UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
CHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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 0-15815
Krupp Insured Plus Limited Partnership
(Exact name of registrant as specified in its charter)
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)
(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
Depositary Receipts representing
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: None
The exhibit index is located on pages 9-13.
<PAGE>
PART I
ITEM 1. BUSINESS
On December 20, 1985, The Krupp Corporation and the Krupp Company
Limited Partnership-IV (the "General Partners") formed Krupp Insured Plus
Limited Partnership (the "Partnership"), a Massachusetts Limited
Partnership. The Partnership raised approximately $149 million through a
public offering of limited partner interests evidenced by units of
depositary receipts ("Units") and used the net proceeds primarily to
acquire participating insured mortgages ("PIMs") and mortgage backed
securities ("MBS"). The Partnership considers itself to be engaged in the
industry segment of investment in mortgages.
The Partnership's investments in PIMs consist of a securitized first
mortgage loan or a sole participation interest in a Department of Housing
and Urban Development ("HUD") insured first mortgage loan, and
participation interests in the current revenue stream of the mortgaged
property and any increase in the mortgaged property's value above certain
specified base levels. The Partnership provided the funds for the first
mortgage loan made to the borrower by acquiring either a securitized first
mortgage loan ("MBS"), originated under the lending programs of the
Federal National Mortgage Association ("FNMA") or Government National
Mortgage Association ("GNMA"), or a sole participation interest in a first
mortgage loan originated under the Federal Housing Administration ("FHA")
lending program (collectively the "insured mortgages"). The Partnership
received the participation interests in the mortgaged property as
additional consideration for providing the funds for the first mortgage
loan and accepting a below market interest rate on the insured mortgage,
which provided the borrower with a below market interest rate on the first
mortgage loan. The borrower conveyed the participation interests to the
Partnership through either a subordinated promissory note and mortgage or a
shared income and appreciation agreement. FNMA guarantees the principal
and interest payments for the FNMA MBS and GNMA guarantees the timely
payment of principal and interest for the GNMA MBS. HUD insures the first
mortgage loan underlying the GNMA MBS and any first mortgage loan
originated under the FHA lending program. The participation interests
conveyed to the Partnership by the borrower are neither insured nor
guaranteed.
The Partnership also acquired MBS backed by single-family or multi-
family mortgage loans issued or originated by GNMA, FNMA or the Federal
Home Loan Mortgage Corporation ("FHLMC"). FNMA and FHLMC guarantee the
principal and basic interest of these FNMA and FHLMC MBS, respectively.
GNMA guarantees the timely payment of principal and interest of GNMA MBS,
and HUD insures the pooled first mortgage loans underlying the GNMA MBS.
Although the Partnership will terminate no later than December 31, 2025
the Partnership anticipates realizing the value of the PIMs through
repayment as early as ten years from the closing dates of the permanent
loans. In addition, the Partnership expects to receive a significant
portion of the value of its MBS within a ten year holding period.
Therefore, dissolution of the Partnership should occur significantly prior
to December 31, 2025, the stated termination date of the Partnership.
The Partnership's investments are not subject to seasonal fluctuations.
However, the realization of the participation features of the PIMs are
subject to similar risks associated with equity real estate investments,
including: reliance on the owner's operating skills, ability to maintain
occupancy levels, control operating expenses, maintain the property and
provide adequate insurance coverage; adverse changes in general economic
conditions, adverse local conditions, and changes in governmental
regulations, real estate zoning laws, or tax laws; and other circumstances
over which the Partnership may have little or no control.
The requirements for compliance with federal, state and local
regulations to date have not adversely effected the Partnership's
operations and the Partnership anticipates no adverse effect in the future.
As of December 31, 1994, there were no personnel directly employed by
the Partnership.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Partnership
is a party or to which any of its investments is the subject.
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 STOCK-
HOLDER MATTERS
There currently is no established trading market for the Units.
The number of investors holding Units as of December 31, 1994 was
approximately 7,100. One of the objectives of the Partnership is to
provide quarterly distributions of cash flow generated by its investments
in mortgages. The Partnership anticipates that future operations will
continue to generate cash available for distribution. Adjustments may be
made to the distribution rate in the future due to the realization and
payout of the existing mortgages.
During 1994 and 1993, the Partnership made special distributions
consisting primarily of principal collections on MBS and, in 1993, also
used proceeds from an insurance claim on a PIM. The Partnership may make
special distributions in the future if PIMs prepay or a sufficient amount
of cash is available from MBS and PIM principal collections.
The Partnership made the following distributions, in quarterly
installments, and special distributions, to its Partners during the two
years ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
Amount Per Unit Amount Per Unit
Quarterly Distributions:
<S> <C> <C> <C> <C>
Unitholders $ 9,554,558 $1.28 $ 9,873,246 $1.32
Corporate Limited Partner 128 $1.28 132 $1.32
General Partners 192,551 203,481
$ 9,747,237 $10,076,859
Special Distributions:
Unitholders $ 7,949,999 $1.06 $ 4,949,999 $ .66
Corporate Limited Partner 106 $1.06 66 $ .66
7,950,105 4,950,065
Total Distributions $17,697,342 $15,026,924
</TABLE>
<PAGE>
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 Supplementary Data, which are included in Items 7 and
Appendix A of this report, respectively.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Total revenues $ 7,688,593 $ 7,698,364 $ 8,697,559 $ 9,616,484 $10,358,773
Net income 5,682,819 5,642,527 5,413,709 7,719,518 8,849,198
Net income allocated to:
Unitholders 5,512,261 5,473,178 5,251,228 7,487,832 8,583,608
Average Per Unit .73 .73 .70 1.00 1.14
Corporate Limited
Partner 73 73 70 100 114
General Partners 170,485 169,276 162,411 231,586 265,476
Total assets at
December 31 96,561,305 108,566,470 117,967,380 131,567,597 134,752,229
Distributions to:
Unitholders
Quarterly 9,554,558 9,873,246 10,509,009 10,649,998 10,650,000
Average per Unit 1.28 1.32 1.40 1.42 1.42
Special 7,949,999 4,949,999 8,249,980 - -
Average per Unit 1.06 .66 1.10 - -
Corporate Limited
Partner
Quarterly 128 132 140 142 142
Special 106 66 110 - -
General Partners 192,551 203,481 228,198 260,279 278,469
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The most significant demand on the Partnership's liquidity is regular
quarterly distributions paid to investors which were approximately $9.7
million in 1994. Funds used for investor distributions come from interest
received on the PIMs, MBS, cash and cash equivalents and the principal
collections received on the PIMs and MBS. The cash generated by these
items totalled approximately $13 million in 1994. To the extent the
Partnership funds a portion of the distribution from principal collections,
the capital resources of the Partnership will decrease. As a result of
this decrease, the total cash inflows to the Partnership will also decrease
which may result in periodic adjustments to the quarterly distributions
paid to investors.
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
FNMA, 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. GNMA guarantees the full and timely payment of principal and basic
interest on the securities it issues, which represent interests in
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.
<PAGE>
Distributable Cash Flow and Net Cash Proceeds from Capital Transactions
Shown below is the calculation of Distributable Cash Flow and Net Cash
Proceeds as defined by Section 17 of the Partnership Agreement and the
source of cash distributions for the year ended December 31, 1994 and from
the Partnership's inception through December 31, 1994. (Amounts in
thousands, except per Unit amounts)
<TABLE>
<CAPTION>
Year Inception
Ended Through
12/31/94 12/31/94
Distributable Cash Flow:
<S> <C> <C>
Income for tax purposes $ 6,242 $ 61,024
Items not requiring or (not providing)
the use of operating funds:
Amortization of deferred expenses
and organization costs 134 4,627
Amortization of premiums 15 284
Acquisition expenses paid from offering
proceeds charged to operations - 1,098
Gain on sale of MBS - (114)
Total Distributable Cash Flow ("DCF") $ 6,391 $ 66,919
Limited Partners Share of DCF $ 6,199 $ 64,911
Limited Partners Share of DCF per Unit $ .83 $ 8.65
General Partners Share of DCF $ 192 $ 2,008
Net Proceeds from Capital Transactions:
Insurance claim proceeds and
principal collections on PIMs $ 485 $ 45,883
Principal collections on MBS 4,989 37,002
Insurance claim proceeds and principal
collections on PIMs and MBS reinvested
in PIMs and MBS - (40,775)
Gain on sale of MBS - 114
Total Net Proceeds from Capital Transactions $ 5,474 $ 42,224
Cash available for distribution
(DCF plus Net Proceeds from Capital
Transactions) $11,865 $109,143
Distributions: (includes special distribution)
Limited Partners $17,359 (a) $105,837 (b)
Limited Partners Average per Unit $ 2.31 (a) $ 14.11 (b)(c)
General Partners 189 (a) 2,008 (b)
Total Distributions $17,548 (a) $107,845 (b)
</TABLE>
(a) Represents all distributions paid in 1994 except the February 1994
distribution and includes an estimate of the distribution to be
paid in February 1995.
(b) Limited Partners average per Unit return of capital as of February
1995 is $5.46 [$14.11-$8.65]. 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 an estimate of distribution to be paid in February 1995.
Operations
The following discussion relates to the operation of the Partnership
during the years ended December 31, 1994, 1993 and 1992 (federal income tax
basis).
<TABLE>
<CAPTION>
(Amounts in thousands)
1994 1993 1992
<S> <C> <C> <C>
Interest income on PIMs $ 4,515 $ 4,350 $ 5,100
Interest income on MBS 2,662 3,097 2,680
Other interest income 262 307 1,002
Partnership expenses (1,048) (1,128) (1,152)
Distributable Cash Flow $ 6,391 $ 6,626 $ 7,630
</TABLE>
The Partnership's operations changed during the three years ending
December 31, 1994, as a result of insurance claims received on PIMs during
1993 and 1992, significant prepayments on its MBS portfolio and the
reinvestment of a portion of insurance claims and principal collections
received. The decrease in interest income on PIMs from 1992 to 1993
resulted primarily from the insurance claims received in 1992 and 1993 on
Abbey Terrace and Lenox Woods I PIMs. These PIMs had an aggregate
principal balance of approximately $8.8 million and coupon rates of 8.375%
and 8% per annum, respectively. In November 1993, the Partnership entered
into an agreement with the borrower of the FHA PIM reducing the interest
rate from 8.875% to 7.375% per annum retroactive to January 1, 1992, which
reduced interest income on PIMs in 1993 as compared to 1992 and 1994.
The $450,000 decrease in interest income MBS from 1993 to 1994 is 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 the recent increase 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. Interest income on MBS increased
in 1993 as compared to 1992 due to reinvestments in MBS.
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 the directors and executive officers of The Krupp Corporation, which is
a General Partner of the Partnership and is a general partner of The Krupp
Company Limited Partnership-IV, the other General Partner of the
Partnership, is as follows:
Position with
Name and Age The Krupp Corporation
Douglas Krupp (48) Co-Chairman of the Board
George Krupp (50) Co-Chairman of the Board
Laurence Gerber (38) President
Marianne Pritchard (45) Treasurer
Ross V. Keeler (46) Executive Vice President,
Capital Markets
Frank Apeseche (37) Executive Vice President
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 and
healthcare facility ownership. Today, The Berkshire Group is an integrated
real estate financial services firm which is headquartered in Boston with
regional offices throughout the country. A staff of 3,400 are responsible
for the more than $3 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.
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 financial services firm which is headquartered in Boston with
regional offices throughout the country. A staff of 3,400 are responsible
for more than $3.0 billion under management for institutional and
individual clients. Mr. Krupp attended the University of Pennsylvania and
Harvard University. Mr. Krupp is Chairman of the Board and Director of
Berkshire Realty Company, Inc. (NYSE-BRI). Mr. Krupp also serves as
Chairman of the Board and Trustee of Krupp Government Income Trust II and
Krupp Government Income Trust.
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 President and a Director of
Berkshire Realty Company, Inc. (NYSE-BRI), and President and Trustee of
Krupp Government Income Trust and Krupp Government Income Trust II.
Marianne Pritchard, Senior Vice President and Chief Financial and
Accounting Officer of Berkshire Realty Affiliates, rejoined The Berkshire
Group in August, 1991. Prior to rejoining The Berkshire Group, Ms.
Pritchard was Vice President and Controller from July 1989 to August 1991
for Liberty Real Estate Group, a subsidiary of Liberty Mutual Insurance
Company. Prior to Liberty, she held the position of Controller/Treasurer
of Berkshire Mortgage Finance from April 1987 to July 1989. Prior to that,
she was Senior Audit Manager with Deloitte and Touche, an international
public accounting firm. Ms. Pritchard is a Certified Public Accountant and
received her B.B.A. degree in Accounting from the University of Texas.
Ross V. Keeler is an Executive Vice-President of Capital Markets for The
Berkshire Group. Prior to joining The Berkshire Group in November 1984,
he served as Executive Vice President of Marketing and a member of the
Board of Directors at First Capital Companies, a national syndicator of
real estate investments. Prior to that, Mr. Keeler served as President of
State Financial Corporation, a company which originated specialized leases
on major equipment for municipalities. He received a B.S. degree in
finance with honors from the University of Florida and received an M.B.A.
degree with scholastic honors from the University of Southern California.
Frank Apeseche was appointed Executive Vice President, Chief Financial
Officer of The Berkshire Group in 1993. He oversees strategic planning,
tax planning, corporate finance and product development for The Berkshire
Group. Before joining the firm in 1986, Mr. Apeseche was a manager at
Arthur Andersen & Co., an international accounting and consulting firm.
Mr. Apeseche holds a B.A. degree with High Distinction from Cornell
University and an M.B.A. degree with honors from the University of
Michigan.
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, 1994 no person owned of record or was known by the
General Partners to own beneficially more than 5% of the Partnership's
7,499,999 outstanding Units. The only interests held by management or its
affiliates consist of its General Partner and Corporate Limited Partner
Interests.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is contained in Note F to the
Partnership's financial statements presented in Appendix A to this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) 1. Financial Statements - see Index to Financial Statements and
Schedule included under Item 8, Appendix A, on page F-2 of
this report.
