UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
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 0-19244
Krupp Government Income Trust
Massachusetts 04-3089272
(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.
<TABLE>
KRUPP GOVERNMENT INCOME TRUST
BALANCE SHEETS
<CAPTION>
ASSETS
September 30, December 31,
1998 1997
Participating Insured Mortgage Investments
("PIMIs") (Note 2):
<S> <C> <C>
Insured Mortgages $ 75,488,620 $108,470,247
Additional Loans 13,358,208 19,209,108
Participating Insured Mortgages ("PIMs")(Note 2) 47,834,126 48,112,523
Mortgage-Backed Securities and multi-family
insured mortgage loan ("MBS") (Note 3) 23,641,686 27,085,341
Total mortgage investments 160,322,640 202,877,219
Cash and cash equivalents 10,217,678 9,749,804
Interest receivable and other assets 1,047,078 1,294,240
Prepaid acquisition fees and expenses, net of
accumulated amortization of $8,604,734 and
$6,658,224, respectively 3,661,716 5,608,226
Prepaid participation servicing fees, net of
accumulated amortization of $2,595,399 and
$1,839,070, respectively 1,493,314 2,249,643
Total assets $176,742,426 $221,779,132
LIABILITIES AND SHAREHOLDERS' EQUITY
Deferred income on Additional Loans(Note 4) $ 5,688,346 $7,871,606
Other liabilities 24,970 25,414
Total liabilities 5,713,316 7,897,020
Shareholders' equity (Note 5):
Common stock, no par value; 17,510,000
shares authorized and 15,053,135 shares
issued and outstanding 169,536,534 212,496,510
Unrealized gain on MBS 1,492,576 1,385,602
Total Shareholders' equity 171,029,110 213,882,112
Total liabilities and Shareholders'
equity $176,742,426 $221,779,132
</TABLE>
The accompanying notes are an integral
part of the financial statements
<TABLE>
KRUPP GOVERNMENT INCOME TRUST
STATEMENTS OF INCOME
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Interest income - PIMs and PIMIs:
<S> <C> <C> <C> <C>
Base interest (Note 2) $2,400,678 $2,981,872 $ 8,412,360 $ 9,201,061
Additional Loan Interest 196,970 123,173 3,059,286 771,918
Participation income 151,417 37,089 5,049,492 1,385,481
Interest income - MBS 466,103 558,426 1,484,351 1,658,847
Other interest income 557,286 250,855 942,923 841,369
Total revenues 3,772,454 3,951,415 18,948,412 13,858,676
Expenses:
Asset management fee to an
affiliate 301,642 384,251 1,032,439 1,148,936
Expense reimbursements to
affiliates 69,522 95,646 137,643 300,288
Amortization of prepaid expenses
and fees 1,064,119 1,220,007 2,702,839 2,010,432
General and administrative 112,730 78,406 336,779 307,662
Total expenses 1,548,013 1,778,310 4,209,700 3,767,318
Net income $2,224,441 $2,173,105 $14,738,712 $10,091,358
Earnings per share $ .15 $ .14 $ .98 $ .67
Weighted average shares outstanding 15,053,135 15,053,135
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<TABLE>
KRUPP GOVERNMENT INCOME TRUST
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Nine Months Ended
September 30,
1998 1997
Operating activities:
<S> <C> <C>
Net income $14,738,712 $10,091,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of discounts and premiums - 4,026
Amortization of prepaid expenses and fees 2,702,839 2,010,432
Changes in assets and liabilities:
Decrease in interest receivable and
other assets 247,162 386,005
Decrease in other liabilities (444) (9,561)
Net cash provided by operating
activities 17,688,269 12,482,260
Investing activities:
Principal collections on MBS 3,550,629 2,175,765
Principal collections on PIMs 656,518 648,606
Acquisition of insured mortgage - (3,366,000)
PIM prepayment 32,603,506 5,630,985
Collection of Additional Loan 5,850,900 1,540,000
Increase (decrease) in deferred income
on Additional Loans (2,183,260) 366,609
Net cash provided by investing
activities 40,478,293 6,995,965
Financing activity:
Dividends (57,698,688) (28,525,706)
Net increase (decrease) in cash and
cash equivalents 467,874 (9,047,481)
Cash and cash equivalents, beginning of period 9,749,804 19,053,931
Cash and cash equivalents, end of period $10,217,678 $10,006,450
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
KRUPP GOVERNMENT INCOME TRUST
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 Berkshire Mortgage
Advisors Limited Partnership, the "Advisor" of Krupp Government Income
Trust (the "Trust"), the disclosures contained in this report are adequate
to make the information presented not misleading. See Notes to Financial
Statements in the Trust's Form 10-K for the year ended December 31, 1998
for additional information relevant to significant accounting policies
followed by the Trust.
