SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL PROPERTY INVESTORS 5
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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PRELIMINARY COPY
NATIONAL PROPERTY INVESTORS 5
1873 South Bellaire Street
Denver, Colorado 80222
August __, 1999
Dear Limited Partner:
We are writing to request your consent to an amendment (the
"Amendment") of the Agreement of Limited Partnership of National Property
Investors 5 (the "Partnership") to extend the term of the Partnership from
December 31, 2005 to December 31, 2021. Enclosed for your consideration is
a Consent Solicitation Statement, dated August__, 1999 (the "Solicitation
Statement"), and a form of Consent of Limited Partner (the "Consent Form")
for indicating whether or not you wish to grant your consent to the
Amendment. The consent of limited partners who own more than 50% of all
outstanding limited partnership units is required to approve the Amendment.
The Amendment will enable the Partnership to refinance the
mortgage debts secured by the Oakwood Village Apartments and the Willow Park
at Lake Adelaide Apartments with new 20-year loans. The refinancings are
expected to result in lower interest costs for the Partnership and a cash
distribution to the limited partners, all as more fully described in the
enclosed Solicitation Statement.
NPI Management Corporation, the managing general partner of the
Partnership, recommends that you consent to the Amendment by completing,
dating and signing the enclosed Consent Form and returning it in the
enclosed pre-addressed, postage-paid envelope.
Your participation is important. Please note that this
solicitation will expire at 5:00 p.m., New York City time, on _________,
1999.
If you have any questions or require any assistance in
completing and returning the Consent Form, please contact Corporate
Investors Communication, Inc., at P.O. Box 2065, South Hackensack, New
Jersey 07606-2065; telephone ( ) ____-____.
Very truly yours,
NATIONAL PROPERTY INVESTORS 5
By: NPI MANAGEMENT CORPORATION
Managing General Partner
NATIONAL PROPERTY INVESTORS 5
1873 SOUTH BELLAIRE STREET
DENVER, COLORADO 80222
CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement is being furnished to limited
partners ("Limited Partners") of record as of the close of business on
August __, 1999 (the "Record Date"), of National Investors Property 5, a
California limited partnership (the "Partnership"), in connection with the
solicitation of consents to an amendment (the "Amendment") of the
Partnership's Agreement of Limited Partnership to extend the term of the
Partnership from December 31, 2005 to December 31, 2021.
The Amendment will enable the Partnership to refinance the mortgage
debts secured by the Oakwood Village Apartments and the Willow Park at Lake
Adelaide Apartments with new 20-year loans which will bear interest below
the current loans (the "Refinancing"). The Refinancing is expected to
result in lower interest costs for the Partnership and a cash distribution
to holders of units of limited partnership interest ("Units").
This Consent Solicitation Statement is being solicited by NPI
Equities Investment, Inc., the managing general partner of the Partnership
(the "General Partner"), on behalf of the Partnership. This Consent
Solicitation Statement, and the accompanying form of Consent of Limited
Partner (the "Consent Form"), are first being mailed to Limited Partners on
or about August , 1999.
THE GENERAL PARTNER RECOMMENDS THAT LIMITED PARTNERS CONSENT
TO THE AMENDMENT.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON ____________, 1999 (THE "EXPIRATION DATE").
Questions and requests for assistance may be directed to
Corporate Investors Communications, Inc. at P.O. Box 2065, South
Hackensack, New Jersey 07606-2065; at telephone number ( ) ___-____.
RECORD DATE; CONSENTS REQUIRED
The Partnership has fixed August __, 1999 as the Record Date for
determining limited partners entitled to notice of and to consent to the
Amendment. Only limited partners of record on the Record Date may execute
and deliver a Consent Form. Approval of the Amendment requires the
affirmative consent of Limited Partners who own more than 50% of the
Partnership's outstanding Units. As of the Record Date, there were 85,513
Units issued and outstanding. Accordingly, approval of the Amendment will
require the affirmative consent of Limited Partners who own at least 41,257
Units. The Amendment will become effective on the Expiration Date, provided
consents from Limited Partners owning at least 41,257 Units have been
received.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, e-mail and in person.
Solicitations may be made by representatives of the General Partner, none
of whom will receive additional compensation for such solicitations. The
cost of preparing, assembling, printing and mailing this Consent
Solicitation Statement and the enclosed Consent Form will be borne by the
Partnership.
CONSENT PROCEDURES
LIMITED PARTNERS WHO DESIRE TO CONSENT TO THE AMENDMENT SHOULD DO SO
BY MARKING THE APPROPRIATE BOX ON THE CONSENT FORM INCLUDED HEREWITH, AND
SIGNING, DATING AND DELIVERING THE CONSENT FORM TO THE PARTNERSHIP BY MAIL
IN THE SELF-ADDRESSED, POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE, BY
OVERNIGHT COURIER OR BY FACSIMILE AT THE ADDRESS OR FACSIMILE NUMBER SET
FORTH ABOVE AND ON THE CONSENT FORM, ALL IN ACCORDANCE WITH THE
INSTRUCTIONS CONTAINED HEREIN AND THEREIN.
All Consent Forms that are properly completed, signed and delivered
to the Partnership and not properly revoked (See "Revocation of
Instructions" below) prior to the Expiration Date, will be given effect in
accordance with the specifications thereof. IF A CONSENT FORM IS DELIVERED
AND NEITHER THE "CONSENTS," THE "WITHHOLDS CONSENT" NOR THE "ABSTAIN" BOX
IS MARKED, BUT THE CONSENT FORM IS OTHERWISE PROPERLY COMPLETED AND SIGNED,
THE LIMITED PARTNER WILL BE DEEMED TO HAVE CONSENTED TO THE AMENDMENT.
Consent Forms must be executed in exactly the same manner as the
name(s) in which ownership of the Units is registered. If the Units to
which a Consent Form relates are held by two or more joint holders, all
such holders should sign the Consent Form. If a Consent Form is signed by a
trustee, partner, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary, agency or
representative capacity, such person must so indicate when signing and
submit with the Consent Form evidence satisfactory to the Partnership of
authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect a
Limited Partner's right to sell or transfer the Units. All Consent Forms
received by the Partnership (and not properly revoked) prior to the
Expiration Date will be effective notwithstanding a record transfer of such
Units subsequent to the Record Date, unless the Limited Partner revokes
such Consent Form prior to 5:00 p.m., New York City time, on the Expiration
Date by following the procedures set forth under "Revocation of
Instructions" below.
All questions as to the validity, form and eligibility (including
time of receipt) regarding consent procedures will be determined by the
General Partner in its sole discretion, which determination will be
conclusive and binding. The Partnership reserves the right to reject any or
all Consent Forms that are not in proper form. The Partnership also
reserves the right to waive any defects, irregularities or conditions of
delivery as to particular Consent Forms. Unless waived, all such defects or
irregularities in connection with the deliveries of Consent Forms must be
cured within such time as the General Partner determines. Neither the
General Partner nor any of its affiliates or any other persons shall be
under any duty to give any notification of any such defects of
irregularities or waivers, nor shall any of them incur any liability for
failure to give such notification. Deliveries of Consent Forms will not be
deemed to have been made until any irregularities or defects therein have
been cured or waived. The interpretations of the terms and conditions of
this solicitation by the General Partner shall be conclusive and binding.
REVOCATION OF INSTRUCTIONS
Any Limited Partner who has delivered a Consent Form to the
Partnership may revoke the instructions set forth in such Consent Form by
delivering to the Partnership a written notice of revocation prior to 5:00
p.m., New York City time, on the Expiration Date. In order to be effective,
a notice of revocation of the instructions set forth in a Consent Form must
(i) contain the name of the person who delivered the Consent Form, (ii) be
in the form of a subsequent Consent Form marked either as "CONSENTS,"
"WITHHOLDS CONSENT" or "ABSTAINS," as the case may be, or in a writing
delivered to the General Partners stating that the prior Consent Form is
revoked, (iii) be signed by the Limited Partner in the same manner as the
original signature on the Consent Form, and (iv) be received by the
Partnership prior to 5:00 p.m. New York City time, on the Expiration Date
at its address set forth on the Consent Form. A purported notice of
revocation that lacks any of the required information, is dispatched to an
improper address or is not received in a timely manner will not be
effective to revoke the instructions set forth in a Consent Form previously
given. A revocation of the instructions set forth in a Consent Form can
only be accomplished in accordance with the foregoing procedures. NO
LIMITED PARTNER MAY REVOKE THE INSTRUCTIONS SET FORTH IN A CONSENT FORM
AFTER 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
NO APPRAISAL RIGHTS
Limited partners of the Partnership are not entitled to dissenters'
appraisal rights under California law or the Partnership's Agreement of
Limited Partnership in connection with the Amendment.
GENERAL PARTNER'S RECOMMENDATION
The General Partner recommends that Limited Partners consent to the
Amendment. The General Partner believes that the Amendment is in the best
interests of the Partnership and its Limited Partners. In making its
determination, the General Partner considered the terms of the proposed
Refinancing (see "Refinancing") and alternatives to such Refinancing (see
"Alternatives Considered").
THE REFINANCING
The Amendment will enable the Partnership to refinance the mortgage
debts secured by the Oakwood Village Apartments and Willow Park at Lake
Adelaide Apartments with new 20-year loans. The Refinancing is expected to
result in lower interest costs for the Partnership and an expected cash
distribution to Unitholders.
As of July 31, 1999, the existing mortgage debts relating to Oakwood
Village Apartments and Willow Park at Lake Adelaide Apartments consisting
of loans with a current principal balance of $3,907,600 and $2,890,730,
respectively, with both bearing interest at 8.56% per year
and maturing on February 1, 2001.
The existing debts would be repaid with the proceeds of two new loans
expected to have an original principal amount of approximately $5,665,000
for the Oakwood Village Apartments and $4,000,000 for the Willow Park at
Lake Adelaide Apartments and both will mature in 2019. The new loans are
expected to have a fixed interest rate equal to 1.79% above the 10 year
Treasury Note rate, at the time the interest rate is fixed. From July 1,
1999 to August 12, 1999, such interest rate would have been between 7.32%
and 7.94% and on August 13, 1999 would have been 7.78%. The exact interest
rate will be determined in the future. The new loans will be non-recourse
(with customary exceptions for fraud, misappropriation of funds and
environmental liability), and would be fully amortized over the 20-year
term. The new loans will have non funded reserves for taxes, insurance and
replacement reserves. Further, the new loans can be prepaid in full until
90 days prior to the maturity date, upon payment of a prepayment penalty.
For the first 15 years of the loan, the prepayment penalty would be
calculated based on a formula that calculates yield maintenance.
Thereafter, the prepayment penalty would be equal to 1% of the principal
amount outstanding. As a condition to making the new loans, the lender is
requiring that the Partnership's Agreement of Limited Partnership be
amended to extend the term of the Partnership beyond the proposed maturity
date of the new loan. The proceeds from the new loans would be used to
repay the existing mortgage debt and related costs (expected to be
approximately $6,798,330), to pay other transaction fees and expenses
associated with the Refinancing (expected to be approximately $241,375) and
to pay deferred maintenance at the Oakwood Village Apartments (estimated to
be approximately $1,500). The remainder of the proceeds (estimated to be
approximately $2,549,540) would be distributed to the holders of Units pro
rata, including Units held by the General Partner and its affiliates.
ALTERNATIVES CONSIDERED
The existing mortgage debt secured by Oakwood Village Apartments
matures in February, 2001. The Partnership does not have sufficient cash on
hand (or other liquid assets) to repay this debt or the indebtedness on
another property which matures at the same time. Consequently, the General
Partner considered two alternatives to the proposed Refinancing: (i) a
refinancing of the debt with a new loan with a maturity on or prior to the
expiration of the Partnership's current term (December 31, 2005); and (ii)
a sale of the property.
A refinancing with a loan with a maturity on or prior to the
expiration of the Partnership's current term (December 31, 2005) would have
resulted in borrowing at a much greater cost. The General Partner believes
that interest rates associated with such a loan would be higher than the
proposed loan.
The General Partner also considered a sale of the property, but
believes that a sale of the property at the current time would not be
advantageous given market conditions, the condition of the property and the
tax consequences to limited partners. In particular, the General Partner
considered the potential for future appreciation in the value of the
property and the fact that limited partners would be allocated taxable gain
resulting from the sale of the property. The General Partner cannot predict
when Oakwood Village Apartments or the Willow Park at Lake Adelaide
Apartments or any other property will be sold or otherwise disposed of. The
General Partner continually considers whether a property should be sold or
otherwise disposed of after consideration of relevant factors, including
prevailing economic conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for
the Partnership. The General Partner recognized that the proposed
Refinancing would not prohibit or unduly restrict the Partnership's ability
to sell the property in the future prior to the expiration of the extended
term of the Partnership.
INTERESTS OF CERTAIN PERSONS
An affiliate of the General Partner manages your Partnership's
properties and receives management fees and reimbursement of its expenses.
In 1998, these fees and expenses totaled $242,000. In addition, the General
Partner receives fees and reimbursement of its expenses for managing the
Partnership. In 1998, these fees and expenses totaled $253,000. The
extension of the term of the Partnership may result in such fees continuing
to be paid for a longer period than would be the case if the term of the
Partnership expired in 2006. Therefore, the interests of the General
Partner and its affiliates in continuing the Partnership may be different
than those of the Limited Partners who desire to have the partnership
dissolved and liquidated more quickly. See "Security Ownership of Certain
Beneficial Owners and Management."
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material U.S. federal income tax
consequences to limited partners of the refinancing is based upon current
U.S. federal tax law which is subject to change, possibly with retroactive
effect. This summary is for general information only and does not address
all aspects of U.S. federal income taxation that may be relevant in the
particular circumstances of each limited partner or to limited partners
subject to special treatment under the Code. In addition, this summary does
not address any state, local or foreign tax consequences. No ruling from
the Internal Revenue Service ("IRS") will be requested with respect to the
U.S. federal income tax consequences of the refinancing and, as such, there
can be no assurance that the IRS will agree with the summary set forth
herein.
EACH LIMITED PARTNER IS URGED TO CONSULT ITS TAX ADVISOR REGARDING
THE SPECIFIC TAX CONSEQUENCES OF THE AMENDMENT AND THE REFINANCING,
INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.
As an initial matter, the extension of the Partnership's term as
provided by the Amendment will not have any tax consequences to Limited
Partners.
In general, the Code provides that an increase in a partner's share
of partnership liabilities is treated as a cash contribution by such
partner to the partnership with a corresponding increase in the partner's
tax basis in its partnership interest. Conversely, to the extent a
partner's share of partnership liabilities is reduced, such reduction is
treated as a distribution of cash by the partnership to the partner with a
corresponding reduction in the partner's tax basis in its partnership
interest. In general, to the extent a partner receives cash distributions
in excess of such partner's tax basis in its partnership interest, taxable
gain is recognized.
