FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE 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.........to.........
Commission file number 0-16684
MULTI-BENEFIT REALTY FUND '87-1
(Exact name of small business issuer as specified in its charter)
California 94-3026785
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash and cash equivalents $ 1,401
Securities available for sale 305
Prepaid expenses and other assets 792
Investment properties:
Land $ 1,742
Buildings and related personal property 21,067
22,809
Less accumulated depreciation (8,780) 14,029
$ 16,527
Liabilities and Partners' Capital (Deficit)
Liabilities
Mortgage notes and interest payable $ 11,457
Accrued taxes 377
Other liabilities 674
Partners' Capital (Deficit)
General Partner $ (112)
Limited Partner "A" Unitholders -
96,284 units outstanding) 262
Limited Partner "B" Unitholders -
75,152 units outstanding) 3,869 4,019
$ 16,527
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,180 $ 1,053 $ 3,374 $ 3,145
Interest and dividend income
on investments 18 31 81 100
Total revenues 1,198 1,084 3,455 3,245
Expenses:
Operating 712 604 1,793 1,860
General and administrative 46 48 198 179
Depreciation 237 251 696 745
Interest 264 267 794 803
Total expenses 1,259 1,170 3,481 3,587
Casualty gain -- -- 539 --
Other income -- -- -- 56
Net (loss) income $ (61) $ (86) $ 513 $ (286)
Net (loss) income allocated
to general partners (1%) $ (1) $ (1) $ 5 $ (3)
Net (loss) income allocated
to limited partners (99%) (60) (85) 508 (283)
$ (61) $ (86) $ 513 $ (286)
Net (loss) income per "A" Unit $ (.35) $ (.49) $ 2.96 $ (1.65)
Net (loss) income per "B" Unit $ (.35) $ (.49) $ 2.96 $ (1.65)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
LIMITED PARTNERS
Total
Partners'
General Equity
Partner "A" Units "B" Units (Deficit)
<S> <C> <C> <C> <C>
Original capital contributions $ 1 $ 9,706 $ 7,538 $ 17,245
Limited partnership units at
December 31, 1994 and
September 30, 1995 -- 96,284 75,152 171,436
Partners' capital (deficit) at
December 31, 1994 $ (108) $ 886 $ 3,646 $ 4,424
Net income for the nine months
ended September 30, 1995 5 285 223 513
Distributions for the nine months
ended September 30, 1995 (9) (909) -- (918)
Partners' capital (deficit) at
September 30, 1995 $ (112) $ 262 $ 3,869 $ 4,019
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 513 $ (286)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 696 745
Amortization of loan costs 32 32
Casualty gain (539) --
Change in accounts:
Prepaid expenses and other assets (248) (282)
Accrued taxes 131 61
Other liabilities 134 212
Interest payable 85 --
Net cash provided by
operating activities 804 482
Cash flows from investing activities:
Property improvements and replacements (925) (56)
Proceeds from sale of securities
available for sale 2,894 645
Purchase of securities available for sale (1,753) (145)
Net insurance proceeds from property damage 555 --
Net cash provided by
investing activities 771 444
Cash flows from financing activities:
Payments on mortgage notes payable (106) (110)
Distributions paid (918) (505)
Net cash used in financing
activities (1,024) (615)
Net increase in cash and cash equivalents 551 311
Cash and cash equivalents at beginning of period 850 441
Cash and cash equivalents at end of period $ 1,401 $ 752
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 677 $ 771
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) MULTI-BENEFIT REALTY FUND '87-1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included
in the Partnership's annual report on Form 10-K for the year ended December 31,
1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Limited Partnership Units
The Partnership has issued two classes of Units, "A" Units and "B" Units.
The two classes of Units are entitled to different rights and priorities as to
cash distributions and partnership allocations. The Units represent economic
rights attributable to the limited partnership interests in the Partnership and
entitle the holders thereof ("Unitholders") to participate in certain
allocations and distributions of the Partnership.
Note B - Related Party Transactions
Multi-Benefit Realty Fund '87-1 ("Partnership") paid property management fees
based upon collected gross rental revenues for property management services as
noted below for the nine month periods ended September 30, 1995, and September
30, 1994, respectively. Such fees are included in operating expense on the
statement of operations. For the nine months ended September 30, 1994, a
portion of such property management fees were paid to property management
companies for day-to-day property management services and a portion was paid to
Partnership Services, Inc. ("PSI") for advisory services related to day-to-day
property operations. Coventry Properties, Inc. ("Coventry"), an affiliate of
the General Partner, provided day-to-day property management responsibilities
for one of the Partnership's properties under the same management fee
arrangement as the unaffiliated management companies. Affiliates of Insignia
Financial Group, Inc. ("Insignia"), an affiliate of the General Partner,
assumed day-to-day management responsibilities for all the Partnership's
properties in late December 1994.
Note B - Related Party Transactions - continued
Fees paid to affiliates of Insignia during the nine months ended September
30, 1995, and fees paid to Coventry and PSI during the nine months ended
September 30, 1994, are reflected in the following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Property management fees $170 $85
Partnership management fees 33(1) 45(1)
(1)The Limited Partnership Agreement ("Agreement") provides for a fee equal to
9% of distributable cash from operations (as defined in the Agreement) received
by the limited partners be paid to the General Partner for executive and
administrative management services.
The Agreement also provides for reimbursement to the General Partner and its
affiliates for costs incurred in connection with the administration of
Partnership activities. Such reimbursements are included in operating expense
on the statement of operations. The General Partner and its current and former
affiliates (including Coventry), received reimbursements as reflected in the
following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $97 $79
On July 1, 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner, who receives
payments on these obligations from the agent. The amount of the partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
Note C - Commitment
The Partnership is required by the Agreement to maintain working capital
reserves of not less than 5% of Net Invested Capital, as defined in the
Agreement. In the event expenditures are made from this reserve, operating
revenue shall be allocated to such reserve to the extent necessary to maintain
the foregoing level. Reserves, including cash and securities available for
sale totalling approximately $1.7 million, exceeded the reserve requirement of
approximately $727,000 at September 30, 1995.
Note D - Casualty Gain
Shadow Brook Apartments experienced fire damage which resulted in a casualty
gain of approximately $539,000.
Note E - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark's Chapter 11 bankruptcy proceeding. These claims
related to Southmark's activities while it exercised control (directly, or
indirectly through its affiliates) over the Partnership. The U.S. Bankruptcy
Court set the Partnership's and the affiliated partnerships' allowed claim at
$11 million, in the aggregate. In March 1994, the Partnership received $49,393
in cash, 901 shares of Southmark Corporation Redeemable Series A Preferred Stock
and 6,591 shares of Southmark Corporation New Common Stock with an aggregate
market value on the date of receipt of $6,631 representing the Partnership's
share of the recovery, based on its pro rata share of the claims filed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment
complexes. The following table sets forth the average occupancy of the
properties for the nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Carlin Manor Apartments
Columbus, Ohio 85% 81%
Hunt Club Apartments
Indianapolis, Indiana 89% 91%
Shadow Brook Apartments
West Valley City, Utah 98% 97%
The General Partner attributes the increase in occupancy at Carlin Manor
Apartments to the efforts of the General Partner to retain tenants.
The Partnership's net income for the nine months ended September 30, 1995,
was $513,000 as compared to a net loss of approximately $286,000 for the nine
months ended September 30, 1994. The Partnership realized a net loss of
approximately $61,000 for the three months ended September 30, 1995, as compared
to a net loss of approximately $86,000 for the three months ended September 30,
1994. The increase in net income for the nine months ended September 30, 1995,
is primarily attributable to the casualty gain recorded for the fire at Shadow
Brook Apartments which destroyed twelve units and damaged twelve more. The
increase is also attributable to increased rental rates during the nine months
ended September 30, 1995. The decrease in the net loss for the three months
ended September 30, 1995, as compared to the net loss for the three
months ended September 30, 1994, is due to increased rental income through
higher rental rates. Also, interest income has decreased for the three and
nine months ended September 30, 1995, due to lower investment balances for
those periods as compared to the prior year. Offsetting the increase in net
income is an increase in general and administrative expense for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994. The increase in general and administrative expense is due primarily to
combined efforts of the Dallas and Greenville offices during the transition
period that ended June 30, 1995. These additional costs were incurred to
minimize any disruption in the year-end reporting function including the
financial reporting and K-1 preparation and distribution. These expenses
decreased in the third quarter as the transition efforts were completed.
For the three months ended September 30, 1995, operating expenses have
increased due to higher maintenance expense at Shadow Brook and Hunt Club.
These increased expenses were for improvements in the appearance of the
properties.
Other income realized in the nine months ended September 30, 1994, is due to
the receipt of its pro rata share of the claims filed in Southmark's Chapter 11
bankruptcy proceedings.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that
the General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership reported cash of approximately
$1,401,000 versus approximately $752,000 for the same period in 1994. The
increase in net cash provided by operating activities is primarily attributable
to the increase in net income (as discussed above), interest payable and
accrued taxes which was partially offset by the casualty gain. Net cash
provided by investing activities increased due to an increase in insurance
proceeds due to the Shadow Brook fire and an increase in proceeds from the sale
of securities available for sale. These increases were partially offset by an
increase in property improvement and replacement expenditures and an increase in
the purchase of securities available for sale. Finally, net cash used in
financing activities increased due to an increase in distributions paid.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $11,457,000, including interest payable,
is amortized over varying periods and requires balloon payments in September
1997 and October 2000 at which time the properties will be refinanced or sold.
For the first nine months of 1995 distributions of approximately $909,000 or
$9.44 per "A" Unit were made to the "A" Unit limited partners. Matching
distributions of approximately $9,000 were also made to the General Partner.
Future cash distributions will depend on the levels of cash generated from
operations, capital expenditure requirements, property sales and the
availability of cash reserves.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K:
None filed for the quarter ended September 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MULTI-BENEFIT REALTY FUND '87-1
By: CONCAP EQUITIES, INC.
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Multi-Benefit Realty Fund '87-1 1995 Third Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000802200
<NAME> MULTI-BENEFIT REALT FUND 87-1
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,401
<SECURITIES> 305
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,809
<DEPRECIATION> (8,780)
<TOTAL-ASSETS> 16,527
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,457
<COMMON> 0
0
0
<OTHER-SE> 4,019
<TOTAL-LIABILITY-AND-EQUITY> 16,527
<SALES> 0
<TOTAL-REVENUES> 3,455
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,481
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 794
<INCOME-PRETAX> 513
<INCOME-TAX> 0
<INCOME-CONTINUING> 513
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 513
<EPS-PRIMARY> 2.96
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
