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 0-11095
NATIONAL PROPERTY INVESTORS 5
(Exact name of small business issuer as specified in its charter)
California 22-2385051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. 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 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
NATIONAL PROPERTY INVESTORS 5
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 549
Receivables and deposits 374
Restricted escrows 69
Other assets 244
Investment properties:
Land $ 2,145
Buildings and related personal property 28,705
30,850
Less accumulated depreciation (23,950) 6,900
$ 8,136
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 122
Tenant security deposit liabilities 124
Accrued property taxes 201
Due to Managing General Partner 290
Other liabilities 208
Mortgage notes payable 12,239
Partners' Deficit
General partner $ (1,301)
Limited partners (82,513 units
issued and outstanding) (3,747) (5,048)
$ 8,136
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
NATIONAL PROPERTY INVESTORS 5
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 $ 1,135 $ 1,184 $ 3,513 $ 3,467
Other income 99 73 290 203
Total revenues 1,234 1,257 3,803 3,670
Expenses:
Operating 536 609 1,711 1,690
Interest 257 265 831 799
Depreciation 352 330 1,036 950
General and administrative 119 45 291 153
Property taxes 57 82 186 185
Total expenses 1,321 1,331 4,055 3,777
Net loss $ (87) $ (74) $ (252) $ (107)
Net loss allocated to general
partner (3%) $ (3) $ (2) $ (8) $ (3)
Net loss allocated to limited
partners (97%) (84) (72) (244) (104)
$ (87) $ (74) $ (252) $ (107)
Net loss per limited partnership unit $ (1.02) $ (0.87) $(2.96) $ (1.26)
Distributions per limited partnership
unit $ -- $ -- $ 19.20 $ --
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
NATIONAL PROPERTY INVESTORS 5
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 82,513 $ 1 $41,257 $41,258
Partners' deficit at
December 31, 1999 82,513 $(1,253) $(1,919) $(3,172)
Distributions to partners -- (40) (1,584) (1,624)
Net loss for the nine months
ended September 30, 2000 -- (8) (244) (252)
Partners' deficit at
September 30, 2000 82,513 $(1,301) $(3,747) $(5,048)
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL PROPERTY INVESTORS 5
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 loss $ (252) $ (107)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 1,036 950
Amortization of loan costs 35 49
Change in accounts:
Receivables and deposits (23) (115)
Other assets (33) (98)
Accounts payable (23) (3)
Tenant security deposit liabilities 2 11
Accrued property taxes 144 142
Other liabilities 2 (50)
Net cash provided by operating activities 888 779
Cash flows from investing activities:
Property improvements and replacements (498) (608)
Net deposits to restricted escrows (16) (51)
Net cash used in investing activities (514) (659)
Cash flows from financing activities:
Distributions to partners (1,624) --
Payments of mortgage notes payable (192) (165)
Loan costs paid (25) --
Net cash used in financing activities (1,841) (165)
Net decrease in cash and cash equivalents (1,467) (45)
Cash and cash equivalents at beginning of period 2,016 972
Cash and cash equivalents at end of period $ 549 $ 927
Supplemental disclosure of cash flow information:
Cash paid for interest $ 797 $ 785
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
e)
NATIONAL PROPERTY INVESTORS 5
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 5
(the "Partnership" or "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 as 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 months ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $193 $188
Reimbursement for services of affiliates (included in
operating and general and administrative expenses,
and investment properties) 179 113
Partnership management fee (included in general and
administrative expenses) 51 --
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 all
of the Registrant's properties for providing property management services. The
Partnership paid to such affiliates approximately $193,000 and $188,000 for the
nine months ended September 30, 2000 and 1999, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $179,000 and $113,000 for the
nine months ended September 30, 2000 and 1999, respectively.
For services relating to the administration of the Partnership and operation of
the Partnership properties, 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
Managing General Partner earned and received approximately $51,000 during the
nine months ended September 30, 2000. No such reimbursements were earned during
the nine months ended September 30, 1999.
Upon the sale of the Partnership's properties, NPI Equity will be entitled to an
Incentive Compensation Fee equal to a declining percentage of the difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity, if any, will be dependent upon the year in which the property is
sold. Payment of the Incentive Compensation Fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised investment in the Partnership at February
1, 1992, and (b) distributions from all sources (capital transactions as well as
cash flow) of an amount equal to six percent (6%) per annum cumulative,
non-compounded, on their appraised investment in the Partnership at February 1,
1992. As of September 30, 2000, an Incentive Management Fee of approximately
$290,000 has been accrued related to the sale of The Village in 1998.
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. The maximum draw available
to the Partnership under the Partnership Revolver is $300,000. 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.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 49,633 limited partnership
units in the Partnership representing 60.152% 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 60.152% 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
37,101 Units, AIMCO 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 unit holders. Except for the foregoing, no other
limitations are imposed on AIMCO's ability to influence voting decisions with
respect to the Partnership.
Note D - Distributions
During the nine months ended September 30, 2000, the Partnership distributed
approximately $1,624,000 to the partners (approximately $1,584,000 to the
limited partners or $19.20 per limited partnership unit) consisting of
approximately $763,000 (approximately $740,000 to the limited partners or $8.97
per limited partnership unit) from operations, and approximately $861,000
(approximately $844,000 to the limited partners or $10.23 per limited
partnership unit) from refinance proceeds of Willow Park Apartments. No
distributions were made during the nine months ended September 30, 1999.
Note E - Disclosures about Segments of an Enterprise and Related Information
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of three apartment
complexes, two of which are located in Florida and one in Alabama. 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 the 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:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
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 $ 1,135 $ -- $ 1,135
Other income 96 3 99
Interest expense 257 -- 257
Depreciation 352 -- 352
General and administrative expense -- 119 119
Segment profit (loss) 29 (116) (87)
Nine Months Ended September 30, 2000 Residential Other Totals
Rental income $ 3,513 $ -- $ 3,513
Other income 253 37 290
Interest expense 831 -- 831
Depreciation 1,036 -- 1,036
General and administrative expense -- 291 291
Segment profit (loss) 2 (254) (252)
Total assets 8,070 66 8,136
Capital expenditures for investment
properties 498 -- 498
Three Months Ended September 30, 1999 Residential Other Totals
Rental income $ 1,184 $ -- $ 1,184
Other income 69 4 73
Interest expense 265 -- 265
Depreciation 330 -- 330
General and administrative expense -- 45 45
Segment loss (33) (41) (74)
Nine Months Ended September 30, 1999 Residential Other Totals
Rental income $ 3,467 $ -- $ 3,467
Other income 188 15 203
Interest expense 799 -- 799
Depreciation 950 -- 950
General and administrative expense -- 153 153
Segment profit (loss) 31 (138) (107)
Total assets 8,718 504 9,222
Capital expenditures for investment
properties 608 -- 608
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.
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 operations. 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 properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Willow Park on Lake Adelaide 96% 96%
Altamonte Springs, Florida
Oakwood Village at Lake Nan Apartments 95% 95%
Winter Park, Florida
Palisades Apartments 92% 90%
Montgomery, Alabama
Results of Operations
The Partnership realized a net loss for the nine months ended September 30,
2000, of approximately $252,000 as compared to a net loss of approximately
$107,000 for the corresponding period in 1999. The Partnership realized a net
loss for the three months ended September 30, 2000 of approximately $87,000 as
compared to a net loss of approximately $74,000 for the corresponding period in
1999. The increase in net loss for the nine months ended September 30, 2000 is
due to an increase in total expenses partially offset by an increase in total
revenues. The increase in net loss for the three months ended September 30, 2000
is due to a decrease in total revenues slightly offset by a decrease in total
expenses.
The increase in total revenues for the three and nine months ended September 30,
2000 is due to an increase in both rental and other income. Rental income
increased due to increased average rental rates at all of the Partnership's
properties partially offset by an increase in concessions and bad debt primarily
at Palisades Apartments. Other income increased primarily due to an increase in
interest income as a result of higher average cash balance held in interest
bearing accounts and increases in various tenant charges and telephone income.
The increase in total expenses for the nine months ended September 30, 2000 is
primarily due to increases in general and administrative, interest, and
depreciation expenses. The decrease in total expenses for the three months ended
September 30, 2000 is primarily due to decreases in operating and property tax
expenses partially offset by increase in general and administrative and
depreciation expenses. General and administrative expenses increased for the
three months ended September 30, 2000 due to an increase in the cost of services
included in the management reimbursements to the Managing General Partner as
allowed under the Partnership Agreement. In addition to this, general and
administrative expenses increased for the three months ended September 30, 2000
as a result of a management fee paid in conjunction with a second quarter
distribution. The increase in depreciation expense is the result of assets
placed in service during the past twelve months that are now being depreciated.
Operating expenses decreased for the three months ended September 30, 2000
primarily due to a decrease in maintenance expense and advertising and rental
expense partially offset by an increase in property expenses. Maintenance
expense decreased primarily at Palisades Apartments during the three and nine
months ended September 30, 2000 as a result of roof repairs performed in 1999.
Also included in maintenance expense was an insurance damage expense at
Palisades Apartments relating to additional repairs on one apartment unit from
fire damage. Advertising and rental expenses decreased primarily due to a
decrease in referral fees at Palisades Apartments. Property expense increased
primarily as a result of increased utility expense at Willow Park Apartments.
The increase in interest expense for the nine months ended September 30, 2000 is
primarily due to the refinancing of the debt encumbering Willow Park Apartments
in December 1999. Property tax expense for the three month period decreased due
to the timing of the receipt of 1999 tax bills affecting the accruals recorded
at September 30, 1999.
In addition to the amounts noted above, general and administrative expenses at
both September 30, 2000 and 1999 include costs associated with the quarterly and
annual communications with the investors and regulatory agencies and the annual
audit required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in 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 September 30, 2000, the Partnership had cash and cash equivalents of
approximately $549,000 as compared to approximately $927,000 at September 30,
1999. For the nine months ended September 30, 2000, cash and cash equivalents
decreased by approximately $1,467,000 from the Partnership's year ended December
31, 1999. The decrease in cash and cash equivalents is due to approximately
$1,841,000 of cash used in financing activities and approximately $514,000 of
cash used in investing activities partially offset by approximately $888,000 of
cash provided by operating activities. Cash used in financing activities
consisted of distributions to partners, principal payments made on the mortgages
encumbering the Partnership's properties, and additional loan costs incurred on
the refinancing of Willow Park Apartments in December 1999 (see discussion
below). Cash used in investing activities consisted of property improvements and
replacements and net deposits to restricted escrows maintained by the mortgage
lenders. The Partnership invests its working capital reserves in money market
accounts.
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, 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 various properties 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. Capital improvements
for each of the Partnership's properties are detailed below.
Willow Park on Lake Adelaide
During the nine months ended September 30, 2000, the Partnership completed
approximately $131,000 of budgeted and nonbudgeted capital improvements at
Willow Park, consisting primarily of appliance and floor covering replacements,
swimming pool enhancements, and submetering equipment. These improvements were
funded through operating cash flow. The Partnership has budgeted, but is not
limited to, capital improvements of approximately $132,000 for the year 2000 at
this property which consist primarily of HVAC replacements, plumbing upgrades,
and floor covering replacements.
Oakwood Village at Lake Nan Apartments
During the nine months ended September 30, 2000, the Partnership completed
approximately $194,000 of budgeted and nonbudgeted capital improvements at
Oakwood Village consisting primarily of submetering equipment, floor covering
replacements, swimming pool enhancements, and major landscaping. These
improvements were funded through operating cash flow and replacement reserves.
The Partnership has budgeted, but is not limited to, capital improvements of
approximately $131,000 for the year 2000 at this property which consist
primarily of floor covering replacements, plumbing enhancements, appliance
replacements, and HVAC replacements.
Palisades Apartments
During the nine months ended September 30, 2000, the Partnership completed
approximately $173,000 of capital improvements at Palisades Apartments,
consisting primarily of HVAC replacements, appliance replacement, and floor
covering replacement. These improvements were funded through operating cash flow
and replacement reserves. The Partnership has budgeted, but is not limited to,
capital improvements of approximately $360,000 for the year 2000 at this
property which consist primarily of exterior painting, floor covering
replacements, HVAC units, and roof replacement.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
On December 15, 1999, the Partnership refinanced the mortgage encumbering Willow
Park Apartments. The interest rate on the new mortgage is 8.02%, compared to
8.56% on the previous mortgage. The refinancing replaced indebtedness of
$2,873,000 with a new mortgage in the amount of $4,000,000. Payments of
approximately $34,000 are due on the first day of each month until the loan
matures on January 1, 2020. The prior note was scheduled to mature in February
2001. New loan costs of approximately $46,000 were paid during the year ended
December 31, 1999. Additional loan costs of approximately $25,000 were paid
during the nine month period ended September 30, 2000. These loan costs were
included in other assets and will be amortized over the life of the loan.
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 approximately $12,239,000 is being amortized over varying
periods with balloon payments due over periods ranging from February 2001 to
January 2020. The Managing General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
During the nine months ended September 30, 2000, the Partnership distributed
approximately $1,624,000 to the partners (approximately $1,584,000 to the
limited partners or $19.20 per limited partnership unit) consisting of
approximately $763,000 (approximately $740,000 to the limited partners or $8.97
per limited partnership unit) from operations, and approximately $861,000
(approximately $844,000 to the limited partners or $10.23 per limited
partnership unit) from refinance proceeds of Willow Park Apartments. No
distributions were made during the nine months ended September 30, 1999. The
Partnership's distribution policy is reviewed on an 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 debt maturities,
refinancings, and/or property sales. 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.
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 5
By: NPI EQUITY INVESTMENTS, INC.
Its 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:
