-----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, S1XyWTH5Uw+6wX8TNk0Yh0I+ONHXz2/wJo2P/JW/KJyHd2fP8yQN8A37DuZ0kVNY i+kFZRnuH550gf+muyRf4w== 0000805297-99-000003.txt : 20000505 0000805297-99-000003.hdr.sgml : 20000505 ACCESSION NUMBER: 0000805297-99-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 DATE AS OF CHANGE: 20000504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP INSURED PLUS II LTD PARTNERSHIP CENTRAL INDEX KEY: 0000805297 STANDARD INDUSTRIAL CLASSIFICATION: 6189 IRS NUMBER: 042955007 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16817 FILM NUMBER: 99584228 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 10-K 1 KRUPP INSURED PLUS II LTD PARTNERSHIP UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-16817 Krupp Insured Plus-II Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 04-2955007 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Beacon Street, Boston, Massachusetts 02108 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (617) 523-0066 ------------------------ Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Depositary Receipts representing Units of Limited Partner Interests 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]. Aggregate market value of voting securities held by non-affiliates: Not applicable, as securities are non-voting. Documents incorporated by reference: See Part IV, Item 14 The exhibit index is located on pages 9-12. -13- PART I This form 10-K 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. ITEM 1. BUSINESS Krupp Insured Plus-II Limited Partnership (the "Partnership") is a Massachusetts limited partnership which was formed on October 29, 1986. The Partnership raised approximately $292 million through a public offering of limited partner interests evidenced by units of depositary receipts ("Units") and used the investable proceeds primarily to acquire participating insured mortgages ("PIMs") and mortgage-backed securities ("MBS"). The Partnership considers itself to be engaged only in the industry segment of investment in mortgages. The Partnership's investments in PIMs on multi-family residential properties consist of a MBS (the "insured mortgage") guaranteed as to principal and basic interest. These insured mortgages were issued or originated under or in connection with the housing programs of Fannie Mae and the Government National Mortgage Association ("GNMA"). PIMs provide the Partnership with monthly payments of principal and basic interest and also provide for Partnership participation in the current revenue stream and in residual value, if any, from a sale or other realization of the underlying property. The borrower conveys these rights to the Partnership through a subordinated promissory note and mortgage. The participation features are neither insured nor guaranteed. The Partnership also acquired MBS and insured mortgages collateralized by single-family or multi-family mortgage loans issued or originated by GNMA, Fannie Mae, HUD or the Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC guarantee the principal and basic interest of the Fannie Mae and FHLMC MBS, respectively. GNMA guarantees the timely payment of principal and basic interest on its MBS, and HUD insures the pooled mortgage loans underlying the GNMA MBS and its own direct mortgage loans. Although the Partnership will terminate no later than December 31, 2026 it is expected that the value of the PIMs generally will be realized by the Partnership through repayment or sale as early as ten years from the dates of the closings of the permanent loans and that the Partnership will realize the value of all of its other investments within that time frame thereby resulting in a dissolution of the Partnership significantly prior to December 31, 2026. The Partnership's investments are not expected to be subject to seasonal fluctuations. Any ultimate realization of the participation features of the PIMs are subject to similar risks associated with equity real estate investments, including: reliance on the owner's operating skills, ability to maintain occupancy levels, control operating expenses, maintain the properties and provide adequate insurance coverage; adverse changes in general economic conditions, adverse local conditions, and changes in governmental regulations, real estate zoning laws, or tax laws; and other circumstances over which the Partnership may have little or no control. The requirements for compliance with federal, state and local regulations to date have not had an adverse effect on the Partnership's operations, and no adverse effect is anticipated in the future. As of December 31, 1998, there were no personnel directly employed by the Partnership. ITEM 2. PROPERTIES None ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Partnership is a party or to which any of its investments is the subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There currently is no established trading market for the Units. The number of investors holding Units as of December 31, 1998 was approximately 15,000. One of the objectives of the Partnership is to provide quarterly distributions of cash flow generated by its investments in mortgages. The Partnership anticipates that future operations will continue to generate cash available for distribution. Adjustments may be made to the distribution rate in the future due to realization and payout of the existing mortgages. During 1998, the Partnership made special distributions consisting primarily of principal proceeds from the Walden Village, Longwood Villas, Harbor House, Westbrook Manor, Fallwood and Greenbrier PIM prepayments and the repayment of the Brookside and Lily Flagg multi-family MBS's. During 1997, the Partnership made special distributions consisting primarily of principal proceeds from the Lakeside, Colonial Park and Pine Ridge PIM prepayments, The Partnership may make special distributions in the future if PIMS prepay or a sufficient amount of cash is available from MBS and PIM principal collections. The Partnership made the following distributions, to its Partners during the two years ended December 31, 1998 and 1997:
1998 1997 --------------------- ------------- Amount Per Unit Amount Per Unit Distributions: Limited Partners $16,414,173 $1.12 $16,414,173 $1.12 General Partners 385,355 436,626 ----------- ----------- $16,799,528 $16,850,799 ----------- ----------- Special Distributions: Limited Partners 56,716,830 $3.87 24,767,815 $1.69 ----------- ----------- Total Distributions $73,516,358 $41,618,614 =========== ===========
ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial information regarding the Partnership's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Supplementary Data, which are included in Item 7 and Item 8, (Appendix A) of this report, respectively.
1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- Total revenues $15,335,618 $ 16,672,558 $ 15,855,280 $ 16,366,468 $18,874,538 Net income 12,017,670 12,972,600 12,331,212 12,656,200 14,147,772 Net income allocated to: Limited Partners 11,657,140 12,583,422 11,961,276 12,276,514 13,723,339 Average per Unit .80 .86 .82 .84 .94 General Partners 360,530 389,178 369,936 379,686 424,433 Total assets at December 31 117,626,762 180,126,977 207,552,419 212,789,466 215,697,082 Distributions to: Limited Partners 16,414,173 16,414,173 16,414,171 16,414,173 21,738,336 Average per Unit 1.12 1.12 1.12 1.12 1.48 Special 56,716,830 24,767,815 - - 17,293,504 Average per Unit 3.87 1.69 - - 1.18 General Partners 385,355 436,626 432,214 430,359 476,952
ITEM 7.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. The General Partners of the Partnership have conducted an assessment of the Partnership's core internal and external computer information systems and have taken the further necessary steps to understand the nature and extent of the work required to make its systems Year 2000 ready in those situations in which it is required to do so. The Year 2000 readiness issue concerns the inability of computerized information systems to accurately calculate, store or use a date after 1999. This could result in a system failure or miscalculations causing disruptions of operations. The Year 2000 issue effects virtually all companies and all organizations. In this regard, the General Partners of the Partnership, along with certain affiliates, began a computer systems project in 1997 to significantly upgrade its existing hardware and software. The General Partners completed the testing and conversion of the financial accounting operating systems in February 1998. As a result, the General Partners have generated operating efficiencies and believe their financial accounting operating systems are Year 2000 ready. The General Partners of the Partnership incurred hardware costs as well as consulting and other expenses related to the infrastructure and facilities enhancements necessary to complete the upgrade and prepare for the Year 2000. There are no other significant internal systems or software that the Partnership is using at the present time. The General Partners of the Partnership are in the process of evaluating the potential adverse impact that could result from the failure of material third-party service providers (including but not limited to its banks and telecommunications providers) and significant vendors to be Year 2000 ready. The Trust is in the process of surveying these third party providers and assessing their readiness with year 2000. To date, the Partnership is not aware of any problems that would materially impact its results of operations, liquidity or capital resources. However, the Partnership has not yet obtained all written assurances that these providers would be Year 2000, ready. The Partnership currently does not have a contingency plan in the event of a particular provider or system not being Year 2000 ready. Such plan will be developed if it becomes clear that a provider is not going to achieve its scheduled readiness objectives by June 30, 1999. The inability of one of these providers to complete its Year 2000 resolution process could impact the Partnership. In addition, the Partnership is also subject to external forces that might generally affect industry and commerce, such as utility and transportation company Year 2000 readiness failures and related service interruptions. To date, the Partnership has not incurred any cost associated with being Year 2000 ready. All costs have been incurred by the General Partners and it is estimated that any future Year 2000 readiness costs will be borne by the General Partners. Liquidity and Capital Resources The most significant demands on the Partnership's liquidity are the regular quarterly distributions paid to investors, approximately $4.2 million each quarter. Funds for the investor distributions come from the monthly principal and basic interest payments received on the PIMs and the MBS, the principal prepayments of the PIMs and MBS, and interest earned on the Partnership's cash and cash equivalents. 