FORM 10-KSB.-ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 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 0-11095
NATIONAL PROPERTY INVESTORS 5
(Name of small business issuer in its charter)
California 22-2385051
(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 [X] No []
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. $5,845,000.
State the aggregate market value of the voting stock held by non-affiliates
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 the registrant's partnership interests is not
available. Should a trading market develop for these interests, it is the
Managing General Partner's belief that such trading would not exceed
$25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
National Property Investors 5 (the "Partnership" or "Registrant") is a publicly-
held California limited partnership organized under the Uniform Limited
Partnership laws of California as of July 15, 1981. The Partnership's Managing
General Partner is NPI Equity Investments, Inc. ("NPI Equity" or the "Managing
General Partner"), a Florida corporation.
The Partnership, through its public offering of Limited Partnership Units, sold
82,513 units aggregating $41,256,500. The general partners contributed capital
in the amount of $1,000 for a 3% interest in the Partnership. The Partnership
was formed for the purpose of acquiring fee and other forms of equity interests
in various types of real property. The Partnership currently owns three
apartment complexes and has a 24.028% interest in another. The Managing General
Partner of the Partnership intends to maximize the operating results and,
ultimately, the net realizable value of each of the Partnership's properties in
order to achieve the best possible return for the investors. Such results may
best be achieved through property sales, refinancings, debt restructurings or
relinquishment of the assets. The Partnership intends to evaluate each of its
holdings periodically to determine the most appropriate strategy for each of the
assets.
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. Limited Partners have no right to
participate in the management or conduct of such business and affairs. NPI-AP
Management, L.P.("NPI-AP"), provides day-to-day management services for 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. Each of its apartment
properties is located in or near a major urban area and, accordingly, competes
for rentals not only with similar apartment properties in its immediate area but
with hundreds of similar apartment properties throughout the urban area. Such
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.
Change in Control
On August 10, 1994, National Property Investors, Inc. ("NPI"), 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. In addition, Apollo obtained general and
limited partnership interests in NPI-AP. NPI Property Management Corporation,
an affiliate of NPI, became the managing general partner of NPI-AP, and assigned
its interest in the management contract for the Partnership's properties to the
partnership as well as all other properties it manages for partnerships
affiliated with the Managing General Partner.
On October 12, 1994, Apollo acquired one-third of the stock of NPI, the parent
corporation of NPI Equity. Pursuant to the terms of the stock acquisition,
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 August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial
Group, Inc. ("Insignia"), a Delaware corporation, all of the issued and
outstanding common stock of NPI. The closing of the transactions contemplated
by the above mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors of each
of those entities to be elected. See "Item 9" for information on the directors
and executive officers of the Partnership.
The Tender Offer
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") and
DeForest Ventures II L.P. ("DeForest II") and (ii) an additional equity interest
in NPI-AP (bringing its total equity interest in NPI-AP 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 interests in 12 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 30,977 limited
partnership units or 37.5% of the total limited partnership units of the
Partnership.
During 1996, DeForest II and certain of its affiliates sold all of their
interests in the Partnership to an affiliate of Insignia. As a result of the
purchase, such affiliate acquired 37,101 limited partnership units or
approximately 45% of the total limited partnership units of the Partnership.
(See "Item 11, Security Ownership of Certain Beneficial Owners and Management.")
ITEM 2. DESCRIPTION OF PROPERTIES
The following table sets forth the Partnership's investments in properties:
Date of
Property Purchase Type of Ownership Use
Willow Park on Lake Adelaide (1) 12/13/82 Fee ownership, subject Apartment
Altamonte Springs, Florida to a first mortgage 185 units
Oakwood Village at 8/3/82 Fee ownership, subject Apartment
Lake Nan Apartments to a first mortgage 278 units
Orlando, Florida
Palisades Apartments 6/22/83 Fee ownership, subject Apartment
Montgomery, Alabama to a first mortgage 432 units
The Village Apartments 1/5/84 Tenant in common with Apartment
Vorhees Township, National Property 138 units (2)
New Jersey Investors 6 the
Partnership owns 24.028%;
subject to a first
mortgage
(1) Formerly known as The Springs of Altamonte Apartments
(2) Represents the Partnership's pro-rata share. In total, The Village
Apartments consists of 576 units.
