-----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, Tgy1mzqHeiZwrNRMGA6R1qZMy/AskKNTYcjBqkY5pHs15sZwbDgL//t+PljZ8WSN ToVAmMOd9iu+37LRagiIQA== 0000802200-97-000001.txt : 19970325 0000802200-97-000001.hdr.sgml : 19970325 ACCESSION NUMBER: 0000802200-97-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970324 SROS: NONE 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16684 FILM NUMBER: 97561403 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINNACIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) (As last amended by 34-31905, eff. 4/26/93) FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 1996 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period.........to......... Commission file number 0-16684 MULTI-BENEFIT REALTY FUND '87-1 (Name of small business issuer in its charter) California 94-3026785 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Units of Depositary Receipts (Title of class) 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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $4,861,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of December 31, 1996. Market value information for the Registrant's partnership interests is not available. Should a trading market develop for these interests, it is the Managing General Partner's belief that such trading would not exceed $25,000,000. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Description of Business Multi-Benefit Realty Fund '87-1 (the "Partnership" or "Registrant") was organized on September 8, 1986, as a limited partnership under the California Revised Limited Partnership Act. On December 10, 1986, the Partnership registered with the Securities and Exchange Commission under the Securities Act of 1933 (File No. 33-8908) and commenced a public offering for sale of $60 million of Units of Depositary Receipts (collectively, the "Units," and individually, "Unit"). Two classes of Units ("A" Units and "B" Units, herein so called), entitled to different rights and priorities as to cash distributions and partnership allocations, were offered. The Units represent economic rights attributable to the limited partnership interests in the Partnership and entitle the holders ("Unit holders") thereof to participate in certain allocations and distributions of the Partnership. The General Partner of the Partnership intended that the "A" Units and "B" Units be allocated such that the "B" Units would not exceed 25% nor be less than 20% of the total amount of the Units sold. At the end of the current fiscal year, the "B" Units represented approximately 44% of the total amount of the Units sold. The General Partner is currently considering several alternative procedures to conform the unit allocations more closely to the intended investment objectives. The General Partner intends to continue such consideration, but has not yet determined a feasible alternative. The Corporate Limited Partner of the Partnership is Multi-Benefit '87-1 Depositary Corporation, an affiliate of the General Partner. The Corporate Limited Partner serves as depositary for the Units pursuant to a Depositary Agreement entered into with the Partnership. The Partnership filed a Form 8-A Registration Statement with the SEC and registered its Units under the Securities Exchange Act of 1934 (File No. 0-16684) on April 11, 1988. The sale of Units closed on September 30, 1988, with 172,436 Units sold at $100 each, or gross proceeds of approximately $17.2 million to the Partnership. The Partnership retired a total of 1,000 Units during 1993, in accordance with its Partnership Agreement ("Agreement"). The Partnership gave no consideration for the Units retired. The Partnership may repurchase or retire any Units, at its absolute discretion, but is under no obligation to do so. Upon the Partnership's formation in 1986, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the sole general partner of the Partnership and the Corporate Limited Partner, a wholly-owned subsidiary of CCEC, was the sole limited partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired a controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, ConCap Equities, Inc. ("CEI") acquired CCEC's general partner interest in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships"), acquired the stock of the Corporate Limited Partner, and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the Unit holders in the Partnership and of the limited partners in each of the Affiliated Partnerships pursuant to a solicitation of the Unit holders dated August 10, 1990. As part of this solicitation, the Unit holders also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership. All of CEI's outstanding stock is owned by an affiliate of Insignia Financial Group, Inc. ("Insignia") which acquired the stock through two transactions in December 1994, and October 1995. A further description of the Partnership's business is included in "Item 6 - Management's Discussion and Analysis or Plan of Operation" included in this Form 10-KSB. The Registrant has no employees. Management and administrative services are performed by the General Partner and by Insignia Residential Group, L.P., an affiliate of Insignia, an affiliate of the General Partner. Pursuant to a management agreement between them, Insignia Residential Group, L.P. provides property management services to the Registrant. The real estate business in which the Partnership is engaged is highly competitive and the Partnership is not a significant factor in this industry. The Registrant's property is subject to competition from similar properties in the vicinity in which the property is located. In addition, various limited partnerships have been formed by the General Partner and/or its affiliates to engage in business which may be competitive with the Registrant. Item 2. Description of Properties The following table sets forth the Registrant's investments in properties: Date of Property Purchase Type of Ownership Use Carlin Manor Apartments 11/87 Fee ownership, subject Apartment Columbus, Ohio to first mortgage. 278 units Hunt Club Apartments 05/87 Fee ownership, subject Apartment Indianapolis, Indiana to first mortgage. 200 units Shadow Brook Apartments 05/87 Fee ownership, subject Apartment West Valley City, Utah to first mortgage. 300 units Schedule of Properties: (dollar amounts in thousands) Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Carlin Manor Apartments $ 6,561 $ 3,307 5-30 SL $ 5,471 Hunt Club Apartments 6,796 3,239 5-30 SL 4,309 Shadow Brook Apartments 10,197 3,457 5-30 SL 6,692 Total $23,554 $10,003 $16,472 See "Note A" to the financial statements in "Item 7" for a description of the Partnership's depreciation policy. Schedule of Mortgages: (dollar amounts in thousands) Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 1996 Rate Amortized Date Maturity Carlin Manor 1st Mortgage $ 2,500 7.33% (1) 11/03 $2,500 Hunt Club 1st Mortgage 3,850 8.30% 84 mo. 10/00 3,575 Shadow Brook 1st Mortgage 6,000 7.33% (1) 11/03 6,000 $12,350 (1) Payments consist of interest only. Average annual rental rate and occupancy for 1996 and 1995 for each property: Average Annual Average Annual Rental Rates Occupancy 1996 1995 1996 1995 Carlin Manor $5,497/unit $5,359/unit 90% 86% Hunt Club 7,074/unit 6,893/unit 94% 91% Shadow Brook 6,511/unit 5,763/unit 97% 98% The General Partner attributes the increase in occupancy at Carlin Manor Apartments and Hunt Club Apartments to the fact that the General Partner has made improvements to the appearance of the properties as well as an increase in advertising at the properties. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the partnership are subject to competition from other residential apartment complexes in the area. The Corporate General Partner believes that all of the properties are adequately insured. The multifamily residential properties' lease terms are for one year or less. No residential tenant leases 10% or more of the available rental space. Real estate taxes and rates in 1996 for each property were (dollar amounts in thousands): 1996 1996 Billing Rate Carlin Manor $107 5.4% Hunt Club 149 9.2% Shadow Brook 81 1.4% Item 3. Legal Proceedings The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such matters are adequately covered by insurance and will be resolved without a material adverse effect upon the business, financial condition, results of operations, or liquidity of the Partnership. Item 4. Submission of Matters to a Vote of Partners During the fiscal year ended December 31, 1996, no matter was submitted to a vote of the Unit holders through the solicitation of proxies or otherwise. PART II Item 5. Market For the Registrant's Units of Depository Receipts and Related Security Holder Matters (A) No established public trading market for the Units exists nor is one expected to develop. (B) Title of Class: Number of Record Unit holders: Units of Depositary Receipts A Units 915 as of December 31, 1996 B Units 1,006 as of December 31, 1996 (C) Distributions of approximately $459,000 were made in 1996, while distributions of approximately $918,000 were paid in 1995. All of the distributions to the limited partners in both 1996 and 1995 were paid to the "A" Unit holders. No distributions have been made to the "B" Unit holders. Future distributions will depend on the levels of cash generated from operations, refinancings, property sales and the availability of cash reserves. At this time, the General Partner anticipates that cash distributions will be made during fiscal 1997. Item 6. Management's Discussion and Analysis or Plan of Operation This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Partnership's net income for the year ended December 31, 1996, was approximately $46,000 as compared to net income of approximately $383,000 for the year ended December 31, 1995. The decrease in net income in 1996 is primarily attributable to the $612,000 casualty gain recognized in 1995 due to the fire damage at Shadow Brook Apartments, a decrease in other income and an increase in operating expenses. Other income decreased as a result of a decrease in interest income earned on cash balances and a decrease in dividends received on an investment in Southmark Corporation. The decrease in other income is also attributable to the receipt of approximately $21,000 in 1995 of insurance proceeds related to a 1993 fire at Carlin Manor apartments. At the time of the receipt, all costs associated with the fire damages and the related repairs had been expensed or capitalized. Operating expenses increased due to an increase in advertising and concessions at Carlin Manor Apartments, which were given to increase occupancy, and an increase in utility bills at Carlin Manor Apartments and Hunt Club Apartments due to the unusually cold winter and spring weather. Offsetting the items noted above was an increase in rental income and decreases in Partnership management fees and maintenance expense. The increase in rental income is the result of increased occupancy at the investment properties. The Partnership management fee expense decreased due to a decrease in distributions made to limited partners from "cash available for distribution" (as defined in the Agreement). Maintenance expense decreased as a result of a large gutter replacement project and painting project done at Hunt Club Apartments in 1995. Included in maintenance expense for the year ended December 31, 1996, is approximately $138,000 of major repairs and maintenance comprised primarily of exterior painting, exterior building improvements and swimming pool repairs. 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 expense. 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 December 31, 1996, the Partnership had unrestricted cash of approximately $1,860,000 compared to approximately $1,240,000 at December 31, 1995. Net cash provided by operating activities at December 31, 1996, increased primarily due to the increase in accounts receivable due to the timing of payments. Net cash used in investing activities increased in comparison to 1995 due to the insurance proceeds from property damage received in 1995 and a decrease in purchases of property improvements and replacements. These decreases were offset by an increase in deposits to restricted escrows and a decrease in proceeds from sale of investments. Net cash provided by financing activities increased due to the refinancing of Carlin Manor and Shadow Brook. The Partnership has no material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. On November 13, 1996, the Partnership financed Carlin Manor and refinanced Shadow Brook. The Partnership received $8,500,000 in gross proceeds from the financings and repaid a mortgage note on Shadow Brook of approximately $7,314,000. The previous mortgage note on Shadow Brook had a stated interest rate of 9.19% and a maturity date of June 1, 1997. The new mortgage notes require monthly interest only payments at a stated interest rate of 7.33% and have balloon payments due on November 1, 2003. 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 property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $12,350,000 requires balloon payments in October 2000 and November 2003, at which time the properties will be refinanced or sold. For the years ended December 31, 1996 and 1995, distributions of approximately $454,000 and $909,000, respectively, were made to the "A" Unit limited partners. Related distributions of approximately $5,000 and $9,000 were also made to the General Partner. Future cash distributions will depend on the levels of cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. Item 7. Financial Statements MULTI-BENEFIT REALTY FUND '87-1 LIST OF FINANCIAL STATEMENTS Report of Independent Auditor Consolidated Balance Sheet--December 31, 1996 Consolidated Statements of Operations--Years ended December 31, 1996 and 1995 Consolidated Statements of Changes in Partners' Capital (Deficit)--Years ended December 31, 1996 and 1995 Consolidated Statements of Cash Flows--Years ended December 31, 1996 and 1995 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Multi-Benefit Realty Fund -87-1 We have audited the accompanying consolidated balance sheet of Multi-Benefit Realty Fund '87-1 as of December 31, 1996, and the related consolidated statements of operations, changes in partners' capital (deficit) and cash flows for each of the two years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnerships management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Multi- Benefit Realty Fund '87-1 as of December 31, 1996, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ERNST & YOUNG LLP Greenville, South Carolina February 17, 1997 MULTI-BENEFIT REALTY FUND '87-1 CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 1996 Assets Cash and cash equivalents: Unrestricted $ 1,860 Restricted - tenant security deposits 140 Other assets 1,061 Investment properties: Land $ 1,742 Buildings and related personal property 21,812 23,554 Less accumulated depreciation (10,003) 13,551 $ 16,612 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 164 Accrued taxes 264 Tenant security deposits 140 Other liabilities 218 Mortgage notes payable 12,350 Partners' Capital (Deficit) General Partner $ (118) Limited Partner "A" Unit holders - 96,284 units outstanding (238) Limited Partner "B" Unit holders - 75,152 units outstanding 3,832 3,476 $ 16,612 See Accompanying Notes to Consolidated Financial Statements MULTI-BENEFIT REALTY FUND '87-1 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data) Years Ended December 31, 1996 1995 Revenues: Rental income $ 4,595 $ 4,312 Other income 266 348 Casualty gain -- 612 Total revenues 4,861 5,272 Expenses: Operating 1,614 1,488 General and administrative 199 203 Partnership management fee 41 82 Maintenance 600 745 Depreciation 993 959 Interest 1,041 1,056 Property taxes 327 356 Total expenses 4,815 4,889 Net income $ 46 $ 383 Net income allocated to general partner (1%) $ -- $ 4 Net income allocated to limited partners (99%) 46 379 $ 46 $ 383 Net income per "A" Unit $ .27 $ 2.21 Net income per "B" Unit $ .27 $ 2.21 See Accompanying Notes to Consolidated