
and other assets 1,106,776 (601,804)
Increase (Decrease) in accrued real
estate taxes (503,943) 660,095
Increase (decrease) in accrued expenses
and other liabilities 185,729 (121,056)
Net cash provided by operating
activities 4,954,320 3,673,472
Cash flows from investing activities:
Deposits to replacement reserve escrows (229,884) (229,884)
Withdrawals from replacement reserve escrows 152,154 57,030
Additions to fixed assets (1,207,896)(1,002,347)
Increase in accrued expenses and other
liabilities related to fixed asset additions - 3,349
Net cash used in investing activities (1,285,626)(1,171,852)
Cash flows from financing activities:
Principal payments on mortgage notes payable(449,214) (419,973)
Increase in deferred expenses - (9,285)
Distributions (1,513,978)(1,513,979)
Net cash used in financing activities (1,963,192)(1,943,237)
Net increase in cash and cash equivalents 1,705,502 558,383
Cash and cash equivalents, beginning of period2,101,415 802,726
Cash and cash equivalents, end of period $3,806,917$1,361,109
</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,
1998 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 normal
recurring accruals) necessary to present
fairly the Partnership's consolidated
financial position as of September 30, 1999,
its results of operations for the three and
nine months ended September 30, 1999 and 1998
and its cash flows for the nine months ended
September 30, 1999 and 1998.
The results of operations for the three and
nine months ended September 30, 1999 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)Cash and Cash Equivalents
Cash and cash equivalents consisted of the
following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
<S> <C> <C>
Cash and money market accounts $ 2,436,248 $ 405,431
Treasury bills 1,370,669 1,695,984
$ 3,806,917$ 2,101,415
</TABLE>
(3)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 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 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
(3)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 have continued to vigorously defend
this case.
Continued discussions with Plaintiffs' counsel
have resulted in a settlement agreement which
was presented to the court on July 28, 1999.
The court granted preliminary approval of the
settlement agreement and a hearing on the
fairness of the settlement has been scheduled
for November 18, 1999. Although the
settlement has not received final approval by
the court, the Partnership has recorded
provisions totaling $1,015,000 in the
consolidated financial statements at September
30, 1999 and December 31, 1998.
(4) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the nine months
ended September 30, 1999 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1998$(10,130,376)$(420,061) $(413,665)$(10,964,102)
Net income 1,463,861 94,443 15,740 1,574,044
Distributions (1,408,000) (90,838) (15,140) ( 1,513,978)
Balance at
September 30,1999$(10,074,515)$(416,456)$(413,065)$(10,904,036)
</TABLE>
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
Amounts accrued or paid to the General Partners' affiliates were
as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September30, Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Property management fees $178,426 $140,224 $467,815 $395,309
Expense reimbursements 100,691 79,283 275,029 201,456
Charged to operations$279,117 $ 219,507$742,844 $596,765
</TABLE>
Expense reimbursements due from affiliates
of $8,323 and $1,456 were included in
prepaid expenses and other assets at
September 30, 1999 and December 31, 1998,
respectively. <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, 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.
Year 2000
The General Partners of the Partnership
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 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 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. 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.
The General Partners of the Partnership have
evaluated Year 2000 compliance issues with
respect to its non-financial systems, such as
computer controlled elevators, boilers,
chillers and other miscellaneous systems. The
General Partners do not anticipate any
problems in its non-financial systems.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND
SUBSIDIARY
Year 2000, Continued
The General Partners of the Partnership
surveyed the Partnership's material third-
party service providers (including but not
limited to its banks and telecommunications
providers) and significant vendors and
received assurances that such providers and
vendors are to be Year 2000 ready. The
General Partners do not anticipate any
problems with such providers and vendors that
would materially impact its results of
operations, liquidity or captial resources.
In addition, the Partnership is also subject
to external forces that might generally affect
industry and commerce, such as utility and
transportation company Year 2000 readiness
failures and related service interruptions.
However, the General Partners do not
anticipate these would materially impact its
results of operations, liquidity or capital
resources.
