FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11095
NATIONAL PROPERTY INVESTORS 5
(Exact name of small business issuer as specified in its charter)
California 22-2385051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, 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, 2001
Assets
Cash and cash equivalents $ 515
Receivables and deposits 244
Restricted escrows 21
Other assets 436
Investment properties:
Land $ 2,145
Buildings and related personal property 29,189
31,334
Less accumulated depreciation (24,672) 6,662
$ 7,878
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 241
Tenant security deposit liabilities 111
Accrued property taxes 74
Due to Managing General Partner 290
Other liabilities 235
Mortgage notes payable 15,271
Partners' Deficit
General partner $ (1,371)
Limited partners (82,513 units
issued and outstanding) (6,973) (8,344)
$ 7,878
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,
2001 2000
Revenues:
Rental income $ 1,085 $ 1,200
Other income 104 73
Total revenues 1,189 1,273
Expenses:
Operating 533 633
Interest 290 287
Depreciation 364 336
General and administrative 94 54
Property taxes 63 64
Total expenses 1,344 1,374
Net loss $ (155) $ (101)
Net loss allocated to general partner (3%) $ (5) $ (3)
Net loss allocated to limited partners (97%) (150) (98)
$ (155) $ (101)
Net loss per limited partnership unit $ (1.82) $ (1.19)
Distributions per limited partnership unit $ 37.42 $ --
See Accompanying Notes to Financial Statements
c)
NATIONAL PROPERTY INVESTORS 5
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 82,513 $ 1 $41,257 $41,258
Partners' deficit at
December 31, 2000 82,513 $(1,300) $(3,735) $(5,035)
Distributions to partners -- (66) (3,088) (3,154)
Net loss for the three months
ended March 31, 2001 -- (5) (150) (155)
Partners' deficit at
March 31, 2001 82,513 $(1,371) $(6,973) $(8,344)
See Accompanying Notes to Financial Statements
d)
NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net loss $ (155) $ (101)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 364 336
Amortization of loan costs 10 16
Change in accounts:
Receivables and deposits (72) 34
Other assets (54) 6
Accounts payable (3) 30
Tenant security deposit liabilities (11) --
Accrued property taxes 62 22
Other liabilities (4) (4)
Net cash provided by operating activities 137 339
Cash flows from investing activities:
Property improvements and replacements (254) (226)
Net withdrawals from (deposits to) restricted escrows 52 (22)
Net cash used in investing activities (202) (248)
Cash flows from financing activities:
Payments of mortgage notes payable (68) (55)
Proceeds from mortgage note payable 7,000 --
Repayment of mortgage note payable (3,825) --
Loan costs paid (186) (95)
Distributions to partners (3,154) --
Net cash used in financing activities (233) (150)
Net decrease in cash and cash equivalents (298) (59)
Cash and cash equivalents at beginning of period 813 2,016
Cash and cash equivalents at end of period $ 515 $ 1,957
Supplemental disclosure of cash flow information:
Cash paid for interest $ 265 $ 216
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" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of 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, 2001 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 2001. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2000. The Managing General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust.
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 property management services based on a percentage of revenue and
for reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership.
The following transactions with affiliates of the Managing General Partner were
incurred during the three months ended March 31, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 62 $ 64
Reimbursement for services of affiliates (included in
operating and general and administrative expenses,
and investment properties) 60 38
Non-accountable general partner reimbursement (included in
general and administrative expenses) 20 --
During the three months ended March 31, 2001 and 2000, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's properties for providing property management services. The
Partnership paid to such affiliates approximately $62,000 and $64,000 for the
three months ended March 31, 2001 and 2000, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $60,000 and $38,000 for the
three months ended March 31, 2001 and 2000, respectively.
For services relating to the administration of the Partnership and operation of
the Partnership properties, the Managing General Partner is entitled to receive
payment for non-accountable expenses up to a maximum of $100,000 per year, based
upon the number of Partnership units sold, subject to certain limitations. The
Managing General Partner earned and received approximately $20,000 during the
three months ended March 31, 2001. No such reimbursements were earned during the
three months ended March 31, 2000.
Upon the sale of the Partnership's properties, NPI Equity will be entitled to an
Incentive Compensation Fee equal to a declining percentage of the difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity, if any, will be dependent upon the year in which the property is
sold. Payment of the Incentive compensation Fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised investment in the Partnership at February
1, 1992, and (b) distributions from all sources (capital transactions as well as
cash flow) of an amount equal to six percent (6%) per annum cumulative,
non-compounded, on their appraised investment in the Partnership at February 1,
1992. As of March 31, 2001, an incentive management fee of approximately
$290,000 has been accrued related to the sale of The Village in 1998.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series. The maximum draw available
to the Partnership under the Partnership Revolver is $300,000. Loans under the
Partnership Revolver will have a term of 365 days, be unsecured and bear
interest at the rate of 2% per annum in excess of the prime rate announced from
time to time by Chase Manhattan Bank, N.A. The maturity date of such borrowing
will be accelerated in the event of: (i) the removal of the Managing General
Partner (whether or not For Cause, as defined in the Partnership Agreement);
(ii) the sale or refinancing of a property by the Partnership, or; (iii) the
liquidation of the Partnership. The Partnership has not borrowed under the
Partnership Revolver, to date.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 51,133 limited partnership
units in the Partnership representing 61.97% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 61.97% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. However, with respect to
37,101 Units, AIMCO is required to vote such Units: (i) against any increase in
compensation payable to the Managing General Partner or to affiliates; and (ii)
on all other matters submitted by it or its affiliates, in proportion to the
votes cast by non-tendering unit holders. Except for the foregoing, no other
limitations are imposed on AIMCO's ability to influence voting decisions with
respect to the Partnership.
Note C - Refinancing of Mortgage Note Payable
On February 14, 2001, the Partnership refinanced the mortgage encumbering
Oakwood Village. The refinancing replaced indebtedness of $3,825,000 with a new
mortgage in the amount of $7,000,000. The mortgage was refinanced at a rate of
7.18% compared to the prior rate of 8.56% and matures on March 1, 2021. Payments
of approximately $55,000 are due on the first day of each month until the loan
matures. Capitalized loan costs of approximately $24,000 were incurred at
December 31, 2000, and approximately $186,000 were incurred during the three
months ended March 31, 2001. These costs are included in other assets and are
being amortized over the life of the loan.
Note D - Distributions
During the three months ended March 31, 2001, the Partnership distributed
approximately $3,154,000 to the partners (approximately $3,088,000 to the
limited partners or $37.42 per limited partnership unit) consisting of
approximately $296,000 (approximately $287,000 to the limited partners or $3.48
per limited partnership unit) from operations, and approximately $2,858,000
(approximately $2,801,000 to the limited partners or $33.94 per limited
partnership unit) from the remaining refinance proceeds of Willow Park
Apartments and the refinance proceeds of Oakwood Village Apartments.
Subsequent to March 31, 2001, the Partnership distributed approximately $173,000
to the partners (approximately $170,000 to the limited partners or $2.06 per
limited partnership unit) from the remaining refinance proceeds of Oakwood
Village Apartments. No distributions were made during the three months ended
March 31, 2000.
Note E - Segment Reporting
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The Managing General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the financial statements as currently presented.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Managing General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2001 and 2000:
Average Occupancy
Property 2001 2000
Willow Park on Lake Adelaide 93% 96%
Altamonte Springs, Florida (1)
Oakwood Village at Lake Nan Apartments 94% 94%
Winter Park, Florida
Palisades Apartments (2) 77% 91%
Montgomery, Alabama
(1) The Managing General Partner attributes the decrease in occupancy to
increased competition in the local market.
(2) The Managing General Partner attributes the decrease in occupancy at the
Palisade Apartments to numerous evictions in the current quarter.
Management is evicting tenants who are not complying with the collection
policy in an effort to improve the tenant base.
Results of Operations
The Partnership's net loss for the three months ended March 31, 2001, was
approximately $155,000 as compared to a net loss of approximately $101,000 for
the three months ended March 31, 2000. The increase in net loss for the three
months ended March 31, 2001 is due to a decrease in total revenues partially
offset by a slight decrease in total expenses. The decrease in total revenues is
due primarily to a decrease in rental income as a result of the decreases in
occupancy at the Palisades Apartments and Willow Park Apartments as discussed
above.
The decrease in total expenses is due to a decrease in operating expense
partially offset by an increase in general and administrative and depreciation
expenses. Operating expense decreased as a result of maintenance expense
decreases at Willow Park on Lake Adelaide and Palisades Apartments partially
offset by an increase in property and insurance expenses at all of the
investment properties. Maintenance expense at Willow Park on Lake Adelaide
decreased as a result of a reduction of contract trash removal, contract yard
and grounds cost and interior and exterior building improvements. Maintenance
expense at Palisades Apartments decreased due to the decrease in occupancy
during the three months ending March 31, 2001, as discussed above. Offsetting
these decreases was an increase in property expense due to increases in vacancy
unit's electricity charges and manager and maintenance salaries. General and
administrative expense increased due to an increase in Partnership management
fees paid as a result of the distributions during the three months ended March
31, 2001 as required by the Partnership Agreement. No such Partnership
management fee was paid during the three months ended March 31, 2000, as no
distributions were paid to the partners. In addition, there was an increase in
the cost of services included in the management reimbursements to the Managing
General Partner as allowed under the Partnership Agreement. The increase in
depreciation is the result of fixed assets placed into service during the past
twelve months.
In addition to the amounts noted above, general and administrative expenses for
the three months ended March 31, 2001 and 2000, included costs associated with
the quarterly and annual communications with investors and regulatory agencies
and the annual audit required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in 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.
Capital Resources and Liquidity
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $515,000 as compared to approximately $1,957,000 at March 31,
2000. For the three months ended March 31, 2001, cash and cash equivalents
decreased by approximately $298,000 from the Partnership's year ended December
31, 2000. The decrease in cash and cash equivalents is due to approximately
$233,000 of cash used in financing activities and approximately $202,000 of cash
used in investing activities partially offset by approximately $137,000 of cash
provided by operating activities. Cash used in investing activities consisted of
property improvements and replacements partially offset by net withdrawals from
restricted escrows maintained by the mortgage lenders. Cash used in financing
activities consisted of principal payments made on the mortgages encumbering the
Partnership's properties, loan costs incurred on the refinancing of Oakwood
Village Apartments in February 2001, repayment of the mortgage encumbering
Oakwood Village Apartments and distributions to the partners partially offset by
proceeds from the refinancing of the mortgage encumbering Oakwood Village
Apartments (see discussion below). The Partnership invests its working capital
reserves in interest bearing accounts.
The Managing General Partner has made available to the Partnership a $300,000
line of credit. At the present time, the Partnership has no outstanding amounts
due under this line of credit. Based on present plans, 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 and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
for each of the Partnership's properties are detailed below.
Willow Park on Lake Adelaide
During the three months ended March 31, 2001, the Partnership completed
approximately $33,000 of capital improvements at Willow Park, consisting
primarily of floor covering replacements, structural improvements and appliance
replacements. These improvements were funded through operating cash flow. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $51,000 for the year 2001 at this property which consist primarily
of floor covering replacements.
Oakwood Village at Lake Nan Apartments
During the three months ended March 31, 2001, the Partnership completed
approximately $61,000 of capital improvements at Oakwood Village consisting
primarily of capital improvement projects and floor covering replacements. These
improvements were funded through replacement reserves and operating cash flow.
The Partnership has budgeted, but is not limited to, capital improvements of
approximately $95,000 for the year 2001 at this property which consist primarily
of building improvements and floor covering replacements.
Palisades Apartments
During the three months ended March 31, 2001, the Partnership completed
approximately $160,000 of capital improvements at Palisades Apartments,
consisting of floor covering replacement, structural improvements and appliance
replacements. These improvements were funded through operating cash flow and
replacement reserves. The Partnership has budgeted, but is not limited to,
capital improvements of approximately $1,014,000 for the year 2001 at this
property which consist primarily of structural improvements, roof replacement
and floor covering replacements. The Partnership recently entered into a
contract to sell Palisades Apartments to an unaffiliated third party. The sale,
which is conditioned upon the purchaser completing its due diligence review of
the property and other customary conditions is expected to close, if at all
during the third quarter. There can be no assurance, however, that the sale will
be consummated, or if consummated, on what terms or in what time frame.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $15,271,000 is being amortized over varying
periods with balloon payment due at maturity for the Palisades Apartments. The
Managing General Partner will attempt to refinance such indebtedness and/or sell
the properties prior to such maturity dates. If the properties cannot be
refinanced or sold for a sufficient amount, the Partnership will risk losing
such properties through foreclosure.
On December 15, 1999, the Partnership refinanced the mortgage encumbering Willow
Park Apartments. The interest rate on the new mortgage is 8.02%, compared to
8.56% on the previous mortgage. The refinancing replaced indebtedness of
$2,873,000 with a new mortgage in the amount of $4,000,000. Payments of
approximately $34,000 are due on the first day of each month until the loan
matures on January 1, 2020. New loan costs of approximately $46,000 were paid
during the year ended December 31, 1999. Additional loan costs of approximately
$95,000 were paid during the three month period ended March 31, 2000. These loan
costs were included in other assets and will be amortized over the life of the
loan.
On February 14, 2001, the Partnership refinanced the mortgage encumbering
Oakwood Village. The refinancing replaced indebtedness of $3,825,000 with a new
mortgage in the amount of $7,000,000. The mortgage was refinanced at a rate of
7.18% compared to the prior rate of 8.56% and matures on March 1, 2021. Payments
of approximately $55,000 are due on the first day of each month until the loan
matures. Capitalized loan costs of approximately $24,000 were incurred at
December 31, 2000, and approximately $186,000 were incurred during the three
months ended March 31, 2001. These costs are included in other assets and are
being amortized over the life of the loan.
During the three months ended March 31, 2001, the Partnership distributed
approximately $3,154,000 to the partners (approximately $3,088,000 to the
limited partners or $37.42 per limited partnership unit) consisting of
approximately $296,000 (approximately $287,000 to the limited partners or $3.48
per limited partnership unit) from operations, and approximately $2,858,000
(approximately $2,801,000 to the limited partners or $33.94 per limited
partnership unit) from the remaining refinance proceeds of Willow Park
Apartments and refinance proceeds of Oakwood Village Apartments. Subsequent to
March 31, 2001, the Partnership distributed approximately $173,000 to the
partners (approximately $170,000 to the limited partners or $2.06 per limited
partnership unit) from the remaining refinance proceeds of Oakwood Village
Apartments. No distributions were made during the three months ended March 31,
2000. The Partnership's distribution policy is reviewed on a quarterly basis.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital improvements to permit further distributions to its
partners during the remainder of 2001 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 51,133 limited partnership
units in the Partnership representing 61.97% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 61.97% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. However, with respect to
37,101 Units, AIMCO is required to vote such Units: (i) against any increase in
compensation payable to the Managing General Partner or to affiliates; and (ii)
on all other matters submitted by it or its affiliates, in proportion to the
votes cast by non-tendering unit holders. Except for the foregoing, no other
limitations are imposed on AIMCO's ability to influence voting decisions with
respect to the Partnership.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Managing General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2001.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: