FORM 10-KSB- ANNUAL OR TRANSITIONAL REPORT
UNDER SECTION 13 OR 15(D)
U.S. SECURITIES AND EXCHANGE COMMISSION
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-9567
NATIONAL PROPERTY INVESTORS III
(Name of small business issuer in its charter)
California 13-2974428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year. $7,943,000
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days. Market value information
for Registrant's Partnership Interests is not available. Should a trading market
develop for these Interests, it is management's belief that such trading would
not exceed $25 million.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF THE BUSINESS
National Property Investors III (the "Partnership or the "Registrant") is a
California limited partnership formed as of February 1, 1979. The Partnership
is engaged in the business of operating and holding for investment, income
producing real estate properties. NPI Equity Investments, Inc., (the "Managing
General Partner or "NPI Equity") a Florida corporation, became the Partnership's
managing general partner on June 21, 1991, succeeding NPI Management Corp. (the
"Prior Managing General Partner"). The Managing General Partner is a wholly
owned subsidiary of National Property Investors, Inc. ("NPI, Inc.").
Reference is made to the Prospectus of the Partnership dated October 24, 1979,
as supplemented by Supplements dated January 24, 1980, April 24, 1980, July 16,
1980, September 3, 1980, October 2, 1980, and October 16, 1980, which have been
filed pursuant to Rules 424(b) and 424(c) under the Securities Act of 1933, as
amended, all of which are incorporated herein by reference. The Prospectus was
filed as part of the Partnership's Registration Statement pursuant to which
66,000 units of Limited Partnership Interest (the "Units") were registered. The
Partnership sold 48,049 units aggregating $24,025,000. The General Partner
contributed capital in the amount of $1,000 for a 1% interest in the
Partnership. As of December 24, 1980, the Partnership had invested all the net
proceeds available for investment in six apartment complexes, three of which
have been disposed of at foreclosure sales.
On August 10, 1994, NPI, Inc., the then parent company of the Managing General
Partner, entered into an agreement with an affiliate of Apollo Real Estate
Advisors, L.P. ("Apollo") to sell to Apollo up to one-third of the stock of NPI,
Inc. In addition, Apollo obtained general and limited partnership interests in
NPI-AP Management, L.P., ("NPI-AP") an affiliate of the Managing General
Partner. NPI Management became the managing general partner of NPI-AP, and
assigned its interest in the management contract for the Partnership's
properties to the partnerships affiliated with the Managing General Partner.
On October 12, 1994, NPI, Inc. sold one-third of the stock of NPI, Inc. to
Apollo. Apollo was entitled to designate three of the seven directors of the
Managing General Partner. In addition, the approval of certain major actions on
behalf of the Partnership required the affirmative vote of at least five
directors of the Managing General Partner.
On October 12, 1994, affiliates of Apollo acquired (i) one-third of the stock of
the respective general partners of DeForest Ventures I L.P. ("DeForest I") and
DeForest Ventures II L.P. ("DeForest II") and (ii) an additional equity interest
in NPI-AP (bringing its total equity interest in such entity to one-third).
NPI-AP is the sole limited partner of DeForest II and one of the limited
partners of DeForest I. DeForest I was formed for the purpose of making tender
offers (the "Tender Offers") for limited partnership interest in twelve
affiliated limited partnerships. DeForest II was formed for the purpose of
making tender offers for limited partnership interests in the Partnership as
well as the remaining six partnerships in the National Property Investors
Series.
During the fourth quarter of 1994, DeForest II acquired 18,450 limited
partnership units or approximately 38% of the total limited partnership units of
the Partnership.
On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to
sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia
Financial Group, Inc., a Delaware corporation ("Insignia"), all of the issued
and outstanding common stock of NPI, Inc., the sole shareholder of the Managing
General Partner. 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, Inc. and the Managing
General Partner resigned and IFGP Corporation caused new officers and directors
of each of those entities to be elected. See "Item 9 Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act."
On January 19, 1996, DeForest II and certain of its affiliates sold all of its
interest in the Partnership to an affiliate of Insignia. The affiliate of
Insignia acquired 21,340 limited partnership units or approximately 44.4% of the
total limited partnership units of the Partnership. (See "Item 11 Security
Ownership of Certain Beneficial Owners and Management.")
The Partnership is involved in only one industry segment, as described above.
The Partnership does not engage in any foreign operations or derive revenues
from foreign sources.
There have been, and it is possible there may be other Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the property
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
The Partnership has no full time employees. The Managing General Partner is
vested with full authority as to the general management and supervision of the
business and affairs of the Partnership. The Limited Partners have no right to
participate in the management or conduct of such business and affairs. NPI-AP
provides day-to-day management services to the Partnership's investment
properties.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. Competition is
primarily on the basis of location, rents, services, and amenities. In
addition, the Partnership competes with significant numbers of individuals and
organizations (including similar partnerships, real estate investment trusts and
financial institutions) with respect to the sale of improved real properties
primarily on the basis of the prices and terms of such transactions.
ITEM 2. DESCRIPTION OF PROPERTIES
The following table sets forth the Partnership's investment in properties.
