-----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, Kc4HHyL4K6fQUDzFpNH1vk/69aYP9SNBHdkVQy9WNZLjG6dROQtU2MMhPhrEDHqm weHWwSeHwOXfaXkRVdQnaA== 0000786622-00-000003.txt : 20000515 0000786622-00-000003.hdr.sgml : 20000515 ACCESSION NUMBER: 0000786622-00-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP INSURED PLUS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000786622 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 042915281 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15815 FILM NUMBER: 627639 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE STREET 2: C/O BERKSHIRE REALTY AFFILIATES CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: KRUPP NATIONAL INSURED MARTGAGE FUND LTD PARTNERSHIP DATE OF NAME CHANGE: 19860702 10-Q 1 KRUPP INSURED PLUS LIMITED PARTNERSHIP 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 THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 0-15815 Krupp Insured Plus Limited Partnership Massachusetts 04-2915281 (State or other jurisdiction (IRS employer identification no.) of incorporation or organization) One Beacon Street, Boston, Massachusetts 02108 (Address of principal executive offices) (Zip Code) (617) 523-0066 (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 INSURED PLUS LIMITED PARTNERSHIP BALANCE SHEETS ASSETS March 31, December 31, 2000 1999 Participating Insured Mortgages ("PIMs") $ 18,942,520 $ 19,032,999 (Note 2) Mortgage-Backed Securities and insured mortgage("MBS") (Note 3) 21,698,031 21,918,397 Total mortgage investments 40,640,551 40,951,396 Cash and cash equivalents (Note 2) 2,847,008 13,002,087 Interest receivable and other assets 291,286 319,994 Prepaid acquisition fees and expenses, net of accumulated amortization of $674,973 and $657,985 respectively 169,279 186,267 Prepaid participation servicing fees, net of accumulated amortization of $234,495 and $226,219, respectively 96,557 104,833 Total assets $ 44,044,681 $ 54,564,577 LIABILITIES AND PARTNERS' EQUITY Liabilities $ 12,976 $ 19,550 Partners' equity (deficit)(Note 4): Limited Partners (7,500,099 Limited Partner interests outstanding) 44,079,477 54,522,528 General Partners (246,206) (241,347) Accumulated Comprehensive Income 198,434 263,846 Total Partners' equity 44,031,705 54,545,027 Total liabilities and Partners' equity $ 44,044,681 $ 54,564,577
The accompanying notes are an integral part of the financial statements.
KRUPP INSURED PLUS LIMITED PARTNERSHIP STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Three Months Ended March 31, 2000 1999 Revenues: Interest income - PIMs Basic interest $ 349,357 $ 537,184 Interest income - MBS 462,298 489,226 Other interest income 64,952 45,683 Total revenues 876,607 1,072,093 Expenses: Asset management fee to an affiliate 75,429 95,558 Expense reimbursements to affiliates 11,457 1,746 Amortization of prepaid fees and expenses 25,264 25,266 General and administrative 9,718 13,720 Total expenses 121,868 136,290 Net income 754,739 935,803 Other Comprehensive Income: Net change in unrealized gain on MBS (65,412) (17,255) Total Comprehensive Income $ 689,327 $ 918,548 Allocation of net income (Note 4): Limited Partners $ 732,097 $ 907,729 Average net income per Limited Partner interest (7,500,099 Limited Partner interests outstanding) $ .10 $ .12 General Partners $ 22,642 $ 28,074
The accompanying notes are an integral part of the financial statements.