2. Financial Statement Schedule - see Index to Financial
Statements and Schedule included under Item 8, Appendix A,
on page F-2 of this report. All other 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 Agreement of Limited Partnership dated as of
June 27, 1986 [Exhibit A to Prospectus included in Amendment
No. 1 of Registrant's Registration Statement on Form S-11
dated July 2, 1986 (File No. 33-2520)].*
(4.2) Subscription Agreement whereby a subscriber agrees to
purchase Units and adopts the provisions of the Amended
Agreement of Limited Partnership [Exhibit D to Prospectus
included in Amendment No. 1 of Registrant's Registration
Statement on Form S-11 dated July 2, 1986 (File No. 33-
2520)].*
(4.3) Eighth Amendment and Restatement of Certificate of Limited
Partnership filed with the Massachusetts Secretary of State
on February 6, 1987 [Exhibit 4.3 to Registrant's Report on
Form 10-K for the year ended December 31, 1986 (File No. 33-
2520)].*
<PAGE>
(10) Material Contracts:
La Costa Apartments
(10.1) Prospectus for GNMA Pool No. 168416 (PL). [Exhibit 19.1 to
Registrant's Report on Form 10-Q for the quarter ended March
31, 1987 (File No. 33-2520)].*
(10.2) Shared Income and Appreciation Agreement, dated March 18,
1987 between International Plaza Associates, Ltd., A
Florida limited partnership, and DRG Funding Corporation, a
Delaware corporation. [Exhibit 19.2 to Registrant's Report
on Form 10-Q for the quarter ended March 31, 1987 (File No.
33-2520)].*
(10.3) Multifamily Mortgage, Assignment of Rents and Security
Agreement, dated March 18, 1987 between International Plaza
Associates, Ltd., a Florida limited partnership, and DRG
Funding Corporation, a Delaware corporation. [Exhibit 19.3
to Registrant's Report on Form 10-Q for the quarter ended
March 31, 1987 (File No. 33-2520)].*
(10.4) Assignment of Mortgage, dated March 18, 1987, between DRG
Funding Corporation, a Delaware corporation, (Mortgagee) and
Krupp Insured Plus Limited Partnership, a Massachusetts
limited partnership, (Assignee). [Exhibit 19.4 to
Registrant's Report on Form 10-Q for the quarter ended March
31, 1987 (File No. 33-2520)].*
Mandalay Apartments
(10.5) Prospectus for GNMA Pool No. 228812 (PL). [Exhibit 1 to
Registrant's Report on Form 8-K dated August 11, 1987 (File
No. 0-15815)].*
(10.6) Shared Income and Appreciation Agreement, dated July 1,
1987, between First Florida Bank, N.A., as Trustee under
Trust No. 48-1990-00 and DRG Funding Corporation. [Exhibit
2 to Registrant's Report on Form 8-K dated August 11, 1987
(File No. 0-15815)].*
(10.7) Assignment of Mortgage, dated July 1, 1987, between DRG
Funding Corporation (as "Mortgagee") and Krupp Insured Plus
Limited Partnership (as "Assignee"). [Exhibit 3 to
Registrant's Report on Form 8-K dated August 11, 1987 (File
No. 0-15815)].*
Greentree Apartments
(10.8) Prospectus for GNMA Pool No. 238744-(PL). [Exhibit 1 to
Registrant's Report on Form 8-K dated December 10, 1987
(File No. 0-15815)].*
(10.9) Mortgage Note, dated October 22, 1987, between Greentree
Associates, Ltd. and DRG Funding Corporation. [Exhibit 2 to
Registrant's Report on Form 8-K dated December 10, 1987
(File No.0-15815)].*
(10.10) Mortgage, dated October 22, 1987, between Greentree
Associates, Ltd. and DRG Funding Corporation. [Exhibit
3 to Registrant's Report on Form 8-K dated December 10,
1987 (File No. 0-15815)].*
(10.11) Shared Income and Appreciation Agreement, dated October
22, 1987, between Greentree Associates, Ltd. and DRG
Funding Corporation. [Exhibit 4 to Registrant's Report
on Form 8-K dated December 10, 1987 (File No. 0-
15815)].*
(10.12) Assignment of Shared Income and Appreciation Agreement,
dated October 22, 1987, between DRG Funding Corporation
and Krupp Insured Plus Limited Partnership (as
"Assignee"). [Exhibit 5 to Registrant's Report on Form
8-K dated December 10, 1987 (File No. 0-15815)].*
(10.13) Multifamily Mortgage, Assignment of Rents and Security
Agreement, dated October 22, 1987, between Greentree
Associates, Ltd. and DRG Funding Corporation. [Exhibit
6 to Registrant's Report on Form 8-K dated December 10,
1987 (File No. 0-15815)].*
(10.14) Assignment of Mortgage (the Multifamily Mortgage,
Assignment of Rents and Security Agreement), dated
November 23, 1987, between DRG Funding Corporation (as
"Mortgagee") and Krupp Insured Plus Limited Partnership
(as "Assignee"). [Exhibit 7 to Registrant's Report on
Form 8-K dated December 10, 1987 (File No. 0-15815)].*
Pine Hills Apartments
(10.15) Prospectus for GNMA Pool No. 238825-(PL). [Exhibit 10.27
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1987 (File No. 0-15815)].*
(10.16) Subordinated Promissory Note, dated November 20, 1987,
between Pine Hill Partners ("Maker" or "Mortgagor") and
York Associates, Inc., ("Holder" or "First-Mortgagee")
as assigned to Krupp Insured Plus Limited Partnership.
[Exhibit 10.28 to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1987 (File No. 0-
15815)].*
(10.17) Subordinated Multifamily Mortgage, Assignment of Rents
and Security Agreement, dated November 20, 1987, between
Pine Hill Partners ("Borrower") and York Associates,
Inc., ("Lender"). [Exhibit 10.29 to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1987
(File No. 0-15815)].*
(10.18) Assignment of Subordinated Mortgage, dated November 23,
1987 between York Associates, Inc., ("Assignor") and
Krupp Insured Plus Limited Partnership ("Assignee").
[Exhibit 10.30 to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1987 (File No. 0-
15815)].*
(10.19) Modification to the loan and participation workout
agreement, dated March 31, 1992, by and between Krupp
Insured Plus Limited Partnership and Pine Hill
Partners.+
Vista Montana
(10.20) Subordinated Promissory Note, dated March 31, 1988,
between VM Associates Limited Partnership, an Arizona
Limited Partnership and GMAC Mortgage Corporation of PA.
