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 June 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
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1999 1998
Multi-family apartment complexes, net of
accumulated depreciation of $46,990,498
<S> <C> <C>
and $45,292,687, respectively $27,449,839$28,589,655
Cash and cash equivalents (Note 2) 3,901,438 2,101,415
Cash restricted for tenant security deposits 317,683
311,432
Replacement reserve escrows 670,621 664,186
Prepaid expenses and other assets (Note 5) 1,869,378 2,572,492
Deferred expenses, net of accumulated amortization
of $100,060 and $82,843, respectively 465,312 482,529
Total assets $34,674,271$34,721,709
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $41,539,287$41,836,237
Accrued real estate taxes 2,130,036 2,008,500
Due to affiliates (Note 5) 13,959 -
Accrued expenses and other liabilities (Note 3)
1,783,625 1,841,074
Total liabilities 45,466,907 45,685,811
Contingency (Note 3)
Partners' deficit (Note 4):
Investor Limited Partners
(35,200 Units outstanding) (9,970,913)(10,130,376)
Original Limited Partner (409,773) (420,061)
General Partners (411,950) (413,665)
Total Partners' deficit (10,792,636)(10,964,102)
Total liabilities and Partners' deficit $34,674,271$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 Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Revenue:
<S> <C> <C> <C> <C>
Rental $3,859,999 $3,708,555 $7,711,816$7,386,407
Interest income 39,351 29,214 75,607 55,321
Total revenue 3,899,350 3,737,769 7,787,423 7,441,728
Expenses:
Operating (Note 5) 751,485 769,244 1,691,150 1,698,660
Maintenance 247,267 236,399 412,486 366,239
General and administrative (Note 5)78,255 44,530 120,083 81,347
Real estate taxes 572,883 579,233 1,145,681 1,156,047
Management fees (Note 5) 159,229 131,774 289,389 255,085
Depreciation and amortization 864,861 898,627 1,715,028 1,784,224
Interest 741,228 751,542 1,485,151 1,505,604
Total expenses 3,415,208 3,411,349 6,858,968 6,847,206
Net income $ 484,142 $ 326,420 $ 928,455$ 594,522
Allocation of net income (Note 4):
Investor Limited Partners
(35,200 Units outstanding) $ 450,252 $ 303,571 $ 863,463$ 552,906
Investor Limited Partner Per Unit$ 12.79 $ 8.63 $ 24.53 $ 15.71
Original Limited Partner $ 29,048 $ 19,585 $ 55,707 $ 35,671
General Partners $ 4,842 $ 3,264 $ 9,285 $ 5,945
</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 Six Months
Ended June 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 928,455$ 594,522
Adjustments to reconcile net income to net
cash provided by operating activities:
Interest earned on replacement reserve escrows (5,333) (5,356)
Depreciation and amortization 1,715,028 1,784,224
Changes in assets and liabilities:
Increase in cash restricted for tenant
security deposits (6,251) (5,857)
Decrease in prepaid expenses and other
assets 703,114 6,893
Increase in accrued real estate taxes 121,536 157,970
Increase (decrease) in accrued expenses
and other liabilities (57,449) 14,295
Increase in due to affiliates 13,959 -
Net cash provided by operating
activities 3,413,059 2,546,691
Cash flows from investing activities:
Deposits to replacement reserve escrows (153,256) (153,256)
Withdrawals from replacement reserve escrows 152,154 10,720
Additions to fixed assets (557,995) (530,106)
Net cash used in investing activities (559,097) (672,642)
Cash flows from financing activities:
Principal payments on mortgage notes payable(296,950) (277,620)
Increase in deferred expenses - (9,285)
Distributions (756,989) (756,989)
Net cash used in financing activities (1,053,939)(1,043,894)
Net increase in cash and cash equivalents 1,800,023 830,155
Cash and cash equivalents, beginning of period 2,101,415 802,726
Cash and cash equivalents, end of period $3,901,438$1,632,881
</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 June 30, 1999, its
results of operations for the three and six
months ended June 30, 1999 and 1998 and its
cash flows for the six months ended June 30,
1999 and 1998.
The results of operations for the three and
six months ended June 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>
June 30, December 31,
1999 1998
<S> <C> <C>
Cash and money market accounts $ 587,300 $ 405,431
Treasury bills 3,314,138 1,695,984
$ 3,901,438 $ 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 $1,015,000 in the
consolidated financial statements at June 30,
1999 and December 31, 1998.
(4) Changes in Partners' Deficit
A summary of changes in Partners' deficit for the six months
ended June 30, 1999 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1998$(10,130,376)$(420,061)$(413,665)$(10,964,102)
Net income 863,463 55,707 9,285 928,455
Distributions (704,000) (45,419) (7,570) (756,989)
Balance at
June 30, 1999 $ (9,970,913)$(409,773)$(411,950)$(10,792,636)
</TABLE>
Continued
KRUPP REALTY LIMITED PARTNERSHIP-V AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(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 MonthsFor the Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Property management fees $159,229 $131,774 $289,389$255,085
Expense reimbursements 101,328 79,213 174,338 122,173
Charged to operations$260,557 $210,987 $463,727$377,258
</TABLE>
Due to affiliates consisted of expense reimbursements of $13,959
at June 30, 1999.
Expense reimbursements due from affiliates of $1,456 were
included in prepaid expenses and other assets at December 31,
1998.<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.
The Partnership's apartment market of
Cockeyville, Maryland (Century) is currently
experiencing an increase in competition from
recently renovated existing properties. The
General Partners are in the process of
evaluating strategies to improve the
competitiveness of the Partnership's
properties.
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 expect all Year 2000
compliance issues identified in its non-
financial systems to be resolved by early in
the fourth quarter. The General Partners of
the Partnership do not believe that future
efforts to achieve Year 2000 compliance in
non-financial systems will result in material
cost to the Partnership.
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.
Nevertheless, the General Partners are
developing contingency plans for all of its
"mission-critical functions" to insure
business continuity.
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 six months ended June 30, 1999 and
1998.
Net income increased for the three and six
months ended June 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 six months ended June 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 six months ending June
30, 1999 to the same periods of 1998 as the
increase in maintenance, general and
administrative and management fee expenses
were offset by a decrease in operating and
depreciation expenses. Increased plumbing
repairs during the second quarter of 1999 at
Park Place as well as an increase in cleaning
costs at both properties have resulted in an
increase in the Partnership's maintenance
expense. Property management fees increased
in conjunction with the increase in rental
revenue as discussed above. General and
administrative expense increased due to higher
expenses incurred in connection with
preparation and mailing of Partnership reports
and other investor communications. Operating
expense increased in 1999 as a result of an
increase in workmen's compensation expense due
to a one-time beneficial adjustment to the
workmen's compensation reserve in 1998.
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 June 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: August 16, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 5 Financial Statements for the six months ended June 30, 1999 and
is qualified in its entirety by reference to such financial statments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,901,438
<SECURITIES> 0
<RECEIVABLES> 73,197<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,784485
<PP&E> 75,005,709<F2>
<DEPRECIATION> (47,090,558)<F3>
<TOTAL-ASSETS> 34,674,271
<CURRENT-LIABILITIES> 3,927,620
<BONDS> 41,539,287<F4>
0
0
<COMMON> (10,792,636)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,674,271
<SALES> 0
<TOTAL-REVENUES> 7,787,423<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,373,817<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,485,151
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 928,455<F8>
<EPS-BASIC> 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 $74,440,337 and deferred expenses of $565,372.
<F3>Accumulated depreciation of $46,990,498 and accumulated amortization of
deferred expenses of $100,060.
<F4>Represents mortgage notes payable.
<F5>Represents total deficit of the General Partners and Limited Partners of
($411,950) and ($10,380,686), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $2,513,108, real estate taxes of $1,145,681
and depreciation and amortization of $1,715,028.
<F8>Net income allocated $9,285 to the General Partners and $919,170 to the
Limited Partners. Average net income per Unit of Limited Partners interest
is $24.53 on 35,200 Units outstanding.
</FN>
</TABLE>
