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 THEx
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15815
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
BALANCE SHEETS
<TABLE>
ASSETS
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Participating Insured Mortgages ("PIMs") $ 59,448,811 $ 59,837,946
Mortgage Backed Securities ("MBS") (Note 2) 28,375,993 29,648,678
Total mortgage investments 87,824,804 89,486,624
Cash and cash equivalents 2,491,756 2,931,523
Interest receivable and other assets 873,023 983,130
Prepaid acquisition fees and expenses, net of
accumulated amortization of $4,232,579 and
$3,658,625, respectively 1,887,929 2,461,883
Prepaid participation servicing fees, net
of accumulated amortization of $1,846,776
and $1,701,854, respectively 553,223 698,145
Total assets $ 93,630,735 $ 96,561,305
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 12,023 $ 14,734
Partners' equity (Note 3):
Limited Partners
(7,500,099 Limited Partner interests
outstanding) 93,783,656 96,689,550
General Partners (164,944) (142,979)
Total Partners' equity 93,618,712 96,546,571
Total liabilities and Partners' equity $ 93,630,735 $ 96,561,305
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF INCOME
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues
<S> <C> <C> <C> <C>
Interest income - PIMs $1,118,398 $1,060,124 $3,362,494 $3,392,118
Interest income - MBS 612,974 654,697 1,868,392 2,002,880
Other interest income 37,109 33,861 119,330 203,341
Total revenues 1,768,481 1,748,682 5,350,216 5,598,339
Expenses:
Asset management fee to an
affiliate 167,148 171,581 499,089 516,416
Expense reimbursements to
affiliates 29,556 61,885 88,665 185,654
Amortization of prepaid
fees and expenses 239,625 239,624 718,876 718,876
General and administrative 28,465 16,727 80,498 79,950
Total expenses 464,794 489,817 1,387,128 1,500,896
Net income $1,303,687 $1,258,865 $3,963,088 $4,097,443
Allocation of net income (Note 3):
Limited Partners $1,264,576 $1,221,099 $3,844,195 $3,974,520
Average net income per
Limited Partner interest
(7,500,099 Limited Partner
interests outstanding) $ .17 $ .16 $ .51 $ .53
General Partners $ 39,111 $ 37,766 $ 118,893 $ 122,923
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
Operating activities:
<S> <C> <C>
Net income $ 3,963,088 $ 4,097,443
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid fees and expenses 718,876 718,876
Premium amortization MBS - 17,701
Changes in assets and liabilities:
Decrease (increase) in interest receivable
and other assets 110,107 (7,470)
(Decrease) increase in liabilities (2,711) 7,313
Net cash provided by operating activities 4,789,360 4,833,863
Investing activities:
Principal collections on MBS 1,272,685 4,441,344
Principal collections on PIMs 389,135 359,864
Net cash provided by investing activities 1,661,820 4,801,208
Financing activities:
Quarterly distributions (6,890,947) (7,452,051)
Special distributions - (7,950,106)
Net cash used for financing activities (6,890,947) (15,402,157)
Net decrease in cash and cash equivalents (439,767) (5,767,086)
Cash and cash equivalents, beginning of period 2,931,523 8,775,797
Cash and cash equivalents, end of period $ 2,491,756 $ 3,008,711
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<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, 1994 for additional information
relevant to significant accounting policies followed by the
Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the Partnership's financial position as of September 30, 1995,
its results of operations for the three and nine months ended
September 30, 1995 and 1994 and its cash flows for the nine months
ended September 30, 1995 and 1994.
The results of operations for the three and nine months ended
September 30, 1995 are not necessarily indicative of the results which
may be expected for the full year. See Management's Discussion and
Analysis of Financial Condition and Results of Operations included in
this report.
2. MBS
At September 30, 1995, the Partnership's MBS portfolio had a market
value of approximately $29,087,000 with unrealized gains of
approximately $711,000 and maturity dates ranging from 2004 to 2033.