[Exhibit 19.7 to Registrant's Report on Form 10-Q for
the Quarter Ended March 31, 1988 (File No. 0-15815)].*
(10.21) Subordinated Multi-family Deed of Trust, dated March 31,
1988, between VM Associates Limited Partnership, an
Arizona Limited Partnership, and GMAC Mortgage
Corporation of PA [Exhibit 19.8 to Registrant's Report
on Form 10-Q for the Quarter Ended March 31, 1988 (File
No. 0-15815)].*
<PAGE>
(10.22) Assignment of Subordinated Deed of Trust, dated March
31, 1988, between GMAC Mortgage Corporation of PA, and
Krupp Insured Plus-II Limited Partnership, a
Massachusetts Limited Partnership. [Exhibit 19.9 to
Registrant's Report on Form 10-Q for the Quarter Ended
March 31, 1988 (File No. 0-15815)].*
(10.23) Assignment of Closing Documents, dated July 12, 1988 by
and between Krupp Insured Plus-II Limited Partnership
("KIP-II"), a Massachusetts limited partnership, and
Krupp Insured Plus Limited Partnership ("KIP-I"), a
Massachusetts limited partnership. [Exhibit 19.10 to
Registrant's Report on Form 10-Q for the Quarter Ended
June 30, 1988 (File No. 0-15815)].*
(10.24) Deed of Trust, dated March 31, 1988 between VM
Associates Limited Partnership, an Arizona limited
partnership and Transamerica Title Insurance Company, a
California corporation. [Exhibit 19.11 to Registrant's
Report on Form 10-Q for the Quarter Ended September 30,
1988 (File No. 0-15815)].*
(10.25) Deed of Trust Note, dated March 31, 1988, between VM
Associates Limited Partnership, an Arizona limited
partnership and GMAC Mortgage Corporation of PA, a
Pennsylvania corporation. [Exhibit 19.12 to Registrant's
Report on Form 10-Q for the Quarter Ended September 30,
1988 (File No. 0-15815)].*
(10.26) Assignment of Mortgage and Collateral Documents, dated
March 31, 1988 by and between Krupp Insured Plus-II
Limited Partnership, a Massachusetts limited partnership
and GMAC Mortgage Corporation of PA, a Pennsylvania
corporation. [Exhibit 19.13 to Registrant's Report on
Form 10-Q for the Quarter Ended September 30, 1988 (File
No. 0-15815)].*
(10.27) Servicing Agreement, dated March 31, 1988 by and between
Krupp Insured Plus-II Limited Partnership, a
Massachusetts limited partnership and GMAC Mortgage
Corporation of PA, a Pennsylvania corporation. [Exhibit
19.14 to Registrant's Report on Form 10-Q for the
Quarter Ended September 30, 1988 (File No. 0-15815)].*
(10.28) Modification to the First mortgage loan and subordinated
Promissory Note, dated June 7, 1993, by and between
Krupp Insured Plus-II Limited Partnership and V.M.
Associates Limited Partnership.+
(10.29) Assignment of interest from Krupp Insured Plus Limited
Partnership II to Krupp Insured Plus Limited
Partnership, dated February 6, 1995.+
Royal Palm Place
(10.30) Supplement to Prospectus for FNMA Pool No. MX-073021.
[Exhibit 19.1 to Registrant's Report on Form 10-Q for
the Quarter Ended June 30, 1991 (File No. 0-15815)].*
(10.31) Subordinated Multifamily Mortgage dated March 20, 1991
between Royal Palm Place, Ltd., a Florida limited
partnership (the "Mortgagor") and Krupp Insured Plus-III
Limited Partnership (the "Mortgagee"). [Exhibit 19.2 to
Registrant's Report on Form 10-Q for the Quarter Ended
June 30, 1991 (File No. 0-15815)].*
(10.32) Subordinated Promissory Note dated March 20, 1991
between Royal Palm Place, Ltd., a Florida limited
partnership (the "Mortgagor") and Krupp Insured Plus-III
Limited Partnership (the "Holder"). [Exhibit 19.3 to
Registrant's Report on Form 10-Q for the Quarter Ended
June 30, 1991 (File No. 0-15815)].*
(10.33) Modification Agreement dated March 20, 1991 by and
between Royal Palm Place, Ltd., a Florida limited
partnership and Krupp Insured Plus-III Limited
Partnership. [Exhibit 19.4 to Registrant's Report on
Form 10-Q for the Quarter Ended June 30, 1991 (File No.
0-15815)].*
(10.34) Participation Agreement dated March 20, 1991 between
Krupp Insured Plus-III Limited Partnership and Krupp
Insured Plus Limited Partnership. [Exhibit 19.1 to
Registrant's Report on Form 10-Q for the Quarter Ended
September 30, 1991 (File No. 0-15815)].*
* Incorporated by reference.
+ Filed herein.
(c) Reports on Form 8-K
During the last quarter of the year ended December 31, 1994 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 the 23rd day of February, 1995.
KRUPP INSURED PLUS LIMITED PARTNERSHIP
By: The Krupp Corporation,
a General Partner
By: /s/ George Krupp
George 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 23rd day of February,
1995.
Signatures Title(s)
/s/ Douglas Krupp Co-Chairman (Principal Executive Officer)
Douglas Krupp and Director of The Krupp Corporation, a
General Partner of the Registrant.
/s/George Krupp Co-Chairman (Principal Executive Officer)
George Krupp and Director of The Krupp Corporation, a
General Partner of the Registrant.
/s/Laurence Gerber President of The Krupp Corporation, a
Laurence Gerber General Partner of the Registrant.
/s/ Marianne Pritchard Treasurer and Chief Accounting Officer of
Marianne Pritchard The Krupp Corporation, a General Partner
of the Registrant.
<PAGE>
APPENDIX A
KRUPP INSURED PLUS LIMITED PARTNERSHIP
FINANCIAL STATEMENTS AND SCHEDULE
ITEM 8 of FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 1994
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Report of Independent Accountants F-3
Balance Sheets at December 31, 1994 and 1993 F-4
Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992 F-5
Statements of Changes in Partners' Equity for the Years
Ended December 31, 1994, 1993 and 1992 F-6
Statements of Cash Flows for the Years
Ended December 31, 1994, 1993 and 1992 F-7
Notes to Financial Statements F-8 - F-14
Schedule IV - Mortgage Loans on Real Estate F-15 - F-16
All other 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 Insured Plus Limited Partnership:
We have audited the financial statements and the financial statement
schedule of Krupp Insured Plus Limited Partnership (the "Partnership")
listed in the index on page F-2 of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
General Partners of the Partnership. Our responsibility is to express an
opinion on these financial statements and financial statement schedule
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 the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Krupp Insured
Plus Limited Partnership as of December 31, 1994 and 1993, and the results
of its operations and its cash flows for each of the three years in the
period ended December 31, 1994 in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 27, 1995
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
BALANCE SHEETS
December 31, 1994 and 1993
ASSETS
<CAPTION>
1994 1993
<S> <C> <C>
Participating Insured Mortgages
("PIMs") (Notes B, C and H) $ 59,837,946 $ 60,322,532
Mortgage-Backed Securities and insured
mortgage ("MBS") (Notes B, D and H) 29,648,678 34,652,217
Total mortgage investments 89,486,624 94,974,749
Cash and cash equivalents (Notes B and H) 2,931,523 8,775,797
Interest receivable and other assets 983,130 697,394
Prepaid acquisition fees and expenses, net of
accumulated amortization of $3,658,625 and
$2,893,353, respectively (Note B) 2,461,883 3,227,155
Prepaid participation servicing fees, net of
accumulated amortization of $1,701,854 and
$1,508,624, respectively (Note B) 698,145 891,375
Total assets $ 96,561,305 $108,566,470
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 14,734 $ 5,376
Partners' equity (deficit) (Notes A and E):
Limited Partners 96,689,550 108,682,007
(7,500,099 Units outstanding)
General Partners (142,979) (120,913)
Total Partners' equity 96,546,571 108,561,094
