UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
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 0-14378
Krupp Institutional Mortgage Fund Limited Partnership
(Exact name of registrant as specified in its charter)
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)
(Registrant's telephone number, including area code) (617) 423-2233
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 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.
Documents incorporated by reference: Part IV, Item 14.
The exhibit index is located on pages 8-9.
The total number of pages in this document is 25.
<PAGE> 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 Institutional Mortgage Fund Limited Partnership (the
"Partnership") was formed on November 15, 1984 by filing a Certificate of
Limited Partnership in The Commonwealth of Massachusetts. The Partnership
was formed for the purpose of making participating mortgage loans ("the
Participating Notes") to Krupp Equity Limited Partnership ("KELP"), in the
amount of up to 95% of the proceeds of the offering of units of limited
partner interest (the "Units") (see Note D to the financial statements
included in Appendix A of this report). The Partnership terminates on
December 31, 2013 unless earlier terminated upon the occurrence of certain
events as set forth in the Partnership Agreement.
The Partnership issued all of the General Partner Interests to The
Krupp Corporation ("Krupp Corp.") and The Krupp Company Limited
Partnership-III ("Krupp Co.-III"), in exchange for capital contributions
aggregating $1,000. The General Partners made additional capital
contributions of $4,207,560 which equals fourteen percent of the capital
contributions of the Investor Limited Partners. The Partnership used
these capital contributions to pay costs incurred in connection with its
organization and the public offering of Units.
On February 21, 1985, the Partnership commenced the marketing and sale
of the Units for $1,000 per Unit. The public offering was closed on
December 5, 1985, at which time 30,059 Units had been sold.
The primary business of Krupp Institutional Mortgage Fund Limited
Partnership (the "Partnership") is making loans evidenced by non-recourse
participating promissory notes ("Participating Notes"), collateralized by
mortgages on improved, income producing real properties and a Collateral
Pledge Agreement dated February 20, 1985 (see Note C to Financial
Statements included in Appendix A of this report). The loans have been
made to Krupp Equity Limited Partnership ("KELP"), which has the same
General Partners as the Partnership, under a master loan agreement (the
"Master Loan Agreement"). The Partnership considers itself to be engaged
in only one industry segment, namely real estate mortgage lending to KELP.
KELP's properties began experiencing cash flow difficulties and,
beginning with the payment due April 1, 1991, KELP has not been able to
fully pay the required quarterly interest payments. The terms of the
Master Loan Agreement, which is currently in default, require KELP to pay
the Partnership basic interest at a rate of 10% per annum on the
Participating Notes.
The General Partners decided in 1991 not to exercise the Partnership's
foreclosure remedies under the Master Loan Agreement, as a result of
KELP's default, because the severely depressed state of the real estate
market in much of the U.S. made it unlikely that KELP would be able to
dispose of its properties at other than very unattractive prices at that
time. Thus, the General Partners believed that it was in the
Partnership's best interest to continue to permit KELP to hold the
properties and attempt to increase cash flows and selectively sell the
properties, as market values recover.
As a result of KELP's difficulties: 1) KELP has remitted to the
Partnership all cash flow generated by the properties after operating and
administrative expenses and senior mortgage obligations ("KELP Cash Flow")
and the Partnership has not exercised its foreclosure rights under the
Master Loan Agreements with respect to KELP's defaults; 2) interest and
late charges on the Partnership's Participating Notes have continued to
accrue, although reserved against; 3) since 1991, as a consequence of the
default, the management agent of KELP's properties (an affiliate of its
General Partners) has continued to serve even though it is not receiving
any payment of property management fees.
As a result of management's annual assessment of the carrying value of
the Participating Notes, which is based on the fair value of underlying
properties considering such factors as tenant turnover, current and
prospective occupancy levels, the current market competition and
assumptions on potential proceeds that might be received upon sale, the
General Partners of KELP determined that the carrying value of its
investments exceeded its net realizable value. As of December 31, 1996,
the General Partners of KELP have recorded a cumulative property valuation
provision of $5,000,000 on its real estate investments. Based on KELP's
valuation provision, the Partnership has recorded its own cumulative
provision for credit losses of $16,524,000, against the outstanding
mortgage note receivable balance of $23,497,754, on its related mortgage
loans.
Although, since 1991, many segments of the U.S. real estate market have
recovered, in the General Partners' judgment, the properties held by KELP
have not materially increased in value over this period. The General
Partners' current plan is to continue not to exercise the Partnership's
foreclosure rights under the Master Loan Agreement, although they intend
to carefully 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 a
satisfactory level of proceeds to the Partnership under the Master Loan
Agreement, the General Partners plan to take appropriate steps on behalf
of the Partnership to require a sale by KELP. By proceeding in this
fashion the General Partners are seeking to avoid a disposition of the
portfolio at "forced liquidation" prices.
Pursuant to this strategy, in 1996, as a result of the above mentioned
disposition activities, KELP sold Village Green Apartments ("Village
Green") and North Salado Village Shopping Center ("North Salado") to
unaffiliated third parties. For details of each transaction, see Note D
to the Financial Statements included in Appendix A of this report.
The General Partners estimate that this disposition process, which has
been ongoing throughout 1996 and earlier, could take several additional
years. The deferral of property dispositions defers significant tax
liabilities of KELP's Partners. It also defers the due date on certain
notes, totaling $2,790,388, issued by the General Partners of KELP, which
have been pledged to the Partnership under a Collateral Pledge Agreement
(see Note D to the Financial Statements included in Appendix A of this
report).
As of December 31, 1996, the Partnership did not employ any personnel.
Item 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Partnership is a party.
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 SECURITY
STOCKHOLDER MATTERS
The transfer of Units is subject to certain limitations contained in
the Partnership Agreement. There is no public market for the Units and it
is not anticipated that any such public market will develop.
The number of Limited Partners as of December 31, 1996 is approximately
3,100.
The Partnership made the following distributions to its Partners during
the fiscal year ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
Amount Per Unit Amount Per Unit
<S> <C> <C> <C> <C>
Limited Partners (30,059 Units) $5,394,087 $179.45 $676,327 $22.50
General Partners 54,486 6,832
$5,448,573 $683,159
</TABLE>
One of the objectives of the Partnership is to generate cash available
for quarterly distributions. However, there is no assurance that future
cash flows from KELP will be available for quarterly distributions.
As a result of the financial condition of the KELP properties and the
reduction in the debt service payments made by KELP to the Partnership,
the Partnership has made quarterly distributions at rates that fluctuate
from .25% to .625% of the invested proceeds.
In 1996, the Partnership made additional distributions totalling
$4,841,321 based on the proceeds received from KELP from the sales of
Village Green and North Salado.
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 Notes thereto, which are included in Items 7 and
8 (Appendix A) of this report, respectively.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total revenue $ 576,376 $ 868,620 $ 1,060,150 $ 776,804 $ 608,365
Net income before
provision for
credit losses 482,943 765,125 899,420 606,894 414,812
Provision for
credit losses - - (4,500,000) - (3,274,000)
Net income (loss) 482,943 765,125 (3,600,580) 606,894 (2,859,188)
Net income (loss)
allocated to:
Limited Partners 478,114 757,474 (3,564,574) 600,825 (2,830,596)
Per Unit 15.91 25.20 (118.59) 19.99 (94.17)
General Partners 4,829 7,651 (36,006) 6,069 (28,592)
Total assets at
December 31, 8,219,472 13,172,780 13,092,186 17,367,488 17,378,398
Distributions:
Limited Partners 5,394,087 676,327 676,327 601,180 488,459
Per Unit 179.45 22.50 22.50 20.00 16.25
General Partners 54,486 6,832 6,832 6,073 4,934
</TABLE>
Item 7. 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, as described in Item 1
above, they have determined that there are advantages to allowing KELP to
continue to own the properties.
On March 5, 1996, KELP sold Village Green to an unaffiliated third party
for $5,200,000. The buyer assumed the principal outstanding on the first
mortgage note payable on the property of $4,633,989, as of the date of
sale, which was applied against sale proceeds. As a result of the sale,
KELP remitted to the Partnership the available sale proceeds, net of
closing costs, of $585,959.
On May 16, 1996, KELP sold North Salado to an unaffiliated third party
for $7,350,000. The outstanding first mortgage note payable on the
property of $2,920,405, was paid at the closing. As a result of the sale,
KELP remitted to the Partnership available sale proceeds, net of closing
costs, of $4,207,000.
The Partnership made an additional distribution in June, 1996 of
$4,841,321, utilizing the proceeds received from KELP from the sales of
Village Green and North Salado.
Operations
1996 compared to 1995
Total revenue in 1996, as compared to 1995, decreased due to a
decrease in interest income on mortgage notes as a result of the reduced
cash flow received from KELP's properties. The decrease in cash flow is
the result of the sales of Village Green and North Salado in 1996.
Total expenses decreased due to a decrease in expense reimbursements,
partially offset by an increase in general and administrative expense.
The decrease in expense reimbursements is due to a decrease in charges
in connection with the preparation and mailing of reports and other
investor communications.
1995 compared to 1994
Total revenue decreased approximately $192,000 primarily from a
decrease in interest income on mortgage notes as a result of the reduced
cash flow received from KELP's properties. The decrease in cash flow
was impacted by the sale of North Oklahoma City Mall in 1994. The
decrease in interest income on mortgage notes receivable was partly
offset by an increase in interest income earned on cash and cash
equivalents.
Total expenses, net of a provision for credit losses in 1994 of
$4,500,000, decreased $57,000. The decrease is due to management's
efforts to control all operating costs.
Distributable Cash from Operations
Distributable Cash from Operations of approximately $483,000, $765,000
and $899,000, as defined by Section 5.01 of the Partnership Agreement, is
equivalent to the net income before the provision for credit losses on the
Participating Notes for the fiscal years ended December 31, 1996, 1995 and
1994, respectively.