3. Changes in Partners' Equity
A summary of changes in Partners' equity for the nine months ended
September 30, 1995 is as follows:
Total
Limited General Partners'
Partners Partners Equity
Balance at December 31, 1994 $96,689,550 $(142,979) $ 96,546,571
Net income 3,844,195 118,893 3,963,088
Quarterly distributions (6,750,089) (140,858) (6,890,947)
Balance at September 30, 1995 $93,783,656 $(164,944) $ 93,618,712
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The most significant demands on the Partnership's liquidity are regular
quarterly distributions paid to investors of approximately $2.3 million.
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 Partnership funds a portion of the distribution
from principal collections and as a result the capital resources of the
Partnership will continually decrease. As a result of this decrease, the
total cash inflows to the Partnership will also decrease which will result
in periodic adjustments to the quarterly distributions paid to investors.
During the last half of 1994 and the first nine months of 1995 prepayments
on the Partnership's MBS portfolio decreased dramatically as compared to
the level of prepayments during 1993 and the beginning of 1994. The high
level of MBS prepayments during 1993 and early 1994 caused such an increase
in available cash that the Partnership made a special distribution of $1.06
per Unit during 1994. Also during 1994, the Partnership adjusted its
distribution to $1.20 per Unit per year to reflect the anticipated cash
inflows that would be available to fund distributions in the near term.
During the nine months ended September 30, 1995, the Partnership received
MBS principal collections of $1.3 million as compared to $4.4 million
during the nine months ended September 30, 1994, reflecting a significantly
lower level of prepayments. To date, this decrease in MBS principal
collections has not adversely affected the Partnership's liquidity or its
ability to maintain the current distribution rate of $1.20 per Unit per
year. However, as the portion of distributions funded with principal
collections on MBS and PIMs reduces the asset base of the Partnership,
future cash inflows will decrease. To the extent cash inflows from
operations decrease and prepayments do not increase sufficiently to offset
the decrease in cash inflows, the Partnership will need to adjust the
distribution rate accordingly.
The Federal National Mortgage Association ("FNMA") is currently negotiating
a loan workout with the underlying borrower of the Royal Palm Place
Apartments PIM, which has a current face value of $5.9 million. Should the
negotiations be unsuccessful FNMA would foreclose on the property and repay
the Partnership the outstanding balance of the PIM. The Partnership would
then distribute the proceeds to the Limited Partners as a special
distribution.
If the Partnership receives a repayment of the Royal Palm PIM it would
reduce the asset base of the Partnership and future cash inflows from
operating activities, so the Partnership would need to adjust the current
distribution rate to reflect these lower cash inflows. Also, a repayment
of the Royal Palm PIM as a result of a foreclosure would eliminate any
future collection of additional interest related to the participation
features by the Partnership. At this time, the General Partners cannot
determine if the PIM will be restructured or paid off.
Assessment of Credit Risk
The Partnership's investments in mortgages are guaranteed or insured by
FNMA, the Government National Mortgage Association ("GNMA"), the Federal
Home Loan Mortgage Corporation ("FHLMC") and the Department of Housing and
Urban Development ("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.
<PAGE>
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 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.
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, 1995 and the period from inception to September
30, 1995. The General Partners provide certain of the information below to
meet requirements of the Partnership Agreement and because they believe
that it is an appropriate supplemental measure of operating performance.
However, Distributable Cash Flow and Net Cash Proceeds from Capital
Transactions should not be considered by the reader as a substitute to net
income as an indicator of the Partnership's operating performance or to
cash flows as a measure of liquidity.
