UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-14378
Krupp Institutional Mortgage Fund Limited Partnership
Massachusetts 04-2860302
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)
(617) 423-2233
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Mortgage notes receivable, net of loan loss
reserve of $16,524,000 (Notes 2 and 3) $11,802,807 $11,822,403
Cash and cash equivalents 1,367,187 1,026,664
Accrued interest receivable - mortgage notes,
net of reserve for uncollectible interest
of $9,143,010 and $7,584,144, respectively
(Note 3) 101,082 231,116
Other assets 1,594 12,003
Total assets $13,272,670 $13,092,186
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 11,478 $ 14,324
Partners' equity (Note 4)
Limited Partners (30,059
Units outstanding) 13,428,183 13,246,687
General Partners (166,991) (168,825)
Total Partners' equity 13,261,192 13,077,862
Total liabilities and partners' equity $13,272,670 $13,092,186
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<C> <C> <C> <C> <C>
Interest income:
Mortgage notes receivable
(Notes 2 and 3) $124,791 $274,461 $663,250 $762,453
Cash equivalents and short-
term investments 19,455 7,906 49,908 26,339
Total interest income 144,246 282,367 713,158 788,792
Expenses:
Expense reimbursements to
affiliates 12,816 26,835 38,448 80,506
General and administrative 12,646 12,881 35,941 46,994
Total expenses 25,462 39,716 74,389 127,500
Net income $118,784 $242,651 $638,769 $661,292
Allocation of net income (Note 4):
Per Unit of Limited Partner
Interest (30,059 Units
outstanding) $ 3.91 $ 7.99 $ 21.04 $ 21.78
General Partners $ 1,188 $ 2,427 $ 6,388 $ 6,613
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 638,769 $ 661,292
Adjustments to reconcile net income to
net cash provided by operating activities:
Changes in assets and liabilities:
Decrease (increase) in accrued interest
receivable-mortgage notes 130,034 (45)
Decrease(increase) in other assets 10,409 (224,237)
Increase (decrease) in liabilities (2,846) 10,717
Net cash provided by operating
activities 776,366 447,727
Investing activity:
Decrease in mortgage note receivable 19,596 17,738
Financing activity:
Distributions (455,439) (379,533)
Net increase in cash and cash equivalents 340,523 85,932
Cash and cash equivalents, beginning of period 1,026,664 992,640
Cash and cash equivalents, end of period $1,367,187 $ 1,078,572
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(1) Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of The Krupp Corporation and The
Krupp Company Limited Partnership-III ("Krupp Co.-III"), the General
Partners of Krupp Institutional Mortgage Fund Limited Partnership (the
"Partnership"), the disclosures contained in this report are adequate to
make the information presented not misleading. See Notes to Financial
Statements in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1994 for additional information relevant to
significant accounting policies followed by the Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements reflect all adjustments
necessary to present fairly the Partnership's financial position as of
September 30, 1995, its results of operations for the three and nine
months ended September 30, 1995 and 1994, and cash flows for the nine
months ended September 30, 1995 and 1994.
The results of operations for the three and nine months ended September
30, 1995 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.
Certain prior year balances have been reclassified to conform with
current year financial statement presentation.
(2) Krupp Equity Limited Partnership ("KELP")
Condensed financial statements of KELP are as follows:
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1995 1994
<S> <C> <C>
Property, at cost $30,902,653 $30,660,597
Property valuation provision (5,400,000) (5,400,000)
Accumulated depreciation (9,607,920) (9,380,069)
15,894,733 15,880,528
Other assets 931,220 1,047,545
Total assets $16,825,953 $16,928,073
</TABLE>
Continued
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(2) Krupp Equity Limited Partners, Continued
LIABILITIES AND PARTNERS' DEFICIT
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Mortgage notes payable to KIMF $ 28,326,807 $ 28,346,403
Mortgage notes payable (A) 7,576,055 7,676,531
Notes payable to an affiliate 300,000 300,000
Accrued interest payable to affiliates 9,540,886 8,089,139
Due to affiliates 651,196 669,473
Other liabilities 634,726 605,065
Total liabilities 47,029,670 45,686,611
Partners' deficit (30,203,717) (28,758,538)
Total liabilities and partners'
deficit $ 16,825,953 $ 16,928,073
</TABLE>
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $ 870,535 $ 1,127,779 $ 2,593,352 $ 3,408,572
Property operating
expenses (353,794) (624,826) (1,028,390) (1,864,330)
Operating income 516,741 502,953 1,564,962 1,544,242
Depreciation and
amortization (82,301) (319,230) (240,497) (953,472)
Interest (930,176) (1,056,147) (2,769,644) (3,115,703)
Net loss before loss
on sale of
property (495,736) (872,424) (1,445,179) (2,524,933)
Loss on sale of
property - (2,306,573) - (2,306,573)
Net loss $(495,736) $(3,178,997) $(1,445,179) $(4,831,506)
</TABLE>
(A) On October 31, 1995, the Partnership refinanced the first mortgage note
payable of North Salado Village Shopping Center for $2,972,130. The
terms of the new mortgage require principal and interest payments at a
rate of 9.25% per annum. The new mortgage may be prepaid without
penalty at any time and will mature on November 15, 2009. Closing costs
for there financing were approximately $80,000.
