FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
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, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period.........to.........
Commission file number 0-9138
NATIONAL PROPERTY INVESTORS II
(Exact name of small business issuer as specified in its charter)
California 13-2906846
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's phone 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 II
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1996
<TABLE>
<CAPTION>
<S>
Assets <C> <C>
Cash and cash equivalents $ 242
Escrow for taxes 90
Other assets 90
Investment properties:
Land $ 352
Buildings and related personal property 5,223
5,575
Less accumulated depreciation (3,985) 1,590
$ 2,012
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 131
Tenant security deposits 53
Mortgage note payable 1,149
Partners' Capital (Deficit):
Limited partners' (45,656 units outstanding) $ 702
General partner's (23) 679
$ 2,012
<FN>
See Notes to Financial Statements
</TABLE>
b) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 294 $ 280 $ 594 $ 577
Other income 17 18 32 31
Total revenues 311 298 626 608
Expenses:
Operating 198 184 381 347
Interest 30 30 57 64
Depreciation 45 45 88 110
General and administrative 48 52 82 100
Total expenses 321 311 608 621
Net (loss) income $ (10) $ (13) $ 18 $ (13)
Net (loss) income allocated
to general partner (1%) $ -- $ -- $ -- $ --
Net (loss) income allocated
to limited partners (99%) (10) (13) 18 (13)
$ (10) $ (13) $ 18 $ (13)
Net (loss) income per
limited partnership unit $ (.22) $ (.28) $ .39 $ (.28)
<FN>
See Notes to Financial Statements
</TABLE>
c) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited General Limited
Partnership Partner's Partners'
Units Deficit Equity Total
<S> <C> <C> <C> <C>
Original capital contributions 45,656 $ 1 $ 22,828 $ 22,829
Partners' (deficit) capital at
December 31, 1995 45,656 $ (23) $ 684 $ 661
Net income for the six
months ended June 30, 1996 -- -- 18 18
Partners' (deficit) capital at
June 30, 1996 45,656 $ (23) $ 702 $ 679
<FN>
See Notes to Financial Statements
</TABLE>
d) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 18 $ (13)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 88 110
Amortization of mortgage costs -- 4
Change in accounts:
Escrow for taxes 50 (48)
Other assets (3) (7)
Accounts payable and accrued expenses (10) 26
Tenant security deposit liabilities (10) (10)
Net cash provided by operating activities 133 62
Cash flows from investing activities:
Property improvements and replacements (27) (19)
Net cash used in investing activities (27) (19)
Cash flows from financing activities:
Payments of mortgage note payable (80) (76)
Net cash used in financing activities (80) (76)
Net increase (decrease) in cash and cash equivalents 26 (33)
Cash and cash equivalents at beginning of period 216 330
Cash and cash equivalents at end of period $ 242 $ 297
Supplemental information:
Cash paid for interest $ 59 $ 60
<FN>
See Notes to Financial Statements
</TABLE>
e) NATIONAL PROPERTY INVESTORS II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors
II (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, 1996, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
1996. For further information, refer to the financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 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.
The following transactions with affiliates of Insignia Financial Group, Inc.
("Insignia"), National Property Investors, Inc.("NPI"), and affiliates of NPI
were charged to expense in 1996 and 1995:
For the Six Months Ended
June 30,
1996 1995
Property management fees (included in operating
expenses) $31,000 $30,000
Reimbursement for services of affiliates (included
in general and administrative expenses) 59,000 84,000
For the period from January 19, 1996, to June 30, 1996, the Partnership insured
its property 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 B - Transactions with Affiliated Parties (continued)
Included in operating expenses for the six months ended June 30, 1995, are
insurance premiums of approximately $20,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of NPI.
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia, a Delaware
corporation, all of the issued and outstanding common stock of NPI for an
aggregate purchase price of $1,000,000. The closing of the transactions
contemplated by the above mentioned agreement (the "Closing") occurred on
January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors to each
of those entities to be elected.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership has one investment property, Sugar Mill Apartments, located in
Melbourne, Florida. The average occupancy for the six month periods ended June
30, 1996 and 1995, was 93% and 94%, respectively.
The Partnership's net income for the six months ended June 30, 1996, was
approximately $18,000 compared to a net loss of approximately $13,000 for the
same period of 1995. The Partnership incurred a net loss of approximately
$10,000 for the three months ended June 30, 1996 compared to a net loss of
approximately $13,000 for the three months ended June 30, 1995. The increase in
net income for the six month period is attributable to decreases in depreciation
and general and administrative expenses. The decrease in depreciation expense
was due to approximately $396,000 of fixed assets becoming fully depreciated in
1995. The decrease in general and administrative expenses is due to a decrease
in cost reimbursements paid to affiliates of the Managing General Partner.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property 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, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
At June 30, 1996, the Partnership had unrestricted cash of $242,000 as compared
to $297,000 at June 30, 1995. Net cash provided by operating activities
increased primarily as a result of a decrease in escrows caused by a change in
the timing of the payment of the real estate taxes. The increase in cash used
in investing activities is due to an increase in property improvements. The
increase in cash used in financing activities is due to the payment of the
mortgage principal balance.
The Managing General Partner has extended to the Partnership a $300,000 line of
credit. At the present time, the Partnership has no outstanding amounts due
under this line of credit. Based on present plans, 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 property 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 $1,149,000 is based on a variable rate, amortized over a ten
year period so that the mortgage will be repaid on the maturity date of October
5, 2001, subject to the holder's right to call the mortgage at one year
intervals commencing October 5, 1994. If the mortgage is not called by the
holder, the Partnership is required to pay an "extension fee" equal to one-half
on one percent (0.5%) of the then outstanding principal balance on the mortgage
for each year during which the mortgage is not so called. The Managing General
Partner is confident that the mortgage can be extended or replaced should the
holder elect to call the mortgage in October 1996. The Managing General Partner
currently is marketing the Partnership's investment property for sale. Future
cash distributions will depend on the levels of cash generated from operations,
a property sale, and the availability of cash reserves. No cash distributions
were paid in 1995 or during the first six months of 1996.
To date, limited partners have received cash in excess of their original
investment. Any additional return is dependent upon the operations and eventual
sales price of the Partnership's remaining property.
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, 1996.
SIGNATURE
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 II
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: August 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors II 1996 Second Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000216679
<NAME> NATIONAL PROPERTY INVESTORS II
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 242
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,575
<DEPRECIATION> 3,985
<TOTAL-ASSETS> 2,012
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,149
0
0
<COMMON> 0
<OTHER-SE> 679
<TOTAL-LIABILITY-AND-EQUITY> 2,012
<SALES> 0
<TOTAL-REVENUES> 626
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18
<EPS-PRIMARY> .39<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
