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, 1997
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) dentification 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
The total number of pages in this document is 11.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
This form 10-Q 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.
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Mortgage notes receivable, net of loan loss
reserve of $16,524,000 (Notes 2 and 3) $ 6,965,980 $ 6,973,754
Cash and cash equivalents 1,094,714 1,112,524
Accrued interest receivable - mortgage notes,
net of reserve for uncollectible interest of
$12,803,469 and $12,225,634, respectively
(Note 3) 131,121 115,272
Due from affiliates (Note 5) 1,159 16,250
Other asset 1,625 1,672
Total assets $ 8,194,599 $ 8,219,472
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 12,765 $ 25,274
Partners' equity (deficit) (Note 4):
Limited Partners (30,059 Units outstanding) 8,399,621 8,411,861
General Partners (217,787) (217,663)
Total Partners' equity 8,181,834 8,194,198
Total liabilities and Partners' equity $ 8,194,599 $ 8,219,472
</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,
1997 1996
<S> <C> <C>
Interest income:
Mortgage notes receivable (Notes 2 and 3) $153,751 $156,375
Cash equivalents 14,723 17,119
Total revenue 168,474 173,494
Expenses:
Expense reimbursements (Note 5) 7,427 12,953
General and administrative 21,598 17,951
Total expenses 29,025 30,904
Net income $139,449 $142,590
Allocation of net income (Note 4):
Limited Partners (30,059 Units outstanding) $138,055 $141,164
Per Unit of Limited Partner Interest $ 4.59 $ 4.70
General Partners $ 1,394 $ 1,426
</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 Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Operating activities:
Net income $ 139,449 $ 142,590
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
Increase in accrued interest receivable -
mortgage notes (15,849) (20,704)
Decrease (increase) in due from affiliates 15,091 (110,729)
Decrease in other assets 47 78
Decrease in liabilities (12,509) (6,654)
Net cash provided by operating
activities 126,229 4,581
Investing activities:
Principal collections from mortgage
notes receivable 7,774 7,037
Increase in other investments - (471,218)
Net cash provided by (used in)
investing activities 7,774 (464,181)
Financing activity:
Distributions (151,813) (151,813)
Net decrease in cash and cash equivalents (17,810) (611,413)
Cash and cash equivalents, beginning of period 1,112,524 1,260,798
Cash and cash equivalents, end of period $1,094,714 $ 649,385
</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, 1996 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, 1997 and its results of
operations and cash flows for the three months ended March
31, 1997 and 1996.
The results of operations for the three months ended March
31, 1997 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")
The Partnership made loans to KELP, an affiliate of the
Partnership, as provided under the Master Loan Agreement and
Collateral Pledge Agreement.The purpose of KELP is to acquire,
manage, operate and sell real estate and personal property; and
to borrow funds from the Partnership and other sources to
finance the acquisition, management and operation of real
estate and personal property related thereto. Condensed
financial statements of KELP are as follows:
KRUPP EQUITY LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
<S> <C> <C>
Real estate assets:
Real estate, at cost $12,716,566 $ 12,716,122
Property valuation provision (5,000,000) (5,000,000)
Accumulated depreciation (3,853,659) (3,795,870)
Total real estate assets 3,862,907 3,920,252
Other assets 290,000 305,538
Total assets $ 4,152,907 $ 4,225,790
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable to the
Partnership $28,282,939 $28,290,713
Notes payable to an affiliate 300,000 300,000
Accrued interest payable to an
affiliate (A) 8,480,920 7,880,286
Due to affiliates 689,018 666,702
Other liabilities 356,537 386,780
Total liabilities 38,109,414 37,524,481
Partners' deficit (33,956,507) (33,298,691)
Total liabilities and Partners'
deficit $ 4,152,907 $4,225,790
</TABLE>
KRUPP EQUITY LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Revenue (A) $ 266,965 $ 767,093
Property operating expenses (127,414) (382,819)
Income before depreciation,
amortization and interest 139,551 384,274
Depreciation and amortization (A) (58,831) (475,321)
Interest (738,536) (875,732)
Loss before gain on sale of property (657,816) (966,779)
Gain on sale of property (A) - 1,475,910
Net income (loss) $ (657,816) $ 509,131
</TABLE>
(A) On March 5, 1996, KELP sold Village Green Apartments to an
unaffiliated third party for $5,200,000. On May 16, 1996, KELP
sold North Salado to an unaffiliated third party for $7,350,000.
KELP remitted available sale proceeds of $4,792,959 to the
Partnership. For KELP's financial reporting purposes, sales
proceeds paid to KIMF of $4,792,959 were applied against accrued
interest in 1996.
(3)Provision for Credit Losses and Accrued Interest Reserves
The General Partners of the Partnership have recorded a cumulative
provision for credit losses of $16,524,000 on its mortgage notes
receivable. Additionally, the Partnership has recorded cumulative
provisions for uncollectible interest of $12,803,469 and $12,225,634 as
of March 31, 1997 and December 31, 1996, respectively. These
cumulative provisions are recorded against the carrying value of the
assets in order 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 from the
ultimate value obtained upon sale of such properties.
(4) Summary of Changes in Partners' Equity
A summary of changes in Partners' equity (deficit) for the three months
ended March 31, 1997 is as follows:
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1996 $ 8,411,861 $(217,663) $ 8,194,198
Net income 138,055 1,394 139,449
Distributions (150,295) (1,518) (151,813)
Balance at March 31, 1997 $ 8,399,621 $(217,787) $ 8,181,834
</TABLE>
(5) Related Party Transactions
The Partnership reimburses affiliates of the General Partners for
certain expenses incurred in connection with the activities of the
Partnership, including communications, bookkeeping and clerical work
necessary in maintaining relations with Limited Partners, and
accounting, tax and computer services necessary for the maintenance of
the books and records of the Partnership.
Due from affiliates consisted of expense reimbursements of $1,159 and
$16,250 at March 31, 1997 and December 31, 1996, respectively.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This 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.
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, which are based upon the
cash flow of the underlying properties. Due to fluctuations in the cash flow
payments received from KELP and its effect on the Partnership's liquidity,
the Partnership may need to periodically adjust its distribution rate.
Therefore, sustaining the current distribution rate is mainly dependent upon
the future cash flow payments received from KELP.
KELP's properties have not generated cash flow sufficient to meet the terms
of their existing obligations. The retail centers have historically suffered
from an economic downturn in retail sales beginning in the late 1980s.
Recently, the remaining properties have maintained a consistent level of
operating cash flow. 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 not commenced foreclosure
proceedings because they have determined that there are advantages to
allowing KELP to continue to own the properties.
Operations
Total revenue slightly decreased for the three months ended March 31, 1997,
as compared to the three months ended March 31, 1996, as a result of the
decrease in interest income on mortgage notes due to reduced cash flow
interest payments received from KELP's properties. The decrease in cash flow
received from the KELP properties can be attributed to the sales of Village
Green and North Salado in 1996.
Total expenses remained stable during the first quarter of 1997
as compared to the same period in 1996, as the decrease in
expense reimbursements offset the increase in general and
administrative expense. The increase in general and
administrative expense in the first quarter of 1997, as compared
to the first quarter of 1996, is primarily due to an increase in
charges in connection with the preparation and mailing of
reports and other investor communications.
Distributable Cash from Operations
Distributable Cash from Operations, of approximately $140,000 and $143,000 at
March 31, 1997 and 1996, respectively, as defined by Section 5.01 of the
Partnership Agreement, is equivalent to the net income of the Partnership.
KELP's Results of Operations
The following table presents an analysis of KELP's cash deficit for the three
months ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
(Rounded to $1,000)
1997 1996
<S> <C> <C>
Cash flow from properties before
mortgage debt service and capital
improvement expenditures and reserves $ 161,000 $ 421,000
First mortgage principal (30,000) (204,000)
Capital improvement expenditures - (80,000)
Capital improvement reserve contributions - (4,000)
Cash flow from properties before
mortgage debt service to the Partnership 131,000 133,000
Mortgage debt service to the Partnership (131,000) (133,000)
KELP general and administrative expenses (13,000) (9,000)
Cash deficit $ (13,000) $ (9,000)
</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>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Krupp Institutional Mortgage Fund Limited Partnership
(Registrant)
BY: /s/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of the Krupp Corporation, a
General Partner.
DATE: May 14 , 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule for KIMF contains summary financial information extracted from the
financial statements for the quarter ended March 31, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,094,714
<SECURITIES> 0
<RECEIVABLES> 23,489,980
<ALLOWANCES> 16,524,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,192,974
<PP&E> 1625<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,194,599
<CURRENT-LIABILITIES> 12,765
<BONDS> 0
0
0
<COMMON> 8,181,834<F2>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,194,599
<SALES> 0
<TOTAL-REVENUES> 168,474
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 29,025
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 139,449
<INCOME-CONTINUING> 139,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,449
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Other Assets
F2 Includes Limited Partners Equity of 8,399,621 and General Partners Deficit of
(217,787).
</FN>
</TABLE>