Date of Type of
Property Purchase Ownership Use
Pinetree Apartments 7/1/80 Fee ownership, subject to a Apartment
Charlotte, North Carolina first deed of trust. 220 units
Lakeside Apartments 12/18/80 Fee ownership, subject to a Apartment
Lisle, Illinois first deed of trust. 568 units
Summerwalk Apartments (1) 12/24/80 Fee ownership, subject to a Apartment
Winter Park, Florida first deed of trust. 304 units
(1) The Partnership acquired the co-tenant's 10% interest in the property in
January, 1997, for $50,000.
SCHEDULE OF PROPERTIES:
(Dollar amounts in thousands)
Property Carrying Accumulated Federal
Value Depreciation Rate Method Tax Basis
Pinetree Apartments $ 6,092 $ 3,979 5-27.5 yrs. SL $2,062
Lakeside Apartments 20,828 13,439 5-27.5 yrs. SL 7,334
Summerwalk Apartments 7,335 4,806 5-27.5 yrs. SL 2,440
$34,255 $ 22,224
SCHEDULE OF MORTGAGE:
(Dollar amounts in thousands)
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1996 Rate Amortized Date Maturity
Pinetree Apartments $ 2,241 9.87 25 yrs. 7/01/01 $ 2,090
Lakeside Apartments 17,200 7.33 (1) 11/01/03 17,200
Summerwalk Apartments 4,557 9.75 (2) (2) 4,557
$ 23,998
(1) Monthly payments are interest only.
(2) The mortgage matured on September 1, 1996, and an extension obtained
through December 1, 1996; however, the loan has not been formally extended
beyond December 1, 1996. The Partnership continues to pay debt service to
the lender while an extension of the loan or alternative financing is
arranged.
SCHEDULE OF RENTAL RATES AND OCCUPANCY
Average Annual Average Annual
Rental Rates Occupancy
Property 1996 1995 1996 1995
Pinetree Apartments $6,092/unit $5,810/unit 91% 95%
Lakeside Apartments 9,042/unit 8,732/unit 93% 95%
Summerwalk Apartments 6,032/unit 5,856/unit 92% 94%
As noted under "Item 1, Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other apartment complexes in the area. The Managing General
Partner believes that all of the properties are adequately insured. All of the
lease terms are for one year or less. No individual tenant occupies 10% or more
of the available rental space.
Real estate taxes (in thousands) and rates in 1996 for each property were:
1996 1996
Billing Rate
Pinetree Apartments $ 59 1.4%
Lakeside Apartments 528 7.3%
Summer Walk Apartments 107 2.0%
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The unit holders of the Partnership did not vote on any matter during the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Partnership, a publicly-held limited partnership, sold 48,049 Limited
Partnership Units aggregating $24,025,000. The Partnership currently has 48,049
units outstanding and 1,824 limited partners of record. There is no intention
to sell additional limited partnership units nor is there an established market
for these units.
No special distributions and distributions from operations were made during the
years ended December 31, 1996 and 1995. See "Item 6 - Management's Discussion
and Analysis of Financial Condition and Results of Operations" for a discussion
of the Partnership's financial ability to make distributions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1996, was
approximately $15,000 versus net income of approximately $245,000 for the year
ended December 31, 1995. This change in net income for the year ended December
31, 1996, is primarily attributable to a decrease in other income, the
recognition of an extraordinary loss due to the early extinguishment of debt and
an increase in operating expenses. The decrease in other income is due to
Lakeside receiving $110,000 for the renewal of a laundry contract in 1995. The
Partnership also recognized an extraordinary loss on the early extinguishment of
debt in 1996 as discussed below. This refinancing also resulted in a decrease
in interest expense for the year ended December 31, 1996, due to the mortgage
being refinanced at a lower interest rate. The increase in operating expense is
due primarily to an increase in real estate tax expense at Lakeside. This
increase is due to the increase in the property's assessed value by the taxing
authority.
Included in operating expense is approximately $152,000 of major repairs and
maintenance comprised primarily of major landscaping and interior and exterior
building repairs.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties 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 market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Capital Resources and Liquidity
At December 31, 1996, the Partnership had unrestricted cash of approximately
$964,000 as compared to approximately $921,000 at December 31, 1995. Net cash
provided by operations decreased primarily due to a decrease in operations and
other assets. This decrease was partially offset by an increase in escrow
deposits and an increase in accounts payable and accrued expenses due to the
timing of payments. Net cash used in investing activities increased due to an
increase in property improvements and replacements. The increase was also due to
funds deposited to a restricted escrow account as required by the terms of the
Lakeside refinancing. Finally, there was an increase in the net cash used in
financing activities due to the refinancing of Lakeside Apartments with a new
$17,200,000 mortgage, replacing the prior mortgage of $16,943,000. This
increase is also due to the Partnership incurring approximately $417,000 in new
loan costs.
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. 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.