KELP's Results of Operations
The average occupancy percentages for KELP's properties for the fiscal
years ended 1996, 1995, 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Current
Leasable
Square Average Occupancy for the
Property Description Footage Years Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Northeast Plaza Commercial 89,224 93% 94% 87% 88% 89%
Bell Plaza Commercial 43,842 98% 100% 90% 90% 89%
</TABLE>
The following table presents an analysis of KELP Cash Flow for purposes
of determining required cash flow payments on the Participating Notes for
the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flow from properties
before mortgage debt
service and capital
improvement expenditures
and reserves $ 992,000 $ 1,951,000 $2,270,000
Mortgage debt service
exclusive of amounts
due to the Partnership (339,000) (941,000) (1,317,000)
Capital improvement
expenditures (244,000) (300,000) (109,000)
Capital improvement
reserve contributions (4,000) (6,000) (4,000)
Cash flow from properties
before mortgage debt
service to the Partnership 405,000 704,000 840,000
Mortgage debt service
to the Partnership (405,000) (704,000) (840,000)
KELP general and administrative
expenses (9,000) (38,000) (48,000)
Cash deficit $ (9,000) $ (38,000) $ (48,000)
</TABLE>
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 directors and executive officers of The Krupp Corporation, which is a
General Partner of both the Partnership and The Krupp Company Limited
Partnership-III, the other General Partner of the Partnership, is as
follows:
Position with
Name and Age The Krupp Corporation
Douglas Krupp (50) Co-Chairman of the Board
George Krupp (52) Co-Chairman of the Board
Laurence Gerber (40) President
Robert A. Barrows (39) Treasurer
Douglas Krupp is Co-Chairman and Co-Founder of The Berkshire Group.
Established in 1969 as the Krupp Companies, this real estate-based firm
expanded over the years within its areas of expertise including investment
program sponsorship, property and asset management, mortgage banking,
healthcare facility ownership and the management of the Company. Today,
The Berkshire Group is an integrated real estate, mortgage and healthcare
company which is headquartered in Boston with regional offices throughout
the country. A staff of approximately 3,400 are responsible for the more
than $4 billion under management for institutional and individual clients.
Mr. Krupp is a graduate of Bryant College. In 1989 he received an honorary
Doctor of Science in Business Administration from this institution and was
elected trustee in 1990. Mr. Krupp is Chairman of the Board and a Director
of both Berkshire Realty Company, Inc. (NYSE-BRI) and Harborside Healthcare
(NYSE-HBR). George Krupp is Douglas Krupp's brother.
George Krupp is the Co-Chairman and Co-Founder of The Berkshire Group.
Established in 1969 as the Krupp Companies, this real estate-based firm
expanded over the years within its areas of expertise including investment
program sponsorship, property and asset management, mortgage banking and
healthcare facility ownership. Today, The Berkshire Group is an integrated
real estate, mortgage and healthcare company which is headquartered in
Boston with regional offices throughout the country. A staff of
approximately 3,400 are responsible for more than $4 billion under
management for institutional and individual clients. Mr. Krupp attended
the University of Pennsylvania and Harvard University. Mr. Krupp also
serves as Chairman of the Board and Trustee of Krupp Government Income
Trust and as Chairman of the Board and Trustee of Krupp Government Income
Trust II.
Laurence Gerber is the President and Chief Executive Officer of The
Berkshire Group. Prior to becoming President and Chief Executive Officer
in 1991, Mr. Gerber held various positions with The Berkshire Group which
included overall responsibility at various times for: strategic planning
and product development, real estate acquisitions, corporate finance,
mortgage banking, syndication and marketing. Before joining The Berkshire
Group in 1984, he was a management consultant with Bain & Company, a
national consulting firm headquartered in Boston. Prior to that, he was a
senior tax accountant with Arthur Andersen & Co., an international
accounting and consulting firm. Mr. Gerber has a B.S. degree in Economics
from the University of Pennsylvania, Wharton School and an M.B.A. degree
with high distinction from Harvard Business School. He is a Certified
Public Accountant. Mr. Gerber also serves as Director of Berkshire Realty
Company, Inc. (NYSE-BRI) and Harborside Healthcare Corporation (NYSE-HBR)
as well as President and Trustee of Krupp Government Income Trust and
President and Trustee of Krupp Government Income Trust II.
Robert A. Barrows is Senior Vice President and Chief Financial Officer
of The Berkshire Group. Mr. Barrows has held several positions within The
Berkshire Group since joining the company in 1983 and is currently
responsible for accounting and financial reporting, treasury, tax, payroll
and office administrative activities. 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.