SCHEDULE OF PROPERTIES (IN THOUSANDS):
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Willow Park $ 6,858 $ 4,533 5-27.5 yrs. S/L $ 1,010
Oakwood Village 9,396 6,501 5.27.5 yrs. S/L 1,072
Palisades 11,862 8,515 5-27.5 yrs. S/L 2,158
The Village 4,957 2,528 5-27.5 yrs. S/L 921
Total $ 33,073 $ 22,077 $ 5,161
See "Note A" of the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES (IN THOUSANDS):
Principal Principal
Balance At Period Balance
December 31, Interest Amortized Maturity Due At
Property 1996 Rate (a) Date Maturity
Willow Park $ 2,968 8.56% 30 years 02/01/01 $ 2,833
Oakwood Village 4,012 8.56% 30 years 02/01/01 3,829
Palisades 4,899 9.00% 22 years 07/01/03 3,996
The Village 2,657 8.50% 27 years 09/01/00 2,505
Total $ 14,536
(a) The mortgage loans on each of the properties mature at various times with
balloon payments due at maturity.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties. Certain of the notes include prepayment penalties if repaid prior
to maturity.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average Annual
Rental Rates Occupancy
Property 1996 1995 1996 1995
Willow Park $6,364/unit $6,217/unit 95% 97%
Oakwood Village 6,068/unit 5,925/unit 91% 93%
Palisades 4,749/unit 4,744/unit 88% 91%
The Village 7,985/unit 7,767/unit 93% 95%
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 residential apartment complexes in the area. The
Managing General Partner believes that all of the properties are adequately
insured. The lease terms for the properties are for one year or less. No
tenant leases 10% or more of the available rental space.
Real estate taxes (in thousands) and effective rates in 1996 for each property
were:
1996 1996
Billing Rate
Willow Park $ 85 2.03%
Oakwood Village 105 1.93%
Palisades 56 3.45%
The Village 134 3.84%
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 EQUITY AND RELATED PARTNER MATTERS
The Partnership, a publicly-held limited partnership, sold 82,513 Limited
Partnership Units aggregating $41,256,500. As of January 1, 1997, the number of
holders of Limited Partnership units was 2,931. There is no intention to sell
additional Limited Partnership Units nor is there an established market for
these Units.
Future cash distributions will depend on the levels of net cash generated from
operations, property sales, refinancings, and the availability of cash reserves.
No cash distributions were made in 1996 or 1995. Currently, the Managing
General Partner is evaluating the feasibility of a distribution of cash reserves
in 1997.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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 loss for the year ended December 31, 1996, was
approximately $515,000 versus a net loss of approximately $725,000 for the year
ended December 31, 1995. Overall, the Partnership experienced an increase in
revenue and a decrease in expenses in 1996 as compared to 1995. The decrease in
net loss is primarily attributable to an increase in other income and a decrease
in operating expenses. The increase in other income is primarily due to an
increase in lease cancellation and application fees in 1996. Also contributing
to the increase in other income was increased interest income resulting from
increased cash reserves held by the Partnership. Operating expenses declined
primarily due to reductions in maintenance expense and insurance expense at the
properties. Partially offsetting these decreases to expense was an increase in
general and administrative expenses. As noted in "Note D - Transactions with
Affiliated Parties," the Partnership reimburses the Managing General Partner and
its affiliates for its costs involved in the management and administration of
all partnership activities. While overall expense reimbursements have increased
for the year ended December 31, 1996, the recurring expenses subsequent to the
transition efforts to the new administration are expected to more closely
approximate historical levels. The increase in expense reimbursements is
directly attributable to the combined efforts of the Greenville, South Carolina,
and Atlanta, Georgia, administration offices during the year-end close,
preparation of the 1995 10-K and tax return (including the limited partner K-
1's), filing of the first two quarterly reports and transition of asset
management responsibilities to the new administration.
Included in operating expense is approximately $161,000 of major repairs and
maintenance comprised of painting, exterior repairs, and major landscaping for
the year ended December 31, 1996.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. 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 cash and cash equivalents of
$1,901,000 as compared to $1,802,000 at December 31, 1995. Net cash provided by
operating activities remained relatively stable from the year ended December 31,
1996, to the year ended December 31, 1995. The increase in cash used in
investing activities is due to increased property improvements and replacements
in 1996. The increase in cash used in financing activities is the result of a
greater portion of the properties monthly payments being applied to mortgage
principal due to normal debt reduction amortization.
