-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HUmylKXLai710uuKzYU8lLW97WO8jK4jBoUFwL0b56qwNSBJHTZiMn9DNt8wutZo G1sxPAOtHBnd3eu/QDMGuQ== 0000711642-01-500134.txt : 20010810 0000711642-01-500134.hdr.sgml : 20010810 ACCESSION NUMBER: 0000711642-01-500134 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MULTI BENEFIT REALTY FUND 87-1 CENTRAL INDEX KEY: 0000802200 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 943026785 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16684 FILM NUMBER: 1702072 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE CITY: GREENVILLE STATE: SC ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE CITY: GREENVILLE STATE: SC ZIP: 80222 10QSB 1 mbrf.txt MBRF 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: -----END PRIVACY-ENHANCED MESSAGE-----