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<Table>
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</Table>
National Property Investors 5
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NATIONAL PROPERTY INVESTORS 5
A CALIFORNIA LIMITED PARTNERSHIP
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 206-0007
September __, 2004
Dear Limited Partner:
We write to request your consent to an amendment (the "Amendment") of
the Partnership Agreement of National Property Investors 5, a California limited
partnership (the "Partnership"), to extend the term of your Partnership from
December 31, 2005 to December 31, 2024.
The Partnership is currently a party to a first mortgage loan (the
"Loan") with GMAC Commercial Mortgage Corporation, the lender ("Lender"),
relating to one of your Partnership's multifamily apartment properties: Oakwood
Village at Lake Nan Apartments, a 278-unit apartment complex located in Orlando,
Florida (the "Oakwood Property"). This Loan was entered into in February 2000
and matures on March 1, 2021.
In addition to the Oakwood Property, the Partnership controls the
Willow Park on Lake Adelaide apartments, a 185-unit apartment complex located in
Altamonte Springs, Florida (the "Willow Parks Property"). The Willow Park
Property, together with the Oakwood Property, are hereinafter referred to as the
"Properties". The Willow Park Property is also subject to a mortgage loan
maturing on July 1, 2020.
Your General Partner regularly evaluates whether the Partnership's
property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets conditions, availability of favorable financing, tax
considerations, and whether a sale would be in the best interests of the
Partnership and the Limited Partners. Based on the locations of the various
Properties, the conditions of the respective submarkets and prospects for
long-term growth and appreciation, NPI Equity Investments, Inc., a Florida
corporation, the general partner of your Partnership (the "General Partner"),
does not presently intend to divest any of the Properties. However, the General
Partner believes that it is in the best interest of the partnership to be able
to sell the Properties in the short term if market conditions warrant. The short
amortization schedule and resulting high monthly debt service payments
associated with the Loan have made the Oakwood Property unattractive to
purchasers at this time. The General Partner is currently working with the
Lender to restructure the Loan to make the Oakwood Property more attractive to
potential purchasers. The General Partner believes that the Partnership's
ability to sell the Oakwood Property on favorable terms will be increased by
changing the parameters of the Loan.
The Loan, which matures on March 1, 2021, extends beyond the current
term of the Partnership, which expires on December 31, 2005. The Loan requires
that the Partnership and AIMCO Properties, L.P. ("AIMCO Properties"), an
affiliate of your General Partner, use good faith, diligent efforts to extend
the term of the Partnership to at least two years past the maturity date of the
Loan, or March 1, 2023. The Lender has required the Partnership to obtain such
extension by November 1, 2004.
If the Amendment is not adopted and the term of the Partnership not
extended by November 1, 2004, an event of default will occur under the Loan.
Such default may result in the exercise of remedies by the Lender. The
Partnership could lose the Oakwood Property as a result of the exercise of such
remedies. In addition, if the Amendment is not adopted, the term of the
Partnership will terminate on
2
December 31, 2005, the Partnership will dissolve and the General Partner will
liquidate all of the Partnership's remaining assets, including the Properties to
the extent not sold or lost as a result of an exercise of remedies by the
lenders, as soon as reasonably practicable. In this case, the sales price for
the Properties of the partnership may be less than if the General Partner had
greater control over the timing of the sales, given current economic conditions
and the local and sub-market conditions where such Properties are located.
Further, if the properties are sold or lost through the exercise of
remedies by the lenders, the Partnership will recognize taxable income from the
disposition of the Properties equal to the difference between the amounts
realized and the Partnership's basis in the Properties, and, potentially, due to
cancellation of indebtedness. Any taxable income would be allocated to partners,
and, depending on the purchase price and related sales costs, a partner's tax
liability could be greater than the funds, if any, it receives from the
Partnership. If the Partnership sells the Properties in a "forced sale," the
General Partner is of the opinion that its negotiating leverage will be greatly
reduced, and the net proceeds, if any, to the Partnership and the Limited
Partners would likely be lower than if the Properties were sold over time in an
orderly manner.
The General Partner cannot predict when the Partnership will be able to
sell its Properties. In April 2003, the Partnership sold the Palisades
Apartments for approximately $4,517,000.
The General Partner and its affiliates have substantial conflicts of
interest with respect to the Amendment. Continuation of the Partnership beyond
2005 will result in the General Partner and its affiliates continuing to receive
management fees from the Partnership. These fees would not continue to be
payable beyond 2005 if the Partnership were liquidated in 2005.
The consent of Limited Partners who own more than 50% of all
outstanding limited partnership units in the Partnership ("Units") is required
to approve the Amendment. AIMCO Properties and its affiliates own 53,890, or
65.31%, of the outstanding Units. AIMCO Properties has indicated that it and its
affiliates will vote as many Units as possible held by it and its affiliates in
favor of the Amendment, but, as more fully described in the accompanying Consent
Solicitation Statement, it must vote 37,149 Units owned by one of its affiliates
in proportion to the votes of other Limited Partners. Accordingly, the consent
of other Limited Partners not affiliated with AIMCO Properties owning 5,942, or
approximately 7.20%, of the outstanding Units must vote in favor of the
Amendment in order for the Amendment to be approved.
The General Partner recommends that you consent to the Amendment by
completing, dating and signing the enclosed Consent Form and returning it in the
enclosed pre-addressed, postage-paid envelope.
Please note that this solicitation will expire at midnight, New York
City time, on September ___, 2004, unless extended. Questions and requests for
assistance may be directed to the Solicitation Agent, The Altman Group, Inc., at
one of its addresses set forth below.
Very truly yours,
NATIONAL PROPERTY INVESTORS 5
By: NPI Equity Investments, Inc.
General Partner
3
THE SOLICITATION AGENT IS
THE ALTMAN GROUP, INC.
