FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-11095
NATIONAL PROPERTY INVESTORS 5
(Exact name of small business issuer as specified in its charter)
California 22-2385051
(State or other jurisdiction of (IRS 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)
(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) NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1996
Assets
Cash and cash equivalents $ 2,000
Other assets 1,358
Investment properties:
Land $ 2,457
Buildings and related personal property 30,214
32,671
Less accumulated depreciation (21,400) 11,271
$ 14,629
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 480
Tenant security deposits 119
Mortgage notes payable 14,635
Partners' Capital (Deficit)
Limited partners' (82,513 units issued and
outstanding) $ 614
General partner's (1,219) (605)
$ 14,629
<FN>
See Accompanying Notes to Financial Statements
b) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues:
Rental income $ 1,342 $ 1,393 $ 2,710 $ 2,749
Other income 132 79 244 159
Total revenues 1,474 1,472 2,954 2,908
Expenses:
Operating 841 933 1,608 1,755
Interest 339 342 672 686
Depreciation 331 357 655 716
General and administrative 77 62 157 120
Total expenses 1,588 1,694 3,092 3,277
Net loss $ (114) $ (222) $ (138) $ (369)
Net loss allocated to
general partner (3%) $ (3) $ (7) $ (4) $ (11)
Net loss allocated to
limited partners (97%) (111) (215) (134) (358)
$ (114) $ (222) $ (138) $ (369)
Net loss per limited
partnership unit $ (1.34) $ (2.61) $ (1.62) $ (4.34)
<FN>
See Accompanying Notes to Financial Statements
c) NATIONAL PROPERTY INVESTORS 5
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 82,513 $ 1 $ 41,257 $ 41,258
Partners' capital (deficit) at
December 31, 1995 82,513 $ (1,215) $ 748 $ (467)
Net loss for the six months
ended June 30, 1996 -- (4) (134) (138)
Partners' capital (deficit) at
June 30, 1996 82,513 $ (1,219) $ 614 $ (605)
<FN>
See Accompanying Notes to Financial Statements
d) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Net loss $ (138) $ (369)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 655 716
Amortization of loan costs 37 40
Change in accounts:
Other assets (330) (59)
Accounts payable and accrued expenses 231 106
Tenant security deposit liabilities (5) (5)
Net cash provided by operating activities 450 429
Cash flows from investing activities:
Property improvements and replacements (158) (111)
Net cash used in investing activities (158) (111)
Cash flows from financing activities:
Payments of mortgage notes payable (94) (87)
Net cash used in financing activities (94) (87)
Net increase in cash and cash equivalents 198 231
Cash and cash equivalents at beginning of period 1,802 1,325
Cash and cash equivalents at end of period $ 2,000 $ 1,556
Supplemental information:
Cash paid for interest $ 639 $ 647
<FN>
See Accompanying Notes to Financial Statements
e) NATIONAL PROPERTY INVESTORS 5
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 5
(the "Partnership") 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 the Managing 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,
1996, are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on NPI Equity Investments,
Inc. ("NPI Equity" or the "Managing General Partner") and its affiliates for the
management and administration of all partnership activities. The Partnership
Agreement provides for payments to affiliates for services and as reimbursement
of certain expenses incurred by affiliates on behalf of the Partnership.
The following transactions with affiliates of Insignia Financial Group, Inc.
("Insignia"), National Property Investors, Inc.("NPI"), and affiliates of NPI
were charged to expense in 1996 and 1995:
For the Six Months Ended
June 30,
1996 1995
Property management fees (included in operating
expenses) $143,000 $138,000
Reimbursement for services of affiliates (included
in general and administrative and operating
expenses) 138,000 106,000
For the period of January 19, 1996, to June 30, 1996, the Partnership insured
its properties under a master policy through an agency and insurer unaffiliated
with the Managing General Partner. An affiliate of the Managing 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 current
year's master policy. The current agent assumed the financial obligations to
the affiliate of the Managing General Partner who received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Managing General Partner by
virtue of the agent's obligations is not significant.
Note B - Transactions with Affiliated Parties (continued)
Included in operating expenses for the six months ended June 30, 1995, are
insurance premiums of approximately $103,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of NPI.
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia, a Delaware
corporation, all of the issued and outstanding common stock of NPI for an
aggregate purchase price of $1,000,000. The closing of the transactions
contemplated by the above mentioned agreement (the "Closing") occurred on
January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors of each
of those entities to be elected.
Note C - Tenant-In-Common Property
The Partnership currently owns The Village Apartments, as a tenant-in-common
with National Property Investors 6 ("NPI 6"), an affiliated public limited
partnership. NPI 6 acquired a 75.972 percent undivided interest with the
Partnership owning the remaining 24.028 percent. The property is accounted for
using the proportionate consolidation method. The financial statements and
supplementary data reflect the Partnership's 24.028 percent proportionate share
of historical cost of this property.
The condensed, combined balance sheets of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at June 30,
1996, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the six and three month periods ended June 30, 1996 and 1995, are summarized
as follows:
(In thousands)
PROPORTIONATE
COMBINED SHARE
June 30, June 30,
1996 1996
Total assets, primarily real estate $ 13,093 $ 3,086
Liabilities, primarily a mortgage payable $ 11,601 $ 2,787
Equity 1,492 299
Total liabilities and equity $ 13,093 $ 3,086
COMBINED PROPORTIONATE SHARE
For the Six Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
Total revenues $ 2,240 $ 2,168 $ 538 $ 521
Operating and other expenses $ 1,214 $ 1,204 $ 291 $ 289
Depreciation 364 373 88 90
Mortgage interest 501 507 120 122
Total expenses 2,079 2,084 499 501
Net income $ 161 $ 84 $ 39 $ 20
COMBINED PROPORTIONATE SHARE
For the Three Months Ended For the Three Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
Total revenues $ 1,167 $ 1,086 $ 281 $ 261
Operating and other expenses $ 614 $ 654 $ 148 $ 157
Depreciation 183 187 44 45
Mortgage interest 250 253 60 61
Total expenses 1,047 1,094 252 263
Net income (loss) $ 120 $ (8) $ 29 $ (2)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
The Springs of Altamonte Apartments
Altamonte Springs, Florida 96% 97%
Oakwood Village at Lake Nan Apartments
Winter Park, Florida 89% 96%
Palisades Apartments
Montgomery, Alabama 89% 92%
The Village Apartments (1)
Voorhees, New Jersey 93% 95%
(1) This property was purchased as a tenancy in common with National Property
Investors 6, an affiliated public partnership, which acquired a 75.972%
undivided interest, with the Partnership owning the remaining 24.028%.
The Managing General Partner attributes the decrease in occupancy at Oakwood
Village to road construction in the area, including the re-routing of the road
to the property, diminished the number of new tenants.
The Partnership's net loss for the six months ended June 30, 1996, was
approximately $138,000 compared to a net loss of approximately $369,000 for the
corresponding period of 1995. The net loss for the three months ended June 30,
1996, was approximately $114,000 compared to a net loss of approximately
$222,000 for the three months ended June 30, 1995. The decrease in net loss is
primarily attributable to an increase in other income and a decrease in
operating expenses. The increase in other income is primarily due to increased
interest income resulting from increased cash reserves held by the Partnership.
Also contributing to the increase in other income was an increase in lease
cancellation fees at all of the Partnership's properties in 1996. Operating
expenses declined due to a reduction in maintenance expense at all of the
Partnership's properties. Partially offsetting these decreases to expense was
an increase in general and administrative expenses resulting from increased
expense reimbursements related to the transition of the partnership
administration offices.
As part of the ongoing business plan of the Partnership, the Managing 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 Managing 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 Managing General Partner will be able to sustain such a plan.
At June 30, 1996, the Partnership had unrestricted cash of $2,000,000, as
compared to $1,556,000 at June 30, 1995. Net cash provided by operating
activities increased primarily as a result of the decrease in net loss as
discussed above. Also contributing to the increase in cash provided by operating
activities was an increase in prepayments of rent. The increase in cash used in
investing activities is due to increased property improvements and replacements
in 1996.
The Managing General Partner has extended to the Partnership a $500,000 line of
credit. At the present time, the Partnership has no outstanding amounts due
under this line of credit, and the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents the
line of credit is the Partnership's only unused source of liquidity.
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 various properties 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 $14,635,000 matures at various times with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales and the availability of cash reserves.
No cash distributions were made in 1995 or during the first six months of 1996.
At this time, it appears that the original investment objective of capital
growth will not be attained and that investors will not receive a return of all
of their invested capital.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: None filed during the quarter ended June 30, 1996.
SIGNATURES
Pursuant to the requirements 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.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: August 5, 1996