FORM 10-QSB---QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
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 September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-10412
NATIONAL PROPERTY INVESTORS 4
(Exact name of small business issuer as specified in its charter)
California 13-3031722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone 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 preceding 12 months (or for such
shorter period that the Partnership was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL PROPERTY INVESTORS 4
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,049
Receivables and deposits 672
Restricted escrows 16
Other assets 645
Investment property:
Land $ 1,980
Buildings and related personal property 25,575
27,555
Less accumulated depreciation (20,850) 6,705
$ 9,087
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 21
Tenant security deposit liabilities 391
Other liabilities 441
Mortgage note payable 19,300
Partners' Deficit
General partner $ (358)
Limited partners (60,005 units
issued and outstanding) (10,708) (11,066)
$ 9,087
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
NATIONAL PROPERTY INVESTORS 4
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 1,746 $ 1,620 $ 5,155 $ 4,849
Other income 112 90 269 264
Total revenues 1,858 1,710 5,424 5,113
Expenses:
Operating 559 543 1,691 1,629
General and administrative 94 192 331 410
Depreciation 285 272 847 787
Interest 372 372 1,117 1,117
Property taxes 125 124 393 369
Total expenses 1,435 1,503 4,379 4,312
Net income $ 423 $ 207 $ 1,045 $ 801
Net income allocated to
general partner (1%) $ 4 $ 2 $ 10 $ 8
Net income allocated to
limited partners (99%) 419 205 1,035 793
$ 423 $ 207 $ 1,045 $ 801
Net income per limited
partnership unit $ 6.98 $ 3.42 $ 17.25 $ 13.22
Distribution per limited
partnership unit $ -- $ 29.53 $ 24.15 $ 63.48
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
NATIONAL PROPERTY INVESTORS 4
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 60,005 $ 1 $ 30,003 $ 30,004
Partners' deficit at
December 31, 1999 60,005 $ (353) $(10,294) $(10,647)
Distributions to partners (15) (1,449) (1,464)
Net income for the nine months
ended September 30,2000 -- 10 1,035 1,045
Partners' deficit at
September 30,2000 60,005 $ (358) $(10,708) $(11,066)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL PROPERTY INVESTORS 4
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,045 $ 801
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 847 787
Amortization of loan costs 56 56
Change in accounts:
Receivables and deposits (19) 149
Other assets (161) (215)
Accounts payable (14) 34
Tenant security deposit liabilities 29 (37)
Accrued property taxes -- 30
Other liabilities (173) 33
Net cash provided by operating activities 1,610 1,638
Cash flows from investing activities:
Net withdrawals from restricted escrows 157 329
Property improvements and replacements (321) (362)
Net cash used in investing activities (164) (33)
Cash flows used in financing activities:
Distribution to partners (2,015) (3,848)
Net decrease in cash and cash equivalents (569) (2,243)
Cash and cash equivalents at beginning of period 1,618 3,418
Cash and cash equivalents at end of period $ 1,049 $ 1,175
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,061 $ 1,061
Distributions to partners of approximately $551,000 were accrued at December 31,
1999 and paid in January 2000.
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
e)
NATIONAL PROPERTY INVESTORS 4
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 4
(the "Partnership" or the "Registrant") 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 nine month periods ended September 30, 2000, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1999.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - 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 for reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with
affiliates of the Managing General Partner were incurred during the nine month
periods ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $270 $255
Reimbursement for services of affiliates (included in
investment property and general and administrative and
operating expenses) 130 84
Partnership management fee (included in general and
administrative expense) 30 203
Non-accountable reimbursement (included in general
and administrative expenses) 100 100
During the nine months ended September 30, 2000, and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from the
Partnership's property for providing property management services. The
Partnership paid to such affiliates approximately $270,000 and $255,000 for the
nine month periods ended September 30, 2000, and 1999, respectively.
Affiliates of the Managing General Partner received reimbursements of
accountable administrative expenses amounting to approximately $130,000 and
$84,000 for the nine month periods ended September 30, 2000, and 1999,
respectively.
For services relating to the administration of the Partnership and operation of
the Partnership's property, the Managing General Partner is entitled to receive
payment for non-accountable expenses up to a maximum of $100,000 per year based
upon the number of Partnership units sold, subject to certain limitations. The
payment of this amount is dependent upon the Partnership distributing cash from
operations. The Managing General Partner was entitled to receive $100,000 for
such services in both 2000 and 1999, which was paid during the nine month
periods ended September 30, 2000 and 1999.
In addition to the amounts discussed above, as compensation for services
rendered in managing the Partnership, the Managing General Partner is entitled
to receive Partnership management fees in conjunction with distributions of cash
from operations, subject to certain limitations. During the nine month periods
ended September 30, 2000 and 1999, approximately $30,000 and $203,000,
respectively, was paid in conjunction with the operating distributions.
The Managing General Partner has made available 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.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 43,900 limited partnership
units in the Partnership representing 73.161% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional limited partnership interests in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 73.161% of the outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. However, with respect to
26,466 units, Insignia Properties, LP, an affiliate of the Managing General
Partner, is required to vote such 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 unitholders. Except for the foregoing, no other
limitations are imposed on the ability of AIMCO or its affiliates to influence
voting decisions with respect to the Partnership.