<Table>
By Mail, Overnight Courier or Hand:
By Facsimile For Information please call:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 206-0007
Lyndhurst, New Jersey 07071
</Table>
4
NATIONAL PROPERTY INVESTORS 5
A CALIFORNIA LIMITED PARTNERSHIP
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 206-0007
CONSENT SOLICITATION STATEMENT
SEPTEMBER ___, 2004
This Consent Solicitation Statement is being furnished to limited
partners (the "Limited Partners") of record as of the close of business on
August 19, 2004 (the "Record Date"), of National Property Investors 5, a
California limited partnership (the "Partnership"), in connection with the
solicitation of consents to an amendment (the "Amendment") of the Partnership's
Agreement of National Property Investors 5 to extend the term of the Partnership
from December 31, 2005 to December 31, 2024. YOUR PARTICIPATION IS IMPORTANT.
This Consent Solicitation Statement is being solicited by NPI Equity
Investments, Inc., a Florida corporation, the managing general partner of the
Partnership (the "General Partner"), on behalf of the Partnership. This Consent
Solicitation Statement, and the accompanying form of Consent of Limited Partner
(the "Consent Form"), are first being mailed to Limited Partners on or about
September __, 2004.
The Partnership is currently a party to a first mortgage loan (the
"Loan") with GMAC Commercial Mortgage Corporation, the lender ("Lender"),
relating to one of your Partnership's multifamily apartment properties: Oakwood
Village at Lake Nan Apartments, a 278-unit apartment complex located in Orlando,
Florida (the "Oakwood Property"). This Loan was entered into in February 2000
and matures on March 1, 2021.
In addition to the Oakwood Property, the Partnership controls the
Willow Park on Lake Adelaide apartments, a 185-unit apartment complex located in
Altamonte Springs, Florida (the "Willow Parks Property"). The Willow Park
Property, together with the Oakwood Property, are hereinafter referred to as the
"Properties". The Willow Park Property is also subject to a mortgage loan
maturing on July 1, 2020.
Your General Partner regularly evaluates whether the Partnership's
property should be sold by considering various factors, such as the
Partnership's financial position, prevailing conditions in real estate and
capital markets conditions, availability of favorable financing, tax
considerations, and whether a sale would be in the best interests of the
Partnership and the Limited Partners. Based on the locations of the various
Properties, the conditions of the respective submarkets and prospects for
long-term growth and appreciation, the General Partner does not presently intend
to divest any of the Properties. However, the General Partner believes that it
is in the best interest of the partnership to be able to sell the Properties in
the short term if market conditions warrant. The short amortization schedule and
resulting high monthly debt service payments associated with the Loan have made
the Oakwood Property unattractive to purchasers at this time. The General
Partner is currently working with the Lender to restructure the Loan to make the
Oakwood Property more attractive to potential purchasers. The General Partner
believes that the Partnership's ability to sell the Oakwood Property on
favorable terms will be increased by changing the parameters of the Loan.
The Loan, which matures on March 1, 2021, extends beyond the current
term of the Partnership, which expires on December 31, 2005. The Loan requires
that the Partnership and AIMCO Properties, L.P.
("AIMCO Properties"), an affiliate of your General Partner, use good faith,
diligent efforts to extend by November 1 2004, the term of the Partnership to at
least two years past the maturity date of the Loan, or March 1, 2023.
If the Amendment is not adopted and the term of the Partnership not
extended by November 1, 2004, an event of default will occur under the Loan.
Such default may result in the exercise of remedies by the Lender. The
Partnership could lose the Oakwood Property as a result of the exercise of such
remedies. In addition, if the Amendment is not adopted, the term of the
Partnership will terminate on December 31, 2005, the Partnership will dissolve
and the General Partner will liquidate all of the Partnership's remaining
assets, including the Properties to the extent not sold or lost as a result of
an exercise of remedies by the lenders, as soon as reasonably practicable. In
this case, the sales price for the Properties of the partnership may be less
than if the General Partner had greater control over the timing of the sales,
given current economic conditions and the local and sub-market conditions where
the Properties are located.
Further, if the Properties of the Partnership are sold or lost through
the exercise of remedies by the lenders, the Partnership will recognize taxable
income from the disposition of the Properties equal to the difference between
the amounts realized and the Partnership's basis in the Properties, and,
potentially, due to cancellation of indebtedness. Any taxable income would be
allocated to partners, and, depending on the purchase price and related sales
costs, a partner's tax liability could be greater than the funds, if any, it
receives from the Partnership. If the Partnership sells the Properties in a
"forced sale," the General Partner is of the opinion that its negotiating
leverage will be greatly reduced, and the net proceeds, if any, to the
Partnership and the Limited Partners would likely be lower than if the
Properties were sold over time in an orderly manner.
The General Partner cannot predict when the Partnership will be able to
sell its Properties. In April 2003, the Partnership sold the Palisades
Apartments for net proceeds of approximately $4,517,000.
The General Partner and its affiliates have substantial conflicts of
interest with respect to the Amendment. Continuation of the Partnership beyond
2005 will result in the General Partner and its affiliates continuing to receive
management fees from the Partnership. These fees would not continue to be
payable beyond 2005 if the Partnership were liquidated in 2005.
The consent of Limited Partners who own more than 50% of all
outstanding limited partnership units in the Partnership ("Units") is required
to approve the Amendment. AIMCO Properties and its affiliates own 53,890, or
65.31%, of the outstanding Units. AIMCO Properties has indicated that it and its
affiliates will vote as many Units as possible held by it and its affiliates in
favor of the Amendment, but, as more fully described in "Record; Date, Consent
Required", it must vote 37,149 Units owned by one of its affiliates in
proportion to the votes of other Limited Partners. Accordingly, other Limited
Partners not affiliated with AIMCO Properties owning 5,942, or approximately
7.20%, of the outstanding Units must vote in favor of the Amendment in order for
the Amendment to be approved.
The General Partner recommends that you consent to the Amendment by
completing, dating and signing the enclosed Consent Form and returning it in the
enclosed pre-addressed, postage-paid envelope.
THE GENERAL PARTNER RECOMMENDS THAT LIMITED PARTNERS CONSENT TO THE
AMENDMENT.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER ___, 2004, unless extended (THE "EXPIRATION DATE").
