UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1995
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 0-14377
Krupp Realty Limited Partnership-VII
Massachusetts 04-2842924
(State or other jurisdiction of (IRS employer
incorporation or organization)
identification no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
KRUPP REALTY LIMITED PARTNERSHIP-VII
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1995 1994
<S> <C> <C>
Multi-family apartment complexes, net of
accumulated depreciation of $8,873,331
and $8,664,936, respectively $ 9,489,144 $ 9,665,226
Retail center, net of accumulated
depreciation of $2,993,100 and $2,896,863,
respectively 6,629,406 6,724,369
Total real estate assets 16,118,550 16,389,595
Cash and cash equivalents 935,363 1,021,464
Cash restricted for tenant security deposits 40,831 55,084
Cash restricted for capital improvements 52,784 54,189
Prepaid expenses and other assets 547,530 555,508
Deferred expenses, net of accumulated
amortization of $28,567 and $19,538,
respectively 257,589 261,143
Total assets $17,952,647 $18,336,983
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $12,871,418 $12,912,152
Accrued expenses and other liabilities 683,589 762,988
Total liabilities 13,555,007 13,675,140
Partners' equity (Note 2) 4,397,640 4,661,843
Total liabilities and partners' equity $17,952,647 $18,336,983
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
Revenue:
Rental $1,099,574 $1,029,443
Interest income 13,547 5,616
Total revenue 1,113,121 1,035,059
Expenses:
Operating (including reimbursements to
affiliates of $25,080 and $41,070,
respectively) 244,532 287,141
Maintenance 60,434 50,756
Real estate taxes 113,571 106,724
Management fees to an affiliate 47,435 40,937
Depreciation and amortization 313,661 313,669
Interest 281,315 300,386
General and administrative (including
reimbursements to affiliates of $7,727
and $12,933, respectively) 14,332 20,612
Total expenses 1,075,280 1,120,225
Net income (loss) $ 37,841 $ (85,166)
Allocation of net income (loss) (Note 2):
Per Unit of Investor Limited Partnership
Interest (27,184 Units outstanding) $ 1.25 $ (3.10)
Original Limited Partner $ 3,027 $ -
General Partners $ 757 $ (852)
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31
1995 1994
<S> <C> <C>
Operating activities:
Net income (loss) $ 37,841 $ (85,166)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 313,661 313,669
Decrease (increase) in cash restricted for
tenant security deposits 14,253 (270)
Decrease (increase) in prepaid expenses and
other assets 7,978 (94,978)
Decrease in accrued expenses and other
liabilities (79,399) (94,178)
Net cash provided by operating activities 294,334 39,077
Investing activities:
Additions to fixed assets (33,587) (23,970)
Decrease in cash restricted for capital improvements 1,405 3,713
Net cash used in investing activities (32,182) (20,257)
Financing activities:
Principal payments on mortgage notes payable (40,734) (41,683)
Increase in deferred expenses (5,475) -
Distributions (302,044) -
Net cash used in financing activities (348,253) (41,683)
Net decrease in cash and cash equivalents (86,101) (22,863)
Cash and cash equivalents, beginning of period 1,021,464 840,798
Cash and cash equivalents, end of period $ 935,363 $ 817,935
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
NOTES TO FINANCIAL STATEMENTS
1. Significant 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 Krupp Corporation and The
Krupp Company Limited Partnership-II, the General Partners of Krupp
Realty Limited Partnership-VII (the "Partnership"), the disclosures
contained in this report are adequate to make the information presented
not misleading. See Notes to Financial Statements included in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1994 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 financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the Partnership's financial position as of March 31, 1995, its
results of operations and cash flows for the three months ended March
31, 1995 and 1994.
The results of operations for the three months ended March 31, 1995 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. Changes in Partners' Equity
A summary of changes in partners' equity (deficit) for the three
months ended March 31, 1995 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Equity
<S> <C> <C> <C> <C>
Balance at
December 31, 1994 $5,174,914 $(289,135) $(223,936) $4,661,843
Cash
Distributions (271,840) (24,163) (6,041) (302,044)
Net income 34,057 3,027 757 37,841
Balance at
March 31, 1995 $4,937,131 $(310,271) $(229,220) $4,397,640
</TABLE>
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's ability to generate cash adequate to meet its needs is
dependent primarily upon the successful operations of its real estate
investments. Such ability is also dependent upon the future availability
of bank borrowings and the future refinancing and sale of the Partnership's
remaining real estate investments. These sources of liquidity will be used
by the Partnership for payment of expenses related to real estate
operations, capital expenditures, debt service and expenses. Cash Flow, if
any, as calculated under Section 8.2(a) of the partnership agreement, will
then be available for distribution to the Partners. In 1994, the General
Partners determined that there was sufficient Cash Flow to reinstate semi-
annual distributions. These distributions commenced in August 1994 at a
rate of 1% of invested capital and increased in 1995 to a rate of 2% of
invested capital.
The Partnership's properties (Courtyards Village, Nora Corners and
Windsor Apartments) have generated increased liquidity due to increased
occupancy and higher rental rates in 1995, as compared to 1994.
Furthermore, the Partnership has increased availability of funds due to
reduced mortgage payments resulting from the 1994 refinancings of mortgage
notes payable at Nora Corners and Windsor Apartments.
In 1995, Courtyards and Windsor have scheduled capital improvement
expenditures totaling $140,000 and $92,000, respectively. As of March 31,
1995, capital improvement expenditures totaling $16,000 have been completed
at each property. Management believes these improvements will improve the
appearance of the properties and allow the properties to remain competitive
in their respective real estate markets.
The General Partners are in the process of reviewing liquidity options
for the limited partners in the Partnership. After falling precipitously
during the recession, real estate values have recently begun to recover.
Typically, the only option available to a limited partner to liquidate his
or her partnership interest has been to sell partnership units in the
thinly-traded secondary market or directly to a small number of "vulture
funds" seeking to purchase units at very low prices. While the Partnership
may not be a target, some speculators have made offers to partnerships to
acquire all or a significant portion of the outstanding partnership units
at prices substantially below net asset value. The General Partners are
exploring other options in an effort to provide the Partnership's limited
partners with an opportunity to liquidate their partnership interests on
reasonable terms giving due regard to property values and tax consequences.
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
Cash Flow
Shown below, as required by the Partnership Agreement, is the
calculation of Cash Flow for the three months ended March 31, 1995:
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net income for tax purposes $ 19,000
Items not requiring (requiring) the use of
operating funds:
Tax basis depreciation and amortization 334,000
Principal payments on mortgage notes payable (41,000)
Capital improvement expenditures (34,000)
Cash Flow $278,000
</TABLE>
Operations
During the first quarter of 1995, as compared to the first quarter of
1994, rental revenues increased primarily due to steady rental rate
increases implemented at Courtyards and Windsor in 1994. Occupancy at
Windsor also improved due to the stabilization of the Dallas economy, with
home purchasing leveling off. The Partnership's commercial property, Nora
Corners, is also maintaining its high level of occupancy with the signing
of two new tenants in the first quarter of 1994, D.L. Lowry Salon, a hair
salon, and Food King, a chinese food restaurant. Interest income has
increased due to additional investments in commercial paper yielding higher
rates of return.
During the first quarter of 1995, as compared to the first quarter of
1994, total expenses of the Partnership have remained relatively stable,
with the exception of operating and interest expense. The decrease in
operating expense is primarily due to management's efforts to reduce
reimbursable operating costs. Certain of these cost savings are
anticipated to continue throughout 1995. Interest expense for the first
quarter of 1995, as compared to the first quarter of 1994, decreased due to
the refinancing of the mortgage notes payable at Windsor Apartments and
Nora Corners in April and October of 1994, respectively. The new mortgage
note at Windsor has a reduced interest rate of 9.25% per annum from the
previous rate of 10.3% per annum. At Nora Corners, the new mortgage note
has an interest rate of 9% per annum from the previous rate of 10.5% per
annum.
Overall, operations at all of the Partnership's properties have
improved, as compared to the first three months of 1994. The General
Partners believe that this improvement will be sustained at least through
the end of 1995.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
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>
SIGNATURES
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-VII
(Registrant)
BY: /s/Marianne Pritchard
Marianne Pritchard
Treasurer and Chief Accounting Officer
of The Krupp Corporation, a General Partner.
DATE: May 4, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This FDS schedule for Krupp Realty Fund-VII contains summary financial
information extracted from the financial statements for the quarter ended
March 31, 1995 and is qualified in its entirety by reference to such
financials statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,028,978
<SECURITIES> 0
<RECEIVABLES> 140,441
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 407,089
<PP&E> 28,271,137<F1>
<DEPRECIATION> (11,894,998)<F2>
<TOTAL-ASSETS> 17,952,647
<CURRENT-LIABILITIES> 683,589
<BONDS> 12,871,418<F3>
<COMMON> 4,397,640<F4>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,952,647
<SALES> 1,113,121
<TOTAL-REVENUES> 1,113,121
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 793,965<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 281,315
<INCOME-PRETAX> 37,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,841
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F6>Net income allocated $757 to g.p.'s and $37,084 to L.P.'s for the quarter ended
3/31/95. Average net income is $1.25 per unit for 27,184 units outstanding.
<F5>Includes operating expenses of $366,733, real estate tax expense of $113,571 &
depreciation and amortization of $313,661.
<F4>Represents total equity of general partners (229,220) and limited partners
4,626,860.
<F3>Represents mortgage notes payable.
<F2>Includes depreciation of $11,866,431 and amortization of deferred expenses of
$28,567.
<F1>Includes apartment complexes of $18,362,475, retail center of $9,622,506 and
deferred expenses of $286,156.
</FN>
</TABLE>
