-----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, S2UXi8mlELtlsr+shNONz6Yv49Uymq7HtcBSP0vvxpQyU2e+5rLQEX1FitmQxXpn +c2K1aVt5F75fNDKCmcPAw== 0000757549-96-000006.txt : 19960816 0000757549-96-000006.hdr.sgml : 19960816 ACCESSION NUMBER: 0000757549-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96612650 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 (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 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 0-14378 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 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
June 30, December 31, 1996 1995 Mortgage notes receivable, net of loan loss reserve of $16,524,000 (Notes 2 and 3) $6,988,733 $11,795,943 Cash and cash equivalents 775,201 1,260,798 Other investment (Note 5) 471,218 - Accrued interest receivable - mortgage notes, net of reserve for uncollectible interest of $10,942,214 and $9,755,416, respectively (Note 3) 105,983 112,304 Other assets 8,460 3,735 Total assets $8,349,595 $13,172,780 LIABILITIES AND PARTNERS' EQUITY Accounts payable $ 3,400 $ - Accrued audit liability 12,600 12,952 Total liabilities 16,000 12,952 Partners' equity (deficit) (Note 4): Limited Partners (30,059 Units outstanding) 8,549,863 13,327,834 General Partners (216,268) (168,006) Total Partners' equity 8,333,595 13,159,828 Total liabilities and Partners' equity $8,349,595 $13,172,780
The accompanying notes are an integral part of the financial statements. KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Interest income: Mortgage notes receivable (Notes 2 and 3) $129,172 $219,745 $285,547 $538,459 Cash equivalents 28,738 16,566 45,857 30,453 Total interest income 157,910 236,311 331,404 568,912 Expenses: Expense reimbursements to affiliates (Note 6) 10,740 12,816 23,693 25,632 General and administrative 19,459 16,283 37,410 23,295 Total expenses 30,199 29,099 61,103 48,927 Net income $127,711 $207,212 $270,301 $519,985 Allocation of net income (Note 4): Limited Partners $126,434 $205,140 $267,598 $514,785 Per Unit of Limited Partner Interest (30,059 Units outstanding) $ 4.20 $ 6.82 $ 8.90 $ 17.13 General Partners $ 1,277 $ 2,072 $ 2,703 $ 5,200
The accompanying notes are an integral part of the financial statements. KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 1995 Operating activities: Net income $ 270,301 $ 519,985 Adjustments to reconcile net income to net cash provided by operating activities: Decrease in accrued interest receivable- mortgage notes 6,321 35,244 Decrease (increase) in other assets (4,725) 10,097 Increase in accounts payable 3,400 - Decrease in accrued audit liability (352) (4,000) Net cash provided by operating activities 274,945 561,326 Investing activities: Decrease in mortgage notes receivable 4,807,210 12,900 Increase in other investments (471,218) - Net cash provided by investing activities 4,335,992 12,900 Financing activity: Distributions (5,096,534) (303,626) Net increase (decrease) in cash and cash equivalents (485,597) 270,600 Cash and cash equivalents, beginning of period 1,260,798 1,026,664 Cash and cash equivalents, end of period $ 775,201 $1,297,264
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 June 30, 1996 and its results of operations for the three and six months ended June 30, 1996 and 1995 and cash flows for the six months ended June 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 six months ended June 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) Krupp Equity Limited Partnership ("KELP") Condensed financial statements of KELP are as follows: KRUPP EQUITY LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS
ASSETS June 30, December 31, 1996 1995 Property at cost $ 12,618,891 $ 30,960,353 Property valuation provision (5,000,000) (5,986,000) Accumulated depreciation (3,679,131) (10,206,689) 3,939,760 14,767,664 Other assets 421,593 1,086,232 Total assets $ 4,361,353 $ 15,853,896 LIABILITIES AND PARTNERS' DEFICIT Mortgage notes payable to the Partnership $ 28,305,692 $ 28,319,943 Mortgage notes payable (A) - 7,599,279 Notes payable to an affiliate 300,000 300,000 Accrued interest payable to affiliates 6,573,393 10,171,783 Due to affiliates 699,238 767,737 Other liabilities 446,032 633,691 Total liabilities 36,324,355 47,792,433 Partners' deficit (31,963,002) (31,938,537) Total liabilities and Partners' deficit $ 4,361,353 $ 15,853,896
KRUPP EQUITY LIMITED PARTNERSHIP CONDENSED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 Revenue $ 435,270 $ 849,533 $ 1,202,363 $ 1,722,817 Property operating expenses (183,791) (359,422) (566,610) (674,596) Income before depreciation, amortization and interest 251,479 490,111 635,753 1,048,221 Depreciation and amortization (A) (189,862) (79,472) (665,183) (158,196) Interest expense (781,299) (923,162) (1,657,031) (1,839,468) Loss before gain on sale of properties (719,682) (512,523) (1,686,461) (949,443) Gain on sale of properties (A) 186,086 - 1,661,996 - Net loss $(533,596) $(512,523) $ (24,465) $ (949,443)
(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. On May 16, 1996, KELP sold North Salado Village Shopping Center to an unaffiliated third party for $7,350,000. After satisfying the first mortgage note payable of $2,920,405 and closing costs, KELP remitted available sales proceeds of $4,207,000 to the Partnership on June 6, 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. During the first six months of 1996, total proceeds of $4,792,959, resulting from the sales of Village Green Apartments and North Salado Village, have been applied against the Partnership's outstanding mortgage note receivable balance. Additionally, the Partnership has recorded cumulative provisions for uncollectible interest of $10,942,214 and $9,775,416 as of June 30, 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 six months ended June 30, 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 267,598 2,703 270,301 Distributions: Operations (300,590) (3,036) (303,626) Capital transactions (4,744,979) (47,929) (4,792,908) Balance at June 30, 1996 $ 8,549,863 $(216,268) $ 8,333,595
(5) Other Investment At June 30, 1996, the Partnership held an investment in commercial paper maturing within one year. The cost approximates the market value. (6) 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 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 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, they have determined that there are advantages to allowing KELP to continue to own the properties. 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. On May 16, 1996, KELP sold North Salado Village Shopping Center to an unaffiliated third party for $7,350,000. The outstanding first mortgage note payable on the property of $2,920,405 was paid at the closing. On June 6, 1996, KELP remitted to the Partnership sales proceeds, net of closing costs, of $4,207,000. In June 1996, the Partnership made a special capital distribution of $4,792,908, based on the proceeds received from KELP for the sales of Village Green Apartments and North Salado Village Shopping Center. In accordance with the Partnership Agreement, the distribution was allocated 99% to the Limited Partners and 1% to the General Partners. Operations The decrease in interest income earned for the three and six months ended June 30, 1996, as compared to the three and six months ended June 30, 1995, is a result of lower cash flow payments from the underlying KELP mortgages, partially offset by an increase in interest income from higher average cash and cash equivalents available for investment. The increase in general and administrative expenses for the three and six months ended June 30, 1996, as compared to the same periods in 1995, is primarily due to an increase in audit expenditures. Distributable Cash from Operations Distributable Cash from Operations, of approximately $128,000 and $207,000 for the three months ended June 30, 1996 and 1995, respectively and $270,000 and $520,000 for the six months ended June 30, 1996 and 1995, respectively, as defined by Section 5.01 of the Partnership Agreement, is equivalent to net income of the Partnership. KELP's Results of Operations The following table presents an analysis of KELP's cash deficit for the three and six months ended June 30, 1996 and 1995:
For the Three Months For the Six Months Ended June 30, Ended June 30, (Rounded to $1,000) (Rounded to $1,000) 1996 1995 1996 1995 Cash flow from properties before mortgage debt service and capital improvement expenditures and reserves $ 247,000 $ 475,000 $ 668,000 $1,040,000 Mortgage debt service exclusive of amounts due to the Partnership (74,000) (238,000) (278,000) (477,000) Capital improvement expenditures (67,000) (45,000) (147,000) (70,000) Release of (contribution to) capital improvement reserve - 4,000 (4,000) (2,000) Cash flow from properties before mortgage debt service to the Partnership 106,000 196,000 239,000 491,000 Mortgage debt service to the Partnership (106,000) (196,000) (239,000) (491,000) KELP general and administrative expenses (6,000) (7,000) (15,000) (13,000) Cash Deficit $ (6,000) $ (7,000) $ (15,000) $ (13,000) 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: August , 1996
EX-27 2
5 This schedule contains summary financial information extracted from Krupp Institutional Mortgage Fund L.P. Financial Statements for the six months ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 775,201 0 23,512,733 16,524,000 0 8,341,135 8,460 0 8,349,595 16,000 0 0 0 8,333,595 0 8,349,595 0 331,404 0 0 61,103 0 0 0 0 0 0 0 0 270,301 0 0 Other Assets. Includes Limited Partner equity of $8,549,863 and General Partner deficit of ($216,268).
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