FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] 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.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
a)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,875
Receivables and deposits 316
Restricted escrows 53
Other assets 148
Investment properties:
Land $ 1,447
Buildings and related personal property 16,905
18,352
Less accumulated depreciation (9,315) 9,037
$ 11,429
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 157
Tenant security deposit liabilities 54
Accrued property taxes 208
Other liabilities 239
Mortgage notes payable 9,596
Partners' (Deficit) Capital
General Partner $ (113)
Limited Partner "A" Unit holders -
96,284 units issued and outstanding (3,760)
Limited Partner "B" Unit holders -
75,152 units issued and outstanding 5,048 1,175
$ 11,429
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental revenue $ 1,123 $ 1,231 $ 2,385 $ 2,475
Other income 119 79 213 152
Gain on sale of investment
property 4,814 -- 4,814 --
Total revenues 6,056 1,310 7,412 2,627
Expenses:
Operating 555 536 1,103 1,062
General and administrative 168 74 208 123
Depreciation 291 263 578 521
Interest 234 249 481 501
Property taxes 74 107 165 200
Total expenses 1,322 1,229 2,535 2,407
Income before extraordinary loss
on early extinguishment of debt 4,734 81 4,877 220
Extraordinary loss on early
extinguishment of debt (105) -- (105) --
Net income $ 4,629 $ 81 $ 4,772 $ 220
Net income allocated to general
partner $ 47 $ 1 $ 48 $ 2
Net income allocated to limited
partners 4,582 80 4,724 218
$ 4,629 $ 81 $ 4,772 $ 220
Per limited partnership "A" and "B" units:
Income before extraordinary
loss on early extinguishment
of debt $ 27.33 $ 0.47 $ 28.16 $ 1.27
Extraordinary loss on early
extinguishment of debt (0.60) -- (0.60) --
Net income $ 26.73 $ 0.47 $ 27.56 $ 1.27
Distributions per limited
partnership "A" units $ 44.37 $ -- $ 44.37 $ --
Distributions per limited
partnership "B" units $ 16.22 $ -- $ 16.22 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Total
Partners'
General Limited Partners (Deficit)
Partner "A" Units "B" Units Capital
<S> <C> <C> <C> <C>
Original capital contributions $ 1 $ 9,706 $ 7,538 $ 17,245
Limited partnership units at
December 31, 1999 and
June 30, 2000 -- 96,284 75,152 171,436
Partners' (deficit) capital at
December 31, 1999 $ (134) $ (2,141) $ 4,196 $ 1,921
Distributions to partners (27) (4,272) (1,219) (5,518)
Net income for the six months
ended June 30, 2000 48 2,653 2,071 4,772
Partners' (deficit) capital
at June 30, 2000 $ (113) $ (3,760) $ 5,048 $ 1,175
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 4,772 $ 220
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 578 521
Amortization of loan costs 31 35
Gain on sale of investment property (4,814) --
Extraordinary loss on early extinguishment of debt 105 --
Change in accounts:
Receivables and deposits 14 31
Other assets (17) (24)
Accounts payable (65) 48
Tenant security deposit liabilities (33) (10)
Accrued property taxes (128) 86
Other liabilities (283) 19
Net cash provided by operating activities 160 926
Cash flows from investing activities:
Property improvements and replacements (212) (450)
Net withdrawals from restricted escrows 190 89
Proceeds from sale of investment property 8,005 --
Net cash provided by (used in) investing
activities 7,983 (361)
Cash flows from financing activities:
Payments on mortgage notes payable (41) (37)
Repayment of mortgage note payable (2,500) --
Prepayment penalty paid (62) --
Distributions to partners (5,945) --
Net cash used in financing activities (8,548) (37)
Net (decrease) increase in cash and cash equivalents (405) 528
Cash and cash equivalents at beginning of period 2,280 1,291
Cash and cash equivalents at end of period $ 1,875 $ 1,819
Supplemental disclosure of cash flow information:
Cash paid for interest $ 477 $ 465
Distributions to partners of approximately $427,000 were declared at December
31, 1999 and paid in January 2000.
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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" or "Registrant") 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, 2000, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2000. 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 fiscal year ended December 31, 1999.
Principles of Consolidation
The consolidated financial statements of the Partnership include its 99% limited
partnership interest in Hunt Club Associates, Ltd. The general partner of this
consolidated partnership is the General Partner. The Partnership may remove the
general partner of Hunt Club Associates, Ltd.; therefore, the consolidated
partnership is controlled and consolidated by the Partnership. All significant
interpartnership balances have been eliminated.