Note D - Distribution to Partners
Cash distributions from operations of approximately $1,464,000 were paid during
the nine months ended September 30, 2000, of which approximately $1,449,000 was
paid to the limited partners ($24.15 per limited partnership unit). At December
31, 1999, a distribution payable of approximately $551,000 (approximately
$545,000 to the limited partners or $9.08 per limited partnership unit) was
accrued and subsequently paid in January 2000.
Subsequent to September 30, 2000, a cash distribution was approved and paid from
operations of approximately $635,000 of which approximately $629,000 was paid to
the limited partners ($10.48 per limited partnership unit). In association with
this distribution, the Managing General Partner was paid a Partnership
management fee of approximately $57,000.
Cash distributions from operations of approximately $3,848,000 were paid during
the nine months ended September 30, 1999, of which approximately $3,809,000 was
paid to the limited partners ($63.48 per limited partnership unit).
Note E - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: a residential property. The
Partnership's residential property segment consists of one apartment complex in
Pennsylvania. The Partnership rents apartment units to tenants for terms that
are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
Segment information for the three and nine month periods ended September 30,
2000 and 1999, is shown in the tables below (in thousands). The "Other" column
includes Partnership administration related items and income and expense not
allocated to the reportable segment.
Three Months Ended September 30,2000 Residential Other Totals
Rental income $ 1,746 $ -- $ 1,746
Other income 111 1 112
Interest expense 372 -- 372
Depreciation 285 -- 285
General and administrative expense -- 94 94
Segment profit (loss) 516 (93) 423
Nine Months Ended September 30,2000 Residential Other Totals
Rental income $ 5,155 $ -- $ 5,155
Other income 266 3 269
Interest expense 1,117 -- 1,117
Depreciation 847 -- 847
General and administrative expense -- 331 331
Segment profit (loss) 1,373 (328) 1,045
Total assets 8,932 155 9,087
Capital expenditures for investment
property 321 -- 321
Three Months Ended September 30,1999 Residential Other Totals
Rental income $ 1,620 $ -- $ 1,620
Other income 76 14 90
Interest expense 372 -- 372
Depreciation 272 -- 272
General and administrative expense -- 192 192
Segment profit (loss) 385 (178) 207
Nine Months Ended September 30,1999 Residential Other Totals
Rental income $ 4,849 $ -- $ 4,849
Other income 210 54 264
Interest expense 1,117 -- 1,117
Depreciation 787 -- 787
General and administrative expense -- 410 410
Segment profit (loss) 1,157 (356) 801
Total assets 9,311 523 9,834
Capital expenditures for investment
property 362 -- 362
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Managing General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
Estate of Harry Schubert v. National Property Investors 4, Civil Action No.
97-09129, Court of Common Pleas of Bucks County, Pennsylvania. During 1998, the
Plaintiff brought action against the Partnership alleging that as the result of
carbon monoxide and methane poisoning due to a malfunctioning heating unit in
the deceased's apartment at the Partnership's property, the decedent lost
consciousness for several hours, suffered respiratory arrest and suffered other
pains and injuries. The Plaintiff alleges breach of contract, fraud, violations
of the Unfair Trade Practices and Consumer Protection Law and negligence. The
Partnership has filed a motion for summary judgment and is waiting for the
court's response. The Partnership intends to vigorously defend this matter.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Partnership's business and
results of operation. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
factors, including those identified herein.
The Partnership's investment property consists of one apartment complex, Village
of Pennbrook Apartments, located in Falls Township, Pennsylvania. The average
occupancy was 96% and 94% for the nine month periods ended September 30, 2000,
and 1999, respectively.
Results of Operations
The Partnership realized net income of approximately $1,045,000 and $801,000 for
the nine month periods ended September 30, 2000 and 1999, respectively. The
increase in net income for the nine months ended September 30, 2000 is
attributable to an increase in total revenues slightly offset by an increase in
total expenses. The increase in total revenues is primarily due to an increase
in rental income and a small increase in other income. The increase in rental
income is due to an increase in both average occupancy and average rental rates
at the property. The increase in other income is primarily due to an increase in
net corporate housing income, pet fees, application fees, and vending income
largely offset by decreased interest income as a result of lower average cash
balances in interest bearing accounts. The increase in total expenses is
primarily the result of increased operating, property tax, and depreciation
expenses partially offset by a decrease in general and administrative expense.
The increase in operating expense is primarily due to an increase in utilities
expense and manager and maintenance salaries and related benefits. The increase
in property tax expense is the result of the timing of the receipt of the tax
bill which affected the accrual at September 30, 2000 and 1999. The increase in
depreciation is the result of property improvements and replacements at
Pennbrook during the past twelve months. The decrease in general and
administrative expense is primarily due to the decrease in the Partnership
management fee as a result of reduced distributions from operations. This
decrease is partially offset by an increase in legal expense as a result of the
Schubert matter discussed in "Part 1 - Financial Information, Item 1. Financial
Statements, Note F - Legal Proceedings".
The Partnership realized net income of approximately $423,000 and $207,000 for
the three months ended September 30, 2000 and 1999, respectively. The increase
in net income is attributable to an increase in total revenues and a decrease in
total expenses. The decrease in total expenses is primarily due to decreased
general and administrative expenses partially offset by an increase in operating
and depreciation expense. For the increase in operating and depreciation
expenses, refer to the discussions above. The decrease in general and
administrative expense is primarily due to the timing of cash distributions and
the payment of Partnership management fees in 2000 and 1999. During the three
months ended September 30, 2000, no cash distributions were made and no
Partnership management fees were earned. During 1999, these amounts were paid
along with the distributions during the three months ended September 30, 1999.
The increase in total revenues is primarily due to an increase in rental and
other income, as discussed above.
Included in general and administrative expenses for the nine months ended
September 30, 2000 and 1999, are reimbursements to the Managing General Partner
allowed under the Partnership Agreement associated with its management of the
Partnership. Costs associated with the quarterly and annual communications with
investors and regulatory agencies, and the annual audit required by the
Partnership Agreement are also included.
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 market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Capital Resources and Liquidity
At September 30, 2000, the Partnership had cash and cash equivalents of
approximately $1,049,000 as compared to approximately $1,175,000 at September
30, 1999. For the nine months ended September 30, 2000, cash and cash
equivalents decreased approximately $569,000 from the Partnership's year ended
December 31, 1999. This decrease was due to approximately $2,015,000 of cash
used in financing activities and approximately $164,000 of cash used in
investing activities partially offset by approximately $1,610,000 of cash
provided by operating activities. Cash used in financing activities consisted of
distributions paid to the partners. Cash used in investing activities consisted
of property improvements and replacements partially offset by net withdrawals
from restricted escrows held by the mortgage lender. The Partnership invests its
working capital reserves in a money market account.
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 and to comply with Federal, state
and local legal and regulatory requirements. Approximately $295,000 has been
budgeted for capital improvements at Village of Pennbrook during the year 2000,
consisting primarily of floor covering replacements, appliances, heating units,
and parking lot improvements. During the nine months ended September 30, 2000,
the Partnership completed approximately $321,000 of budgeted and unbudgeted
capital improvements at Village of Pennbrook consisting primarily of furniture
and fixtures, appliance replacements, structural improvements, water heater
replacements, air conditioning unit replacements, and carpet and vinyl
replacement. These capital improvements were funded from operating cash flows
and replacement reserves. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flows generated by the property. The capital improvements
will be incurred only if cash is available from operations or from partnership
reserves. To the extent that such capital improvements are completed, the
Partnership's distributable cash flow, if any, may be adversely affected at
least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of $19,300,000 consists of monthly interest only payments of
approximately $118,000 at a stated rate of 7.33%. The mortgage matures on
November 1, 2003, with the principal due on the maturity date. The Managing
General Partner will attempt to refinance such indebtedness and/or sell the
property prior to such maturity date. If the property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure.
Cash distributions from operations of approximately $1,464,000 were paid during
the nine months ended September 30, 2000, of which approximately $1,449,000 was
paid to the limited partners ($24.15 per limited partnership unit). At December
31, 1999, a distribution payable of approximately $551,000 (approximately
$545,000 to the limited partners or $9.08 per limited partnership unit) was
accrued and subsequently paid in January 2000. Subsequent to September 30, 2000,
a cash distribution was approved and paid from operations of approximately
$635,000 of which approximately $629,000 was paid to the limited partners
($10.48 per limited partnership unit). Cash distributions from operations of
approximately $3,848,000 were paid during the nine months ended September
30,1999, of which approximately $3,809,000 was paid to the limited partners
($63.48 per limited partnership unit). The Partnership's distribution policy is
reviewed on a semi-annual basis. Future cash distributions will depend on the
levels of net cash generated from operations, the availability of cash reserves,
and the timing of the debt maturity, refinancing, and/or property sale. There
can be no assurance, however, that the Partnership will generate sufficient
funds from operations after required capital improvements to permit further
distributions to its partners during the remainder of 2000 or subsequent
periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. The Managing General Partner does not anticipate that costs associated
with this case will be material to the Partnership's overall operations.
Estate of Harry Schubert v. National Property Investors 4, Civil Action No.
97-09129, Court of Common Pleas of Bucks County, Pennsylvania. During 1998, the
Plaintiff brought action against the Partnership alleging that as the result of
carbon monoxide and methane poisoning due to a malfunctioning heating unit in
the deceased's apartment at the Partnership's property, the decedent lost
consciousness for several hours, suffered respiratory arrest and suffered other
pains and injuries. The Plaintiff alleges breach of contract, fraud, violations
of the Unfair Trade Practices and Consumer Protection Law and negligence. The
Partnership has filed a motion for summary judgment and is waiting for the
court's response. The Partnership intends to vigorously defend this matter.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
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 September 30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant 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
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