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 that quarterly distributions do not fully utilize the cash available for distribution and cash balances increase, the General Partners may adjust the distribution rate or distribute such funds through a special distribution. The portion of distributions attributable to the principal collections reduces the capital resources of the Partnership. As the capital resources 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. At this time the General Partners have determined that the Partnership can maintain its current distribution rate of $1.12 per Unit per year. During 1998, the Partnership made six special distributions and during the first quarter of 1999 the Partnership anticipates making an additional special distribution due to PIM prepayments and an insured mortgage prepayment. The Partnership made special distributions of $.94, $1.63 and $1.30 per Unit in March 1998, July 1998 and December 1998, respectively. The March 1998 special distribution consisted of the prepayment proceeds from the Fallwood, Greenbrier and Westbrooks PIMs. The July 1998 special distributions consisted of the prepayment proceeds from the Longwood Villas and Harbor House PIMs and the prepayment proceeds from the Brookside insured mortgage. The December 1998 special distributions consisted of the prepayment proceeds from the Walden Village PIM and the Lily Flagg insured mortgage. The Partnership anticipates making a $1.97 per Unit special distribution during the first quarter of 1999 with the prepayment proceeds of the Carlyle, Hillside, Stanford and Waterford Court PIMs. The General Partners expect that there will be more prepayments during 1999. The owners of Country Meadows and Saratoga have both notified the General Partners of their intentions to refinance their properties if favorable refinancing conditions persist. The General Partners also expect the Greenhouse PIM will be prepaid during the fourth quarter 1999. The first mortgage lender foreclosed on the property during January 1999 as a result of a continuing default. The first mortgage lender expects to sell the property by year-end when the Partnership will receive the entire principal balance remaining on the PIM but will not receive any participation income. The Partnership has received its full principal and basic interest payments due on the PIM while the underlying first mortgage loan has been in default because those payments are guaranteed by GNMA.In the event of further PIM prepayments, the General Partners may determine that an adjustment to the distribution rate will be necessary to reflect the reduced future cash flows from the remaining mortgage investments. In addition to providing insured or guaranteed monthly principal and basic interest payments, the Partnership's PIM investments also may provide additional income through its participation feature in the underlying properties if they operate successfully. The Partnership may receive a share in any operating cash flow that exceeds debt service obligations and capital needs or a share in any appreciation in value when the properties are sold or refinanced. However, this participation is neither guaranteed nor insured, and it is dependent upon whether property operations or its terminal value meet certain criteria. During 1998, the Partnership received a total of $1,361,968 in participation income from operating cash flow that exceeded the established thresholds from eight of its PIM investments: Carlyle Court, Longwood Villas, Stanford Court, Walden Village, Westbrook, Fallwood, Greenbrier and Waterford Court. The Partnership also received a total of $2,390,707 in prepayment penalties and participation income related to sale or refinance value from Carlyle Court, Fallwood, Greenbrier, Harbor House, Hillside Court, Longwood Villas, Stanford Court, Walden Village, Westbrook and Waterford Court PIM's and the Lily Flagg and Brookside MBS. Most of the properties had stable operating results during 1998. High occupancy rates were maintained at most of the properties due to stable or improving markets. However, as many of the properties have aged, rental rate increases have not kept pace with the increasing costs of maintenance, repairs and replacements. Consequently, the General Partners do not expect that the Partnership will receive significant participation income from the operations of the properties that remain in the portfolio. During the first five years, owners are prohibited from prepaying the first mortgage loans underlying the PIMs. During the second five years, owners may prepay the loans by incurring a prepayment penalty. The Partnership has the option to call certain PIMs by accelerating their maturity if they are not prepaid by the tenth year after permanent funding. The General Partners 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, the interest rate environment and availability of financing will affect those decisions. 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 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. Operations The following discussion relates to the operation of the Partnership during the years ended December 31, 1998, 1997 and 1996.
(Amounts in thousands) 1998 1997 1996 Interest income on PIMs: Basic interest $7,417 $11,090 $12,070 Participation income 3,753 1,816 32 Interest income on MBS and insured mortgages 3,083 3,099 3,366 Other interest income 1,083 668 387 Partnership expenses (1,287) (1,793) (1,778) Amortization of prepaid fees and expenses (2,031) (1,907) (1,746) ------- ------- ------- Net Income $12,018 $12,973 $12,331 ======= ======= =======
Net income decreased by approximately $955,000 during 1998 as compared to 1997. This decrease was due primarily to significantly lower basic interest on PIMs of approximately $3,673,000. This was partially offset by increases in participation income of approximately $1,937,000, other interest income of approximately $415,000 and a decrease in Partnership expenses of approximately $506,000. The significant decrease in basic interest on PIMs was caused by the prepayments of the Westbrook Manor, Fallwood, Greenhouse, Harbor House, Walden Village and Longwood Villas PIMs during 1998 and Lakeside, Colonial Park and Pine Ridge PIMs during 1997. The Partnership realized a significant increase in participation income due primarily to Shared Appreciation Income and prepayment premiums realized from the 1998 PIM prepayments of the Harbor House, Westbrook Manor, Fallwood, Greenbrier, Walden Village and Longwood Villas Apartment PIMs, and the Brookside and Lily Flagg MBS as compared to the 1997 Lakeside PIM prepayment. The Partnership also realized Shared Income Interest from the Fallwood, Greenbrier, Westbrook Manor, Stanford, Carlyle, Waterford and Walden Village Apartment PIMs which exceeded the amount of participation income realized during the same period of 1997. Interest income on cash and cash equivalents increased due to the Partnership having higher average short-term investment balances as a result of the prepayments mentioned above. The decrease in Partnership expenses was due to a decrease in asset management fees which were a result of the 1998 PIM prepayments mentioned above that reduced the asset base. Also, the Partnership received a rebate for expense reimbursements related to 1997 during the second quarter of 1998. Interest income on MBS and basic interest income on PIMs will continue to decline as principal collections reduce the outstanding balance of these investments. As the Partnership distributes principal collections on MBS and PIMs through quarterly or special distributions, the invested assets of the Partnership will decline which should result in a continuing decline in net income. Net income increased during 1997 as compared to 1996 by approximately $642,000. This increase was primarily due to higher participation income, offset partially by lower basic interest and higher amortization expense directly related to the prepayments of the Lakeside, Colonial and Pine Ridge Apartment PIMs. Basic interest income on PIMs decreased by approximately $980,000 in 1997 as compared to 1996 as a result of prepayments on three PIMs and a general reduction in the invested assets in the Partnership attributed to the receipt of principal payments. Subsequently, special distributions were made from the Partnership using the prepayment proceeds. An increase in participation income of $1,784,000 was primarily a result of receiving Shared Appreciation Interest and prepayment penalities totaling $603,000, Shared Income Interest of $507,000 from the prepayments of the Lakeside, Colonial Park and Pine Ridge Apartments PIMs and Shared Income Interest of $706,000 from seven of the Partnership's remaining PIMs. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Appendix A to this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Partnership has no directors or executive officers. Information as to the directors and executive officers of Krupp Plus Corporation which is a General Partner of the Partnership and is the general partner of Mortgage Services Partners Limited Partnership, which is the other General Partner of the Partnership, is as follows: Position with Name and Age Krupp Plus Corporation Douglas Krupp (52) President, Co-Chairman of the Board and Director George Krupp (54) Co-Chairman of the Board and Director Peter F. Donovan (45) Senior Vice President Ronald Halpern (57) Senior Vice President Carol Mills (49) Vice President Robert A. Barrows (41) Vice President and Treasurer Douglas Krupp co-founded and serves as Co-Chairman and Chief Executive Officer of The Berkshire Group, an integrated real estate financial services firm engaged in real estate acquisition and property management, mortgage banking and financial management. The Berkshire Group's interests include ownership of a mortgage company specializing in commercial mortgage financing with a portfolio of approximately $6.0 billion. In addition, The Berkshire Group has a significant ownership interest in Berkshire Realty Company, Inc. (NYSE-BRI), a real estate investment trust specializing in apartment investments. Mr. Krupp has held the position of Co-Chairman since The Berkshire Group was established as The Krupp Companies in 1969 and he has served as the Chief Executive Officer since 1992. Mr. Krupp serves as Chairman of the Board and Director of Berkshire Realty Company, Inc. (NYSE-BRI) and he is also a member of the Board of Trustees at Brigham & Women's Hospital. He is a graduate of Bryant College where he received an honorary Doctor of Science in Business Administration in 1989 and was elected trustee in 1990. Mr. Krupp also serves as Chairman of the Board and Trustee of Krupp Government Income Trust and Krupp Government Income Trust II. George Krupp is the Co-Founder and Co-Chairman of The Berkshire Group, an integrated real estate financial services firm engaged in real estate acquisition, mortgage banking, investment sponsorship, venture capital investing and financial management. Mr. Krupp has held the position of Co-Chairman since The Berkshire Group was established as The Krupp Companies in 1969. Mr. Krupp has been an instructor of history at the New Jewish High School in Waltham, Massachusetts since September of 1997. Mr. Krupp attended the University of Pennsylvania and Harvard University and holds a Master's Degree in History from Brown University. Peter F. Donovan is Chief Executive Officer of Berkshire Mortgage Finance which position he has held since January of 1998 and in this capacity, he oversees the strategic growth plans of this mortgage banking firm. Berkshire Mortgage Finance is the 16th largest in the United States based on servicing and asset management of a $6.0 billion loan portfolio. Previously he served as President of Berkshire Mortgage Finance from January of 1993 to January of 1998 and in that capacity he directed the production, underwriting, servicing and asset management activities of the firm. Prior to that, he was Senior Vice President of Berkshire Mortgage Finance and was responsible for all participating mortgage originations. Before joining the firm in 1984, he was Second Vice President, Real Estate Finance for Continental Illinois National Bank & Trust, where he managed a $300 million construction loan portfolio of commercial properties. Mr. Donovan received a B.A. from Trinity College and an M.B.A. degree from Northwestern University. Ronald Halpern (age 57) is President and COO of Berkshire Mortgage Finance. He has served in these positions since January of 1998 and in this capacity, he is responsible for the overall operations of the Company. Prior to January of 1998, he was Executive Vice President, managing the underwriting, closing, portfolio management and servicing departments for Berkshire Mortgage Finance. Before joining the firm in 1987, he held senior management positions with the Department of Housing and Urban Development in Washington D.C. and several HUD regional offices. Mr. Halpern has over 30 years of experience in real estate finance. He is currently a member of the Advisory Council for Fannie Mae and Freddie Mac and was prior Chairman of the MBA Multifamily Housing Committee. He holds a B.A. degree from the University of the City of New York and J.D. degree from Brooklyn Law School. Robert A. Barrows is Senior Vice President and Chief Financial Officer of Berkshire Mortgage Finance. Mr. Barrows has held several positions within The Berkshire Group since joining the company in 1983 and is currently responsible for accounting, financial reporting, treasury and management information systems for Berkshire Mortgage Finance.Prior to joining The Berkshire Group, he was an audit supervisor for Coopers & Lybrand L.L.P. in Boston. He received a B.S. degree from Boston College and is a Certified Public Accountant. Carol J.C. Mills is Senior Vice President for Loan Management of Berkshire Mortgage Finance and in this capacity, she is responsible for the Loan Servicing and Asset Management functions of the Boston, Bethesda and Seattle offices of Berkshire Mortgage Finance. She manages the estimated $6 billion portfolio of loans. Ms.Mills joined Berkshire in December 1997 as Vice President and was promoted to Senior Vice President in January 1999. From January 1989 through November 1997, Ms. Mills was Vice President of First Winthrop Corporation and Winthrop Financial Associates, in Cambridge, MA. Ms. Mills earned a B.A.degree from Mount Holyoke College and a Master of Architecture degree from Harvard University. Ms. Mills is a member of the Real Estate Finance Association, New England Women in Real Estate and the Mortgage Bankers Association. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no directors or executive officers. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of December 31, 1998, no person owned of record or was known by the General Partners to own beneficially more than 5% of the Partnership's 14,655,512 outstanding Units. The only interests held by management or its affiliates consist of its General Partner and Corporate Limited Partner Interests. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information required under this Item is contained in Note F to the Partnership's Notes To Financial Statements presented in Appendix A to this report. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)1. Financial Statements - see Index to Financial Statements and Schedule included under Item 8, Appendix A, page F-2 to this report. 2. Financial Statement Schedule - see Index to Financial Statements and Schedule included under Item 8, Appendix A, page F-2 to this report. All other schedules are omitted as they are not applicable, not required or the information is provided in the Financial Statements or the Notes thereto. (b) Exhibits: Number and Description Under Regulation S-K The following reflects all applicable Exhibits required under Item 601 of Regulation S-K: (4) Instruments defining the rights of security holders including indentures: (4.1) Amended and Restated Agreement of Limited Partnership dated as of May 29, 1987 [Exhibit A to Prospectus included in Post Effective Amendment No. 1 of Registrant's Registration Statement on Form S-11 dated June 18, 1987 (File No. 33-9889)].* (4.2) Second Amendment to Agreement of Limited Partnership dated as of June 17, 1987 [Exhibit 4.6 in Post Effective Amendment No. l of Registrant's Registration Statement on Form S-11 dated June 18, 1987 (File No. 33-9889)].* (4.3) Subscription Agreement whereby a subscriber agrees to purchase Units and adopts the provisions of the Amended and Restated Agreement of Limited Partnership [Exhibit D to Prospectus included in Post Effective Amendment No. 1 of Registrant's Registration Statement on Form S-11 dated June 18, 1987 (File No. 33-9889)].* (4.4) Copy of Amended Certificate of Limited Partnership filed with the Massachusetts Secretary of State on April 28, 1987. [Exhibit 4.4 in Amendment No. 1 of Registrant's Registration Statement on Form S-11 dated May 14, 1987 (File No. 33-9889)].* (10) Material Contracts: (10.1) Form of agreement between the Partnership and Krupp Mortgage Corporation. [Exhibit 10.3 in Amendment No. 1 of Registrant's Registration Statement on Form S-11 dated May 14, 1987 (File No. 33-9889)].* Le Coeur du Monde Apartments (10.2) Prospectus for GNMA Pools No. 257721 (CS) and 257722 (PN). [Exhibit 19.10 to Registrant's Report on Form 10-Q for the quarter ended June 30, 1988 (File No. 0-16817)].* (10.3) Subordinated Multi-Family Open-End Deed of Trust (including Subordinated Promissory Note) dated May 11, 1988 between Le Coeur du Monde Limited Partnership and Krupp Insured Plus-II Limited Partnership. [Exhibit 19.11 to Registrant's Report on Form 10-Q for the quarter ended June 30, 1988 (File No. 0-16817)].* Country Meadows Apartments (10.4) Prospectus for GNMA Pools No. 260733 (CL) and 260734 (PN). [Exhibit 19.18 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1988 (File No. 0-16817)].* (10.5) Subordinated Multifamily Deed of Trust (including Subordinated Promissory Note) dated June 15, 1988 between Country Meadows Limited Partnership and Krupp Insured Plus-II Limited Partnership. [Exhibit 19.19 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1988 (File No. 0-16817)].* Denrich Apartments (10.6) Prospectus for GNMA Pool No. 267075 (PL). [Exhibit 10.29 to Registrant's Report on Form 10-K for the year ended December 31, 1988 (File No. 0-16817)].* (10.7) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated November 3, 1988 between Arthur J. Stagnaro and Krupp Insured Plus-II Limited Partnership. [Exhibit 10.30 to Registrant's Report on Form 10-K for the year ended December 31, 1988 (File No. 0-16817)].* (10.8) Modification Agreement dated June 28, 1995 between Arthur J. Stagnaro and Krupp Insured Plus-II Limited Partnership [Exhibit 10.1 to Registrant's Report on Form 10-Q for the quarter ended June 30, 1995 (File No. 0-16817)].* The Greenhouse (10.9) Prospectus for GNMA Pools No. 259233(CS) and 259234(PN) [Exhibit 19.1 to Registrant's Report on Form 10-Q for the quarter ended March 31, 1989 (File No. 0-16817)].