FORM 10-QSB.--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.......to.........
Commission file number 0-11095
NATIONAL PROPERTY INVESTORS 5
(Exact name of small business issuer as specified in its charter)
California 22-2385051
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1997
Assets
Cash and cash equivalents $ 1,874
Receivables and deposits 874
Other assets 398
Investment properties:
Land $ 2,457
Buildings and related personal property 31,085
33,542
Less accumulated depreciation (23,083) 10,459
$ 13,605
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 95
Tenant security deposits 113
Accrued taxes 210
Other liabilities 217
Mortgage notes payable 14,379
Partners' Deficit:
Limited partners' (82,513 units issued and
outstanding) $ (166)
General partner's (1,243) (1,409)
$ 13,605
See Accompanying Notes to Financial Statements
b) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Rental income $ 1,379 $ 1,342 $ 4,095 $ 4,052
Other income 114 99 338 343
Total revenues 1,493 1,441 4,433 4,395
Expenses:
Operating 911 919 2,652 2,527
Interest 333 338 1,003 1,010
Depreciation 343 333 1,006 988
General and administrative 69 67 199 224
Total expenses 1,656 1,657 4,860 4,749
Net loss $ (163) $ (216) $ (427) $ (354)
Net loss allocated to
general partner (3%) $ (5) $ (6) $ (13) $ (11)
Net loss allocated to
limited partners (97%) (158) (210) (414) (343)
$ (163) $ (216) $ (427) $ (354)
Net loss per limited
partnership unit $ (1.91) $ (2.55) $ (5.02) $ (4.16)
<FN>
See Accompanying Notes to Financial Statements
</FN>
c) NATIONAL PROPERTY INVESTORS 5
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 82,513 $ 1 $ 41,257 $ 41,258
Partners' (deficit) capital at
December 31, 1996 82,513 $ (1,230) $ 248 $ (982)
Net loss for the nine months
ended September 30, 1997 -- (13) (414) (427)
Partners' deficit at
September 30, 1997 82,513 $ (1,243) $ (166) $ (1,409)
<FN>
See Accompanying Notes to Financial Statements
</FN>
d) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Net loss $ (427) $ (354)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,006 988
Amortization of loan costs 59 58
Change in accounts:
Receivables and deposits (188) (194)
Other assets (32) (43)
Accounts payable 2 (9)
Tenant security deposit liabilities 2 (7)
Accrued taxes 196 172
Other liabilities -- 138
Net cash provided by operating activities 618 749
Cash flows from investing activities:
Property improvements and replacements (469) (401)
Withdrawals from restricted escrows 109 48
Deposits to restricted escrows (128) (149)
Net cash used in investing activities (488) (502)
Cash flows from financing activities:
Payments of mortgage notes payable (157) (146)
Net cash used in financing activities (157) (146)
Net (decrease) increase in cash and cash
equivalents (27) 101
Cash and cash equivalents at beginning of period 1,901 1,802
Cash and cash equivalents at end of period $1,874 $1,903
Supplemental information:
Cash paid for interest $ 944 $ 976
<FN>
See Accompanying Notes to Financial Statements
</FN>
e)
NATIONAL PROPERTY INVESTORS 5
NOTES TO FINANCIAL STATEMENT
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of National Property Investors 5
(the "Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 30, 1997, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1997. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-KSB
for the year ended December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
Pursuant to a series of transactions which closed during 1996, affiliates of
Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and
outstanding shares of stock of NPI Equity and National Property Investors, Inc.
("NPI"). NPI Equity is a wholly-owned subsidiary of NPI. In connection with
these transactions, affiliates of Insignia appointed new officers and directors
of NPI Equity and NPI.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred in the nine month periods ended September 30, 1997 and 1996
(in thousands):
1997 1996
Property management fees (included in operating
expenses) $216 $215
Reimbursement for services of affiliates (included
in general and administrative and operating
expenses) 165 175
For the period of January 19, 1996, to August 31, 1997, the Partnership insured
its properties under a master policy through an agency and insurer unaffiliated
with the Managing General Partner. An affiliate of the Managing General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the current
year's master policy. The current agent assumed the financial obligations to
the affiliate of the Managing General Partner who received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Managing General Partner by
virtue of the agent's obligations is not significant.
NOTE C - TENANT-IN-COMMON PROPERTY
The Partnership currently owns The Village Apartments, as a tenant-in-common
with National Property Investors 6 ("NPI 6"), an affiliated public limited
partnership. NPI 6 acquired a 75.972% undivided interest with the Partnership
owning the remaining 24.028%. The property is accounted for using the
proportionate consolidation method. The financial statements and supplementary
data reflect the Partnership's 24.028% proportionate share of historical cost of
this property.
The condensed, combined balance sheet of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at September
30, 1997, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the nine and three month periods ended September 30, 1997 and 1996, are
summarized as follows (in thousands):
PROPORTIONATE
COMBINED SHARE
September 30, September 30,
1997 1997
Total assets, primarily real estate $ 12,097 $ 2,847
Liabilities, primarily a mortgage payable $ 11,187 $ 2,688
Equity 910 159
Total liabilities and equity $ 12,097 $ 2,847
COMBINED PROPORTIONATE SHARE
For the Nine Months Ended For the Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Total revenues $ 3,510 $ 3,419 $ 844 $ 822
Operating and other expenses $ 1,934 $ 1,879 $ 464 $ 451
Depreciation 581 553 140 133
Mortgage interest 743 752 179 181
Total expenses 3,258 3,184 783 765
Net income $ 252 $ 235 $ 61 $ 57
COMBINED PROPORTIONATE SHARE
For the Three Months Ended For the Three Months Ended
September 30, September 30,
1997 1996 1997 1996
Total revenues $ 1,207 $ 1,179 $ 291 $ 284
Operating and other expenses $ 744 $ 665 $ 178 $ 160
Depreciation 199 189 48 45
Mortgage interest 247 251 60 61
Total expenses 1,190 1,105 286 266
Net income $ 17 $ 74 $ 5 $ 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Willow Park on Lake Adelaide
Altamonte Springs, Florida 96% 96%
Oakwood Village at Lake Nan Apartments
Winter Park, Florida 96% 89%
Palisades Apartments
Montgomery, Alabama 86% 88%
The Village Apartments (1)
Voorhees, New Jersey 94% 94%
(1) This property was purchased as a tenancy in common with National Property
Investors 6, an affiliated public partnership, which acquired a 75.972%
undivided interest, with the Partnership owning the remaining 24.028%.
The Managing General Partner attributes the increase in occupancy at Oakwood
Village to enhanced marketing efforts necessitated by the recent completion of
road construction which has caused the property to be less readily accessible.
To combat the diversion of traffic, the property expanded its marketing to
include signs, maps and pamphlets emphasizing the property's location.
The Partnership's net loss for the nine months ended September 30, 1997, was
approximately $427,000 compared to a net loss of approximately $354,000 for the
corresponding period of 1996. The net loss for the three months ended September
30, 1997, was approximately $163,000 compared to a net loss of approximately
$216,000 for the three months ended September 30, 1996. The increase in net loss
for the nine month period ended September 30, 1997 is primarily attributable to
an increase in operating expenses. Included in operating expenses for the nine
months ended September 30, 1997 is approximately $211,000 of major repairs and
maintenance compared to approximately $98,000 for the comparable period in 1996.
The increase primarily relates to an exterior rehabilitation project at Willow
Park. This project included the expenditure of $111,000 for exterior painting
and stucco repair. Other major repairs and maintenance included in operating
expenses for the nine months ended September 30, 1997 consisted primarily of
major landscaping, window coverings, and swimming pool repairs. Major repairs
and maintenance included in operating expense for 1996 were comprised primarily
of exterior building repairs, major landscaping and window coverings. Partially
offsetting the increase in operating expenses for the nine months ended
September 30, 1997, was a decrease in general and administrative expenses during
that same period. General and administrative expenses decreased primarily due
to increased expense reimbursements in 1996, related to the costs incurred in
connection with the transition and relocation of the administrative offices
during the first half of 1996.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due to
changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At September 30, 1997, the Partnership had unrestricted cash of $1,874,000
compared to $1,903,000 at September 30, 1996. The net cash provided by
operating activities decreased primarily as a result of the increase in
operating expenses as discussed above. In addition, cash provided by other
liabilities decreased due to the timing of rental collections. The decrease in
net cash used in investing activities is due to increased withdrawals from
restricted escrows, which was partially offset by an increase in property
improvements and replacements. Cash used in financing activities remained
relatively stable.
The Managing General Partner has extended to the Partnership a $500,000 line of
credit. At the present time, the Partnership has no outstanding amounts due
under this line of credit, and the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents the
line of credit is the Partnership's only unused source of liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of $14,379,000 matures at various times with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales and the availability of cash reserves.
No cash distributions were made in 1996 or during the first nine months of 1997.
No distributions are anticipated during the fourth quarter of 1997.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K: None filed during the quarter ended September 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Vice President and Treasurer
Date: November 4, 1997