UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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 0-15815
Krupp Insured Plus Limited Partnership
Massachusetts 04-2915281
(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 INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
BALANCE SHEETS
<CAPTION>
ASSETS
September 30, December 31,
1994 1993
<S> <C> <C>
Participating Insured Mortgages ("PIMs") $ 59,962,668 $ 60,322,532
Mortgage Backed Securities ("MBS") (Note 2) 30,193,172 34,652,217
Total mortgage investments 90,155,840 94,974,749
Cash and cash equivalents 3,008,711 8,775,797
Interest receivable and other assets 704,864 697,394
Prepaid acquisition fees and expenses, net of
accumulated amortization of $3,467,307 and
$2,893,353, respectively 2,653,201 3,227,155
Prepaid participation servicing fees, net
of accumulated amortization of $1,653,546
and $1,508,624, respectively 746,453 891,375
Total assets $ 97,269,069 $108,566,470
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 12,689 $ 5,376
Partners' equity (Note 3) 97,256,380 108,561,094
Total liabilities and Partners' equity $ 97,269,069 $108,566,470
</TABLE>
The accompanying notes are an integral
part of the financial statements.
-2-
<PAGE>
<TABLE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Revenues
<S> <C> <C> <C> <C>
Interest income - PIMs $1,060,124 $1,138,429 $3,392,118 $3,146,340
Interest income - MBS 654,697 778,204 2,002,880 2,408,912
Other interest income 33,861 41,516 203,341 195,279
Total revenues 1,748,682 1,958,149 5,598,339 5,750,531
Expenses:
Asset management fee to an
affiliate 171,581 187,059 516,416 569,761
Expense reimbursements to
affiliates 61,885 61,885 185,654 182,817
Amortization of prepaid expenses
and fees 239,624 231,350 718,876 694,079
General and administrative 16,727 28,040 79,950 111,585
Total expenses 489,817 508,334 1,500,896 1,558,242
Net income $1,258,865 $1,449,815 $4,097,443 $4,192,289
Allocation of net income (Note 3):
Average net income per Unit
(7,499,999 Units outstanding) $ .16 $ .19 $ .53 $ .54
Corporate Limited Partner $ 16 $ 19 $ 53 $ 54
General Partners $ 37,766 $ 43,495 $ 122,923 $ 125,769
</TABLE>
The accompanying notes are an integral
part of the financial statements.
-3-
<PAGE> KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Nine Months Ended
September 30,
1994 1993
Operating activities:
<S> <C> <C>
Net income $ 4,097,443 $ 4,192,289
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid expenses and fees 718,876 694,079
Premium amortization treasury note - 55,441
Premium amortization MBS 17,701 21,468
Changes in assets and liabilities:
Increase in interest receivable
and other assets (7,470) (342,833)
Increase in liabilities 7,313 131,464
Net cash provided by operating activities 4,833,863 4,751,908
Investing activities:
Decrease in other investments - 6,000,000
Principal collections on MBS 4,441,344 7,166,300
Proceeds from insurance claims on PIMs - 475,727
Investment in MBS - (5,266,522)
Principal collections on PIMs 359,864 305,581
Net cash provided by investing activities 4,801,208 8,681,086
Financing activities:
Quarterly distributions (7,452,051) (7,578,233)
Special distributions (7,950,106) (4,950,065)
Net cash used for financing activities (15,402,157) (12,528,298)
Net increase (decrease) in cash and cash equivalents (5,767,086) 904,696
Cash and cash equivalents, beginning of period 8,775,797 5,395,292
Cash and cash equivalents, end of period $ 3,008,711 $ 6,299,988
</TABLE>
The accompanying notes are an integral
part of the financial statements.
-4-
<PAGE>
KRUPP INSURED PLUS 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.
However, in the opinion of the General Partners, The Krupp
Corporation and The Krupp Company Limited Partnership-IV
(collectively the "General Partners") of Krupp Insured Plus
Limited Partnership (the "Partnership") the disclosures
contained in this report are adequate to make the information
presented not misleading. See Notes to Financial Statements
included in the Partnership's Form 10-K for the year ended
December 31, 1993 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 (consisting of only normal recurring accruals)
necessary to present fairly the Partnership's financial
position as of September 30, 1994, its results of operations
for the three and nine months ended September 30, 1994 and 1993
and its cash flows for the nine months ended September 30, 1994
and 1993.