* (10.10) Subordinated Multifamily Deed of Trust (including Subordinated Promissory Note) dated January 5, 1989 between Farnam Associates Limited Partnership and Krupp Insured Plus-II Limited Partnership. [Exhibit 19.2 to Registrant's Report on Form 10-Q for the quarter ended March 31, 1989 (File No. 0-16817)].* Richmond Park Apartments (10.11) Prospectus for GNMA Pool No. 260865 (PL) [Exhibit 1 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)].* (10.12) Subordinated Multifamily Open-Ended Mortgage (including Subordinated Promissory Note) dated July 14, 1989 between Carl Milstein, Trustee, Irwin Obstgarten, Al Simon and Krupp Insured Plus-II Limited Partnership. [Exhibit 2 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)]* (10.13) Participation Agreement dated July 31, 1989 between Krupp Insured Mortgage Limited Partnership and Krupp Insured Plus-II Limited Partnership. [Exhibit 3 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)].* Saratoga Apartments (10.14) Prospectus for GNMA Pool No. 280643 (Pl) [Exhibit 4 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)].* (10.15) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated July 27, 1989 between American National Bank and Trust Company of Chicago, as Trustee and Krupp Insured Mortgage Limited Partnership. [Exhibit 5 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)].* (10.16) Participation Agreement dated July 31, 1989 between Krupp Insured Plus-II Limited Partnership and Krupp Insured Mortgage Limited Partnership. [Exhibit 6 to Registrant's Report on Form 8-K dated August 30, 1989 (File No. 0-16817)].* Carlyle Court (10.17) Prospectus for FNMA Pool No. MX-073004 [Exhibit 10.50 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (file No. 0-16817)].* (10.18) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated September 26, 1989 between Carlyle-XI, L.P. an Indiana limited partnership and Krupp Insured Plus-II Limited Partnership [Exhibit 10.51 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* Hillside Court (10.19) Prospectus for FNMA Pool No. MX-073003 [Exhibit 10.52 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* (10.20) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated September 16, 1989 between Hillside Limited Partnership-IX, an Indiana limited partnership and Krupp Insured Plus-II Limited Partnership [Exhibit 10.53 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* Stanford Court (10.21) Prospectus for FNMA Pool No. MX-073002 [Exhibit 10.54 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* (10.22) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated September 26, 1989 between Hillside Limited Partnership-IX, an Indiana limited partnership and Krupp Insured Plus-II Limited Partnership [Exhibit 10.55 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* Waterford Court (10.23) Prospectus for FNMA Pool No. MX-073005 [Exhibit 10.56 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* (10.24) Subordinated Multifamily Mortgage (including Subordinated Promissory Note) dated September 26, 1989 between Waterford-VIII, an Indiana limited partnership and Krupp Insured Plus-II Limited Partnership [Exhibit 10.57 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (File No. 0-16817)].* * Incorporated by reference. (c) Reports on Form 8-K During the last quarter of the year ended December 31, 1998, the Partnership did not file any reports on Form 8-K. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) 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, on the 5th day of February, 1999. KRUPP INSURED PLUS-II LIMITED PARTNERSHIP By: Krupp Plus Corporation, a General Partner By: /s/Douglas Krupp Douglas Krupp, President, Co-Chairman (Principal Executive Officer) and Director of Krupp Plus Corporation Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the 5th day of February, 1999. Signatures Title(s) /s/Douglas Krupp President, Co-Chairman (Principal Executive Douglas Krupp Officer) and Director of Krupp Plus Corporation, a General Partner /s/George Krupp Co-Chairman (Principal Executive Officer) George Krupp and Director of Krupp Plus Corporation, a General Partner /s/Peter F. Donovan Senior Vice President of Krupp Plus Peter F. Donovan Corporation, a General Partner /s/Robert A. Barrows Treasurer and Chief Accounting Officer of Robert A. Barrows Krupp Plus Corporation, a General Partner F-19 APPENDIX A KRUPP INSURED PLUS-II LIMITED PARTNERSHIP FINANCIAL STATEMENTS AND SCHEDULE ITEM 8 of FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION For the Year Ended December 31, 1998 KRUPP INSURED PLUS-II LIMITED PARTNERSHIP INDEX TO FINANCIAL STATEMENTS AND SCHEDULE Report of Independent Accountants F-3 Balance Sheets at December 31, 1998 and 1997 F-4 Statements of Income and Comprehensive Income for the Years Ended December 31, 1998, 1997 and 1996 F-5 Statements of Changes in Partners' Equity for the Years Ended December 31, 1998, 1997 and 1996 F-6 Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 F-7 Notes to Financial Statements F-8 - F-16 Schedule IV - Mortgage Loans on Real Estate F-17 - F-19 All other schedules are omitted as they are not applicable or not required, or the information is provided in the financial statements or the notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Krupp Insured Plus-II Limited Partnership: In our opinion, the accompanying Financial Statements listed on the index on Page F-2 of this Form 10-K present fairly, in all material respects, the financial position of Krupp Insured Plus-II Limited Partnership (the "Partnership")at December 31, 1998 and 1997 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Partnership's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion express above. PricewaterhouseCoopers LLP Boston, Massachusetts March 12, 1999,
KRUPP INSURED PLUS-II LIMITED PARTNERSHIP BALANCE SHEETS December 31, 1998 and 1997 ASSETS 1998 1997 ---- ---- Participating Insured Mortgages ("PIMs") (Notes B, C, H and I) $ 82,258,207 $122,048,053 Mortgage-Backed Securities and multi-family insured mortgages("MBS") (Notes B, D and H) 24,792,352 44,727,693 ------------ ------------ Total mortgage investments 107,050,559 166,775,746 Cash and cash equivalents (Notes B, H and I) 8,758,737 9,052,480 Interest receivable and other assets 730,829 1,180,660 Prepaid acquisition fees and expenses, net of accumulated amortization of $6,024,495 and $8,293,080 respectively (Note B) 889,863 2,481,160 Prepaid participation servicing fees, net of accumulated amortization of $1,876,746 and $2,707,314, respectively (Note B) 196,774 636,931 ------------ ------------ Total assets $117,626,762 $180,126,977 ============ ============
LIABILITIES AND PARTNERS' EQUITY Liabilities $ 252,769 $ 25,588 ------------ ------------ Partners' equity (deficit) (Notes A, E and I): Limited Partners 117,123,621 178,597,484 (14,655,512 Units outstanding) General Partners (290,140) (265,315) Accumulated comprehensive income(Note B) 540,512 1,769,220 ------------ ----------- Total Partners' equity 117,373,993 180,101,389 ------------ ------------ Total liabilities and Partners' equity $117,626,762 $180,126,977 ============ ============
The accompanying notes are an integral part of the financial statements.
KRUPP INSURED PLUS-II LIMITED PARTNERSHIP STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the Years Ended December 31, 1998, 1997 and 1996 1998 1997 1996 ---- ---- ---- Revenues: Interest income - PIMs: Basic interest $ 7,416,814 $11,089,440 $12,070,443 Participation interest 3,752,675 1,816,364 31,948 Interest income - MBS 3,083,259 3,098,699 3,366,026 Other interest income 1,082,870 668,055 386,863 ----------- ----------- ----------- Total revenues 15,335,618 16,672,558 15,855,280 ----------- ----------- ----------- Expenses: Asset management fee to an affiliate (Note F) 981,223 1,365,013 1,458,207 Expense reimbursement to affiliates (Note F) 57,448 162,269 155,091 Amortization of prepaid expenses and fees (Note B) 2,031,454 1,907,062 1,746,476 General and administrative 247,823 265,614 164,294 ----------- ----------- ----------- Total expenses 3,317,948 3,699,958 3,524,068 ----------- ----------- ----------- Net income (Notes E and G) 12,017,670 12,972,600 12,331,212 Other Comprehensive Income: Net change in unrealized gain/(loss) on MBS (1,228,708) 1,213,884 (726,014) ----------- --------- ----------- Total Comprehensive Income $ 10,788,962 $ 14,186,484 $ 11,605,198 ============ ============ ============ Allocation of net income (Notes E and G.): Limited Partners $11,657,140 $12,583,422 $11,961,276 =========== =========== =========== Average net income per Limited Partner interest $ .80 $ .86 $ .82 =========== =========== =========== (14,655,512 Limited Partner interests outstanding) General Partners $ 360,530 $ 389,178 $ 369,936 =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
KRUPP INSURED PLUS-II LIMITED PARTNERSHIP STATEMENTS OF CHANGES IN PARTNERS' EQUITY For the Years Ended December 31, 1998, 1997 and 1996 Accumulated Total Limited General Comprehensive Partners' Partners Partners Income Equity Balance at December 31, 1995 $211,648,945 $ (155,589) $ 1,281,350 $ 212,774,706 Net income 11,961,276 369,936 - 12,331,212 Distributions (16,414,171) (432,214) - (16,846,385) Change in unrealized gain - - (726,014) (726,014) ------------- --------- ---------- ---------- Balance at December 31, 1996 207,196,050 (217,867) 555,336 207,533,519 Net income 12,583,422 389,178 - 12,972,600 Distributions (16,414,173) (436,626) - (16,850,799) Special distributions (24,767,815) - - (24,767,815) Change in unrealized gain - - 1,213,884 1,213,884 ------------ --------- ---------- ------------ Balance at December 31, 1997 178,597,484 (265,315) 1,769,220 180,101,389 Net income 11,657,140 360,530 - 12,017,670 Distributions (16,414,173) (385,355) - (16,799,528) Special distributions (56,716,830) - - (56,716,830) Change in unrealized gain - - (1,228,708) (1,228,708) ------------ --------- ----------- ------------ Balance at December 31, 1998 $117,123,621 $(290,140) $ 540,512 $117,373,993 ============ ========== ========== ============
The accompanying notes are an integral part of the financial statements.
