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, 1996
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 0-14393
Krupp Cash Plus Limited Partnership
Massachusetts 04-2865878
(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
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 CASH PLUS LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Real estate assets:
Retail centers, less accumulated
depreciation of $16,810,212 and
$15,298,268, respectively $29,122,747 $30,082,471
Mortgage-backed securities ("MBS"), net
of accumulated amortization (Note 4) 4,519,885 5,151,696
Total real estate assets 33,642,632 35,234,167
Cash and cash equivalents 4,401,270 2,841,353
Other assets 718,668 782,000
Total assets $38,762,570 $38,857,520
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 335 $ 6,428
Accrued expenses and other liabilities
(Note 2) 1,362,723 963,809
Total liabilities 1,363,058 970,237
Partners' equity (deficit) (Note 3):
Unitholders (4,000,000 Units outstanding) 37,551,307 38,032,296
Corporate Limited Partner (100 Units
outstanding) 1,168 1,180
General Partners (152,963) (146,193)
Total Partners' equity 37,399,512 37,887,283
Total liabilities and Partners'
equity $38,762,570 $38,857,520
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Rental $1,291,131 $1,415,939 $4,309,207 $4,406,111
Interest income - MBS
(Note 4) 96,716 113,783 303,261 353,493
Interest income - other 57,247 57,056 152,981 146,129
Total revenue 1,445,094 1,586,778 4,765,449 4,905,733
Expenses:
Operating (Note 5) 250,964 261,302 845,024 779,634
Maintenance 57,953 69,098 216,146 203,272
General and adminis-
trative (Note 5) 44,763 48,089 116,706 140,782
Real estate taxes 90,662 281,776 679,269 883,713
Management fees (Note 5) 70,462 95,726 214,546 230,098
Depreciation 506,194 463,215 1,511,944 1,430,302
Total expenses 1,020,998 1,219,206 3,583,635 3,667,801
Net income $ 424,096 $ 367,572 $1,181,814 $1,237,932
Allocation of net income
(Note 3):
Unitholders (4,000,000
Units outstanding) $ 415,604 $ 360,212 $1,158,149 $1,213,144
Net income per Unit of
Depositary Receipt $ .10 $ .09 $ .29 $ .30
Corporate Limited
Partner (100 Units
outstanding) $ 10 $ 9 $ 29 $ 30
General Partners $ 8,482 $ 7,351 $ 23,636 $ 24,758
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP CASH PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
<S> <C> <C>
Operating activities:
Net income $ 1,181,814 $ 1,237,932
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,511,944 1,430,302
Amortization of MBS premium, net 1,012 1,231
Decrease (increase) in other assets 63,332 (130,700)
Decrease in accounts payable (6,093) (103,785)
Increase in accrued expenses and other
liabilities 398,914 914,898
Net cash provided by operating
activities 3,150,923 3,349,878
Investing activities:
Additions to fixed assets (552,220) (429,024)
Principal collections on MBS 630,799 376,097
Net cash provided by (used in)
investing activities 78,579 (52,927)
Financing activity:
Distributions (1,669,585) (1,671,553)
Net increase in cash and cash equivalents 1,559,917 1,625,398
Cash and cash equivalents, beginning of period 2,841,353 2,319,369
Cash and cash equivalents, end of period $ 4,401,270 $ 3,944,767
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP CASH PLUS LIMITED PARTNERSHIP
NOTES TO 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
Cash Plus Limited Partnership (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,
1995 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 September 30, 1996, its
results of operations for the three and nine months ended September 30,
1996 and 1995 and its cash flows for the nine months ended September 30,
1996 and 1995. Certain prior year balances have been reclassified to
conform with current year financial statement presentation.
The results of operations for the three and nine months ended September
30, 1996 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) Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Accrued real estate taxes $ 594,626 $685,370
Accrued insurance 140,394 114,397
Prepaid rent 545,618 84,065
Tenant security deposits 52,394 48,707
Other accrued expenses 29,691 31,270
$1,362,723 $963,809
</TABLE>
(3) Changes in Partners' Equity
A summary of changes in Partners' equity (deficit) for the nine months
ended September 30, 1996 is as follows:
<TABLE>
<CAPTION>
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 $38,032,296 $ 1,180 $(146,193) $37,887,283
Net income 1,158,149 29 23,636 1,181,814
Distributions (1,639,138) (41) (30,406) (1,669,585)
Balance at
September 30, 1996 $37,551,307 $ 1,168 $(152,963) $37,399,512
</TABLE>
(4) Mortgage Backed Securities
The MBS held by the Partnership are issued by the Federal Home Loan
Mortgage Corporation and the Government National Mortgage Association.
