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, 2002
[ ] 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, 2002
Assets
Cash and cash equivalents $ 540
Receivables and deposits 157
Other assets 493
Investment properties:
Land $ 1,447
Buildings and related personal property 17,725
19,172
Less accumulated depreciation (10,769) 8,403
$ 9,593
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 43
Tenant security deposit liabilities 51
Accrued property taxes 219
Other liabilities 228
Mortgage notes payable 12,448
Partners' (Deficit) Capital
General Partner $ (125)
Limited Partner "A" Unit holders -
96,284 units issued and outstanding (7,400)
Limited Partner "B" Unit holders -
75,152 units issued and outstanding 4,129 (3,396)
$ 9,593
See Accompanying Notes to Consolidated Financial Statements
b)
MULTI-BENEFIT REALTY FUND '87-1
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2002 2001
Revenues:
Rental income $ 850 $ 886
Other income 98 67
Total revenues 948 953
Expenses:
Operating 385 382
General and administrative 59 115
Depreciation 214 209
Interest 237 196
Property taxes 66 61
Total expenses 961 963
Net loss $ (13) $ (10)
Net loss allocated to general partner $ -- $ --
Net loss allocated to limited partners (13) (10)
$ (13) $ (10)
Net loss per limited partnership "A" and "B" units $(0.08) $(0.06)
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, 2001 and
March 31, 2002 -- 96,284 75,152 171,436
Partners' (deficit) capital at
December 31, 2001 $ (125) $(7,393) $ 4,135 $ (3,383)
Net loss for the three months
ended March 31, 2002 -- (7) (6) (13)
Partners' (deficit) capital
at March 31, 2002 $ (125) $(7,400) $ 4,129 $ (3,396)
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,
2002 2001
Cash flows from operating activities:
Net loss $ (13) $ (10)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 214 209
Amortization of loan costs 7 9
Change in accounts:
Receivables and deposits 5 (73)
Other assets (44) (16)
Accounts payable (44) 75
Tenant security deposit liabilities 1 2
Accrued property taxes 66 67
Other liabilities 8 90
Net cash provided by operating activities 200 353
Cash flows from investing activities:
Property improvements and replacements (41) (216)
Net withdrawals from restricted escrows 112 13
Net cash provided by (used in) investing
activities 71 (203)
Cash flows from financing activities:
Payments on mortgage notes payable (73) (20)
Distributions to partners -- (590)
Net cash used in financing activities (73) (610)
Net increase (decrease) in cash and cash equivalents 198 (460)
Cash and cash equivalents at beginning of period 342 892
Cash and cash equivalents at end of period $ 540 $ 432
Supplemental disclosure of cash flow information:
Cash paid for interest $ 231 $ 188
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 month period ended March 31, 2002, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2002. 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, 2001. The General Partner is an affiliate of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.
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 - 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.
During the three months ended March 31, 2002 and 2001, affiliates of the General
Partner were entitled to receive 5% of gross receipts from both of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $49,000 and
$48,000 for the three months ended March 31, 2002 and 2001, respectively, which
is included in operating expenses.
Affiliates of the General Partner received reimbursements of accountable
administrative expenses amounting to approximately $44,000 and $40,000 for the
three months ended March 31, 2002 and 2001, respectively, which is included in
investment properties and general and administrative expenses. Included in these
amounts are construction oversight fees paid to an affiliate of the Managing
General Partner of approximately $4,000 during the three months ended March 31,
2002. There were no such fees paid during the three months ended March 31, 2001.
This fee is related to construction management services provided by AIMCO and
its affiliates. The fee was calculated based on a percentage of additions to
investment properties.
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. No fees were earned during the three months
ended March 31, 2002. Fees of approximately $48,000 were earned during the three
months ended March 31, 2001 in association with the distributions, which is
included in general and administrative expenses.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the three months ended March 31,
2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately $34,000 and $36,000, respectively, for insurance coverage and fees
associated with policy claims administration.
Note C - Distributions
Upon distribution of sale proceeds from the sale of Carlin Manor during the year
ended December 31, 2000, the "A" Unit holders did not receive the correct
priority return. As a result, at March 31, 2002 the "B" Unit holders have been
overpaid approximately $1,422,000 (approximately $18.92 per limited partnership
"B" unit). Approximately $1,397,000 of this amount is due to the "A" Unit
holders (approximately $14.51 per limited partnership "A" unit) and
approximately $25,000 is due to the General Partner. All future distributions
payable to the "B" Unit holders will be paid to the "A" Unit holders until the
"A" Unit holders receive the correct priority return.
