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, 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)
June 30, 2001
Assets
Cash and cash equivalents $ 390
Receivables and deposits 150
Restricted escrows 146
Other assets 256
Investment properties:
Land $ 1,447
Buildings and related personal property 17,399
18,846
Less accumulated depreciation (10,136) 8,710
$ 9,652
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 47
Tenant security deposit liabilities 56
Accrued property taxes 211
Other liabilities 288
Mortgage notes payable 9,839
Partners' (Deficit) Capital
General Partner $ (125)
Limited Partner "A" Unit holders -
96,284 units issued and outstanding (4,780)
Limited Partner "B" Unit holders -
75,152 units issued and outstanding 4,116 (789)
$ 9,652
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,
2001 2000 2001 2000
Revenues:
Rental income $ 889 $ 1,123 $ 1,775 $ 2,385
Other income 69 119 136 213
Gain on sale of investment
property -- 4,814 -- 4,814
Total revenues 958 6,056 1,911 7,412
Expenses:
Operating 352 555 734 1,103
General and administrative 86 168 201 208
Depreciation 212 291 421 578
Interest 199 234 395 481
Property taxes 68 74 129 165
Total expenses 917 1,322 1,880 2,535
Income before extraordinary loss
on early extinguishment of debt 41 4,734 31 4,877
Extraordinary loss on early
extinguishment of debt -- (105) -- (105)
Net income $ 41 $ 4,629 $ 31 $ 4,772
Net income allocated to general
Partner (1%) $ -- $ 47 $ -- $ 48
Net income allocated to limited
Partners (99%) 41 4,582 31 4,724
$ 41 $ 4,629 $ 31 $ 4,772
Per limited partnership "A" and "B" units:
Income before extraordinary
loss on early extinguishment
of debt $ 0.24 $ 27.33 $ 0.18 $ 28.16
Extraordinary loss on early
extinguishment of debt -- (0.60) -- (0.60)
Net income $ 0.24 $ 26.73 $ 0.18 $ 27.56
Distributions per limited
partnership "A" units $ 0.86 $ 44.37 $ 1.35 $ 44.37
Distributions per limited
partnership "B" units $ 1.10 $ 16.22 $ 8.24 $ 16.22
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
June 30, 2001 -- 96,284 75,152 171,436
Partners' (deficit) capital at
December 31, 2000 $ (117) $ (4,667) $ 4,721 $ (63)
Distributions to partners (8) (130) (619) (757)
Net income for the six months
ended June 30, 2001 -- 17 14 31
Partners' (deficit) capital
at June 30, 2001 $ (125) $ (4,780) $ 4,116 $ (789)
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)
Six Months Ended
June 30,
2001 2000
Cash flows from operating activities:
Net income $ 31 $ 4,772
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 421 578
Amortization of loan costs 19 31
Gain on sale of investment property -- (4,814)
Extraordinary loss on early extinguishment of debt -- 105
Change in accounts:
Receivables and deposits (65) 14
Other assets (22) (17)
Accounts payable (20) (65)
Tenant security deposit liabilities (2) (33)
Accrued property taxes 59 (128)
Other liabilities 11 (283)
Net cash provided by operating activities 432 160
Cash flows from investing activities:
Property improvements and replacements (271) (212)
Net withdrawals from restricted escrows 135 190
Proceeds from sale of investment property -- 8,005
Net cash (used in) provided by investing
activities (136) 7,983
Cash flows from financing activities:
Payments on mortgage notes payable (41) (41)
Repayment of mortgage note payable -- (2,500)
Prepayment penalty paid -- (62)
Distributions to partners (757) (5,945)
Net cash used in financing activities (798) (8,548)
Net decrease in cash and cash equivalents (502) (405)
Cash and cash equivalents at beginning of period 892 2,280
Cash and cash equivalents at end of period $ 390 $ 1,875
Supplemental disclosure of cash flow information:
Cash paid for interest $ 375 $ 477
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"), 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, 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. The General Partner is an affiliate
of Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.
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 required that those enterprises report
selected information about operating segments in interim financial reports. It
also established 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 six months ended June 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 96 $133
Reimbursement for services of affiliates (included in
general and administrative expenses) 108 57
Partnership management fee (included in general and
administrative expense) 67 91
During the six months ended June 30, 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 $96,000 and
$133,000 for the six months ended June 30, 2001 and 2000, respectively.
An affiliate of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $108,000 and $57,000 for the
six months ended June 30, 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 $67,000 and $91,000
were paid for the six months ended June 30, 2001 and 2000, respectively, 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 61,630 "A" and 38,532 "B"
limited partnership units in the Partnership representing 64.01% and 51.27% 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 64.01% and 51.27%
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 six months ended June 30, 2001, the Partnership declared and paid
cash distributions from operations of approximately $757,000 (approximately
$130,000 to "A" Unit holders or $1.35 per limited partnership "A" Unit and
approximately $619,000 to "B" Unit holders or $8.24 per limited partnership "B"
Unit). 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).
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 $4,814,000 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.
