-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQJnaALiyclYurhfkwN3GvJkUMfuNUfslxGqlGgoAfOikryIo4UaQOsIB3HIKT8a ntNH5Etq2YTuK9D9/kg4yQ== 0000757549-96-000004.txt : 19960509 0000757549-96-000004.hdr.sgml : 19960509 ACCESSION NUMBER: 0000757549-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960508 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP INSTITUTIONAL MORTGAGE FUND LTD PARTNERSHIP CENTRAL INDEX KEY: 0000757549 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 042860302 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14378 FILM NUMBER: 96557694 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: C/O BERKSHIRE REALTY AFFILIATES STREET 2: 470 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 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, 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 0-14378 Krupp Institutional Mortgage Fund Limited Partnership Massachusetts 04-2860302 (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 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 Mortgage notes receivable, net of loan loss reserve of $16,524,000 (Notes 2 and 3) $11,788,906 $11,795,943 Cash and cash equivalents 649,385 1,260,798 Other investments 471,218 - Accrued interest receivable - mortgage notes, net of reserve for uncollectible interest of $10,331,364 and $9,755,416, respectively (Note 3) 133,008 112,304 Other assets 114,386 3,735 Total assets $13,156,903 $13,172,780 LIABILITIES AND PARTNERS' EQUITY Liabilities $ 6,298 $ 12,952 Partners' equity (deficit) (Note 4): Limited Partners (30,059 Units outstanding) 13,318,703 13,327,834 General Partners (168,098) (168,006) Total Partners' equity 13,150,605 13,159,828 Total liabilities and Partners' equity $13,156,903 $13,172,780 The accompanying notes are an integral part of the financial statements. KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1996 1995 Interest income: Mortgage notes receivable (Notes 2 and 3) $156,375 $318,714 Cash equivalents 17,119 13,887 Total interest income 173,494 332,601 Expenses: Expense reimbursements (Note 5) 12,953 12,816 General and administrative 17,951 7,012 Total expenses 30,904 19,828 Net income $142,590 $312,773 Allocation of net income (Note 4): Limited Partners $141,164 $309,645 Per Unit of Limited Partner Interest (30,059 Units Outstanding) $ 4.70 $ 10.30 General Partners $ 1,426 $ 3,128 The accompanying notes are an integral part of the financial statements. KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1996 1995 Operating activities: Net income $ 142,590 $ 312,773 Adjustments to reconcile net income to net cash provided by operating activities: Increase in accrued interest receivable - mortgage notes (20,704) (63,564) Increase in other assets (110,651) (5,538) Increase (decrease) in liabilities (6,654) 144,313 Net cash provided by operating activities 4,581 387,984 Investing activities: Principal collections from mortgage notes receivable 7,037 6,370 Increase in other investments (471,218) - Net cash provided by (used in) investing activities (464,181) 6,370 Financing activity: Distributions (151,813) (151,813) Net increase (decrease) in cash and cash equivalents (611,413) 242,541 Cash and cash equivalents, beginning of period 1,260,798 1,026,664 Cash and cash equivalents, end of period $ 649,385 $1,269,205 The accompanying notes are an integral part of the financial statements. KRUPP INSTITUTIONAL MORTGAGE FUND 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 Krupp Corporation and The Krupp Company Limited Partnership-III ("Krupp Co.-III"), the General Partners of Krupp Institutional Mortgage Fund Limited Partnership (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements 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 necessary to present fairly the Partnership's financial position as of March 31, 1996 and its results of operations and cash flows for the three months ended March 31, 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 months ended March 31, 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) Krupp Equity Limited Partnership ("KELP") Condensed financial statements of KELP are as follows: KRUPP EQUITY LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 Property at cost $24,093,587 $ 30,960,353 Property valuation provision (5,986,000) (5,986,000) Accumulated depreciation (7,112,270) (10,206,689) 10,995,317 14,767,664 Other assets 1,215,564 1,086,232 Total assets $12,210,881 $ 15,853,896 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable to the Partnership $ 28,312,906 $ 28,319,943 Mortgage notes payable (A) 2,927,947 7,599,279 Notes payable to an affiliate 300,000 300,000 Accrued interest payable to affiliates 10,775,513 10,171,783 Due to affiliates 874,345 767,737 Other liabilities 449,573 633,691 Total liabilities 43,640,284 47,792,433 Partners' deficit (31,429,403) (31,938,537) Total liabilities and Partners' deficit $ 12,210,881 $ 15,853,896 CONDENSED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1996 1995 Revenues $ 767,093 $ 873,284 Property operating expenses (382,819) (315,174) Income before depreciation, amortization and interest 384,274 558,110 Depreciation and amortization (A) (475,321) (78,724) Interest (875,732) (916,306) Loss before gain on sale of property (966,779) (436,920) Gain on sale of property (A) 1,475,910 - Net income (loss) $ 509,131 $(436,920) (A) On March 5, 1996, KELP sold Village Green Apartments to an unaffiliated third party for $5,200,000. The buyer assumed the first mortgage note payable on the property of $4,633,989. On April 29, 1996, KELP remitted available sale proceeds of $585,959 to the Partnership. (3) Provision for Credit Losses and Accrued Interest Reserves The General Partners of the Partnership have recorded a cumulative provision for credit losses of $16,524,000 on its mortgage notes receivable. Additionally, the Partnership has recorded cumulative provisions for uncollectible interest of $10,331,364 and $9,775,416 as of March 31, 1996 and December 31, 1995, respectively. These cumulative provisions are booked against the carrying value of the assets in order to reflect management's current estimates of the underlying property values which, given the inherent uncertainty of real estate valuation in the current market, could differ from the ultimate value obtained upon sale of such properties. (4) Summary of Changes in Partners' Equity A summary of changes in Partners' equity (deficit) for the three months ended March 31, 1996 is as follows: Total Limited General Partners' Partners Partners Equity Balance at December 31, 1995 $13,327,834 $(168,006) $13,159,828 Net income 141,164 1,426 142,590 Distributions (150,295) (1,518) (151,813) Balance at March 31, 1996 $13,318,703 $(168,098) $13,150,605 (5) Related Party Transactions The Partnership reimburses affiliates of the General Partners for certain expenses incurred in connection with the activities of the Partnership, including: communications, bookkeeping and clerical work necessary in maintaining relations with Limited Partners, and accounting, tax and computer services necessary for the maintenance of the books and records of the Partnership. KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Currently, the Partnership has sufficient liquidity to meet its operating needs. The most significant capital need is distributions to investors. However, distributions are currently dependent on cash flow received from KELP's interest payments on the Participating Notes based upon the cash flow of the underlying properties. KELP's properties have not generated cash flow sufficient to meet the terms of their existing obligations. The retail centers have historically suffered from an economic downturn in retail sales beginning in the late 1980's. Recently, the properties have maintained a consistent level of operating cash flow. The partners of KELP have made cumulative capital contributions of approximately $4,673,000 to cover prior operating deficits and have arranged for certain short-term borrowings. Additionally, the affiliated management agent has not received payment of management fees since 1991. The General Partners of the Partnership have not commenced foreclosure proceedings because, as described in Note 3, they have determined that there are advantages to allowing KELP to continue to own the properties. On October 20, 1995, the partners of KELP refinanced the first mortgage note payable of North Salado Shopping Center for $2,972,130. The terms of the new mortgage require monthly principal and interest payments of $31,612 at a rate of 9.25% per annum. The new mortgage note matures November 15, 2009. The new mortgage may be prepaid without penalty until November 15, 1996, if the property is sold to an unaffiliated third party. Previously, the mortgage note payable for North Salado required monthly payments of $32,241, consisting of principal and interest at the rate of 10.625% per annum. On March 5, 1996, KELP sold Village Green Apartments to an unaffiliated third party for $5,200,000. The buyer assumed the principal outstanding on the first mortgage note payable on the property of $4,633,989. On April 29, 1996, KELP remitted to the Partnership the available sale proceeds, net of closing costs, of $585,959. The partners of KELP have entered into a purchase and sale agreement with an unaffiliated buyer for North Salado Village Shopping Center. The contracted price for the property is $7,350,000 and the sale is expected to take place during the second quarter of 1996. At March 31, 1996, the property is subject to first and second mortgages of $2,927,947 and $7,513,000, respectively. Operations The increase in interest income earned for the three months ended March 31, 1996 as compared to the same period in 1995 is due to higher average cash and cash equivalent balances available for investment commercial paper. Mortgage interest income decreased due to lower cash flow payments from the underlying KELP mortgages. The increase in general and administrative expenses in the first quarter of 1996, as compared to the first quarter of 1995, is primarily due to an increase in audit expenditures. Distributable Cash from Operations Distributable Cash from Operations, of approximately $143,000 and $313,000 at March 31, 1996 and 1995, respectively, as defined by Section 5.01 of the Partnership Agreement, is equivalent to the net income of the Partnership. KELP's Results of Operations The following table presents an analysis of KELP'S cash deficit for the three months ended March 31, 1996 and 1995:
For the Three Months Ended March 31, (Rounded to $1,000) 1996 1995 Cash flow from properties before mortgage debt service and capital improvement expenditures and reserves $ 421,000 $ 565,000 Mortgage debt service exclusive of amounts due to the Partnership (204,000) (239,000) Capital improvement expenditures (80,000) (25,000) Contribution to capital improvement reserve (4,000) (6,000) Cash flow from properties before mortgage debt service to the Partnership 133,000 295,000 Mortgage debt service to the Partnership (133,000) (295,000) KELP general and administrative expenses (9,000) (14,000) Cash Deficit $ (9,000) $ (14,000)
KRUPP INSTITUTIONAL MORTGAGE FUND 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 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 Institutional Mortgage Fund Limited Partnership (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner. DATE: May 7, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Krupp Institutional Mortgage Fund L.P. Financial Statements for the quarter ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1996 MAR-31-1996 649,385 0 28,312,906 16,524,000 0 13,042,517 114,386 0 13,156,903 6,298 0 0 0 13,150,605 0 13,156,903 0 173,494 0 0 30,904 0 0 0 0 0 0 0 0 141,164 0 0 Other Assets. Includes Limited Partner equity of $13,318,703 and General Partner deficit of ($168,098).
-----END PRIVACY-ENHANCED MESSAGE-----