Continued
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(3) Accrued Interest Reserves and Cash Flow Payments
The Partnership has recorded additional reserves for uncollectible
interest of $1,558,866 for 1995. The General Partners have estimated
that $101,082 of the current interest receivable due on the
Participating Notes is collectible. The mortgage note and interest
reserves are recorded against the carrying value of the assets to
reflect management's current estimates of the underlying property values
which, given the inherent uncertainty of real estate valuation in the
current market, could differ significantly from the ultimate value
obtained from such properties.
The Partnership has waived for 90 days the right to pursue its
foreclosure remedies. It has received a payment equal to cash flow net
of operating and administrative expenses and first mortgage obligations.
This waiver is effective only with respect to the payment due October
1995, and KIMF reserves its rights to take any action to which it is
entitled in the event any future event of default occurs.
(4) Summary of Change in Partners' Equity
A summary of changes in partners' equity (deficit) for the nine months
ended September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partners Equity
<C> <C> <C> <C>
Balance at
December 31, 1994 $13,246,687 $(168,825) $13,077,862
Net income 632,381 6,388 638,769
Distributions (450,885) (4,554) (455,439)
Balance at
September 30, 1995 $13,428,183 $(166,991) $13,261,192
</TABLE>
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Currently, the Partnership has sufficient liquidity to meet its operating
needs. The most significant capital need is distributions to investors.
However, distributions are currently dependent on cash flow received from
KELP's interest payments on the Participating Notes.
KELP's properties have not generated cash flow sufficient to meet the terms
of their existing obligations. Historically, retail centers have suffered
from an economic downturn in retail sales beginning in the late 1980s.
Recently, the properties have maintained a consistent level of operating cash
flow. However, the properties held by KELP have not materially increased in
value since the depressed state of the real estate markets in much of the
United States made it unlikely that the properties would be sold at other than
very unattractive prices.
The partners of KELP have made cumulative capital contributions of
approximately $4,673,000 to cover prior operating deficits and have arranged
for certain short-term borrowings. Additionally, the affiliated management
agent has not received payment of management fees since 1991. The General
Partners of the Partnership have declined to proceed toward foreclosure
because they determined that there were advantages to allowing KELP to
continue to own the properties.
By proceeding in this fashion, the General Partners are seeking to avoid a
disposition of the portfolio at "forced liquidation" prices. The General
Partners intend to closely monitor the operations of each property and the
state of the market in which each property is located. At such time as the
Partnership believes the disposition of a property by KELP would produce an
attractive level of proceeds to the Partnership under the Master Loan
Agreement, the General Partners will take the appropriate steps on behalf of
the Partnership to require a sale by KELP or commence foreclosure proceedings
with respect to such property. The General Partners of KELP are beginning the
marketing of Village Green Apartments and North Salado Village Shopping
Center.
Operations
The increase in interest earned on cash equivalents for the three and nine
months ended September 30, 1995 as compared to the same periods in 1994 is due
to higher interest rates and balances of investments.
Mortgage interest income for the three and nine months ended September 30,
1995, as compared to the same periods in 1994, decreased due to lower cash
flow payments from the KELP properties.
Additionally, the Partnership has experienced a reduction in expenses due
to savings in investor service costs during the three and nine months ended
September 30, 1995. These cost savings are anticipated to continue throughout
1995.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP - Continued
Distributable Cash from Operations
Distributable Cash from Operations, as defined by Section 5.1 of the
Partnership Agreement, is equivalent to the net income of the Partnership.
KELP's Results of Operations
The following table reflects the analysis of KELP's cash flow for the three
and nine months ended September 30, 1995 and 1994 (rounded to thousands):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cash Flow from properties
before mortgage debt service
and capital improvement
expenditures and reserves $ 518,000 $ 561,000 $1,558,000 $1,736,000
Mortgage debt service
exclusive of amounts
due to Partnership (239,000) (360,000) (716,000) (1,075,000)
Capital improvement
expenditures (172,000) (31,000) (242,000) (52,000)
Contribution to capital
improvement reserve (6,000) - (8,000) -
Cash flow from properties
before mortgage debt
service to the
Partnership 101,000 170,000 592,000 609,000
Mortgage debt service to the
Partnership (101,000) (170,000) (592,000) (609,000)
KELP general and
administrative
expense (3,000) (12,000) (16,000) (27,000)
Cash Deficit (1) $ (3,000) $ (12,000) $ (16,000) $ (27,000)
</TABLE>
(1) Cash deficit equals net loss before the gain or loss on sales plus
depreciation and amortization, and unpaid Participating Note interest
less mortgage principal payments, capital improvement expenditures and
capital improvement reserves.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response: None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Krupp Institutional Mortgage Fund Limited Partnership
(Registrant)
BY: /s/Marianne Pritchard
Marianne Pritchard
Treasurer and Chief Accounting Officer
of The Krupp Corporation, a General
Partner.
DATE: November 3, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,367,187
<SECURITIES> 0
<RECEIVABLES> 28,427,889
<ALLOWANCES> 16,524,000
<INVENTORY> 0
<CURRENT-ASSETS> 13,271,076
<PP&E> 1,594<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,272,670
<CURRENT-LIABILITIES> 11,478
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,272,670
<SALES> 0
<TOTAL-REVENUES> 713,158
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 74,389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 638,769
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Other assets.
</FN>
</TABLE>