Note E - 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 series of transactions
which closed on October 1, 1998 and February 26, 1999 whereby Insignia and
Insignia Properties Trust, respectively, were merged into AIMCO. 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. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. Plaintiffs have until August 16, 2001
to file a fourth amended complaint. The General Partner does not anticipate that
any costs, whether legal or settlement 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 six months ended June 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Hunt Club Apartments 92% 94%
Indianapolis, Indiana
Shadow Brook Apartments 97% 97%
West Valley City, Utah
Results of Operations
The Partnership had net income of approximately $31,000 for the six months ended
June 30, 2001 as compared to approximately $4,772,000 for the six months ended
June 30, 2000. For the three months ended June 30, 2001, the Partnership had net
income of approximately $41,000 as compared to net income of approximately
$4,629,000 for the three months ended June 30, 2000. The decrease in net income
for both the three and six month periods ended June 30, 2001 is primarily
attributable to the gain recorded on the sale of Carlin Manor Apartments as
discussed below and a decrease in total revenues partially offset by a decrease
in total expenses resulting from the sale of Carlin Manor Apartments.
Excluding the operations of Carlin Manor Apartments as well as the gain on the
sale and the extraordinary loss on the early extinguishment of the debt at
Carlin Manor, the Partnership had net income of approximately $15,000 for the
six months ended June 30, 2001 compared to no income or loss for the comparable
period in 2000. For the three months ended June 30, 2001 the Partnership had net
income of approximately $25,000 compared to a net loss of approximately $57,000
for the three months ended June 30, 2000. The increase in net income for the six
months ended June 30, 2001 is due to a decrease in total expenses partially
offset by a slight decrease in total revenues. The increase in net income for
the three months ended June 30, 2001 is due to a decrease in total expenses and
a slight increase in total revenues. The slight decrease in total revenues for
the six months ended June 30, 2001 is due to a decrease in other income
partially offset by an increase in rental income. The slight increase in total
revenues for the three months ended June 30, 2001 is due to an increase in
rental income partially offset by a decrease in other income. Other income
decreased for the three and six months ended June 30, 2001 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 partially offset by increased utility reimbursements at both
properties. Rental income increased for the three and six months ended June 30,
2001 due primarily to an increase in average rental rates at both of the
Partnership's properties which more than offset the decrease in occupancy at
Hunt Club Apartments.
Excluding the operations of Carlin Manor, total expenses decreased for the three
and six month periods ended June 30, 2001 due to decreased operating and general
and administrative expenses partially offset by increased depreciation expense.
Operating expenses decreased primarily due to reduced manager salaries, reduced
expenses associated with the rental of apartments to employees, and reduced
maintenance expenses at both of the Partnership's properties. General and
administrative expenses decreased primarily due to a decrease in the payment of
Partnership management fees due to reduced distributions from operations during
2001 and also decreased due to decreased professional fees necessary to manage
the Partnership. These decreases were partially offset by an increase in the
cost of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement. Also included in general and
administrative expenses for the three and six months ended June 30, 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. Depreciation expense increased primarily due to property
improvements and replacements completed during the past twelve months.
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 $4,814,000 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 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 June 30, 2001, the Partnership had cash and cash equivalents of approximately
$390,000 as compared to approximately $1,875,000 at June 30, 2000. Cash and cash
equivalents decreased approximately $502,000 for the six months ended June 30,
2001, from December 31, 2000, due to approximately $136,000 of cash used in
investing activities and approximately $798,000 of cash used in financing
activities, which was partially offset by approximately $432,000 of cash
provided by operating activities. 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. 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. The Partnership invests its working capital reserves in
interest bearing 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.
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 six months ended June 30,
2001, the Partnership completed approximately $93,000 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 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 six months ended June 30, 2001,
the Partnership completed approximately $53,000 of capital improvements at
Shadow Brook Apartments, consisting primarily of office computers, electrical
upgrades, carpet and vinyl replacements, and appliances. These improvements were
funded from operating cash flow and replacement reserves.
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.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. Shadow
Brook Apartments' mortgage of $6,000,000 requires interest only payments and a
balloon payment in November 2003. Hunt Club Apartments' mortgage indebtedness of
approximately $3,839,000 is amortized over 20 years and matures September 1,
2020 with no balloon payment. The General Partner will attempt to refinance the
Shadow Brook Apartments indebtedness and/or sell the property prior to its
maturity date. If the property cannot be refinanced or sold for a sufficient
amount, the Partnership will risk losing the property through foreclosure.
During the six months ended June 30, 2001, the Partnership declared and paid
cash distributions from operations of approximately $757,000 (approximately
$130,000 to "A" Unit holders or $1.35 per limited partnership "A" Unit and
approximately $619,000 to "B" Unit holders or $8.24 per limited partnership "B"
Unit). 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). 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 series of transactions
which closed on October 1, 1998 and February 26, 1999 whereby Insignia and
Insignia Properties Trust, respectively, were merged into AIMCO. 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. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. Plaintiffs have until August 16, 2001
to file a fourth amended complaint. The General Partner does not anticipate that
any costs, whether legal or settlement 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 quarter ended June 30, 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: