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 June 30, 1996
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 0-16684
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 (864) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,308
Restricted--tenant security deposits 143
Investments 108
Accounts receivable 49
Escrows for taxes 174
Restricted escrows 110
Other assets 187
Investment properties:
Land $ 1,742
Buildings and related personal property 21,444
23,186
Less accumulated depreciation (9,504) 13,682
$ 15,761
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 76
Accrued taxes 248
Tenant security deposits 144
Other liabilities 318
Mortgage notes payable 11,245
Partners' Capital (Deficit)
General Partner $ (114)
Limited Partner "A" Unitholders -
96,284 units outstanding 1
Limited Partner "B" Unitholders -
75,152 units outstanding 3,843 3,730
$ 15,761
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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,144 $ 1,060 $ 2,275 $ 2,125
Other income 64 82 132 179
Casualty gain -- -- -- 539
Total revenues 1,208 1,142 2,407 2,843
Expenses:
Operating 395 332 814 711
General and administrative 58 59 92 120
Partnership management fee -- -- 20 33
Maintenance 138 121 243 209
Depreciation 245 231 487 459
Interest 262 265 524 530
Property taxes 64 108 156 207
Total expenses 1,162 1,116 2,336 2,269
Net income $ 46 $ 26 $ 71 $ 574
Net income allocated
to general partner (1%) $ -- $ -- $ 1 $ 6
Net income allocated
to limited partners (99%) 46 26 70 568
$ 46 $ 26 $ 71 $ 574
Net income per A Unit: $ .27 $ .15 $ .41 $ 3.31
Net income per B Unit: $ .27 $ .15 $ .41 $ 3.31
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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, 1995 and
June 30, 1996 -- 96,284 75,152 171,436
Partners' capital (deficit) at
December 31, 1995 $ (113) $ 190 $ 3,812 $ 3,889
Distributions to partners (2) (228) -- (230)
Net income for the six
months ended June 30, 1996 1 39 31 71
Partners' capital (deficit) at
June 30, 1996 $ (114) $ 1 $ 3,843 $ 3,730
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 71 $ 574
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 487 459
Amortization of loan costs 21 21
Casualty gain -- (539)
Change in accounts:
Restricted cash (11) (72)
Accounts receivable 66 (55)
Escrows for taxes 34 (157)
Other assets 16 35
Accounts payable (261) 368
Tenant security deposit liabilities 12 (5)
Accrued taxes (15) 32
Other liabilities (65) 84
Net cash provided by operating activities 355 745
Cash flows from investing activities:
Property improvements and replacements (116) (405)
Deposits to restricted escrows (21) (17)
Receipts from restricted escrows -- 66
Proceeds from sale of investments 197 2,342
Purchase of investments -- (1,753)
Net cash provided by investing activities 60 233
Cash flows from financing activities:
Payments on mortgage notes payable (86) (66)
Distributions to partners (230) (918)
Loan costs paid (25) --
Net cash used in financing activities (341) (984)
Net increase (decrease) in cash 74 (6)
Cash and cash equivalents at beginning of period 1,234 850
Cash and cash equivalents at end of period $ 1,308 $ 844
Supplemental disclosure of cash flow information:
Cash paid for interest $ 500 $ 424
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) MULTI-BENEFIT REALTY FUND '87-1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Multi-Benefit
Realty Fund '87-1 ("Partnership") 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 ConCap Equities, Inc. ("General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for the year
ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 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.
Investments
Investments consisting primarily of U.S. Treasury Notes with original maturities
of more than ninety days are considered to be held-to-maturity securities.
Note B - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership paid property management fees based upon collected gross rental
revenues for property management services as noted below for the six month
periods ended June 30, 1996 and 1995, respectively. Such fees are included in
operating expense on the consolidated statement of operations and are reflected
in the following table. The Limited Partnership Agreement ("Agreement")
provides for reimbursement to the General Partner and its affiliates for costs
incurred in connection with the administration of Partnership activities. The
General Partner and its current and former affiliates received reimbursements
and fees as reflected in the following table:
For the Six Months Ended
June 30,
1996 1995
(in thousands)
Property management fees $119 $108
Reimbursements for services of
affiliates (2) 106 83
Partnership management fees (1) 20 33
(1) The Agreement provides that 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.
(2) Included in "reimbursements for services of affiliates" for 1996 is
approximately $49,000 in reimbursements for construction oversight costs.
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 cash equivalents and
investments totaling approximately $1,400,000, exceeded the reserve requirement
of approximately $754,000 at June 30, 1996.
Note D - Casualty Gain
Shadow Brook Apartments experienced fire damage which destroyed twelve units and
damaged twelve other units in 1995. At June 30, 1995, the fire resulted in a
casualty gain of approximately $539,000.
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 each
of the six months ended June 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Carlin Manor Apartments
Columbus, Ohio 89% 85%
Hunt Club Apartments
Indianapolis, Indiana 95% 87%
Shadow Brook Apartments
West Valley City, Utah 98% 98%
The General Partner attributes the increase in occupancy at Carlin Manor
Apartments and Hunt Club Apartments to the fact that the General Partner has
made improvements to the appearance of the properties as well as increasing the
advertising of the properties. Both of these factors are believed to have
contributed to the increase in occupancy.
Results of Operations
The Partnership's net income for the six months ended June 30, 1996, was
approximately $71,000 as compared to net income of approximately $574,000 for
the corresponding period in 1995. The Partnership recorded net income of
approximately $46,000 for the three month period ended June 30, 1996, as
compared to net income of $26,000 for the corresponding period in 1995. The
decrease in net income for the six month period ended June 30, 1996, is
primarily attributable to the $539,000 casualty gain recognized in the first
quarter of 1995 due to the fire damage at Shadow Brook Apartments which
destroyed twelve apartments and damaged twelve others. Furthermore, the
decrease in net income for six months ended June 30, 1996, is attributable to
the decrease in other income, the increase in operating expenses, and the
increase in maintenance expenses. Other income decreased as a result of a
decrease in the interest income earned on investments and a decrease in
dividends received on an investment in Southmark Corporation. The decrease in
other income is also attributable to the receipt of approximately $21,000 in
1995 of insurance proceeds related to a 1993 fire at Carlin Manor Apartments.
At the time of the receipt all costs associated with the fire damages and the
related repairs had been expensed or capitalized. Operating expense increased
due to an increase in advertising and concessions at Carlin Manor Apartments,
which were given in an attempt to increase occupancy, and an increase in utility
bills at Carlin Manor Apartments and Hunt Club Apartments due to the unusually
cold winter and spring weather. Finally, maintenance expense increased due to
an increase in snow removal expense, landscaping and parking area expense and
pool expense. Snow removal expense increased as a result of the unusually cold
winter and spring weather. Landscaping and parking area expense increased due
to projects completed at Shadow Brook Apartments to improve the appearance of
the property. Pool expense increased due to the resurfacing project completed
at Hunt Club Apartments. Offsetting the items noted above for the six months
ended June 30, 1996, are a decrease in general and administrative expense, a
decrease in partnership management fees, and a decrease in property taxes. The
decrease in general and administrative expense is due to the additional costs
associated with the combined efforts of the Dallas and Greenville offices during
the transition efforts that ended June 30, 1995. The increased costs related to
the transition efforts were incurred to minimize any disruption in the 1994
year-end reporting function, including K-1 preparation and distribution.
Partnership management fees decreased as a result of the decrease in
distributable cash from operations (as defined in the Limited Partnership
Agreement). The decrease in property tax expense is due to the fact that the
actual 1995 tax invoice was reduced from the amount accrued at June 30, 1995,
which was based on prior year amounts.
The increase in net income for the three month period ended June 30, 1996, is
due primarily to the decrease in property taxes as explained above.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property to assess the
feasibility of increasing rents, maintaining or increasing occupancy levels and
protecting the Partnership for increases in expense. As part of this plan, the
General Partner attempts to protect the Partnership for 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.
Liquidity and Capital Resources
At June 30, 1996, the Partnership had unrestricted cash of approximately
$1,308,000 compared to approximately $844,000 at June 30, 1995. Net cash
provided by operating activities decreased due to a decrease in accounts payable
and a decrease in other liabilities. This decrease in net cash provided by
operating activities was partially offset by a decrease in accounts receivable
and a decrease in deposits to the escrows for taxes. Net cash provided by
investing activities decreased as a result of a decrease in cash received from
restricted escrows and a decrease in net cash received from investments. This
decrease in net cash provided by investing activities was partially offset by
decreased purchases of property improvements and replacements during the six
months ended June 30, 1996. Net cash used in financing activities decreased
due to a decrease in distributions during the six months ended June 30, 1996,
versus the six months ended June 30, 1995.
The Partnership has no material capital programs scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations, is received from the capital
reserve account or from cash and cash equivalents on hand.
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 properties 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 $11,245,000 is amortized over varying
periods and requires balloon payments in June 1997 and October 2000 at which
time the properties will be refinanced or sold. During the first six months of
1996, a distribution of approximately $228,000 or $2.36 per "A" Unit was made to
the "A" Unit limited partners, and a distribution of approximately $2,000 was
made to the General Partner. Distributions of approximately $909,000 or $9.44
per "A" Unit were made to the "A" Unit limited partners during the first six
months of 1995. Distributions of approximately $9,000 were also made to the
General Partner. Future cash distributions will depend on the level of net cash
generated from operations, refinancings, 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 June 30, 1996.
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.
Vice President/CAO
Date: August 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Multi-Benefit Realty Fund '87-1 1996 Second Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000802200
<NAME> MULTI-BENEFIT REALTY FUND '87-1
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,308
<SECURITIES> 108
<RECEIVABLES> 49
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,186
<DEPRECIATION> 9,504
<TOTAL-ASSETS> 15,761
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,245
0
0
<COMMON> 0
<OTHER-SE> 3,730
<TOTAL-LIABILITY-AND-EQUITY> 15,761
<SALES> 0
<TOTAL-REVENUES> 2,407
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,336
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71
<EPS-PRIMARY> .41<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