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, and 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 properties 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 $14,536,000 matures at various times with balloon
payments due at maturity at which time the properties will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, property sales, refinancings, and the availability of
cash reserves. No cash distributions were made in 1995 or 1996. Currently, the
Managing General Partner is evaluating the feasibility of a distribution of cash
reserves in 1997.
ITEM 7. FINANCIAL STATEMENTS
NATIONAL PROPERTY INVESTORS 5
LIST OF FINANCIAL STATEMENTS
Report of Independent Auditors'
Balance Sheet - December 31, 1996
Statements of Operations - Years ended December 31, 1996 and 1995
Statements of Changes in Partners' Capital (Deficit) - Years ended
December 31, 1996 and 1995
Statements of Cash Flows - Years ended December 31, 1996 and 1995
Notes to Financial Statements
Independent Auditors' Report
To the Partners
National Property Investors 5
Greenville, South Carolina
We have audited the accompanying balance sheet of National Property Investors 5
(a limited partnership)(the "Partnership") as of December 31, 1996, and the
related statements of operations, changes in partners' capital (deficit) and
cash flows for each of the two years in the period ended December 31, 1996.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors 5
as of December 31, 1996, and the results of its operations and its 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
Certified Public Accountants
New York, NY
January 27, 1997
NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
December 31, 1996
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 1,901
Other assets 1,092
Investment properties:
Land $ 2,457
Buildings and related personal property 30,616
33,073
Less accumulated depreciation (22,077) 10,996
$ 13,989
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 324
Tenant security deposits 111
Mortgage notes payable 14,536
Partners' Capital (Deficit):
Limited partners' (82,513 units issued and
outstanding) $ 248
General partner's (1,230) (982)
$ 13,989
See Accompanying Notes to Financial Statements
NATONAL PROPERTY INVESTORS 5
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1996 1995
Revenues:
Rental income $ 5,403 $ 5,449
Other income 442 318
Total revenues 5,845 5,767
Expenses:
Operating 3,413 3,556
Interest 1,345 1,369
Depreciation 1,332 1,339
General and administrative 270 228
Total expenses 6,360 6,492
Net loss $ (515) $ (725)
Net loss allocated to general partner (3%) $ (15) $ (22)
Net loss allocated to limited partners (97%) (500) (703)
$ (515) $ (725)
Net loss per limited partnership unit $ (6.05) $ (8.52)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 82,513 $ 1 $ 41,257 $ 41,258
Partners' (deficit) capital at
December 31, 1994 82,513 $ (1,193) $ 1,451 $ 258
Net loss for the year
ended December 31, 1995 -- (22) (703) (725)
Partners' (deficit) capital
at December 31, 1995 82,513 (1,215) 748 (467)
Net loss for the year ended
December 31, 1996 -- (15) (500) (515)
Partners' (deficit) capital
at December 31, 1996 82,513 $ (1,230) $ 248 $ (982)
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1996 1995
Cash flows from operating activities:
Net loss $ (515) $ (725)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,332 1,339
Amortization of loan costs 77 79
Change in accounts:
Other assets (104) 151
Accounts payable and accrued expenses 75 19
Tenant security deposit liabilities (13) (14)
Net cash provided by operating activities 852 849
Cash flows from investing activities:
Property improvements and replacements (560) (195)
Net cash used in investing activities (560) (195)
Cash flows from financing activities:
Payments of mortgage notes payable (193) (177)
Net cash used in financing activities (193) (177)
Net increase in cash and cash equivalents 99 477
Cash and cash equivalents at beginning of period 1,802 1,325
Cash and cash equivalents at end of period $ 1,901 $ 1,802
Supplemental information:
Cash paid for interest $ 1,273 $ 1,347
See Accompanying Notes to Financial Statements
NATIONAL PROPERTY INVESTORS 5
Notes to Financial Statements
December 31, 1996
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization:
National Property Investors 5 (the "Partnership"), a limited partnership, was
organized under the Uniform Limited Partnership Laws of California as of July
15, 1981, for the purpose of acquiring and operating income producing
residential real estate. The Partnership currently owns two apartment complexes
located in Florida and one complex located in Alabama. The Partnership also
owns a 24.028 percent interest (as a tenant-in-common with an affiliate of the
managing general partner) in an apartment complex located in New Jersey. The
Partnership will terminate on December 31, 2005, unless previously terminated,
in accordance with the terms of the Agreement of Limited Partnership. Limited
partners' units are at a stated value of $500. A total of 82,513 units of the
limited partnership were issued for aggregate capital contributions of
$41,256,500. In addition, the general partners contributed a total of $1,000 to
the Partnership.
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.
Allocation of Income, Loss, and Distributions:
Net income, net loss, and distributions of cash of the Partnership are allocated
between general and limited partners in accordance with the provisions of the
partnership agreement.
Fair Value of Financial Instruments:
In 1995, the Partnership implemented "Statement of Financial Accounting
Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments", as amended by "SFAS No. 119, Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments", which requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate fair
value. Fair value is defined in the SFAS as the amount at which the instruments
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale. The Partnership believes that the carrying
amount of its financial instruments (except for long term debt) approximates
their fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
Investment Properties:
Investment properties are stated at cost. Acquisition fees are capitalized as a
cost of real estate. In 1995, the Partnership adopted "SFAS 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 recognized for long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the assets' carrying
amounts. The impairment loss is measured by comparing the fair value of the
asset to its carrying amount. The adoption of the SFAS had no effect on the
Partnership's financial statements.
For real estate purchased in joint ownership with an affiliated partnership, the
assets, liabilities, revenues, and expenses are allocated on a pro-rata basis to
each partnership in accordance with its percentage of ownership.
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.
Leases:
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on its leases.
Depreciation:
Depreciation is computed by the straight-line method over estimated useful lives
ranging from 15 to 27.5 years for buildings and improvements and from five to
seven years for furnishings.
Deferred Costs:
Financing costs are deferred and amortized as interest expense over the term of
the related loan. Net deferred costs of approximately $366,000 are included in
other assets at December 31, 1996. At December 31, 1996, accumulated
amortization of deferred financing costs totaled approximately $246,000.
Income Taxes:
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
Reclassifications:
Certain reclassifications have been made to the 1995 balances to conform to the
1996 presentation.
NOTE B - MORTGAGE NOTES PAYABLE
The principal terms of the mortgage notes payable are as follows (in thousands):
Principal Monthly Principal
Balance At Payment Balance
December 31, Including Interest Maturity Due At
Property 1996 Interest Rate Date Maturity
Willow Park $ 2,968 $ 23 8.56% 02/01/01 $ 2,833
Oakwood Village 4,012 32 8.56% 02/01/01 3,829
Palisades 4,899 45 9.00% 07/01/03 3,996
The Village 2,657 22 8.50% 09/01/00 2,505
Total $ 14,536 $ 122
The mortgage notes payable are nonrecourse and are secured by pledge of
respective apartment properties and by pledge of revenues from the respective
apartment properties.
Scheduled principal payments on the mortgage notes payable subsequent to
December 31, 1996, are as follows (in thousands):
1997 $ 211
1998 230
1999 251
2000 2,767
2001 6,823
Thereafter 4,254
$ 14,536
NOTE C - INCOME TAXES
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
The Partnership files its tax return on an accrual basis and has computed
depreciation for tax purposes using accelerated methods which are not in
accordance with generally accepted accounting principles. A reconciliation of
the net loss per the financial statements to the net taxable loss to partners is
as follows (in thousands, except unit data):
1996 1995
Net loss per financial statements $ (515) $ (725)
Difference in income and expenses for
financial statement and tax reporting 22 3
Difference between tax depreciation
and financial statement depreciation (18) (38)
Net taxable loss to partners $ (511) $ (760)
Federal taxable loss per limited $ (6.00) $ (8.93)
partnership unit
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 1996 (in thousands):
Net liabilities as reported $ (982)
Land and buildings (746)
Accumulated depreciation (5,089)
Syndication and distribution costs 4,485
Other 15
Net liabilities - Federal tax basis $ (2,317)
NOTE D - 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 is the general partner of the Partnership. NPI Equity is a wholly-
owned subsidiary of National Property Investors, Inc. ("NPI").
