FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
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, 1997
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
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 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)
June 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 1,616
Restricted--tenant security deposits 133
Accounts receivable 10
Escrow for taxes and insurance 77
Restricted escrows 401
Other assets 365
Investment properties:
Land $ 1,742
Buildings and related personal property 22,049
23,791
Less accumulated depreciation (10,484) 13,307
$ 15,909
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 85
Accrued taxes 259
Tenant security deposits 133
Other liabilities 221
Mortgage notes payable 12,319
Partners' Capital (Deficit)
General Partner $ (124)
Limited Partner "A" Unitholders -
96,284 units outstanding (862)
Limited Partner "B" Unitholders -
75,152 units outstanding 3,878 2,892
$ 15,909
See Accompanying Notes to Consolidated Financial Statements
b) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues:
Rental income $ 1,173 $ 1,144 $ 2,337 $ 2,275
Interest income 19 20 45 40
Other income 54 44 110 92
Total revenues 1,246 1,208 2,492 2,407
Expenses:
Operating 376 395 818 814
General and administrative 48 58 71 92
Partnership management fee -- -- 61 20
Maintenance 141 138 271 243
Depreciation 242 245 481 487
Interest 251 262 502 524
Property taxes 91 64 183 156
Total expenses 1,149 1,162 2,387 2,336
Net income $ 97 $ 46 $ 105 $ 71
Net income allocated
to general partner (1%) $ 1 $ -- $ 1 $ 1
Net income allocated
to limited partners (99%) 96 46 104 70
$ 97 $ 46 $ 105 $ 71
Net income per A Unit: $ .55 $ .27 $ .60 $ .41
Net income per B Unit: $ .55 $ .27 $ .60 $ .41
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)
Total
Partners'
General Limited Partners Equity
Partner "A" Units "B" Units (Deficit)
Original capital contributions $ 1 $ 9,706 $ 7,538 $ 17,245
Limited partnership units at
December 31, 1996 and
June 30, 1997 -- 96,284 75,152 171,436
Partners' capital (deficit) at
December 31, 1996 $ (118) $ (238) $ 3,832 $ 3,476
Distributions to partners (7) (682) -- (689)
Net income for the six
months ended June 30, 1997 1 58 46 105
Partners' capital (deficit) at
June 30, 1997 $ (124) $ (862) $ 3,878 $ 2,892
See Accompanying Notes to Consolidated Financial Statements
d) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net income $ 105 $ 71
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 481 487
Amortization of loan costs 31 21
Change in accounts:
Restricted cash 7 (11)
Accounts receivable 37 66
Escrow for taxes and insurance 132 34
Other assets (27) 16
Accounts payable (79) (261)
Tenant security deposit liabilities (7) 12
Accrued taxes (5) (15)
Other liabilities 3 (65)
Net cash provided by operating activities 678 355
Cash flows from investing activities:
Property improvements and replacements (236) (116)
Deposits to restricted escrows (112) (21)
Receipts from restricted escrows 148 --
Proceeds from sale of investments -- 197
Net cash (used in) provided by
investing activities (200) 60
Cash flows from financing activities:
Payments on mortgage notes payable (32) (86)
Distributions to partners (689) (230)
Loan costs paid (1) (25)
Net cash used in financing activities (722) (341)
Net (decrease) increase in cash (244) 74
Cash and cash equivalents at beginning of period 1,860 1,234
Cash and cash equivalents at end of period $ 1,616 $ 1,308
Supplemental disclosure of cash flow information:
Cash paid for interest $ 471 $ 500
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 consolidated financial statements of Multi-Benefit
Realty Fund '87-1 (the "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. (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 six month
periods ended June 30, 1997, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1997. 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, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 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
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, 1997 and 1996, 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 affiliates received reimbursements and fees as reflected
in the following table:
For the Six Months Ended
June 30,
1997 1996
(in thousands)
Property management fees $122 $119
Reimbursements for services of affiliates (1) 54 106
Partnership management fees (2) 61 20
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $49,000 in reimbursements for construction oversight costs.
