10QSB 1 0001.txt SECOND QUARTER 10-QSB FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-16684 MULTI-BENEFIT REALTY FUND '87-1 (Exact name of small business issuer as specified in its charter) California 94-3026785 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) MULTI-BENEFIT REALTY FUND '87-1 CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 2000
Assets Cash and cash equivalents $ 1,875 Receivables and deposits 316 Restricted escrows 53 Other assets 148 Investment properties: Land $ 1,447 Buildings and related personal property 16,905 18,352 Less accumulated depreciation (9,315) 9,037 $ 11,429 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 157 Tenant security deposit liabilities 54 Accrued property taxes 208 Other liabilities 239 Mortgage notes payable 9,596 Partners' (Deficit) Capital General Partner $ (113) Limited Partner "A" Unit holders - 96,284 units issued and outstanding (3,760) Limited Partner "B" Unit holders - 75,152 units issued and outstanding 5,048 1,175 $ 11,429
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, 2000 1999 2000 1999 Revenues: Rental revenue $ 1,123 $ 1,231 $ 2,385 $ 2,475 Other income 119 79 213 152 Gain on sale of investment property 4,814 -- 4,814 -- Total revenues 6,056 1,310 7,412 2,627 Expenses: Operating 555 536 1,103 1,062 General and administrative 168 74 208 123 Depreciation 291 263 578 521 Interest 234 249 481 501 Property taxes 74 107 165 200 Total expenses 1,322 1,229 2,535 2,407 Income before extraordinary loss on early extinguishment of debt 4,734 81 4,877 220 Extraordinary loss on early extinguishment of debt (105) -- (105) -- Net income $ 4,629 $ 81 $ 4,772 $ 220 Net income allocated to general partner $ 47 $ 1 $ 48 $ 2 Net income allocated to limited partners 4,582 80 4,724 218 $ 4,629 $ 81 $ 4,772 $ 220 Per limited partnership "A" and "B" units: Income before extraordinary loss on early extinguishment of debt $ 27.33 $ 0.47 $ 28.16 $ 1.27 Extraordinary loss on early extinguishment of debt (0.60) -- (0.60) -- Net income $ 26.73 $ 0.47 $ 27.56 $ 1.27 Distributions per limited partnership "A" units $ 44.37 $ -- $ 44.37 $ -- Distributions per limited partnership "B" units $ 16.22 $ -- $ 16.22 $ --
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, 1999 and June 30, 2000 -- 96,284 75,152 171,436 Partners' (deficit) capital at December 31, 1999 $ (134) $ (2,141) $ 4,196 $ 1,921 Distributions to partners (27) (4,272) (1,219) (5,518) Net income for the six months ended June 30, 2000 48 2,653 2,071 4,772 Partners' (deficit) capital at June 30, 2000 $ (113) $ (3,760) $ 5,048 $ 1,175
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, 2000 1999 Cash flows from operating activities: Net income $ 4,772 $ 220 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 578 521 Amortization of loan costs 31 35 Gain on sale of investment property (4,814) -- Extraordinary loss on early extinguishment of debt 105 -- Change in accounts: Receivables and deposits 14 31 Other assets (17) (24) Accounts payable (65) 48 Tenant security deposit liabilities (33) (10) Accrued property taxes (128) 86 Other liabilities (283) 19 Net cash provided by operating activities 160 926 Cash flows from investing activities: Property improvements and replacements (212) (450) Net withdrawals from restricted escrows 190 89 Proceeds from sale of investment property 8,005 -- Net cash provided by (used in) investing activities 7,983 (361) Cash flows from financing activities: Payments on mortgage notes payable (41) (37) Repayment of mortgage note payable (2,500) -- Prepayment penalty paid (62) -- Distributions to partners (5,945) -- Net cash used in financing activities (8,548) (37) Net (decrease) increase in cash and cash equivalents (405) 528 Cash and cash equivalents at beginning of period 2,280 1,291 Cash and cash equivalents at end of period $ 1,875 $ 1,819 Supplemental disclosure of cash flow information: Cash paid for interest $ 477 $ 465 Distributions to partners of approximately $427,000 were declared at December 31, 1999 and paid in January 2000.
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, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Principles of Consolidation The consolidated financial statements of the Partnership include its 99% limited partnership interest in Hunt Club Associates, Ltd. The general partner of this consolidated partnership is the General Partner. The Partnership may remove the general partner of Hunt Club Associates, Ltd.; therefore, the consolidated partnership is controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. Limited Partnership Units The Partnership has issued two classes of Units of Depositary Receipts ("Units"), "A" Units and "B" Units. The two classes of Units are entitled to different rights and priorities as to cash distributions and Partnership allocations. The Units represent economic rights attributable to the limited partnership interests in the Partnership and entitle the holders thereof ("Unit holders") to participate in certain allocations and distributions of the Partnership. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with the General Partner and/or its affiliates were incurred during the six months ended June 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expense) $133 $132 Reimbursement for services of affiliates (included in general and administrative expense) 57 48 Partnership management fee (included in general and administrative expense) 91 -- During the six months ended June 30, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $133,000 and $132,000 for the six months ended June 30, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursements of accountable administrative expenses amounting to approximately $57,000 and $48,000 for the six months ended June 30, 2000 and 1999, respectively. The Partnership Agreement provides for a fee equal to 9% of distributable cash from operations (as defined in the Partnership Agreement) received by the limited partners to be paid to the General Partner for executive and administrative management services. Fees of approximately $91,000 were paid during the six months ended June 30, 2000, in association with the distributions. No fees were earned during the six months ended June 30, 1999. AIMCO and its affiliates currently own 60,253 "A" and 37,662 "B" limited partnership units in the Partnership representing 62.58% and 50.11% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of 62.58% and 50.11% of the outstanding units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note D - Commitment The Partnership is required by the Partnership Agreement to maintain working capital reserves of not less than 5% of Net Invested Capital, as defined in the Partnership Agreement. In the event expenditures are made from this reserve, operating revenue shall be allocated to such reserve to the extent necessary to maintain the foregoing level. Reserves, consisting of cash and cash equivalents totaling approximately $1,875,000, exceeded the reserve requirement of approximately $534,000 at June 30, 2000. Note E - Distribution During the six months ended June 30, 2000, the Partnership paid a cash distribution from operations, which was declared and accrued at December 31, 1999, of approximately $427,000 of which approximately $423,000 ($4.39 per limited partnership "A" Unit) was paid to the "A" Unit limited partners. In addition, the Partnership declared and paid distributions from operations of approximately $1,018,000 (approximately $1,008,000 to "A" Unit holders or $10.47 per limited partnership "A" Unit) and of proceeds from the sale of Carlin Manor Apartments of approximately $4,500,000 (approximately $3,264,000 to "A" Unit holders or $33.90 per limited partnership "A" Unit and approximately $1,219,000 to "B" Unit holders or $16.22 per limited partnership "B" Unit). There were no distributions paid or declared during the six months ended June 30, 1999. Note F - Sale of Investment Property On June 12, 2000, the Partnership sold Carlin Manor Apartments to an unaffiliated third party for $8,100,000. After payment of closing costs of approximately $95,000, the net sales proceeds received by the Partnership were approximately $8,005,000. The Partnership used a portion of the proceeds to pay off the mortgage encumbering the property of $2,500,000. Approximately $4,500,000 of the proceeds were distributed to the partners during the six months ended June 30, 2000. The remaining proceeds were used to establish additional cash reserves for the Partnership. The Partnership's gain on the sale was approximately $4,814,000 and an extraordinary loss on early extinguishment of debt of approximately $105,000 consisting of a prepayment penalty and the write-off of unamortized loan costs. The sales transaction is summarized as follows (amounts in thousands): Net sales price, net of selling costs $ 8,005 Net real estate (1) (3,091) Net other liabilities (100) Gain on sale of real estate $ 4,814 (1) Net of accumulated depreciation of approximately $4,256,000. The following pro-forma information reflects the operations of the Partnership for the six months ended June 30, 2000 and 1999, as if Carlin Manor Apartments had been sold January 1, 1999. 2000 1999 (in thousands, except per unit data) Revenues $ 1,912 $ 1,810 Net income 1 17 Net income per limited partnership "A" and "B" unit 0.01 0.10 Note G - Segment Information Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consists of two apartment complexes, one each in Indiana and Utah. On June 12, 2000, the Partnership sold its residential property located in Ohio. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those of the Partnership as described in the Partnership's Annual Report on Form 10-KSB for the year ended December 31, 1999. Factors management used to identify the Partnership's reportable segments: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties are managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the three and six month periods ended June 30, 2000 and 1999, is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segment.
Three Months Ended June 30, 2000 Residential Other Totals Rental income $ 1,123 $ -- $ 1,123 Other income 105 14 119 Interest expense 234 -- 234 Depreciation 291 -- 291 General and administrative expense -- 168 168 Gain on sale of investment property 4,814 -- 4,814 Extraordinary loss on early extinguishment of debt (105) -- (105) Segment profit (loss) 4,783 (154) 4,629
Six Months Ended June 30, 2000 Residential Other Totals Rental income $ 2,385 $ -- $ 2,385 Other income 184 29 213 Interest expense 481 -- 481 Depreciation 578 -- 578 General and administrative expense -- 208 208 Gain on sale of investment property 4,814 -- 4,814 Extraordinary loss on early extinguishment of debt (105) -- (105) Segment profit (loss) 4,951 (179) 4,772 Total assets 9,842 1,587 11,429 Capital expenditures for investment properties 212 -- 212
Three Months Ended June 30, 1999 Residential Other Totals Rental income $ 1,231 $ -- $ 1,231 Other income 65 14 79 Interest expense 249 -- 249 Depreciation 263 -- 263 General and administrative expense -- 74 74 Segment profit (loss) 141 (60) 81
Six Months Ended June 30, 1999 Residential Other Totals Rental income $ 2,475 $ -- $ 2,475 Other income 127 25 152 Interest expense 501 -- 501 Depreciation 521 -- 521 General and administrative expense -- 123 123 Segment profit (loss) 318 (98) 220 Total assets 13,582 1,428 15,010 Capital expenditures for investment properties 450 -- 450
Note H - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussions of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for each of the six months ended June 30, 2000 and 1999: Average Occupancy Property 2000 1999 Hunt Club Apartments 94% 92% Indianapolis, Indiana Shadow Brook Apartments 97% 97% West Valley City, Utah Results of Operations The Partnership had net income of approximately $4,772,000 for the six months ended June 30, 2000 as compared to approximately $220,000 for the six months ended June 30, 1999. For the three months ended June 30, 2000 the Partnership had net income of approximately $4,629,000 as compared to net income of approximately $81,000 for the three months ended June 30, 1999. The increase in net income for both the three and six month periods ended June 30, 2000 is primarily attributable to the gain recorded on the sale of Carlin Manor Apartments as discussed below. Excluding the gain on the sale of Carlin Manor Apartments as well as the extraordinary loss on the early extinguishment of the debt at Carlin Manor, the Partnership had net income of approximately $63,000 for the six months ended June 30, 2000 compared to net income of approximately $220,000 for the comparable period in 1999. For the three months ended June 30, 2000 the Partnership had a net loss of approximately $80,000 compared to net income of approximately $81,000 for the three months ended June 30, 1999. The decrease in net income for the three and six month periods ended June 30, 2000 is due to an increase in total expenses and a decrease in total revenues. The decrease in total revenues for both the three and six month periods is due to a decrease in rental revenue partially offset by an increase in other income. Rental revenue decreased due primarily to the sale of Carlin Manor Apartments in 2000. Partially offsetting the impact of the sale of Carlin Manor were increased occupancy and increased average rental rates at Hunt Club Apartments. Other income increased as a result of increased interest income due to higher average cash balances in interest bearing accounts, increased telephone commissions and tenant charges at all the Partnership's properties. Total expenses increased for the three and six month periods due to increased operating, depreciation and general and administrative expenses, partially offset by decreased property tax expense. Operating expenses increased primarily due to a net insurance proceeds received in 1999 for storm damage at Hunt Club and increased contract labor costs, partially offset by reduced snow removal costs at Hunt Club Apartments. Depreciation expense increased due to property improvements and replacements completed during the past twelve months. General and administrative expenses increased due to the payment of partnership management fees on distributions from operations during 2000. There were no distributions from operations during the six months ended June 30, 1999 so no such fees were paid during 1999. In addition, professional fees associated with the management of the Partnership increased. Included in general and administrative expenses for the three and six months ended June 30, 2000 and 1999, are management reimbursements to the General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with the investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Property tax expense decreased due to the sale of Carlin Manor and to a property tax refund and reduced assessed value received at Hunt Club Apartments. On June 12, 2000, the Partnership sold Carlin Manor Apartments to an unaffiliated third party for $8,100,000. After payment of closing costs of approximately $95,000, the net sales proceeds received by the Partnership were approximately $8,005,000. The Partnership used a portion of the proceeds to pay off the mortgage encumbering the property of $2,500,000. Approximately $4,500,000 of the proceeds were distributed to the partners during the six months ended June 30, 2000. The remaining proceeds were used to establish additional cash reserves for the Partnership. The Partnership's gain on the sale was approximately $4,814,000 and there was an extraordinary loss on early extinguishment of debt of approximately $105,000 consisting of a prepayment penalty and the write-off of unamortized loan costs. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. Liquidity and Capital Resources At June 30, 2000, the Partnership had cash and cash equivalents of approximately $1,875,000 as compared to approximately $1,819,000 at June 30, 1999. Cash and cash equivalents decreased approximately $405,000 for the six months ended June 30, 2000, from the Partnership's year ended December 31, 1999, due to approximately $8,548,000 of cash used in financing activities, which was partially offset by approximately $7,983,000 of cash provided by investing activities and approximately $160,000 of cash provided by operating activities. Cash used in financing activities consisted primarily of distributions to partners and, to a lesser extent, the payoff of the mortgage encumbering Carlin Manor Apartments, prepayment penalties paid and payments of principal made on the mortgage encumbering Hunt Club Apartments. Cash provided by investing activities consisted of proceeds from the sale of Carlin Manor Apartments and of net withdrawals from restricted escrows maintained by the mortgage lender which were partially offset by property improvements and replacements. The Partnership invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Carlin Manor During the six months ended June 30, 2000 the Partnership expended approximately $63,000 for floor covering, major landscaping, and appliance replacements at Carlin Manor. This property was sold on June 12, 2000. Hunt Club Approximately $193,000 was budgeted for capital improvements for the year 2000 at Hunt Club Apartments consisting primarily of structural upgrades, fencing, carpet and vinyl replacement, and appliance replacement. During the six months ended June 30, 2000, the Partnership completed approximately $48,000 of capital improvements at Hunt Club Apartments, consisting primarily of floor covering replacements, gutter replacements, exterior painting and other building improvements. These improvements were funded from operating cash flow and replacement reserves. Shadow Brook Approximately $186,000 was budgeted for capital improvements for the year 2000 at Shadow Brook Apartments consisting primarily of carpet and vinyl replacement, roof replacement, and lighting improvements. During the six months ended June 30, 2000, the Partnership completed approximately $101,000 of capital improvements at Shadow Brook Apartments, consisting primarily of roof replacement, carpet and vinyl replacement, and lighting improvements. These improvements were funded from replacement reserves. The additional capital expenditures for 2000 at the Partnership's properties will be made only to the extent of cash available from operations and Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are currently thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $9,596,000 is amortized over varying periods and requires one balloon payment in October 2000 and one in November 2003. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. During the six months ended June 30, 2000, the Partnership paid a cash distribution from operations, which was declared and accrued at December 31, 1999, of approximately $427,000 of which approximately $423,000 ($4.39 per limited partnership "A" Unit) was paid to the "A" Unit limited partners. In addition, the Partnership declared and paid distributions from operations of approximately $1,018,000 (approximately $1,008,000 to "A" Unit holders or $10.47 per limited partnership "A" Unit) and of proceeds from the sale of Carlin Manor Apartments of approximately $4,500,000 (approximately $3,264,000 to "A" Unit holders or $33.90 per limited partnership "A" Unit and approximately $1,219,000 to "B" Unit holders or $16.22 per limited partnership "B" Unit). There were no distributions paid or declared during the six months ended June 30, 1999. The Partnership's distribution policy is reviewed on a semi-annual basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings, and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit further distributions to its partners during the remainder of 2000 or subsequent periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K filed during the quarter ended June 30, 2000: None. 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: