FORM 10-QSB.--QUARTERLY 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 June 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)
June 30, 1997
Assets
Cash and cash equivalents $ 1,934
Receivables and deposits 790
Other assets 413
Investment properties:
Land $ 2,457
Buildings and related personal property 30,927
33,384
Less accumulated depreciation (22,740) 10,644
$13,781
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 123
Tenant security deposits 112
Accrued taxes 145
Other liabilities 214
Mortgage notes payable 14,433
Partners' Deficit:
Limited partners' (82,513 units issued and
outstanding) $ (8)
General partner's (1,238) (1,246)
$13,781
See Accompanying Notes to Financial Statements
b) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues:
Rental income $ 1,380 $ 1,342 $ 2,716 $ 2,710
Other income 98 132 224 244
Total revenues 1,478 1,474 2,940 2,954
Expenses:
Operating 888 841 1,741 1,608
Interest 334 339 670 672
Depreciation 335 331 663 655
General and administrative 88 77 130 157
Total expenses 1,645 1,588 3,204 3,092
Net loss $ (167) $ (114) $ (264) $ (138)
Net loss allocated to
general partner (3%) $ (5) $ (3) $ (8) $ (4)
Net loss allocated to
limited partners (97%) (162) (111) (256) (134)
$ (167) $ (114) $ (264) $ (138)
Net loss per limited
partnership unit $ (1.96) $ (1.34) $ (3.10) $ (1.62)
See Accompanying Notes to Financial Statements
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 six months
ended June 30, 1997 -- (8) (256) (264)
Partners' deficit at
June 30, 1997 82,513 $ (1,238) $ (8) $ (1,246)
<FN>
See Accompanying Notes to Financial Statements
d) NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net loss $ (264) $ (138)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 663 655
Amortization of loan costs 40 37
Change in accounts:
Receivables and deposits (115) (122)
Other assets (28) (92)
Accounts payable 30 19
Tenant security deposit liabilities 1 (5)
Accrued taxes 131 118
Other liabilities (3) 94
Net cash provided by operating activities 455 566
Cash flows from investing activities:
Property improvements and replacements (311) (158)
Withdrawals from restricted escrows 85 14
Deposits to restricted escrows (93) (130)
Net cash used in investing activities (319) (274)
Cash flows from financing activities:
Payments of mortgage notes payable (103) (94)
Net cash used in financing activities (103) (94)
Net increase in cash and cash equivalents 33 198
Cash and cash equivalents at beginning of period 1,901 1,802
Cash and cash equivalents at end of period $1,934 $2,000
Supplemental information:
Cash paid for interest $ 630 $ 639
See Accompanying Notes to Financial Statements
e)
NATIONAL PROPERTY INVESTORS 5
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of National Property Investors 5
(the "Partnership") 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, 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.
NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of National Property Investors, Inc. ("NPI").
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"). 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 six month periods ended June 30, 1997 and 1996 (in
thousands):
For the Six Months Ended
June 30,
1997 1996
Property management fees (included in operating
expenses) $ 144 $ 143
Reimbursement for services of affiliates
(included in general and administrative expenses
and operating expenses) 110 138
For the period of January 19, 1996, to June 30, 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 sheets of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at June 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 six and three month periods ended June 30, 1997 and 1996, are summarized
as follows:
(In thousands)
PROPORTIONATE
COMBINED SHARE
Total assets, primarily real estate $ 12,157 $ 2,861
Liabilities, primarily a mortgage payable $ 11,263 $ 2,706
Equity 894 155
Total liabilities and equity $ 12,157 $ 2,861
COMBINED PROPORTIONATE SHARE
For the Six Months Ended For the Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Total revenues $ 2,303 $ 2,240 $ 553 $ 538
Operating and other expenses $ 1,190 $ 1,214 $ 286 $ 291
Depreciation 382 364 92 88
Mortgage interest 496 501 119 120
Total expenses 2,068 2,079 497 499
Net income $ 235 $ 161 $ 56 $ 39
COMBINED PROPORTIONATE SHARE
For the Three Months Ended For the Three Months Ended
June 30, June 30,
1997 1996 1997 1996
Total revenues $ 1,167 $ 1,167 $ 280 $ 281
Operating and other expenses $ 639 $ 614 $ 153 $ 148
Depreciation 193 183 47 44
Mortgage interest 247 250 59 60
Total expenses 1,079 1,047 259 252
Net income $ 88 $ 120 $ 21 $ 29
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
six months ended June 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Willow Park on Lake Adelaide
Altamonte Springs, Florida 95% 96%
Oakwood Village at Lake Nan Apartments
Winter Park, Florida 96% 89%
Palisades Apartments
Montgomery, Alabama 86% 89%
The Village Apartments (1)
Voorhees, New Jersey 94% 93%
(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.
The Partnership's net loss for the six months ended June 30, 1997, was
approximately $264,000 compared to a net loss of approximately $138,000 for
the corresponding period of 1996. The net loss for the three months ended June
30, 1997, was approximately $167,000 compared to a net loss of approximately
$114,000 for the three months ended June 30, 1996. The increase in net loss is
primarily attributable to an increase in operating expenses. Included in
operating expenses for the six months ended June 30, 1997 is approximately
$166,000 of major repairs and maintenance compared to approximately $48,000 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. Partially offsetting the
increase in operating expenses for the six months ended June 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 June 30, 1997, the Partnership had unrestricted cash of $1,934,000 compared
to $2,000,000 at June 30, 1996. The net cash provided by operating activities
decreased primarily as a result of the increase in operating expenses as
discussed above and the decrease in other liabilities related to the timing of
payments. The increase in net cash used in investing activities is due to
increased property improvements and replacements, which was partially offset by
an increase in withdrawals from restricted escrows. Cash used in financing
activities remained relatively constant.
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 $14,433,000 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 six months 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 June 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: August 7, 1997