To date, the Partnership has not incurred, and
does not expect to incur, any significant cost
associated with being Year 2000 ready.
Operations
The following discussion relates to the
operations of the Partnership and its
properties (Park Place and Century) for the
three and nine months ended September 30, 1999
and 1998.
Net income increased for the three and nine
months ended September 30, 1999 as compared to
the same periods in 1998, as rental revenue
increased and total expenses remained
relatively stable.
The increase in rental revenue for the three
and nine months ended September 30, 1999 when
compared to the same periods in 1998 is
attributable to residential rental rate
increases implemented at Park Place and
Century during the second half of 1998 and the
first quarter of 1999. Interest income
increased as average cash and cash equivalent
balances increased between the periods.
Total expenses remained relatively stable when
comparing the three and nine months ending
September 30, 1999 to the same periods of 1998
as the increase in operating, general and
administrative and management fee expenses
were offset by a decrease in real estate taxes
and depreciation expenses. Operating expense
increased in the third quarter of 1999,
resulting from increases in electricity
expense and an increase in workmen's
compensation expense due to an adjustment to
the workmen's compensation reserve in 1998.
General and administrative expense increased
due to higher expenses incurred in connection
with preparation and mailing of Partnership
reports and other investor communications.
Property management fees increased in
conjunction with the increase in rental
revenue as discussed above. Real estate taxes
decreased during the third quarter of 1999 due
to an abatement, of approximately $245,000,
and refund of prior years taxes received by
Park Place. Depreciation expense decreased as
fixed asset additions purchased in previous
years at Park Place became fully depreciated.
KRUPP REALTY LIMITED PARTNERSHIP-V AND
SUBSIDIARY
PART II - OTHER INFORMATION
Item 1.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 Tower Apartments ("Park
Place") and Marine Terrace Apartments, a
previously owned property. 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 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 have continued to vigorously defend
this case.
Continued discussions with Plaintiffs' counsel
have resulted in a settlement agreement which
was presented to the court on July 28, 1999.
The court granted preliminary approval of the
settlement agreement and a hearing on the
fairness of the settlement has been scheduled
for November 18, 1999. Although the
settlement has not received final approval by
the court, the Partnership has recorded
provisions totaling $1,015,000 in the
consolidated financial statements at September
30, 1999 and December 31, 1998.
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/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief
Accounting Officer of The
Krupp Corporation, a General
Partner.
DATE: November 15, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp Realty
Fund 5 Financial Statements for the nine months ended September 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,806,917
<SECURITIES> 0
<RECEIVABLES> 77,437<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,459,186
<PP&E> 75,655,610<F2>
<DEPRECIATION> (47,984,803)<F3>
<TOTAL-ASSETS> 34,014,347
<CURRENT-LIABILITIES> 3,531,360
<BONDS> 41,387,023<F4>
0
0
<COMMON> (10,904,036)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,014,347
<SALES> 0
<TOTAL-REVENUES> 11,763,548<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,965,979<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,223,525
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,574,044<F8>
<EPS-BASIC> 0<F8>
<EPS-DILUTED> 0<F8>
<F1> Includes all receivables grouped in "prepaid expenses and other assets"
on the Balance Sheet.
<F2> Multi-family complexes of $75,090,238 and deferred expenses of $565,372.
<F3> Accumulated depreciation of $47,876,135 and accumulated amortization of
deferred expenses of $108,668.
<F4> Represents mortgage notes payable.
<F5> Represents total deficit of the General Partners and Limited Partners of
($413,065)and ($10,490,971), respectively.
<F6> Includes all revenue of the Partnership.
<F7> Includes operating expenses of $4,021,923 real estate taxes of $1,334,783
and depreciation and amortization of $2,609,273.
<F8> Net income allocated $15,740 to the General Partners and $1,558,304 to
the Limited Partners. Average net income per Unit of Limited Partners
interest is $41.59 on 35,200 Units outstanding.
</TABLE>
