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 March 31, 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)
March 31, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 992
Restricted--tenant security deposits 133
Investments 305
Accounts receivable 48
Escrows for taxes 220
Restricted escrows 99
Other assets 174
Investment properties:
Land $ 1,742
Buildings and related personal property 21,383
23,125
Less accumulated depreciation (9,262) 13,863
$ 15,834
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 88
Accrued taxes 306
Tenant security deposits 133
Other liabilities 335
Mortgage notes payable 11,288
Partners' Capital (Deficit)
General Partner $ (115)
Limited Partner "A" Unitholders -
96,284 units outstanding (24)
Limited Partner "B" Unitholders -
75,152 units outstanding 3,823 3,684
$ 15,834
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
March 31,
1995 1995
<S> <C> <C>
Revenues:
Rental income $ 1,131 $ 1,065
Other income 68 97
Casualty gain -- 539
Total revenues 1,199 1,701
Expenses:
Operating 419 379
General and administrative 34 61
Partnership management fees 20 33
Maintenance 105 88
Depreciation 242 228
Interest 262 265
Property taxes 92 99
Total expenses 1,174 1,153
Net income $ 25 $ 548
Net income allocated to general partner (1%) $ -- $ 5
Net income allocated to limited partners (99%) 25 543
$ 25 $ 548
Net income per A Unit: $ .14 $ 3.16
Net income per B Unit: $ .14 $ 3.16
<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
March 31, 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 three
months ended March 31, 1996 -- 14 11 25
Partners' capital (deficit) at
March 31, 1996 $ (115) $ (24) $ 3,823 $ 3,684
<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>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 25 $ 548
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 242 228
Amortization of discounts and loan costs 11 11
Casualty gain -- (539)
Change in accounts:
Restricted cash (2) (1)
Accounts receivable 67 (15)
Escrows for taxes (12) (112)
Other assets 14 (14)
Accounts payable (249) 50
Tenant security deposit liabilities 2 1
Accrued taxes 43 51
Other liabilities (48) 177
Net cash provided by operating activities 93 385
Cash flows from investing activities:
Property improvements and replacements (52) (25)
Deposits to restricted escrows (11) (7)
Proceeds from sale of investments -- 246
Purchase of investments -- (150)
Net cash (used in) provided by
investing activities (63) 64
Cash flows from financing activities:
Payments on mortgage notes payable (42) (26)
Distributions to partners (230) (367)
Net cash used in financing activities (272) (393)
Net (decrease) increase in cash (242) 56
Cash and cash equivalents at beginning of period 1,234 850
Cash and cash equivalents at end of period $ 992 $ 906
Supplemental disclosure of cash flow information:
Cash paid for interest $ 251 $ 170
<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 the General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 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
three month periods ended March 31, 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. Such reimbursements are included in general and
administrative expense on the consolidated statement of operations. The General
Partner and its current and former affiliates received reimbursements and fees
as reflected in the following table:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $ 59 $ 53
Reimbursements for services of affiliates 29 38
Partnership management fees (1) 20 33
(1) The 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.
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 $1.4 million, exceeded the reserve
requirement of approximately $754,000 at March 31, 1996.
Note D - Casualty Gain
Shadow Brook Apartments experienced fire damage which destroyed twelve
units and damaged twelve other units in 1995. At March 31, 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 the three months ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Carlin Manor Apartments
Columbus, Ohio 89% 86%
Hunt Club Apartments
Indianapolis, Indiana 93% 86%
Shadow Brook Apartments
West Valley City, Utah 99% 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 as shown in the financial statements for the
three months ended March 31, 1996, was approximately $25,000 as compared to net
income of approximately $548,000 for the three months ended March 31, 1995. The
decrease in net income 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.
Operating expenses have increased during the three months ended March 31, 1996,
as compared to the three months ended March 31, 1995, due to increased utility
costs, advertising, personnel and service costs. Utility costs increased as a
result of the severe winter experienced in the property locales. Advertising
increased as a result of the General Partner's efforts to increase occupancy.
Personnel and service costs are up as a result of additional personnel at the
properties and bonuses paid to property personnel. Also, net income decreased
due to the decrease in other income and an increase in maintenance expense.
Other income decreased due to a decrease in interest income which resulted from
a decrease in investment balances during the three months ended March 31, 1996,
as compared to the three months ended March 31, 1995. Maintenance expense
increased due to an increase in snow removal expense as a result of the severe
winter weather. Also, maintenance expense increased due to increases in
interior and exterior building improvements such as ceiling fan installation and
skylight repairs. Furthermore, the decrease in net income was offset by
decreases in general and administrative expenses and partnership management fees
for the three months ended March 31, 1996, as compared to the three months ended
March 31, 1995. 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 due to the decrease in
distributions made to the limited partners from "cash available for
distribution" (as defined in the Agreement).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment 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.
Liquidity and Capital Resources
At March 31, 1996, the Partnership had unrestricted cash of approximately
$992,000 versus approximately $906,000 at March 31, 1995. Net cash provided by
operating activities decreased primarily due to a decrease in accounts
receivable, a decrease in the deposits to the escrows for taxes and a decrease
in other liabilities. These were partially offset by a decrease in accounts
payable due to the timing of payments to vendors. Net cash used in investing
activities increased due to net cash received in 1995 from the sale of
investments and an increase in property improvements and replacements during the
three months ended March 31, 1996. Net cash used in financing activities
decreased primarily due to a decrease in distributions during the first quarter
of 1996 versus the first quarter of 1995. This decrease was partially offset by
increased payments on mortgage notes payable.
The Partnership has no material capital projects 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 is available 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 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. Near-term needs
include all operating, maintenance, and other expenses which are needed to
operate the Partnership's investment properties in the near future. The
mortgage indebtedness of approximately $11,288,000 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. A distribution of approximately
$363,000 or $3.77 per A Unit was made to the A Unit limited partners in March
1995. A distribution of approximately $4,000 was also made to the General
Partner. During March 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. Future cash distributions
will depend on the levels of net cash generated from operations, refinancings,
property sales and 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 March 31, 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: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Multi
Benefit Realty Fund '87-1 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 992
<SECURITIES> 305
<RECEIVABLES> 48
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,125
<DEPRECIATION> 9,262
<TOTAL-ASSETS> 15,834
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,288
0
0
<COMMON> 0
<OTHER-SE> 3,684
<TOTAL-LIABILITY-AND-EQUITY> 15,834
<SALES> 0
<TOTAL-REVENUES> 1,199
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,174
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 262
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