Total liabilities and Partners' equity $ 96,561,305 $108,566,470
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Interest income - PIMs
Base interest $4,517,722 $4,349,745 $5,099,506
Participation Income 262,069 - 3,615
Interest income - MBS 2,647,031 3,097,129 2,675,934
Other interest income 261,771 251,490 918,504
Total revenues 7,688,593 7,698,364 8,697,559
Expenses:
Asset management fee to an
affiliate (Note F) 686,828 751,490 766,153
Expense reimbursements to affiliates
(Note F) 222,785 244,702 230,515
Amortization of prepaid expenses and
fees (Note B) 958,502 928,187 2,132,096
General and administrative expenses 137,659 131,458 155,086
Total expenses 2,005,774 2,055,837 3,283,850
Net income (Note G) $5,682,819 $5,642,527 $5,413,709
Allocation of net income (Note E):
Average net income per Unit of
Depositary Receipt $ .73 $ .73 $ .70
(7,499,999 Units outstanding)
Corporate Limited Partner $ 73 $ 73 $ 70
General Partners $ 170,485 $ 169,276 $ 162,411
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
Corporate Total
Limited General Partners'
Unitholders Partner Partners Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1991 $131,538,307 $ 1,833 $ (20,921) $131,519,219
Net income 5,251,228 70 162,411 5,413,709
Quarterly distributions (10,509,009) (140) (228,198) (10,737,347)
Special distributions (8,249,980) (110) - (8,250,090)
Balance at December 31, 1992 118,030,546 1,653 (86,708) 117,945,491
Net income 5,473,178 73 169,276 5,642,527
Quarterly distributions (9,873,246) (132) (203,481) (10,076,859)
Special distributions (4,949,999) (66) - (4,950,065)
Balance at December 31, 1993 108,680,479 1,528 (120,913) 108,561,094
Net income 5,512,261 73 170,485 5,682,819
Quarterly distributions (Note E) (9,554,558) (128) (192,551) (9,747,237)
Special distributions (Note E) (7,949,999) (106) - (7,950,105)
Balance at December 31, 1994 $ 96,688,183 $ 1,367 $(142,979) $ 96,546,571
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Operating activities:
Net income $ 5,682,819 $ 5,642,527 $ 5,413,709
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid expenses and fees 958,502 928,187 2,132,096
Premium amortization 14,986 55,441 83,778
Changes in assets and liabilities:
Decrease (increase) in interest receivable
and other assets (285,736) 1,449,206 (1,192,355)
Increase (decrease) in liabilities 9,358 (16,513) (26,489)
Net cash provided by operating activities 6,379,929 8,058,848 6,410,739
Investing activities:
Decrease (increase) in other investments - 6,000,000 (6,139,219)
Investment in PIMs - (68,757) -
Investments in MBS - (6,154,086) (25,367,607)
Proceeds from insurance claims on PIMs - 475,727 8,286,224
Principal collections on PIMs 484,586 407,385 377,473
Principal collections on MBS 4,988,553 9,688,312 6,321,952
Net cash provided by (used for) investing
activities 5,473,139 10,348,581 (16,521,177)
Financing activities:
Quarterly distributions (9,747,237) (10,076,859) (10,737,347)
Special distributions (7,950,105) (4,950,065) (8,250,090
Net cash used for financing activities (17,697,342) (15,026,924) (18,987,437)
Net increase (decrease) in cash and cash
equivalents (5,844,274) 3,380,505 (29,097,875)
Cash and cash equivalents, beginning
of period 8,775,797 5,395,292 34,493,167
Cash and cash equivalents, end of period $ 2,931,523 $ 8,775,797 $ 5,395,292
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
A. Organization
Krupp Insured Plus Limited Partnership (the "Partnership") is a
Massachusetts Limited Partnership. The General Partners of the
Partnership are The Krupp Corporation and The Krupp Company Limited
Partnership-IV and the Corporate Limited Partner is Krupp Depositary
Corporation. The Partnership terminates on December 31, 2025,
unless terminated earlier upon the occurrence of certain events as
set forth in the Partnership Agreement.
The Partnership commenced the public offering of Units on July 7,
1986 and completed its public offering having sold 7,499,999 Units
for $149,489,830 net of purchase volume discounts of $510,150 as of
January 27, 1987.
B. Significant Accounting Policies
The Partnership uses the following accounting policies for financial
reporting purposes which differ in certain respects from those used
for federal income tax purposes (Note G):
PIMs
The Partnership carries its investments in PIMs at amortized cost
as it has the ability and intention to hold these investments.
Basic interest is recognized on the stated coupon rate of the
Department of Housing and Urban Development ("HUD") insured
mortgage (less the servicer's fee) or the stated coupon rate of
the Government National Mortgage Association ("GNMA") or Federal
National Mortgage Association ("FNMA") MBS. The Partnership
recognizes interest related to the participation features as
earned and when it deems these amounts as collectible.
MBS
The Partnership carries its MBS at amortized cost as it has both
the ability and the intention to hold its MBS. The Partnership
amortizes any purchase premiums or discounts over the life of the
underlying mortgages using the effective interest method.
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.
Prepaid Expenses and Fees
Prepaid expenses and fees represent prepaid acquisition expenses
and prepaid participation servicing fees paid for the acquisition
and servicing of PIMs. The Partnership amortizes the prepaid
acquisition fees and expenses using the effective interest method
over a period of ten to twelve years, which represents the actual
maturity or anticipated call date of the underlying mortgage.
The Partnership amortizes the prepaid participation servicing fees
using the straight-line method over a ten year period beginning
from the acquisition of the GNMA or FNMA MBS or final endorsement
of the FHA loan.
Continued
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
B. Significant Accounting Policies, Continued
Prepaid Expenses and Fees, Continued
During 1992, the Partnership reallocated most of the prepaid
acquisition expenses and fees of the PIMs repaid with insurance
claim proceeds to the non-participating insured mortgages acquired
with those insurance claim proceeds. The Partnership wrote off
$1,285,171 representing the prepaid acquisition expenses and fees
not reallocated and all prepaid participation servicing fees
originally allocated to those PIMs.
Income Taxes
The Partnership is not liable for federal or state income taxes
because Partnership income is allocated to the partners for income
tax purposes. If the Partnership's tax returns are examined by
the Internal Revenue Service or state taxing authority and such an
examination results in a change in Partnership taxable income,
such change will be reported to the partners.
Reclassification
Certain prior year balances have been reclassified to be
consistent with current year presentation.
C. PIMs
The Partnership has investments in six PIMs. The Partnership's PIMs
consist of a GNMA or FNMA MBS representing the securitized first
mortgage loan on the underlying property or a sole participation
interest in the mortgage loan originated under the FHA lending
program on the underlying property (collectively the "insured
mortgages"), and participation interests in the revenue stream and
appreciation of the underlying property above specified base levels.
The borrower conveys these participation features to the Partnership
generally through a subordinated promissory note and mortgage (the
"Agreement"). The Partnership receives guaranteed monthly payments
of principal and interest on the GNMA and FNMA MBS and HUD insures
the mortgage loan underlying the GNMA MBS and the FHA mortgage loan.
The borrower usually can not prepay the first mortgage loan during
the first five years and may prepay the first mortgage loan
thereafter subject to a 9% prepayment penalty in years six through
nine, a 1% prepayment penalty in year ten and no prepayment penalty
thereafter. The Partnership may receive interest related to its
participation interests in the underlying property, however, these
amounts are neither insured nor guaranteed.
Generally, the participation features consist of the following: (i)
"Minimum Additional Interest" which is at the rate of .5% per annum
calculated on the unpaid principal balance of the first mortgage on
the underlying property, (ii) "Shared Income Interest" which is 25%
of the monthly gross rental income generated by the underlying
property in excess of a specified base, but only to the extent that
it exceeds the amount of Minimum Additional Interest earned during
such month, (iii) "Shared Appreciation Interest" which is 25%
Continued
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
C. PIMs, Continued
of any increase in the value of the underlying property in excess of
a specified base. Payment of participation interest from the
operations of the property is limited to 50% of net revenue or
surplus cash as defined by FNMA or HUD, respectively. The aggregate
amount of Minimum Additional Interest, Shared Income Interest and
Shared Appreciation Interest payable by the underlying borrower on
the maturity date generally can not exceed 50% of any increase in
Value of the property. However, generally 50% of any net proceeds
will be available to satisfy any accrued but unpaid shared income or
minimum additional interest.
Shared Appreciation Interest is payable when one of the following
occurs: (1) the sale of the underlying property to an unrelated
third party on a date which is later than five years from the date
of the Agreement, (2) the maturity date or accelerated maturity date
of the Agreement, or (3) prepayment of amounts due under the
Agreement and the insured mortgage.
Under the Agreement, the Partnership, upon giving twelve months
written notice, can accelerate the maturity date of the Agreement to
a date not earlier than ten years from the date of the Agreement for
(a) the payment of all participation interest due under the
Agreement as of the accelerated maturity date, or (b) the payment of
all participation interest due under the Agreement plus all amounts
due on the first mortgage note on the property.
During 1993 and 1992, the Partnership received insurance claims on
the following PIMs and subsequently distributed the net proceeds to
the Unitholders of record on the date the net proceeds were
received:
<TABLE>
<CAPTION>
PIM Date Received Net Proceeds
<S> <C> <C>
Abbey Terrace March 12, 1993 $ 475,727
Lenox Woods I May 19, 1992 $ 3,897,924
Abbey Terrace August 14, 1992 $ 4,388,300
</TABLE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
The Partnership's PIMs consist of the following at December 31, 1994
and 1993:
<TABLE>
<CAPTION>
Aggregate Outstanding
Range of Range of Principal Balance at
Original Number Interest Maturity December 31,
Issuer Principal of PIMs Rates Dates (a) 1994 1993
<S> <C> <C> <C> <C> <C> <C>
GNMA $42,450,020
(b)(c)(d) 4 7 - 8% 4/22-12/22 $40,178,312 $40,569,867
FHA 13,814,400
(e) 1 7.375% 12/33 13,757,653 13,814,400
FNMA 6,021,258
(f) 1 7.75% 4/01 5,901,981 5,938,265
$62,285,678 6 $59,837,946 $60,322,532
</TABLE>
Continued
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
(a) The range of maturity dates for PIMs issued by GNMA and FHA represent
the stated maturity date of the security or insured mortgage, however,
the Partnership anticipates realizing amounts due under these PIMs
well before these stated maturity dates.
(b) Includes a PIM with a prepayment penalty of 9% in year 6 through 7, 3%
in year 8 and 9, with no penalty thereafter.
(c) Includes a PIM having an original face value of $17,850,000 that was
purchased for $17,403,750 (a $446,250 discount). The prepayment
penalty for this PIM is 9% in year 6, declining by 1% each year
thereafter through year 9, with no penalty thereafter.
(d) On January 1, 1992, the Partnership entered into an agreement which
provided for a reduction in the permanent interest rate on a GNMA PIM
having an original face value of $4,900,000, which reduced the
interest rate from 8.5% to 7% for a period of four years. The
reduction in the permanent interest rate was granted in exchange for a
reduction of the Shared Appreciation Interest Base from $5,700,000 to
$4,900,000.
(e) On November 30, 1993, the Partnership entered into an agreement with
the underlying borrower of the FHA PIM for a permanent interest rate
reduction from 8.875% per annum to 7.375% per annum, retroactive to
January 1, 1992. In exchange for the interest rate reduction, the
Partnership received an increase in Shared Appreciation Income from
25% in excess of the base amount of $15,410,000 to 25% of the net
sales proceeds over the outstanding indebtedness ($13,757,653 as of
December 31, 1994). In the event of a refinancing, Shared
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
Appreciation Income is 25% of the appraised value over the outstanding
indebtedness. In addition, Shared Income Interest increased from 25%
of rental income in excess of the base amount of $175,000 to 25% of
all distributable surplus cash. On December 1, 1993, the underlying
first mortgage loan received final endorsement.
(f) The total PIM on the underlying property is $22,000,000 of which 73%
or $15,978,742 is held by Krupp Insured Plus III Limited Partnership.
The underlying mortgages of the PIMs are collateralized by multi-family
apartment complexes located in five states. The apartment complexes range
in size from 103 to 386 units.
D. MBS
At December 31, 1994, the Partnership's MBS portfolio has a market
value of approximately $29,177,000 and unrealized gains and losses of
$119,000 and $591,000, respectively, maturing from 2004 to 2033. The
Partnership does not expect to realize these gains or losses as it has
the intention and ability to hold the MBS.
In 1993, the Partnership made the final advances on two insured
mortgages funding the construction of multi-family housing. These
insured mortgages have face values of $9,324,000 and $5,817,171 with
interest rates of 8.75% and 8.25% per annum, respectively, and mature
in 2033. The Partnership received interest only payments during
construction and following final endorsement in 1993 receives monthly
principal and interest payments.
E. Partners' Equity
Profits and losses from Partnership operations and Distributable Cash
Flow are allocated 97% to the Unitholders and Corporate Limited
Partner (the "Limited Partners") and 3% to the General Partners.
Continued
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
E. Partners' Equity, Continued
Upon the occurrence of a capital transaction, as defined in the
Partnership Agreement, net cash proceeds will be distributed first, to
the Limited Partners until they have received a return of their total
invested capital, second, to the General Partners until they have
received a return of their total invested capital, third, 99% to the
Limited Partners and 1% to the General Partners until the Limited
Partners receive an amount equal to any deficiency in the 10%
cumulative return on their invested capital that exists through fiscal
years prior to the date of the capital transaction, fourth, to the
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
class of General Partners until they have received an amount equal to
4% of all amounts of cash distributed under all capital transactions
and fifth, 96% to the Limited Partners and 4% to the General Partners.
Profits arising from a capital transaction will be allocated in the
same manner as related cash distributions. Losses from a capital
transaction will be allocated 97% to the Limited Partners and 3% to
the General Partners.
During 1994, 1993 and 1992, the Partnership made quarterly
distributions totalling $1.28, $1.32 and $1.40 per Unit and Special
distributions of $1.06, $.66 and $1.10 per Unit, respectively.
