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 0-17690
Krupp Insured Mortgage Limited Partnership
Massachusetts 04-3021395
(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 MORTGAGE LIMITED PARTNERSHIP
<TABLE>
BALANCE SHEETS
ASSETS
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Participating Insured Mortgages ("PIMs") $190,663,941 $191,653,787
Mortgage-Backed Securities ("MBS") (Note 2) 21,047,515 22,795,244
Total mortgage investments 211,711,456 214,449,031
Cash and cash equivalents 4,702,825 5,064,654
Other investment (Note 1) 992,819 -
Interest receivable and other assets 2,040,124 2,277,632
Prepaid acquisition fees and expenses, net of
accumulated amortization of $7,314,335 and
$6,204,472, respectively 7,159,709 8,269,572
Prepaid participation servicing fees, net of
accumulated amortization of $2,332,135 and
$1,954,664, respectively 2,454,040 2,831,511
Total assets $229,060,973 $232,892,400
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 15,715 $ 15,380
Partners' equity (deficit) (Note 3):
Limited Partners 229,198,504 232,984,076
(14,956,896 Limited Partner interests
outstanding)
General Partners (153,246) (107,056)
Total Partners' equity 229,045,258 232,877,020
Total liabilities and Partners' equity $229,060,973 $232,892,400
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED MORTGAGE 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
Revenue:
Interest income - PIMs
<S> <C> <C> <C> <C>
Base interest $3,643,123 $3,655,716 $10,940,159 $10,924,595
Participation interest 38,683 163,866 507,668 426,095
Interest income - MBS 437,182 422,247 1,350,699 1,292,741
Other interest income 80,329 128,027 233,358 364,500
Total revenues 4,199,317 4,369,856 13,031,884 13,007,931
Expenses:
Asset management fee
to an affiliate 401,324 401,916 1,195,930 1,195,682
Expense reimbursements to
affiliates 64,227 134,483 192,680 403,451
Amortization of prepaid fees
and expenses 495,778 495,528 1,487,334 1,486,584
General and administrative 58,363 28,548 181,153 155,716
Total expenses 1,019,692 1,060,475 3,057,097 3,241,433
Net income $3,179,625 $3,309,381 $ 9,974,787 $ 9,766,498
Allocation of net income (Note 3):
Limited Partners $3,084,236 $3,210,100 $ 9,675,543 $ 9,473,503
Average net income per Unit
(14,956,896 Limited Partner
interests outstanding) $ .21 $ .21 $ .65 $ .63
General Partners $ 95,389 $ 99,281 $ 299,244 $ 292,995
</TABLE>
<PAGE>
KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
Operating activities:
<S> <C> <C>
Net income $ 9,974,787 $ 9,766,498
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of other investment discount (8,118) -
Amortization of prepaid fees and expenses 1,487,334 1,486,584
Changes in assets and liabilities:
Decrease in interest receivable
and other assets 237,508 9,113
Increase in liabilities 335 7,289
Net cash provided by operating activities 11,691,846 11,269,484
Investing activities:
Principal collections on MBS 1,747,729 4,994,082
Investment in MBS - (4,861,358)
Principal collections on PIMs 989,846 899,052
Other investment (984,701) -
Net cash provided by investing activities 1,752,874 1,031,776
Financing activity:
Distributions (13,806,549) (19,008,329)
Net decrease in cash and cash equivalents (361,829) (6,707,069)
Cash and cash equivalents, beginning of the period 5,064,654 13,443,459
Cash and cash equivalents, end of the period $ 4,702,825 $ 6,736,390
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP INSURED MORTGAGE 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,
Krupp Plus Corporation and Mortgage Services Partners Limited
Partnership, (collectively the "General Partners") of Krupp Insured
Mortgage Limited Partnership (the "Partnership"), the disclosures
contained in this report are adequate to make this 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.
Other Investment
Other investment consists of a banker's acceptance with an original
maturity greater than three months. The Partnership carries the other
investment at amortized cost, which approximates fair value, due to the
short period of time to maturity.
2. MBS
At September 30, 1995, the Partnership's MBS portfolio has a market
value of approximately $21,677,000 and unrealized gains and losses of
approximately $734,000 and $105,000, respectively, with maturity dates
ranging from 1999 to 2024.
3. Changes in Partners' Equity
A summary of changes in Partners' Equity for the nine months ended
September 30, 1995 is as follows:
<TABLE>
Total
<CAPTION>
Limited General Partners'
Partner Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1994 $232,984,076 $(107,056) $232,877,020
Net income 9,675,543 299,244 9,974,787
Distributions (13,461,115) (345,434) (13,806,549)
Balance at September 30, 1995 $229,198,504 $(153,246) $229,045,258
</TABLE>
<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 $4.5 million.
Funds used for investor distributions are generated from interest income
received on the PIMs, MBS, cash and short-term investments, and the
principal collections received on the PIMs and MBS. The Partnership funds
a portion of the distribution from principal collections, 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
distributions paid to investors.