Additional information on the MBS held is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
<S> <C> <C>
Face Value $ 4,504,217 $ 5,135,017
Amortized Cost $ 4,519,885 $ 5,151,696
Estimated Market Value $ 4,637,000 $ 5,435,000
</TABLE>
Coupon rates of the MBS range from 8.5% to 9.0% per annum and mature in
the years 2008 through 2017. The Partnership's MBS portfolio had gross
unrealized gains of approximately $117,000 and $284,000 at September 30,
1996 and December 31, 1995, respectively, and no unrealized losses. The
Partnership does not expect to realize these gains as it currently has
the intention and ability to hold the MBS until maturity.
(5) Related Party Transactions
Commencing with the date of acquisition of the Partnership's properties,
the Partnership entered into agreements under which property management
fees are paid to an affiliate of the General Partners for services as
management agent. Such agreements provide for management fees 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 accounting, computer,
insurance, travel, legal and payroll, and with the preparation and
mailing of reports and other communications to the Unitholders.
Amounts accrued or paid to the General Partners or their affiliates are
as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Property management
fees $ 70,462 $ 95,726 $214,546 $230,098
Expense
reimbursements 74,685 74,922 214,162 192,926
Charged to
operations $145,147 $170,648 $428,708 $423,024
</TABLE>
<PAGE>
KRUPP CASH PLUS LIMITED PARTNERSHIP
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 operations of its real estate investments.
Liquidity is also generated by the MBS portfolio. The Partnership holds MBS
that are guaranteed by Government National Mortgage Association ("GNMA") and
Federal Home Loan Mortgage Corporation ("FHLMC"). The principal risks in
respect of MBS are the credit worthiness of GNMA and FHLMC and the risk that
the current value of any MBS may decline as a result of changes in market
interest rates. The General Partners believe that the risk is minimal due to
the fact that the Partnership has the ability to hold these securities to
maturity. The Partnership's sources of future liquidity will be used for
payment of expenses related to real estate operations, capital expenditures
including tenant build-outs to secure quality tenants, and other
administrative expenses. Cash Flow, if any, as calculated under Section 17 of
the Partnership Agreement, will then be available for distribution to the
Partners.
The Partnership's retail centers continue to have a relatively consistent
level of operating results. However, to attain these results, management has
found it necessary to fund a significant portion of tenant build-outs to
secure quality tenants in the Partnership's retail centers.
The Partnership has ongoing improvements which are necessary at High Point
National Furniture Mart to reconfigure space for new tenants and comply with
present building code standards. Renovations to the three floors of the
building were completed during the second quarter of 1996, while renovations
to the elevator system which began in the second quarter of 1996, were
completed in the third quarter of 1996. The refurbished show-room spaces have
enabled the property to command higher rents and maintain 99% occupancy.
Management is currently evaluating leasing issues at Tradewinds. One 17,770
square foot tenant's lease will be terminated as of December 31, 1996.
Management is working on finding a new tenant for this space and is
negotiating with one of the anchor tenants regarding possible expansion.
Improvements to the facade at Tradewinds were completed during the second
quarter of 1996 in order to remain competitive against newer centers.
In order to continue to fund the capital improvements noted above, the General
Partners, on an ongoing basis, assess the current and future liquidity needs
in determining the levels of working capital the Partnership should maintain.
Adjustments to distributions are made when appropriate to reflect such
assessments. Based on current assessments, the General Partners have
determined that retaining the current annualized distribution rate of
approximately $0.55 per Unit will allow the Partnership to maintain adequate
reserves to fund the necessary capital improvements.
Distributable Cash Flow and Net Proceeds from Capital Transactions
Shown below is the calculation of Distributable Cash Flow and Net Proceeds
from Capital Transactions as defined by Section 17 of the Partnership
Agreement, and the source of cash distributions for the nine months ended
September 30, 1996 and from the Partnership's inception through September 30,
1996. The General Partners provide certain of the information below to meet
requirements of the Partnership Agreement and because they believe that it is
an appropriate supplemental measure of operating performance. However,
Distributable Cash Flow and Net Proceeds from Capital Transactions should not
be considered by the reader as a substitute to net income, as an indicator of
the Partnership's operating performance or to cash flows as a measure of
liquidity.
<TABLE>
<CAPTION>
(In $1,000's except per Unit amounts)
For the Nine Months Inception to
Ended September 30, September 30,
1996 1996
<S> <C> <C>
Distributable Cash Flow:
Net income for tax purposes $1,456 $ 23,396
Items not requiring or (not providing)
the use of operating funds:
Tax basis depreciation and amortization 1,261 17,769
Interest income on note receivable - (371)
Gain on sale of assets - (1,686)
Additions to fixed assets (552) (8,452)
Cash from vacancy guarantee on Luria's Plaza - 873
Fixed asset additions funded from cash
reserves - 865
Operating reserve for fixed asset additions - (1,070)
Total Distributable Cash Flow ("DCF") $2,165 $ 31,324
Unitholders' Share of DCF $2,122 $ 30,698
Unitholders' Share of DCF per Unit $ .53 $ 7.67 (d)
General Partners' Share of DCF $ 43 $ 626
Net Proceeds from Capital Transactions:
Principal collections on MBS, net $ 632 $ 15,085
Proceeds from sale of MBS - 19,018
Net proceeds from sale of property
including interest on mortgage
note receivable - 1,208
Mortgage note - 7,150
Reinvestment of MBS principal
collections - (16,141)
Total Net Proceeds from Capital
Transactions $ 632 $ 26,320
Distributions:
Unitholders $1,639 (a) $ 55,436 (b)(c)
Unitholders' Average per Unit $ .41 (a) $ 13.86 (b)(c)(d)
General Partners $ 43 (a) $ 625 (b)
Total Distributions $1,682 (a) $ 56,061 (b)(c)
</TABLE>
(a) Represents distributions paid in 1996, except the February, 1996
distribution, which relates to 1995 cash flow, and includes an estimate
of the distribution to be paid in November, 1996.
(b) Includes an estimate of the distribution to be paid in November, 1996.
(c) Includes a $7,150,000 note which was distributed from the Partnership to
the Evergreen Plaza Note-Holding Trust whose beneficiaries were the
Partnership's Unitholders on record on May 31, 1990.
(d) Unitholders' average per Unit return of capital as of November, 1996 is
$6.19 [$13.86-$7.67].
Operations
Distributable Cash Flow decreased for the nine months ended September 30,
1996, as compared to the nine months ended September 30, 1995, due to an
increase in capital improvements at the Partnership's properties and a
decrease in net income.
Rental revenue decreased for the three and nine months ended September 30,
1996, as compared to the same periods in 1995. The decrease in rental
revenue is due to lower tenant billings as a result of the decline in
reimbursable real estate taxes. MBS interest income also decreased due to
repayment and prepayments of principal which occur on the MBS portfolio. The
decrease was partially offset by an increase in other interest income as a
result of higher cash and cash equivalent balances available for investment.
Total expenses decreased for the three months ended September 30, 1996, as
compared to the same period in 1995, due to decreases in maintenance, real
estate tax and management fee expenses. The decline in maintenance expense
is a result of lower preventative maintenance performed at the Partnership's
properties in the third quarter of 1996, as compared to the third quarter of
1995. The decrease in real estate taxes is a result of a reassessment of
Tradewinds by the local taxing authority. Management fees also decreased in
conjunction with the decline in revenue.
During the nine months ended September 30, 1996, total expenses decreased
primarily due to a decrease in real estate taxes, as discussed above.
However, this decrease was partially offset by an increase in both operating
and maintenance expenses. Operating expense increased due to prior years'
insurance refunds received in 1995, and increased utility consumption as a
result of the unusually harsh winter weather conditions at the properties.
The increase in maintenance expense is due to increased snow removal and
exterior repair expenditures as result of the adverse weather conditions.
Depreciation expense increased for the three and nine months ended September
30, 1996, as compared to the same periods in 1995, in conjunction with the
increase in capital improvement expenditures.
General
In accordance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
which is effective for fiscal years beginning after December 15, 1995, the
Partnership has implemented policies and practices for assessing impairment
of its real estate assets.
The investments in properties are carried at cost less accumulated
depreciation unless the General Partners believe there is a significant
impairment in value, in which case a provision to write down investments in
properties to fair value will be charged against income. At this time, the
General Partners do not believe that any assets of the Partnership are
significantly impaired.
<PAGE>
KRUPP CASH PLUS LIMITED PARTNERSHIP
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 its behalf by the
undersigned, thereunto duly authorized.
Krupp Cash Plus Limited Partnership
(Registrant)
By: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting
Officer of The Krupp Corporation, a
General Partner.
Date: October 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cash Plus I
Financial Statements for the nine months ended September 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,401,270
<SECURITIES> 4,519,885
<RECEIVABLES> 512,408<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 206,260
<PP&E> 45,932,959
<DEPRECIATION> (16,810,212)
<TOTAL-ASSETS> 38,762,570
<CURRENT-LIABILITIES> 1,363,058
<BONDS> 0
0
0
<COMMON> 37,399,512<F2>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 38,762,570
<SALES> 0
<TOTAL-REVENUES> 4,765,449
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,583,635<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,181,814<F4>
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1>Includes all receivables included in "other assets" on the balance sheet.
<F2>Represents total deficit of the General Partners ($152,963) and equity of
the Limited Partners $37,552,475.
<F3>Includes operating expenses of $1,392,422, real estate taxes of $679,269 and
depreciation expense of $1,511,944.
<F4>Net income allocated $23,636 to General Partners $1,158,178 for the nine
months ended September 30, 1996. Average net income is $.29 per unit.
4,000,000 Units outstanding.
</FN>
</TABLE>
