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 March 31, 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
(in thousands, except for unit data)
<TABLE>
<CAPTION>
March 31,
1996
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 254
Escrow deposits 66
Security deposits and other assets 101
Investment properties:
Land $ 352
Buildings and related personal property 5,207
5,559
Less accumulated depreciation (3,941) 1,618
Total assets $ 2,039
Liabilities and Partners' Equity
Accounts payable and accrued expenses $ 104
Tenants' security deposits payable 57
Mortgage payable 1,189
Partners' Equity (Deficit):
Limited partners' (45,656 units outstanding) $ 712
General partners' (23) 689
Total liabilities and partners' equity $ 2,039
<FN>
See Notes to Financial Statements
</TABLE>
b) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 300 $ 297
Other income 15 13
Total revenues 315 310
Expenses:
Operating 183 163
Depreciation 43 65
General and administrative 34 48
Mortgage interest 27 34
Total expenses 287 310
Net income $ 28 $ --
Net income allocated to general partners (1%) $ -- $ --
Net income allocated to limited partners (99%) 28 --
Net income $ 28 $ --
Net income per limited partnership unit $ .61 $ --
<FN>
See Notes to Financial Statements
</TABLE>
c) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited General Limited
Partnership Partners' Partners' Total
Units Deficit Equity Equity
<S> <C> <C> <C> <C>
Original capital contributions 45,656 $ 1 $ 22,828 $ 22,829
Partners' (deficit) equity at
December 31, 1995 45,656 $ (23) $ 684 $ 661
Net income for the three
months ended March 31, 1996 -- -- 28 28
Partners' (deficit) equity at
March 31, 1996 45,656 $ (23) $ 712 $ 689
<FN>
See Notes to Financial Statements
</TABLE>
d) NATIONAL PROPERTY INVESTORS II
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except for unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 28 $ --
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 43 65
Amortization of mortgage costs -- 3
Change in accounts:
Escrow deposits 74 (24)
Security deposits and other assets (14) (2)
Accounts payable and accrued expenses (36) 13
Tenants' security deposits payable (6) 2
Net cash provided by operating activities 89 57
Cash flows from investing activities:
Property improvements and replacements (11) (17)
Net cash used in investing activities (11) (17)
Cash flows from financing activities:
Mortgage principal repayments (40) (37)
Net cash used in financing activities (40) (37)
Net increase in cash and cash equivalents 38 3
Cash and cash equivalents at beginning of period 216 330
Cash and cash equivalents at end of period $ 254 $ 333
Supplemental information:
Interest paid $ 30 $ 31
<FN>
See Notes to Financial Statements
</TABLE>
e) NATIONAL PROPERTY INVESTORS II
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited financial statements 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 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 month
period ended March 31, 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 Insignia Financial Group, Inc., National
Property Investors, Inc., and affiliates were charged to expense in 1996 and
1995:
For the Three Months Ended
March 31,
1996 1995
Property management fees (included in operating
expenses) $ 15,000 $ 15,000
Reimbursement for services of affiliates (included 25,000 41,000
in general and administrative expenses)
For the period from January 19, 1996, to March 31, 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 three months ended March 31, 1995, are
insurance premiums of approximately $10,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General Partner")
is the general partner of the Partnership. NPI Equity is a wholly owned
subsidiary of National Property Investors, Inc. ("NPI, Inc.") On August 17,
1995, the stockholders of NPI, Inc. entered into an agreement to sell to IFGP
Corporation, a Delaware corporation ("Insignia"), all of the issued and
outstanding common stock of NPI, Inc. for an aggregate purchase price of
$1,000,000. The closing of the transactions comtemplated by the above mentioned
agreement (the "Closing") occured on January 19, 1996.
Upon the closing, the officers and directors of NPI and NPI Equity 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's investment property consists of one apartment complex,
Sugar Mill Apartments, located in Melbourne, Florida. The average occupancy
for the three month periods ended March 31, 1996 and 1995 was 94% and 98%,
respectively. The decline in occupancy from 1995 to 1996 is attributable to a
higher level of turnover than in previous years from the student tenants.
The Partnership's net income for the three months ended March 31, 1996, was
approximately $28,000 versus breaking even for the same period of 1995. The
increase in net income is attributable to decreases in depreciation expense,
general and administrative expense and interest expense. 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 of the Managing General Partner; and
the decrease in interest expense is attributable to the amortization of the
mortgage principal balance. Additionally, there was an increase in other income
which was attributable to an increase in lease cancellation fees due to the
increased turnover. Partially offsetting these increases to income, was an
increase in operating expenses which is attributable to an increase in water
expenses due to two slab leaks which have now been repaired.
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 March 31, 1996, the Partnership had unrestricted cash of $254,000 as
compared to $333,000 at March 31, 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 along with an
increase in accounts payable and accrued expenses due to the prepayment of
rent. The decrease in cash used in investing activities is due to a decrease in
property replacements. The increase in cash used in financing activities is due
to the amortization of the mortgage principal balance.
The Managing General Partner has extended to the Registrant a $300,000 line
of credit. At the present time, the Registrant 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 Registrant'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 $1,189,000 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. 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 quarter 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 Registrant'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: Form 8-K dated January 19, 1996 was filed reporting
the change in control of the Registrant.
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.
Managing General Partner
/s/William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: May 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Properties Investors II 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 254
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 5,559
<DEPRECIATION> (3,941)
<TOTAL-ASSETS> 2,039
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,189
0
0
<COMMON> 0
<OTHER-SE> 689
<TOTAL-LIABILITY-AND-EQUITY> 2,039
<SALES> 0
<TOTAL-REVENUES> 315
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 287
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 28
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28
<EPS-PRIMARY> .61
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