In the opinion of the Advisor of the Trust, the accompanying unaudited
financial statements reflect all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the Trust's financial
position as of September 30, 1998, the results of its operations for the
three and nine months ended September 30, 1998 and 1997 and its cash flows
for the nine months ended September 30, 1998 and 1997.
The results of operations for the three and nine months ended September
30, 1998 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 and PIMIs
At September 30, 1998, the Trust's PIMs and PIMIs have a fair value of
$131,585,260 and gross unrealized gains and losses of approximately
$841,663 and $5,937,357 respectively. The PIMs and PIMIs have maturities
ranging from 2001 to 2034. At September 30, 1998, there was one insured
mortgage loan held in the Trust's portfolio that was delinquent in its
principal and interest payments. The borrower on the Lifestyles at Boot
Ranch PIMI defaulted on its May 1, 1998 debt service payment. However, the
Trust continues to receive its monthly principal and interest pass-thru
payments because those payments are insured by GNMA. All other borrowers
were current in their debt service obligations on the insured mortgages
held in the Trust's portfolio.
On July 15, 1998, the Trust received a prepayment of The Coconut Palm
Club PIMI first mortgage with a remaining principal balance of
$15,851,211. In addition, in June the Trust received a prepayment of the
Coconut Palm Club Additional Loan of $2,850,900. The Trust also received
a preferred return of $1,419,116 and Additional Loan base interest payable
through the date of sale of $89,091.
During June of 1998, the Trust received a prepayment of the Park Highlands
PIMI and Additional Loan with a remaining principal balance of
$16,752,295 and $3,000,000 respectively. In addition, the Trust received
Participation income as follows: (i) a Preferred Return of $1,481,865,
(ii) Participating Appreciation interest of $1,206,719, (iii) a Prepayment
Premium of $479,476, (iv) Participating Income interest of $211,316 and
(v) Additional Loan base interest payable through the date of sale of
$57,945.
Due to the prepayments of the Park Highlands and Coconut Palm Club
Additional Loans in June, the Trust also recognized additional loan
interest of $1,290,000 and $1,295,354 respectively, that had been
previously classified as deferred income on these Additional Loans.
Continued
KRUPP GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS, Continued
2. PIMs and PIMIs, continued
On August 6, 1998, the Advisor of the Trust declared a special dividend
of $2.86 per share that was paid on September 9, 1998 from the prepayment
proceeds of the Park Highlands and Coconut Palm Club PIMIs.
Mountain View Apartments has been adversely affected by a competitive
housing market in the Huntsville area. Since March 31, 1998 the borrower
of the Mountain View Additional Loan has been in technical default on its
Additional Loan for not making the full required base interest payments
due on the Additional Loan. The Advisor is currently assessing the
feasibility of extending debt service relief to the borrower until the
market stabilizes.
3. MBS
At September 30, 1998, the Trust's MBS portfolio has an amortized cost of
approximately $22,149,110 and unrealized gains of $1,492,576. The MBS
portfolio has maturities ranging from 2008 to 2029.
In June 1997, Statement of Financial Accounting Standards No. 130,
'Reporting Comprehensive Income' (FASB 130), was issued establishing
standards for reporting and displaying comprehensive income and its
components effective January 1, 1998. FASB 130 requires comprehensive
income and its components, as recognized under accounting standards,
to be displayed in a financial statement with the same prominence as
other financial statements, if material. FASB 130 had no material effect
on the Trust's financial position or results of operations.