Note D - 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. (the "Nuanes action") 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. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court heard argument on the motion and ordered further briefing after which
time the matter will be taken under submission. The Court has set the matter for
trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases 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 Registrant from time to time. The
discussions of the Registrant'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 Registrant'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, 2002 and 2001:
Average Occupancy
Property 2002 2001
Hunt Club Apartments 93% 92%
Indianapolis, Indiana
Shadow Brook Apartments 96% 97%
West Valley City, Utah
Results of Operations
The Partnership had a net loss of approximately $13,000 for the three months
ended March 31, 2002 as compared to net loss of approximately $10,000 for the
three months ended March 31, 2001. The increase in net loss for the three month
period ended March 31, 2002 is primarily attributable to a slight decrease in
total revenue partially offset by a slight decrease in total expenses.
Total revenue decreased due to a decrease in rental income largely offset by an
increase in other income. Rental income decreased due primarily to a decrease in
occupancy and an increase in bad debt expenses at Hunt Club Apartments partially
offset by an increase in average rental rates at Shadow Brook Apartments. Other
income increased primarily due to increased utility reimbursements at both
properties and increased corporate unit rent at Shadow Brook Apartments. These
increases were partially offset by reduced interest income due to lower average
cash balances in interest bearing accounts.
Total expenses decreased for the three month period ended March 31, 2002 due to
decreased general and administrative expenses largely offset by increased
interest expense. General and administrative expenses decreased primarily due to
decreased Partnership management fees on distributions from operations since
there were no distributions paid during the three months ended March 31, 2002.
Included in general and administrative expenses for the three months ended March
31, 2002 and 2001 are management reimbursements to the General Partner allowed
under the Partnership Agreement and costs associated with the quarterly and
annual communications with the investors and regulatory agencies and the annual
audit required by the Partnership Agreement. Interest expense increased
primarily due to the refinance of Shadow Brook Apartments in September 2001
which increased the debt balance.
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, 2002, the Partnership had cash and cash equivalents of
approximately $540,000 as compared to approximately $432,000 at March 31, 2001.
Cash and cash equivalents increased approximately $198,000 for the three months
ended March 31, 2002, from the Partnership's year ended December 31, 2001, due
to approximately $200,000 of cash provided by operating activities and
approximately $71,000 of cash provided by investing activities which were
partially offset by approximately $73,000 of cash used in financing activities.
Cash provided by investing activities consisted of net withdrawals from
restricted escrows maintained by the mortgage lender which were partially offset
by property improvements and replacements. Cash used in financing activities
consisted of payments of principal made on the mortgages encumbering the
Partnership's properties. 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 $110,000 has been budgeted for capital improvements for the year
2002 at Hunt Club Apartments consisting primarily of appliance and floor
covering replacements. During the three months ended March 31, 2002, the
Partnership completed approximately $16,000 of capital improvements at Hunt Club
Apartments consisting primarily of floor covering replacements. These
improvements were funded from replacement reserves.
Shadow Brook
Approximately $116,000 has been budgeted for capital improvements for the year
2002 at Shadow Brook Apartments consisting primarily of floor covering
replacements, exterior painting, and appliances. During the three months ended
March 31, 2002, the Partnership completed approximately $25,000 of capital
improvements at Shadow Brook Apartments, consisting primarily of floor covering
replacements. These improvements were funded from operating cash flow.
The additional capital expenditures for 2002 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 $12,448,000 is amortized over 20 years
and matures September 1, 2020 and September 1, 2021 at which time the loans are
scheduled to be fully amortized.
The Partnership distributed the following amounts during the three months ended
March 31, 2002 and 2001 (in thousands, except per unit data):
Three Months Per Limited Three Months Per Limited
Ended Partnership Ended Partnership
March 31, 2002 Unit March 31, 2001 Unit
Operations $ -- $ -- $ 590 $ 7.63
The limited partner portion of the distribution during the three months ended
March 31, 2001 was 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. The Partnership's cash available for
distribution is reviewed on a monthly 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
distributions to its partners during the remainder of 2002 or subsequent
periods.
Upon distribution of sale proceeds from the sale of Carlin Manor during the year
ended December 31, 2000, the "A" Unit holders did not receive the correct
priority return. As a result, at March 31, 2002 the "B" Unit holders have been
overpaid approximately $1,422,000 (approximately $18.92 per limited partnership
"B" unit). Approximately $1,397,000 of this amount is due to the "A" Unit
holders (approximately $14.51 per limited partnership "A" unit) and
approximately $25,000 is due to the General Partner. All future distributions
payable to the "B" Unit holders will be paid to the "A" Unit holders until the
"A" Unit holders receive the correct priority return.
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. (the "Nuanes action") 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. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court heard argument on the motion and ordered further briefing after which
time the matter will be taken under submission. The Court has set the matter for
trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases 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 2002:
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: