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 September 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
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Multi-family apartment complexes, net of
accumulated depreciation of $9,299,789,
and $8,664,936, respectively $ 9,170,925 $ 9,665,226
Retail center, net of accumulated
depreciation of $3,187,101 and $2,896,863,
respectively 6,447,935 6,724,369
Total real estate assets 15,618,860 16,389,595
Cash and cash equivalents 1,041,112 1,021,464
Cash restricted for tenant security deposits 34,848 55,084
Cash restricted for capital improvements 59,619 54,189
Prepaid expenses and other assets 553,184 555,508
Deferred expenses, net of accumulated
amortization of $46,548 and $19,538,
respectively 240,746 261,143
Total assets $17,548,369 $18,336,983
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $12,787,455 $12,912,152
Accrued expenses and other liabilities 706,401 762,988
Total liabilities 13,493,856 13,675,140
Partners' equity (Note 2):
Limited Partners (27,184
Limited Partner interests
outstanding) 4,628,024 5,174,914
Original Limited Partner (337,461) (289,135)
General Partners (236,050) (223,936)
Total Partners' equity 4,054,513 4,661,843
Total liabilities and Partners' equity $17,548,369 $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 Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue:
Rental $1,132,319 $1,093,652 $3,344,272 $3,188,206
Interest income 18,274 7,353 48,113 18,652
Total revenue 1,150,593 1,101,005 3,392,385 3,206,858
Expenses:
Operating (including reimburse-
ments to affiliates of
$32,688, $40,769, $80,710
and $122,308 respectively) 286,275 288,585 769,235 875,696
Maintenance 125,375 96,253 256,627 233,492
Real estate taxes 106,905 99,107 329,217 304,333
Management fees to an affiliate 50,855 49,791 146,860 138,172
Depreciation and amortization 321,867 312,875 952,101 970,793
Interest 279,576 346,613 841,374 947,132
General and administrative
(including reimbursements to
affiliates of $7,644, $13,845,
$23,022 and $41,278,
respectively) 54,811 55,812 100,213 99,976
Total expenses 1,225,664 1,249,036 3,395,627 3,569,594
Net loss $ (75,071) $ (148,031) $ (3,242) $ (362,736)
Allocation of net loss (Note 2):
Per Unit of Investor
Limited Partner Interest
(27,184 Units outstanding) $ (2.73) $ (5.39) $ (.12) $ (13.21)
General Partners $ (751) $ (1,480) $ (32) $ (3,627)
</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 Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Operating activities:
Net loss $ (3,242) $ (362,736)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 952,101 970,793
Decrease in restricted cash for tenant
security deposits 20,236 6,562
Decrease (increase) in prepaid expenses
and other assets 2,324 (245,699)
Decrease in accrued expenses and other
liabilities (56,587) (68,676)
Net cash provided by operating
activities 914,832 300,244
Investing activities:
Additions to fixed assets (154,356) (139,187)
Increase in cash restricted for capital
improvements (5,430) (267)
Net cash used in investing
activities (159,786) (139,454)
Financing activities:
Principal payments on mortgage notes payable (124,697) (111,856)
Proceeds from refinancing mortgage note payable - 5,300,000
Payoff of mortgage note payable - (5,017,971)
Increase in deferred expenses (6,613) (208,723)
Distributions (604,088) (151,022)
Net cash used in financing
activities (735,398) (189,572)
Net increase (decrease) in cash 19,648 (28,782)
Cash and cash equivalents, beginning of period 1,021,464 840,798
Cash and cash equivalents, end of period $1,041,112 $ 812,016
</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 only of
normal recurring accruals) necessary to present fairly the Partnership's
financial position as of September 30, 1995, its results of operations for
the three and nine months ended September 30, 1995 and 1994 and its cash
flows for the nine months ended September 30, 1995 and 1994. Certain prior
period balances have been reclassified to reflect current year financial
statement presentation.
The results of operations for the three and nine months ended September 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 nine months
ended September 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 Loss (3,210) - (32) (3,242)
Cash Distribution (543,680) (48,326) (12,082) (604,088)
Balance at
September 30, 1995 $4,628,024 $(337,461) $(236,050) $4,054,513
</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 refinancing 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 September 30,
1995, capital improvement expenditures totaling $84,000 and $48,000 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 nine months ended September 30, 1995:
<TABLE>
<CAPTION>
Rounded to $1,000
<S> <C>
Net loss for tax purposes $ (54,000)
Items not requiring (requiring) the use of
operating funds:
Tax basis depreciation and amortization 1,003,000
Principal payments on mortgage notes payable (125,000)
Capital improvement expenditures (154,000)
Working capital reserves (368,000)
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 nine months ended September 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. The Partnership's
commercial property, Nora Corners, is 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
in the second quarter of 1995, Ladies' Sportswear. In addition, the Accent
Shop,
a home retail store, renewed its lease. Interest income increased due to
additional investments in commercial paper yielding higher rates of return.
During the three and nine months ended September 30, 1995, as compared to the
same period in 1994, total expenses of the Partnership have remained relatively
stable, with the exception of operating, maintenance 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. Maintenance expense increased due to
landscaping, parking lot and exterior building improvements implemented at
Courtyards and Windsor during the third quarter of 1995. Interest expense
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 nine 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: November 2, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contgains summary financial information extracted from the krupp
Realty Fund 7 financial statement for the nine months ended September 30, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,135,579
<SECURITIES> 0
<RECEIVABLES> 160,170
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 392,474
<PP&E> 28,393,041<F1>
<DEPRECIATION> (12,533,435)<F2>
<TOTAL-ASSETS> 17,548,369
<CURRENT-LIABILITIES> 706,401
<BONDS> 12,787,455<F3>
<COMMON> 4,054,513<F4>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,548,369
<SALES> 3,392,385
<TOTAL-REVENUES> 3,392,385
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,554,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 841,374
<INCOME-PRETAX> (3,242)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,242)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,242)
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Includes apartment complexes of $18,470,714, retail center of $9,635,036 and
deferred expenses of 287,291.
<F2>Includes depreciation of $12,486,890 and amortization of deferred expenses of
$48,545.
<F3>Represents mortgage notes payable.
<F4>Represents total equity of general partners ($236,050) and limited partners
$4,290,563.
<F6>Net loss allocated ($32) to general partners and ($3,210) to limited partners
for the nine months ended 9/30/95. Average net loss is (.12) per unit for
27,184 units outstanding.
</FN>
</TABLE>