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, 1996, no person of record owned, or was known by the
General Partners to own, beneficially more than 5% of the Partnership's
30,059 outstanding Units. On that date, the General Partners and their
affiliates owned 10 Units (.03% of the total outstanding) of the
Partnership in addition to their General Partner Interests.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership does not have any directors, executive officers or
nominees for election as director. Additionally, as of December 31, 1996
no person of record owned, or was known by the General Partners to own,
beneficially more than 5% of the Partnership's outstanding Units.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements - see Index to Financial Statements
included under Item 8, Appendix A on page F-2 of this report.
2. Financial Statement Schedules - All 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 Limited Partnership Agreement dated as of February 14,
1985 [Exhibit A to Prospectus included in Registrant's
Registration Statement on Form S-11 dated February 15, 1985
(File No. 2-94392)].*
(4.2) Amended Certificate of Limited Partnership filed with the
Massachusetts Secretary of State on December 13, 1985. [Exhibit
4.2 to Registrant's Report on Form 10-K for the year ended
October 31, 1985 (File No. 2-94392)].*
(10) Material contracts:
(10.1) The form of Master Loan Agreement (including the form of
Participating Note and Collateral Pledge Agreement) between the
Partnership and Krupp Equity Limited Partnership ("KELP") [Exhibit
C to Prospectus included in Registrant's Registration Statement on
Form S-11 dated February 15, 1985 (File No. 2-94392)].*
(10.2) Revised basic form of Mortgage to secure payment of the Loans
under the Master Loan Agreement [Exhibit 10.3(a) included in
Registrant's Registration Statement on Form S-11 dated February
15, 1985 (File No. 2-94392)].*
(10.3) Revised form of Promissory Note as executed by the partners of
KELP and pledged under the Collateral Pledge Agreement to secure
payment of Loans under the Master Loan Agreement. [Exhibit 10.4(b)
included in Registrant's Registration Statement on Form S-11 dated
February 15, 1985 (File No. 2-94392)].*
Northeast Plaza Shopping Center
(10.4) Promissory Note of KELP, dated September 12, 1985, payable to
the Partnership. [Exhibit 5 to Registrant's Report on Form 8-K
dated September 12, 1985 (File No. 2-94392)].*
(10.5) Collateral Mortgage and Collateral Chattel Mortgage Note from
KELP dated September 12, 1985. [Exhibit 6 to Registrant's Report
on Form 8-K dated September 12, 1985 (File No. 2-94392)].*
(10.6) Act of Collateral Mortgage and Collateral Chattel Mortgage by
KELP in favor of the Partnership dated September 12, 1985.
[Exhibit 7 to Registrant's Report on Form 8-K dated September
12, 1985 (File No. 2-94392)].*
(10.7) Act of Pledge and Pawn of Collateral Mortgage and Collateral
Chattel Mortgage Note dated September 12, 1985 between KELP and
the Partnership. [Exhibit 8 to Registrant's Report on Form 8-K
dated September 12, 1985 (File No. 2-94392)].*
(10.8) Modification of promissory note dated August 31, 1993 by and
between the Partnership and KELP. [Exhibit 10.1 to Registrant's
Report on Form 10-Q dated September 30, 1993 (File No. 0-
14378)].*
Bell Plaza Shopping Center
(10.9) Promissory Note of KELP, dated June 2, 1987, payable to the
Partnership [Exhibit 1 to Registrant's Report on Form 8-K dated
June 2, 1987 (File No. 0-14378)].*
(10.10) Mortgage dated June 2, 1987, from KELP to the Partnership.
[Exhibit 2 to Registrant's Report on Form 8-K dated June 2, 1987
(File No. 0-14378)].*
*Incorporated by reference.
(c) Reports on Form 8-K
During the last quarter of the fiscal year ended December 31, 1996, the
Partnership did not file any reports on Form 8-K.
<PAGE>
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 27th
day of March, 1997.
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED
PARTNERSHIP
By: The Krupp Corporation, aGeneral Partner
By: /s/ Douglas Krupp
Douglas Krupp, Co-Chairman(Principal
Executive Officer) and Director of The Krupp
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 27th day of March, 1997.
Signatures Titles
/s/ Douglas Krupp Co-Chairman (Principal Executive Officer) and
Douglas Krupp Director of The Krupp Corporation, a General
Partner.
/s/ George Krupp Co-Chairman (Principal Executive Officer) and
George Krupp Director of The Krupp Corporation, a General
Partner.
/s/ Laurence Gerber President of The Krupp Corporation, a General
Laurence Gerber Partner.
/s/ Robert A. Barrows Treasurer of The Krupp Corporation, a General
Robert A. Barrows Partner.