On November 15, 1996, the Partnership refinanced the mortgage encumbering
Lakeside Apartments. The refinancing replaced indebtedness of $17,042,000,
including accrued interest of approximately $99,000, with a new mortgage in the
amount of $17,200,000. The mortgage was refinanced at a rate equal to 7.33%,
compared to the prior rate of 8.25%. Payments of interest only are due on the
first day of each month until the loan matures on November 1, 2003. The prior
note was scheduled to mature in August, 1999. Total capitalized loan costs were
$417,000. The Partnership recognized an extraordinary loss on early
extinguishment of debt in the amount of approximately $75,000 due to the write
off of unamortized loan costs.
The Partnership had a balloon payment of approximately $4,582,000 on Summerwalk
Apartments due in December 1996. While the loan has not been formally extended,
the Partnership continues to pay debt service to the lender while an extension
of the loan or alternative financing is arranged. However, if replacement
financing is not found or if the current financing is not extended, it is
possible that the Partnership could sell the property or lose the property
through foreclosure. If the property is lost through foreclosure, the
Partnership would not recognize a loss for financial statement purposes. In
connection with the efforts to obtain replacement financing, the Partnership
acquired the 10% interest in the property previously held by an unaffiliated
third party for $50,000 in January, 1997.
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 properties to adequately maintain the physical
assets and the 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 approximately $23,998,000 is being amortized over
varying periods with balloon payments due at maturity at which time the
properties will either be refinanced or sold. The Partnership secured long term
financing for Lakeside Apartments during the fourth quarter of 1996, as
discussed above, and extended the current financing on Summerwalk Apartments.
The Managing General Partner is currently negotiating for long-term financing on
Summerwalk. These negotiations should be completed during the first quarter of
1997. Future cash distributions will depend on the levels of cash generated
from operations, a property sale, a property refinancing and the availability of
cash reserves. No cash distributions were paid during the year ended December
31, 1996, or December 31, 1995.
ITEM 7. FINANCIAL STATEMENTS
NATIONAL PROPERTY INVESTORS III
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheet - December 31, 1996
Consolidated Statements of Operations - Years ended December 31, 1996 and
1995
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 1996 and 1995
Consolidated Statements of Cash Flows - Years ended December 31, 1996 and
1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
To The Partners
National Property Investors III
Greenville, South Carolina
We have audited the accompanying consolidated balance sheet of National Property
Investors III, (a limited partnership) (the "Partnership") and its subsidiary as
of December 31, 1996, and the related consolidated statements of operations,
changes in partners' deficit and cash flows for each of the two years in the
period ended December 31, 1996. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Property Investors III and its subsidiary, as of December 31, 1996, and
the results of their operations and their cash flows for each of the two years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/Imowitz Koenig & Co., LLP
New York, New York
February 6, 1997
NATIONAL PROPERTY INVESTORS III
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1996
Assets
Cash and cash equivalents $ 964
Escrow deposits 127
Other assets 1,293
Investment properties:
Land $ 3,023
Buildings and related personal property 31,232
34,255
Less accumulated depreciation (22,224) 12,031
$ 14,415
Liabilities and Partners' Deficit
Liabilities
Accounts payable and accrued expenses $ 1,094
Tenants' security deposits payable 171
Mortgages payable 23,998
Partners' Deficit:
Limited partners' (48,049 units issued
and outstanding) $ (10,560)
General partners' (288) (10,848)
$ 14,415
See Accompanying Notes to Consolidated Financial Statements
NATIONAL PROPERTY INVESTORS III
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1996 1995
Revenues:
Rental income $ 7,607 $ 7,521
Other income 336 428
Total revenues 7,943 7,949
Expenses:
Operating expenses 4,215 4,014
Interest 2,113 2,178
Depreciation 1,288 1,289
General and administrative 237 223
Total expenses 7,853 7,704
Income before extraordinary item 90 245
Extraordinary loss on extinguishment of debt (75) --
Net income $ 15 $ 245
Net income allocated to general partners $ -- $ 2
Net income allocated to limited partners 15 243
Net income $ 15 $ 245
Net income per limited partnership unit:
Income before extraordinary item $ 1.86 $ 5.05
Extraordinary loss (1.55) --
Net income $ .31 $ 5.05
See Accompanying Notes to Consolidated Financial Statements
NATIONAL PROPERTY INVESTORS III
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited General Limited
Partnership Partner's Partners' Total
Units Deficit Deficit Deficit
Original capital contributions 48,049 $ 1 $ 24,025 $ 24,026
Partners' deficit at
December 31, 1994 48,049 $ (290) $ (10,818) $ (11,108)
Net income for the year ended
December 31, 1995 -- 2 243 245
Partners' deficit at
December 31, 1995 48,049 (288) (10,575) (10,863)
Net income for the year ended
December 31, 1996 -- -- 15 15
Partners' deficit at
December 31, 1996 48,049 $ (288) $ (10,560) $ (10,848)
See Accompanying Notes to Consolidated Financial Statements
NATIONAL PROPERTY INVESTORS III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
1996 1995
Cash flows from operating activities:
Net income $ 15 $ 245
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,288 1,289
Amortization of mortgage costs 51 54
Extraordinary loss on extinguishment of debt 75 --
Change in accounts:
Escrow deposits 163 (92)
Other assets (265) 210
Accounts payable and accrued expenses 377 (11)
Tenant security deposit payable (42) 14
Net cash provided by operating activities 1,662 1,709
Cash flows from investing activities:
Deposits to restricted escrows (574) (280)
Receipts from restricted escrows 341 143
Property improvements and replacements (806) (368)
Net cash used in investing activities (1,039) (505)
Cash flows from financing activities:
Mortgage principal payments (420) (488)
Repayment of mortgage note payable (16,943) --
Proceeds from refinancing 17,200 --
Loan costs (417) --
Net cash used in financing activities (580) (488)
Net increase in cash and cash equivalents 43 716
Cash and cash equivalents at beginning of period 921 205
Cash and cash equivalents at end of period $ 964 $ 921
Supplemental information:
Cash paid for interest $ 2,081 $ 2,124
See Accompanying Notes to Consolidated Financial Statements
NATIONAL PROPERTY INVESTORS III
Notes to Consolidated Financial Statements
December 31, 1996
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization:
National Property Investors III (the "Partnership"), a limited partnership, was
organized under the Uniform Limited Partnership Laws of California as of
February 1, 1979, for the purpose of acquiring and operating income-producing
residential real estate. The Partnership currently owns garden apartments in
Charlotte, North Carolina, Lisle Illinois and Winter Park, Florida. The
Partnership will terminate on December 31, 2005, or sooner, in accordance with
the terms of the Agreement of Limited Partnership. Limited partners' units are
at a stated value of $500. A total of 48,049 units of the limited partnership
were issued, for an aggregate capital contribution of $24,025,000. In addition,
the general partners contributed a total of $1,000 to the Partnership.
Principles of Consolidation:
The consolidated financial statements include all the accounts of the
Partnership and its majority owned Partnerships. All significant
interpartnership balances have been eliminated. Minority interest is immaterial
and not shown separately in the financial statements.
Cash and Cash Equivalents:
The Partnership considers all highly liquid investments with a maturity, when
purchased, of three months or less to be cash equivalents. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Investment Properties:
In 1995 the Partnership adopted Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. The effect of
adoption was not material.
Depreciation:
Depreciation is calculated by the straight-line method over the estimated lives
of the rental properties and related personal property ranging from 5 to 27.5
years.
Leases:
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on its leases.
Tenant Security Deposits:
The Partnership requires security deposits for the apartment units. Deposits
can be applied to the rent or any cleaning and damage charges when the tenant's
lease expires. The security deposit is refunded; however, if there has been no
damage to the units.
Loan Costs:
Loan costs of $648,000 are included in "Other assets" in the accompanying
consolidated balance sheet and are being amortized on a straight-line basis over
the life of the loan. At December 31, 1996, accumulated amortization is
approximately $118,000. Amortization of loan costs is included in interest
expense.
Income Taxes:
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. No provision for income taxes is made in the consolidated
financial statements of the Partnership.
Fair Value:
In 1995, the Partnership implemented Statement of Financial Accounting Standards
No. 107, "Disclosure about Fair Value of Financial Instruments," which requires
disclosure of fair value information about financial instruments for which it is
practicable to estimate that value. The carrying amount of the Partnership's
cash and cash equivalents approximates fair value due to short-term matruities.
The Partnership estimates the fair value of its fixed rate mortgages by
discounted cash flow analysis, based on estimated borrowing rates currently
available to the Partnership ("Note C"). The fair value of the mortgages is
approximately $24,216,000, which approximates the carrying value.
Net Income (Loss) Per Weighted Average limited partnership Unit:
Net income (loss) per Limited Partnership Unit is computed by dividing net
income (loss) allocated to the limited partners by 48,049 units outstanding.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Reclassifications:
Certain reclassifications have been made to the 1995 balances 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.
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General Partner"),
is the general partner of the Partnership. On January 19, 1996, the
stockholders of National Property Investors, Inc. ("NPI"), the sole shareholder
of NPI Equity, sold all of the issued and outstanding shares of NPI to IFGP
Corporation ("IFGP"), an affiliate of Insignia Financial Group, Inc.
("Insignia"). Upon closing, the officers and directors of NPI Equity resigned
and IFGP elected new officers and directors. In connection with the sale of the
NPI stock to IFGP, DeForest Ventures II, L.P., an entity comprised of the former
NPI shareholders and their affiliates, sold the 21,340 limited partnership units
owned by it to Insignia LLC.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were charged to expense or capitalized in 1996 and 1995 (dollar amounts in
thousands):
For the Years Ended
December 31,
1996 1995
Property management fees (included in operating
expenses) $ 392 $ 385
Reimbursement for services of affiliates (included
in investment properties, general and
administrative expenses and operating expenses) 198 187
During the year ended December 31, 1996, the Partnership paid approximately
$174,000 to affiliates of the Managing General Partner for brokerage fees
incurred in connection with the November 15, 1996, refinancing of Lakeside
Apartments (see "Note E"). These charges have been capitalized as loan costs,
and will be amortized over the life of the loan.
For the period from January 19, 1996, to December 31, 1996, 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.
Included in operating expenses for the year ended December 31, 1995, are
insurance premiums of approximately $175,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NPI Equity is entitled to receive 1% of adjusted cash from operations and an
allocation of 1% of the net income or loss of the Partnership.
On March 29, 1996, an affiliate of Insignia acquired the corporate general
partners owning 1% of the subsidiary partnership which owns the Pinetree
Apartments.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series (NPI Partnership). The
maximum draw available to the Partnership under the Partnership Revolver is
$500,000. Loans under the Partnership Revolver will have a term of 365 days, be
unsecured and bear interest at the rate of 2% per annum in excess of the prime
rate announced from time to time by Chemical Bank, N.A. The maturity date of
such borrowing will be accelerated in the event of: (i) the removal of the NPI
Equity (whether or not For Cause); (ii) the sale or refinancing of a property by
the Partnership (whether or not a borrowing under the Partnership Revolver was
made with respect to such property); or (iii) the liquidation of the
Partnership. The Partnership has not borrowed under the Partnership Revolver,
to date.
NOTE C - MORTGAGES PAYABLE
(Dollar amounts in thousands)
The principle terms of mortgages payable are as follows:
Monthly Principal Principal
Payment Stated Balance Balance At
Including Interest Maturity Due At December 31,
Property Interest Rate Date Maturity 1996
Lakeside $ 105 (1) 7.33% 11/01/03 $ 17,200 $ 17,200
Pinetree 21 9.87% 7/01/01 2,090 2,241
Summerwalk 46 9.75% (2) 4,557 4,557
$ 172 $ 23,998
(1) Amount is interest only.
(2) The mortgage matured on September 1, 1996, and an extension obtained
through December 1, 1996; however, the loan has not been formally extended
beyond December 1, 1996. The Partnership continues to pay debt service
to the lender while an extension of the loan or alternative financing is
arranged.
Refer to "Note E" for discussion of the refinancing of the mortgage encumbering
Lakeside Apartments.
Scheduled principal payments on the mortgage payable subsequent to December 31,
1996, are as follows (in thousands):
1997 $ 4,585
1998 31
1999 34
2000 38
2001 2,110
Thereafter 17,200
$ 23,998
NOTE D - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(Dollar amounts in thousands)
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Lakeside $ 17,200 $ 2,087 $ 15,363 $ 3,378
Pinetree 2,241 493 3,873 1,726
Summerwalk 4,557 427 6,347 561
$ 23,998 $ 3,007 $ 25,583 $ 5,665
Gross Amount at Which Carried
At December 31, 1996
Buildings Accum- Depre-
And Related lated Date ciable
Personal Depre- Acqu- Life-
Description Land Property Total ciation ired Years
Lakeside $ 2,093 $ 18,735 $ 20,828 $13,439 12/80 5-27.5 yrs.
Pinetree 499 5,593 6,092 3,979 7/80 5-27.5 yrs.
Summerwalk 431 6,904 7,335 4,806 12/80 5-27.5 yrs.
$ 3,023 $ 31,232 $ 34,255 $22,224
Reconciliation of Investment Properties and Accumulated Depreciation:
December 31,
1996 1995
Investment Properties
Balance at beginning of year $ 33,449 $ 33,081
Property Improvements 806 368
Balance at end of year $ 34,255 $ 33,449
December 31,
1996 1995
Accumulated Depreciation
Balance at beginning of year $ 20,936 $ 19,647
Additions charged to expense 1,288 1,289
Balance at end of year $ 22,224 $ 20,936
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996 and 1995, is $34,230,000 and $33,465,000. The accumulated
depreciation taken for Federal income tax purposes at December 31, 1996 and
1995, is $18,400,000 and $17,582,000.
NOTE E - REFINANCING AND EXTRAORDINARY LOSS
On November 15, 1996, the Partnership refinanced the mortgage encumbering
Lakeside Apartments. The refinancing replaced indebtedness of $17,042,000,
including accrued interest of approximately $99,000, with a new mortgage in the
amount of $17,200,000. The mortgage was refinanced at a rate equal to 7.33%,
compared to the prior rate of 8.25%. Payments of interest only are due on the
first day of each month until the loan matures on November 1, 2003. The prior
note was scheduled to mature in August 1999. Total capitalized loan costs were
$417,000. The Partnership recognized an extraordinary loss on early
extinguishment of debt in the amount of approximately $75,000 due to the write
off of unamortized loan costs.
NOTE F - INCOME TAXES
(Dollar amounts in thousands)
The Partnership files its tax returns on an accrual basis. A reconciliation of
net income from the consolidated financial statements to the net taxable income
to partners is as follows:
Years Ended December 31,
1996 1995
Net income per consolidated
financial statements $ 15 $ 245
Difference between income and
expenses for consolidated
financial statement and tax
reporting 52 10
Difference between tax depreciation
and consolidated financial statement
deprecation 243 95
Net taxable income to partners $ 310 $ 350
Federal taxable income per limited
partnership unit $ 6.40 $ 7.21
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of partners' deficit (in thousands):
1996
Partners' deficit as reported $ (10,848)
Land and buildings 25
Accumulated depreciation (220)
Syndication and distribution costs 2,727
Prepaid rent 45
Other (4)
Partners' deficit-Federal tax basis $ (8,275)
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There were no disagreements with Imowitz Koenig & Co., LLP regarding the 1996 or
1995 audits of the Partnership's financial statements.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Partnership has no officers or directors. NPI Equity Investments, Inc.
("NPI Equity" or the "Managing General Partner"), manages substantially all of
the Partnership's affairs and has general responsibility in all matters
affecting its business. NPI Equity is a wholly owned subsidiary of National
Property Investors, Inc. ("NPI"). As of December 31, 1996, the names, ages and
positions held by executive officers and directors of NPI Equity are as follows:
Name Age Position
William H. Jarrard, Jr. 50 President and Director
Ronald Uretta 40 Vice President
and Treasurer
John K. Lines 37 Vice President and
Secretary
Kelley M. Buechler 39 Assistant Secretary
William H. Jarrard, Jr. has been President and Director of the Managing General
Partner since January 1996 and Managing Director - Partnership Administration of
Insignia since January 1991. Mr. Jarrard served as Managing Director -
Partnership Administration and Asset Management from July 1994 to January 1996.
During the five years prior to joining Insignia in 1991, he served in similar
capacities for U. S. Shelter.
Ronald Uretta has been Vice President and Treasurer of the Managing General
Partner since January 1996, and Insignia's Chief Operating Officer since August
1996. From January 1992 to August 1996, Mr. Uretta was Insignia's Chief
Financial Officer. Mr. Uretta was Insignia's Secretary from January 1992 to
June 1994. From May 1988 until September 1990, Mr. Uretta was a self-employed
financial consultant. From January 1978 until January 1988, Mr. Uretta was
employed by Veltri Raynor & Company, independent certified public accountants.
John K. Lines, Esq. has been Vice President and Secretary of the Managing
General Partner since January 1996, Insignia's General Counsel since June 1994,
and General Counsel and Secretary since July 1994. From May 1993 until June
1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen
Financial Corporation, West Palm Beach, Florida. From October 1991 until May
1993, Mr. Lines was a Senior Attorney with BANC ONE CORPORATION, Columbus, Ohio.
From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders
& Dempsey, Columbus, Ohio.
Kelley M. Buechler is Assistant Secretary of the Managing General Partner. Ms.
Buechler has been Assistant Secretary of Insignia since 1991. During the five
years prior to joining Insignia in 1991, she served in similar capacities for U.
S. Shelter.
No family relationships exist among any of the officers or directors of the
Managing General Partner.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of the Managing General Partner. The Partnership has no
plan, nor does the Partnership presently propose a plan, which will result in
any remuneration being paid to any officer or director upon termination of
employment. However, reimbursements and other payments have been made to the
Partnership's Managing General Partner and its affiliates, as described below in
"Item 12 Certain Relationships and Related Transactions", which is incorporated
herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding limited partnership
units of the Partnership owned by each person who is known by the Partnership to
own beneficially or exercise voting or dispositive control over more than 5% of
the Partnership's limited partnership units, by each of NPI Equity's directors
and by all directors and executive officers of NPI Equity as a group as of
December 31, 1996.
Name and address of Amount and nature of
Beneficial Owner Beneficial Owner % of Class
Insignia Properties, LP 21,340 44.4
One Insignia Financial Plaza
Greenville, SC 29602
All directors and
executive officers as a group
(four persons) -- --
There are no arrangements known to the Partnership, the operation of which may
at a subsequent date, result in a change in control of the Partnership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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. On January 19, 1996, the
stockholders of National Property Investors, Inc. NPI, the sole shareholder of
NPI Equity, sold all of the issued and outstanding shares of NPI to IFGP
Corporation ("IFGP"), an affiliate of Insignia Financial Group, Inc.
("Insignia"). Upon closing, the officers and directors of NPI Equity and NPI
resigned and IFGP elected new officers and directors. In connection with the
sale of the NPI stock to IFGP, DeForest Ventures II, L.P., an entity comprised
of the former NPI shareholders and their affiliates, sold the 21,340 limited
partnership units owned by it to Insignia LLC, (See "Item 11 Security Ownership
of Certain Beneficial Owners and Management.")
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were charged to expense or capitalized in 1996 and 1995 (dollar amounts in
thousands):
For the Years Ended
December 31,
1996 1995
Property management fees (included in operating
expenses) $ 392 $ 385
Reimbursement for services of affiliates (included
in investment properties, general and
administrative expenses and operating expenses) 198 187
During the year ended December 31, 1996, the Partnership paid approximately
$174,000 to affiliates of the Managing General Partner for brokerage fees
incurred in connection with the December 31, 1996, refinancing of Lakeside
Apartments. These charges have been capitalized as loan costs and will be
amortized over the life of the loan.
For the period from January 19, 1996, to December 31, 1996, 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.
Included in operating expenses for the year ended December 31, 1995, are
insurance premiums of approximately $175,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NPI Equity is entitled to receive 1% of adjusted cash from operations and an
allocation of 1% of the net income or loss of the Partnership.
On March 29, 1996, an affiliate of Insignia acquired the corporate general
partners owning 1% of the subsidiary partnership which owns the Pinetree
Apartments.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series (NPI Partnerships). The
maximum draw available to the Partnership under the Partnership Revolver will
have a term of 365 days, be unsecured and bear interest at the rate of 2% per
annum in excess of the prime rate announced from time to time by Chemical Bank,
N.A. The maturity date of such borrowing will be accelerated in the event of:
(i) the removal of the NPI Equity (whether of not For Cause); (ii) the sale or
refinancing of a property by the Partnership (whether or not a borrowing under
the Partnership Revolver was made with respect to such property); or (iii) the
liquidation of the Partnership. The Partnership has not borrowed under the
Partnership Revolver, to date.
As a result of its ownership of 21,340 limited partnership units, Insignia
Properties, L.P. ("Insignia LP") could be in a position to significantly
influence all voting decisions with respect to the Partnership. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
Insignia LP would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner. However, DeForest II, from whom
Insignia LP acquired its Units, had agreed for the benefit of non-tendering
unitholders, that is would vote its Units (i) against any increase in
compensation payable to the Managing General Partner or to affiliates; and (ii)
on all other matters submitted by it or its affiliates, in proportion to the
votes cast by non tendering units holders. Except for the foregoing, no other
limitations are imposed on Insignia LP's right to vote each Unit acquired.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) See exhibit index contained herein.
(b) Reports on Form 8-K during the fourth quarter of 1996: None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL PROPERTY INVESTORS III
By: NPI EQUITY INVESTMENTS, INC.
Managing General Partner
By: /s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Date: March 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Partnership and
in the capacities and on the date indicated.
Signature/Name Title Date
/s/ William H. Jarrard, Jr. President and March 28, 1997
William H. Jarrard, Jr. Director
/s/ Ronald Uretta Vice President and March 28, 1997
Ronald Uretta Treasurer
EXHIBIT INDEX
Exhibit
2.1 NPI, Inc. Stock Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2 to the Partnership's
Current Report on Form 8-K dated August 17, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.2 to Form 8-K filed by
Insignia Financial Group, Inc. with the Securities and Exchange
Commission on September 1, 1995.
2.4 Limited liability Company Agreement of Riverside Drive L.L.C.
dated as of August 17, 1995, Incorporated by reference to Exhibit
2.4 to Form 8-K filed by Insignia Financial Group, Inc. with the
Securities and Exchange Commission on September 1, 1995.
2.5 Master Indemnity Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.5 to Form 8-K filed by
Insignia Financial Group, Inc. with the Securities and Exchange
Commission on September 1, 1995
3.4 (a) Agreement of Limited Partnership incorporated by reference to
Exhibit A to the Prospectus of the Partnership dated October 24,
1979 contained in the Partnership's Registration Statement on
Form S-11 (Reg. No. 2-63733).
3.4 (b) Amendments to Agreement of Limited Partnership dated as of
November 25, 1980 incorporated by reference to Exhibits 3 and 4
to the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1981.
3.4 (c) Amendments to the Agreement of Limited Partnership Incorporated
by reference to the Definitive Proxy Statement of The Partnership
dated April 3, 1981.
3.4 (d) Amendments to the Agreement of Limited Partnership Incorporated
by reference to the Statement Furnished In Connection With The
Solicitation of Consents of the Partnership dated August 28,
1992.
10.1 Mortgage Modification Agreement dated March 28, 1988, among
Collateral Mortgage, Ltd., SB Partners and the Partnership
relating to the Summerwalk Apartments, incorporated by reference
to Exhibit 10(e) to the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988.
10.2 Loan Modification Agreement dated March 28, 1988, among
Collateral Mortgage, Ltd., SB Partners and the Partnership
relating to the Summerwalk Apartments, incorporated by reference
to Exhibit 10(f) to the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988.
10.3 Modification of Subordination dated March 28, 1988, between SB
Partners and the Partnership relating to the Summerwalk
Apartments, incorporated by reference to Exhibit 10(g) to the
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988.
10.6 Form of Property Management Agreement dated June 21, 1991, by and
between the Partnership and NPI Management with respect to each
of the Partnership's properties, incorporated by reference to
Exhibit 10.6 to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1991.
10.7 Third Amendment to Mortgage, Security Agreement and Assignment of
Rents and Leases dated August 29, 1991, among the Partnership, SB
Partners and Collateral Mortgage, Ltd. relating to the Summerwalk
Apartments, incorporated by reference to Exhibit 10.7 to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1991.
10.8 Third Amendment to Loan Agreement dated August 9, 1991, among the
Partnership, SB Partners and Collateral Mortgage, Ltd., relating
to the Summerwalk Apartments, incorporated by reference to
Exhibit 10.8 to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1991.
10.9 Third Amendment to Real Estate Mortgage Note dated August 29,
1991, among the Partnership, SB Partners and Collateral Mortgage,
Ltd., relating to the Summerwalk Apartments, incorporated by
reference to Exhibit 10.9 to the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1991.
