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 June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15815
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
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
<S> <C> <C> <C>
Participating Insured Mortgages ("PIMs") $ 42,504,831 $ 42,745,790
(Note 2)
Mortgage-Backed Securities and insured
mortgage ("MBS") (Note 3) 26,353,493 27,147,213
Total mortgage investments 68,858,324 69,893,003
Cash and cash equivalents 2,292,217 1,757,197
Interest receivable and other assets 474,136 517,476
Prepaid acquisition fees and expenses, net of
accumulated amortization of $3,262,418 and
$4,196,787, respectively 548,192 832,838
Prepaid participation servicing fees, net of
accumulated amortization of $595,975 and
$802,641, respectively 214,871 273,009
Total assets $ 72,387,740 $ 73,273,523
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 10,443 $ 18,468
Partners' equity (deficit):
Limited Partners 71,578,984 72,448,679
(7,500,099 Limited Partner interests
outstanding)
General Partners (233,646) (194,008)
Unrealized gain on MBS 1,031,959 1,000,384
Total Partners' equity 72,377,297 73,255,055
Total liabilities and Partners' equity $ 72,387,740 $ 73,273,523
</TABLE>
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<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Interest income - PIMs $ 805,709 $1,106,158 $1,604,668 $2,214,716
Interest income - MBS 549,766 582,702 1,100,607 1,173,796
Other interest income 29,910 27,017 54,926 57,948
Total revenues 1,385,385 1,715,877 2,760,201 3,446,460
Expenses:
Asset management fee to an affiliate 126,990 161,367 253,461 323,869
Expense reimbursements to affiliates 20,130 22,993 36,467 50,745
Amortization of prepaid expenses and
fees 154,600 239,626 342,784 479,251
General and administrative 38,485 20,328 85,880 47,433
Total expenses 340,205 444,314 718,592 901,298
Net income $1,045,180 $1,271,563 $2,041,609 $2,545,162
Allocation of net income (Note 4):
Limited Partners $1,013,824 $1,233,416 $1,980,360 $2,468,807
Average net income per Limited
Partner interest
(7,500,099 Limited Partner
interests outstanding) $ .13 $ .17 $ .26 $ .33
General Partners $ 31,356 $ 38,147 $ 61,249 $ 76,355
</TABLE>
<PAGE>
KRUPP INSURED PLUS LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
1997 1996
<S> <C> <C>
Operating activities:
Net income $ 2,041,609 $ 2,545,162
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid expenses and fees 342,784 479,251
Changes in assets and liabilities:
Decrease (increase) in interest receivable
and other assets 43,340 (59,872)
Decrease in liabilities (8,025) (6,602)
Net cash provided by operating activities 2,419,708 2,957,939
Investing activities:
Principal collections on PIMs 240,959 251,268
Principal collections on MBS 825,295 976,352
Net cash provided by investing activities 1,066,254 1,227,620
Financing activity:
Quarterly distributions (2,950,942) (4,591,206)
Net increase (decrease) in cash and cash equivalents 535,020 (405,647)
Cash and cash equivalents, beginning of period 1,757,197 2,394,592
Cash and cash equivalents, end of period $ 2,292,217 $ 1,988,945
</TABLE>
<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, 1996 for additional information relevant
to significant accounting policies followed by the Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the Partnership's financial position as of June 30, 1997, its
results of operations for the three and six months ended June 30, 1997
and 1996 and its cash flows for the six months ended June 30, 1997 and
1996.
The results of operations for the three and six months ended June 30,
1997 are not necessarily indicative of the results which may be expected
for the full year. See Management's Discussion and Analysis of Financial
Condition and Results of Operations included in this report.
2. PIMs
At June 30, 1997, the Partnership's PIMs have a fair value of
$42,760,970 and gross unrealized gains and losses of $586,208 and
$330,069, respectively. The PIMs have maturities ranging from 2006 to
2033.
3. MBS
At June 30, 1997, the Partnership's MBS portfolio has an amortized cost
of $25,321,534 and gross unrealized gains of $1,031,959 with maturities
from 2004 to 2033.
4. Changes in Partners' Equity
A summary of changes in Partners' Equity for the six months ended June
30, 1997 is as follows:
<TABLE>
Total
<CAPTION>
Limited General Unrealized Partners'
Partners Partners Gain Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 72,448,679 $(194,008) $1,000,384 $ 73,255,055
Net income 1,980,360 61,249 - 2,041,609
Quarterly distributions (2,850,055) (100,887) -
(2,950,942)
Increase in unrealized gain
on MBS - - 31,575 31,575
Balance at June 30, 1997 $ 71,578,984 $(233,646) $1,031,959 $72,377,297
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning
Management s expectations regarding the future financial performance and
future events. These forward-looking statements involve significant risk
and uncertainties, including those described herein. Actual results may
differ materially from those anticipated by such forward-looking
statements.