(2) 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.
The Partnership insures 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 $1,616,000, exceeded the reserve requirement
of approximately $759,000 at June 30, 1997.
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, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Carlin Manor Apartments
Columbus, Ohio 90% 89%
Hunt Club Apartments
Indianapolis, Indiana 92% 95%
Shadow Brook Apartments
West Valley City, Utah 97% 98%
Results of Operations
The Partnership's net income for the three and six month periods ended June 30,
1997, was approximately $97,000 and $105,000, respectively, compared to net
income of approximately $46,000 and $71,000, respectively, for the same periods
of 1996. The increase in net income is primarily due to increases in revenues.
The increase in revenues is due to an increase in rental income, interest income
and other income. The increase in rental income is primarily due to an increase
in rental rates at Shadow Brook Apartments which more than offset the slight
decrease in average occupancy. Additionally, Carlin Manor Apartments also had
increased rental income caused by the increase in occupancy. The increase in
other income is due to an increase in deposit forfeitures, lease cancellation
fees, and cleaning and damage fees primarily due to an increase in turnover at
Shadow Brook Apartments. Interest income increased due to an increase in
invested cash and cash equivalents. In addition to the increase in revenues,
the Partnership had a decrease in general and administrative expense. The
decrease in general and administrative expense is due to a decrease in legal
expense. Offsetting the above increases to net income were increases in
partnership management fees, maintenance expense, and tax expense. The increase
in partnership management fees is the result of an increase in distributions
made to the limited partners from "cash available for distribution" (as defined
in the Agreement, see "Item 1. Note B - Related Party Transactions").
Maintenance expense increased due to a paving project at Hunt Club. Included in
maintenance expense for the six months ended June 30, 1997, is approximately
$41,000 of major repairs and maintenance comprised primarily of parking lot
paving, major landscaping and window coverings. For the six months ended June
30, 1996, approximately $49,000 of major repairs and maintenance is included in
maintenance expense comprised primarily of swimming pool repairs, window
coverings, and exterior and interior building repairs. The increase in tax
expense is due to the fact that the June 1996 accrual for Hunt Club was based on
a reduced 1995 tax bill. The actual 1996 tax bill was more than estimated,
thereby increasing the basis for the 1997 accrual.
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 for 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 June 30, 1997, the Partnership had unrestricted cash of approximately
$1,616,000 compared to approximately $1,308,000 at June 30, 1996. Net cash
provided by operating activities increased primarily due to the decrease in cash
used for payment of accounts payable and a decrease in the escrow for taxes and
insurance. Net cash used in investing activities increased due to a decrease in
proceeds from the sale of investments and increases in property improvements and
replacements and deposits to restricted escrows. These increases were partially
offset by increases in receipts from restricted escrows. Net cash used in
financing activities increased due to an increase in distributions to partners.
This increase was partially offset by decreases in the payments made on mortgage
notes payable and in loan costs paid.
The Partnership has no material capital projects scheduled to be performed in
1997, 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, received from the capital
reserve account or 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 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 $12,319,000 is amortized over varying
periods and requires balloon payments in October 2000 and November 2003 at which
time the properties will be refinanced or sold. During the first six months of
1997, a distribution of approximately $682,000 was made to the "A" Unit limited
partners, and a distribution of approximately $7,000 was made to the General
Partner. A distribution of approximately $228,000 was made to the "A" Unit
limited partners and a distribution of approximately $2,000 was made to the
General Partner during the first six months of 1996. 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 June 30, 1997.
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/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: August 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Multi-Benefit Realty Fund '87-1 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,619
<SECURITIES> 0
<RECEIVABLES> 7
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,791
<DEPRECIATION> 10,484
<TOTAL-ASSETS> 15,909
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 12,319
0
0
<COMMON> 0
<OTHER-SE> 2,892
<TOTAL-LIABILITY-AND-EQUITY> 15,909
<SALES> 0
<TOTAL-REVENUES> 2,337
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,387
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 502
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 105
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<NET-INCOME> 105
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<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
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