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 March 31, 2001
[ ] 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 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)
March 31, 2001
Assets
Cash and cash equivalents $ 432
Receivables and deposits 158
Restricted escrows 268
Other assets 260
Investment properties:
Land $ 1,447
Buildings and related personal property 17,344
18,791
Less accumulated depreciation (9,924) 8,867
$ 9,985
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 142
Tenant security deposit liabilities 60
Accrued property taxes 219
Other liabilities 367
Mortgage notes payable 9,860
Partners' (Deficit) Capital
General Partner $ (123)
Limited Partner "A" Unit holders -
96,284 units issued and outstanding (4,720)
Limited Partner "B" Unit holders -
75,152 units issued and outstanding 4,180 (663)
$ 9,985
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
March 31,
2001 2000
Revenues:
Rental income $ 886 $1,262
Other income 67 94
Total revenues 953 1,356
Expenses:
Operating 382 548
General and administrative 115 40
Depreciation 209 287
Interest 196 247
Property taxes 61 91
Total expenses 963 1,213
Net (loss) income $ (10) $ 143
Net (loss) income allocated to general partner $ -- $ 1
Net (loss) income allocated to limited partners (10) 142
$ (10) $ 143
Net (loss) income per limited partnership "A" and "B" units $(0.06) $ 0.83
Distributions per limited partnership "A" units $ 0.49 $ --
Distributions per limited partnership "B" units $ 7.14 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Total
Partners'
General Limited Partners (Deficit)
Partner "A" Units "B" Units Capital
Original capital contributions $ 1 $ 9,706 $ 7,538 $ 17,245
Limited partnership units at
December 31, 2000 and
March 31, 2001 -- 96,284 75,152 171,436
Partners' (deficit) capital at
December 31, 2000 $ (117) $(4,667) $ 4,721 $ (63)
Distribution to partners (6) (47) (537) (590)
Net loss for the three months
ended March 31, 2001 -- (6) (4) (10)
Partners' (deficit) capital
at March 31, 2001 $ (123) $(4,720) $ 4,180 $ (663)
See Accompanying Notes to Consolidated Financial Statements
d)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net (loss) income $ (10) $ 143
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation 209 287
Amortization of loan costs 9 16
Change in accounts:
Receivables and deposits (73) 48
Other assets (16) (26)
Accounts payable 75 (24)
Tenant security deposit liabilities 2 6
Accrued property taxes 67 (30)
Other liabilities 90 (181)
Net cash provided by operating activities 353 239
Cash flows from investing activities:
Property improvements and replacements (216) (71)
Net withdrawals from restricted escrows 13 145
Net cash (used in) provided by investing
activities (203) 74
Cash flows from financing activities:
Payments on mortgage notes payable (20) (20)
Distributions to partners (590) (427)
Net cash used in financing activities (610) (447)
Net decrease in cash and cash equivalents (460) (134)
Cash and cash equivalents at beginning of period 892 2,280
Cash and cash equivalents at end of period $ 432 $ 2,146
Supplemental disclosure of cash flow information:
Cash paid for interest $ 188 $ 231
At December 31, 2000, approximately $125,000 of property improvements and
replacements were included in accounts payable.
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" 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"), which is wholly-owned by Apartment Investment and Management Company
("AIMCO"), 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, 2001, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2001. 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, 2000.
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 of the Registrant. 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.
Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The General Partner believes that
segment-based disclosures will not result in a more meaningful presentation than
the consolidated financial statements as currently presented.
Note B - 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.
The following transactions with the General Partner and/or its affiliates were
incurred during the three months ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 48 $ 67
Reimbursement for services of affiliates (included in
general and administrative expenses) 40 24
Partnership management fee (included in general and
administrative expense) 48 --
During the three months ended March 31, 2001 and 2000, 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 $48,000 and
$67,000 for the three months ended March 31, 2001 and 2000, respectively.
An affiliate of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $40,000 and $24,000 for the
three months ended March 31, 2001 and 2000, 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 $48,000 were earned
during the three months ended March 31, 2001 in association with the
distributions.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 61,580 "A" and 38,480 "B"
limited partnership units in the Partnership representing 63.96% and 51.20% of
the outstanding "A" and "B" units, respectively. 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 which would include without
limitation, voting on certain amendments to the Partnership Agreement and voting
to remove the General Partner. As a result of its ownership of 63.96% and 51.20%
of the outstanding "A" and "B" units, respectively, 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 C - Distributions
During the three months ended March 31, 2001, the Partnership declared and paid
a cash distribution from operations of approximately $590,000 (approximately
$47,000 to "A" Unit holders or $0.49 per limited partnership "A" Unit and
approximately $537,000 to "B" Unit holders or $7.14 per limited partnership "B"
Unit). During the three months ended March 31, 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.
Subsequent to March 31, 2001, the Partnership declared distributions from
operations of approximately $167,000 (approximately $82,000 to "A" Unit holders
or $0.85 per limited partnership "A" Unit and approximately $82,000 to "B" Unit
holders or $1.09 per limited partnership "B" Unit).
Note D - 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
$5,337,000 of the proceeds were distributed to the partners during the year
ended December 31, 2000. The remaining proceeds were used to establish
additional cash reserves for the Partnership. The Partnership's gain on the sale
was approximately $4,910,000 and an extraordinary loss on early extinguishment
of debt was recorded of approximately $105,000 consisting of a prepayment
penalty and the write-off of unamortized loan costs during the year ended
December 31, 2000.
Note E - Refinancing of Mortgage Note Payable
On August 31, 2000, the Partnership refinanced the mortgage encumbering Hunt
Club Apartments. The refinancing replaced indebtedness of approximately
$3,582,000 with a new mortgage of $3,900,000. The new mortgage carries a stated
interest rate of 8.05% as compared to the 8.30% interest rate on the old
mortgage. Payments on the mortgage loan are due monthly until the loan matures
on September 1, 2020. In addition, the Partnership was required to establish a
repair escrow of approximately $239,000 with the lender for certain capital
replacements. Total capitalized loan costs were approximately $157,000 at
December 31, 2000.
Note F - 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, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the 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 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 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 and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The
Court has also scheduled a hearing on a motion for class certification for
August 27, 2001. Plaintiffs must file their motion for class certification no
later than June 15, 2001. 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.
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 three months ended March 31, 2001 and 2000:
Average Occupancy
Property 2001 2000
Hunt Club Apartments 92% 95%
Indianapolis, Indiana
Shadow Brook Apartments 97% 97%
West Valley City, Utah
The General Partner attributes the decrease in occupancy at Hunt Club Apartments
to increased competition in the area and to other properties offering
concessions.
Results of Operations
The Partnership had a net loss of approximately $10,000 for the three months
ended March 31, 2001 as compared to net income of approximately $143,000 for the
three months ended March 31, 2000. The decrease in net income for the three
month period ended March 31, 2001 is primarily attributable to a decrease in
total revenues partially offset by a decrease in total expenses resulting from
the sale of Carlin Manor Apartments in June 2000 as discussed below.
Excluding the operations of Carlin Manor Apartments, the Partnership had a net
loss of approximately $10,000 for the three months ended March 31, 2001 compared
to net income of approximately $57,000 for the comparable period in 2000. The
decrease in net income for the three months ended March 31, 2001 is due to a
decrease in total revenues and an increase in total expenses. The decrease in
total revenues is due to a decrease in other income partially offset by an
increase in rental income. Other income decreased as a result of decreased
interest income due to lower average cash balances in interest bearing accounts
and decreased telephone commissions primarily at Shadow Brook Apartments. Rental
income increased due primarily to increased average rental rates at both of the
Partnership's properties despite a decrease in occupancy at Hunt Club
Apartments.
Excluding the operations of Carlin Manor, total expenses increased for the three
month period ended March 31, 2001 due to increased depreciation and general and
administrative expenses partially offset by decreased operating expenses.
Depreciation expense increased primarily due to property improvements and
replacements completed during the past twelve months. General and administrative
expenses increased primarily due to the payment of Partnership management fees
on distributions from operations during 2001. General and administrative
expenses also increased due to an increase in the cost of services included in
the management reimbursements to the General Partner as allowed under the
Partnership Agreement and increased professional fees necessary to manage the
Partnership. Also included in general and administrative expenses for the three
months ended March 31, 2001 and 2000 are costs associated with the quarterly and
annual communications with the investors and regulatory agencies and the annual
audit required by the Partnership Agreement. Operating expenses decreased
primarily due to reduced payroll bonuses and reduced maintenance expenses at
both of the Partnership's properties and reduced manager salaries 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
$5,337,000 of the proceeds were distributed to the partners during the year
ended December 31, 2000. The remaining proceeds were used to establish
additional cash reserves for the Partnership. The Partnership's gain on the sale
was approximately $4,910,000 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 during the year ended
December 31, 2000.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each 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 March 31, 2001, the Partnership had cash and cash equivalents of
approximately $432,000 as compared to approximately $2,146,000 at March 31,
2000. Cash and cash equivalents decreased approximately $460,000 for the three
months ended March 31, 2001, from the Partnership's year ended December 31,
2000, due to approximately $610,000 of cash used in financing activities and
approximately $203,000 of cash used in investing activities which were partially
offset by approximately $353,000 of cash provided by operating activities. Cash
used in financing activities consisted primarily of distributions to partners
and, to a lesser extent, of payments of principal made on the mortgage
encumbering Hunt Club Apartments. Cash used in investing activities consisted of
property improvements and replacements which were partially offset by net
withdrawals from restricted escrows maintained by the mortgage lender.
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.
Hunt Club
Approximately $147,000 was budgeted for capital improvements for the year 2001
at Hunt Club Apartments consisting primarily of carpet and tile replacements,
appliances, and water heater replacements. During the three months ended March
31, 2001, the Partnership completed approximately $74,000 of capital
improvements at Hunt Club Apartments consisting primarily of appliances, carpet
replacements, structural improvements, telephones, and water heater
replacements. These improvements were funded from operating cash flow and
replacement reserves.
Shadow Brook
Approximately $91,000 was budgeted for capital improvements for the year 2001 at
Shadow Brook Apartments consisting primarily of carpet and vinyl replacements,
major landscaping, and appliances. During the three months ended March 31, 2001,
the Partnership completed approximately $17,000 of capital improvements at
Shadow Brook Apartments, consisting primarily of carpet and vinyl replacements,
office computers, and major landscaping. These improvements were funded from
operating cash flow.
The additional capital expenditures for 2001 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.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Hunt
Club Apartments. The refinancing replaced indebtedness of approximately
$3,582,000 with a new mortgage of $3,900,000. The new mortgage carries a stated
interest rate of 8.05% as compared to the 8.30% interest rate on the old
mortgage. Payments on the mortgage loan are due monthly until the loan matures
on September 1, 2020. In addition, the Partnership was required to establish a
repair escrow of approximately $239,000 with the lender for certain capital
replacements. Total capitalized loan costs were approximately $157,000 at
December 31, 2000.
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 $9,860,000 is amortized over varying
periods with Shadow Brook Apartments' mortgage requiring a balloon payment in
November 2003. Hunt Club Apartments' mortgage indebtedness is amortized over 20
years and matures September 1, 2020. 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 three months ended March 31, 2001, the Partnership declared and paid
a cash distribution from operations of approximately $590,000 (approximately
$47,000 to "A" Unit holders or $0.49 per limited partnership "A" Unit and
approximately $537,000 to "B" Unit holders or $7.14 per limited partnership "B"
Unit). During the three months ended March 31, 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.
Subsequent to March 31, 2001, the Partnership declared distributions from
operations of approximately $167,000 (approximately $82,000 to "A" Unit holders
or $0.85 per limited partnership "A" Unit and approximately $82,000 to "B" Unit
holders or $1.09 per limited partnership "B" Unit). The Partnership's
distribution policy is reviewed on a quarterly 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 2001 or subsequent periods.
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, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the 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 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 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 and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. The demurrer is scheduled to be heard on May 14, 2001. The
Court has also scheduled a hearing on a motion for class certification for
August 27, 2001. Plaintiffs must file their motion for class certification no
later than June 15, 2001. 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:
None.
b) Reports on Form 8-K filed during the first quarter of 2001:
None.
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: