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 March 31,1999
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
10.<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
This form 10-Q contains forward-looking
statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
Actual results could differ materially from
those projected in the forward-looking
statements as a result of a number of factors,
including those identified herein.
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(Unaudited) March 31,December 31, 1999 1998
Multi-family apartment complexes, net of
accumulated depreciation of $46,134,246
<S> <C> <C>
and $45,292,687, respectively $27,919,558$ 28,589,655
Cash and cash equivalents (Note 2) 2,575,960 2,101,415
Cash restricted for tenant security deposits 315,046 311,432
Replacement reserve escrows 734,313 664,186
Prepaid expenses and other assets (Note 5) 3,047,563 2,572,492
Deferred expenses, net of accumulated
amortization of $91,451 and $82,843,
respectively 473,921 482,529
Total assets $35,066,361$ 34,721,709
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $41,689,011$ 41,836,237
Accrued real estate taxes 2,510,019 2,008,500
Accrued expenses and other liabilities 2,144,109 1,841,074
Total liabilities 46,343,139 45,685,811
Contingency (Note 3)
Partners' deficit (Note 4):
Investor Limited Partners
(35,200 Units outstanding) (10,421,165) (10,130,376)
Original Limited Partner (438,821) (420,061)
General Partners (416,792) (413,665)
Total Partners' deficit (11,276,778) (10,964,102)
Total liabilities and Partners' deficit $35,066,361$ 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
Ended March 31,
1999 1998
Revenue:
<S> <C> <C>
Rental $3,851,817 $3,677,852
Interest income 36,256 26,107
Total revenue 3,888,073 3,703,959
Expenses:
Operating (Note 5) 939,665 929,416
Maintenance 165,219 129,840
General and administrative (Note 5) 41,828 36,817
Real estate taxes 572,798 576,814
Management fees (Note 5) 130,160 123,311
Depreciation and amortization 850,167 885,597
Interest 743,923 754,062
Total expenses 3,443,760 3,435,857
Net income $ 444,313 $ 268,102
Allocation of net income (Note 4):
Investor Limited Partners
(35,200 Units outstanding) $ 413,211 $ 249,335
Investor Limited Partners Per Unit $ 11.74 $ 7.08
Original Limited Partner $ 26,659 $ 16,086
General Partners $ 4,443 $ 2,681
</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 Three Months
Ended March 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 444,313$268,102
Adjustments to reconcile net income to net cash
provided by operating activities:
Interest earned on replacement reserve escrow(4,463) (3,132)
Depreciation
and amortization 850,167 885,597
Changes in assets and liabilities:
Increase in cash restricted for tenant
security deposits (3,614) (4,184)
Decrease (increase) in prepaid expenses
and other assets (475,071) 455,117
Increase (decrease) in accrued real
estate taxes 501,519 (344,155)
Increase in accrued expenses and other
liabilities 302,197 52,772
Net cash provided by operating
activities 1,615,048 1,310,117
Cash flows from investing activities:
Deposits to replacement reserve escrows (76,628) (76,628)
Withdrawals from replacement reserve escrows 10,964 -
Additions to fixed assets (171,462) (150,359)
Increase in accrued expenses and other liabilities
related to fixed asset additions 838 5,454
Net cash used in investing activities (236,288) (221,533)
Cash flows from financing activities:
Principal payments on mortgage notes payable (147,226) (137,642)
Increase in deferred expenses - (9,285)
Distributions (756,989) (756,989)
Net cash used in financing activities (904,215) (903,916)
Net increase in cash and cash equivalents 474,545 184,668
Cash and cash equivalents, beginning of period 2,101,415 802,726
Cash and cash equivalents, end of period $2,575,960$ 987,394
</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
(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 March 31, 1999, and
its results of operations and cash flows for
the three months ended March 31, 1999 and
1998.
The results of operations for the three months
ended March 31, 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>
March 31, December 31,
1999 1998
<S> <C> <C>
Cash and money market accounts $ 134,916$ 405,431
Treasury bills 2,441,044 1,695,984
$ 2,575,960$ 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 tentative settlement which
was presented to the court in December, 1998.
Although the settlement has not been
finalized, the Partnership has recorded
provisions totaling $1,015,000 in the
consolidated financial statements at March 31,
1999 and December 31, 1998.
(4) Changes in Partners' Deficit
A summary of changes in Partners' deficit for
the three months ended March 31, 1999 is as
follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31,1998$(10,130,376)$(420,061)$(413,665)$(10,964,102)
Net income 413,211 26,659 4,443 444,313
Distributions (704,000) (45,419) (7,570) (756,989)
Balance at
March 31, 1999 $(10,421,165)$(438,821)$(416,792)$(11,276,778)
</TABLE>
(5)Related Party Transactions
The Partnership pays property management fees
to an affiliate of the General Partners for
management services. Pursuant to the
management agreements, management fees are
payable monthly at a rate of 5% of the gross
receipts from the properties under management.
The Partnership also reimburses affiliates of
the General Partners for certain expenses
incurred in connection with the operation of
the Partnership and its properties, including
administrative expenses.
Amounts accrued or paid to the General
Partners' affiliates were as follows:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
<S> <C> <C>
Property management fees $130,160 $123,311
Expense reimbursements 73,010 42,960
Charged to operations $203,170 $166,271
</TABLE>
Expense reimbursements due from affiliates
of $3,380 and $1,456 were included in
prepaid expenses and other assets at March
31, 1999 and December 31, 1998,
respectively.
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.
The Partnership's apartment markets are currently
experiencing an increase in competition from recently
renovated existing properties and new construction.
The General Partners are in the process of evaluating
strategies to improve the competitiveness of the
Partnership's properties.
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.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
Liquidity and Capital Resources, Continued
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 Apartments ("Park
Place") and Century Apartments ("Century") for
the three months ended March 31, 1999 and
1998.
Net income increased for the three months
ended March 31, 1999 as compared to the same
period in 1998, as rental revenue increased
and expenses stayed relatively stable.
In comparing the three months ended March 31,
1999 to the same period in 1998, the increase
in rental revenue is attributable to
residential rental rate increases implemented
at Park Place and Century. Interest income
increased as average cash and cash equivalent
balances increased between the periods.
Total expenses remained relatively stable when
comparing the first three months of 1999 to
the first three months of 1998, as the
increase in maintenance expense offset the
decrease in depreciation expense. Landscaping
and electrical repairs at Park Place as well
as increased cleaning costs at Century have
resulted in an increase in the Partnership's
maintenance expense. Depreciation expense
decreased as fixed asset additions purchased
in previous years became fully depreciated.
<PAGE>
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 tentative settlement which
was presented to the court in December, 1998.
Although the settlement has not been
finalized, the Partnership has recorded
provisions totaling $1,015,000 in the
consolidated financial statements at March 31,
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: May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 5 Financial Statements for the three months ended March 31, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,575,960
<SECURITIES> 0
<RECEIVABLES> 750,396<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,346,526
<PP&E> 74,619,176<F2>
<DEPRECIATION> (46,225,697)<F3>
<TOTAL-ASSETS> 35,066,361
<CURRENT-LIABILITIES> 4,654,128
<BONDS> 41,689,011<F4>
0
0
<COMMON> (11,276,778)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 35,066,361
<SALES> 0
<TOTAL-REVENUES> 3,888,073<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,699,837<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 743,923
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 444,313<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 $74,053,804 and deferred expenses of $565,372.
<F3>Accumulated depreciation of $46,134,246 and accumulated amortization of
deferred expenses of $91,451.
<F4> Represents mortgage notes payable.
<F5>Represents total deficit of the General Partners and Limited Partners of
($416,792) and ($10,859,986), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $1,276,872, real estate taxes of $572,798
and depreciation and amortization of $850,167.
<F8>Net income allocated $4,443 to the General Partners and $439,870 to the
Limited Partners. Average net income per Unit of Limited Partners interest
is $11.74 on 35,200 Units outstanding.
</FN>
</TABLE>