As of July 31, 1999, the aggregate balance on the existing loans was
$6,798,330. The principal amount of the new loan (part of which will be
used to satisfy the existing loans in full) will be $9,655,000, or
$2,856,670 more than the existing loans. Each Limited Partner's adjusted
tax basis in its Partnership interest will be increased by its pro rata
share of such excess, or approximately $33.41 per Unit. Following the
completion of the refinancing, the Partnership anticipates making a pro
rata cash distribution of approximately $2,549,540, or $29.81 per Unit. As
noted above, while this cash distribution will reduce the adjusted tax
basis of the Limited Partners' interests in the Partnership, a Limited
Partner will not recognize taxable gain unless the cash it receives exceeds
its adjusted tax basis. Therefore, the refinancing and distribution should
not result in the recognition of taxable income to the Limited Partners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On October 1, 1998, Insignia Financial Group, Inc. merged into
Apartment Investment Management Company ("AIMCO"), and on February 26,
1999, Insignia Properties Trust merged into AIMCO. As a result of these
transactions, AIMCO acquired indirect ownership of the General Partner.
No director or officer of the General Partner owns any Units. The
following table sets forth certain information regarding Units of the
Partnership owned by each person who is known by the Partnership to own
beneficially more than 5% of the Units as of July 30, 1999:
Name and address* of Amount and Nature of
Beneficial Owner Beneficial Owner Percent of Class
---------------- ---------------- ----------------
AIMCO Properties L.P. 2,307.00 (1) 2.8%
Insignia Properties 38,344.00 (2) 45.0%
L.P.
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* 1873 South Bellaire Street, Denver, Colorado 80222
(1) The Units may be deemed beneficially owned by AIMCO-GP, Inc. (which
is the general partner of AIMCO Properties, L.P.) and AIMCO (which
owns AIMCO-GP, Inc.)
(2) The Units may be deemed beneficially owned by AIMCO/IPT, Inc. (which
is the general partner of Insignia Properties, L.P.) and AIMCO (which
owns AIMCO/IPT, Inc.)
NATIONAL PROPERTY INVESTORS 5
By: NPI MANAGEMENT CORPORATION
Managing General Partner
August ___, 1999
PRELIMINARY COPY APPENDIX
NATIONAL PROPERTY INVESTORS 5
1873 South Bellaire Street
Denver, Colorado 80222
CONSENT OF LIMITED PARTNER
The undersigned, a limited partner of National Property Investors 5
(the "Partnership"), and the holder of units ("Units") of limited
partnership interest in the Partnership, acting with respect to all of the
Units owned by the undersigned, hereby:
[__] Consents [__] Withholds Consent [__] Abstains
with respect to an amendment (the "Amendment") of Section 4 of the
Partnership's Agreement of Limited Partnership to read in its entirety as
follows: "The Partnership shall commence as of the 15th day of July, 1981,
and shall continue until the 31st day of December, 2021, unless previously
terminated in accordance with the provisions of this Partnership
Agreement."
IF NO ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND
SIGNED CONSENT FORM WILL BE DEEMED TO BE A CONSENT TO THE AMENDMENT.
The undersigned hereby acknowledges receipt of the Consent
Solicitation Statement, dated __________, 1999. THIS CONSENT IS SOLICITED
ON BEHALF OF NATIONAL PROPERTY INVESTORS 5, BY NPI MANAGEMENT CORPORATION,
THE MANAGING GENERAL PARTNER.
A fully completed, signed and dated copy of this Consent Form should
be sent to the Partnership by mail or overnight courier to the address
specified above, or by fax to the fax number specified above, prior to 5:00
p.m., New York City time on ____________, 1999.
Dated:____________, 1999 By:____________________________________
____________________________________
Please Print Name
If held jointly:
By:____________________________________
____________________________________
Please Print Name
Please sign exactly as you hold your Partnership Units. When signing as an
attorney-in-fact, executors, administrator, trustee or guardian, please
give your full title. If an interest is jointly held, each holder should
sign. If a corporation, please sign in full corporate name by a duly
authorized officer. If a partnership, please sign in partnership name by a
duly authorized person.