Liquidity and Capital Resources
The most significant demands on the Partnership's liquidity are regular
quarterly distributions paid to investors of approximately $1.5 million.
Funds used for investor distributions come from (i) nterest received on
the PIMs, MBS, cash and cash equivalents, (ii) the principal collections
received on the PIMs and MBS and (iii) cash reserves. The Partnership
funds a portion of the distribution from principal collections causing the
capital resources of the Partnership to continually decrease. As a result
of this decrease, the total cash inflows to the Partnership will also
decrease which will result in periodic downward adjustments to the
quarterly distributions paid to investors.
The General Partners periodically review the distribution rate to
determine whether an adjustment is necessary based on projected future
cash flows. In general, the General Partners try to set a distribution
rate that provides for level quarterly distributions of cash available for
distribution. To the extent quarterly distributions differ from cash
available for distribution, the General Partners may adjust the
distribution rate or distribute funds through a special distribution.
On July 11, 1997, the owner of the Pine Hills Apartments notified the
Partnership of its intent to payoff its PIM when the property is
refinanced. Upon refinancing the Partnership will receive the outstanding
principal of $4.6 million. The General Partners of the Partnership have
required the owner to obtain an appraisal of the property to determine
whether any SAI has been earned. The Partnership will distribute the
capital transaction proceeds from this prepayment to investors through a
special distribution. The General Partners will be reviewing the
anticipated cash flows from the remaining investments to determine whether
the current distribution rate will be sustainable or if an adjustment is
necessary.
-9-
<PAGE>
As an ongoing result of the Partnership s agreement to a modification
of the Royal Palm PIM in December of 1995, the Partnership will receive
interest only payments on the FNMA MBS at an interest rate of 6.5% in
1997. Thereafter interest rates will range from 7.0% to 8.775% per annum
through maturity. Also, the Partnership received its pro-rata share of
the principal payment totaling $250,000 paid in January.
For the first five years of the PIMs the borrowers were prohibited from
prepaying. For the second five years, the borrower can prepay the loan by
incurring a prepayment penalty. The Partnership has the option to call
certain PIMs by accelerating their maturity if the loans are not prepaid
by the tenth year after permanent funding. The Partnership will determine
the merits of exercising the call option for each PIM as economic
conditions warrant. Such factors as the condition of the asset, local
market conditions, interest rates and available financing will have an
impact on this decision.
Assessment of Credit Risk
The Partnership's investments in mortgages are guaranteed or insured by
the Federal National Mortgage Association ( FNMA ), the Government
National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC") or the United States 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.
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.
Operations
The following discussion relates to the operations of the Partnership
during the three and six months ended June 30, 1997 and 1996:
Net income decreased during the three and six months ended June 30,
1997 as compared to the three and six months ended June 30, 1996 due
primarily to lower interest income on PIMs and MBS. Interest income on
PIMs and MBS will continue to decline as principal collections reduce the
outstanding balance of the Partnership s portfolio. The Partnership
funds a portion of distributions with MBS and PIM principal collections
which reduces the invested assets generating income for the Partnership.
-10-
<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
-11-
<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 Mortgage Accounting Officer
of The Krupp Corporation, a General Partner of the Registrant.
DATE: August 5, 1997
-12-
<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-I LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,292,217
<SECURITIES> 68,858,324<F1>
<RECEIVABLES> 474,136
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 763,063<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 72,387,740
<CURRENT-LIABILITIES> 10,443
<BONDS> 0
0
0
<COMMON> 71,345,338<F3>
<OTHER-SE> 1,031,959<F4>
<TOTAL-LIABILITY-AND-EQUITY> 72,387,740
<SALES> 0
<TOTAL-REVENUES> 2,760,201<F5>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 718,592<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,041,609
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,041,609
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,041,609
<EPS-PRIMARY> 0<F7>
<EPS-DILUTED> 0<F7>
<FN>
<F1>Includes participating Insured Mortgages (PIMs") of $42,504,831 and
Mortgage-Backed Securities ("MBS") of $26,353,493.
<F2>Includes prepaid acquisition fees and expenses of $3,810,610 net of accumulated
amortization of $3,262,418 and prepaid participation servicing fees of $810,846
net of accumulated amortization of $595,975.
<F3>Represents total equity of General Partners and Limited Partners. General
Partners deficit of ($233,646) and Limited Partners equity of $71,578,984.
<F4>Unrealized gain on MBS.
<F5>Represents interest income on investments in mortgages and cash.
<F6>Includes $342,784 of amortization of prepaid fees and expenses.
<F7>Net income allocated $61,249 to the General Partners and $1,980,360 to the
Limited Partners. Average net income per Limited Partner interest is $.26 on
7,500,099 Limited Partner interests outstanding.
</FN>
</TABLE>