Financial Statements MULTI-BENEFIT REALTY FUND '87-1 CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands, except unit data) Total Partners' General Limited Partners Capital Partner "A" Units "B" Units (Deficit) Original capital contributions $ 1 $ 9,706 $ 7,538 $ 17,245 Limited partnership units at December 31, 1996 and December 31, 1995 -- 96,284 75,152 171,436 Partners' capital (deficit) at December 31, 1994 $ (108) $ 886 $ 3,646 $ 4,424 Net income for the year ended December 31, 1995 4 213 166 383 Distributions for the year ended December 31, 1995 (9) (909) -- (918) Partners' capital (deficit) at December 31, 1995 (113) 190 3,812 3,889 Net income for the year ended December 31, 1996 -- 26 20 46 Distributions for the year ended December 31, 1996 (5) (454) -- (459) Partners' capital (deficit) at December 31, 1996 $ (118) $ (238) $ 3,832 $ 3,476 See Accompanying Notes to Consolidated Financial Statements MULTI-BENEFIT REALTY FUND '87-1 CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Years Ended December 31, 1996 1995 Cash flows from operating activities: Net income $ 46 $ 383 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 993 959 Amortization of loan costs 45 43 Casualty gain -- (612) Change in accounts: Restricted cash (8) (132) Accounts receivable 69 (107) Due from affiliates -- 10 Other assets 46 (7) Escrows for taxes and insurance -- (208) Accounts payable (222) 375 Accrued taxes 1 17 Tenant security deposit liabilities 7 1 Other liabilities (116) (63) Net cash provided by operating activities 861 659 Cash flows from investing activities: Property improvements and replacements (506) (1,229) Deposits to restricted escrows (348) (38) Receipts from restricted escrows -- 66 Proceeds from sale of investments 298 3,447 Purchase of investments -- (2,305) Net insurance proceeds from property damage -- 831 Net cash (used in) provided by investing activities (556) 772 Cash flows from financing activities: Proceeds from long-term borrowings 8,500 -- Repayment of mortgage notes payable (7,314) -- Loan costs paid (246) -- Payments on mortgage notes payable (166) (148) Distributions to partners (459) (918) Net cash provided by (used in) financing activities 315 (1,066) Net increase in cash and cash equivalents 620 365 Cash and cash equivalents at beginning of period 1,240 875 Cash and cash equivalents at end of period $ 1,860 $ 1,240 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,001 $ 929 See Accompanying Notes to Consolidated Financial Statements MULTI-BENEFIT REALTY FUND '87-1 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Organization and Significant Accounting Policies Organization: Multi-Benefit Realty Fund '87-1 (the "Partnership") was organized as a limited partnership under the laws of the State of California pursuant to a Certificate and Agreement of Limited Partnership filed September 8, 1986. The Partnership commenced operations on February 27, 1987, the date on which impound requirements were met. The Partnership operates three apartment properties located in the Mid-west and West. Upon the Partnership's formation in 1986, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the sole general partner of the Partnership and the Corporate Limited Partner, a wholly-owned subsidiary of CCEC, was the sole limited partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired a controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, ConCap Equities, Inc. ("CEI"), acquired CCEC's general partner interest in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships"), acquired the stock of the Corporate Limited Partner, and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the Unit holders in the Partnership and of the limited partners in each of the Affiliated Partnerships pursuant to a solicitation of the Unit holders dated August 10, 1990. As part of this solicitation, the Unit holders also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership. All of CEI's outstanding stock is owned by an affiliate of Insignia Financial Group, Inc. ("Insignia") which acquired the stock through two transactions in December 1994 and October 1995. Principles of Consolidation: The financial statements include all the accounts of the Partnership and its 99% owned partnership. All significant interpartnership balances have been eliminated. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Partners' Capital (Deficit): The Partnership has issued two classes of Units of Depositary Receipts ("Units"), "A" Units and "B" Units. The two classes of both 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. The Partnership Agreement("Agreement") provides for the allocation of net income and net losses from operations for both financial and tax reporting purposes as follows: net profits are allocated 99% to the holders of "A" Units until they have been allocated income equal to their priority return, and 1% to the General Partner. The priority return represents 9% per annum return on invested capital for the Partnership's first fiscal year, 9.5% for the second year and 10% per annum thereafter. Additional net profits are allocated 1% to the General Partner and 99% to the Unit holders. Net losses are allocated 1% to the General Partner and 99% to the Unit holders until their capital accounts are depleted. Additional net losses are allocated to the General Partner. Distributable cash from operations is