<TABLE>
<CAPTION>
(amounts in thousands, except
per Unit amounts)
Nine Months Ended Inception through
September 30, 1995 September 30, 1995
Distributable Cash Flow (Federal income
tax basis):
<S> <C> <C>
Income for tax purposes $ 4,580 $ 65,604
Items not requiring or (not providing)
the use of operating funds:
Amortization of prepaid fees and expenses 102 4,729
Amortization of MBS premiums - 284
Acquisition expenses paid from
offering proceeds charged to operations - 1,098
Gain on sale of MBS - (114)
Total Distributable Cash Flow ("DCF") $ 4,682 $ 71,601
Limited Partners Share of DCF $ 4,542 $ 69,453
Limited Partners Share of DCF per Unit $ .61 $ 9.26 (b)
General Partners Share of DCF $ 140 $ 2,148
Net Proceeds from Capital Transactions:
Insurance claim proceeds and
principal collections on PIMs $ 389 $ 46,272
Principal collections on MBS 1,273 38,275
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 $ 1,662 $ 43,886
</TABLE>
<PAGE>
Distributable Cash Flow and Net Cash Proceeds From Capital
Transactions, Continued
<TABLE>
<CAPTION>
Nine Months Ended Inception through
September 30, 1995 September 30, 1995
Cash available for distribution
(DCF plus Net Proceeds from
<S> <C> <C>
Capital Transactions) $ 6,344 $115,487
Distributions:
Limited Partners $ 6,751 (a) $112,588 (a)
Limited Partners Average per Unit $ .90 (a) $ 15.01 (a)(b)
General Partners $ 140 (a) $ 2,148 (a)
Total Distributions $ 6,891 $114,736
</TABLE>
(a) This includes an estimate of the November 1995 distribution.
(b) Limited Partners average per Unit return of capital as of November 1995 is
$5.75 [$15.01 - $9.26] 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.
Operations
The following discussion relates to the operations of the Partnership
during the three and nine months ended September 30, 1995 and 1994:
<TABLE>
(Rounded to $1,000)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest income on PIMs $1,118 $1,060 $3,362 $3,392
Interest income on MBS 613 652 1,868 2,021
Other interest income 37 34 119 203
Partnership expenses (225) (251) (667) (782)
Distributable Cash Flow 1,543 1,495 4,682 4,834
Amortization of MBS premium - 4 - (18)
Amortization of prepaid fees
and expenses (239) (240) (719) (719)
Net income $1,304 $1,259 $3,963 $4,097
</TABLE>
Net income decreased during the nine months ended September 30, 1995 as
compared to the nine months ended September 30, 1994 primarily as a result of
a lower average asset balance during 1995. Interest income on MBS decreased
$153,000 during the nine months ended September 30, 1995 as compared to the
corresponding period in 1994 due primarily to the significant prepayments of
the mortgages underlying the MBS during 1993 and the first half of 1994.
Interest income on PIMs and other interest income decreased $30,000 and
$84,000, respectively, during the nine months ended September 30, 1995 versus
the same period in 1994, but were offset by a $115,000 decrease in Partnership
expenses during the nine months ended September 30, 1995 as compared to the
same period in 1994. Partnership expenses decreased due to lower expense
reimbursements to affiliates and a lower asset management fee due to a
declining asset base.
<PAGE>
There was no material change in net income during the third quarter of 1995
as compared to the corresponding period in 1994. The decrease in interest
income on MBS during the third quarter of 1995 as compared to the same
period in 1994 reflects the slowdown of prepayments during the second half
of 1994 and the first nine months of 1995.
<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
<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/Robert A. Barrows
Robert A. Barrows
Vice President and Chief Accounting Officer of The Krupp
Corporation, a General Partner of the Registrant.
Date: October 24, 1995
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,491,756
<SECURITIES> 87,824,804<F1>
<RECEIVABLES> 873,023
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,441,152<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 93,630,735
<CURRENT-LIABILITIES> 12,023
<BONDS> 0
<COMMON> 93,618,712<F3>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 93,630,735
<SALES> 0
<TOTAL-REVENUES> 5,350,216<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,387,128<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,963,088
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,963,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,963,088
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Includes the following investments: Participating Insured Mortgages ("PIMs")
$59,448,811 & Mortgage-Backed Securities ("MBS") $28,375,993.
<F2>Includes the following prepaid acquisition fees & expenses of $1,887,929 net of
accumulated amortization of $2,232,579 and prepaid participation servicing of
$553,223 net of accumulated amortization of $1,846,776.
<F3>Represents total equity of General Partners & Limited Partners of ($164,944)
and $93,783,656.
<F4>Represents interest income on investments in mortgages & cash
<F5>Includes $718,876 of amortization related to prepaid fees & expenses
<F6>Net income allocated $118,893 to the General Partners & $3,844,195 to the
Limited Partners. Average net income per unit of Limited Partners interest is
.51 on 7,500,099 Units outstanding
</FN>
</TABLE>