2
SEE "RISK FACTORS" BELOW FOR A DESCRIPTION OF RISK FACTORS THAT YOU
SHOULD CONSIDER IN CONNECTION WITH THE AMENDMENT:
o Although the Partnership's Agreement of Limited Partnership provides
that the Partnership will terminate in the year 2005, if the Amendment
is adopted, you may not be able to exit from the Partnership until a
termination of the Partnership in December 31, 2024, or if this
termination date is extended, until such extended date. The General
Partner cannot predict when any of the Properties will be sold or
otherwise disposed of.
o The General Partner and its affiliates have substantial conflicts of
interest with respect to the Amendment. Continuation of the
Partnership beyond 2005 will result in the General Partner and its
affiliates continuing to receive management fees from the Partnership.
These fees would not continue to be payable beyond 2005 if the
Partnership were liquidated in 2005.
Questions and requests for assistance may be directed to: THE ALTMAN
GROUP, INC., at its address set forth below.
RISK FACTORS
There are risks associated with the approval and the rejection of the
Amendment. In addition, the General Partner is an affiliate of AIMCO Properties,
which, together with its affiliates, may have interests that conflict with the
interests of the Limited Partners. You should consider the following risks
carefully:
RISKS IF THE AMENDMENT IS APPROVED
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF
PROPERTIES. The General Partner proposes to continue to operate the Partnership
and has no current intention to sell the Properties and liquidate the
Partnership. Thus, the Amendment reduces the likelihood that a Limited Partner
will receive the return of his or her investment in the Partnership through a
sale of the Properties, particularly in the near term. It is not currently known
when any Property may be sold. There may be no way to liquidate your investment
in the Partnership in the future until all Properties are sold.
Your General Partner regularly evaluates whether any of the Properties
should be sold by considering various factors, such as the Partnership's
financial position, prevailing conditions in real estate and capital markets
conditions, availability of favorable financing, tax considerations, and whether
a sale would be in the best interests of the Partnership and the Limited
Partners. At the current time, the General Partner is of the opinion that the
short amortization schedules and resulting high monthly debt service payments
associated with the current loans make the Properties unattractive to
purchasers.
The General Partner cannot predict when any of the Partnership's
Properties will be sold or otherwise disposed of. If the Amendment is approved,
you may not be able to exit from the Partnership until a termination of the
Partnership in December 31, 2024, or if the termination date is extended, until
that extended date.
AFFILIATES OF THE GENERAL PARTNER WILL CONTINUE TO RECEIVE FEES.
Affiliates of the General Partner manage the properties and receive management
fees equal to 5% of gross receipts from the properties. The Partnership paid
affiliates of your General Partner approximately $177,000 and $207,000 in
management fees during the years ended December 31, 2003 and December 31, 2002,
respectively. Affiliates of the General Partner received reimbursement of
accountable administrative expenses amounting to approximately $216,000 and
$361,000 during the years ended December 31, 2003 and
3
December 31, 2002, respectively. At December 31, 2003, the Partnership owed an
affiliate of the General Partner $239,000 in accrued accountable administrative
expenses.
The General Partner is also entitled to receive a payment for
non-accountable expenses up to a maximum of $100,000 per year. The General
Partner did not receive any such reimbursement for the years ended December 31
2003 and December 31, 2002.
Upon the sale of the Partnership's properties, the General Partner will
be entitled to an incentive compensation fee equal to a declining percentage of
the difference between the total amount distributed to limited partners and the
appraised value of their investment at February 1, 1992. The percentage amount
to be realized by the General Partner, if any, will be dependent upon the year
in which the property is sold. Payment of the incentive compensation fee is
subordinated to the receipt by the limited partners, of: (a) distributions from
capital transaction proceeds of an amount equal to their 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 December 31, 2003, an incentive
management fee of approximately $290,000 has been accrued related to the sale of
the Village in 1998. The General Partner was not entitled to receive an
Incentive Compensation Fee from the sale of Palisades Apartments.
Your General Partner, 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. At December 31, 2003, the
Partnership has a balance of approximately $3,041,000 under this Partnership
Revolver, which includes accrued interest of approximately $20,000. During the
years ended December 31, 2003 and 2002, interest on the advances, at the rate of
prime plus 2%, or 6.00% at December 31, 2003, was approximately $172,000 and
$94,000, respectively.
The Partnership insures the Properties up to certain limits through
coverage provided by an affiliate of your General Partner, which is generally
self-insured for a portion of losses and liabilities related to workers
compensation, property casualty and vehicle liability. The Partnership insures
the Properties above those limits through insurance policies obtained by
Apartment Investment and Management Company ("AIMCO") from insurers unaffiliated
with the General Partner. Together with its subsidiaries, AIMCO Properties
conducts substantially all of the operations of AIMCO, which is a real estate
investment trust that owns and manages multifamily apartment properties
throughout the United States. AIMCO Properties' general partner is a
wholly-owned subsidiary of AIMCO. During the year ended December 31, 2003 and
2002, the Partnership paid affiliates of the General Partner approximately
$43,000 and $102,000, respectively, for insurance coverage and fees associated
with policy claims administration.
The extension of the Partnership's term will result in these fees
continuing to be paid for a longer period than would be the case if the term of
the Partnership expired in 2005. Therefore, the interests of the General Partner
and its affiliates in continuing the Partnership may be different than those of
the Limited Partners who desire to have the Partnership dissolved and liquidated
earlier. See "Security Ownership of Certain Beneficial Owners and Management."
THERE IS NO ACTIVE TRADING MARKET FOR YOUR UNITS. Although the Units
are registered with the Securities and Exchange Commission (the "SEC"), there is
no active trading market for the Units. There may be a limited number of
prospective buyers for your Units in the future, and you may find it difficult
to liquidate your investment at a price that exceeds the amounts you might
receive on the liquidation and
4
dissolution of the Partnership. The General Partner cannot predict when any of
the Properties will be sold or otherwise disposed of. If the Amendment is not
approved, your Partnership will terminate on December 31, 2005; if the Amendment
is approved, you may not be able to exit from the Partnership until December 31,
2024, or if this termination date is further extended, until such extended date.
YOU MAY BE REQUIRED TO HOLD YOUR UNITS INDEFINITELY. It is not known
whether or when any of the Properties may ultimately be sold. Therefore, there
may be no way to liquidate your investments in the Partnership in the future
until the Properties are sold and your Partnership is liquidated. The General
Partner is exploring the possibility of a sale of the Properties, and whether it
is in the interest of the Partnership to divest these Properties in the near
term. However, the General Partner believes that the short amortization
schedules and resulting high monthly debt service payments associated with the
current loans make the Properties unattractive to purchasers at this time.
THE VALUE OF THE PROPERTIES MAY DECLINE, AND YOUR INVESTMENT WILL
CONTINUE TO BE AT RISK. The Partnership will continue to bear the investment
risk associated with the continued ownership of the Properties. The future
success of the Partnership will depend upon many factors beyond the control of
the General Partner, including competitive activity, the need for capital
expenditures, prevailing economic and market conditions and financial, business
and other factors. These factors, and others, may cause the value of the
Properties and the Partnership to decline.
YOUR PREFERRED RETURNS ACCRUE AT A SIMPLE INTEREST RATE. Pursuant to
the terms of the Partnership Agreement, each Limited Partner is entitled to
certain cumulative preferred returns with respect to certain distributions.
Those preferred returns are computed on a simple interest basis. Based on those
computations, the General Partner is entitled, after the Limited Partners
receive their preferred returns, to special distributions computed as a
percentage of the gross sales price of properties sold and additional cash from
sales or refinancing and working capital reserves available for distribution. To
the extent that the Partnership's assets accrete value at a rate that exceeds
the preferred returns, the value of the preferred returns available to the
Limited Partners will be lower over time, relative to a return based on a
compounded interest rate. Although your General Partner regularly evaluates
whether the Properties should be sold, if the term of the Partnership is
extended, the General Partner will not be required to sell the Properties until
the end of the extended term.
AIMCO PROPERTIES AND ITS AFFILIATES CONTROL YOUR PARTNERSHIP. Decisions
with respect to the day-to-day management of your Partnership are the
responsibility of the General Partner. The General Partner is affiliated with
AIMCO Properties, which may control actions of the General Partner. In addition,
AIMCO Properties and its affiliates hold 53,890, or 65.31%, of the outstanding
Units. One of AIMCO Properties' affiliates, with respect to 37,149, or 45.02%,
of the outstanding Units, previously agreed to vote such Units (i) against any
proposal to increase the fees and other compensation payable by the Partnership
to the General Partner and any of its affiliates, and (ii) with respect to any
proposal made by the General Partner or any of its affiliates, in proportion to
votes cast by other unitholders. Under the Partnership Agreement, Limited
Partners holding a majority of the outstanding Units must approve certain
transactions, including certain amendments to the Partnership Agreement and the
sale of all or substantially all of the Partnership's assets. AIMCO Properties
and its affiliates can significantly influence, and may have the ability to
control under certain circumstances, some voting decisions with respect to the
Partnership.
RISKS IF THE AMENDMENT IS NOT APPROVED
THE PARTNERSHIP MAY LOSE THE PROPERTIES. If the Amendment is not
adopted and the term of the Partnership not extended by November 1, 2004, an
event of default will occur under the Loan and the Partnership could lose the
Oakwood Property as a result of the exercise of remedies by the Lender.
5
Further, if the Oakwood Property is sold or lost through the exercise of
remedies by the Lender, the Partnership will recognize taxable income from the
disposition of the Oakwood Property equal to the difference between the
proceeds, if any, and the Partnership's basis in the Oakwood Property, and,
potentially, due to cancellation of indebtedness. Any taxable income would be
allocated to partners, and, depending on the purchase price and related sales
costs, a partner's tax liability could be greater than the funds, if any, it
receives from the Partnership. If the Partnership sells the Oakwood Property in
a "forced sale," the General Partner is of the opinion that its negotiating
leverage will be greatly reduced, and the net proceeds to the Partnership and
the Limited Partners would likely be lower than if the Oakwood Property were
sold over time in an orderly manner.
THE PARTNERSHIP WILL TERMINATE ON DECEMBER 31, 2005. If the Amendment
is not adopted, the term of the Partnership will terminate on December 31, 2005,
the Partnership will dissolve and the General Partner will liquidate all of the
Partnership's remaining assets, including the Properties to the extent not sold
or lost as a result of an exercise of remedies by the lenders, as soon as
reasonably practicable. In this case, the sales price for the Properties may be
less than if the General Partner had greater control over the timing of the
sales, given current economic conditions and the local and sub-market conditions
where the Property is located.
YOU MAY RECOGNIZE GAIN IF THE PROPERTY IS SOLD OR THE LENDERS FORECLOSE
ON THE PROPERTIES. Any sale, exchange or other disposition of the Properties by
the Partnership, including by foreclosure, would likely result in the
recognition of gain or loss by the Partnership equal to the difference between
(i) the amount realized for the Properties and (ii) the Partnership's tax basis
(which has been reduced because of prior years' depreciation deductions) in the
Properties. The amount realized for each Property would be the selling price for
that Property, less any expenses of sale, plus any liabilities assumed by the
purchaser of the Property or liabilities that the purchaser takes the Property
subject to. In addition, the Partnership may recognize cancellation of
indebtedness ("COD") income to the extent it is unable to satisfy all other
Partnership indebtedness that is not assumed by the purchaser of the Properties,
or if the lenders foreclose on the Properties. Any taxable gain or loss and COD
income will pass through to the partners of the Partnership. See "Material U.S.
Federal Income Tax Consequences" below.
DISTRIBUTIONS FROM YOUR PARTNERSHIP MAY NOT BE SUFFICIENT TO COVER
CURRENT TAX LIABILITIES OF THE PARTNERS. As noted above, if the Oakwood Property
is sold or lost through the exercise of remedies by the lenders, the Partnership
will recognize taxable income from the disposition of the Oakwood Property equal
to the difference between the proceeds, if any, and the Partnership's basis in
the Oakwood Property, and, potentially, due to cancellation of indebtedness. Any
taxable income would be allocated to partners, and, depending on the purchase
price and related sales costs, a partner's tax liability could be greater than
the funds, if any, it receives from the Partnership. If the Partnership sells
the Oakwood Property in a "forced sale," the General Partner is of the opinion
that its negotiating leverage would be greatly reduced, and the net proceeds to
the Partnership and the Limited Partners would likely be lower than if the
Properties were sold over time in an orderly manner.