10.10 Mortgage Note dated June 30, 1994, made by National Pinetree
Limited Partnership for the benefit of Main America Capital, L.C.
in the original principal balance of $2,300,000, incorporated by
reference to Exhibit 10.1 to the Partnership's Quarterly Report
on Form 10-Q for the period ended September 30, 1994.
10.11 Deed of Trust and Security Agreement among National Pinetree
Limited Partnership, as borrower, and Main America Capital L.C.,
as beneficiary, dated June 30, 1994, incorporated by reference to
Exhibit 10.2 to the Partnership's Quarterly Report on Form 10-Q
for the period ended September 30, 1994.
10.14 Multifamily Note dated September 30, 1996, by and between the
Partnership and Lehman Brothers Holding, Inc. for Lakeside
Apartments.
10.15 Multifamily Note dated November 1, 1996, by and between the
Partnership and Lehman Brothers Holding, Inc. for Lakeside
Apartments.
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors III 1996 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000310485
<NAME> NATIONAL PROPERTY INVESTORS III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 964
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 34,255
<DEPRECIATION> (22,224)
<TOTAL-ASSETS> 14,415
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 23,998
0
0
<COMMON> 0
<OTHER-SE> (10,848)
<TOTAL-LIABILITY-AND-EQUITY> 14,415
<SALES> 0
<TOTAL-REVENUES> 7,943
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,853
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,113
<INCOME-PRETAX> 90
<INCOME-TAX> 0
<INCOME-CONTINUING> 90
<DISCONTINUED> 0
<EXTRAORDINARY> (75)
<CHANGES> 0
<NET-INCOME> 15
<EPS-PRIMARY> .31<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
EXHIBIT 10.14
MULTIFAMILY NOTE
US $17,200,000.00 New York, New York
As of September 30, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of
SEVENTEEN MILLION TWO HUNDRED THOUSAND AND 00/100 DOLLARS, with interest on the
unpaid principal balance from the date of this Note, until paid, at the
Applicable Interest Rate (defined herein). Principal and interest shall be
payable at 3 World Financial Center, New York, New York 10285, or such other
place as the holder hereof may designate in writing, as follows:
(i) payments of interest only commencing on the first day of October, 1996
and thereafter on the first day of each succeeding calendar month up
to and including the Maturity Date (defined herein); and
(ii) the balance of the aggregate outstanding principal sum and all accrued
but unpaid interest thereon shall be due and payable on the Maturity
Date.
The term "Maturity Date" shall mean November 15, 1996.
Interest on the principal sum of the Note shall be calculated on the basis
of the actual number of days elapsed in a three hundred sixty (360) day year.
All payments to Lender under the Note or this Agreement shall be made by wire
transfer of immediately available federal funds.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees of 25% of the unpaid principal balance hereof.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless the
holder hereof shall agree otherwise in writing. The holder hereof may require
that any partial prepayments be made on the date monthly installments are due
and be in the amount of that part of one or more monthly installments which
would be applicable to principal.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed of
Trust dated as of the date hereof, and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall be
governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused the
same to be executed by its representatives thereunto duly authorized.
NATIONAL PROPERTY INVESTORS III, a California
limited partnership
By: NPI Equity Investments, Inc., a Florida
corporation, its general partner
By: /s/William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: President
EXHIBIT 10.15
Loan No. 734105800
Lakeside (IL)
MULTIFAMILY NOTE
US $17,200,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of
Seventeen Million Two Hundred Thousand and 00/100 Dollars, with interest on the
unpaid principal balance from the date of this Note, until paid, at the rate of
7.33 percent per annum. Interest only shall be payable at 3 World Financial
Center, New York, New York 10285, or such other place as the holder hereof may
designate in writing, in consecutive monthly installments of One Hundred Five
Thousand Sixty-Three and 33/100 Dollars (US $105,063.33) on the first day of
each month beginning December 1, 1996, until the entire indebtedness evidenced
hereby is fully paid, except that any remaining indebtedness, if not sooner
paid, shall be due and payable on November 1, 2003.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless the
holder hereof shall agree otherwise in writing. The holder hereof may require
that any partial prepayments be made on the date monthly installments are due
and be in the amount of that part of one or more monthly installments which
would be applicable to principal.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed of
Trust dated as of the date hereof, and reference is made thereto for rights as
to acceleration of the indebtedness evidenced by this Note. This Note shall be
governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of interest due hereunder within
ten (10) calendar days after such installment of interest is due. The
undersigned shall pay any other installment due hereunder or due in accordance
with the terms of the Mortgage or Deed of Trust securing this Note, within
thirty (30) calendar days of the date such installment is due.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
BORROWER: NATIONAL PROPERTY INVESTORS III
a California limited partnership
BY: NPI Equity Investments, Inc.
a Florida corporation, its general
partner
BY: /s/William H. Jarrard, Jr.
Name: William H. Jarrard. Jr.
Title: President
LENDER: LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
Corporation
By:/s/Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This 1st day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
Corporation
By:/s/Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