The results of operations for the three and nine months ended
September 30, 1994 are not necessarily indicative of the
results which may be expected for the full year. See
Management's Discussion and Analysis of Financial Condition and
Results of Operations included in this report.
Certain prior period balances have been reclassified to be
consistent with current year financial statement presentation.
2. MBS
At September 30, 1994, the Partnership's MBS portfolio had a
market value of approximately $30,022,000 with unrealized gains
and losses of approximately $229,000 and $400,000,
respectively. The Partnership does not expect to realize these
gains or losses as it has the intent and ability to hold the
MBS.
Continued
-5-
<PAGE> KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
3. Changes in Partners' Equity
A summary of changes in Partners' equity for the nine months
ended September 30, 1994 is as follows:
<TABLE>
<CAPTION>
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $108,680,479 $1,528 $(120,913) $108,561,094
Net income 3,974,467 53 122,923 4,097,443
Quarterly distributions (7,304,559) (97) (147,395) (7,452,051)
Special distributions (7,950,000) (106) - (7,950,106)
Balance at September 30, 1994 $ 97,400,387 $1,378 $(145,385) $ 97,256,380
</TABLE>
-6-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During 1993 and the first half of 1994, the Partnership received
significant prepayments on its MBS due to low market interest rates
that facilitated the refinancing of the underlying mortgages. Due
to this, the General Partners reviewed the Partnership's liquidity
needs and determined that a special distribution of $1.06 per Unit
should be paid and that the regular distribution rate should be
adjusted to $1.20 per Unit per year (approximately $9 million per
year and $2.25 million per quarter) commencing with the November
1994 distribution. The General Partners expect to periodically
adjust the distribution rate as mortgage proceeds are received and
subsequently distributed to the Limited Partners while also
maintaining sufficient liquidity to meet the Partnership's
anticipated needs.
Assessment of Credit Risk
The Partnership's investments in mortgages are guaranteed or
insured by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC") and HUD and
therefore the certainty of their cash flows and the risk of
material loss of the amounts invested depends on the
creditworthiness of these entities.
FNMA is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally
chartered corporation that guarantees obligations originated under
its programs and is wholly-owned by the twelve Federal Home Loan
Banks. These obligations are not guaranteed by the U.S. Government
or the Federal Home Loan Bank Board. The Government National
Mortgage Association guarantees the full and timely payment of
principal and basic interest on the securities it issues, which
represents interest in pooled mortgages insured by HUD.
Obligations insured by HUD, an agency of the U.S. Government, are
backed by the full faith and credit of the U.S. Government.
-7-
<PAGE>
Distributable Cash Flow and Net Cash Proceeds From Capital
Transactions
Shown below is the calculation of Distributable Cash Flow and Net
Cash Proceeds from Capital Transactions, as defined by Section 17
of the Partnership Agreement, and the source of cash distributions
for the nine months ended September 30, 1994 and the period from
inception to September 30, 1994 (amounts in thousands, except per
Unit amounts).
<TABLE>
<CAPTION>
Nine Months Ended Inception through
September 30, 1994 September 30, 1994
Distributable Cash Flow:
<S> <C> <C>
Net Income $ 4,097 $ 58,921
Items not requiring or (not providing)
the use of operating funds:
Amortization of prepaid expenses, fees
and organization costs 719 5,171
Amortization of MBS premiums 18 287
Acquisition expenses paid from
offering proceeds charged to operations - 1,098
Gain on sale of MBS - (114)
Total Distributable Cash Flow ("DCF") $ 4,834 $ 65,363
Limited Partners Share of DCF $ 4,689 $ 63,402
Limited Partners Share of DCF per Unit $ .63 $ 8.45
General Partners Share of DCF $ 145 $ 1,961
Net Proceeds from Capital Transactions:
Insurance claim proceeds and
principal collections on PIMs $ 360 $ 45,758
Principal collections on MBS 4,441 36,425
Insurance claim proceeds and
principal collections on PIMs - (40,775)
and MBS reinvested in PIMs and MBS
Gain on sale of MBS - 114
Total Net Proceeds from Capital
Transactions $ 4,801 $ 41,522
Cash available for distribution
(DCF plus Net Proceeds from
Capital Transactions) $ 9,635 $106,885
Distributions:
Limited Partners $15,235 (a)(c) $103,766 (a)
Limited Partners Average per Unit $ 2.03 (a) $ 13.83 (a)(b)
General Partners 142 (a) 1,961 (a)
Total Distributions $15,377 (c) 105,727
</TABLE>
(a) This includes an estimate of the November 1994 distribution.
