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 0-11095
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
NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2005
Assets
Cash and cash equivalents $ 217
Receivables and deposits 319
Other assets 489
Restricted escrows 389
Investment properties:
Land $ 1,169
Buildings and related personal property 19,669
20,838
Less accumulated depreciation (16,283) 4,555
$ 5,969
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 38
Tenant security deposit liabilities 58
Accrued property taxes 112
Other liabilities 225
Due to affiliates (Note B) 4,032
Mortgage notes payable 11,820
Partners' Deficit
General partner $ (1,428)
Limited partners (82,508 units
issued and outstanding) (8,888) (10,316)
$ 5,969
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
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 $ 857 $ 737 $ 1,669 $ 1,481
Other income 90 85 171 166
Casualty gain (Note C) 399 -- 399 --
Total revenues 1,346 822 2,239 1,647
Expenses:
Operating 375 388 817 733
General and administrative 56 46 100 87
Depreciation 104 92 202 182
Interest 313 243 582 486
Property taxes 56 55 119 111
Total expenses 904 824 1,820 1,599
Net income (loss) $ 442 $ (2) $ 419 $ 48
Net income allocated to general
partner (3%) $ 13 $ -- $ 13 $ 1
Net income (loss) allocated to limited
partners (97%) 429 (2) 406 47
Net income (loss) $ 442 $ (2) $ 419 $ 48
Per limited partnership unit:
Net income (loss) $ 5.19 $ (0.02) $ 4.92 $ 0.57
See Accompanying Notes to Financial Statements
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, 2004 82,508 $(1,441) $(9,294) $(10,735)
Net income for the six months
ended June 30, 2005 -- 13 406 419
Partners' deficit at
June 30, 2005 82,508 $(1,428) $(8,888) $(10,316)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating activities:
Net income $ 419 $ 48
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation 202 182
Casualty gain (399) --
Amortization of loan costs 23 8
Change in accounts:
Receivables and deposits (20) (62)
Other assets (28) (86)
Accounts payable (49) (9)
Tenant security deposit liabilities (2) (10)
Accrued property taxes 112 111
Other liabilities (24) 5
Due to affiliates (260) 122
Net cash (used in) provided by operating activities (26) 309
Cash flows from investing activities:
Property improvements and replacements (1,613) (219)
Insurance proceeds received 399 --
Net deposits to restricted escrows (489) --
Net cash used in investing activities (1,703) (219)
Cash flows from financing activities:
Principal payments on mortgage notes payable (165) (154)
Proceeds from mortgage note payable 2,150 --
Loan costs paid (62) --
Advances from affiliate 1,104 49
Payments on advances from affiliates (1,177) --
Net cash provided by (used in) financing activities 1,850 (105)
Net increase (decrease) in cash and cash equivalents 121 (15)
Cash and cash equivalents at beginning of period 96 90
Cash and cash equivalents at end of period $ 217 $ 75
Supplemental disclosure of cash flow information:
Cash paid for interest $ 726 $ 385
At December 31, 2004, approximately $127,000 of property improvements and
replacements were included in accounts payable and are included in property
improvements and replacements at June 30, 2005.
See Accompanying Notes to Financial Statements
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 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 fiscal year ended December 31, 2004. 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 depends 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.
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
$87,000 and $81,000 for the six months ended June 30, 2005 and 2004,
respectively, which is included in operating expenses.
Affiliates of the Managing General Partner charged the Partnership reimbursement
of accountable administrative expenses amounting to approximately $247,000 and
$63,000 for the six months ended June 30, 2005 and 2004, respectively, which is
included in interest, general and administrative expenses 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 $169,000 and $3,000, respectively. The
construction management service fees are calculated based on a percentage of
additions to investment properties. As of June 30, 2005, the Partnership owed
approximately $279,000 of accrued accountable administrative expenses to an
affiliate of the Managing General Partner, which is included in due to
affiliates on the accompanying balance sheet.
For services relating to the administration of the Partnership and operation of
the Partnership's 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. No such reimbursements were earned during the six months ended June
30, 2005 or 2004.
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 $47,000 and $46,000 for insurance coverage and fees associated
with policy claims administration.
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 June 30, 2005, an Incentive Compensation Fee of approximately
$290,000 has been accrued related to the sale of The Village in 1998 and is
included in due to affiliates on the accompanying balance sheet. The Managing
General Partner was not entitled to receive an Incentive Compensation Fee from
the sale of Palisades Apartments in 2003.
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 Revolver will
have a term of 365 days, be unsecured and bear interest at the prime rate plus
2% 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. During the
latter part of 2001, the Managing General Partner agreed to advance funds in
excess of the Partnership Revolver. These additional funds were needed to fund
operating expenses of two of the investment properties and the Partnership.
During the six months ended June 30, 2005 and 2004, the Managing General Partner
advanced additional amounts of approximately $1,104,000 and $49,000,
respectively, to the Partnership. During the six months ended June 30, 2005, the
Partnership repaid approximately $1,538,000 of advances and accrued interest
from the mortgage financing at Oakwood Village at Lake Nan Apartments (See Note
D). There were no such payments during the six months ended June 30, 2004. At
June 30, 2005, the Partnership has a balance of approximately $3,463,000 under
this Partnership Revolver, which includes accrued interest of approximately
$28,000. During the six months ended June 30, 2005 and 2004, interest on the
advances, at the rate of prime plus 2%, or 8.25% at June 30, 2005, was
approximately $168,000 and $94,000, respectively, and is included in interest
expense.
Note C - Casualties
In August and September 2004, Willow Park on Lake Adelaide Apartments
experienced damage from Hurricanes Charley, Frances and Jeanne. At June 30,
2005, the Partnership estimates damage costs to be approximately $112,000. The
Managing General Partner does not anticipate that any insurance proceeds will be
received to cover estimated repairs. The Partnership does not expect a casualty
loss to result from these events as the damaged assets were fully depreciated.
In August and September 2004, Oakwood Village at Lake Nan Apartments experienced
damage from Hurricanes Frances and Jeanne. At June 30, 2005, the Partnership
estimates damage costs to be approximately $738,000, which the Partnership
estimates to be partially covered by insurance proceeds. The Partnership does
not expect a casualty loss to result from these events as the damaged assets
were fully depreciated. During the six months ended June 30, 2005, the
Partnership received insurance proceeds of approximately $399,000 which are
being held by the mortgage lender. The Partnership recognized a casualty gain of
approximately $399,000. In addition, during the six months ended June 30, 2005,
the Partnership incurred clean up costs of approximately $54,000, which were not
covered by insurance proceeds, and these costs are reflected in operating
expenses on the accompanying statements of operations.
Note D - Second Mortgage Financing
On June 1, 2005, the Partnership obtained a second mortgage loan on Oakwood
Village at Lake Nan Apartments in the amount of $2,150,000. The second mortgage
requires monthly payments of interest beginning July 1, 2005 until the loan
matures June 1, 2008. Interest on the loan is variable and is equal to the one
month LIBOR rate plus 300 basis points, or 6.34% at June 30, 2005. Capitalized
loan costs incurred on the financing were approximately $62,000. After payment
of closing costs and required deposits, the Partnership received proceeds of
approximately $1,990,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Oakwood Village at Lake
Nan Apartments. The modification of terms consisted of an interest rate of
7.48%, monthly payments of approximately $43,000, commencing July 1, 2005
through the maturity of July 1, 2015, at which time a balloon payment of
approximately $5,395,000 is due. The previous terms consisted of monthly
payments of approximately $55,000 with a stated interest rate of 7.18% through
the maturity date of March 1, 2021, at which time the loan was scheduled to be
fully amortized.
Note E - 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
Willow Park on Lake Adelaide 97% 87%
Altamonte Springs, Florida
Oakwood Village at Lake Nan Apartments 89% 89%
Winter Park, Florida
The Managing General Partner attributes the increase in occupancy at Willow Park
on Lake Adelaide Apartments to improved market conditions in the local area.
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.
Results of Operations
For the three months ended June 30, 2005, the Partnership had net income of
approximately $442,000 compared to a net loss of approximately $2,000 for the
corresponding period in 2004. For the six months ended June 30, 2005, the
Partnership had net income of approximately $419,000 compared to net income of
approximately $48,000 for the corresponding period in 2004. The decrease in net
loss and the increase in net income for the three and six month periods is due
to an increase in total revenues partially offset by an increase in total
expenses. Total revenues for both periods increased due to an increase in rental
income and a casualty gain recognized in 2005. Rental income increased due to an
increase in occupancy at Willow Park on Lake Adelaide Apartments, an increase in
the average rental rates at both investment properties, and a decrease in bad
debt expense at both investment properties.
In August and September 2004, Willow Park on Lake Adelaide Apartments
experienced damage from Hurricanes Charley, Frances and Jeanne. At June 30,
2005, the Partnership estimates damage costs to be approximately $112,000. The
Managing General Partner does not anticipate that any insurance proceeds will be
received to cover estimated repairs. The Partnership does not expect a casualty
loss to result from these events as the damaged assets were fully depreciated.
In August and September 2004, Oakwood Village at Lake Nan Apartments experienced
damage from Hurricanes Frances and Jeanne. At June 30, 2005, the Partnership
estimates damage costs to be approximately $738,000, which the Partnership
estimates to be partially covered by insurance proceeds. The Partnership does
not expect a casualty loss to result from these events as the damaged assets
were fully depreciated. During the six months ended June 30, 2005, the
Partnership received insurance proceeds of approximately $399,000, which are
being held by the mortgage lender. The Partnership recognized a casualty gain of
approximately $399,000. In addition, during the six months ended June 30, 2005,
the Partnership incurred clean up costs of approximately $54,000, which were not
covered by insurance proceeds, and these costs are reflected in operating
expenses on the accompanying statements of operations.
Total expenses for the three month period increased due to an increase in
depreciation and interest expenses. Total expenses for the six month period
increased due to increases in operating, depreciation, and interest expenses.
Operating expense for the six month period increased due to increases in
advertising, property and maintenance expenses. Advertising expense increased
due to an increase in referral fees at Oakwood Village at Lake Nan Apartments.
Property expense increased due to an increase in the cost of employee apartments
at Willow Park on Lake Adelaide Apartments and an increase in salaries and
related benefits at both investment properties. Maintenance expense increased
due to an increase in cleanup costs related to the hurricane at Oakwood Village
at Lake Nan Apartments. Depreciation expense for both periods increased due to
assets placed into service at Oakwood Village at Lake Nan Apartments. Interest
expense for both periods increased due to an increase in the outstanding balance
of loans due to affiliates of the Managing General Partner and the addition of
the second mortgage on Oakwood Village at Lake Nan Apartments.
Included in general and administrative expenses for the six months ended June
30, 2005 and 2004 are management reimbursements to the Managing General Partner
as allowed under the Partnership Agreement. Also included in general and
administrative expenses for both periods are costs associated with the quarterly
and annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement.
Capital Resources and Liquidity
At June 30, 2005, the Partnership had cash and cash equivalents of approximately
$217,000 compared to approximately $75,000 at June 30, 2004. For the six months
ended June 30, 2005, cash and cash equivalents increased by approximately
$121,000. The increase in cash and cash equivalents is due to approximately
$1,850,000 of cash provided by financing activities, partially offset by
approximately $26,000 of cash used in operating activities and approximately
$1,703,000 of cash used in investing activities. Cash provided by financing
activities consisted of proceeds from the second mortgage on Oakwood Village at
Lake Nan Apartments and advances received from an affiliate of the Managing
General Partner partially offset by principal payments on the mortgages
encumbering the investment properties, repayments of advances and loan costs
paid. Cash used in investing activities consisted of property improvements and
replacements and deposits to restricted escrows partially offset by insurance
proceeds received. 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 Revolver will
have a term of 365 days, be unsecured and bear interest at the prime rate plus
2% 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. During the
latter part of 2001, the Managing General Partner agreed to advance funds in
excess of the Partnership Revolver. These additional funds were needed to fund
operating expenses of two of the investment properties and the Partnership.
During the six months ended June 30, 2005 and 2004, the Managing General Partner
advanced additional amounts of approximately $1,104,000 and $49,000,
respectively, to the Partnership. During the six months ended June 30, 2005, the
Partnership repaid approximately $1,538,000 of advances and accrued interest
from the mortgage financing at Oakwood Village at Lake Nan Apartments (as
discussed below). There were no such payments during the six months ended June
30, 2004. At June 30, 2005, the Partnership has a balance of approximately
$3,463,000 under this Partnership Revolver, which includes accrued interest of
approximately $28,000. During the six months ended June 30, 2005 and 2004,
interest on the advances, at the rate of prime plus 2%, or 8.25% at June 30,
2005, was approximately $168,000 and $94,000, respectively, and is included in
interest expense.
On June 1, 2005, the Partnership obtained a second mortgage loan on Oakwood
Village at Lake Nan Apartments in the amount of $2,150,000. The second mortgage
requires monthly payments of interest beginning July 1, 2005 until the loan
matures June 1, 2008. Interest on the loan is variable and is equal to the one
month LIBOR rate plus 300 basis points, or 6.34% at June 30, 2005. Capitalized
loan costs incurred on the financing were approximately $62,000. After payment
of closing costs and required deposits, the Partnership received proceeds of
approximately $1,990,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Oakwood Village at Lake
Nan Apartments. The modification of terms consisted of an interest rate of
7.48%, monthly payments of approximately $43,000, commencing July 1, 2005
through the maturity of July 1, 2015, at which time a balloon payment of
approximately $5,395,000 is due. The previous terms consisted of monthly
payments of approximately $55,000 with a stated interest rate of 7.18% through
the maturity date of March 1, 2021, at which time the loan was scheduled to be
fully amortized.
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 planned for each of
the Partnership's properties are detailed below.
Willow Park on Lake Adelaide Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $254,000 of capital improvements at Willow Park on Lake Adelaide
Apartments consisting primarily of structural improvements, major landscaping,
roof replacement and appliance and floor covering replacements. These
improvements were funded from operating cash flow and advances from an affiliate
of the Managing General Partner. 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.
Oakwood Village at Lake Nan Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $1,232,000 of capital improvements at Oakwood Village at Lake Nan
Apartments consisting primarily of construction related to hurricane damage,
parking lot upgrades, and appliance and floor covering replacements. These
improvements were funded from operating cash flow and advances from an affiliate
of the Managing General Partner. 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 insurance proceeds and
anticipated cash flow generated by the property.
Additional capital expenditures will be incurred only if cash is available from
operations or from Partnership reserves. 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 generally sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness encumbering Willow Park on Lake Adelaide Apartments of
approximately $3,451,000 matures in January 2020 at which time the loan is
scheduled to be fully amortized. The first mortgage encumbering Oakwood Village
at Lake Nan Apartments of approximately $6,219,000 matures in July 2015 at which
time a balloon payment of approximately $5,395,000 is due. The second mortgage
encumbering Oakwood Village at Lake Nan Apartments of approximately $2,150,000
matures in June 2008 at which time the full principal balance is due. The
Managing General Partner will attempt to refinance such indebtedness and/or sell
the property prior to such maturity dates. If the property cannot be refinanced
or sold for a sufficient amount, the Partnership will risk losing the property
through foreclosure.
There were no distributions during the six months ended June 30, 2005 and 2004.
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. The Partnership's cash available for
distribution is reviewed on a monthly basis. In light of the significant amount
due to the Managing General Partner at June 30, 2005, it is not anticipated that
the Partnership will make any distributions in the foreseeable future.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 53,900 limited partnership units
(the "Units") in the Partnership representing 65.33% 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 65.33% of
the outstanding Units, AIMCO and its affiliates are in a position to influence
all voting decisions with respect to the Partnership. 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 its affiliation with
the Managing General Partner. However, with respect to 37,149 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. 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.
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.
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 15, 2005
NATIONAL PROPERTY INVESTORS 5
EXHIBIT INDEX
Exhibit
2.1 NPI, Inc. Stock Purchase Agreement dated as of August 17,
1995, incorporated by reference to Exhibit 2 to the
Partnership's Current Report on Form 8-K dated August 17,
1995.
2.2 Partnership Units Purchase Agreement dated as of August 17,
1995, incorporated by reference to Exhibit 2.1 to Form 8-K
filed by Insignia Financial Group, Inc. ("Insignia") with the
Securities and Exchange Commission on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.2 to Form 8-K filed by
Insignia Financial Group, Inc. with the Securities and
Exchange Commission on September 1, 1995.
2.5 Master Indemnity Agreement dated as of August 17, 1995,
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.
2.6 Agreement and Plan of Merger, dated as of October 1, 1999, by
and between AIMCO and IPT incorporated by reference to Exhibit
2.1 in the Registrant's Current Report on Form 8-K dated as of
October 16, 1999.
3.4 (a) Agreement of Limited Partnership incorporated by reference
to Exhibit A to the Prospectus of the Partnership dated
January 4, 1982, included in the Partnership's Registration
Statement on Form S-11 (Reg. No. 2-74143).
(b) Amendments to Agreement of Limited Partnership incorporated by
reference to the Definitive Proxy Statement of the Partnership
dated April 3, 1991.
(c) Amendments to the Partnership Agreement, incorporated by
reference to the Statement Furnished in Connection with the
Solicitation of the Registrant dated August 28, 1992.
(d) Amendment to the Partnership Agreement, incorporated by
reference to Current Report on Form 8-K dated October 25,
2004.
10.17 Multifamily Note between the Registrant and GMAC Commercial
Mortgage Corporation, dated December 15, 1999, as it
pertains to Willow Park on Lake Adelaide Apartments.
Incorporated by reference to the Partnership's Annual
Report on Form 10-KSB for the period ended December 31,
1999.
10.20 Multifamily Note dated June 1, 2005 between National Property
Investors 5, a California limited partnership, and GMAC
Commercial Mortgage Bank, incorporated by reference to Current
Report on Form 8-K dated June 1, 2005.
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.
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 5;
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 15, 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 5;
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 15, 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 5 (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 15, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 15, 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.