allocated 1% to the General Partner and 99% to the Unit holders with holders of "A" Units first receiving their priority return, then the balance is split equally between holders of "A" Units and "B" Units. The General Partner receives 1% of surplus funds and holders of "A" Units will receive their priority return, then both classes of Unit holders will receive a return of their invested capital. Any remainder will be allocated 10% to holders of "A" Units and 90% to holders of "B" Units. Cash and Cash Equivalents: Unrestricted - Unrestricted cash includes cash on hand and in banks, money market funds and certificates of deposit with original maturities less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Restricted cash - tenant security deposits - The Partnership requires security deposits from lessees for the duration of the lease and such deposits are considered restricted cash. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Escrows for Taxes and Insurance: Funds, totaling approximately $208,000, which are included in other assets, are held by the Partnership and the mortgage holder and are designated for the payment of real estate taxes and insurance. Capital Replacement Reserve: In relation to the mortgages at all three properties, the mortgage lenders have required a "replacement reserve" for certain capital improvements. At December 31, 1996, the balance was approximately $437,000 and is included in other assets. Investment Properties: Prior to the fourth quarter of 1995, investment properties were carried at the lower of cost or estimated fair value, which was determined using the higher of the property's non-recourse debt amount, when applicable, or the net operating income of the investment property capitalized at a rate deemed reasonable for the type of property. During the fourth quarter of 1995 the Partnership adopted "FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The effect of adoption was not material. Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the apartment properties and related personal property. For Federal income tax purposes, the modified accelerated cost recovery method is used for depreciation of (1) real property additions over 27 1/2 years and (2) personal property additions over 5-15 years. Loan Costs: Loan costs of approximately $348,000 less accumulated amortization of approximately $4,000 are included in other assets and are being amortized on a straight-line basis over the life of the loans. During 1996, approximately $246,000 was added to loan cost as a result of the financing obtained at Carlin Manor and Shadow Brook. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, management finds it necessary to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged to expenses as incurred. Advertising: The Partnership expenses the costs of advertising as incurred. Advertising expense, included in operating expenses, was approximately $100,000 and $79,000 for the years ended December 31, 1996 and 1995, respectively. Fair Value: In 1995, the Partnership implemented "FASB No. 107, Disclosure about Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value. The carrying amount of the Partnership's cash and cash equivalents approximates fair value due to short-term maturities. The Partnership estimates the fair value of its fixed rate mortgages by discounted cash flow analysis, based on estimated borrowing rates currently available to the Partnership. Reclassifications: Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Mortgage Notes Payable The principal terms of mortgage notes payable are as follows (dollar amounts in thousands): Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 1996 Interest Rate Date Maturity Carlin Manor 1st mortgage $ 2,500 $15 7.33% 11/01/03 $2,500 Hunt Club 1st mortgage 3,850 32 8.30% 10/01/00 3,575 Shadow Brook 1st mortgage 6,000 37 7.33% 11/01/03 6,000 Totals $12,350 The estimated fair values of the Partnership's aggregate debt is approximately $12,494,000. This value represents a general approximation of possible value and is not necessarily indicative of the amount the Partnership may pay in actual market transactions. The mortgage notes payable are non-recourse and are secured by pledge of all of the Partnership's apartment properties and by pledge of revenues from the apartment properties. Certain of the notes require prepayment penalties if repaid prior to maturity and prohibit resale of the properties subject to existing indebtedness. On November 13, 1996, the Partnership financed Carlin Manor and refinanced Shadow Brook. The Partnership received $8,500,000 in gross proceeds from the financings and repaid a mortgage note on Shadow Brook of approximately $7,314,000. The previous mortgage note on Shadow Brook had a stated interest rate of 9.19% and a maturity date of June 1, 1997. The new mortgage notes require monthly interest only payments at a stated interest rate of 7.33% and have balloon payments due on November 1, 2003. Scheduled principal payments of mortgage notes payable subsequent to December 31, 1996, are as follows (dollar amounts in thousands): 1997 65 1998 71 1999 77 2000 3,637 2001 -- Thereafter 8,500 $12,350 Note C- Income Taxes The Partnership has received a ruling from the Internal Revenue Service that it will be classified as a partnership for Federal income tax purposes. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners. The following is a reconciliation of reported net income and Federal taxable loss (in thousands, except per unit data): 1996 1995 Net income as reported $ 46 $ 383 Add (deduct): Write-downs of fixed asset values 15 -- Deferred casualty gain -- (612) Depreciation differences 122 155 Change in prepaid rental (86) 95 Other (41) (88) Federal taxable loss $ (56) $ (67) Federal taxable loss per limited partnership unit $ (.32) $(.39) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities: Net assets as reported $3,476 Buildings 2,056 Accumulated depreciation 866 Syndication fees 1,975 Other 44 Net assets - tax basis $8,417 Note D - Related Party Transactions 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 paid property management fees based upon collected gross rental revenues for property management services as noted below for the years ended December 31, 1996 and 1995, respectively. Such fees are included in operating expense on the consolidated statements of operations and are reflected in the following table. The Limited Partnership Agreement ("Agreement") provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. The General Partner and its current and former affiliates received reimbursements and fees as reflected in the following table: For the Year Ended December 31, 1996 1995 (in thousands) Property management fees $240 $223 Reimbursements for services of affiliates (1) 178 120 Partnership management fees (2) 41 82 (1)Included in "reimbursements for services of affiliates for 1996 is approximately $54,000 in reimbursements for construction oversight costs. (2)The Agreement provides for a fee equal to 9% of distributable cash from operations (as defined in the Agreement) received by the limited partners be paid to the General Partner for executive and administrative management services. On July 1, 1995, the Partnership began insuring its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payments on these obligations from the agent. The amount of the partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. Note E - Commitments and Contingencies The Partnership is required by the Agreement to maintain working capital reserves of not less than 5% of Net Invested Capital, as defined in the 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, including cash and cash equivalents totaling approximately $1.9 million, exceeded the reserve requirement of approximately $754,000 at December 31, 1996. The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such matters are adequately covered by insurance and will be resolved without a material adverse effect upon the business, financial condition, results of operations, or liquidity of the Partnership. Note F - Real Estate and Accumulated Depreciation Investment Properties Initial Cost (dollar amounts in thousands) To Partnership Cost Buildings Capitalized and Related (Written Down) Personal Subsequent to Description Encumbrances Land Property Acquisition Carlin Manor Apartments Columbus, Ohio $ 2,500 $ 408 $ 6,582 $ (429) Hunt Club Apartments Indianapolis, Indiana 3,850 485 5,673 638 Shadow Brook Apartments West Valley City, Utah 6,000 961 8,263 973 Totals $ 12,350 $1,854 $20,518 $ 1,182
Gross Amount At Which Carried At December 31, 1996 Buildings And Related Personal Accumulated Date of Date Depreciable Description Land Property Total Depreciation Construction Acquired Life-Years Carlin Manor Apartments Phase I Columbus, Ohio $ 295 $ 6,266 $6,561 $3,307 1967 11/87 5-30 Phase II 1972 Hunt Club Apartments Indianapolis, Indiana 485 6,311 6,796 3,239 1979 05/87 5-30 Shadow Brook Apartments West Valley City, Utah 962 9,235 10,197 3,457 1985 05/87 5-30 Totals $1,742 $21,812 $23,554 $10,003
Reconciliation of "Investment Properties and Accumulated Depreciation" (dollar amounts in thousands): Years Ended December 31, 1996 1995 Real Estate Balance at beginning of year $23,073 $22,208 Property improvements 506 1,229 Disposals of property (25) (364) Balance at End of Year $23,554 $23,073 Accumulated Depreciation Balance at beginning of year $ 9,020 $ 8,188 Additions charged to expense 993 959 Disposition of property (10) (127) Balance at End of Year $10,003 $ 9,020 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1996 and 1995, is approximately $25,610,000 and approximately $25,104,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996 and 1995, is approximately $9,137,000 and approximately $8,267,000. Note G - Casualty Gain Shadow Brook Apartments experienced fire damage which destroyed twelve units and damaged twelve others. The fire resulted in a casualty gain of approximately $612,000 during the year ended December 31, 1995. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure As of May 3, 1995, Arthur Andersen LLP, the independent accountant previously engaged as the principal accountant to audit the financial statements of the Registrant was dismissed. As of the same date, the firm of Ernst & Young LLP was engaged to provide that service for the Registrant. During the Partnership's two most recent fiscal years and any subsequent interim period preceding the change, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreements in connection with its report. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act The names of the directors and executive officers of ConCap Equities, Inc. ("CEI"), the Partnership's Managing General Partner as of December 31, 1995, their ages and the nature of all positions with CEI presently held by them are as follows: NAME OF INDIVIDUAL POSITION IN CEI AGE William H. Jarrard, Jr. President 50 Ronald Uretta Vice President/Treasurer 41 John K. Lines Vice President/Secretary 37 Kelley M. Buechler Assistant Secretary 39 Martha L. Long Controller 37 William H. Jarrard, Jr. has been Managing Director - Partnership Administration of Insignia since January 1991. Mr. Jarrard served as Managing Director - Partnership Administration and Asset Management from July 1994 until January 1996. Ronald Uretta has been Vice President/Treasurer of CEI since December 1996 and Insignia's Treasurer since January 1992. Since August 1996, he has also served as Chief Operating Officer. He also served as Insignia's Secretary from January 1992 to June 1994 and as Insignia's Chief Financial Officer from January 1992 to August 1996. Since September 1990, Mr. Uretta has also served as the Chief Financial Officer and controller of Metropolitan Asset Group. John K. Lines has been Vice President and Secretary of CEI since December 1994, Secretary of the MAE subsidiaries since August 1994, General Counsel of Insignia since June 1994, and General Counsel and Secretary of Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation in West Palm Beach, Florida. From October 1991 until April 1993, Mr. Lines was a Senior Attorney with Banc One Corporation in Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was employed as an associate with Squire Sanders & Dempsey in Columbus, Ohio. Martha L. Long has been Controller of CEI since December 1996 and Senior Vice President - Finance and Controller of Insignia since January 1997. In June 1994, Ms. Long joined Insignia as its Controller and was promoted to Senior Vice President - Finance in January 1997. Prior to that time, she was Senior Vice President and Controller of The First Savings Bank, FSB in Greenville, South Carolina. Kelley M. Buechler has been Assistant Secretary of CEI since December 1994, Assistant Secretary of the MAE subsidiaries since January 1992, and Assistant Secretary of Insignia since January 1991. During the five years prior to joining Insignia in 1991, she served in a similar capacity for U.S. Shelter. Item 10. Executive Compensation No direct compensation was paid or payable by the Partnership to directors or officers (since it does not have any directors or officers) for the years ended December 31, 1996 and December 31, 1995. The Partnership has no plans to pay any such renumeration to any directors or officers of the General Partner in the future. Item 11. Security Ownership of Certain Beneficial Owners and Management (a) Security Ownership of Certain Beneficial Owners As of December 31, 1996, no person was known to CEI to own of record or beneficially more than 5 percent (5%) of the Units of the Partnership. (b) Beneficial Owners of Management Neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially. (c) Changes in Control Beneficial Owners of CEI As of December 31, 1996, the following persons were known to CEI to be the beneficial owners of more than 5 percent (5%) of its common stock: NUMBER OF PERCENT NAME AND ADDRESS CEI SHARES OF TOTAL GII Realty, Inc. 100,000 100% One Insignia Financial Plaza P.O. Box 1089 Greenville, SC 29602 GII Realty, Inc. is owned by an affiliate of Insignia (see "Item 1"). Item 12. Certain Relationships and Related Transactions Transactions with Current Management and Others Except for the transactions described below, neither CEI nor any of its directors, officers or associates, or any associates of any of them, has had any interest in any other transaction to which the Partnership is a party. Please refer to "Item 7 - Financial Statements and Supplementary Data," Note D - Related Party Transactions, for the amounts and items of permissible compensation and fees paid to the General Partner and its affiliates and other related parties for the last two years. The Registrant has paid property management fees based upon collected gross rental revenues for property management services of approximately $240,000 and $223,000 for the years ended December 31, 1996 and 1995, respectively. All of the above referenced agreements with affiliates of CEI and related parties of the Partnership are subject to the conditions and limitations imposed by the Agreement. Item 13. 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: None filed for the quarter ended December 31, 1996. SIGNATURE PAGE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly 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. Its General Partner, March 21, 1997 By: /s/ William H. Jarrard, Jr. Date William H. Jarrard, Jr. President March 21, 1997 By: /s/ Ronald Uretta Date Ronald Uretta Vice President/Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 21, 1997 By: /s/ William H. Jarrard, Jr. Date William H. Jarrard, Jr. Director and President March 21, 1997 By: /s/ Ronald Uretta Date Ronald Uretta Vice President/Treasurer EXHIBIT INDEX S-K REFERENCE SEQUENTIAL NUMBER DOCUMENT DESCRIPTION PAGE NUMBER 3 Certificate of Limited Partnership, N/A as amended to date. 4 Depositary Agreement (Incorporated N/A by reference to Registration State- ment of Registrant (File No. 33-8908) filed December 10, 1986, as amended to date). 10.1 Property Management Agreement No. 310 N/A dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.2 Bill of Sale and Assignment dated N/A October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.3 Assignment and Assumption Agreement dated N/A October 23, 1990, by and between CCEC and ConCap Management Limited Partnership ("CCMLP") (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.4 Assignment and Agreement as to Certain N/A Property Management Services dated October 23, 1990, by and between CCMLP and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.5 Assignment and Assumption Agreement dated N/A October 23, 1990, by and between CCMLP and Metro ConCap, Inc. (300 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.6 Construction Management Cost Reimbursement N/A Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.9 Construction Management Cost Reimbursement N/A Agreement dated January 1, 1991, by and between the Partnership and The Hayman Company. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.10 Investor Services Agreement dated October N/A 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.11 Assignment and Assumption Agreement N/A (Investor Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1990). 10.12 Letter of Notice dated December 20, N/A 1991, from Partnership Services, Inc. ("PSI") to the Partnership regarding the change in ownership and dissolution of ConCap Services Company whereby PSI assumed the Investor Services Agreement. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.13 Financial Services Agreement dated October N/A 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.14 Assignment and Assumption Agreement N/A (Financial Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.15 Letter of Notice dated December 20, N/A 1991, from PSI to the Partnership regarding the change in ownership and dissolution of ConCap Capital Company whereby PSI assumed the Financial Services Agreement. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.16 Property Management Agreement No. 518 N/A dated June 1, 1993, by and between the Partnership and Coventry Management, Inc. 10.17 Assignment and Assumption Agreement N/A (Financial Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.18 Letter dated December 8, 1994 reporting a N/A change in control of the General partner of the Registrant. (Incorporated by reference to Form 8-K dated December 8, 1994). 10.19 Multifamily Note dated November 1, 1996, between Multi-Benefit Realty Fund '87-1, a California limited partnership, and Lehman Brokers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 10.20 Multifamily Note dated November 1, 1996, between Multi-Benefit Realty Fund '87-1, a California limited partnership, and Lehman Brokers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 11 Statement regarding computation of 19 Net Income per Unit of Depositary Receipt (Incorporated by reference to Note 5 of Item 8 - Financial State- ments of this Form 10-K) 16 Letter, Dated August 12, 1992, from N/A Ernst & Young to the Securities and Exchange Commission regarding change in certifying accountant. (Incorporated by reference to Form 8-K dated August 6, 1992) 16.1 Letter dated May 3, 1995, from Arthur N/A Anderson to the Securities and Exchange Commission regarding change in Certifying Accountant. (Incorporated by reference to Form 8-K dated May 3, 1995). 27 Financial Data Schedule is filed as an Exhibit to this report. EX-27 2
5 This schedule contains summary financial information extracted from Multi-Benefit Realty Fund 87-1 1996 Year-End 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000802200 MULTI BENEFIT REALTY FUND 87-1 1,000 12-MOS DEC-31-1996 DEC-31-1996 1,860 0 0 0 0 0 23,554 (10,003) 16,612 0 12,350 0 0 0 3,476 16,612 0 4,861 0 4,815 0 0 1,041 0 0 0 0 0 0 46 .27 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.19 3 Exhibit 10.19 Loan No. 734105894 Carlin Manor MULTIFAMILY NOTE US $2,500,000 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Fifteen Thousand Two Hundred Seventy and 83/100 Dollars ($15,270.83) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located hereunder . The undersigned shall pay any installment of interest due within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. MULTI-BENEFIT REALTY FUND '87-1, a California limited partnership By: ConCap Equities, Inc. a Delaware corporation, its general partner By: /s/ Kelley M. Buechler Name: Kelley M. Buechler Title: Assistant Secretary PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This 1st day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Authorized Signatory EX-10.20 4 Exhibit 10.20 Loan No. 734133669 Shadow Brook MULTIFAMILY NOTE US $6,000,000 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of SIX MILLION AND 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Thirty Six Thousand Six Hundred Fifty and 00/100 Dollars ($36,650.00) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located hereunder . The undersigned shall pay any installment of interest due within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. MULTI-BENEFIT REALTY FUND '87-1, a California limited partnership By: ConCap Equities, Inc. a Delaware corporation, its general partner By: /s/ Kelley M. Buechler Name: Kelley M. Buechler Title: Assistant Secretary PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This 1st day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Authorized Signatory -----END PRIVACY-ENHANCED MESSAGE-----