-----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, K1WWacCjCiqh9XsrlE5+XrnqEXA0cfVcgaSq6wJHBJYYy/BWBn4OLSs9RNhgNZaC zxGJFb0CQnFr7GrN2umVHA== 0000786622-96-000008.txt : 19960507 0000786622-96-000008.hdr.sgml : 19960507 ACCESSION NUMBER: 0000786622-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960506 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 000-15815 FILM NUMBER: 96556849 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 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, 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 0-15815 Krupp Insured Plus Limited Partnership Massachusetts 04-2915281 (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 INSURED PLUS LIMITED PARTNERSHIP BALANCE SHEETS ASSETS
March 31, December 31, 1996 1995 Participating Insured Mortgages ("PIMs") $ 59,162,011 $ 59,289,135 (Note 2) Mortgage-Backed Securities and insured mortgage ("MBS") (Note 3) 28,374,427 29,026,838 Total mortgage investments 87,536,438 88,315,973 Cash and cash equivalents 2,183,412 2,394,592 Interest receivable and other assets 854,960 871,942 Prepaid acquisition fees and expenses, net of accumulated amortization of $4,615,215 and $4,423,897, respectively 1,505,293 1,696,611 Prepaid participation servicing fees, net of accumulated amortization of $1,943,391 and $1,895,084, respectively 456,608 504,915 Total assets $ 92,536,711 $ 93,784,033 LIABILITIES AND PARTNERS' EQUITY Liabilities $ 5,221 $ 14,454 Partners' equity (deficit): Limited Partners 91,764,909 92,779,548 (7,500,099 Limited Partner interests outstanding) General Partners (180,224) (172,710) Unrealized gain on MBS 946,805 1,162,741 Total Partners' equity 92,531,490 93,769,579 Total liabilities and Partners' equity $ 92,536,711 $ 93,784,033
The accompanying notes are an integral part of the financial statements. KRUPP INSURED PLUS LIMITED PARTNERSHIP STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 1995 Revenues: Interest income - PIMs $1,108,558 $1,123,249 Interest income - MBS 591,094 632,007 Other interest income 30,931 41,301 Total revenues 1,730,583 1,796,557 Expenses: Asset management fee to an affiliate 162,502 165,544 Expense reimbursements to affiliates 27,752 29,555 Amortization of prepaid fees and expenses 239,625 239,625 General and administrative 27,105 17,735 Total expenses 456,984 452,459 Net income $1,273,599 $1,344,098 Allocation of net income (Note 4): Limited Partners $1,235,391 $1,303,775 Average net income per Limited Partner interest (7,500,099 Limited Partners interests outstanding) $ .16 $ .17 General Partners $ 38,208 $ 40,323
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, 1996 1995 Operating activities: Net income $ 1,273,599 $ 1,344,098 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of prepaid fees and expenses 239,625 239,625 Premium amortization MBS 870 1,435 Changes in assets and liabilities: Decrease in interest receivable and other assets 16,982 74,823 Decrease in liabilities (9,233) (6,833) Net cash provided by operating activities 1,521,843 1,653,148 Investing activities: Principal collections on MBS 435,605 438,439 Principal collections on PIMs 127,124 127,184 Net cash provided by investing activities 562,729 565,623 Financing activity: Quarterly distributions (2,295,752) (2,296,728) Net decrease in cash and cash equivalents (211,180) (77,957) Cash and cash equivalents, beginning of period 2,394,592 2,931,523 Cash and cash equivalents, end of period $ 2,183,412 $ 2,853,566
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, 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 March 31, 1996 and its results of operations and cash flows for the three months ended March 31, 1996 and 1995. 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. PIMs At March 31, 1996, the Partnership's PIMs have a fair value of approximately $58,767,000 and gross unrealized gains and losses of approximately $482,000 and $877,000, respectively. The PIMs have maturities ranging from 2006 to 2033. 3. MBS At March 31, 1996, the Partnership's MBS portfolio has an amortized cost of approximately $27,427,000 and gross unrealized gains of approximately $947,000 with maturities from 2004 to 2033. 4. Changes in Partners' Equity A summary of changes in Partners' Equity for the three months ended March 31, 1996 is as follows:
Total Limited General Unrealized Partners' Partners Partners Gain Equity Balance at December 31, 1995 $ 92,779,548 $(172,710) $1,162,741 $ 93,769,579 Net income 1,235,391 38,208 - 1,273,599 Quarterly distributions (2,250,030) (45,722) - (2,295,752) Decrease in unrealized gain on MBS - - (215,936) (215,936) Balance at March 31, 1996 $ 91,764,909 $(180,224) $ 946,805 $ 92,531,490
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The most significant demands on the Partnership's liquidity are regular quarterly distributions paid to investors of approximately $2.3 million. Funds used for investor distributions come from (i)interest received on the PIMs, MBS, cash and cash equivalents, (ii) the principal collections received on the PIMs and MBS and (iii) cash reserves. The Partnership funds a portion of the distribution from principal collections and as a result the capital resources of the Partnership will continually decrease. As a result of this decrease, the total cash inflows to the Partnership will also decrease which will result in periodic adjustments to the quarterly distributions paid to investors. The General Partners periodically review the distribution rate to determine whether an adjustment to the distribution rate 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 of cash available for distribution. To the extent quarterly distributions differ from cash available for distribution, the General Partners may adjust the distribution rate or distribute funds through a special distribution. Based on current projections, the General Partners believe the Partnership can maintain the current distribution rate through 1996. However, in the event of PIM prepayments the Partnership would be required to distribute any proceeds from the prepayments as a special distribution which may cause an adjustment to the distribution rate to reflect the anticipated future cash inflows from the remaining mortgage investments. In the first quarter of 1996, the borrower of the Mandalay Apartments PIM approached the Partnership about refinancing the property and repaying the PIM including all participation interest due. The General Partners believe any refinancing would most likely occur in the second half of 1996. Additionally, the borrower of the Greentree Apartments PIM and the Partnership are currently discussing the future sale of the property. These discussions are preliminary and there is no pending sale at this time. In the event of a sale or refinancing of these PIMs or any other PIM, the Partnership would distribute the proceeds to investors as a special distribution and adjust the distribution rate as necessary to reflect the anticipated cash inflows from the remaining mortgage investments. For the first five years of the PIMs the borrowers are prohibited from prepaying. For the second five years, the borrower can prepay the loan incurring a prepayment penalty. The Partnership has the option to call certain PIMs by accelerating their maturity if the loans 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 this decision. Assessment of Credit Risk The Partnership's investments in mortgages are guaranteed or insured by the Federal National Mortgage Association ("FNMA"), the Government National Mortgage Association ("GNMA"), 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. FNMA 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. Distributable Cash Flow and Net Cash Proceeds From Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Cash Proceeds from Capital Transactions, as defined by Section 17 of the Partnership Agreement, and the source of cash distributions for the three months ended March 31, 1996 and the period from inception through March 31, 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 Cash 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. (Amounts in thousands, except per Unit amounts).
Three Months Ended Inception through March 31, 1996 March 31, 1996 Distributable Cash Flow: Income for tax purposes $ 1,479 $ 68,575 Items not requiring or (not providing) the use of operating funds: Amortization of prepaid expenses and organization costs 34 4,795 Amortization of MBS premiums 1 285 Acquisition expenses paid from offering proceeds charged to operations - 1,098 Gain on sale of MBS - (114) Total Distributable Cash Flow ("DCF") $ 1,514 $ 74,639 Limited Partners Share of DCF $ 1,469 $ 72,400 Limited Partners Share of DCF per Limited Partner interest ("Unit") $ .19 $ 9.65 General Partners Share of DCF $ 45 $ 2,239 Net Proceeds from Capital Transactions: Insurance claim proceeds and principal collections on PIMs $ 127 $ 46,559 Principal collections on MBS 436 39,223 Insurance claim proceeds and principal collections on PIMs and MBS reinvested in PIMs and MBS - (40,775) Gain on sale of MBS - 114 Total Net Proceeds from Capital Transactions $ 563 $ 45,121 Cash available for distribution (DCF plus Net Proceeds from Capital Transactions) $ 2,077 $119,760
Distributable Cash Flow and Net Cash Proceeds From Capital Transactions, Continued
Three Months Ended Inception through March 31, 1996 March 31, 1996 Distributions: (includes special distributions) Limited Partners $2,250 (a) $117,087 (a) Limited Partners Average per Unit $ .30 (a) $ 15.61 (a)(b) General Partners 45 (a) 2,239 (a) Total Distributions $2,295 $119,326
(a) Includes an estimate of the May 1996 distribution. (b) Limited Partners average per Unit return of capital as of May 1996 is $5.96 [$15.61 - $9.65]. Return of capital represents that portion of distributions which is not funded from DCF such as proceeds from the sale of assets and substantially all of the principal collections received from MBS and PIMs. Operations The following discussion relates to the operations of the Partnership during the three months ended March 31, 1996 and 1995.
(Amounts in thousands) 1996 1995 Interest income on PIMs $ 1,109 $ 1,123 Interest income on MBS 592 632 Other interest income 31 41 Partnership expenses (218) (212) Distributable Cash Flow 1,514 1,584 Amortization of prepaid fees and expenses (240) (240) Net income $ 1,274 $1,344
Net income decreased during the first three months of 1996 as compared to the first three months of 1995 due primarily to lower interest income on MBS. Interest income on MBS will continue to decline as principal collections reduce the outstanding balance of the MBS portfolio. The Partnership funds a portion of distributions with MBS and PIM principal collections which reduces the invested assets generating income for the Partnership. As the invested assets decline so will interest income on MBS, base interest income on PIMs and other interest income. 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: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of The Krupp Corporation, a General Partner of the Registrant. DATE: April 23, 1996 EX-27 2
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. 3-MOS DEC-31-1996 MAR-31-1996 2,183,412 87,536,438 854,960 0 0 1,961,901 0 0 92,536,711 5,221 0 91,584,685 0 0 946,805 91,536,711 0 1,730,583 0 0 456,984 0 0 1,273,599 0 1,273,599 0 0 0 1,273,599 0 0 Includes the following investments: Participating Insured Mortgages ("PIMs") $59,162,011 and mortgage-backed securities ("MBS") $28,374,427. Includes prepaid acquisition fees and expenses of $6,120,508 net of accumulated amortization of $4,615,215 and prepaid participation servicing fees of $2,399,999 net of accumulated amortization of $1,943,391. Represents total equity of General Partners and Limited Partners. General Partners deficit ($180,224) and Limited Partners equity of $91,764,909. Unrealized gain on MBS Represents interest income on investments in mortgages and cash. Includes $239,625 of amortization related to prepaid fees and expenses. Net income allocated $38,208 to the General Partners and $1,235,391 to the Limited Partners. Average net income per Limited Partner interest is $.16 on 7,500,099 Limited Partner interests outstanding.
-----END PRIVACY-ENHANCED MESSAGE-----