KRUPP INSURED PLUS LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2000 1999 Operating activities: Net income $ 754,739 $ 35,803 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of prepaid fees and expenses 25,264 25,266 Changes in assets and liabilities: Decrease in interest receivable and other assets 28,708 12,524 (Decrease) increase in liabilities (6,574) 189,161 Net cash provided by operating activities 802,137 1,162,754 Investing activities: Principal collections on MBS 154,954 386,872 Principal collections on PIMs 90,479 126,545 Net cash provided by investing activities 245,433 513,417 Financing activities: Quarterly distributions (1,452,520) (1,453,608) Special distributions (9,750,129) - Net cash used for financing activities (11,202,649) (1,453,608) Net increase (decrease) in cash and cash equivalents (10,155,079) 222,563 Cash and cash equivalents, beginning of period 13,002,087 3,653,130 Cash and cash equivalents, end of period $ 2,847,008 $ 3,875,693 Non cash activities: Decrease in Fair Value of MBS $ (65,412) $ (17,255)
The accompanying notes are an integral part of the financial statements. KRUPP INSURED 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. However, in the opinion of the general partners, The Krupp Corporation and The Krupp Company Limited Partnership-IV (collectively the "General Partners"), of Krupp Insured 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 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 financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of March 31, 2000 and its results of operations and cash flows for the three months ended March 31, 2000 and 1999. The results of operations for the three months ended March 31, 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. PIMs On January 11, 2000, the Partnership paid a special distribution to the investors of $1.30 per Limited Partner interest from the principal proceeds received from the payoff of the La Costa PIM in the amount of $9,746,923. The Borrower defaulted on the first mortgage loan underlying the PIM in June of 1999. The Partnership continued to receive its full principal and basic interest payments until the default was resolved, because GNMA guaranteed those payments to the Partnership. The Partnership did not receive any participation interest as a result of this default. At March 31, 2000, the Partnership's PIMs have a fair market value of $18,675,374 and gross unrealized gains and losses of $434 and $267,580, respectively. The PIMs have maturities ranging from 2006 to 2033. 3. MBS At March 31, 2000, the Partnership's MBS portfolio has an amortized cost of $12,396,863 and gross unrealized gains and losses of $202,298, and $3,864, respectively. The Partnership's insured mortgage has an amortized cost of $9,102,734. The portfolio has maturities from 2006 to 2032. 4. Changes in Partners' Equity
A summary of changes in Partners' Equity for the three months ended March 31, 2000 is as follows: Accumulated Total Limited General Comprehensive Partners' Partners Partners Income Equity Balance at December 31, 1999 $ 54,522,528 $ (241,347) $ 263,846 $ 54,545,027 Net income 732,097 22,642 - 754,739 Quarterly distributions (1,425,019) (27,501) - (1,452,520) Special distributions (9,750,129) - - (9,750,129) Change in unrealized gain on MBS - - (65,412) (65,412) Balance at March 31, 2000 $ 44,079,477 $ (246,206) $ 198,434 $ 44,031,705
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 At March 31, 2000 the Partnership had liquidity consisting of cash and cash equivalents of approximately $2.8 million as well as the cash flow provided by its investments in PIMs and MBS. The Partnership anticipates that these sources will be adequate to provide the Partnership with sufficient liquidity to meet its obligations as well as to provide distributions to its investors. The most significant demand on the Partnership's liquidity is quarterly distributions paid to investors of approximately $1.4 million each quarter. The Partnership currently has a distribution rate of $.76 per Limited Partner interest per year, paid in quarterly installments of $.19 per Limited Partner interest. Funds for the quarterly distributions come from the monthly principal and interest payments received on the PIMs and MBS, the principal prepayments of the PIMs and MBS, interest earned on the Partnership's cash and cash equivalents, and cash reserves. The portion of distributions attributable to the principal collections and cash reserves reduces the capital resources of the Partnership. As the capital resources of the Partnership decrease, the total cash flows to the Partnership also will decrease and over time will result in periodic adjustments to the distributions paid to investors. The General Partners periodically review the distribution rate to determine whether an adjustment is necessary based on projected future cash flows. In general, the General Partners try to set a distribution rate that provides for level quarterly distributions. Based on current projections, the General Partners believe the Partnership will need to adjust the current distribution rate beginning with the distribution payable in August 2000. The General Partners will determine the new rate during the second quarter. In addition to providing insured or guaranteed monthly principal and basic interest payments, the Partnership's investments in the PIMs also may provide additional income through a participation interest in the underlying properties. However, this payment is neither guaranteed nor insured and depends on the successful operations of the underlying properties. On January 11, 2000, the Partnership paid a special distribution to the investors of $1.30 per Limited Partner interest from the principal proceeds received from the payoff of the La Costa PIM in the amount of $9,746,923. The Borrower defaulted on the first mortgage loan underlying the PIM in June of 1999. The Partnership continued to receive its full principal and basic interest payments until the default was resolved, because GNMA guaranteed those payments to the Partnership. The Partnership did not receive any participation interest as a result of this default. The General Partners currently do not expect either of the remaining PIMs still held in the Partnership's portfolio to pay off during 2000. Royal Palm Place and Vista Montana operate under long-term restructure programs. As an ongoing result of the Partnership's 1995 agreement to modify the payment terms of the Royal Palm Place PIM, the Partnership will receive basic interest-only payments on the Fannie Mae MBS at the rate of 7.875% per annum during 2000. Thereafter, the interest rate will range from 7.875% to 8.775% per annum through the maturity of the first mortgage loan in 2006. The Partnership also received its share of the scheduled $250,000 principal payment in January 2000. Although occupancy at Royal Palm averaged in the low 90% range through 1999, it faces significant competition from neighboring properties that have changed ownership and benefited from new capital investment in exterior and interior renovations. The Partnership agreed in 1993 to change the original participation terms and to permanently reduce the rate on the Vista Montana first mortgage loan to 7.375% per annum when construction was significantly delayed. The borrower also raised additional equity at the time of the modification by selling investment tax credits, which have been held in escrow and are used to fund operating deficits. Although the property, located in a suburb of Phoenix, maintains occupancy in the low to mid 90% range, revenues generally do not cover all operating and capital costs, and the shortfalls are covered by the escrow. The Partnership has the option to call certain PIMs by accelerating the maturity date of the loans if they are not prepaid by the tenth year after permanent funding. The Partnership will determine the merits of exercising the call option for each PIM as economic conditions warrant. Such factors as the condition of the asset, local market conditions, interest rates and available financing will have an impact on these decisions. Results of Operations Net income decreased by approximately $181,000 during the three months ended March 31, 2000 as compared to the same period ending 1999. This decrease was due primarily to lower basic interest on PIMs of approximately $188,000. The reduction in basic interest on PIMs is primarily due to the payoff of the La Costa Apartments PIM in December of 1999. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Assessment of Credit Risk The Partnership's investments in mortgages are guaranteed or insured by the Government National Mortgage Association ("GNMA"), Fannie Mae, the Federal Home Loan Mortgage Corporation ("FHLMC") or the United States Department of Housing and Urban Development ("HUD") and therefore the certainty of their cash flows and the risk of material loss of the amounts invested depends on the creditworthiness of these entities. Fannie Mae is a federally chartered private corporation that guarantees obligations originated under its programs. FHLMC is a federally chartered corporation that guarantees obligations originated under its programs and is wholly-owned by the twelve Federal Home Loan Banks. These obligations are not guaranteed by the U.S. Government or the Federal Home Loan Bank Board. GNMA guarantees the full and timely payment of principal and basic interest on the securities it issues, which represents interest in pooled mortgages insured by HUD. Obligations insured by HUD, an agency of the U.S. Government, are backed by the full faith and credit of the U.S. Government. The Partnership includes in cash and cash equivalents approximately $2.6 million of commercial paper, which is issued by entities with a credit rating equal to one of the top two rating categories of a nationally recognized statistical rating organization. Interest Rate Risk The Partnership's primary market risk exposure is to interest rate risk, which can be defined as the exposure of the Partnership's net income, comprehensive income or financial condition to adverse movements in interest rates. At March 31, 2000, the Partnership's PIMs and MBS comprise the majority of the Partnership's assets. As such, decreases in interest rates may accelerate the prepayment of the Partnership's investments. The Partnership does not utilize any derivatives or other instruments to manage this risk as the Partnership plans to hold all of its investments to expected maturity. The Partnership monitors prepayments and considers prepayment trends, as well as distribution requirements of the Partnership, when setting regular distribution policy. For MBS, the fund forecasts prepayments based on trends in similar securities as reported by statistical reporting entities such as Bloomberg. For PIMs the Partnership incorporates prepayment assumptions into planning as individual properties notify the Partnership of the intent to prepay or as they mature. KRUPP INSURED 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 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 Insured Plus Limited Partnership (Registrant) BY: Robert A. Barrows Vice-President (Chief Accounting Officer) of The Krupp Corporation, a General Partner of the Registrant. DATE: April 28, 2000 EX-27 2 FDS--
5 The schedule contains summary financial information extracted from the balance sheet and statement of income and is qualified in its entirety by reference to such financial statements. 0000786622 KRUPP INSURED PLUS LIMITED PARTNERSHIP 3-MOS Dec-31-2000 Mar-31-2000 2,847,008 40,640,551 291,286 0 0 265,836 0 0 44,044,681 12,976 0 0 0 43,833,271 198,434 44,044,681 0 876,607 0 0 121,868 0 0 754,739 0 754,739 0 0 0 754,739 0 0 Includes Participating Insured Mortgages ("PIMs") of $18,942,520 and Mortgage-Backed Securities ("MBS") of $21,698,031. Includes prepaid acquisition fees and expenses of $844,252 net of accumulated amortization of $674,973 and prepaid participation servicing fees of $331,052 net of accumulated amortization of $234,495. Represents total equity of General Partners and Limited Partners. General Partners deficit of ($246,206) and Limited Partners equity of $44,079,477. Unrealized gains on MBS. Represents interest income on investments in mortgages and cash. Includes $25,264 of amortization of prepaid fees and expenses. Net income allocated $22,642 to the General Partners and $732,097 to the Limited Partners. Average net income per Limited Partner interest is $.10 on 7,500,099 Limited Partner interests outstanding.
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