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial
Group, Inc. ("Insignia"), a Delaware corporation, all of the issued and
outstanding common stock of NPI. The closing of the transactions contemplated
by the above mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors of each
of those entities to be elected.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred in 1996 and 1995 (in thousands):
1996 1995
Property management fees (included in operating
expenses) $ 287 $ 278
Reimbursement for services of affiliates, including
$22,000 of construction services reimbursements
in 1996 (included in general and administrative
expenses, operating expenses, and investment
properties) 225 204
For the period of 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 fiscal year ended December 31, 1995, are
insurance premiums of approximately $206,000 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 3% of adjusted cash from operations and an
allocation of 3% of the net income or loss of the Partnership. There was no
adjusted cash from operations distributed for the years ended December 31, 1996
and 1995. Upon the sale of all properties and termination of the Partnership,
the general partners may be required to contribute certain funds to the
Partnership in accordance with the partnership agreement.
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 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
managing general partner (whether or not For Cause, as defined in the
Partnership Agreement); (ii) the sale or refinancing of a property by the
Partnership, or; (iii) the liquidation of the Partnership. The Partnership has
not borrowed under the Partnership Revolver, to date.
NOTE E - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS)
Initial Cost
To Partnership
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Willow Park $ 2,968 $ 567 $ 5,218 $ 1,073
Altamonte Springs, Florida
Oakwood Village 4,012 589 7,181 1,626
Orlando, Florida
Palisades 4,899 970 8,448 2,444
Montgomery, Alabama
The Village 2,657 307 4,018 632
Vorhees Township, New Jersey
Totals $14,536 $ 2,433 $ 24,865 $ 5,775
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1996
Buildings
And Related
Personal Accumulated Year Of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Willow Park $ 574 $ 6,284 $ 6,858 $ 4,533 1973 12/82 5-27.5 yrs.
Oakwood Village 595 8,801 9,396 6,501 1973 08/82 5-27.5 yrs.
Palisades 976 10,886 11,862 8,515 1968-1972 06/83 5-27.5 yrs.
The Village 312 4,645 4,957 2,528 1979-1980 01/84 5-27.5 yrs.
Totals $ 2,457 $ 30,616 $33,073 $ 22,077
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1996 1995
Balance at beginning of year $ 32,513 $ 32,318
Property improvements and
replacements 560 195
Balance at end of year $ 33,073 $ 32,513
Accumulated Depreciation
Balance at beginning of year $ 20,745 $ 19,406
Additions charged to expense 1,332 1,339
Balance at end of year $ 22,077 $ 20,745
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1996 and 1995 respectively, is approximately $32,327,000 and
$31,759,000. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1996 and 1995 is approximately $27,166,000 and $25,817,000.
NOTE F - TENANT-IN-COMMON PROPERTY
The Partnership currently owns The Village Apartments, as a tenant-in-common
with National Property Investors 6 ("NPI 6"), an affiliated public limited
partnership. NPI 6 acquired a 75.972% undivided interest with the Partnership
owning the remaining 24.028%. The property is accounted for using the
proportionate consolidation method. The financial statements and supplementary
data reflect the Partnership's 24.028% proportionate share of historical cost of
this property.
The condensed, combined balance sheets of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at December
31, 1996, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the twelve month periods ended December 31, 1996 and 1995, are summarized as
follows (in thousands):
PROPORTIONATE
COMBINED SHARE
December 31, December 31,
1996 1996
Total assets, primarily real estate $ 12,962 $ 3,055
Liabilities, primarily a mortgage payable $ 11,303 $ 2,716
Equity 1,659 339
Total liabilities and equity $ 12,962 $ 3,055
COMBINED PROPORTIONATE SHARE
For the Year Ended For the Year Ended
December 31, December 31,
1996 1995 1996 1995
Total revenues $ 4,559 $ 4,387 $ 1,095 $ 1,054
Operating and other expenses $ 2,487 $ 2,487 $ 597 $ 597
Depreciation 745 733 179 176
Mortgage interest 1,000 1,012 240 244
Total expenses 4,232 4,232 1,016 1,017
Net income $ 327 $ 155 $ 79 $ 37
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
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 names and ages of, as well as the positions and offices held by, the
executive officers and directors of NPI Equity Investments, Inc. ("NPI Equity"),
are set forth below. There are no family relationships between or among any
officers or directors.
