United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from _________to _________
Commission file number 0-14554
NATIONAL PROPERTY INVESTORS 8
(Exact name of small business issuer as specified in its charter)
California 13-3254885
(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
NATIONAL PROPERTY INVESTORS 8
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2005
Assets
Cash and cash equivalents $ 174
Receivables and deposits 250
Restricted escrows 18
Other assets 648
Investment properties:
Land $ 1,970
Buildings and related personal property 33,193
35,163
Less accumulated depreciation (25,496) 9,667
$ 10,757
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 200
Tenant security deposit liabilities 103
Accrued property taxes 375
Other liabilities 221
Due to affiliates (Note B) 2,857
Mortgage notes payable 14,637
Partners' Deficit
General partner $ (298)
Limited partners (44,882 units
issued and outstanding) (7,338) (7,636)
$ 10,757
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues:
Rental income $ 989 $ 921 $ 1,975 $ 1,817
Other income 95 77 175 152
Total revenues 1,084 998 2,150 1,969
Expenses:
Operating 521 519 963 945
General and administrative 49 47 95 89
Depreciation 379 385 763 765
Interest 335 304 660 602
Property taxes 98 132 211 265
Total expenses 1,382 1,387 2,692 2,666
Net loss $ (298) $ (389) $ (542) $ (697)
Net loss allocated to general
partner (1%) $ (3) $ (4) $ (5) $ (7)
Net loss allocated to limited
partners (99%) (295) (385) (537) (690)
$ (298) $ (389) $ (542) $ (697)
Net loss per limited partnership
unit $ (6.57) $ (8.57) $(11.96) $(15.37)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 44,882 $ 1 $22,441 $22,442
Partners' deficit at
December 31, 2004 44,882 $ (293) $(6,801) $(7,094)
Net loss for the six months
ended June 30, 2005 -- (5) (537) (542)
Partners' deficit at
June 30, 2005 44,882 $ (298) $(7,338) $(7,636)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating activities:
Net loss $ (542) $ (697)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation 763 765
Amortization of loan costs 18 17
Change in accounts:
Receivables and deposits (6) (71)
Other assets (63) (75)
Accounts payable 43 36
Tenant security deposit liabilities (6) 3
Accrued property taxes (78) (113)
Due to affiliate 150 91
Other liabilities (15) (43)
Net cash provided by (used in) operating
Activities 264 (87)
Cash flows used in investing activities:
Property improvements and replacements (894) (329)
Cash flows from financing activities:
Payments on mortgage note payable (241) (225)
Advances from affiliate 834 651
Repayment of advances from affiliate (12) --
Net cash provided by financing activities 581 426
Net (decrease) increase in cash and cash equivalents (49) 10
Cash and cash equivalents at beginning of period 223 146
Cash and cash equivalents at end of period $ 174 $ 156
Supplemental disclosure of cash flow information:
Cash paid for interest $ 557 $ 556
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts payable $ 99 $ 46
Included in property improvements and replacements for the six months ended June
30, 2005 are approximately $281,000 of improvements which were included in
accounts payable at December 31, 2004.
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 8
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 8
(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"), the general partner of the Partnership, which is wholly-owned
by Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust, 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, 2005 are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2005. 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, 2004.
Certain reclassifications have been made to the 2004 balances to conform to the
2005 presentation.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends on the Managing General Partner and
its affiliates for the management and administration of all Partnership
activities. The Partnership Agreement provides for (i) payments to affiliates
for services and (ii) reimbursement of certain expenses incurred by affiliates
on behalf of the Partnership.
Affiliates of the Managing General Partner receive 5% of gross receipts from
both of the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$108,000 and $99,000 for the six months ended June 30, 2005 and 2004,
respectively, which is included in operating expense.
Affiliates of the Managing General Partner charged the Partnership reimbursement
of accountable administrative expenses amounting to approximately $154,000 and
$98,000 for the six months ended June 30, 2005 and 2004, respectively, which is
included in general and administrative expense and investment properties. The
portion of these reimbursements included in investment properties for the six
months ended June 30, 2005 and 2004 are fees related to construction management
services provided by an affiliate of the Managing General Partner of
approximately $74,000 and $29,000, respectively. The construction management
service fees are calculated based on a percentage of additions to the investment
properties. Approximately $297,000 of the accountable administrative expenses
were accrued at June 30, 2005 and are included in due to affiliates.
For services relating to the administration of the Partnership and operation of
its properties, the Managing General Partner is entitled to receive payment for
non-accountable expenses up to a maximum of $150,000 per year of distributions
from operations based upon the number of Partnership units sold, subject to
certain limitations. The Managing General Partner was not entitled to receive a
reimbursement during the six months ended June 30, 2005 and 2004 because there
were no distributions from operations during these periods.
For managing the affairs of the Partnership, the Managing General Partner of the
Partnership is entitled to receive a partnership management fee. The fee is
equal to 4% of the Partnership's adjusted cash from operations, as defined in
the Partnership Agreement, in any year, provided that 50% of the fee shall not
be paid until the Partnership has distributed to the limited partners adjusted
cash from operations in such year which is equal to 5% of the limited partners'
adjusted invested capital, as defined, on a non-cumulative basis. In addition,
50% of the fee shall not be paid until the Partnership has distributed to the
limited partners adjusted cash from operations in such year which is equal to 8%
of the limited partners' adjusted invested capital on a non-cumulative basis.
The fee shall be paid when adjusted cash from operations is distributed to the
limited partners. The Managing General Partner was not entitled to receive this
fee during the six months ended June 30, 2005 and 2004.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2%
(8.25% at June 30, 2005) per annum. The maturity date of any such borrowing
accelerates in the event of: (i) the removal of NPI Equity as the managing
general partner (whether or not for cause); (ii) the sale or refinancing of a
property by the Partnership (whether or not a borrowing under the Partnership
Revolver was made with respect to such property); or (iii) the liquidation of
the Partnership. The Managing General Partner has exceeded this credit limit. It
advanced the Partnership approximately $187,000 under the Partnership Revolver
during the six months ended June 30, 2005. In addition, the Managing General
Partner advanced approximately $647,000 for costs associated with the
redevelopment project at Huntington Athletic Club, as discussed below. It
advanced the Partnership approximately $651,000 during the six months ended June
30, 2004. Interest expense during the six months ended June 30, 2005 and 2004
was approximately $95,000 and $25,000, respectively. During the six months ended
June 30, 2005, the Partnership made payments on the outstanding loans and
accrued interest of $30,000. There were no payments made on outstanding loans
during the six months ended June 30, 2004. At June 30, 2005, the amount of the
outstanding loans and accrued interest was approximately $2,560,000 and is
included in due to affiliates.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of June 30,
2005 the Managing General Partner had advanced a total of approximately $666,000
per this consent.
Upon sale of Partnership properties, the Managing General Partner 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 the Managing General Partner, 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
present 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, noncompounded, on their
present appraised investment in the Partnership at February 1, 1992.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers' compensation, property casualty, general
liability and vehicle liability. The Partnership insures its properties above
the AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the Managing General Partner. During the six months ended June
30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates
approximately $83,000 and $73,000, respectively, for insurance coverage and fees
associated with policy claims administration.
Note C - Contingencies
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. (the "Nuanes action") 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
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution. On January 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the Managing General Partner, are defendants in a lawsuit alleging
that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to
pay maintenance workers overtime for all hours worked in excess of forty per
week. The complaint attempts to bring a collective action under the FLSA and
seeks to certify state subclasses in California, Maryland, and the District of
Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and
NHP Management Company failed to compensate maintenance workers for time that
they were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. On June 23, 2005 the Court conditionally certified the collective
action on both the on-call and overtime issues. The Court ruling allows
plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the Court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Managing General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's financial condition or results of
operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in connection therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its properties,
the Partnership could potentially be liable for environmental liabilities or
costs associated with its properties.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the Managing General Partner have
implemented a national policy and procedures to prevent or eliminate mold from
its properties and the Managing General Partner believes that these measures
will minimize the effects that mold could have on residents. To date, the
Partnership has not incurred any material costs or liabilities relating to
claims of mold exposure or to abate mold conditions. Because the law regarding
mold is unsettled and subject to change the Managing General Partner can make no
assurance that liabilities resulting from the presence of or exposure to mold
will not have a material adverse effect on the Partnership's financial condition
or results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions, and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Managing General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's financial condition or results of
operations.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 2005 and 2004:
Average Occupancy
Property 2005 2004
Williamsburg on the Lake Apartments 95% 82%
Indianapolis, Indiana
Huntington Athletic Club Apartments 94% 93%
Morrisville, North Carolina
The Managing General Partner attributes the increase in occupancy at
Williamsburg on the Lake Apartments to an aggressive marketing campaign and
reduced rental rates.
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment properties,
interest rates on mortgage loans, costs incurred to operate the investment
properties, general economic conditions and weather. 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 expenses. 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, the Managing General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions; accordingly, there is no guarantee that the Managing General Partner
will be able to sustain such a plan. Further, a number of factors that are
outside the control of the Partnership such as the local economic climate and
weather can adversely or positively affect the Partnership's financial results.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of June 30,
2005 the Managing General Partner had advanced a total of approximately $666,000
per this consent.
Results of Operations
The Partnership's net loss for the three and six months ended June 30, 2005 was
approximately $298,000 and $542,000 compared to a net loss of approximately
$389,000 and $697,000 for the three and six months ended June 30, 2004. The
decrease in net loss for the six months ended June 30, 2005 is a result of an
increase in total revenues partially offset by an increase in total expenses.
The decrease in net loss for the three months ended June 30, 2005 is due to an
increase in total revenues and a slight decrease in total expenses.
Total revenues increased for the three and six months ended June 30, 2005 due to
an increase in rental income and, to a lesser extent, other income. The increase
in rental income for the six months ended June 30, 2005 was due to an increase
in occupancy at both of the Partnership's properties and an increase in average
rental rates at Huntington Athletic Club Apartments, partially offset by a
decrease in average rental rates and an increase in bad debt expense at
Williamsburg on the Lake Apartments. The increase in rental income for the three
months ended June 30, 2005 was due to an increase in average rental rates at
Huntington Athletic Club Apartments, partially offset by a decrease in average
rental rates at Williamsburg on the Lake Apartments. The increase in other
income for the three and six months ended June 30, 2005 was primarily due to a
refund of deposits on account with the town of Morrisville received by
Huntington Athletic Club Apartments and an increase in resident utility payments
and legal fees at Williamsburg on the Lake Apartments partially offset by a
decrease in lease cancellation fees at both of the Partnership's investment
properties.
Total expenses increased for the six months ended June 30, 2005 due to increases
in operating and interest expenses partially offset by a decrease in property
tax expense. Total expenses decreased slightly for the three months ended June
30, 2005 due to a decrease in property tax expense that was slightly offset by
an increase in interest expense. Operating expenses increased for the six months
ended June 30, 2005 primarily due to increases in property and administrative
expenses partially offset by reduced insurance and maintenance expenses.
Property expense increased primarily due to increases in referral fees at both
of the Partnership's investment properties and increased salaries and related
benefits at Huntington Athletic Club Apartments, partially offset by a decrease
in utility expense and salaries and related benefits at Williamsburg on the Lake
Apartments. Administrative expense increased primarily due to resident eviction
costs at Williamsburg on the Lake Apartments partially offset by a decrease in
applicant screening costs at Williamsburg on the Lake Apartments. Insurance
expense decreased due to a decrease in the cost of general liability insurance
at Williamsburg on the Lake Apartments. Maintenance expense decreased due to
decreases in contract services, building repairs and equipment maintenance at
Williamsburg on the Lake Apartments. Interest expense increased for the three
and six months ended June 30, 2005 primarily due to an increase in interest on
advances from the Managing General Partner due to the interest being calculated
on a substantially higher balance. Property tax expense decreased for the three
and six months ended June 30, 2005 primarily due to a reassessment of the
property value at Williamsburg on the Lake Apartments as discussed below.
During 2003, the state of Indiana implemented a reassessment of property tax
values. The Partnership appealed the reassessed property tax value of
Williamsburg on the Lake Apartments. In the state of Indiana, property tax bills
are paid one year in arrears. Due to the Partnership's appeal of the reassessed
property value, the property tax accrual for 2003 and, in certain situations,
the remaining liability for the 2002 property tax bills was based on the
property tax value as estimated by a third party property tax specialist. The
appeal was settled during the year ended December 31, 2004 and the final
property value was lower than the amount estimated by the third party.
Therefore, property tax expense for 2002 and 2003 was reduced by approximately
$147,000 and the estimate for property taxes which will be due for 2004 was
reduced by approximately $70,000 during the fourth quarter of 2004 based on this
revised property value.
Included in general and administrative expenses at both June 30, 2005 and 2004
are costs of services included in the management reimbursements paid to the
Managing General Partner as allowed under the Partnership Agreement, costs
associated with the annual audit required by the Partnership Agreement and costs
associated with the quarterly and annual communications with investors and
regulatory agencies.
Liquidity and Capital Resources
At June 30, 2005, the Partnership had cash and cash equivalents of approximately
$174,000 compared to approximately $156,000 at June 30, 2004. The decrease of
approximately $49,000 in cash and cash equivalents since December 31, 2004 is
due to approximately $894,000 of cash used in investing activities partially
offset by approximately $581,000 and $264,000 of cash provided by financing and
operating activities, respectively. Cash used in investing activities consisted
of property improvements and replacements. Cash provided by financing activities
consisted of advances from an affiliate of the Managing General Partner
partially offset by payments of principal made on the mortgages encumbering the
Partnership's investment properties and repayments of advances from an affiliate
of the Managing General Partner. The Partnership invests its working capital
reserves in interest bearing accounts.
NPI Equity, on behalf of the Partnership and certain affiliated partnerships,
has established a revolving credit facility (the "Partnership Revolver") to be
used to fund deferred maintenance and working capital needs of the Partnership
and certain other affiliated partnerships in the National Property Investors
Partnership Series. The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver will have
a term of 365 days, be unsecured and bear interest at the prime rate plus 2%
(8.25% at June 30, 2005) per annum. The maturity date of any such borrowing
accelerates in the event of: (i) the removal of NPI Equity as the managing
general partner (whether or not for cause); (ii) the sale or refinancing of a
property by the Partnership (whether or not a borrowing under the Partnership
Revolver was made with respect to such property); or (iii) the liquidation of
the Partnership. The Managing General Partner has exceeded this credit limit. It
advanced the Partnership approximately $834,000 during the six months ended June
30, 2005, of which approximately $647,000 are for costs associated with the
redevelopment project at Huntington Athletic Club Apartments, as discussed
below. It advanced the Partnership approximately $651,000 during the six months
ended June 30, 2004. Interest expense during the six months ended June 30, 2005
and 2004 was approximately $95,000 and $25,000, respectively. During the six
months ended June 30, 2005, the Partnership made payments on the outstanding
loans and accrued interest of $30,000. There were no payments made on
outstanding loans during the six months ended June 30, 2004. At June 30, 2005,
the amount of the outstanding loans and accrued interest was approximately
$2,560,000.
The Partnership is currently undergoing a substantial redevelopment project at
Huntington Athletic Club Apartments. It is estimated that the costs associated
with this renovation will be approximately $2.6 million. In order to fund these
renovations, the Partnership sought the consent of its limited partners to
obtain a $2.0 million loan from an affiliate of the Managing General Partner.
The consent to the loan was obtained on November 5, 2004. The funds advanced per
this consent bear interest at 10% per annum. The balance of the costs associated
with the redevelopment is expected to be funded from operations. As of June 30,
2005 the Managing General Partner had advanced a total of approximately $666,000
per this consent.
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. The Managing General
Partner monitors developments in the area of legal and regulatory compliance.
For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional
compliance measures with regard to governance, disclosure, audit and other
areas. In light of these changes, the Partnership expects that it will incur
higher expenses related to compliance. Capital improvements for each of the
Partnership's properties are detailed below.
Williamsburg on the Lake Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $148,000 of capital improvements, at Williamsburg on the Lake
Apartments consisting primarily of floor covering and appliance replacements,
electrical upgrades and other building improvements. These improvements were
funded from operating cash flow. The Partnership regularly evaluates the capital
improvement needs of the property. While the Partnership has no material
commitments for property improvements and replacements, certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Huntington Athletic Club Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $529,000 of capital improvements arising from the redevelopment of
the property. Additional capital improvements of approximately $35,000 during
the six months ended June 30, 2005 consisted of floor covering and appliance
replacements. These improvements were funded from operating cash flow and
advances from the Managing General Partner. The Partnership regularly evaluates
the capital improvement needs of the property. The Partnership has committed to
a substantial redevelopment project at Huntington Athletic Club Apartments which
includes site improvements and exterior building upgrades. It is estimated that
the costs associated with this renovation will be approximately $2.6 million. In
order to fund these renovations, the Partnership sought the consent of its
limited partners to a $2.0 million loan from an affiliate of the Managing
General Partner. The consent to the loan was obtained November 5, 2004. The
balance of the costs associated with the redevelopment is expected to be funded
from operating cash flow. The redevelopment project is scheduled to be completed
during the first quarter of 2006. Certain other routine capital expenditures are
anticipated during 2005. Additional improvements may be considered and will
depend on the physical condition of the property as well as anticipated cash
flow generated by the property.
Capital expenditures will be incurred only if cash is available from operations
and advances from the Managing General Partner. To the extent that capital
improvements are completed, the Partnership's distributable cash flow, if any,
may be adversely affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's properties of approximately
$14,637,000 is amortized over 20 years and matures June 1, 2020 and January 1,
2022 at which time the loans are scheduled to be fully amortized.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2008. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership.
There were no distributions during the six months ended June 30, 2005 and 2004.
Future cash distributions will depend on the levels of cash generated from
operations, the timing of debt maturities, refinancings, and/or property sales.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Given the balance of outstanding loans to the Managing General Partner,
it is not expected that the Partnership will generate sufficient funds from
operations, after required capital improvements, to permit any distributions to
its partners during the foreseeable future.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 27,772 limited partnership units
(the "Units") in the Partnership representing 61.88% of the outstanding units at
June 30, 2005. 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 acquire additional Units in exchange for cash or a combination of cash and
units in AIMCO Properties, L.P., the operating partnership of AIMCO, either
through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the Managing General Partner. As a result of its ownership of 61.88% of
the outstanding Units, AIMCO and its affiliates are in a position to influence
all voting decisions with respect to the Partnership. However, DeForest Ventures
II L.P., from whom an affiliate of AIMCO and the Managing General Partner,
through its merger with Insignia, acquired 16,447 units, had agreed for the
benefit of third party unitholders, that it would vote these units: (i) against
any increase in compensation payable to the Managing General Partner or to its
affiliates; and (ii) on all other matters submitted by it or its affiliates, in
proportion to the votes cast by third party unit holders. Except for the
foregoing, no other limitations are imposed on AIMCO or its affiliates' right to
vote each unit held. Although the Managing General Partner owes fiduciary duties
to the limited partners of the Partnership, the Managing General Partner also
owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties
of the Managing General Partner, as managing general partner, to the Partnership
and its limited partners may come into conflict with the duties of the Managing
General Partner to AIMCO as its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line basis over the term of the lease. The Partnership evaluates all
accounts receivable from residents and establishes an allowance, after the
application of security deposits, for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.
ITEM 3. Controls and Procedures
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Managing General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Managing General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
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. (the "Nuanes action") 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
purported to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) that are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Managing General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities that were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary
damages and equitable relief, including judicial dissolution of the Partnership.
In addition, during the third quarter of 2001, a complaint captioned Heller v.
Insignia Financial Group (the "Heller action") was filed against the same
defendants that are named in the Nuanes action. On or about August 6, 2001,
plaintiffs filed a first amended complaint. The Heller action was brought as a
purported derivative action, and asserted claims for, among other things, breach
of fiduciary duty, unfair competition, conversion, unjust enrichment, and
judicial dissolution. On January 28, 2002, the trial court granted defendants
motion to strike the complaint. Plaintiffs took an appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial court's order striking the
first amended complaint.
The Managing General Partner does not anticipate that any costs to the
Partnership, whether legal or settlement costs, associated with these cases will
be material to the Partnership's overall operations.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the Managing General Partner, are defendants in a lawsuit alleging
that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to
pay maintenance workers overtime for all hours worked in excess of forty per
week. The complaint attempts to bring a collective action under the FLSA and
seeks to certify state subclasses in California, Maryland, and the District of
Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and
NHP Management Company failed to compensate maintenance workers for time that
they were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. On June 23, 2005 the Court conditionally certified the collective
action on both the on-call and overtime issues. The Court ruling allows
plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the Court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
Managing General Partner does not believe that the ultimate outcome will have a
material adverse effect on the Partnership's financial condition or results of
operations.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index Attached.
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 8
By: NPI EQUITY INVESTMENTS, INC.
Managing General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: August 12, 2005
NATIONAL PROPERTY INVESTORS 8
Exhibit Index
Exhibit Number Description of Exhibit
2.5 Master Indemnity Agreement (1)
3.4 Agreement of Limited Partnership (2)
Amendments to Agreement of Limited Partnership (3)
Amendments to Agreement of Limited Partnership (4)
Amendments to Agreement of Limited Partnership (5)
10.26 Multifamily Note dated May 8, 2000, by and between National
Property Investors 8, a California limited partnership, and
GMAC Commercial Mortgage Corporation, a California
Corporation, relating to Huntington Athletic Club
(incorporated by reference to Exhibit 10.26 filed with the
Registrant's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2000).
10.27 Multifamily note dated December 6, 2001 by and between
National Property Investors 8, a California limited
partnership, and GMAC Commercial Mortgage Corporation, a
California Corporation, relating to Williamsburg Apartments
(incorporated by reference to Exhibit 10.27 filed with the
Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 2001).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of the equivalent of the Chief Executive Officer
and Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(1) Incorporated by reference to Exhibit 2.5 to Form 8-K filed
by Insignia Financial Group, Inc. with the Securities and
Exchange Commission on September 1, 1995.
(2) Incorporated by reference to Exhibit A to the Prospectus of
the Registrant dated May 13, 1985 contained in the
Registrant's Registration Statement on Form S-11 (Reg. No.
2-95864).
(3) Incorporated by reference to Exhibits 3, 4(b) to the
Registrant's Form 10-K for the fiscal year ended December
31, 1985.
(4) Incorporated by reference to the definitive Proxy Statement of
the Registrant dated April 3, 1991.
(5) Incorporated by reference to the Statement Furnished in
Connection with the Solicitation Of Consents of the Registrant
dated August 28, 1992.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of National Property
Investors 8;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
small business issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based
on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting.
Date: August 12, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of NPI
Equity Investments, Inc.,
equivalent of the chief executive
officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of National Property
Investors 8;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
small business issuer, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based
on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting.
Date: August 12, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of NPI Equity Investments,
Inc., equivalent of the chief financial
officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of National Property
Investors 8 (the "Partnership"), for the quarterly period ended June 30, 2005 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Martha L. Long, as the equivalent of the chief executive officer of
the Partnership, and Stephen B. Waters, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: August 12, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 12, 2005
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.