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 June 30, 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
June 30, December 31,
1995 1994
<S> <C> <C>
Multi-family apartment complexes, net of
accumulated depreciation of $9,084,164
and $8,664,936, respectively $ 9,321,534 $ 9,665,226
Retail center, net of accumulated
depreciation of $3,089,825 and $2,896,863,
respectively 6,534,611 6,724,369
Total real estate assets 15,856,145 16,389,595
Cash and cash equivalents 1,268,693 1,021,464
Cash restricted for tenant security deposits 40,648 55,084
Cash restricted for capital improvements 53,619 54,189
Prepaid expenses and other assets 464,990 555,508
Deferred expenses, net of accumulated
amortization of $37,581 and $19,538,
respectively 249,713 261,143
Total assets $17,933,808 $18,336,983
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $12,829,858 $12,912,152
Accrued expenses and other liabilities 672,322 762,988
Total liabilities 13,502,180 13,675,140
Partners' equity (Note 2) 4,431,628 4,661,843
Total liabilities and partners' equity $17,933,808 $18,336,983
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue:
Rental income $1,112,379 $1,065,111 $2,211,953 $2,094,554
Interest income 16,292 5,683 29,839 11,299
Total revenue 1,128,671 1,070,794 2,241,792 2,105,853
Expenses:
Operating (including
reimbursements to affiliates
of $22,942, $42,068, $48,022
and $83,138, respectively) 238,429 299,970 482,961 587,111
Maintenance 70,818 86,483 131,252 137,239
Real estate taxes 108,741 98,502 222,312 205,226
Management fees to an affiliate 48,570 47,444 96,005 88,381
Depreciation and amortization 316,572 344,249 630,233 657,918
Interest 280,483 300,133 561,798 600,519
General and administrative
(including in reimbursements
to affiliates of $7,651,
$12,801, $15,378 and $25,834,
respectively) 31,070 23,552 45,402 44,164
Total expenses 1,094,683 1,200,333 2,169,963 2,320,558
Net income (loss) $ 33,988 $ (129,539) $ 71,829 $ (214,705)
Allocation of net income (loss) (Note 2):
Per Unit of Investor
Limited Partnership Interest
(27,184 Units outstanding) $ 1.13 $ (4.72) $ 2.38 $ (7.82)
Original Limited Partner $ 2,719 $ - $ 5,746 $ -
General Partners $ 680 $ (1,295) $ 1,437 $ (2,147)
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
<S> <C> <C>
Operating activities:
Net income (loss) $ 71,829 $ (214,705)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 630,233 657,918
Decrease in cash restricted
for tenant security deposits 14,436 6,838
Decrease (increase) in prepaid expenses
and other assets 90,518 (192,930)
Decrease in accrued expenses
and other liabilities (90,666) (98,069)
Net cash provided by operating
activities 716,350 159,052
Investing activities:
Additions to fixed assets (78,740) (65,329)
Decrease (increase) in cash restricted for
capital improvements 570 (2,287)
Net cash used for investing
activities (78,170) (67,616)
Financing activity:
Increase in deferred expenses (6,613) (207,428)
Principal payments on mortgage notes payable (82,294) (75,027)
Proceeds from refinancing mortgage note payable - 5,300,000
Payoff of mortgage note payable - (5,017,971)
Distributions (302,044) -
Net cash used for financing
activities (390,951) (426)
Net increase in cash and cash equivalents 247,229 91,010
Cash and cash equivalents, beginning of period 1,021,464 840,798
Cash and cash equivalents, end of period $1,268,693 $ 931,808
</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 June 30, 1995, its results of operations for the
three and six months ended June 30, 1995 and 1994 and its cash flows for
the six months ended June 30, 1995 and 1994.
The results of operations for the three and six months ended June 30, 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 six months
ended June 30, 1995 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Equity
<C> <C> <C> <C> <C>
Balance at
December 31, 1994 $5,174,914 $(289,135) $(223,936) $4,661,843
Net income 64,646 5,746 1,437 71,829
Cash distributions (271,840) (24,163) (6,041) (302,044)
Balance at
June 30, 1995 $4,967,720 $(307,552) $(228,540) $4,431,628
</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 an annualized
rate of 1% of invested capital and increased in February 1995 to an annualized
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 the 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 June 30,
1995, capital improvement expenditures totaling $41,000 and $31,000 have been
completed at Courtyards and Windsor, respectively. Management believes these
improvements will improve the appearance of the properties and allow the
properties to remain competitive in their respective real estate markets.
Cash Flow
Shown below, as required by the Partnership Agreement, is the calculation
of Cash Flow for the six months ended June 30, 1995:
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net income for tax purposes $ 37,000
Items not requiring (requiring) the use of
operating funds:
Tax basis depreciation and amortization 669,000
Principal payments on mortgage notes payable (82,000)
Capital improvement expenditures (79,000)
Working Capital Reserves (243,000)
Cash Flow $302,000
</TABLE>
Continued
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
Operations
During the three and six months ended June 30, 1995, as compared to the same
period in 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, and one new tenant, Ladies' Sportswear, in
the second quarter of 1995. In addition, The Accent Shop, a home retail
store, renewed its five-year lease.
During the three and six months ended June 30, 1995, as compared to the same
period in 1994, total expenses of the Partnership have remained relatively
stable, with the exception of operating and interest expenses. The decrease
in operating expense is primarily due to a reduction in insurance expense due
to a favorable claim history as well as management's efforts to reduce
reimbursable operating costs. Certain of these cost savings are anticipated
to continue throughout 1995. Interest expense for the first and second
quarter of 1995, as compared to the first and second 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 six 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: August 4, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Krupp
Realty Fund 7 financial statement for the quarter ended June 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,362,960
<SECURITIES> 0
<RECEIVABLES> 165,904
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 299,086
<PP&E> 28,317,425<F1>
<DEPRECIATION> (12,211,567)<F2>
<TOTAL-ASSETS> 17,933,808
<CURRENT-LIABILITIES> 672,322
<BONDS> 12,829,858<F3>
<COMMON> 4,431,628<F4>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,933,808
<SALES> 2,241,792
<TOTAL-REVENUES> 2,241,792
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,608,165<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 561,798
<INCOME-PRETAX> 71,829
<INCOME-TAX> 0
<INCOME-CONTINUING> 71,829
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,829
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Includes apartment complexes of $18,405,698, retail center of $9,624,436 and
deferred expenses of $287,291.
<F2>Includes depreciation of $12,173,989 and amortization of deferred expenses
$37,578.
<F3>Represents mortgage notes payable.
<F4>Represents total equity of general partners (228,540) and limited partners
4,660,168.
<F5>Includes operating expenses of $755,620, real estate tax of $222,312, and
depreciation and amortization of $630,233.
<F6>Net income allocated $1,437 to general partners and $70,392 to the limited
partners for the six months ended 6/30/95. Average net income is $2.38 per
unit for 27,184 units outstanding.
</FN>
</TABLE>