4. Changes in Shareholders' Equity
A summary of changes in shareholders' equity for the nine months ended
September 30, 1998 is as follows:
<TABLE>
<CAPTION>
Total
Common Retained Unrealized Shareholders'
Stock Earnings Gain Equity
<S> <C> <C> <C> <C>
Balance at December 31,
1997 $212,496,510 $ - $ 1,385,602 $213,882,112
Net income - 14,738,712 - 14,738,712
Dividends (42,959,976)(14,738,712) - (57,698,688)
Change in unrealized
gain on MBS - - 106,974 106,974
Balance at September 30,
1998 $169,536,534 $ - $ 1,492,576 $171,029,110
</TABLE>
<PAGE>
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 risks
and uncertainties, including those described herein. Actual results may
differ materially from those anticipated by such forward-looking statements.
The Advisor of the Trust has conducted an assessment of the Trust's core
internal and external computer information systems and has taken the further
necessary steps to understand the nature and extent of the work required to
make its systems Year 2000 ready in those situations in which it is required
to do so. The Year 2000 readiness issue concerns the inability of
computerized information systems to accurately calculate, store or use
a date after 1999. This could result in a system failure or
miscalculations causing disruptions of operations. The Year 2000 issue
affects virtually all companies and all organizations.
In this regard, the Advisor of the Trust, along with certain affiliates,
began a computer systems project in 1997 to significantly upgrade its
existing hardware and software. The Advisor completed the testing and
conversion of the financial accounting operating systems in February 1998.
As a result, the Advisor has generated operating efficiencies and believes
its financial accounting operating systems are Year 2000 ready. The Trust
incurred hardware costs as well as consulting and other expenses related to
the infrastructure and facilities enhancements necessary to complete
the upgrade and prepare for the Year 2000. There are no other systems or
software that the Trust is using at the present time.
The Advisor of the Trust is in the process of evaluating the potential
adverse impact that could result from the failure of material third-party
service providers (including but not limited to its banks and
telecommunications providers) and significant vendors to be Year 2000 ready.
No estimate can be made at this time as to the impact of the readiness of
such third parties.
Liquidity and Capital Resources
The most significant demand on the Trust's liquidity is dividends paid to
investors of approximately $4.9 million per quarter. The Trust currently
has an annual dividend rate of $1.30 per share, paid in quarterly
installments of $.325 per share. Funds for dividends come from interest
income received on PIMs, PIMIs, MBS, cash and cash equivalents net of
operating expenses and the principal collections received on PIMs, PIMIs and
MBS. The portion of dividends funded from principal collections reduces the
capital resources of the Trust. As the capital resources of the Trust
decrease, the total cash flows to the Trust will also decrease which may
result in periodic adjustments to the dividends paid to the investors. In
addition, to the quarterly dividends, the Trust pays special dividends when
prepayments occur in its PIM and PIMI portfolio.
As a result of the Park Highlands and Coconut Palm Club prepayments the Trust
made a special dividend of $2.86 per share from the prepayment proceeds.
Consequently, the Trust's capital resources and its future cash flows will be
lower. However, at this time the Advisor has determined that the Trust can
maintain its current dividend rate of $1.30 per share per year. In general,
the Advisor tries to set a dividend rate that provides for level quarterly
dividends. To the extent quarterly dividends do not fully utilize the
cash available for distribution and cash balances increase, the Advisor may
reinvest the available proceeds, adjust the dividend rate or distribute such
funds through a special dividend.
The Trust's investments in PIMs and PIMIs, in addition to providing
guaranteed or insured monthly principal and interest payments, may provide
the Trust with additional income through participation in the cash
generated by the operations of the underlying properties and a portion
of the appreciation realized upon the sale or refinancing of the
underlying properties. The Trust's participation interests and the base
interest payments on the Additional Loan portion of the PIMIs are
neither insured nor guaranteed and will depend primarily on the successful
operation of the underlying properties. Seven of the Trust's original eight
PIMIs funded the construction of multi-family housing, which require time to
achieve stabilized operations following completion of construction. With
this in mind, the Trust required the borrowers to establish reserves and
escrows with Additional Loan proceeds to provide funds for the Additional
Loan base interest payments during the construction and lease-up periods.
As these reserves become depleted, full payment of the Additional Loan base
interest depends primarily on whether the underlying property can
generate sufficient operating cash flow. Only Red Run still has adequate
reserve escrows to make the required Additional Loan base interest payments
for 1998 if cash flow from the property is insufficient. The Seasons made
both scheduled 1998 Additional Loan base interest payment with operating cash
flow. Two other properties, Lifestyles and Windward Lakes, are operating
under workout agreements with the Trust that require Additional Loan base
interest payments only if surplus cash is generated through property
operations after servicing the insured mortgage. Lifestyles has not made any
payments during 1998, and Windward Lakes made a partial payment.
Mountain View made only a partial payment of Additional Loan base interest
in March 1998 and the September 1998 payment remains outstanding. The
borrower on the Mountain View PIMI has asked the Advisor to provide long-term
debt service relief. During 1995 and 1996, the Trust had entered into a
short-term workout agreement that had waived four Additional Loan base
interest payments and had reduced the interest rate on the insured mortgage
by .5% for 18 months. Although the workout helped stabilize the property
through a down market cycle, the recent strength in the Huntsville market
combined with low interest rates and abundant capital sources has caused a
flood of both single-family home and apartment construction. Consequently,
occupancy and rental rates have fallen at Mountain View. The Advisor is
still assessing the feasibility of providing debt service relief until
the market stabilizes again.
The borrower on the Lifestyles PIMI defaulted on its May 1, 1998 debt
service payment on the insured first mortgage loan. The Trust had entered
into a workout agreement had reduced the interest rate on the insured
mortgage by 1% per annum for a twenty-four month period that ended in
December 1997 and changed the required interest payments on the
Additional Loan. Lifestyles is operating under a workout agreement with
the Trust that requires future Additional Loan base interest payments only if
surplus cash is generated through property operations after servicing
the insured mortgage. Due to continuing competition from newer
properties, Lifestyles has not been able to generate sufficient operating
revenues to maintain the property and service the first mortgage debt. The
Advisor expects to structure a long-term modification of the first mortgage
loan as well as the Additional Loan prior to year-end 1998.
For the first five years of the PIMIs the borrowers are prohibited from
repaying. For the second five years, the borrowers can repay the loans and
pay the greater of a prepayment penalty or all participation interest for
PIMs, or by paying all amounts due under the PIMIs and satisfying the
required preferred return. The participation features and Additional Loans
are neither insured nor guaranteed, and if repayment of a PIM, or PIMI
results from foreclosure on the underlying property or an insurance claim,
the Trust would not likely receive any participation interest or any amounts
due under the Additional Loan. The Trust has the option to call PIMs and
PIMIs by accelerating their maturity if the loans are not repaid by the
tenth year after permanent funding. The Trust will determine the merits of
exercising the call option for each PIM or PIMI 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 Trust's investments in mortgages are guaranteed or insured by Fannie Mae,
the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government National
Mortgage Association ("GNMA") 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.
Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. However, obligations of Fannie
Mae are not backed by the U.S. Government. Fannie Mae is one of the largest
corporations in the United States and the Secretary of the Treasury of the
United States has discretionary authority to lend up to $2.25 billion to
Fannie Mae at any time. 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.
The Trust's Additional Loans have similar risks as those associated with
higher risk debt instruments, including: reliance on the owners' operating
skills, ability to maintain occupancy levels, control operating expenses,
ability to maintain the properties and obtain 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 Trust may have little or no
control.
The Trust includes in cash and cash equivalents approximately $9.8 million of
commercial paper, which is issued by entities with a credit rating equal to
one of the top two rating categories of a nationally recognized statistical
rating organization.
Operations
The following discussion relates to the operations of the Trust during the
three and nine months ended September 30, 1998 and 1997.
