FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] 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)
(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)
March 31, 1997
Assets
Cash and cash equivalents $ 1,899
Receivables and deposits 753
Other assets 394
Investment properties:
Land $ 2,457
Buildings and related personal property 30,749
33,206
Less accumulated depreciation (22,405) 10,801
$ 13,847
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 50
Tenant security deposits 112
Accrued taxes 79
Other liabilities 200
Mortgage notes payable 14,485
Partners' Capital (Deficit):
Limited partners' (82,513 units issued and
outstanding) $ 154
General partner's (1,233) (1,079)
$ 13,847
<FN>
See Accompanying Notes to Financial Statements
b) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 1,336 $ 1,368
Other income 126 112
Total revenues 1,462 1,480
Expenses:
Operating 853 767
Interest 336 333
Depreciation 328 324
General and administrative 42 80
Total expenses 1,559 1,504
Net loss $ (97) $ (24)
Net loss allocated to general partner (3%) $ (3) $ (1)
Net loss allocated to limited partners (97%) (94) (23)
$ (97) $ (24)
Net loss per limited partnership unit $ (1.14) $ (.28)
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' (deficit) capital at
December 31, 1996 82,513 $ (1,230) $ 248 $ (982)
Net loss for the three months
ended March 31, 1997 -- (3) (94) (97)
Partners' (deficit) capital at
March 31, 1997 82,513 $ (1,233) $ 154 $ (1,079)
<FN>
See Accompanying Notes to Financial Statements
d) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss $ (97) $ (24)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 328 324
Amortization of loan costs 20 16
Change in accounts:
Receivables and deposits (103) (165)
Other assets 11 (9)
Accounts payable (43) 72
Tenant security deposit liabilities 1 (3)
Accrued taxes 65 60
Other liabilities (17) 91
Net cash provided by operating activities 165 362
Cash flows from investing activities:
Property improvements and replacements (133) (68)
Withdrawals from restricted escrows 61 14
Deposits to restricted escrows (44) (77)
Net cash used in investing activities (116) (131)
Cash flows from financing activities:
Payments of mortgage notes payable (51) (49)
Net cash used in financing activities (51) (49)
Net (decrease) increase in cash and cash equivalents (2) 182
Cash and cash equivalents at beginning of period 1,901 1,802
Cash and cash equivalents at end of period $ 1,899 $ 1,984
Supplemental information:
Cash paid for interest $ 316 $ 339
<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 NPI Equity Investments, Inc. ("NPI Equity" or 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 month period ended March 31, 1997, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1997. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the year ended
December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on 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.
NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of National Property Investors, Inc. ("NPI").
On January 19, 1996, the stockholders of NPI sold to IFGP Corporation, a
Delaware corporation, an affiliate of Insignia Financial Group, Inc.
("Insignia"), a Delaware corporation, all of the issued and outstanding common
stock of NPI.
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.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred in the three month periods ended March 31, 1997 and 1996 (in
thousands):
For the Three Months Ended
March 31,
1997 1996
Property management fees (included in operating
expenses) $ 71 $ 70
Reimbursement for services of affiliates, including
$15,000 of construction services reimbursements
in 1997 (included in general and administrative
expenses, operating expenses, and investment
properties) 49 72
For the period of January 19, 1996, to March 31, 1997, 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 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% undivided interest with the Partnership
owning the remaining 24.028%. The property is accounted for using the
proportionate consolidation method. The financial statements and supplementary
data reflect the Partnership's 24.028% 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 March 31,
1997, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the three month periods ended March 31, 1997 and 1996, are summarized as
follows:
(In thousands)
PROPORTIONATE
COMBINED SHARE
Total assets, primarily real estate $ 12,060 $ 2,838
Liabilities, primarily a mortgage payable $ 11,255 $ 2,704
Equity 805 134
Total liabilities and equity $ 12,060 $ 2,838
COMBINED PROPORTIONATE SHARE
For the Three Months Ended For the Three Months Ended
March 31, March 31,
1997 1996 1997 1996
Total revenues $ 1,136 $ 1,073 $ 273 $ 257
Operating and other expenses $ 551 $ 600 $ 133 $ 143
Depreciation 189 181 45 44
Mortgage interest 249 251 60 60
Total expenses 989 1,032 238 247
Net income $ 147 $ 41 $ 35 $ 10
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
three months ended March 31, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Willow Park on Lake Adelaide
Altamonte Springs, Florida 94% 96%
Oakwood Village at Lake Nan Apartments
Winter Park, Florida 97% 91%
Palisades Apartments
Montgomery, Alabama 84% 88%
The Village Apartments (1)
Voorhees, New Jersey 93% 91%
(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 increase in occupancy at Oakwood
Village to quality customer service and marketing. Despite the completion of
road construction in the area, which included re-routing the road to the
property, management was still able to increase occupancy. Occupancy decreased
at Palisades Apartments due to evictions of tenants with delinquent rent
balances. Management expects that this action will reduce bad debt expense in
the future. Currently, improvements at the property, including the building of a
guard house at the front entrance, are expected to improve overall appearance
and occupancy.
The Partnership's net loss for the three months ended March 31, 1997, was
approximately $97,000 compared to a net loss of approximately $24,000 for the
corresponding period of 1996. The increase in net loss for the three months
ended March 31, 1997, is due to an increase in operating expenses and a decrease
in total revenues. Included in operating expenses for the three months ended
March 31, 1997 is approximately $141,000 of major repairs and maintenance
compared to approximately $5,000 for the comparable period in 1996. The
increase in operating expenses is attributable to an exterior rehabilitation
project at Willow Park during the first quarter of 1997. This project included
the expenditure of approximately $111,000 on exterior painting and stucco
repair. Partially offsetting the increase in operating expenses is a decrease
in general and administrative expenses. The decrease in general and
administrative expense is primarily attributable to a decrease in expense
reimbursements paid to affiliates of the Managing General Partner in 1997.
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 March 31, 1997, the Partnership had unrestricted cash of $1,899,000, as
compared to $1,984,000 at March 31, 1996. Net cash provided by operating
activities decreased primarily as a result of the increase in operating expense,
as discussed above, and decreases in accounts payable and other liabilities
related to the timing of payments. The decrease in net cash used in investing
activities is due primarily to increased withdrawals from restricted escrows in
1997.
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 $14,485,000 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 1996 or during the first three months of
1997. Currently, the Managing General Partner is evaluating the feasibility of
a distribution of cash reserves in 1997.
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 March 31, 1997.
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
Vice President and Treasurer
Date: April 24, 1997