Limited Partnership Units
The Partnership has issued two classes of Units of Depositary Receipts
("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 ("Unit
holders") to participate in certain allocations and distributions of the
Partnership.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Transactions with Affiliated Parties
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 Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
<PAGE>
The following transactions with the General Partner and/or its affiliates were
incurred during the six months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expense) $133 $132
Reimbursement for services of affiliates (included in
general and administrative expense) 57 48
Partnership management fee (included in general and
administrative expense) 91 --
During the six months ended June 30, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $133,000 and
$132,000 for the six months ended June 30, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $57,000 and $48,000 for the
six months ended June 30, 2000 and 1999, respectively.
The Partnership Agreement provides for a fee equal to 9% of distributable cash
from operations (as defined in the Partnership Agreement) received by the
limited partners to be paid to the General Partner for executive and
administrative management services. Fees of approximately $91,000 were paid
during the six months ended June 30, 2000, in association with the
distributions. No fees were earned during the six months ended June 30, 1999.
AIMCO and its affiliates currently own 60,253 "A" and 37,662 "B" limited
partnership units in the Partnership representing 62.58% and 50.11% of the
outstanding units. A number of these units were acquired pursuant to tender
offers made by AIMCO or its affiliates. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. As a result of its ownership of 62.58% and 50.11% of the
outstanding units, AIMCO is in a position to influence all voting decisions with
respect to the Registrant. When voting on matters, AIMCO would in all likelihood
vote the Units it acquired in a manner favorable to the interest of the General
Partner because of their affiliation with the General Partner.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital reserves of not less than 5% of Net Invested Capital, as defined in the
Partnership 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, consisting of cash and cash equivalents
totaling approximately $1,875,000, exceeded the reserve requirement of
approximately $534,000 at June 30, 2000.
<PAGE>
Note E - Distribution
During the six months ended June 30, 2000, the Partnership paid a cash
distribution from operations, which was declared and accrued at December 31,
1999, of approximately $427,000 of which approximately $423,000 ($4.39 per
limited partnership "A" Unit) was paid to the "A" Unit limited partners. In
addition, the Partnership declared and paid distributions from operations of
approximately $1,018,000 (approximately $1,008,000 to "A" Unit holders or $10.47
per limited partnership "A" Unit) and of proceeds from the sale of Carlin Manor
Apartments of approximately $4,500,000 (approximately $3,264,000 to "A" Unit
holders or $33.90 per limited partnership "A" Unit and approximately $1,219,000
to "B" Unit holders or $16.22 per limited partnership "B" Unit). There were no
distributions paid or declared during the six months ended June 30, 1999.
Note F - Sale of Investment Property
On June 12, 2000, the Partnership sold Carlin Manor Apartments to an
unaffiliated third party for $8,100,000. After payment of closing costs of
approximately $95,000, the net sales proceeds received by the Partnership were
approximately $8,005,000. The Partnership used a portion of the proceeds to pay
off the mortgage encumbering the property of $2,500,000. Approximately
$4,500,000 of the proceeds were distributed to the partners during the six
months ended June 30, 2000. The remaining proceeds were used to establish
additional cash reserves for the Partnership. The Partnership's gain on the sale
was approximately $4,814,000 and an extraordinary loss on early extinguishment
of debt of approximately $105,000 consisting of a prepayment penalty and the
write-off of unamortized loan costs.
The sales transaction is summarized as follows (amounts in thousands):
Net sales price, net of selling costs $ 8,005
Net real estate (1) (3,091)
Net other liabilities (100)
Gain on sale of real estate $ 4,814
(1) Net of accumulated depreciation of approximately $4,256,000.
The following pro-forma information reflects the operations of the Partnership
for the six months ended June 30, 2000 and 1999, as if Carlin Manor Apartments
had been sold January 1, 1999.
2000 1999
(in thousands, except per unit data)
Revenues $ 1,912 $ 1,810
Net income 1 17
Net income per limited
partnership "A" and "B" unit 0.01 0.10
<PAGE>
Note G - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
residential properties. The Partnership's residential property segment consists
of two apartment complexes, one each in Indiana and Utah. On June 12, 2000, the
Partnership sold its residential property located in Ohio. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segment are the same as those of the Partnership as described in
the Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1999.
Factors management used to identify the Partnership's reportable segments: The
Partnership's reportable segment consists of investment properties that offer
similar products and services. Although each of the investment properties are
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
Segment information for the three and six month periods ended June 30, 2000 and
1999, is shown in the tables below (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
<TABLE>
<CAPTION>
Three Months Ended June 30, 2000 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 1,123 $ -- $ 1,123
Other income 105 14 119
Interest expense 234 -- 234
Depreciation 291 -- 291
General and administrative expense -- 168 168
Gain on sale of investment property 4,814 -- 4,814
Extraordinary loss on early
extinguishment of debt (105) -- (105)
Segment profit (loss) 4,783 (154) 4,629
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 2,385 $ -- $ 2,385
Other income 184 29 213
Interest expense 481 -- 481
Depreciation 578 -- 578
General and administrative expense -- 208 208
Gain on sale of investment property 4,814 -- 4,814
Extraordinary loss on early
extinguishment of debt (105) -- (105)
Segment profit (loss) 4,951 (179) 4,772
Total assets 9,842 1,587 11,429
Capital expenditures for investment
properties 212 -- 212
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 1,231 $ -- $ 1,231
Other income 65 14 79
Interest expense 249 -- 249
Depreciation 263 -- 263
General and administrative expense -- 74 74
Segment profit (loss) 141 (60) 81
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 2,475 $ -- $ 2,475
Other income 127 25 152
Interest expense 501 -- 501
Depreciation 521 -- 521
General and administrative expense -- 123 123
Segment profit (loss) 318 (98) 220
Total assets 13,582 1,428 15,010
Capital expenditures for investment
properties 450 -- 450
</TABLE>
Note H - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussions of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operations. Accordingly, 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.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the six months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Hunt Club Apartments 94% 92%
Indianapolis, Indiana
Shadow Brook Apartments 97% 97%
West Valley City, Utah
Results of Operations
The Partnership had net income of approximately $4,772,000 for the six months
ended June 30, 2000 as compared to approximately $220,000 for the six months
ended June 30, 1999. For the three months ended June 30, 2000 the Partnership
had net income of approximately $4,629,000 as compared to net income of
approximately $81,000 for the three months ended June 30, 1999. The increase in
net income for both the three and six month periods ended June 30, 2000 is
primarily attributable to the gain recorded on the sale of Carlin Manor
Apartments as discussed below.
Excluding the gain on the sale of Carlin Manor Apartments as well as the
extraordinary loss on the early extinguishment of the debt at Carlin Manor, the
Partnership had net income of approximately $63,000 for the six months ended
June 30, 2000 compared to net income of approximately $220,000 for the
comparable period in 1999. For the three months ended June 30, 2000 the
Partnership had a net loss of approximately $80,000 compared to net income of
approximately $81,000 for the three months ended June 30, 1999. The decrease in
net income for the three and six month periods ended June 30, 2000 is due to an
increase in total expenses and a decrease in total revenues. The decrease in
total revenues for both the three and six month periods is due to a decrease in
rental revenue partially offset by an increase in other income. Rental revenue
decreased due primarily to the sale of Carlin Manor Apartments in 2000.
Partially offsetting the impact of the sale of Carlin Manor were increased
occupancy and increased average rental rates at Hunt Club Apartments. Other
income increased as a result of increased interest income due to higher average
cash balances in interest bearing accounts, increased telephone commissions and
tenant charges at all the Partnership's properties.
Total expenses increased for the three and six month periods due to increased
operating, depreciation and general and administrative expenses, partially
offset by decreased property tax expense. Operating expenses increased primarily
due to a net insurance proceeds received in 1999 for storm damage at Hunt Club
and increased contract labor costs, partially offset by reduced snow removal
costs at Hunt Club Apartments. Depreciation expense increased due to property
improvements and replacements completed during the past twelve months. General
and administrative expenses increased due to the payment of partnership
management fees on distributions from operations during 2000. There were no
distributions from operations during the six months ended June 30, 1999 so no
such fees were paid during 1999. In addition, professional fees associated with
the management of the Partnership increased. Included in general and
administrative expenses for the three and six months ended June 30, 2000 and
1999, are management reimbursements to the General Partner allowed under the
Partnership Agreement. In addition, costs associated with the quarterly and
annual communications with the investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included. Property tax
expense decreased due to the sale of Carlin Manor and to a property tax refund
and reduced assessed value received at Hunt Club Apartments.
On June 12, 2000, the Partnership sold Carlin Manor Apartments to an
unaffiliated third party for $8,100,000. After payment of closing costs of
approximately $95,000, the net sales proceeds received by the Partnership were
approximately $8,005,000. The Partnership used a portion of the proceeds to pay
off the mortgage encumbering the property of $2,500,000. Approximately
$4,500,000 of the proceeds were distributed to the partners during the six
months ended June 30, 2000. The remaining proceeds were used to establish
additional cash reserves for the Partnership. The Partnership's gain on the sale
was approximately $4,814,000 and there was an extraordinary loss on early
extinguishment of debt of approximately $105,000 consisting of a prepayment
penalty and the write-off of unamortized loan costs.
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 expenses. 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, 2000, the Partnership had cash and cash equivalents of approximately
$1,875,000 as compared to approximately $1,819,000 at June 30, 1999. Cash and
cash equivalents decreased approximately $405,000 for the six months ended June
30, 2000, from the Partnership's year ended December 31, 1999, due to
approximately $8,548,000 of cash used in financing activities, which was
partially offset by approximately $7,983,000 of cash provided by investing
activities and approximately $160,000 of cash provided by operating activities.
Cash used in financing activities consisted primarily of distributions to
partners and, to a lesser extent, the payoff of the mortgage encumbering Carlin
Manor Apartments, prepayment penalties paid and payments of principal made on
the mortgage encumbering Hunt Club Apartments. Cash provided by investing
activities consisted of proceeds from the sale of Carlin Manor Apartments and of
net withdrawals from restricted escrows maintained by the mortgage lender which
were partially offset by property improvements and replacements. The Partnership
invests its working capital reserves in money market accounts.
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 and to comply with Federal,
state, and local legal and regulatory requirements. Capital improvements planned
for each of the Registrant's properties are detailed below.
<PAGE>
Carlin Manor
During the six months ended June 30, 2000 the Partnership expended approximately
$63,000 for floor covering, major landscaping, and appliance replacements at
Carlin Manor. This property was sold on June 12, 2000.
Hunt Club
Approximately $193,000 was budgeted for capital improvements for the year 2000
at Hunt Club Apartments consisting primarily of structural upgrades, fencing,
carpet and vinyl replacement, and appliance replacement. During the six months
ended June 30, 2000, the Partnership completed approximately $48,000 of capital
improvements at Hunt Club Apartments, consisting primarily of floor covering
replacements, gutter replacements, exterior painting and other building
improvements. These improvements were funded from operating cash flow and
replacement reserves.
Shadow Brook
Approximately $186,000 was budgeted for capital improvements for the year 2000
at Shadow Brook Apartments consisting primarily of carpet and vinyl replacement,
roof replacement, and lighting improvements. During the six months ended June
30, 2000, the Partnership completed approximately $101,000 of capital
improvements at Shadow Brook Apartments, consisting primarily of roof
replacement, carpet and vinyl replacement, and lighting improvements. These
improvements were funded from replacement reserves.
The additional capital expenditures for 2000 at the Partnership's properties
will be made only to the extent of cash available from operations and
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness of approximately $9,596,000 is amortized over varying
periods and requires one balloon payment in October 2000 and one in November
2003. The General Partner will attempt to refinance such indebtedness and/or
sell the properties prior to such maturity dates. If the properties cannot be
refinanced or sold for a sufficient amount, the Partnership will risk losing
such properties through foreclosure.
During the six months ended June 30, 2000, the Partnership paid a cash
distribution from operations, which was declared and accrued at December 31,
1999, of approximately $427,000 of which approximately $423,000 ($4.39 per
limited partnership "A" Unit) was paid to the "A" Unit limited partners. In
addition, the Partnership declared and paid distributions from operations of
approximately $1,018,000 (approximately $1,008,000 to "A" Unit holders or $10.47
per limited partnership "A" Unit) and of proceeds from the sale of Carlin Manor
Apartments of approximately $4,500,000 (approximately $3,264,000 to "A" Unit
holders or $33.90 per limited partnership "A" Unit and approximately $1,219,000
to "B" Unit holders or $16.22 per limited partnership "B" Unit). There were no
distributions paid or declared during the six months ended June 30, 1999. The
Partnership's distribution policy is reviewed on a semi-annual basis. Future
cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit further distributions to its
partners during the remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
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 filed during the quarter ended June 30, 2000:
None.
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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/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