KRUPP INSURED PLUS-II LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1998, 1997 and 1996 1998 1997 1996 ----- ----- ----- Operating activities: Net income $ 12,017,670 $ 12,972,600 $ 12,331,212 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of premiums - 231,706 - Amortization of short-term investment discount - - (13,630) Amortization of prepaid expenses and fees 2,031,454 1,907,062 1,746,476 Shared Appreciation Income and prepayment penalties (2,390,707) (602,856) - Changes in assets and liabilities: Decrease in interest receivable and other assets 449,831 423,641 425,062 Increase in liabilities 227,181 6,688 4,140 ------------ ----------- ------------ Net cash provided by operating activities 12,335,429 14,938,841 14,493,260 ------------ ------------ ------------ Investing activities: Short-term investment - - (488,210) Principal collections on PIMs including Shared Appreciation Income and prepayment premiums of $2,255,077 in 1998 and $602,856 in 1997, respectively 42,044,923 18,422,260 1,211,435 Principal collections on MBS including prepayment premiums of $135,630 in 1998 18,842,263 9,388,723 2,587,489 Proceeds from sale of investment - - 1,000,000 ------------ ------------ ------------ Net cash provided by investing activities 60,887,186 27,810,983 4,310,714 ------------------ ------------ ------------ Financing activities: Distributions (16,799,528) (16,850,799) (16,846,385) Special distributions (56,716,830) (24,767,815) - ------------------- ------------ ------ Net cash used for financing activities (73,516,358) (41,618,614) (16,846,385) ------------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents (293,743) 1,131,210 1,957,589 Cash and cash equivalents, beginning of year 9,052,480 7,921,270 5,963,681 ------------ ------------ ------------ Cash and cash equivalents, end of year $ 8,758,737 $ 9,052,480 $ 7,921,270 ================= ============ ============ Supplemental disclosure of non-cash investing activities: Reclassification of investment in a PIM to a MBS $ - $ 11,850,469 $ -
The accompanying notes are an integral part of the financial statements. KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS A. Organization Krupp Insured Plus-II Limited Partnership (the "Partnership") was formed on October 29, 1986 by filing a Certificate of Limited Partnership in The Commonwealth of Massachusetts. The Partnership was organized for the purpose of investing in commercial and multi-family loans and mortgage backed securities. The Partnership issued all of the General Partner Interests to Krupp Plus Corporation and Mortgage Services Partners Limited Partnership in exchange for capital contributions aggregating $3,000. The Partnership terminates on December 31, 2026, unless terminated earlier upon the occurrence of certain events as set forth in the Partnership Agreement. The Partnership commenced the public offering of Units on May 29, 1987 and completed its public offering having sold 14,655,412 Units for $292,176,381 net of purchase volume discounts of $931,859 as of May 27, 1988. B. Significant Accounting Policies The Partnership uses the following accounting policies for financial reporting purposes, which may differ in certain respects from those used for federal income tax purposes (Note G). MBS The Partnership, in accordance with Financial Accounting Standards Board's Statement 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"), classifies its MBS portfolio as available-for-sale. As such the Partnership carries its MBS at fair market value and reflects any unrealized gains (losses) as a separate component of Partners' Equity. The Partnership amortizes purchase premiums or discounts over the life of the underlying mortgages using the effective interest method. Effective January 1, 1998 the Partnership adopted the, Statement of Financial Accounting Standards No. 130, 'Reporting Comprehensive Income' (FAS 130). FAS 130 was issued establishing standards for reporting and displaying comprehensive income and its components. FAS 130 requires comprehensive income and its components, as recognized under accounting standards, to be displayed in a financial statement with the same prominence as other financial statements, if material. Accordingly, unrealized gains (losses) on the Partnership's available-for sale securities have been included in other comprehensive income. The Federal Housing Administration MBS is carried at amortized cost unless the General Partner of the Partnership believes there is an impairment in value, in which case a valuation allowance would be established in accordance with Financial Accounting Standards No. 114, "Accounting by Creditors for impairment of a Loan," and Financial Accounting Standard No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures." The Partnership also has insured non-participating mortgage loans. Such loans are carried at amortized cost. PIMs The Partnership accounts for the MBS portion of its PIM in accordance with FAS 115 under the classification of held to maturity. The Partnership carries the Government National Mortgage Association ("GNMA") or Fannie Mae MBS at amortized cost. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS B. Significant Accounting Policies, continued Basic interest on PIMs is recognized based on the stated coupon rate of the GNMA or Fannie Mae MBS. Participation income is recognized as earned and when deemed collectible by the Partnership. Cash and Cash Equivalents The Partnership includes all short-term investments with maturities of three months or less at the date of acquisition in cash and cash equivalents. The Partnership invests its cash primarily in commercial paper and money market funds with a commercial bank and has not experienced any loss to date on its invested cash. Prepaid Expenses and Fees Prepaid expenses and fees consist of acquisition fees and expenses and participation servicing fees paid for the acquisition and servicing of PIMs. The Partnership amortizes prepaid acquisition fees and expenses using a method that approximates the effective interest method over a period of ten to twelve years, which represents the actual maturity or anticipated payoff of the underlying mortgage. The Partnership amortizes prepaid participation servicing fees using a method that approximates the effective interest method over a ten-year period beginning at final endorsement of the loan if a GNMA loan and at closing if a Fannie Mae loan. Income Taxes The Partnership is not liable for federal or state income taxes because Partnership income is allocated to the partners for income tax purposes. If the Partnership's tax returns are examined by the Internal Revenue Service or state taxing authority and such an examination results in a change in Partnership taxable income, such change will be reported to the partners. Estimates and Assumptions The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and liabilities and revenues and expenses during the period. Actual results could differ from those estimates. C. PIMs At December 31, 1998, the Partnership has investments in ten PIMs. The Partnership's PIMs consist of a GNMA or Fannie Mae MBS representing the securitized first mortgage loan on the underlying property (collectively the "insured mortgages"), and participation interests in the revenue stream and appreciation of the underlying property above specified base levels. The borrower conveys these participation features to the Partnership generally through a subordinated promissory note and mortgage (the "Agreement"). The Partnership receives guaranteed monthly payments of principal and basic interest on the GNMA and Fannie Mae MBS and HUD insures the first mortgage loan underlying the GNMA MBS. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS C. PIMs, continued The borrower usually cannot prepay the first mortgage loan during the first five years and usually may prepay the first mortgage loan thereafter subject to a 9% prepayment penalty in years six through nine, a 1% prepayment penalty in year ten and no prepayment penalty thereafter. The Partnership may receive income related to its participation interests in the underlying property, however, these amounts are neither insured nor guaranteed. Generally, the participation features consist of the following: (i) "Minimum Additional Interest" rates ranging from .5% to .75% per annum calculated on the unpaid principal balance of the first mortgage on the underlying property , (ii) "Shared Income Interest" ranging from 25% to 30% of the monthly gross rental income generated by the underlying property in excess of a specified base, but only to the extent that it exceeds the amount of Minimum Additional Interest received during such month, (iii) "Shared Appreciation Interest" ranging from 25% to 30% of any increase in the value of the underlying property in excess of a specified base. Payment of Minimum Additional Interest and Shared Income Interest will be from the operations of the property and is limited to 50% of net revenue or surplus cash as defined by Fannie Mae or HUD, respectively. The total amount of Minimum Additional Interest, Shared Income Interest and Shared Appreciation interest payable by the underlying borrower usually can not exceed 50% of any increase in value of the property. However, generally any net proceeds from a sale or refinancing will be available to satisfy any accrued but unpaid Shared Income or Minimum Additional Interest. Shared Appreciation Interest is payable when one of the following occurs: (1) the sale of the underlying property to an unrelated third party on a date which is later than five years from the date of the Agreement, (2) the maturity date or accelerated maturity date of the Agreement, or (3) prepayment of amounts due under the Agreement and the insured mortgage. Under the Agreement, the Partnership, upon giving twelve months written notice, can accelerate the maturity date of the Agreement and insured mortgage to a date not earlier than ten years from the date of the Agreement for (a) the payment of all participation income due under the Agreement as of the accelerated maturity date, or (b) the payment of all participation income due under the Agreement plus all amounts due on the first mortgage note on the property. On October 19, 1998, the Partnership received a prepayment on the Walden Village Apartment's PIM of $6,990,486. Also, the Partnership received a prepayment penalty of $165,599. On December 4, 1998, the Partnership made a special distribution to the investors of $.49 per Limited Partner interest. During the second quarter of 1998, the Partnership received prepayments of the Harbor House and Longwood Villas Apartments PIMs. The Partnership received the outstanding principal balance of $12,146,408 and a prepayment penalty of $750,000 from the Harbor House PIM and the outstanding principal balance of $6,261,587 from the Longwood Villas PIM. During the first Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS --------------- C. PIMs, continued quarter of 1998, the Partnership received a prepayment penalty of $62,616 from the Longwood Villas PIM. The Partnership made a special distribution of $.43 per Limited Partner interest relating to the Longwood Villas Apartments PIM on July 17, 1998 and a special distribution of $.88 per Limited Partner interest for the Harbor House Apartment PIM prepayment was made on July 24, 1998. During the first quarter of 1998, the Partnership received prepayments of the Westbrook Manor, Fallwood and Greenbrier Apartment PIMs in the amounts of $4,841,446, $6,505,922, and $2,196,031, respectively. In addition to the prepayments, the Partnership received $416,810 of Shared Appreciation Interest and $632,002 of Minimum Additional Interest and Shared Income Interest. On March 27, 1998, the Partnership made a special distribution to the investors of $.94 per Limited Partner interest. In November 1997, the Pine Ridge Apartments PIM was repaid by the borrower. In addition to the outstanding balance due on the first mortgage of $4,161,080, the Partnership received approximately $243,000 of Shared Appreciation Interest and $284,000 of Shared Income Interest. On December 19, 1997, the Partnership made a special distribution of $.30 per Unit to the Limited Partners with proceeds from the outstanding principal proceeds and the Share Appreciation Interest. During the third quarter of 1997, the Partnership received a $437,963 payment for all additional interest earned on the Lily Flagg Apartments PIM through the date of release of participation rights. The Partnership then converted the investment in the PIM to an multi-family insured mortgage. On June 17, 1997, the Partnership received a prepayment of the Lakeside Apartments PIM. The Partnership received the outstanding principal balance of $9,935,167, a prepayment penalty of $99,000, Shared Appreciation Income of $235,000 and Shared Income Interest of $335,000. On June 27, 1997, the Partnership made a special distribution of $.71 per Unit to the Limited Partners with the proceeds from the outstanding principal proceeds,the prepayment penalty and the Shared Appreciation Interest. During the fourth quarter of 1996, the borrower of the Colonial Park Apartments PIM sold the property to a buyer that assumed the first mortgage loan and future obligations arising from the participation features. The Partnership received $35,000 as a discounted payoff of the accumulated participation interest then due from the original borrower. On October 15, 1997, the Partnership received a prepayment of The Colonial Park Apartments PIM. The Partnership received the outstanding first mortgage principal balance of $2,520,805. The Partnership collected a prepayment penalty of approximately $25,000 and Shared Income Interest of $14,000 during the fourth quarter of 1997. On November 21, 1997, the Partnership made a special distribution of $.17 per unit to the Limited Partners with the proceeds from the outstanding principal proceeds and the prepayment penalty. At December 31, 1998 and 1997 there were no loans within the Partnership's portfolio that were delinquent as to principal or interest. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS ---------------- C. PIMs, continued Listed in the chart is a summary of the Partnership's PIM investments. The Partnership's PIMs consisted of the following at December 31, 1998 and 1997:
Aggregate Number Permanent Original of PIMs Interest Maturity Investment Basis Issuer Principal at 12/31/98 Rate Range Date Range at December 31, - - - ------ ------------ ----------- ---------- ----------- -------------------- 1998 1997 ---- ---- GNMA $ 57,350,100 6 6.75%-8.5% 12/23 - 10/30 $54,290,923 $86,756,622 (a) (b)(c) Fannie Mae 30,015,000 4 7.25%-7.75% 10/99 27,967,284 28,271,601 FHA 7,220,800 (d) - - - 7,019,830 ------------------ -- ----------------- ------------------ $ 94,585,900 10 $82,258,207 $122,048,053 ============ == =========== ============
(a) Includes two PIMs - Richmond Park and Saratoga - in which the Partnership holds a 62% and 50% interest, respectively, and the remaining portion is held by an affiliate of the Partnership. (b) In May 1993, the Partnership agreed to temporarily reduce the basic interest rate of the LeCouer du Monde PIM, retroactive to October 1, 1992. The reduction lasted for thirty-six months and ranged from 6.375% to 8.125% per annum. The current basic interest rate is 8.25% per annum. Any unpaid basic interest is payable from the net proceeds from a sale or refinancing of the property. As consideration for this reduction, the Partnership increased its Shared Appreciation Interest rate from 30% to 35% and decreased the base value used for this calculation from $10,795,260 to $9,814,200. (c) On June 28, 1995, the Partnership entered into a temporary basic interest rate reduction agreement on the Denrich Apartments PIM. Beginning July 1, 1995, the basic interest rate decreased from 8% per annum to 6.25% per annum for thirty months, then will increase to 6.75% per annum for the following thirty-six month period and then increase to the original interest rate of 8% per annum. The difference between basic interest at the original rate and the reduced rates will accumulate and be payable from surplus cash or from the net proceeds of a sale or refinancing. These accumulated amounts will be due and payable prior to any distributions to the borrower or payment of participation income to the Partnership. Also under the agreement, the base level for calculating Shared Appreciation Interest decreased from $4,025,000 to $3,500,000. (d) The Partnership had one FHA PIM as of December 31, 1997. During 1998 the Parnership received a prepayment of the Walden Village Apartments PIM. The underlying mortgages of the PIMs are collateralized by multi-family apartment complexes located in 7 states. The apartment complexes range in size from 91 to 736 units. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS ---------------- D. MBS On October 15, 1998, the Partnership received a repayment on the Lily Flagg MBS of approximately $11,721,863. A prepayment penalty of $117,330 was received on September 17, 1998. On December 2, 1998, the Partnership made a special distribution to investors of $.81 per Limited Partner interest. On June 19, 1998, the Partnership received a prepayment of the Brookside insured mortgage in the amount of $4,605,549, representing the outstanding principal balance, and a prepayment penalty of $18,300. The Partnership made a special distribution of $.32 per limited partner interest on July 24, 1998. During the third and fourth quarter of 1997, the Partnership received prepayments on three multi-family MBS in the amounts of $2,318,901, $2,425,094 and $2,824,583. The Partnership made special distribution of $.33 per unit per Limited Partner for the first two MBS prepayments and $.19 per unit per Limited Partner interest for the third MBS prepayment. At December 31, 1998, the Partnership's MBS portfolio has an amortized cost of $12,380,666 and unrealized gains of approximately $540,512. At December 31, 1997, the Partnership's MBS portfolio had an amortized cost of $14,760,303 and unrealized gains of approximately $1,769,220. The Partnership's MBS have maturities ranging from 2007 to 2033. At December 31, 1998 and 1997 the Partnership's Insured Mortgage Portfolio had an amortized cost of $11,871,174 and $28,198,170,respectively. E. Partners' Equity Profits and losses from Partnership operations and Distributable Cash Flow are allocated 97% to the Unitholders and Corporate Limited Partner (the "Limited Partners") and 3% to the General Partners. Upon the occurrence of a capital transaction, as defined in the Partnership Agreement, net cash proceeds will be distributed first, to the Limited Partners until they have received a return of their total invested capital, second, to the General Partners until they have received a return of their total invested capital, third, 99% to the Limited Partners and 1% to the General Partners until the Limited Partners receive an amount equal to any deficiency in the 11% cumulative return on their invested capital that exists through fiscal years prior to the date of the capital transaction, fourth, to the class of General Partners until they have received an amount equal to 4% of all amounts of cash distributed under all capital transactions and fifth, 96% to the Limited Partners and 4% to the General Partners. Profits arising from a capital transaction, will be allocated in the same manner as related cash distributions. Losses from a capital transaction will be allocated 97% to the Limited Partners and 3% to the General Partners. During 1998, 1997 and 1996, the Partnership made quarterly distributions totaling $1.12 per Unit. The partnership made special distributions of $3.87 and $1.69 per Unit in 1998 and 1997, respectively. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS ---------------- E. Partners' Equity, continued As of December 31, 1997, the following cumulative partner contributions and allocations have been made since the inception of the Partnership:
Corporate Limited General Unrealized Unitholders Partner Partners Gain Total Capital $292,176,381 $ 2,000 $ 3,000 $ - $292,181,381 contributions Syndication costs (15,580,734) - - - (15,580,734) Quarterly Distributions (226,888,098) (1,584) (5,514,741) (232,404,423) Special Distributions (101,415,450) (692) - - (101,416,142) Net income 168,830,618 1,180 5,221,601 174,053,399 Unrealized gain on MBS - - - 540,512 540,512 ------------ ------- ---------- ----------- ------------ Total at December 31 1998 $117,122,717 $ 904 $ (290,140) $ 540,512 $117,373,993 ============ ======== ========== ========= ============
F. Related Party Transactions Under the terms of the Partnership Agreement, the General Partners or their affiliates are entitled to an asset management fee for the management of the Partnership's business, equal to .75% per annum of the value of the Partnership's actual and committed mortgage assets, payable quarterly. The General Partners may also receive an incentive management fee in an amount equal to .3% per annum on the Partnership's total invested assets provided the Unitholders have received their specified non-cumulative annual return on their Invested Capital. Total fees payable to the General Partners for management services shall not exceed 10% of cash available for distribution over the life of the Partnership. Additionally, the Partnership reimburses affiliates of the General Partners for certain costs incurred in connection with maintaining the books and records of the Partnership and the preparation and mailing of financial reports, tax information and other communications to investors. G. Federal Income Taxes The reconciliation of the income reported in the accompanying financial statements with the income reported in the Partnership's 1998 federal income tax return is as follows: Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS ---------------- G. Federal Income Taxes, continued Net income per statement of income $ 12,017,670 Less:Book to tax difference for amortization of prepaid expenses and fees (1,777,218) Net income for federal income tax purposes $ 10,240,452 ============ The allocation of the 1998 net income for federal income tax purposes is as follows: Portfolio Income Unitholders $ 10,004,891 Corporate Limited Partner 68 General Partners 235,493 ----------- $ 10,240,452 For the years ended December 31, 1998, 1997 and 1996 the average per unit income to the Unitholders for federal income tax purposes was $.68, $.86 and $.95 respectively. The basis of the Partnership's assets for financial reporting purposes is less than its tax basis by approximately $2,344,000 and $2,892,000 at December 31, 1998 and 1997, respectively. The basis of the Partnership?s liabilities for financial reporting purposes are the same as its tax basis at December 31, 1998 and 1997, respectively. H. Fair Value Disclosures of Financial Instruments The Partnership uses the following methods and assumptions to estimate the fair value of each class of financial instruments: Cash and Cash Equivalents The carrying amount approximates fair value because of the short maturity of those instruments. MBS The Partnership estimates the fair value of MBS based on quoted market prices. Insured Mortgage loans are valued in a manner consistent with PIMs as described below: PIMs There is no active trading market for these investments. Management estimates the fair value of the PIMs using quoted market prices of MBS having the same stated coupon rate. Management does not include any participation income in the Partnership's estimated fair value arising from the properties, because Management does not believe it can predict the time of realization of the feature with any certainty. Based on the estimated fair value determined using these methods and assumptions, the Trust's investments in PIMs had gross unrealized gains of approximately $2,099,000 Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS ---------------- H. Fair Value Disclosures of Financial Instruments, continued at December 31, 1998 and gross unrealized gains of approximately $822,000 at December 31, 1997. At December 31, 1998 and 1997, the estimated fair values of the Partnership's financial instruments are as follows: 1998 1997 ---- ---- Fair Carrying Fair Carrying Value Value Value Value Cash and cash equivalents $ 8,759 $ 8,759 $ 9,052 $ 9,052 MBS 24,792 24,792 44,728 44,728 PIMs 84,357 82,258 122,870 122,048 -------- -------- -------- -------- $117,908 115,809 $176,650 $175,828 ======== ======= ======== ======== I. Subsequent Events On January 25, 1999, the Partnership received proceeds from the prepayment of the Waterford Apartments PIM. The Partnership received the outstanding principal balance of $9,394,386 plus Minimum and Shared Income Interest of $262,429, and Shared Appreciation Interest and prepayment penalty of $226,291. The Partnership plans on distributing $.66 per Limited Partner Interest in February, 1999 from the principal proceeds and prepayment penalty income received on this loan. On January 25, 1999, the Partnership received proceeds from the prepayment of the Carlyle Apartments PIM. The Partnership received the outstanding principal balance of $7,696,897 plus Minimum and Shared Income Interest of $145,448, and Shared Appreciation Interest and prepayment penalty of $525,000. The Partnership plans on distributing $.56 per Limited Partner Interest in February, 1999 from the principal proceeds and prepayment penalty income received on this loan. On January 25, 1999, the Partnership received proceeds from the prepayment of the Stanford Court Apartments PIM. The Partnership received the outstanding principal balance of $6,609,242 plus Minimum and Shared Income Interest of $25,000 and a prepayment penalty of $66,093. The Partnership plans on distributing $.46 per Limited Partner Interest in February, 1999 from the principal proceeds and prepayment penalty income received on this loan. On January 25, 1999, the Partnership received proceeds from the prepayment of the Hillside Apartments PIM. The Partnership received the outstanding principal balance of $4,266,759 plus a prepayment penalty of $42,668. The Partnership plans on distributing $.29 per Limited Partner Interest in February, 1999 from the principal proceeds and prepayment penalty income received on this loan.
KRUPP INSURED PLUS-II LIMITED PARTNERSHIP SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE December 31, 1998 Normal Monthly Carrying Interest Maturity Payment Original Current Amount at PIMs (a) Rate (b) Date (j) (k) Face Amount Face Amount 12/31/98(o) - - - -------- -------- -------- ------- ----------- ----------- ----------- GNMA Country Meadows 8.25% 10/15/30 89,100 $12,475,000 $12,040,163 $12,040,163 Apts (c)(e)(h) Savage, MD Denrich Aparts 6.75% 12/15/23 24,900 3,500,000 3,233,836 3,233,836 Philadelphia, PA (c)(e) (h)(n) Le Coeur du Monde 8.25% 10/15/30 70,100 9,814,200 9,467,257 9,467,257 Apts (c)(f) St. Louis, MO (l) Richmond Park 7.50% 8/15/24 107,900 16,000,000 14,787,106 14,787,106 Richmond Heights,(c)(e)(h) OH Saratoga Apts. 7.875% 8/15/24 47,300 6,750,000 6,274,105 6,274,105 Rolling Meadows,(c)(e)(h) IL The Greehouse 8.50% 2/15/30 64,600 8,810,900 8,488,456 8,488,456 ----------- ----------- ------------ Omaha, NE (d)(e)(h) 57,350,100 54,290,923 54,290,923 ---------- ----------- ----------- FNMA Carlyle Court 7.25% 10/1/99 54,600 8,280,000 7,696,897 7,696,897 Indianapolis, IN(c)(e)(h) (m) Hillside Court 7.25% 10/1/99 30,000 4,590,000 4,266,759 4,266,759 Centerville, OH (c)(e)(h) (m) Stanford Court 7.25% 10/1/99 46,700 7,110,000 6,609,242 6,609,242 Speedway, IN (c)(e)(h) (m) Waterford Court 7.75% 10/1/99 69,500 10,035,000 9,394,386 9,394,386 ----------- ------------ ------------ Lafayette, IN (c)(g)(i) (m) 30,015,000 27,967,284 27,967,284 ----------- ------------ ------------ $87,365,100 $82,258,207 $82,258,207 =========== =========== ===========
Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, continued December 31, 1998 ----------------- (a) The Participating Insured Mortgages ("PIMs") consist of either a mortgage-backed security guaranteed by the Fannie Mae or the Government National Mortgage Association ("GNMA") and a subordinated promissory note and mortgage or shared income and appreciation agreement with the underlying Borrower that conveys participation interests in the revenue stream and appreciation of the underlying property above certain specified base levels. (b) Represents the permanent interest rate of the GNMA or Fannie Mae MBS. In addition, the Partnership receives additional interest consisting of (i) Minimum Additional Interest based on a percentage of the unpaid principal balance of the first mortgage on the property, (ii) Shared Income Interest based on a percentage of monthly gross income generated by the underlying property in excess of a specified base amount (but only to the extent it exceeds the amount of Minimum Additional Interest received during such month), (iii) Shared Appreciation Interest based on a percentage of any increase in the value of the underlying property in excess of a specified base value. (c) Minimum Additional Interest is at a rate of .5% per annum calculated on the unpaid principal balance of the first mortgage note. (d) Minimum Additional Interest is at a rate of .75% per annum calculated on the unpaid principal balance of the first mortgage note. (e) Shared Income Interest is based on 25% of monthly gross rental income over a specified base amount. (f) Shared Income Interest is based on 30% of monthly gross rental income over a specified base amount. (g) Shared Income Interest is based on 35% of monthly gross rental income over a specified base amount. (h) Shared Appreciation Interest is based on 25% of any increase in the value of the project over the specified base value. (i) Shared Appreciation Interest is based on 35% of any increase in the value of the project over the specified base value. (j) The Partnership's GNMA MBS have call provisions,which allow the Partnership to accelerate their respective maturity date. (k) The normal monthly payment consisting of principal and basic interest is payable monthly at level amounts over the term of the GNMA MBS. The GNMA MBS and Fannie Mae MBS generally may not be prepaid during the first five years and may be prepaid subject to a 9% prepayment penalty in years six through nine, a 1% prepayment penalty in year ten and no prepayment penalty after year ten. The normal monthly payment consisting of principal and basic interest for a Fannie Mae MBS is payable at level amounts based on a 35-year amortization. All unpaid principal and accrued basic interest is due at the end of year ten. Continued KRUPP INSURED PLUS-II LIMITED PARTNERSHIP NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, Continued ------------- (l) The Partnership agreed to temporarily reduce the interest rate on the Le Couer du Monde PIM. The reduction was retroactive to October 1, 1992, and ranged from 6.375% to 8.125% per annum through October 1, 1995 and thereafter is at 8.25% per annum. As consideration for this reduction, the Partnership increased its Shared Appreciation Interest rate from 30% to 35% and decreased the Base Value used for this calculation from $10,795,620 to $9,814,200. (m) The approximate principal balance due at maturity for each PIM, respectively, is as follows: PIM Amount Carlyle Court $7,620,000 Hillside Court $4,224,000 Stanford Court $6,543,000 Waterford Court $9,308,000 (n) On June 28, 1995, the Partnership entered into a temporary basic interest rate reduction agreement on the Denrich Apartments PIM. Beginning July 1,1995, the basic interest rate decreased from 8% per annum to 6.25% per annum for thirty months, then increases to 6.75% per annum for the following thirty-six month period and then increases to the original rate of 8% per annum. The difference between basic interest at the original interest rate and the reduced rates will accumulate and be payable from surplus cash or from the net proceeds of a sale or refinancing. These accumulated amounts will be due and payable prior to any distributions to the borrower or payment of participation income to the Partnership. Also under the agreement, the Base Value for calculating Shared Appreciation Interest decreased from $4,025,000 to $3,500,000. (o) The aggregate cost of PIMs for federal income tax purposes is $82,258,207. A reconciliation of the carrying value of PIMs for each of the three years in the period ended December 31, 1998 is as follows:
1998 1997 1996 ---- ---- ---- Balance at beginning of period $122,048,053 $151,717,926 $152,929,361 Deductions during period: Reclassification - (11,850,469) - Prepayments and principal collections 39,789,846 (17,819,404) (1,211,435) ------------ ------------- ------------ Balance at end of period $ 82,258,207 $122,048,053 $151,717,926 ============ ============ ============
Unaudited 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 year ended December 31, 1998 and the period from inception through December 31, 1998. 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) Inception Year Ended Through 12/31/98 12/31/98 Distributable Cash Flow: Income for tax purposes $10,240 $176,938 Items not requiring (not providing) the use of operating funds: Amortization of prepaid expenses and fees 3,809 13,851 Acquisition expenses paid from offering proceeds charged to operations - 690 Shared appreciation income/prepayment penalties (2,391) (4,995) Gain on sale of MBS - (377) ------- -------- Total Distributable Cash Flow ("DCF") $11,658 $186,107 ======= ======== Limited Partners Share of DCF $11,308 $180,524 ======= ======== Limited Partners Share of DCF per Unit $ .77 $ 12.32 ======= ======== General Partners Share of DCF $ 350 $ 5,583 ======= ======== Net Proceeds from Capital Transactions: Principal collections on PIMs and PIM sale proceeds including Shared Appreciation Income/Prepayment Penalties $42,045 $108,380 Principal collections on MBS and MBS sale proceeds 18,842 90,330 Reinvestment of MBS and PIM principal collections and sale proceeds - (41,966) Gain on sale of MBS - 377 ------- -------- Total Net Proceeds from Capital Transactions $60,887 $157,121 ======= ======== Cash available for distribution (DCF plus proceeds from Capital Transactions) $72,545 $343,228 ======= ======== Distributions: Limited Partners $73,131(a) $332,409(b) ------- -------- Limited Partners Average per Unit $ 4.99(a) $ 22.68(b)(c) ======= ======== General Partners $ 355(a) $ 5,583(b) ======= ======== Total Distributions $73,486 $337,992 ======= ========
(a) Represents all distributions paid in 1998 except the February 1998 distribution and includes an estimate of the distribution to be paid in February 1999. (b) Includes an estimate of the distribution to be paid in February 1999. (c) Limited Partners average per Unit return of capital as of February 1999 is $10.36 [$22.68 - $12.32] 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. 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. 0000805297 Krupp Insured Mortgage Plus-II Limited Partnership 12-MOS Dec-31-1998 Dec-31-1998 8,758,737 107,050,559 730,829 0 0 1,086,637 0 0 117,626,762 252,769 0 0 0 116,833,481 540,512 117,626,762 0 15,335,618 0 0 3,317,948 0 0 12,017,670 0 12,017,670 0 0 0 12,017,670 0 0 Includes Participating Insured Mortgages ("PIMs") of $82,258,207 and Mortgage-Backed Securities ("MBS") of $24,792,352. Includes prepaid acquisition fees and expenses of $6,914,358 net of accumulated amortization of $6,024,495 and prepaid participation servicing fees of $2,073,520 net of accumulated amortization of $1,876,746. Represents total equity of General Partners and Limited Partners. General Partners deficit of ($290,140) and Limited Partners equity of $117,123,621. Unrealized gains on MBS. Represents interest income on investments in mortgages and cash. Includes $2,031,454 of amortization of prepaid fees and expenses. Net income allocated $360,530 to the General Partners and $11,657,140 to the Limited Partners. Average net income per Limited Partner interest is $.80 on 14,655,512 Limited Partner interests outstanding.
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