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 0-10412
NATIONAL PROPERTY INVESTORS 4
(Exact name of small business issuer as specified in its charter)
California 13-30391722
(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 4
BALANCE SHEET
(in thousands, except for unit data)
<TABLE>
<CAPTION>
March 31,
1996
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 3,014
Escrow deposits 289
Security deposits and other assets 581
Investment properties:
Land $ 1,980
Buildings and related personal property 23,032
25,012
Less accumulated depreciation (16,300) 8,712
Total assets $ 12,596
Liabilities and Partners' Deficit
Accounts payable and accrued expense $ 623
Tenants' security deposits payable 401
Mortgage payable 16,781
Partners' Deficit:
Limited partners' (60,005 units outstanding) $ (4,891)
General partners' (318) (5,209)
Total liabilities and partners' deficit $ 12,596
<FN>
See Notes to Financial Statements
</TABLE>
b) NATIONAL PROPERTY INVESTORS 4
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 $ 1,507 $ 1,462
Other income 56 69
Total revenues 1,563 1,531
Expenses:
Operating 758 639
Mortgage interest 380 388
Depreciation 231 262
General and administrative 53 57
Total expenses 1,422 1,346
Net income $ 141 $ 185
Net income allocated to general partners (1%) $ 1 $ 2
Net income allocated to limited partners (99%) 140 183
Net income $ 141 $ 185
Net loss per limited partnership unit $ 2.33 $ 3.05
<FN>
See Notes to Financial Statements
</TABLE>
c) NATIONAL PROPERTY INVESTORS 4
STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
(in thousands, except for unit data)
<TABLE>
<CAPTION>
Limited General Limited
Partnership Partners' Partners' Total
Units Deficit Deficit Deficit
<S> <C> <C> <C> <C>
Original capital contributions 60,005 $ 1 $ 30,003 $ 30,004
Partners' deficit at
December 31, 1995 60,005 $ (319) $ (5,031) $ (5,350)
Net income for the three
months ended March 31, 1996 -- 1 140 141
Partners' deficit at
March 31, 1996 60,005 $ (318) $ (4,891) $ (5,209)
<FN>
See Notes to Financial Statements
</TABLE>
d) NATIONAL PROPERTY INVESTORS 4
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 $ 141 $ 185
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 231 262
Amortization of mortgage costs 12 12
Change in account:
Escrow deposits (110) (104)
Security deposits and other assets 63 (7)
Accounts payable and accrued expenses 444 99
Tenants' security deposits payable 26 --
Net cash provided by operating activities 807 447
Cash flows from investing activities:
Property improvements and replacements (23) (11)
Net cash used in investing activities (23) (11)
Cash flows from financing activities:
Mortgage principal repayments (96) (88)
Net cash used in financing activities (96) (88)
Net increase in cash and cash equivalents 688 348
Cash and cash equivalents at beginning of period 2,326 1,068
Cash and cash equivalents at end of period $ 3,014 $ 1,416
Supplemental information:
Interest paid $ 368 $ 376
<FN>
See Notes to Financial Statements
</TABLE>
e) NATIONAL PROPERTY INVESTORS 4
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
National Property Investors 4 (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.,
National Property Investors, Inc. ("NPI"), and affiliates of NPI were charges to
expense in 1996 and 1995:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Property management fees (included in operating
expenses) $ 77,000 $ 76,000
Reimbursement for services of affiliates (included
in general and administrative expenses) 49,000 47,000
</TABLE>
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 $30,000 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 NPI. On August 17, 1995, the stockholders of NPI entered into an
agreement to sell to IFGP Corporation, a Delaware corporation ("Insignia"), 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 NPI Equity resigned
and IFGP Corporation caused new officers to be elected to each of those
entities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment property consists of one apartment complex,
Village of Pennbrook Apartments, located in Pennsylvania. The average occupancy
for the three month periods ended March 31, 1996, and 1995 was 92% and 96%,
respectively. The decline in occupancy is due to properties in the area
lowering rental rates and offering move in specials while the rental rates of
the Village of Pennbrook increased.
The Partnership's net income for the three months ended March 31, 1996 was
approximately $141,000 versus $185,000 for the same period of 1995. The
decrease in net income is attributable to an increase in operating expenses and
a decrease in other income. The increase in operating expense is due to an
increase in utility expenses along with increased maintenance expenses. The
increase in maintenance expenses is due to the property repairing a substantial
number of faulty heaters. The decrease in other income is due to a decrease in
security deposit forfeitures in 1996. Partially offsetting these reductions to
income, was an increase in interest income and a decrease in deprecation
expense. The increase in interest income was due to the Partnership maintaining
higher cash balances available for short-term investing. The decrease in
depreciation expense was due to approximately $500,000 of fixed assets becoming
fully depreciate in 1995.
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 $3,014,000 as
compared to $1,416,000 at March 31, 1995. Net cash provided by operating
activities increased primarily as a result of an increase in accounts payable
and accrued expenses, including the prepayment of rent. The increase in cash
used in investing activities is due to an increase 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 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 $16,781,000 is amortized over 25 years with a balloon payment
due August 1, 1997. 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. At this time, it appears that the investment objective of capital
growth will not be attained and that investors will not receive a return of all
their invested capital.
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 4
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 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors 4 1996 First Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000318508
<NAME> NATIONAL PROPERTY INVESTORS 4
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,014
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,012
<DEPRECIATION> 16,300
<TOTAL-ASSETS> 12,596
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 16,781
0
0
<COMMON> 0
<OTHER-SE> (5,209)
<TOTAL-LIABILITY-AND-EQUITY> 12,596
<SALES> 0
<TOTAL-REVENUES> 1,563
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,422
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 380
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141
<EPS-PRIMARY> 2.33
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