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 NPI Equity since
January 1996 and Managing Director-Partnership Administration of Insignia
Financial Group, Inc. ("Insignia") since January 1991. Mr. Jarrard served as
Managing Director-Partnership Administration and Asset Management from July 1994
until January 1996.
Ronald Uretta has been Vice President and Treasurer of NPI Equity since January
1996 and Insignia's Treasurer since January 1992. Since August 1996, he has
served as Insignia's Chief Operating Officer. He also served as Insignia's
Secretary from January 1992 to June 1994 and as Chief Financial Officer from
January 1992 to August 1996. Since September 1990, Mr. Uretta has also served
as the Chief Financial Officer and Controller of Metropolitan Asset Group.
John K. Lines has been Vice President and Secretary of NPI Equity 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 has been Assistant Secretary of NPI Equity since January 1996
and Assistant Secretary of Insignia since 1991.
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 in "Item
12" below.
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 Registrant to
own beneficially or exercise voting or dispositive control over more than 5% of
the Registrant's limited partnership units, by each of the directors and by all
directors and executive officers of the Managing General Partner as a group as
of January 1, 1997.
Name and address of Amount of nature of
Beneficial Owner Beneficial Owner % of Class
Insignia Properties, LP 37,101 45.0%
One Insignia Financial
Greenville, SC 29602
All directors and executive 0 --
officers as a group (four persons)
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") and
DeForest Ventures II L.P. ("DeForest II") and (ii) an additional equity interest
in NPI-AP (bringing its total equity interest in NPI-AP 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 interests in 12 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 30,977 limited
partnership units or 37.5% of the total limited partnership units of the
Partnership.
During 1996, DeForest II and certain of its affiliates sold all of their
interests in the Partnership to an affiliate of Insignia. As a result of the
purchase, such affiliate acquired 37,101 limited partnership units or
approximately 45% of the total limited partnership units of the Partnership.
There are no arrangements known to the Managing General Partner 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
No transactions have occurred between the Partnership and any officer or
director of NPI Equity.
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. NPI Equity is a wholly-
owned subsidiary of National Property Investors, Inc. ("NPI").
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to
IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial
Group, Inc. ("Insignia"), a Delaware corporation, all of the issued and
outstanding common stock of NPI. The closing of the transactions contemplated by
the above mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI and the Managing General
Partner resigned and IFGP Corporation caused new officers and directors of each
of those entities to be elected.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred in 1996 and 1995 (in thousands):
1996 1995
Property management fees (included in operating
expenses) $ 287 $ 278
Reimbursement for services of affiliates, including
$22,000 of construction services reimbursements
in 1996 (included in general and administrative
expenses, operating expenses, and investment
properties) 225 204
For the period of 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 fiscal year ended December 31, 1995, are
insurance premiums of approximately $206,000 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 3% of adjusted cash from operations and an
allocation of 3% of the net income or loss of the Partnership. There was no
adjusted cash from operations distributed for the years ended December 31, 1996
and 1995. Upon the sale of all properties and termination of the Partnership,
the general partners may be required to contribute certain funds to the
Partnership in accordance with the partnership agreement.
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 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
managing general partner (whether or not For Cause, as defined in the
Partnership Agreement); (ii) the sale or refinancing of a property by the
Partnership, or; (iii) the liquidation of the Partnership. The Partnership has
not borrowed under the Partnership Revolver, to date.
During 1996, an affiliate of Insignia acquired approximately 45% of the total
limited partnership units of the Partnership, as described in "Item 11" above.
As a result of its ownership of 37,101 limited partnership units, an affiliate
of Insignia 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, such affiliate 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 such affiliate
acquired its Units, had agreed for the benefit of non-tendering unitholders,
that it 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 such affiliates right to vote each Unit acquired.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed 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 Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL PROPERTY INVESTORS 5
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Date: March 18, 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 Registrant and
in the capacities and on the date indicated.
/s/ William H. Jarrard, Jr. President and Director March 18, 1997
William H. Jarrard, Jr.
/s/Ronald Uretta Vice President and
Ronald Uretta Treasurer March 18, 1997
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 NPI, Inc. Stock Purchase Agreement, dated as of
August 17, 1995, incorporated by reference to the
Partnership's Current Report on Form 8-K dated August
17, 1995.
2.2 Partnership Units Purchase Agreement dated as of
August 17, 1995, incorporated by reference to Exhibit
2.1 to Form 8-K filed by Insignia Financial Group,
Inc. ("Insignia") with the Securities and Exchange
Commission on September 1, 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 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 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 January 4, 1982, included in the
Partnership's Registration Statement on Form S-11
(Reg. No. 2-74143).
(b) Amendments to the Agreement of Limited
Partnership, incorporated by reference to the
Definitive Proxy Statement of the Partnership dated
April 3, 1991.
(c) Amendments to the Partnership Agreement
incorporated by reference to the Statement Furnished
in Connection With The Solicitation of the Registrant
dated August 28, 1992.
10.3 Form of Property Management Agreement dated June 21,
1991, by and between the Partnership and NPI
Management with respect to the Partnership's
properties incorporated by reference to the
Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991.
10.5 Mortgage Note, dated June 29, 1993, made by the
Partnership for the benefit of Collateral Mortgage,
Ltd., as it pertains to Palisades Apartments
incorporated by reference to the Partnership's
Quarterly Report on Form 10-Q for the period ended
June 30, 1993.
10.6 Loan Agreement, dated June 29, 1993, between the
Partnership and Collateral Mortgage, Ltd., as it
pertains to Palisades Apartments incorporated by
reference to the Partnership's Quarterly Report on
Form 10-Q for the period ended June 30, 1993.
10.7 Mortgage and Security Agreement dated June 29, 1993,
between the Partnership and Collateral Mortgage,
Ltd., as it pertains to Palisades Apartments
incorporated by reference to the Partnership's
Quarterly Report on Form 10-Q for the period ended
June 30, 1993.
10.8 Amended and Restated First Mortgage Note, dated
September 30, 1993, made by the Partnership for the
benefit of The Travelers Insurance Company, as it
pertains to The Village Apartments incorporated by
reference to the Partnership's Quarterly Report on
Form 10-Q for the period ended September 30, 1993.
10.9 Amended and Restated First Mortgage, dated September
30, 1993, between the Partnership and The Travelers
Insurance Company, as it pertains to The Village
Apartments incorporated by reference to the
Partnership's Quarterly Report on Form 10-Q for the
period ended September 30, 1993.
10.10 Multifamily Note and Addendum, dated January 3, 1994,
made by the Partnership for the benefit of Hanover
Capital Mortgage Corporation, as it pertains to The
Springs Apartments incorporated by reference to the
Partnership's Annual Report on Form 10-K for the
period ended December 31, 1993.
10.11 Multifamily Mortgage, Assignment of Rents and
Security Agreement and Rider, dated January 3, 1994,
between the Partnership and Hanover Capital Mortgage
Corporation, as it pertains to The Springs Apartments
incorporated by reference to the Partnership's Annual
Report on Form 10-K for the period ended December 31,
1993.
10.12 Multifamily Note and Addendum, dated January 7, 1994,
made by the Partnership for the benefit of Hanover
Capital Mortgage Corporation, as it pertains to
Oakwood Village at Lake Nan Apartments incorporated
by reference to the Partnership's Annual Report on
Form 10-K for the period ended December 31, 1993.
10.13 Multifamily Mortgage, Assignment of Rents and
Security Agreement and Rider, dated January 7, 1994,
between the Partnership and Hanover Capital
Corporation, as it pertains to Oakwood Village at
Lake Nan Apartments incorporated by reference to the
Partnership's Annual Report on Form 10-K for the
period ended December 31, 1993.
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors 5 1996 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000355637
<NAME> NATIONAL PROPERTY INVESTORS 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,901
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 33,073
<DEPRECIATION> 22,077
<TOTAL-ASSETS> 13,989
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 14,536
0
0
<COMMON> 0
<OTHER-SE> (982)
<TOTAL-LIABILITY-AND-EQUITY> 13,989
<SALES> 0
<TOTAL-REVENUES> 5,845
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,360
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,345
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (515)
<EPS-PRIMARY> (6.05)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