<PAGE>
APPENDIX A
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
ITEM 8 OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1996
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants F-3
Balance Sheets at December 31, 1996 and December 31, 1995 F-4
Statements of Operations for the Years Ended December 31, 1996,
1995 and 1994 F-5
Statements of Changes in Partners' Equity for the
Years Ended December 31, 1996, 1995 and 1994 F-6
Statements of Cash Flows for the Years Ended December 31, 1996,
1995 and 1994 F-7
Notes to Financial Statements F-8 - F-15
All schedules are omitted as they are not applicable or not required, or
the information is provided in the financial statements or the notes
thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Krupp Institutional Mortgage Fund Limited Partnership:
We have audited the financial statements of Krupp Institutional Mortgage
Fund Limited Partnership (the "Partnership") listed in the index on page F-
2 of this Form 10-K. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Note E, the Partnership has recorded a loan loss reserve
of $16,524,000 and a reserve for uncollectible interest of $12,225,634,
based on management's estimate of the value of the properties which serve
as collateral for the mortgage notes receivable. As is the case with all
real estate, the ultimate value of such properties can only be determined
in a negotiation between buyer and seller.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Krupp
Institutional Mortgage Fund Limited Partnership as of December 31, 1996 and
1995, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Boston, Massachusetts
March 6, 1997
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Mortgage notes receivable, net of loan loss
reserve of $16,524,000 for 1996 and 1995,
(Notes C, D and E) $ 6,973,754 $11,795,943
Cash and cash equivalents (Note F) 1,112,524 1,260,798
Accrued interest receivable - mortgage notes,
net of reserve for uncollectible interest of
$12,225,634 and $9,755,416, respectively
(Notes C, D and E) 115,272 112,304
Due from affiliates (Note H) 16,250 1,575
Other assets 1,672 2,160
Total assets $ 8,219,472 $13,172,780
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 25,274 $ 12,952
Partners' equity (deficit)(Note G):
Limited Partners (30,059 Units outstanding) 8,411,861 13,327,834
General Partners (217,663) (168,006)
Total Partners' equity 8,194,198 13,159,828
Total liabilities and Partners' equity $ 8,219,472 $13,172,780
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Interest income:
Mortgage notes receivable
(Notes C, D and E) $497,376 $799,092 $ 1,020,409
Cash equivalents (Note F) 79,000 69,528 39,741
Total revenue 576,376 868,620 1,060,150
Expenses:
Expense reimbursements (Note H) 33,345 49,689 96,608
General and administrative 60,088 53,806 64,122
Provision for credit losses
(Notes C, D and E) - - 4,500,000
Total expenses 93,433 103,495 4,660,730
Net income (loss) (Note I) $482,943 $765,125 $(3,600,580)
Allocation of net income
(loss)(Note G):
Limited Partners (30,059 Units
outstanding) $478,114 $757,474 $(3,564,574)
Per Unit of Limited Partner
Interest $ 15.91 $ 25.20 $ (118.59)
General Partners $ 4,829 $ 7,651 $ (36,006)
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1993 $17,487,588 $(125,987) $17,361,601
Distributions (676,327) (6,832) (683,159)
Net loss (3,564,574) (36,006) (3,600,580)
Balance at December 31, 1994 13,246,687 (168,825) 13,077,862
Distributions (676,327) (6,832) (683,159)
Net income 757,474 7,651 765,125
Balance at December 31, 1995 13,327,834 (168,006) 13,159,828
Distributions (Note G) (5,394,087) (54,486) (5,448,573)
Net income (Note G) 478,114 4,829 482,943
Balance at December 31, 1996 $ 8,411,861 $(217,663) $ 8,194,198
</TABLE>
The per Unit distributions for the years 1994 through 1996 were $22.50,
$22.50 and $179.45, respectively.
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 482,943 $ 765,125 $(3,600,580)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Provision for credit losses - - 4,500,000
Decrease (increase) in
accrued interest receivable
- mortgage notes (2,968) 118,812 (205,236)
Decrease (increase) in due from
affiliates (14,675) 9,159 (10,734)
Decrease (increase) in other
assets 488 (891) 1,344
Increase (decrease) in
liabilities 12,322 (1,372) 8,437
Net cash provided by
operating activities 478,110 890,833 693,231
Investing activity:
Principal collections from
mortgage notes receivable 4,822,189 26,460 23,952
Financing activity:
Distributions (5,448,573) (683,159) (683,159)
Net increase (decrease) in cash
and cash equivalents (148,274) 234,134 34,024
Cash and cash equivalents,
beginning of year 1,260,798 1,026,664 992,640
Cash and cash equivalents,
end of year $1,112,524 $ 1,260,798 $1,026,664
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSTITUTIONAL MORTGAGE FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
A. Organization
Krupp Institutional Mortgage Fund Limited Partnership (the
"Partnership") was formed on November 15, 1984 by filing a Certificate
of Limited Partnership in The Commonwealth of Massachusetts. The
Partnership was formed for the purpose of making participating mortgage
loans ("the Participating Notes") to Krupp Equity Limited Partnership
("KELP"), in the amount of up to 95% of the proceeds of the offering of
units of limited partner interest (the "Units") (see Note D). The
Partnership terminates on December 31, 2013 unless earlier terminated
upon the occurrence of certain events as set forth in the Partnership
Agreement.
The Partnership issued all of the General Partner Interests to The Krupp
Corporation ("Krupp Corp.") and The Krupp Company Limited
Partnership-III ("Krupp Co.-III"), in exchange for capital contributions
aggregating $1,000. The General Partners made additional capital
contributions of $4,207,560 which equals fourteen percent of the capital
contributions of the Investor Limited Partners. The Partnership used
these capital contributions to pay costs incurred in connection with its
organization and the public offering of Units.
On February 21, 1985, the Partnership commenced the marketing and sale
of the Units for $1,000 per Unit. The public offering was closed on
December 5, 1985, at which time 30,059 Units had been sold.
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 (see Note I).
Risks and Uncertainties
The Partnership invests its cash primarily in deposits and money
market funds with commercial banks. The Partnership has not
experienced any losses to date on its invested cash.
The preparation of financial statements in conformity 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 reporting period. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Partnership includes all short-term investments with maturities
of three months or less from the date of acquisition in cash and cash
equivalents. Cash equivalents are recorded at cost, which
approximates current market value.
Provisions for Credit Losses and Accrued Interest Reserves
In accordance with Statement of Financial Accounting Standard No.
114, "Accounting by Creditors for Impairment of a Loan", and
Statement of Financial Accounting Standard No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures", the Partnership has implemented polices and practices
for assessing impairment of its mortgage loans and the recognition of
income on impaired loans.
Mortgage notes receivable are recorded at the lower of cost or
estimated net realizable value. The estimated net realizable value
of the mortgage loans is based on current market estimates of the
underlying properties held as collateral considering such factors as
tenant turnover, current and prospective occupancy levels, the
current market competition and assumptions on potential proceeds that
might be received upon sale. Given the uncertainty of real estate
valuation in the current market, these market estimates could differ
from the ultimate value obtained from a sale of such properties (see
Note E).
The Partnership recognizes interest income on its impaired loans
based on the expected cash flow payments to be received from KELP.
Cash flow payments are determined as all cash flow generated by the
properties after operating and administrative expenses and senior
mortgage obligations. Unpaid interest and late charges are accrued
and reserved against. For financial reporting purposes, the
Partnership recognizes sales proceeds received from KELP as
repayments of principal on the mortgage notes receivable.
Income Taxes
The Partnership is not liable for federal or state income taxes as
Partnership income or loss is allocated to the Partners for income
tax purposes. In the event that the Partnership's tax returns are
examined by the Internal Revenue Service or state taxing authority
and such examination results in a change in the Partnership's
taxable income or loss, such change will be reported to the Partners.
C. Mortgage Notes Receivable
The Partnership made loans to KELP, an affiliate of the Partnership, as
provided under the Master Loan Agreement and Collateral Pledge Agreement
(the "Agreements"). Under the terms of the Master Loan Agreement, basic
interest accrued at a rate of 7.6% per annum and was payable quarterly,
in arrears, on the unpaid principal balance of the Participating Notes
which were due on December 31, 1992, however, the Partnership exercised
its option to extend the maturity date to December 29, 1995.
KELP's properties began experiencing cash flow deficiencies and,
beginning with the payment due April 1, 1991, KELP has not been able to
fully pay the required quarterly interest payments.
The terms of the Master Loan Agreement required KELP to pay the
Partnership adjusted basic interest at a rate of 10% per annum, which
accrued and was payable quarterly, in arrears, on the unpaid principal
balance of the Participating Notes. The Participating Notes matured
December 29, 1995.
Mortgage Notes Receivable consisted of the following as of December 31,
1996 and 1995:
<TABLE>
<CAPTION>
Principal
Property 1996 1995
<S> <C> <C>
Northeast Plaza Shopping Center $ 6,907,763 $ 6,936,993
North Salado Village Shopping Center I - 1,513,000
North Salado Village Shopping Center II - 6,000,000
Village Green Apartments - 1,902,750
Bell Plaza Shopping Center 5,300,000 5,300,000
Mortgage notes receivable
collateralized by properties 12,207,763 21,652,743
Remaining indebtedness from previously
owned KELP properties 16,082,950 6,667,200
Mortgage notes receivable before
reserve and sales proceeds
received from KELP 28,290,713 28,319,943
Less: Sales proceeds received from
KELP (4,792,959) -
Less: Loan loss reserve (16,524,000) (16,524,000)
Total mortgage notes receivable $ 6,973,754 $ 11,795,943
</TABLE>
Northeast Plaza Shopping Center ("Northeast Plaza")
Northeast Plaza is an 89,224 square foot shopping plaza located in
Baton Rouge, Louisiana. On September 12, 1985, the Partnership
loaned KELP $6,000,000 collateralized by a second mortgage on the
Northeast Plaza and the Collateral Pledge Agreement.
The non-recourse first mortgage of $994,873, collateralized by
Northeast Plaza, matured in 1993. In 1994, the General Partners used
a portion of working capital reserves to purchase the first mortgage
note in order to preserve the Partnership's equity in the underlying
property and became the first lien holder of the property. As a
result, the Partnership earns 10% from its first mortgage interest
investment versus 4% to 6% earned on the working capital reserve
balance.
The maturity date of the note was extended to December 29, 1995 as
evidenced by the modification of the promissory note dated August 31,
1993. The note requires monthly payments of $10,135 consisting of
principal and interest at the rate of 10% per annum based on a 25-
year amortization schedule. The non-recourse first mortgage note had
balances of $907,763 and $936,993 at December 31, 1996 and 1995,
respectively.
Bell Plaza Shopping Center ("Bell")
Bell is a 43,842 square foot shopping center located in Oak Lawn,
Illinois, a suburb of Chicago. On June 2, 1987, the Partnership
loaned KELP $5,300,000 collateralized by a first mortgage evidenced
by a deed of trust on Bell and the Collateral Pledge Agreement.
The average outstanding balances of the mortgage notes receivable were
$25,908,849, $28,333,173 and $28,358,379 at December 31, 1996, 1995 and
1994, respectively.
The carrying value of the above mentioned mortgage notes receivable
reflected in the accompanying balance sheets at December 31, 1996 and
1995 approximates fair value.
During 1996, KELP sold Village Green Apartments and North Salado Village
Shopping Center to unaffiliated third parties. The Partnership applied
sales proceeds of $4,792,959 received from KELP against the outstanding
mortgage notes receivable (see Note D).
D. Krupp Equity Limited Partnership
KELP was formed on January 3, 1985 by filing a Certificate of Limited
Partnership in The Commonwealth of Massachusetts. KELP terminates on
December 31, 2005, unless earlier terminated upon the occurrence of
certain events as set forth in its Partnership Agreement. KELP issued
all of the General Partner Interests to two General Partners, Krupp
Corp. and Krupp Co.-III, and issued all of the Limited Partner Interests
to Krupp Co.-III. KELP received capital contributions from the two
General Partners, Krupp Corp. and Krupp Co-III, totalling $480,000 which
consisted of $204,000 in cash and $276,000 in promissory notes. KELP
also received $6,984,086 of Limited Partner capital contributions from
Krupp Co.-III consisting of cash, the assumption of a note payable to an
affiliate in the amount of $1,550,013, and promissory notes in the
amount of $2,514,388. These promissory notes, totalling $2,790,388, are
pledged as additional collateral for the Participating Notes under the
Master Loan Agreement and the 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:
<PAGE>
KRUPP EQUITY LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Property, at cost (1) $ 12,716,122 $30,960,353
Property valuation provision (2) (5,000,000)(5,986,000)
Accumulated depreciation (3,795,870)(10,206,689)
Total real estate assets 3,920,252 14,767,664
Other assets 305,538 1,012,929
Total assets $ 4,225,790 $15,780,593
LIABILITIES AND PARTNERS' DEFICIT
Mortgage notes payable to the Partnership(1) $ 28,290,713 $28,319,943
Mortgage notes payable (1) - 7,599,279
Notes payable to an affiliate 300,000 300,000
Accrued interest payable to an affiliate (1) 7,880,286 10,171,783
Due to affiliates 666,702 767,737
Other liabilities 386,780 560,388
Total liabilities 37,524,481 47,719,130
Partners' deficit (33,298,691)(31,938,537)
Total liabilities and Partners' deficit $ 4,225,790$15,780,593
</TABLE>
(1) On March 5, 1996, Village Green was sold to an unaffiliated party
for $5,200,000. The sale agreement required the buyer to assume
the first mortgage note payable on the property of $4,633,989 and
as a result, no prepayment penalty was assessed by the holder of
the note. The sale resulted in a gain to KELP of $1,457,889, for
financial reporting purposes. On May 16, 1996, North Salado was
sold to an unaffiliated third party for $7,350,000. The first
mortgage note payable of $2,920,405 was paid at the closing and no
prepayment penalty was assessed, under the terms of the mortgage
note. The sale of the property resulted in a gain of $121,515 to
KELP, for financial reporting purposes. The properties were
released as collateral by the Partnership for KELP's secondary
mortgage obligations. For KELP's financial reporting purposes,
sales proceeds paid to KIMF of $4,792,959 were applied against
accrued interest in 1996.
(2) During the fourth quarter of 1995, the General Partners of KELP
determined that the carrying value of its retail properties
exceeded its net realizable value which resulted in an additional
valuation adjustment of $586,000 which was charged against
earnings. In 1996, no additional adjustment to KELP's remaining
real estate investments was required, and to date the General
Partners have recorded a cumulative property valuation provision
of $5,000,000.
KRUPP EQUITY LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenue $ 1,737,771 $ 3,479,262 $ 4,320,747
Property operating expenses (726,856) (1,535,994) (2,074,159)
Operating income 1,010,915 1,943,268 2,246,588
Depreciation and amortization (784,010) (844,628) (1,218,383)
Interest (3,166,463) (3,692,639) (4,038,180)
Loss before gain on sale
of properties and property
valuation provision (2,939,559) (2,593,999) (3,009,975)
Gain on sale of properties 1,579,404 - (3,592,179)
Property valuation provision - (586,000) (5,400,000)
Loss before extraordinary
gain (1,360,154) (3,179,999) (12,002,154)
Extraordinary gain - debt
forgiveness - - 1,176,738
Net loss $(1,360,155) $(3,179,999)$(10,825,416)
</TABLE>
It is expected that KELP will continue to be unable to pay its stated
debt service obligation to the Partnership. The General Partners of
KELP have attempted to mitigate the cash flow issues in the following
ways: 1) the General Partners or the Limited Partner of KELP have funded
certain prior deficits through capital contributions; 2) the General
Partners of KELP have arranged for borrowings to cover certain prior
deficits; 3) KELP has remitted to the Partnership all available cash
flow from the properties; and 4) the management agent for the properties
(an affiliate of the General Partners of KELP) has continued to serve
even though it is not receiving payment of property management fees.
KELP will continue to monitor expenses and implement rental increases as
market conditions permit in order to increase cash flow from the
properties.
E. 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 $12,225,634 and $9,755,416 as
of December 31, 1996 and 1995, 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.
F. Cash and Cash Equivalents
Cash and cash equivalents at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash and money market accounts $ 316,317 $ 465,788
Commercial paper 796,207 795,010
$1,112,524 $1,260,798
</TABLE>
Commercial paper at December 31, 1996 represents corporate issues
complying with Section 3.04 of the Partnership Agreement maturing in the
first quarter of 1997.
G. Partners' Equity
Net profits and losses from Partnership operations, excluding Additional
Interest on the Participating Notes, shall be determined as of the end
of each fiscal year, and are allocated ninety-nine percent (99%) to the
class of Limited Partners and one percent (1%) to the class of General
Partners.
Net profits and losses and Distributable Cash from Operations, as
defined by Section 5.01 of the Partnership Agreement, allocated to the
Limited Partners have been apportioned in the ratio of the number of
Units owned per Limited Partner to the total number of Units
outstanding. The General Partners portion of net profits and losses,
distributions of Distributable Cash from Operations and Surplus Funds,
as defined, has been allocated proportionately among the General
Partners according to their respective invested capital.
Distributable Cash from Operations shall be distributed ninety-nine
percent (99%) to the class of Limited Partners and one percent (1%) to
the class of General Partners. Surplus Funds received by the
Partnership, as defined in the Partnership Agreement, are to be
allocated differently than that described above.
As of December 31, 1996, the following cumulative Partner contributions
and allocations were made since inception of the Partnership:
<TABLE>
<CAPTION>
Total
Limited General Partners'
Partners Partners Equity
<S> <C> <C> <C>
Capital contributions $ 30,059,000 $ 4,208,560 $ 34,267,560
Syndication costs - (4,157,560) (4,157,560)
Distributions (20,310,311) (205,157) (20,515,468)
Net loss (1,336,828) (63,506) (1,400,334)
Balance at
December 31, 1996 $ 8,411,861 $ (217,663) $ 8,194,198
</TABLE>
H. 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 consists of the following as of December 31, 1996
and 1995:
1996 1995
Expense reimbursements $16,250 $ 1,575
I. Federal Income Taxes
The reconciliations of the net income (loss) reported in the accompanying
Statement of Operations with the net income (loss) reported in the
Partnership's federal income tax return for the years ended December 31,
1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) per Statement
of Operations $ 482,943 $ 765,125$(3,600,580)
Book to tax difference due to
provision for credit loss - - 4,500,000
Income (expense) recognized
for tax not book 1,496,640 (3,998) 3,998
Net income for federal income
tax purposes $1,979,583 $ 761,127 $ 903,418
</TABLE>
The allocation of net income for federal income tax purposes for 1996 is as
follows:
<TABLE>
<CAPTION>
Portfolio Portfolio
Income Expense Total
<S> <C> <C> <C>
Limited Partners $2,052,286 (92,499) $1,959,787
General Partners 20,730 (934) 19,796
$2,073,016 $ (93,433) $1,979,583
</TABLE>
The basis of the Partnership's assets for tax purposes exceeds its
assets for financial reporting purposes by approximately $25,000,000 and
$24,000,000 at December 31, 1996 and 1995, respectively. The tax and book
basis of the Partnership's liabilities are equal.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Institutional Mortgage Fund L.P. Financial Statements for the year ended
December 31, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,112,524
<SECURITIES> 0
<RECEIVABLES> 23,613,026
<ALLOWANCES> 16,524,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 17,922<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,219,472
<CURRENT-LIABILITIES> 25,274
<BONDS> 0
0
0
<COMMON> 8,194,198<F2>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,219,472
<SALES> 0
<TOTAL-REVENUES> 576,376
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 93,433
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 482,943
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Other assets
<F2>Includes Limited Partner equity of $8,411,861 and general Partner deficit of
(217,663)
</FN>
</TABLE>
