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 September 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 ___
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes __ No X_
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2005
Assets
Cash and cash equivalents $ 117
Receivables and deposits 186
Other assets 359
Restricted escrow 374
Investment properties:
Land $ 1,169
Buildings and related personal property 19,835
21,004
Less accumulated depreciation (16,368) 4,636
$ 5,672
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 99
Tenant security deposit liabilities 59
Accrued property taxes 168
Other liabilities 229
Due to affiliates (Note B) 3,499
Mortgage notes payable 11,774
Partners' Deficit
General partner $ (1,424)
Limited partners (82,508 units
issued and outstanding) (8,732) (10,156)
$ 5,672
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Rental income $ 738 $ 770 $ 2,407 $ 2,251
Other income 114 96 285 262
Casualty gain (Note C) 241 -- 640 --
Total revenues 1,093 866 3,332 2,513
Expenses:
Operating 411 557 1,228 1,290
General and administrative 46 25 146 112
Depreciation 115 89 317 271
Interest 305 243 887 729
Property taxes 56 56 175 167
Total expenses 933 970 2,753 2,569
Net income (loss) $ 160 $ (104) $ 579 $ (56)
Net income (loss) allocated to general
partner (3%) $ 5 $ (3) $ 17 $ (2)
Net income (loss) allocated to limited
partners (97%) 155 (101) 562 (54)
$ 160 $ (104) $ 579 $ (56)
Per limited partnership unit:
Net income (loss) $ 1.88 $ (1.22) $ 6.81 $ (0.65)
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 nine months
ended September 30, 2005 -- 17 562 579
Partners' deficit at
September 30, 2005 82,508 $(1,424) $(8,732) $(10,156)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
Cash flows from operating activities:
Net income (loss) $ 579 $ (56)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Casualty gain (640) --
Depreciation 317 271
Amortization of loan costs 36 11
Change in accounts:
Receivables and deposits 121 (60)
Other assets (11) (91)
Accounts payable (85) (40)
Tenant security deposit liabilities (1) (15)
Accrued property taxes 168 167
Other liabilities (28) 75
Due to affiliates (529) 200
Net cash (used in) provided by operating activities (73) 462
Cash flows from investing activities:
Property improvements and replacements (1,712) (310)
Insurance proceeds received 640 --
Net deposits to restricted escrows (374) --
Net cash used in investing activities (1,446) (310)
Cash flows from financing activities:
Principal payments on mortgage notes payable (211) (233)
Proceeds from mortgage note payable 2,150 --
Loan costs paid (62) --
Advances from affiliate 1,104 49
Payments on advances from affiliates (1,441) --
Net cash provided by (used in) financing activities 1,540 (184)
Net increase (decrease) in cash and cash equivalents 21 (32)
Cash and cash equivalents at beginning of period 96 90
Cash and cash equivalents at end of period $ 117 $ 58
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,032 $ 564
Supplemental disclosure of non-cash flow information:
Property improvements and replacements in accounts payable $ 97 $ 31
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 September 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 nine month periods ended September 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
$135,000 and $123,000 for the nine months ended September 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 $303,000 and
$99,000 for the nine months ended September 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 nine months ended September 30, 2005 and 2004 are
fees related to construction management services provided by an affiliate of the
Managing General Partner of approximately $192,000 and $12,000, respectively.
The construction management service fees are calculated based on a percentage of
additions to investment properties. As of September 30, 2005, the Partnership
owed approximately $14,000 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 nine months ended
September 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 nine months ended
September 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 September 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 the investment properties and the Partnership. During the
nine months ended September 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 nine months ended September 30,
2005, the Partnership repaid approximately $1,880,000 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 nine months ended September
30, 2004. At September 30, 2005, the Partnership has a balance of approximately
$3,195,000 under this Partnership Revolver, which includes accrued interest of
approximately $24,000. During the nine months ended September 30, 2005 and 2004,
interest on the advances, at the rate of prime plus 2%, or 8.75% at September
30, 2005, was approximately $240,000 and $145,000, 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 September 30,
2005, the Partnership estimates damage costs to be approximately $167,000. 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 addition, during the nine months ended September 30, 2005, the Partnership
incurred clean up costs of approximately $14,000 which were not covered by
insurance, and these costs are reflected in operating expenses on the
accompanying statements of operations.
In August and September 2004, Oakwood Village at Lake Nan Apartments experienced
damage from Hurricanes Frances and Jeanne. Reconstruction of the units was
completed during the third quarter of 2005. During the nine months ended
September 30, 2005, a casualty gain of approximately $640,000 was recorded at
Oakwood Village at Lake Nan Apartments. The gain was the result of the receipt
of insurance proceeds of approximately $640,000. The assets that were written
off were fully depreciated. In addition, during the nine months ended September
30, 2005, the Partnership incurred clean up costs of approximately $56,000 which
were not covered by insurance, 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 6.32% at September 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.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
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.
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, filed in the United States District Court for the District of
Columbia, 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. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the 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, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). 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.
Note F - Subsequent Event
Subsequent to September 30, 2005, the Partnership entered into a sale contract
with a third party to sell Oakwood Village on Lake Nan Apartments for a purchase
price of approximately $19,235,000. The anticipated closing date is January 31,
2006. For the nine months ended September 30, 2005 the property had total
revenues of approximately $2,692,000 and net income of approximately $698,000.
The net book value of Oakwood Village on Lake Nan Apartments assets at September
30, 2005 was approximately $2,895,000.
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 nine
months ended September 30, 2005 and 2004:
Average Occupancy
Property 2005 2004
Willow Park on Lake Adelaide 97% 90%
Altamonte Springs, Florida
Oakwood Village at Lake Nan Apartments 91% 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 and nine months ended September 30, 2005, the Partnership had net
income of approximately $160,000 and $579,000, respectively. For the three and
nine months ended September 30, 2004, the Partnership had a net loss of
approximately $104,000 and $56,000, respectively. The increase in net income for
the three month period is due to an increase in total revenues and a decrease in
total expenses. The increase in net income for the nine month period is due to
an increase in total revenues partially offset by an increase in total expenses.
Total revenues increased for the three month period due to a casualty gain
recognized in 2005 and increases in both rental and other income. The increase
in rental income is attributable to an increase in occupancy and the average
rental rate at Willow Park on Lake Adelaide Apartments. Other income increased
due to an increase in interest income. Total income increased for the nine month
period due to a casualty gain recognized in 2005 and an increase in rental and
other income. Rental income increased due to an increase in both the occupancy
and the average rental rate at both investment properties and a decrease in bad
debt expense at Willow Park on Lake Adelaide Apartments. Other income increased
due to an increase in lease cancellation fees and utility reimbursements at
Willow Park on Lake Adelaide Apartments.
In August and September 2004, Willow Park on Lake Adelaide Apartments
experienced damage from Hurricanes Charley, Frances and Jeanne. At September 30,
2005, the Partnership estimates damage costs to be approximately $167,000. 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 addition, during the nine months ended September 30, 2005, the Partnership
incurred clean up costs of approximately $14,000 which were not covered by
insurance, and these costs are reflected in operating expenses on the
accompanying statements of operations.
In August and September 2004, Oakwood Village at Lake Nan Apartments experienced
damage from Hurricanes Frances and Jeanne. Reconstruction of the units was
completed during the third quarter of 2005. During the nine months ended
September 30, 2005, a casualty gain of approximately $640,000 was recorded at
Oakwood Village at Lake Nan Apartments. The gain was the result of the receipt
of insurance proceeds of approximately $640,000. The assets that were written
off were fully depreciated. In addition, during the nine months ended September
30, 2005, the Partnership incurred clean up costs of approximately $56,000,
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 decreased due to a decrease in
operating expenses partially offset by an increase in general and
administrative, depreciation, and interest expense. Total expenses for the nine
month period increased due to increases in general and administrative,
depreciation, and interest expense partially offset by a decrease in operating
expense. Property tax expense was relatively constant for both the three and
nine month comparable periods. Operating expense decreased for both periods due
to a decrease in advertising and maintenance expense partially offset by an
increase in property and administrative expenses for the nine months ended
September 30, 2005. Maintenance expense decreased due to less hurricane clean up
costs incurred during 2005 than were incurred during 2004 related to several
hurricanes which impacted both properties during 2004. Advertising expense
decreased as a result of less referral fees and periodical costs especially at
Oakwood Village on Lake Nan. Property expense increased for the nine months
ended September 30, 2005 due to increases in salaries and related benefits and
employee apartments. Administrative costs increased for the nine months ended
September 30, 2005 due to an increase in costs associated with maintaining call
centers to provide improved information to prospective tenants related to the
properties. 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.
General and administrative expenses increased due to an increase in the costs
related to the annual audit of the Partnership and to an increase in the costs
associated with the management reimbursements charged to the Partnership.
Included in general and administrative expenses for the nine months ended
September 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 September 30, 2005, the Partnership had cash and cash equivalents of
approximately $117,000 compared to approximately $58,000 at September 30, 2004.
For the nine months ended September 30, 2005, cash and cash equivalents
increased by approximately $21,000. The increase in cash and cash equivalents is
due to approximately $1,540,000 of cash provided by financing activities
partially offset by approximately $1,446,000 and $73,000 of cash used in
investing and operating activities, respectively. 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 repayments of advances received from an
affiliate of the Managing General Partner, principal payments on the mortgages
encumbering the investment properties, and the payment of loan costs. 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 the investment properties and the Partnership. During the
nine months ended September 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 nine months ended September 30,
2005, the Partnership repaid approximately $1,880,000 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 nine months ended
September 30, 2004. At September 30, 2005, the Partnership has a balance of
approximately $3,195,000 under this Partnership Revolver, which includes accrued
interest of approximately $24,000. During the nine months ended September 30,
2005 and 2004, interest on the advances, at the rate of prime plus 2%, or 8.75%
at September 30, 2005, was approximately $240,000 and $145,000, 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 6.32% at September 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 nine months ended September 30, 2005, the Partnership completed
approximately $397,000 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 nine months ended September 30, 2005, the Partnership completed
approximately $1,285,000 of capital improvements at Oakwood Village at Lake Nan
Apartments consisting primarily of construction related to hurricane damage,
parking lot upgrades, exterior painting, fencing, and appliance and floor
covering replacements. These improvements were funded from operating cash flow,
advances from an affiliate of the Managing General Partner and insurance
proceeds. 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 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 $3,419,000 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 $6,205,000 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 nine months ended September 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 September 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
September 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.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
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.
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, filed in the United States District Court for the District of
Columbia, 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. In June 2005 the Court conditionally certified the collective action
on both the on-call and overtime issues, which allows the 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, and AIMCO Properties, L.P. and NHP Management
Company will have the opportunity to move to decertify the collective action.
Because the court denied plaintiffs' motion to certify state subclasses, on
September 26, 2005, the plaintiffs filed a class action with the same
allegations in the Superior Court of California (Contra Costa County). 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: November 14, 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.
10.18 Multifamily Note between the Registrant and GMAC Commercial
Mortgage Corporation, dated February 13, 2001, as it
pertains to Oakwood Village at Lake Nan Apartments.
Incorporated by reference to the Partnership's Annual
Report on Form 10-KSB for the period ended December 31,
2000.
NATIONAL PROPERTY INVESTORS 5
EXHIBIT INDEX (continued)
10.20 Multifamily Note dated June 1, 2005 between National Property
Investors 5, a California limited partnership, and GMAC
Commercial Mortgage Bank, as it relates to Oakwood Village at
Lake Nan Apartments. Incorporated by reference to Current
Report on Form 8-K dated June 1, 2005.
10.21 Purchase and Sale Contract between National Property Investors
5, a California limited partnership, and the affiliated
Selling Partnerships and The Bethany Group, LLC, a California
limited liability company, dated November 2, 2005. Related to
sale of Oakwood Village at Lake Nan Apartments. Incorporated
by reference to the Partnership's Current Report on Form 8-K
dated November 2, 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: November 14, 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: November 14, 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 September 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: November 14, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 14, 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.