NO APPRAISAL RIGHTS
Limited Partners are not entitled to dissenters' appraisal rights under
California law or the Partnership Agreement in connection with the Amendment.
6
GENERAL PARTNER'S RECOMMENDATION
The General Partner recommends that Limited Partners consent to the
Amendment. The General Partner is of the opinion that the Amendment is in the
best interests of the Partnership and its Limited Partners.
In addition, the General Partner believes that the Amendment is in the
best interest of the Limited Partners because a sale of the Properties now, and
the liquidation of the Partnership's assets in 2005, will be taxable events to
the Partnership, which will equal the difference between the proceeds, if any,
and the Partnership's basis in the Properties, and, potentially, due to
cancellation of indebtedness. Any taxable income would be allocated to partners,
and, depending on the purchase price and related sales costs, a partner's tax
liability could be greater than the funds, if any, it receives from the
Partnership. If the Partnership sells the Oakwood Property in a "forced sale,"
the General Partner is of the opinion that its negotiating leverage would be
greatly reduced, and the net proceeds to the Partnership and the Limited
Partners would likely be lower than if the Oakwood Property were sold over time
in an orderly manner. The General Partner recommends that you consult with your
tax and financial advisors as to the ultimate potential impact a sale of the
Oakwood Property and a liquidation of the Partnership's assets will have on you.
Conversely, if the Amendment is approved, the Properties will not be
required to be sold and the Partnership will not expire until December 31, 2024.
As economic conditions improve in the markets where the Partnership properties
are located and rental revenues increase, the value of the properties are
expected to increase. By approving the Amendment, the General Partner may be in
a better position to maximize the value of the properties. In addition, the
Amendment would not prohibit or unduly restrict the Partnership's ability to
sell the Properties or other assets of the Partnership in the future prior to
the expiration of the extended term of the Partnership.
THE AMENDMENT
The Amendment of Section 4 of the Partnership Agreement will read in
its entirety as follows: "The Partnership commenced as of the 15th day of July,
1981, and shall continue until December 31, 2024, unless previously terminated
in accordance with the provisions of this Partnership Agreement."
CONFLICTS OF INTEREST
The General Partner is an affiliate of AIMCO Properties. AIMCO
Properties and its affiliates, including the General Partner may have interests
that conflict with the interests of the Limited Partners. You should consider
these factors before consenting to the Amendment or the selection of counsel.
Affiliates of the General Partner Will Continue to Receive Fees.
Affiliates of the General Partner manage the Properties and receive management
fees equal to 5% of gross receipts from the Properties. The Partnership paid
affiliates of your General Partner approximately $177,000 and $207,000 in
management fees during the years ended December 31, 2003 and December 31, 2002,
respectively. Affiliates of the General Partner received reimbursement of
accountable administrative expenses amounting to approximately $216,000 and
$361,000 during the years ended December 31, 2003 and December 31, 2002,
respectively. At December 31, 2003, the Partnership owed an affiliate of the
General Partner $239,000 in accrued accountable administrative expenses.
The General Partner is also entitled to receive a payment for
non-accountable expenses up to a maximum of $100,000 per year. The General
Partner did not receive any such reimbursement for the
7
years ended December 31, 2003 and 2002.
Upon the sale of the Properties, the General Partner will be entitled
to an Incentive Compensation Fee equal to a declining percentage of the
difference between the total amount distributed to limited partners and the
appraised value of their investment at February 1, 1992. The percentage amount
to be realized by the General Partner, if any, will be dependent upon the year
in which the property is sold. Payment of the incentive compensation fee is
subordinated to the receipt by the limited partners, of: (a) distributions from
capital transaction proceeds of an amount equal to their 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 December 31, 2003, an incentive
management fee of approximately $290,000 has been accrued related to the sale of
the Village in 1998. The General Partner was not entitled to receive an
incentive compensation fee from the sale of Palisades Apartments.
Your General Partner, 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. At December 31, 2003, the
Partnership has a balance of approximately $3,041,000 under this Partnership
Revolver, which includes accrued interest of approximately $20,000. During the
years ended December 31, 2003 and 2002, interest on the advances, at the rate of
prime plus 2%, or 6.00% at December 31, 2003, was approximately $172,000 and
$94,000, respectively.
Beginning in 2001, the Partnership began insuring the Properties up to
certain limits through coverage provided by an affiliate of your General Partner
which is generally self-insured for a portion of losses and liabilities related
to workers compensation, property casualty and vehicle liability. The
Partnership insures the Properties above those limits through insurance policies
obtained by AIMCO Properties from insurers unaffiliated with the General
Partner. During the year ended December 31, 2002 and 2001, the Partnership paid
affiliates of the General Partner approximately $43,000 and $102,000,
respectively, for insurance coverage and fees associated with policy claims
administration.
The extension of the Partnership's term will likely result in these
fees continuing to be paid for a longer period than would be the case if the
term of the Partnership expired in 2005. Therefore, the interests of the General
Partner and its affiliates in continuing the Partnership may be different than
those of the Limited Partners who desire to have the Partnership dissolved and
liquidated more quickly.
AIMCO Properties May Buy Units in Future Tender Offers. AIMCO
Properties is affiliated with the General Partner. From time to time, AIMCO
Properties and its affiliates have purchased Units of the Partnership in the
past with a view to making a profit. AIMCO Properties and its affiliates hold
53,890, or 65.31%, of the outstanding Units. If the Partnership is liquidated
and dissolved pursuant to its original term, AIMCO Properties and its affiliates
will not have future opportunities to make a profit on the purchase of Units.
INFORMATION ABOUT YOUR PARTNERSHIP
GENERAL. Your Partnership was organized under the Uniform Limited
Partnership Act of the State of California in July, 1981 for the purpose of
investing in, acquiring, managing and ultimately selling income-producing real
properties. The General Partner is a wholly-owned subsidiary of AIMCO. The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2005. The
8
Partnership's principal executive offices are located at 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80327, and its telephone number is
(303) 757-8101.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). Through the Insignia Merger,
AIMCO also acquired 100% ownership interest in the entity that manages the
residential properties owned by your Partnership. On October 31, 1998, IPT and
AIMCO entered into an agreement and plan of merger, dated as of October 1, 1998,
pursuant to which IPT merged with AIMCO on February 26, 1999. AIMCO then
contributed IPT's interest in AIMCO IPLP, LP, (formerly known as Insignia
Properties, L.P)., IPT's operating partnership, to AIMCO's wholly owned
subsidiary, AIMCO/IPT, Inc. AIMCO also replaced IPT as the sole general partner
of AIMCO IPLP, LP, (formerly known as Insignia Properties L.P). As a result, the
General Partner is an indirect, wholly owned subsidiary of AIMCO/IPT and the
property manager of your Partnership's properties is our indirect, wholly owned
subsidiary.
The Partnership does not have any employees. Management and
administrative services are provided by the General Partner and by agents
retained by the General Partner. An affiliate of the General Partner has been
providing such property management services.
THE PROPERTIES
The properties controlled by your Partnership are: Oakwood Village at
Lake Nan Apartments, a 278-unit apartment complex located in Orlando, Florida
and Willow Park on Lake Adelaide, a 185-unit apartment complex, located in
Altamonte Springs, Florida.
Set forth below is the gross carrying value, accumulated depreciation,
depreciable life, method of depreciation, and Federal tax basis for each of the
properties as of December 31, 2003.
<Table>
<Caption>
Gross
Carrying Federal
Value Accumulated Depreciable Tax Basis
Properties (in thousands) Depreciation Life Method (in thousands)
- ---------- -------------- ------------ ----------- ------ --------------
Willow Park $ 8,253 $6,825 5-30yrs S/L 1,236
Oakwood Village 10,984 9,449 5-30yrs S/L 1,497
Totals $19,237 $16,274 2,733
</Table>
The following table sets forth certain information relating to the
loans encumbering the properties:
<Table>
<Caption>
Principal
Balance at Principal
December 31, Stated Due at
2003 Interest Period Maturity Maturity
Properties (in thousands) Rate Amortized Date (in thousands)
- ---------- -------------- ------------ ----------- -------- --------------
Willow Park $ 3,627 8.02% 20yrs 1/1/20 $ --
Oakwood Village $ 6,522 7.18% 20yrs 3/1/21 --
Totals $10,149 --
</Table>
9
The following table sets forth the average rental rates and occupancy
for 2003 and 2002 for the properties:
<Table>
<Caption>
Average Annual
Rental Rates Average Annual
(per unit) Occupancy
------------------------ -----------------------
Properties 2003 2002 2003 2002
- ---------- ---- ---- ---- ----
Willow Park $7,383 $7,526 94% 94%
Oakwood Village 7,669 $7,487 93% 93%
</Table>
The following table sets forth the real estate taxes and rates in 2002
for each property:
<Table>
<Caption>
2003
Billing 2003
(in thousands) Rate
-------------- ----
Willow Park $94 1.89%
Oakwood Village 122 1.79%
</Table>
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF INVESTMENTS.
In general, your General Partner, together with the property manager, which is
an affiliate of AIMCO Properties, regularly evaluates the Properties by
considering various factors, such as the Partnership's financial position and
real estate and capital markets conditions. The General Partner monitors their
specific locale and sub-market conditions (including stability of the
surrounding neighborhood), evaluating current trends, competition, new
construction and economic changes. It oversees each asset's operating
performance and continuously evaluates the physical improvement requirements. In
addition, the financing structure for the Properties (including any prepayment
penalties), tax implications, availability of attractive mortgage financing to a
purchaser, and the investment climate are all considered. Any of these factors,
and possibly others, could potentially contribute to any decision by the General
Partner to sell, refinance, upgrade with capital improvements or hold any of the
Properties. If rental market conditions improve, the level of distributions
might increase over time. It is possible that the private resale market for the
Properties could improve over time, making a sale of the Properties in a private
transaction at some point in the future a more viable option than it is
currently. The General Partner is of the opinion that a sale of the Properties
at the present time would not adequately reflect the future prospects of the
Properties. Another significant factor considered by your General Partner is the
likely tax consequences of a sale of any of the Properties.
ADDITIONAL INFORMATION. Your Partnership, AIMCO and AIMCO Properties
are subject to the information and reporting requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, file reports and
other information with the SEC relating to the business, financial condition and
other matters of each of the foregoing entities. Such reports and other
information may be inspected at the public reference facility maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1200, Washington, D.C.
20549. Copies of such material can also be obtained from the Public Reference
Room of the SEC in Washington, D.C. at prescribed rates. The SEC also maintains
a site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC.
10
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material U.S. Federal income tax
consequences is based upon current U.S. Federal tax law which is subject to
change, possibly with retroactive effect. This summary is for general
information only and does not address all aspects of U.S. Federal income
taxation that may be relevant in the particular circumstances of each Limited
Partner or to Limited Partners subject to special treatment under the Code. In
addition, this summary does not address any state, local or foreign tax
consequences. No ruling from the Internal Revenue Service ("IRS") will be
requested with respect to the U.S. Federal income tax consequences of the
liquidation and dissolution of the Partnership, and, as such, there can be no
assurance that the IRS will agree with the summary set forth herein.
There will be no Federal or state income tax consequences resulting
solely from the approval of the Amendment extending the term of the Partnership
Agreement. However, failure to extend the term of the Partnership will be an
event of default. If the Partnership is required to sell the Oakwood Property,
or the Lender forecloses on the Oakwood Property, the Partnership likely would
recognize gain or loss, which would pass through to the partners of the
Partnership.
TAX CONSEQUENCES OF SALE OF PARTNERSHIP PROPERTY OR FORECLOSURE. The
description set forth below is a general description of the tax consequences
that a partner of the Partnership may incur as a result of a sale of any of the
Properties or a foreclosure by the lenders in the 2004 tax year, each partner
should consult with his or her own tax advisor to determine his or her
particular tax consequences.
Any sale, exchange or other disposition of any of the Properties by the
Partnership, including by foreclosure, would likely result in the recognition of
gain or loss by the Partnership equal to the difference between (i) the amount
realized for such Property and (ii) the Partnership's tax basis (which has been
reduced because of prior years' depreciation deductions) in such Property. In
the case of a foreclosure the amount realized would generally include the full
amount of the debt to which such Property is subject. The amount realized for
each Property would be the proceeds, if any, received for such Property, less
any expenses of sale, plus any liabilities assumed by the purchaser of the
Property or liabilities subject to which the purchaser takes the Property. In
addition, the Partnership may recognize cancellation of indebtedness ("COD")
income to the extent it is unable to satisfy all other Partnership indebtedness
that is not assumed by the purchaser of such Property, or possibly if the
lenders foreclose on such Property. Any taxable gain or loss and COD income will
pass through to the partners of the Partnership.
Any gain or loss recognized as a result of the transfer of a Property
may be characterized for taxation purposes as ordinary or capital, or a
combination of both. To the extent that any part of a Property being sold
consists of depreciable personal property under Internal Revenue Code of 1986,
as amended (the "Code") Section 1245 to the extent that the Partnership were
considered a dealer with respect to the Property or possibly in certain other
circumstances, gain on a sale of such Property may be treated as ordinary
income. Some portion of any gain recognized on a Property may be considered
"unrecaptured section 1250 gain" (generally, prior depreciation deductions with
respect to real property) that is taxable at a maximum Federal individual rate
of 25%. Generally, the unrecaptured Code Section 1250 gain tax rate applies only
to individuals and certain other noncorporate taxpayers. Gain in excess of
ordinary income and unrecaptured Code Section 1250 gain generally will be taxed
as Code Section 1231 gain, which may be taxed at capital gain rates (currently,
the maximum federal capital gains tax rate applicable to individuals and certain
other noncorporate taxpayers is generally 15%) depending upon your individual
tax circumstances. Any loss from a disposition of such Property may be
characterized as ordinary loss, subject to certain rules that may require a
partner to re-characterize the loss as capital loss depending upon such
partner's particular circumstances. Any COD income would generally be taxable as
ordinary income (subject to certain possible elections and exclusions) Ordinary
income is generally taxed
11
at a maximum Federal individual rate of 35.0%. The rates set forth above are the
Federal tax rates that currently are in effect for 2004. In addition, the
partners may also be subject to state and local taxes.
The proceeds available for distribution to the partners of the
Partnership in the event of a sale of any Property or a foreclosure by the
lenders may be less than any tax liabilities resulting from such sale or
foreclosure. Accordingly, a Limited Partner may need to use funds from other
sources to satisfy any such tax liabilities.
If a partner possesses suspended tax losses, tax credits, or other
items of tax benefit, a partner may be able to use such items to reduce any tax
liability that arises with respect to any gain recognized as a result of the
sale of any of the Properties or a foreclosure by the lenders.
SINCE THE TAX CONSEQUENCES TO A PARTICULAR PARTNER OF, A SALE OF THE
PARTNERSHIP'S ASSETS, OR A FORECLOSURE ARE DEPENDENT IN PART ON FACTS THAT ARE
UNIQUE TO EACH SUCH PARTNER, EACH PARTNER IS URGED TO CONSULT HIS OR HER TAX
ADVISORS AS TO THE EXACT CONSEQUENCES TO HIM OR HER OF SUCH ACTIONS, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person or entity was known by the General
Partner to be the beneficial owner of more than 5% of the Units of the
Partnership. Neither the General Partner nor any director or officer of the
General Partner owns any Units.
<Table>
<Caption>
ENTITY NUMBER OF UNITS PERCENT OF TOTAL
- ------ --------------- ----------------
AIMCO IPLP, LP (an affiliate of AIMCO) 37,149 45.02%
AIMCO Properties, LP (an affiliate of AIMCO) 16,741 20.29%
</Table>
AIMCO IPLP, LP is indirectly ultimately owned by AIMCO. The principal
executive offices of AIMCO IPLP, LP, AIMCO Properties and AIMCO are located at
4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, and their
telephone number is (303) 757-8101.
RECORD DATE; CONSENTS REQUIRED
The Partnership has fixed August 19, 2004 as the Record Date for
determining Limited Partners entitled to notice of and to consent to the
Amendment. Only Limited Partners of record on the Record Date may execute and
deliver a Consent Form.
Approval of the Amendment requires the affirmative consent of Limited
Partners who own more than 50% of the Partnership's outstanding Units. As of the
Record Date, there were 82,513 Units issued and outstanding. AIMCO Properties
and its affiliates currently own 53,890, or approximately 65.31%, of the
outstanding Units. With respect to 37,149, or 45.02%, of the outstanding Units,
one of AIMCO
12
Properties' affiliates previously agreed to vote such Units (i) against any
proposal to increase the fees and other compensation payable by the Partnership
to the General Partner and any of its affiliates, and (ii) with respect to any
proposal made by the General Partner or any of its affiliates, in proportion to
votes cast by other Limited Partners, and such affiliate will vote those Units
accordingly. AIMCO Properties and its affiliates have notified the General
Partner that, with respect to 30,448 Units, or 36.9%, of the outstanding Units,
consisting of Units not subject to such restriction plus a corresponding
proportion of the restricted limited partnership units, they will consent in
writing to the Amendment. Abstentions will not be counted as consents in favor
of the Amendment. Therefore, the written consent of other owners not affiliated
with AIMCO Properties of 5,942 Units, or approximately 7.20%, of the total
outstanding Units, is required for approval of the Amendment. The Amendment will
become effective on the Expiration Date, provided the requisite consents from
Limited Partners have been received.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, e-mail and in person.
Solicitations may be made by the Solicitation Agent, or by representatives of
the General Partner, none of whom will receive additional compensation for such
solicitations. The cost of preparing, assembling, printing and mailing this
Consent Solicitation Statement and the enclosed Consent Form will be borne by
the Partnership. The fees and expenses of the Solicitation Agent are expected to
be approximately $5,000 and will be borne by the Partnership.
CONSENT PROCEDURES
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE AMENDMENT SHOULD DO SO BY
MARKING THE APPROPRIATE BOX ON THE CONSENT FORM INCLUDED HEREWITH, AND SIGNING,
DATING AND DELIVERING THE CONSENT FORM TO THE SOLICITATION AGENT BY MAIL IN THE
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE, BY OVERNIGHT
COURIER OR BY FACSIMILE AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH BELOW AND
ON THE CONSENT FORM, ALL IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND THEREIN.
All Consent Forms that are properly completed, signed and delivered and
not properly revoked (See "Revocation of Instructions" below) prior to the
Expiration Date, will be given effect in accordance with the specifications
thereof. IF A CONSENT FORM IS DELIVERED AND NONE OF THE "CONSENTS," THE
"WITHHOLDS CONSENT" NOR THE "ABSTAIN" BOX IS MARKED, BUT THE CONSENT FORM IS
OTHERWISE PROPERLY COMPLETED AND SIGNED, THE LIMITED PARTNER WILL BE DEEMED TO
HAVE CONSENTED TO THE AMENDMENT.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the Units is registered. If the Units to which a
Consent Form relates are held by two or more joint holders, all such holders
should sign the Consent Form. If a Consent Form is signed by a trustee, partner,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary, agency or representative capacity, such
person must so indicate when signing and submit with the Consent Form evidence
satisfactory to the Partnership of authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect a Limited
Partner's right to sell or transfer the Units. All Consent Forms received by the
Partnership or the Solicitation Agent (and not properly revoked) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
Units subsequent to the Record Date, unless the Limited Partner revokes such
Consent Form prior to midnight, New York City time, on the Expiration Date by
following the procedures set forth under "Revocation of Instructions" below.
13
All questions as to the validity, form and eligibility (including time
of receipt) regarding consent procedures will be determined by the General
Partner in its sole discretion, which determination will be conclusive and
binding. The Partnership reserves the right to reject any or all Consent Forms
that are not in proper form. The Partnership also reserves the right to waive
any defects, irregularities or conditions of delivery as to particular Consent
Forms. Unless waived, all such defects or irregularities in connection with the
deliveries of Consent Forms must be cured within such time as the General
Partner determines. Neither the General Partner nor any of its affiliates or any
other persons shall be under any duty to give any notification of any such
defects of irregularities or waivers, nor shall any of them incur any liability
for failure to give such notification. Deliveries of Consent Forms will not be
deemed to have been made until any irregularities or defects therein have been
cured or waived. The interpretations of the terms and conditions of this
solicitation by the General Partner shall be conclusive and binding.
REVOCATION OF INSTRUCTIONS
Any Limited Partner who has delivered a Consent Form may revoke the
instructions set forth in such Consent Form by delivering to the Solicitation
Agent a written notice of revocation prior to midnight, New York City time, on
the Expiration Date. In order to be effective, a notice of revocation of the
instructions set forth in a Consent Form must (i) contain the name of the person
who delivered the Consent Form, (ii) be in the form of a subsequent Consent Form
marked either as "CONSENTS," "WITHHOLDS CONSENT" or "ABSTAINS," as the case may
be, or in a writing delivered to the Solicitation Agent stating that the prior
Consent Form is revoked, (iii) be signed by the Limited Partner in the same
manner as the original signature on the Consent Form, and (iv) be received by
the Solicitation Agent prior to midnight, New York City time, on the Expiration
Date at its address set forth on the Consent Form. A purported notice of
revocation that lacks any of the required information, is dispatched to an
improper address or is not received in a timely manner will not be effective to
revoke the instructions set forth in a Consent Form previously given. A
revocation of the instructions set forth in a Consent Form can only be
accomplished in accordance with the foregoing procedures. NO LIMITED PARTNER MAY
REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER MIDNIGHT, NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
General Partner
THE SOLICITATION AGENT IS
THE ALTMAN GROUP, INC.
<Table>
By Mail, Overnight Courier or Hand:
By Facsimile For Information please call:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 206-0007
Lyndhurst, New Jersey 07071
</Table>
14
APPENDIX
PRELIMINARY COPY
NATIONAL PROPERTY INVESTORS 5
CONSENT OF LIMITED PARTNER
The undersigned, a limited partner of NATIONAL PROPERTY INVESTORS 5
(the "Partnership"), and the holder of units ("Units") of limited partnership
interest in the Partnership, acting with respect to all of the Units owned by
the undersigned, hereby:
[ ] Consents [ ] Withholds Consent [ ] Abstains
with respect to an amendment (the "Amendment") of Section 4 of the Partnership's
Agreement of Limited Partnership to read in its entirety as follows:
"The Partnership commenced as of the 15th day of July, 1981 and shall
continue until December 31, 2024, unless previously terminated in
accordance with the provisions of this Partnership Agreement."
IF NO ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT
FORM WILL BE DEEMED TO BE A CONSENT.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement, dated September __, 2004. THIS CONSENT IS SOLICITED ON BEHALF OF
NATIONAL PROPERTY INVESTORS 5, BY NPI EQUITY INVESTMENTS, INC., THE GENERAL
PARTNER. A fully completed, signed and dated copy of this Consent Form should be
sent to the, by mail or overnight courier to the address specified below, or by
fax to the fax number specified below, prior to midnight, New York City time on
_______, 2004, unless extended by the Partnership.
Dated: ____________, 2004
By:
---------------------------------------------------------
- ------------------------------------------------------------
Please Print Name
If held jointly:
By:
---------------------------------------------------------
- ------------------------------------------------------------
Please Print Name
Please sign exactly as you hold your Partnership Units. When signing as an
attorney-in-fact, executors, administrator, trustee or guardian, please give
your full title. If an interest is jointly held, each holder should sign. If a
corporation, please sign in full corporate name by a duly authorized officer. If
a partnership, please sign in partnership name by a duly authorized person.
THE SOLICITATION AGENT IS
THE ALTMAN GROUP, INC.
<Table>
By Mail, Overnight Courier or Hand:
By Facsimile For Information please call:
1275 Valley Brook Avenue (201) 460-0050 TOLL FREE (800) 206-0007
Lyndhurst, New Jersey 07071
</Table>