-----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, M8iNcV+1yiQLUM7CJ7s2P0kcSa1KqgGSjcfExuY+RTaa1hciCkrLsFdrI7jjOnwB 1LJh78KVxmjxuH8rJFCQww== 0000757549-97-000006.txt : 19970520 0000757549-97-000006.hdr.sgml : 19970520 ACCESSION NUMBER: 0000757549-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97609380 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, 1997 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) dentification 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 The total number of pages in this document is 11. 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 INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP BALANCE SHEETS ASSETS
March 31, December 31, 1997 1996 Mortgage notes receivable, net of loan loss reserve of $16,524,000 (Notes 2 and 3) $ 6,965,980 $ 6,973,754 Cash and cash equivalents 1,094,714 1,112,524 Accrued interest receivable - mortgage notes, net of reserve for uncollectible interest of $12,803,469 and $12,225,634, respectively (Note 3) 131,121 115,272 Due from affiliates (Note 5) 1,159 16,250 Other asset 1,625 1,672 Total assets $ 8,194,599 $ 8,219,472 LIABILITIES AND PARTNERS' EQUITY Liabilities $ 12,765 $ 25,274 Partners' equity (deficit) (Note 4): Limited Partners (30,059 Units outstanding) 8,399,621 8,411,861 General Partners (217,787) (217,663) Total Partners' equity 8,181,834 8,194,198 Total liabilities and Partners' equity $ 8,194,599 $ 8,219,472
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, 1997 1996 Interest income: Mortgage notes receivable (Notes 2 and 3) $153,751 $156,375 Cash equivalents 14,723 17,119 Total revenue 168,474 173,494 Expenses: Expense reimbursements (Note 5) 7,427 12,953 General and administrative 21,598 17,951 Total expenses 29,025 30,904 Net income $139,449 $142,590 Allocation of net income (Note 4): Limited Partners (30,059 Units outstanding) $138,055 $141,164 Per Unit of Limited Partner Interest $ 4.59 $ 4.70 General Partners $ 1,394 $ 1,426
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, 1997 1996 Operating activities: Net income $ 139,449 $ 142,590 Adjustments to reconcile net income to net cash provided by operating activities: Changes in assets and liabilities: Increase in accrued interest receivable - mortgage notes (15,849) (20,704) Decrease (increase) in due from affiliates 15,091 (110,729) Decrease in other assets 47 78 Decrease in liabilities (12,509) (6,654) Net cash provided by operating activities 126,229 4,581 Investing activities: Principal collections from mortgage notes receivable 7,774 7,037 Increase in other investments - (471,218) Net cash provided by (used in) investing activities 7,774 (464,181) Financing activity: Distributions (151,813) (151,813) Net decrease in cash and cash equivalents (17,810) (611,413) Cash and cash equivalents, beginning of period 1,112,524 1,260,798 Cash and cash equivalents, end of period $1,094,714 $ 649,385
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, 1996 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, 1997 and its results of operations and cash flows for the three months ended March 31, 1997 and 1996. The results of operations for the three months ended March 31, 1997 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") The Partnership made loans to KELP, an affiliate of the Partnership, as provided under the Master Loan Agreement and Collateral Pledge Agreement.The purpose of KELP is to acquire, manage, operate and sell real estate and personal property; and to borrow funds from the Partnership and other sources to finance the acquisition, management and operation of real estate and personal property related thereto. Condensed financial statements of KELP are as follows: KRUPP EQUITY LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS
ASSETS March 31, December 31, 1997 1996 Real estate assets: Real estate, at cost $12,716,566 $ 12,716,122 Property valuation provision (5,000,000) (5,000,000) Accumulated depreciation (3,853,659) (3,795,870) Total real estate assets 3,862,907 3,920,252 Other assets 290,000 305,538 Total assets $ 4,152,907 $ 4,225,790 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable to the Partnership $28,282,939 $28,290,713 Notes payable to an affiliate 300,000 300,000 Accrued interest payable to an affiliate (A) 8,480,920 7,880,286 Due to affiliates 689,018 666,702 Other liabilities 356,537 386,780 Total liabilities 38,109,414 37,524,481 Partners' deficit (33,956,507) (33,298,691) Total liabilities and Partners' deficit $ 4,152,907 $4,225,790
KRUPP EQUITY LIMITED PARTNERSHIP CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 1996 Revenue (A) $ 266,965 $ 767,093 Property operating expenses (127,414) (382,819) Income before depreciation, amortization and interest 139,551 384,274 Depreciation and amortization (A) (58,831) (475,321) Interest (738,536) (875,732) Loss before gain on sale of property (657,816) (966,779) Gain on sale of property (A) - 1,475,910 Net income (loss) $ (657,816) $ 509,131
(A) On March 5, 1996, KELP sold Village Green Apartments to an unaffiliated third party for $5,200,000. On May 16, 1996, KELP sold North Salado to an unaffiliated third party for $7,350,000. KELP remitted available sale proceeds of $4,792,959 to the Partnership. For KELP's financial reporting purposes, sales proceeds paid to KIMF of $4,792,959 were applied against accrued interest in 1996. (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 $12,803,469 and $12,225,634 as of March 31, 1997 and December 31, 1996, respectively. These cumulative provisions are recorded 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, 1997 is as follows:
Total Limited General Partners' Partners Partners Equity Balance at December 31, 1996 $ 8,411,861 $(217,663) $ 8,194,198 Net income 138,055 1,394 139,449 Distributions (150,295) (1,518) (151,813) Balance at March 31, 1997 $ 8,399,621 $(217,787) $ 8,181,834
(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. Due from affiliates consisted of expense reimbursements of $1,159 and $16,250 at March 31, 1997 and December 31, 1996, respectively. 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 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, which are based upon the cash flow of the underlying properties. Due to fluctuations in the cash flow payments received from KELP and its effect on the Partnership's liquidity, the Partnership may need to periodically adjust its distribution rate. Therefore, sustaining the current distribution rate is mainly dependent upon the future cash flow payments received from KELP. 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 1980s. Recently, the remaining 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 they have determined that there are advantages to allowing KELP to continue to own the properties. Operations Total revenue slightly decreased for the three months ended March 31, 1997, as compared to the three months ended March 31, 1996, as a result of the decrease in interest income on mortgage notes due to reduced cash flow interest payments received from KELP's properties. The decrease in cash flow received from the KELP properties can be attributed to the sales of Village Green and North Salado in 1996. Total expenses remained stable during the first quarter of 1997 as compared to the same period in 1996, as the decrease in expense reimbursements offset the increase in general and administrative expense. The increase in general and administrative expense in the first quarter of 1997, as compared to the first quarter of 1996, is primarily due to an increase in charges in connection with the preparation and mailing of reports and other investor communications. Distributable Cash from Operations Distributable Cash from Operations, of approximately $140,000 and $143,000 at March 31, 1997 and 1996, 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, 1997 and 1996:
For the Three Months Ended March 31, (Rounded to $1,000) 1997 1996 Cash flow from properties before mortgage debt service and capital improvement expenditures and reserves $ 161,000 $ 421,000 First mortgage principal (30,000) (204,000) Capital improvement expenditures - (80,000) Capital improvement reserve contributions - (4,000) Cash flow from properties before mortgage debt service to the Partnership 131,000 133,000 Mortgage debt service to the Partnership (131,000) (133,000) KELP general and administrative expenses (13,000) (9,000) Cash deficit $ (13,000) $ (9,000)
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/Wayne H. Zarozny Wayne H. Zarozny Treasurer and Chief Accounting Officer of the Krupp Corporation, a General Partner. DATE: May 14 , 1997 EX-27 2
5 This schedule for KIMF contains summary financial information extracted from the financial statements for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 MAR-31-1997 1,094,714 0 23,489,980 16,524,000 0 8,192,974 1625 0 8,194,599 12,765 0 0 0 8,181,834 0 8,194,599 0 168,474 0 0 29,025 0 0 0 139,449 139,449 0 0 0 139,449 0 0 Other Assets F2 Includes Limited Partners Equity of 8,399,621 and General Partners Deficit of (217,787).
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