The Trust's net income increased for the three months ended September
30, 1998 as compared to the same period in 1997. This increase was primarily
due to higher participation income, additional loan interest income and
other interest income and lower expense reimbursements, asset management
fees and amortization expense. The increase in participation income is due
to the Trust receiving higher Shared Interest Income from The Seasons and
Riverview. The increase in Additional Loan Interest is primarily due to
recognizing a portion of Red Run's base interest payment as income since
the property operations funded such payment. The increase in interest income
on cash and cash equivalents is due to the Trust having higher short-term
investment balances for the three months ended September 30, 1998 as
compared to the same period in 1997. This was offset by lower base interest
on PIMs and interest income on MBS. The decrease in base interest and asset
management fees is due to the Park Highlands and Coconut Palm Club PIMI
prepayments during the second and third quarters of 1998.
The Trust's net income increased significantly for the nine months ended
September 30, 1998, as compared to the same period in 1997. This increase
was primarily due to higher participation income, additional loan base
interest income and other interest income and lower expense reimbursements
and asset management fees. This was offset by lower base interest on PIMs
and interest income on MBS and an increase in amortization expense. The
increases in participation income and additional loan base interest income
are primarily related to the prepayments of the Park Highlands and Coconut
Palm Club PIMI's. The Trust also reclassed and recognized all of the
deferred additional loan interest related to these two PIMI prepayments
as additional loan base interest income. In addition, the Trust is
receiving and recognizing as interest income the additional loan base
interest payments related to The Seasons PIMI. The Trust also received
participation interest from The Seasons PIMI, the Lincoln Green and the
Riverview PIMs. Base interest and asset management fees decreased as a
result of the PIMI prepayments of the Park Highlands during the second
quarter of 1998, Coconut Palm Club during the third quarter of 1998 and
Timber Ridge during the first quarter of 1997. During the nine months ended
September 30 1998, the Trust received a rebate for expense reimbursements
related to 1997. The increase in amortization expense is because the Trust
fully amortized the remaining balances of prepaid fees and expenses
associated with the Park Highlands and Coconut Palm Club PIMI's. Other
interest income also increased due to the Trust having higher short-term
investment balances during the nine months ended September 30, 1998 when
compared to the corresponding period in 1997.
The Trust generally funds a portion of its dividends with principal
collections which, will continue to reduce the assets of the Trust thereby
reducing the income generated by the Trust in the future.
<PAGE>
KRUPP GOVERNMENT INCOME TRUST
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
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 Government Income Trust
(Registrant)
BY: /s/Robert A. Barrows
Robert A. Barrows
Treasurer and Chief Accounting Officer of
Krupp Government Income Trust
DATE: October 28, 1998
<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>0000857264
<NAME>KRUPP GOVERNMENT INCOME TRUST
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-END> Sep-30-1998
<CASH> 10,217,678
<SECURITIES> 160,322,640<F1>
<RECEIVABLES> 1,047,078
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,155,030<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 176,742,426
<CURRENT-LIABILITIES> 5,713,316<F3>
<BONDS> 0
0
0
<COMMON> 169,536,534
<OTHER-SE> 1,492,576<F4>
<TOTAL-LIABILITY-AND-EQUITY> 176,742,426
<SALES> 0
<TOTAL-REVENUES> 18,948,412<F5>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,209,700<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,738,712
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,738,712
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,738,712
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes Participating Insured Mortgage Investments ("PIMIs") (insured
mortgages of $75,488,620 and Additional Loans of $13,358,208), Participating
Insured Mortgages ("PIMs") of $47,834,126 and Mortgage-backed Securities ("MBS")
of $23,641,686.,
<F2>Includes prepaid acquisition fees and expenses of $12,266,450 net of
accoumulated amortization of $8,604,734 and prepaid participation servicing fees
of $4,088,713 net of accumulated amortization of $2,595,399.
<F3>Includes deferred income on Additional Loans of $5,688,346.
<F4>Unrealized gain on MBS.
<F5>Represents interest income on investments in mortgages and cash.
<F6>Includes $2,702,839 of amortization of prepaid fees and expenses.
</FN>
</TABLE>
