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 June 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>
June 30, December 31,
1995 1994
<S> <C> <C>
Mortgage notes receivable, net of loan loss
reserve of $16,524,000 (Notes 2 and 3) $11,809,503 $11,822,403
Cash and cash equivalents 1,297,264 1,026,664
Accrued interest receivable - mortgage notes,
net of reserve for uncollectible interest
of $8,519,381 and $7,584,144, respectively
(Note 3) 195,872 231,116
Other assets 1,906 12,003
Total assets $13,304,545 $13,092,186
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 10,324 $ 14,324
Partners' equity (Note 4) 13,294,221 13,077,862
Total liabilities and partners' equity $13,304,545 $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 For the Six
Months Ended Months Ended
June 30, June 30,
1995 1994 1995 1994
<C><C> <C> <C> <C> <C>
Interest income:
Mortgage notes receivable
(Notes 2 and 3) $219,745 $263,339 $538,459 $487,992
Cash equivalents 16,566 10,931 30,453 18,433
Total interest income 236,311 274,270 568,912 506,425
Expenses:
Expense reimbursements
to affiliates 12,816 26,836 25,632 53,671
General and administrative 16,283 18,845 23,295 34,113
Total expenses 29,099 45,681 48,927 87,784
Net income $207,212 $228,589 $519,985 $418,641
Allocation of net income (Note 4):
Per Unit of Limited Partner
Interest (30,059 Units
outstanding) $ 6.82 $ 7.53 $ 17.13 $ 13.79
General Partners $ 2,072 $ 2,286 $ 5,200 $ 4,186
</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 Six Months
Ended June 30,
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 519,985 $ 418,641
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 35,244 (212,968)
Decrease (increase) in other assets 10,097 (1,274)
Increase (decrease) in liabilities (4,000) 5,183
Net cash provided by
operating activities 561,326 209,582
Investing activity:
Decrease in mortgage notes receivable 12,900 11,678
Financing activity:
Distributions (303,626) (227,720)
Net increase (decrease) in cash and
cash equivalents 270,600 (6,460)
Cash and cash equivalents, beginning of period 1,026,664 992,640
Cash and cash equivalents, end of period $1,297,264 $ 986,180
</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
June 30, 1995, its results of operations for the three and six months
ended June 30, 1995 and 1994, and cash flows for the six months ended
June 30, 1995 and 1994.
The results of operations for the three and six months ended June 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.
(2) Krupp Equity Limited Partnership ("KELP")
Condensed financial statements of KELP are as follows:
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1995 1994
<S> <C> <C>
Property, at cost $30,730,504 $30,660,597
Property valuation provision (5,400,000) (5,400,000)
Accumulated depreciation (9,529,851) (9,380,069)
15,800,653 15,880,528
Other assets 860,535 1,047,545
Total assets $16,661,188 $16,928,073
</TABLE>
Continued
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(2) Krupp Equity Limited Partnership ("KELP"), Continued
LIABILITIES AND PARTNERS' DEFICIT
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Mortgage notes payable to KIMF $ 28,333,503 $ 28,346,403
Mortgage notes payable 7,610,347 7,676,531
Notes payable to an affiliate 300,000 300,000
Accrued interest payable to an affiliates 9,004,381 8,089,139
Due to affiliates 624,097 669,473
Other liabilities 496,841 605,065
Total liabilities 46,369,169 45,686,611
Partners' deficit (29,707,981) (28,758,538)
Total liabilities and partners'
deficit $ 16,661,188 $ 16,928,073
</TABLE>
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $ 849,533 $1,161,971 $ 1,722,817 $ 2,280,793
Property
operating
expenses (359,422) (613,039) (674,596) (1,239,604)
Income before
depreciation,
amortization and
interest 490,111 548,932 1,048,221 1,041,189
Depreciation and
amortization (79,472) (319,310) (158,196) (634,242)
Interest expense (923,162) (1,034,244) (1,839,468) (2,059,556)
Net loss $(512,523) $ (804,622) $ (949,443) $(1,652,609)
</TABLE>
(3) Accrued Interest Receivable
The Partnership has recorded additional reserves for uncollectible
interest of $935,237 for 1995. The General Partners have estimated that
$195,872 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.
Continued
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(3) Accrued Interest Receivable - Continued
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 July 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 Changes in Partners' Equity
A summary of changes in partners' equity (deficit) for the six months
ended June 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 514,785 5,200 519,985
Cash distributions (300,590) (3,036) (303,626)
Balance at
June 30, 1995 $13,460,882 $(166,661) $13,294,221
</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 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. 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.
Operations
The increase in interest earned on cash equivalents for the three and six
months ended June 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 six months ended June 30, 1995,
as compared to the same periods 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 and six months ended
June 30, 1995. 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>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Continued
KELP's Results of Operations
The following table reflects the analysis of KELP's cash flow for the three
and six months ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
For the For the
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cash flow from Properties
before mortgage debt
service and capital
improvement expenditures
and reserves $ 475,000 $ 612,000 $1,040,000 $1,175,000
Mortgage debt service
exclusive of amounts
due to Partnership (238,000) (358,000) (477,000) (715,000)
Capital improvement
expenditures (45,000) (15,000) (70,000) (21,000)
Release of (contribution to)
capital improvement
reserve 4,000 - (2,000) -
Cash flow from properties
before mortgage debt
service to the Partnership 196,000 239,000 491,000 439,000
Mortgage debt service to the
Partnership (196,000) (239,000) (491,000) (439,000)
KELP general and
administrative expenses (7,000) (1,000) (13,000) (15,000)
Cash (Deficit) (1) $ (7,000) $ (1,000) $ (13,000) $ (15,000)
</TABLE>
(1) Cash deficit equals net loss plus depreciation, amortization, unpaid
Participating Note interest less mortgage principal payments, and
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 of The Krupp Corporation,
a General Partner
DATE: August 4, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the KIMF
financial statement for the quarter ended June 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,297,264
<SECURITIES> 0
<RECEIVABLES> 28,529,375
<ALLOWANCES> 16,524,000
<INVENTORY> 0
<CURRENT-ASSETS> 13,302,639
<PP&E> 1,906<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,304,545
<CURRENT-LIABILITIES> 10,234
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,304,545
<SALES> 0
<TOTAL-REVENUES> 568,912
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 48,927
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 519,985
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Other assets
</FN>
</TABLE>