Based on current projections, the General Partners believe the Partnership
can maintain the current distribution rate both on a short and long term
basis. However, in the event of a PIM prepayment the Partnership would
distribute any proceeds from the prepayment as a special distribution and
adjust the distribution rate to reflect the anticipated future cash inflows
from the remaining mortgages. The General Partners do not anticipate any
PIMs prepaying in the near future.
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") 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.
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 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.
<PAGE>
Distributable Cash Flow and Net Cash Proceeds from Capital Transactions
Shown below is the calculation of Distributable Cash Flow and Net Cash
Proceeds from Capital Transactions as defined in 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>
(amounts in thousands,
except
per Unit amounts)
<CAPTION>
Nine Months Ended Inception through
September 30, 1995 September 30, 1995
Distributable Cash Flow:
<S> <C> <C>
Income for tax purposes $ 10,741 $ 105,264
Items not requiring or (not providing)
the use of operating funds:
Remington Place interest rate reduction (71) (167)
Amortization of prepaid fees,
expenses and organization costs 792 5,802
Acquisition expenses paid from
offering proceeds charged to operations - 184
Gain on sale of MBS - (417)
Total Distributable Cash Flow ("DCF") $ 11,462 $ 110,666
Limited Partners Share of DCF $ 11,118 $ 107,346
Limited Partners Share of DCF per Unit $ .74 $ 7.18 (b)
General Partners Share of DCF $ 344 $ 3,320
Net Proceeds from Capital Transactions:
Principal collection on PIMs 990 5,705
Principal collections on MBS 1,748 56,061
Principal collections reinvested
in MBS and PIMs - (14,537)
Gain on sale of MBS - 417
Total Net Proceeds from Capital Transactions $ 2,738 $ 47,646
Cash available for distribution
(DCF plus Net Proceeds from
Capital Transactions) $ 14,200 $ 158,312
Distributions:
Limited Partners $ 13,461 (a) $ 152,266 (a)
Limited Partners Average per Unit $ .90 (a) $ 10.18 (a)(b)
General Partners $ 344 (a) $ 3,320 (a)
Total Distributions $ 13,805 $ 155,586
(a) Includes an estimate of the distribution to be paid in November 1995.
(b) Limited Partners average per Unit return of capital as of November 1995 is
$3.00 [$10.18 - $7.18]. 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.
</TABLE>
<PAGE>
Operations
The following discussion relates to the operations of the Partnership
during the three and nine months ended September 30, 1995 and 1994
(amounts in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
Interest income on PIMs:
<S> <C> <C> <C> <C>
Base interest $3,643 $3,656 $10,940 $10,925
Participation interest 39 164 508 426
Interest income on MBS 437 422 1,351 1,293
Other interest income 81 128 233 364
Partnership expenses (524) (565) (1,570) (1,755)
Distributable Cash Flow 3,676 3,805 11,462 11,253
Amortization of prepaid fees
and expenses (496) (496) (1,487) (1,487)
Net income $3,180 $3,309 $ 9,975 $ 9,766
</TABLE>
Net income increased during the nine months ended September 30, 1995 as
compared to the corresponding periods in 1994 due primarily to lower
expense reimbursements to affiliates. Net income decreased during the
third quarter of 1995 as compared to the third quarter of 1994 due
primarily to a decrease in participation interest income.
<PAGE>
KRUPP INSURED MORTGAGE 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 Mortgage Limited Partnership
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer
of Krupp Plus Corporation, a General
Partner of the Registrant.
DATE: October 24, 1995
-14-
<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> 0000832095
<NAME> KRUPP INSURED MORTGAGE LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,702,825
<SECURITIES> 211,711,456<F1>
<RECEIVABLES> 2,040,124
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,613,749<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 229,060,973
<CURRENT-LIABILITIES> 15,715
<BONDS> 0
<COMMON> 229,045,258<F3>
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 229,045,258
<SALES> 0
<TOTAL-REVENUES> 13,031,884<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,057,097<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,974,787
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,974,787
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,974,787
<EPS-PRIMARY> 0<F6>
<EPS-DILUTED> 0<F6>
<FN>
<F1>Includes the following investments: Participating Insured Mortgages ("PIMs")
$190,663,941 & Mortgage-Backed Securities ("MBS") $21,047,515
<F2>Includes the following prepaid acquisition fees & expenses of $7,159,709 net of
accumulated amortization of $7,314,335 and prepaid participating servicing of
$2,454,040 net of accumulated amortization of $2,332,135
<F3>Represents total equity of General Partners & Limited Partners of $(153,246)
and $229,198,504
<F4>Represents interest income on investments in mortgages & cash
<F5>Includes $1,487,337 of amortization related to prepaid fees & expenses
<F6>Net income allocated $299,244 to the General Partners & $9,675,543 to the
Limited Partners. Average net income per unit of Limited Partners interest is
$.65 on 14,956,896 units outstanding.
</FN>
</TABLE>
