UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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 identification no.)
incorporation or organization)
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 9.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. 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-VII AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
Multi-family apartment
complexes, net of accumulated depreciation
of $14,953,516 and $14,265,488, respectively $ 8,302,694 $ 8,809,883
Cash and cash equivalents 334,961 120,525
Cash restricted for tenant security deposits 27,456 27,256
Replacement reserve escrow 30,275 72,378
Prepaid expenses and other assets 411,669 663,021
Deferred expenses, net of accumulated
amortization of $190,721
and $171,421, respectively 124,931 144,234
============= ============
Total assets $ 9,231,986 $ 9,837,297
============= ============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable $ 10,164,953 $ 10,220,052
Accrued expenses and other liabilities 500,353 625,590
------------- ------------
Total liabilities 10,665,306 10,845,642
Partners' Deficit (Note 2):
Investor Limited Partners
(27,184 units understanding) (568,516) (172,633)
Original Limited Partner (547,849) (525,767)
General Partners (316,955) (309,945)
------------- ------------
Total Partners' Deficit (1,433,320) (1,008,345)
============= ============
Total liabilities and Partners' $ 9,231,986 $ 9,837,297
deficit ============= ============
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP- VII AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------------- ----------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rental $ 1,039,290 $ 962,083 $2,074,302 $1,932,653
Interest income 3,693 5,745 8,503 13,946
----------- ---------- ---------- ----------
Total revenue 1,042,983 967,828 2,082,805 1,946,599
----------- ---------- ---------- ----------
Expenses:
Operating (Note 3) 252,346 253,434 499,127 483,313
Maintenance 103,510 128,806 168,124 222,353
Real estate taxes 93,494 93,767 204,251 229,967
General and administrative
(Note 3) 66,208 53,785 101,089 78,121
Management fees (Note 3) 60,587 37,151 115,509 80,143
Depreciation and
amortization 352,793 372,872 707,327 742,815
Interest $ 217,868 $ 220,150 $ 436,324 $ 440,840
----------- ---------- ---------- ----------
Total expenses 1,146,806 1,159,965 2,231,751 2,277,552
----------- ---------- ---------- ----------
Net loss $ (103,823) $ (192,137) $ (148,946) $ (330,953)
=========== ========== ========== ==========
Allocation of net loss:
Investor Limited Partners
(27,184 units outstanding):
Net loss $ (102,785)$ (190,216) $ (147,457) $ (327,643)
=========== ========== ========== ==========
Investor Limited Partners,
Per Unit:
Net loss $ (3.78) $ (7.00) $ (5.42) $ (12.05)
=========== ========== ========== ==========
Original Limited Partner
Net loss - - - -
=========== ========== ========== ==========
General Partners:
Net loss $ (1,038) $ (1,921) $ (1,489) $ (3,310)
=========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-VII AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
--------------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (148,946) $ (330,953)
Adjustment to reconcile net loss to net
cash provided by operating activities:
Interest earned on replacement
reserve escrow (219) (460)
Depreciation and amortization 707,327 742,815
Changes in assets and liabilities:
Increase in restricted cash for
tenant security deposits (27,704) (322)
Decrease (increase) in prepaid
expenses and other assets 251,352 (86,186)
Decrease in accrued expenses and
other liabilities (95,529) (107,577)
------------- -------------
Net cash provided by
operating activities 686,281 217,317
------------- -------------
Cash flows from investing activities:
Deposits to replacement reserve escrow (25,200) (25,200)
Withdrawals from replacement
reserve escrow 67,522 151
Additions to fixed assets (180,835) (194,873)
Decrease in accrued expenses and other
liabilities related to fixed assets
additions (2,204) (3,500)
------------- -------------
Net cash provided by (used in)
investing activities (140,717) (223,422)
------------- -------------
Cash flows from financing activities:
Principal payments on mortgage notes payable (55,099) (50,583)
Distributions (276,029) (276,029)
------------- -------------
Net cash used in financing activities (331,128) (326,612)
------------- -------------
Net increase (decrease) in cash and cash
equivalents 214,436 (332,717)
Cash and cash equivalents, beginning of 120,525 629,483
period ------------- -------------
Cash and cash equivalents, end of period $ 334,961 $ 296,766
============= =============
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP- VII AND SUBSIDIARIES
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 principals 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-VII and Subsidiaries (the "Partnership"),the
disclosures contained in this report are adequate to make the
information presented not misleading. See notes to the Consolidated
Financial Statement included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1999 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, 2000, its results of operation for the three and six months
ended June 30,2000 and 1999, and its cash flows for the six months
ended June 30, 2000 and 1999.
The results of operations for the three and six months ended June 30,
2000 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' deficit for six months ended June 30,
2000 is as follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners
Partners Partners Partners Deficit
--------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Balance at
December 31, 1999 $(172,633) $ (525,767) $(309,945) $(1,008,345)
Distributions (248,426) (22,082) (5,521) (276,029)
Net loss (147,457) - (1,489) (148,946)
--------- ---------- --------- -----------
Balance at
June 30, 2000 $(568,516) $ (547,849) $(316,955) $ 1,433,320)
========= ========== ========= ===========
</TABLE>
<PAGE>
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
gross receipts from residential properties under management. The
Partnership also reimburse affiliates of the General Partners for
certain expenses incurred in connection with the operation of the
Partnership and its properties, including administrative expenses.
Amounts accrue or paid to the General Partners' affiliates were
as follows:
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------------- ---------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Property management fees $ 60,587 $ 37,151 $ 115,509 $ 80,143
Expenses reimbursement 53,947 54,378 95,681 88,345
----------- ---------- ---------- ----------
Charged to operations $ 114,534 $ 91,529 $ 211,190 $ 168,488
=========== ========== ========== ==========
</TABLE>
Expense reimbursements due from affiliates of $87,200 and $237,015
were included in prepaid expenses and other assets at June 30, 2000
and December 31, 1999, respectively.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP- VII AND SUBSIDIARIES
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 successful operations of its real estate
investments. Such ability would also be impacted by 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 improvements, debt service and other expenses. Cash flow,
calculated under section 8.2 (a) of the Partnership Agreement, will then be
if any, as available for distribution to the Partners.
The General Partners, on an ongoing basis, assess the current and future
liquidity needs in determining the levels of working capital reserves the
Partnership should maintain. Adjustments to distributions are made when
appropriate to reflect such assessment. The current annual distribution rate
is $18.28 per Unit, and is paid semiannually in February and August.
Operations
The following discussion relates to the operations of the Partnership and its
properties (Courtyards Village and Windsor Apartments) for the three and six
months ended June 30, 2000 and 1999.
Net loss decreased during the three and six months ended June 30, 2000 when
compared to the three and six months ended June 30, 1999, as total revenues
increased and total expenses decreased. The increase in total revenue
is primarily a result of rental rate increases implemented at all of the
Partnership's properties at the end of the first quarter of 2000. Interest
income decreased due to lower average cash and cash equivalent balances
available for investment when compared to 1999.
Total expenses for the three months ended June 30, 2000 decreased when
compared to the three months ended June 30, 1999 with decreases in maintenance
and depreciation expenses offset by an increase in general administrative
reduced the need for repairs and maintenance in some areas. Depreciation
expense expenses. Maintenance expense decreased in 2000 as capital expenditures
decreased as fixed asset additions purchased in the previous years become fully
depreciated. General and administrative expenses increased as a result of
increased investor communication costs including printing and mailing of
quarterly and annual reports.
Total expenses for the six months ended June 30, 2000 decreased when
compared to the six months ended June 30, 1999 due to the reasons discussed
above as well as an increase in operating expenses. Operating expenses increased
as a result of increases in utilities, insurance, and refuse removal costs.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP- VII AND SUBSIDIARIES
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>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned, thereunto duly authorized.
Krupp Realty Limited Partnership - VII
--------------------------------------
(Registrant)
BY: /s/ Wayne H Zarozny
---------------------------------------
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of the Krupp Corporation,
a General Partner.
DATE: August 14, 2000