(b) Limited Partners average per Unit return of capital as of
November 1994 is $5.38 [$13.83 - $8.45] Return of capital
represents that portion of distributions which is not funded
from DCF such as proceeds from the sale of assets and
substantially all of the principal collections received from
MBS and PIMs.
(c) Includes the special distribution of $1.06 per Unit.
-8-
<PAGE>
Operations
The following discussion relates to the operations of the
Partnership during the three and nine months ended September 30,
1994 and 1993:
<TABLE>
<CAPTION>
(Rounded to $1,000)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Interest income on PIMs $1,060,000 $1,138,000 $3,392,000 $3,146,000
Interest income on MBS 652,000 778,000 2,021,000 2,464,000
Other interest income 34,000 41,000 203,000 195,000
Partnership expenses (251,000) (276,000) (782,000) (864,000)
Distributable Cash Flow $1,495,000 $1,681,000 $4,834,000 $4,941,000
</TABLE>
Distributable Cash Flow did not change materially during the
three and nine months ended September 30, 1994 as compared to the
corresponding periods in 1993, even though interest income on PIMs
and MBS did have significant changes during these periods.
During the second quarter of 1993, the Partnership adjusted
interest income on PIMs by approximately $293,000 pursuant to an
agreement reducing the interest rate on the Vista Montana PIM from
8.875% to 7.375% per annum effective as of January 1, 1992. As a
result, interest income on PIMs for the nine months ended September
30, 1994 shows a significant increase versus the corresponding
period in 1993.
Interest income on MBS decreased $126,000 and $443,000 during the
three and nine months ended September 30, 1994, respectively, as
compared to the corresponding periods in 1993 due primarily to
significant prepayments of the mortgages underlying the MBS. The
General Partners believe the rate of prepayments should decrease as
a result of recent increases in interest rates. With lower
prepayments the MBS portfolio will decrease at a slower rate,
thereby reducing the rate at which interest income on MBS declines.
-9-
<PAGE>
KRUPP INSURED PLUS 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
-10-
<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 Insured Plus Limited Partnership
(Registrant)
BY:/s/Marianne Pritchard
Marianne Pritchard
Treasurer and Chief Accounting Officer of The Krupp
Corporation, a General Partner of the Registrant.
DATE: October 26, 1994
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,008,711
<SECURITIES> 90,155,840<F1>
<RECEIVABLES> 704,864
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,399,654<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 97,269,069
<CURRENT-LIABILITIES> 12,689
<BONDS> 0
<COMMON> 97,256,380<F3>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 97,269,069
<SALES> 0
<TOTAL-REVENUES> 5,598,339<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,500,896<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,097,443
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,097,443
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,097,443
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Participating Insured Mortgages (PIMs") $59,962,668
Mortgage Backed Securities ("MBS") 30,193,172
<F2>prepaid acquisition fees and expenses of $2,653,201;
net of accumulated amortization of $3,467,307 and prepaid participation
servicing fees of $746,453 net of accumulated amortization of $1,653,546.
<F3>Equity of general partners $(145,385), limited partners of $97,401,765
<F4>Interest income on mortgages and cash.
<F5>Includes $718,876 of amortization of prepaid fees and expenses.
<F6>Net income allocated $122,923 to the General Partners and $3,974,520 to the
Limited Partners. Average net income per unit of Limited Partners interest
is $.53 on 7,500,099 units outstanding.
</FN>
</TABLE>
