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, 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)
September 30, 1996
Assets
Cash and cash equivalents:
Unrestricted $ 1,224
Restricted--tenant security deposits 143
Accounts receivable 26
Escrows for taxes 276
Restricted escrows 120
Other assets 193
Investment properties:
Land $ 1,742
Buildings and related personal property 21,624
23,366
Less accumulated depreciation (9,747) 13,619
$15,601
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 113
Accrued taxes 335
Tenant security deposits 142
Other liabilities 297
Mortgage notes payable 11,200
Partners' Capital (Deficit)
General Partner $ (117)
Limited Partner "A" Unitholders -
96,284 units outstanding (217)
Limited Partner "B" Unitholders -
75,152 units outstanding 3,848 3,514
$15,601
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 Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Rental income $ 1,166 $ 1,079 $ 3,441 $ 3,204
Other income 66 93 198 272
Casualty gain -- -- -- 539
Total revenues 1,232 1,172 3,639 4,015
Expenses:
Operating 360 361 1,174 1,072
General and administrative 43 46 135 166
Partnership management fee 20 -- 41 33
Maintenance 200 225 444 434
Depreciation 250 237 737 696
Interest 259 264 782 794
Property taxes 87 100 242 307
Total expenses 1,219 1,233 3,555 3,502
Net income (loss) $ 13 $ (61) $ 84 $ 513
Net (loss) income allocated
to general partner (1%) $ -- $ (1) $ 1 $ 5
Net income (loss) allocated
to limited partners (99%) 13 (60) 83 508
$ 13 $ (61) $ 84 $ 513
Net income (loss) per A Unit: $ .08 $ (.35) $ .49 $ 2.96
Net income (loss) per B Unit: $ .08 $ (.35) $ .49 $ 2.96
<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)
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, 1995 and
September 30, 1996 -- 96,284 75,152 171,436
Partners' capital (deficit) at
December 31, 1995 $ (113) $ 190 $ 3,812 $ 3,889
Distributions to partners (5) (454) -- (459)
Net income for the nine months
ended September 30, 1996 1 47 36 84
Partners' capital (deficit) at
September 30, 1996 $ (117) $ (217) $ 3,848 $ 3,514
<FN>
See Accompanying Notes to Consolidated Financial Statements
d) MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net income $ 84 $ 513
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 737 696
Amortization of loan costs 32 32
Casualty gain -- (539)
Change in accounts:
Restricted cash (11) (70)
Accounts receivable 89 (4)
Escrows for taxes (67) (256)
Other assets 44 (26)
Accounts payable (224) 238
Tenant security deposit liabilities 10 (4)
Accrued taxes 72 131
Other liabilities (87) (15)
Net cash provided by operating activities 679 696
Cash flows from investing activities:
Property improvements and replacements (317) (925)
Deposits to restricted escrows (32) (27)
Receipts from restricted escrows -- 66
Proceeds from sale of investments 298 2,894
Purchase of investments -- (1,753)
Net insurance proceeds from property damage -- 555
Net cash (used in) provided by
investing activities (51) 810
Cash flows from financing activities:
Payments on mortgage notes payable (130) (106)
Distributions to partners (459) (918)
Loan costs paid (49) --
Net cash used in financing activities (638) (1,024)
Net (decrease) increase in cash (10) 482
Cash and cash equivalents at beginning of period 1,234 850
Cash and cash equivalents at end of period $ 1,224 $ 1,332
Supplemental disclosure of cash flow information:
Cash paid for interest $ 751 $ 677
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 ("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 nine month
periods ended September 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.
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 nine month
periods ended September 30, 1996 and 1995, respectively. Such fees are included
in operating expense on the consolidated statements 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 Nine Months Ended
September 30,
1996 1995
(in thousands)
Property management fees $179 $170
Reimbursements for services of affiliates (1) 142 97
Partnership management fees (2) 41 33
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $51,000 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.
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 $1,224,000, exceeded the reserve requirement
of approximately $754,000 at September 30, 1996.
NOTE D - CASUALTY GAIN
Shadow Brook Apartments experienced fire damage which destroyed twelve units and
damaged twelve other units in 1995. At September 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 nine months ended September 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Carlin Manor Apartments
Columbus, Ohio 90% 85%
Hunt Club Apartments
Indianapolis, Indiana 95% 89%
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 nine months ended September 30, 1996, was
approximately $84,000 as compared to net income of approximately $513,000 for
the nine months ended September 30, 1995. The Partnership recorded net income
of approximately $13,000 for the three month period ended September 30, 1996, as
compared to a net loss of approximately $61,000 for the corresponding period in
1995. The decrease in net income for the nine month period ended September 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.
Furthermore, the decrease in net income for the nine months ended September 30,
1996, is attributable to the decrease in other income, the increase in operating
expenses, and the increase in partnership management fees. Other income
decreased as a result of a decrease in interest income earned on cash balances
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. Partnership
management fees increased due to an increase in distributions made to limited
partners from "cash available for distribution" (as defined in the Agreement)
although total distributions decreased for the nine month period ended September
30, 1996. Offsetting the items noted above for the nine months ended September
30, 1996, are a decrease in general and administrative expense and a decrease in
property tax expense. 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. The decrease in property tax expense is due to the fact that
the actual 1995 tax invoices for Hunt Club and Shadow Brook were reduced from
the amount accrued at September 30, 1995, which was based on prior year amounts.
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 September 30, 1996, the Partnership had unrestricted cash of approximately
$1,224,000 compared to approximately $1,332,000 at September 30, 1995. Net
cash provided by operating activities at September 30, 1996, is consistent with
that of the same period in the prior year. Net cash used in investing
activities increased as a result of a decrease in cash received from restricted
escrows and a decrease in net cash received from investments. This increase in
net cash used in investing activities was partially offset by decreased
purchases of property improvements and replacements during the nine months ended
September 30, 1996. Net cash used in financing activities decreased due to a
decrease in distributions and increased payments on the mortgage notes payable
during the nine months ended September 30, 1996, versus the nine months ended
September 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 $11,200,000 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 nine months of
1996, distributions of approximately $454,000 or $4.72 per "A" Unit were made to
the "A" Unit limited partners, and a distribution of approximately $5,000 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 nine
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 September 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: November 6, 1996