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 March 31, 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
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1995 1994
<S> <C> <C>
Mortgage notes receivable, net of loan loss
reserve of $16,524,000 (Notes 2 and 3) $11,816,033 $11,822,403
Cash and cash equivalents 1,269,205 1,026,664
Accrued interest receivable - mortgage notes,
net of reserve for uncollectible interest of
$7,998,420 and $7,584,144, respectively
(Note 3) 294,680 231,116
Other assets 17,541 12,003
Total assets $13,397,459 $13,092,186
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 158,637 $ 14,324
Partners' equity (Note 4) 13,238,822 13,077,862
Total liabilities and partners' equity $13,397,459 $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 March 31,
1995 1994
<S> <C> <C>
Interest income:
Mortgage notes receivable (Notes 2 and 3) $318,714 $224,653
Cash equivalents 13,887 7,502
Total interest income 332,601 232,155
Expenses:
Expense reimbursements to affiliates 12,816 26,835
General and administrative 7,012 15,268
Total expenses 19,828 42,103
Net income $312,773 $190,052
Allocation of net income (Note 4):
Per Unit of Limited Partner Interest
(30,059 Units Outstanding) $ 10.30 $ 6.26
General Partners $ 3,128 $ 1,900
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 312,773 $ 190,052
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accrued interest receivable -
mortgage notes (63,564) (174,135)
Decrease (increase) in other assets (5,538) 351
Increase (decrease) in liabilities 144,313 (352)
Net cash provided by operating
activities 387,984 15,916
Investing activity:
Principal collections from mortgage notes receivable 6,370 5,766
Financing activity:
Distributions (151,813) (75,907)
Net increase (decrease) in cash and cash equivalents 242,541 (54,225)
Cash and cash equivalents, beginning of period 1,026,664 992,640
Cash and cash equivalents, end of period $1,269,205 $ 938,415
</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
March 31, 1995 and its results of operations and cash flows for the
three months ended March 31, 1995 and 1994.
The results of operations for the three months ended March 31, 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.
(2) Krupp Equity Limited Partnership ("KELP")
<TABLE>
<CAPTION>
Condensed financial statements of KELP are as follows:
CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31,
1995 1994
<S> <C> <C>
Property at cost $30,685,409 $30,660,597
Property valuation provision (5,400,000) (5,400,000)
Accumulated depreciation (9,454,570) (9,380,069)
15,830,839 15,880,528
Other assets 920,063 1,047,545
Total assets $16,750,902 $16,928,073
</TABLE>
Continued
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(2) Krupp Equity Limited Partnership, Continued
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' DEFICIT
<S> <C> <C>
Mortgage notes payable to KIMF $ 28,340,033 $ 28,346,403
Mortgage notes payable 7,643,832 7,676,531
Notes payable to an affiliate 300,000 300,000
Accrued interest payable to affiliates 8,574,644 8,089,139
Due to affiliates 654,857 669,473
Other liabilities 432,994 605,065
Total liabilities 45,946,360 45,686,611
Partners' deficit (29,195,458)(28,758,538)
Total liabilities and partners' deficit $ 16,750,902 $ 16,928,073
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
1995 1994
Revenues $ 873,284 $ 1,118,822
Property operating expenses (315,174) (626,564)
Income before depreciation,
amortization and interest 558,110 492,258
Depreciation and amortization (78,724) (314,932)
Interest (916,306) (1,025,312)
Net loss $(436,920) $ (847,986)
</TABLE>
(3) Accrued Interest Reserves
The Partnership has recorded additional reserves for uncollectible
interest of $414,276 for 1995. The General Partners have estimated
that $294,680 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 April 1995, and KIMF reserves its rights to take any action to
which it is entitled in the event any future event of default occurs.
Continued
<PAGE> KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(4) Summary of Changes in Partners' Equity
A summary of changes in partners' equity (deficit) for the three months
ended March 31, 1995 is as follows:
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at
December 31, 1994 $13,246,687 $(168,825) $13,077,862
Net income 309,645 3,128 312,773
Cash distributions (150,295) (1,518) (151,813)
Balance at
March 31, 1995 $13,406,037 $(167,215) $13,238,822
</TABLE>
<PAGE>
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 based
upon the cash flow of the underlying properties.
KELP's properties have not generated cash flow sufficient to meet the
terms of their existing obligations. The retail centers have suffered
historically 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.
Operations
The increase in interest earned on cash equivalents for the three
months ended March 31, 1995 as compared to the same period in 1994 is due
to higher interest rates and balances of investments.
Mortgage interest income for the three months ended March 31, 1995, as
compared to the same period in 1994, increased due to higher 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 months ended
March 31, 1995. Certain of these cost savings are anticipated to continue
throughout 1995.
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.
Continued
<PAGE>
KELP's Results of Operations
The following table presents an analysis of KELP'S cash flow for the
three months ended March 31,1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flow from properties before
mortgage debt service and capital
improvement expenditures and reserves $ 565,000 $ 563,000
Mortgage debt service exclusive of
amounts due to Partnership (239,000) (357,000)
Capital improvement expenditures (25,000) (6,000)
Contribution to capital improvement
reserve (6,000) -
Cash flow from properties before
mortgage debt service to the
Partnership 295,000 200,000
Mortgage debt service to the
Partnership (295,000) (200,000)
KELP general and administrative
expenses (6,000) (19,000)
Cash Flow Deficit $ (6,000) $ (19,000)
</TABLE>
<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 of The Krupp Corporation,
a General Partner.
DATE: May 4, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This FDS schedule for KIMF contains summary financial information extracted from
the financial statements for the quarter ended March 31, 1995 and is qualified
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,269,205
<SECURITIES> 0
<RECEIVABLES> 28,634,713
<ALLOWANCES> 16,524,000
<INVENTORY> 0
<CURRENT-ASSETS> 13,379,918
<PP&E> 17,541<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,397,459
<CURRENT-LIABILITIES> 158,637
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,397,459
<SALES> 0
<TOTAL-REVENUES> 332,601
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 312,773
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Other Assets
</FN>
</TABLE>