As of December 31, 1994, the following cumulative partner
contributions and allocations have been made since inception of the
Partnership:
<TABLE>
<CAPTION>
Corporate
Limited General
Unitholders Partner Partners Total
<S> <C> <C> <C> <C> <C>
Capital contributions $149,489,830 $ 2,000 $ 3,000 $149,494,830
Syndication costs (7,906,604) - - (7,906,604)
Quarterly distributions (82,436,032) (1,143) (1,961,190) (84,398,365)
Special distributions (21,149,978) (282) - (21,150,260)
Net income 58,690,967 792 1,815,211 60,506,970
Balance at December 31, 1994 $ 96,688,183 $ 1,367 $ (142,979) $ 96,546,571
</TABLE>
F. Related Party Transactions
Under the terms of the Partnership Agreement, the General Partners
receive an Asset Management Fee equal to .75% per annum of the value of
the Partnership's total invested assets payable quarterly. The General
Partners may also receive an incentive management fee in an amount equal
to .3% per annum on the Partnership's Total Invested Assets providing
the Unitholders receive a specified non-cumulative annual return on
their Invested Capital. Total fees payable to the General Partners for
asset management and incentive management fees shall not exceed 10% of
distributable cash flow over the life of the Partnership.
Additionally, the Partnership reimburses affiliates of the General
Partners for certain expenses incurred related to administrative
services provided to the Partnership including legal, accounting, data
processing, transfer agent and investor communications.
Continued
<PAGE>
G. Federal Income Taxes
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
The reconciliation of the net income reported in the accompanying
statement of income with the net income reported in the Partnership's
1994 federal income tax return is as follows:
<TABLE>
<S> <C>
Net income from statement of operations $ 5,682,819
Plus: Book to tax difference for amortization of
prepaid expenses and fees 824,951
Less: Book to tax difference for timing of
PIM income (265,684)
Net income for federal income tax purposes $ 6,242,086
</TABLE>
The allocation of the 1994 net income for federal income tax purposes
is as follows:
<TABLE>
<CAPTION>
Portfolio
Income
<S> <C>
Unitholders $6,054,742
General Partners 187,263
Corporate Limited Partner 81
$6,242,086
</TABLE>
For the years Ended December 31, 1994, 1993 and 1992 the average
per unit net income to the Unitholders for federal income tax
purposes was $.81, $.83 and $.85, respectively.
H. Fair Value Disclosures of Financial Instruments
The Partnership used the following methods and assumptions to
estimate the fair value of each class of financial instruments:
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short
maturity of those instruments.
MBS
The Partnership estimated the fair value of MBS based on quoted
market prices.
Continued
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
H. Fair Value Disclosures of Financial Instruments, Continued
PIMs
There is no established trading market for these investments.
Management estimates the fair value of the PIMs using quoted market
prices of MBS having the same stated coupon rate and the estimated
value of the participation features. Management estimates the fair
value of the participation features using the estimated fair value of
the underlying properties. Management does not include in the
estimated fair value of the participation features any fair value
estimate arising from appreciation of the properties, because
Management does not believe it can predict the time of realization of
the appreciation feature with any certainty.
At December 31, 1994 and 1993, the Partnership estimates fair value
of its financial instruments as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Cash and cash equivalents $ 2,932,000 $ 8,776,000
MBS 29,177,000 36,078,000
PIMs 54,971,000 62,159,000
$ 87,080,000 $107,013,000
</TABLE>
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Normal
Interest Monthly Carrying
Rate (c) Maturity Payment Original Current Amount at
PIMs(a)(b) (d)(e) Date (d) (e)(f) Face Amount Face Amount 12/31/94
<S> <C> <C> <C> <C> <C> <C>
GNMA
La Costa Apts.
Miami, FL 7.5% 4/15/22 $ 74,500 $11,050,000 $10,409,281 $10,409,281
Mandalay Apts.
Clearwater Beach,
FL 7.25% 8/15/22 117,200 17,850,000 16,822,945 16,402,371
Greentree Apts.
Hoover, AL 8% 11/15/22 64,600 9,096,270 8,671,212 8,671,212
Pine Hills Apts.
Howell, MI 7%
(h) 12/15/22 36,600 4,900,000 4,695,448 4,695,448
42,896,270 40,598,886 40,178,312
FHA
Vista Montana Apts.
Val Vista Lakes, AZ 7.375%
(i) 12/1/33 86,000 13,814,400 13,757,653 13,757,653
FNMA
Royal Palm Place
(g)
Kendall, FL 7.75% 4/1/01 41,700 6,021,258 5,901,981 5,901,981
$62,731,928 $60,258,520 $59,837,946
(j)
</TABLE>
(a) The Participating Insured Mortgages ("PIMs") consist of either a
mortgage-backed security ("MBS") issued and guaranteed by the Federal
National Mortgage Association ("FNMA"), a securitized mortgage loan
insured by the department of Housing and Urban Development ("HUD")
issued and guaranteed as to the timely payment of principal and
interest by the Government National Mortgage Association ("GNMA") or a
first mortgage issued by the Federal Housing Authority ("FHA") and
insured by HUD, and a subordinated promissory note and mortgage or
shared income and appreciation agreement with the underlying borrower
that conveys participation interests in the revenue stream and
appreciation of the underlying property above certain base levels.
(b) The GNMA MBS, FNMA MBS and FHA mortgage loans generally may not be
prepaid during the first five years and may be prepaid subject to a 9%
prepayment penalty in years six through nine, a 1% prepayment penalty
in year ten and no prepayment penalty after year ten.
(c) Represents only the stated interest rate of the GNMA or FNMA MBS or the
stated interest rate of the FHA mortgage loan less the servicing fee.
In addition, the Partnership may receive participation interest ,
consisting of (i) Minimum Additional Interest based on a percentage of
the unpaid principal balance of the first mortgage on the property,
(ii) Shared Income Interest based on a percentage of monthly gross
income generated by the underlying property in excess of a specified
base amount (but only to the intent it exceeds the amount of Minimum
Additional Interest received during such month) and (iii) Shared
Appreciation Interest based on a percentage of any increase in the
value of the underlying property in excess of a specified base value.
Minimum Additional Interest is at a rate of .5% per
Continued
KRUPP INSURED PLUS LIMITED PARTNERSHIP
NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE, Continued
__________
annum calculated on the unpaid principal balance of the first mortgage
note. Shared Income Interest is based on 25% of the monthly gross rental
income
generated by the underlying property in excess of a specified base, but
only to the extent it exceeds the amount of Minimum Additional Interest
earned during the month. Shared Appreciation Interest is based on 25% of
any increase in the value of the project over the base value.
(d) The Partnership's GNMA MBS and FHA mortgage loan have call provisions,
which allow the Partnership to accelerate their respective maturity
dates to as early as ten years from the date of the loan.
(e) The normal monthly payment consisting of principal and interest is
payable monthly at level amounts over the term of the GNMA MBS and the
FHA direct mortgages.
(f) The normal monthly payment consisting of principal and interest for
FNMA MBS is payable at level amounts based on a 35-year amortization.
All unpaid principal and accrued interest is due at the end of year
ten.
(g) The total PIM on the underlying property is $22,000,000 of which 72.63%
or $15,978,742 is held by Krupp Insured Plus-III Limited Partnership.
The Partnership's share of the principal balance due at maturity for
the Royal Palm PIM is approximately $5,585,000.
(h) On January 1, 1992, the Partnership entered into an agreement which
provided for a reduction in the permanent interest rate from 8% to 7%
per annum for a period of four years. The reduction in the permanent
interest rate was granted in exchange for a reduction of the Shared
Appreciation Interest Base from $5,700,000 to $4,900,000.
(i) On November 30, 1993, the Partnership entered into an agreement with
the underlying borrower for a permanent interest rate reduction from
8.75% per annum to 7.375% per annum retroactive to January 1, 1992. In
exchange for the interest rate reduction, the Partnership received an
increase in Shared Appreciation Income from 25% in excess of the base
amount of $15,410,000 to 25% of the net sales proceeds over the
outstanding indebtedness ($13,757,653 at December 31, 1994). In the
event of a refinancing, Shared Appreciation Income is 25% of the
appraised value over the outstanding indebtedness. In addition, Shared
Income Interest increased from 25% of rental income in excess of the
base amount of $175,000 to 25% of all distributable surplus cash.
(j) The aggregate cost of PIMs for federal income tax purposes is
$59,837,946.
A reconciliation of the carrying value of Mortgages for each of the three
years in the period ended December 31, 1994 is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of period $ 60,322,532 $61,136,887 $69,800,584
Additions during period:
Investments in PIMs - 68,757 -
Deductions during period:
Proceeds from insurance
claims - (475,727) (8,286,224)
Principal collections (484,586) (407,385) (377,473)
Balance at end of period $ 59,837,946 $60,322,532 $61,136,887
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Balance
Sheet and Statement of Income and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000786622
<NAME> KRUPP INSURED PLUS LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,931,523
<SECURITIES> 89,486,624<F1>
<RECEIVABLES> 983,130
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,160,028<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 96,561,305
<CURRENT-LIABILITIES> 14,734
<BONDS> 0
<COMMON> 96,546,571<F3>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 96,561,305
<SALES> 0
<TOTAL-REVENUES> 7,688,593<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,005,774<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,682,819
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,682,819
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,682,819
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0
<FN>
<F1>Includes the following investments: Participating Insured Mortgages ("PIMs")
$59,837,946 and Mortgage-Backed Securities ("MBS") $29,648,678.
<F2>Includes the following prepaid acquistion fees and expenses of $2,461,883
net
of accumulated amoritzation of $3,658,625 and prepaid participation servicing
fees of $698,145 net of accumulated amortization of $1,701,854.
<F3>Represents total equity of general partners and limited partners of
$(142,979)
and $96,689,550.
<F4>Represents interest income on investments in mortgages and cash.
<F5>Includes $958,502 of amortization related to prepaid fees and expenses.
<F6>Net income allocated $170,485 to the General Partners and $5,512,334 to the
Limited Partners for the 12 months ended December 31, 1994. Average net income
per unit of Limited Partners interest is $.73 on 7,500,099 units outstanding.
</FN>
</TABLE>
March 31, 1992
Mr. Del J. Lauria
General Partner
Pine Hill Partners
32605 Twelve Mile Road Suite 350
Farmington Hills, MI 48334
RE: Loan and Participation Modification
Pine Hill Apartments
Howell, Michigan
Dear Mr. Lauria:
The Investment Committee for Krupp Insured Plus Limited Partnership (KIP)
has approved the following modifications to the loan and participation
workout agreement between Pine Hill Partners (Borrower) and Krupp dated
January 7, 1992.
1. The interest rate to KIP will be reduced to 7.0% for the four year
workout period. The Borrower will continue to make full payments to
Mellon Financial pursuant to the terms of its first mortgage. Once
KIP receives its payment from Mellon, the difference between the
reduced rate of 7.0% and the original rate to KIP of 8.5% will be
rebated to the Borrower. There will be a retroactive adjustment to
the beginning of the workout period effective with the next rebate.
2. The floor for shared appreciation interest, as stipulated in the
January 7, 1992 agreement, will be $4,900,000.
3. Any surplus cash generated by the property during the workout period,
after payment of debt service and funding of all required monthly
reserves, may be applied to first, to pay any property payables;
second, for property repair and improvements; and third, funded into
the reserve for replacement only. During the workout period no
surplus cash may be used of repay Borrower/owner advances.
Borrower will submit a capital budget for review and approval by KIP,
prior to the expenditure of any surplus cash for property repairs and
improvements.
4. During the workout period, the Borrower will be required to submit
monthly financial and other property reports including, but not limited
to operating statements, balance sheets, rent rolls, occupancy,
and delinquency reports, and will be subject to quarterly
inspections by KMC to review operations.
All other terms and conditions of the loan documents will remain in full
force and effect.
If you are in agreement with the proposed interest rate reduction and
participation modification, please acknowledge by signing below and
returning one copy to us. Upon your acceptance of this agreement, we will
instruct our legal counsel to draft a revised Subordinated Promissory Note,
as well as other required documentation. These documents will be sent to
you for your review. All legal costs associated with documentation of the
loan modification will be paid by 252 Associates.
This proposed agreement shall expire on April 8, 1992.
Sincerely,
Krupp Insured Plus Pine Hill Partners
Limited Partnership
Joanne Leary
Vice President By: Del J. Lauria
Portfolio Manager General Partner
cc: Ronald Halpern
Peter Donovan
BY FACSIMILE AND MAIL
June 7, 1993
Arthur C. Powell
General Partner
VM Associates L. P.
5141 North 40th Street
Suite 200
Phoenix, AZ 85018
Re: Vista Montana Apartments
Dear Art:
Based on our discussions, the attached summarizes the
modifications to the Vista Montana first mortgage loan and
Subordinated Promissory Note that Krupp Insured Plus-II Limited
Partnership ("KIP") is willing to accept. All other terms and
conditions of the loan documents will remain in full force and
effect.
If the terms of this workout agreement are acceptable to you,
please acknowledge by signing below, initialing the attachement
and returning one copy of this letter and attachment to us. This
proposal is subject to any approvals required by HUD or GMAC. In
the event the parties cannot in good faith agree on appropriate
documentation of the workout agreement, this agreement shall
become null and void. All legal costs associated with
documentation of the agreement and loan modification shall be
paid by the Borrower. This proposal shall expire on Tuesday,
June 8, 1993.
Sincerely,
Krupp Insured Plus-II Accepted:
Limited Partnership VM Associates
Limited Partnership
Joanne Leary Arthur C. Powell
Vice President General Partner
I:\...\Vistamon\misc\fnlpro
Memorandum
To: File
CC: Nancy Giunta
From: Kathy Bakon
Date: February 6, 1995
Subject: Assignment of Vista Montana from KIP 2 to KIP
Please let this memo serve as an Assignment of interest from
Krupp Insured Plus - II Limited Partnership to Krupp Insured Plus
Limited Partnership in the documents dated June 7, 1993 between
VM Associates Limited Partnership and Krupp Insured Plus -II
Limited Partnership. All documents prior to this were assigned
via an Assignment dated July 12, 1988 by and between Krupp
Insured Plus-II Limited Partnership, and Krupp Insured Plus
Limited Partnership.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers effective as of
June 7, 1993.
ASSIGNOR: KRUPP INSURED PLUS -II Limited Partnership
By:
ASSIGNEE: KRUPP INSURED PLUS - I Limited Partnership
By:
