FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-11864
NATIONAL PROPERTY INVESTORS 6
(Exact name of small business issuer as specified in its charter)
California 13-3140364
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, 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
PART I - FINANCIAL INFORMATION
a) NATIONAL PROPERTY INVESTORS 6
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents $ 16,663
Escrows for taxes and insurance 385
Restricted escrows 977
Other assets 1,740
Investment properties:
Land $ 5,366
Buildings and related personal property 72,375
77,741
Less accumulated depreciation (46,593) 31,148
$ 50,913
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 573
Tenant security deposits 319
Mortgages payable 35,570
Partners' Capital (Deficit):
Limited partners' (109,600 units issued and
outstanding) $ 14,854
General partner's (403) 14,451
$ 50,913
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
b> NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 3,244 $ 3,262 $ 9,732 $ 9,629
Other income 284 212 786 630
Total revenues 3,528 3,474 10,518 10,259
Expenses:
Operating 1,825 1,846 5,147 5,244
Interest 600 608 1,800 1,826
Depreciation 804 894 2,385 2,682
General and administrative 90 88 266 320
Total expenses 3,319 3,436 9,598 10,072
Income before extraordinary
loss 209 38 920 187
Extraordinary loss on
debt refinancing (355) -- (355) --
Net (loss) income $ (146) $ 38 $ 565 $ 187
Net (loss) income allocated
to general partner (1%) $ (1) $ -- $ 6 $ 2
Net (loss) income allocated
to limited partners (99%) (145) 38 559 185
$ (146) $ 38 $ 565 $ 187
Net (loss) income per limited
partnership unit:
Income before
extraordinary loss $ 1.89 $ .35 $ 8.31 $ 1.69
Extraordinary loss on
debt refinancing (3.21) -- (3.21) --
Net (loss) income per limited
partnership unit $ (1.32) $ .35 $ 5.10 $ 1.69
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
c) NATIONAL PROPERTY INVESTORS 6
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 109,600 $ 1 $ 54,800 $ 54,801
Partners' capital (deficit)
at December 31, 1995 109,600 $ (409) $ 14,295 $ 13,886
Net income for the nine months
ended September 30, 1996 -- 6 559 565
Partners' capital (deficit) at
September 30, 1996 109,600 $ (403) $ 14,854 $ 14,451
See Accompanying Notes to Financial Statements
d) NATIONAL PROPERTY INVESTORS 6
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net income $ 565 $ 187
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,385 2,682
Amortization of loan costs 78 78
Extraordinary loss on debt refinancing 355 --
Change in accounts:
Escrows for taxes and insurance (111) (54)
Other assets (149) 10
Accounts payable and accrued expenses 100 107
Tenant security deposit liabilities (73) (72)
Net cash provided by operating activities 3,150 2,938
Cash flows from investing activities:
Deposits to restricted escrows (886) --
Receipts from restricted escrows -- 91
Property improvements and replacements (806) (680)
Net cash used in investing activities (1,692) (589)
Cash flows from financing activities:
Mortgage principal payments (271) (238)
Repayment of mortgage notes payable (16,030) --
Proceeds from refinancing of debt 27,150 --
Loan costs (820) --
Debt extinguishment costs (274) --
Net cash provided by (used in) financing
activities 9,755 (238)
Net increase in cash and cash equivalents 11,213 2,111
Cash and cash equivalents at beginning of period 5,450 2,436
Cash and cash equivalents at end of period $ 16,663 $ 4,547
Supplemental information:
Cash paid for interest $ 1,916 $ 1,747
See Accompanying Notes to Financial Statements
e) NATIONAL PROPERTY INVESTORS 6
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of National Property Investors 6
(the "Partnership") 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, 1996, are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1996. For further information, refer to the financial statements
and footnotes thereto included in the Partnership's annual report on Form 10-K
for the year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
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.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES - (continued)
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were charged to expense in 1996 and 1995:
For the Nine Months Ended
September 30,
1996 1995
Property management fees (included in operating
expenses) $516,000 $499,000
Reimbursement for services of affiliates (included
in general and administrative and operating
expenses) 228,000 301,000
During the nine months ended September 30, 1996, the Partnership paid
approximately $284,000 to an affiliate of the Managing General Partner for
brokerage fees incurred in connection with the September 30, 1996, refinancing
of all of the Partnership's properties except The Village (see "Note D").
These charges have been capitalized as loan costs, and will be amortized over
the life of the loans.
For the period from January 19, 1996, to September 30, 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.
For the period ended September 30, 1995, NPI Equity was paid fees of $7,000
relating to successful real estate tax appeals on the Partnership's investment
properties. These fees are included in operating expenses.
Included in operating expenses for the nine months ended September 30, 1995, are
insurance premiums of approximately $266,000 which were paid to the Managing
General Partner under a master insurance policy arranged for by the Managing
General Partner.
NOTE C - TENANT-IN-COMMON PROPERTY
The Partnership currently owns The Village Apartments, as a tenant-in-common
with National Property Investors 5 ("NPI 5"), an affiliated public limited
partnership. NPI 5 acquired a 24.028% undivided interest with the Partnership
owning the remaining 75.972%. The property is accounted for using the
proportionate consolidation method. The financial statements and supplementary
data reflect the Partnership's 75.972% 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 September
30, 1996, and the condensed, combined statements of operations of The Village
Apartments and the Partnership's proportionate share of revenues and expenses
for the nine and three month periods ended September 30, 1996 and 1995, are
summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
PROPORTIONATE
COMBINED SHARE
September 30, September 30,
1996 1996
<S> <C> <C>
Total assets, primarily real estate $ 12,910 $ 9,868
Liabilities, primarily a mortgage payable $ 11,344 $ 8,618
Equity 1,566 1,250
Total liabilities and equity $ 12,910 $ 9,868
</TABLE>
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
Nine Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Total revenues $ 3,419 $ 3,292 $ 2,597 $ 2,501
Operating and other expenses $ 1,879 $ 1,871 $ 1,428 $ 1,421
Depreciation 553 559 420 425
Mortgage interest 752 761 571 578
Total expenses 3,184 3,191 2,419 2,424
Net income $ 235 $ 101 $ 178 $ 77
</TABLE>
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
Three Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Total revenues $ 1,179 $ 1,124 $ 895 $ 854
Operating and other expenses $ 665 $ 667 $ 505 $ 506
Depreciation 189 186 144 142
Mortgage interest 251 254 190 193
Total expenses 1,105 1,107 839 841
Net income $ 74 $ 17 $ 56 $ 13
</TABLE>
NOTE D - EXTRAORDINARY LOSS ON DEBT REFINANCING
On September 30, 1996, the Managing General Partner refinanced the mortgages on
all of the Partnership's properties except The Village. The mortgages were
refinanced into short-term temporary loans at 8% interest, which mature on
November 15, 1996. Payments of interest only are due on the first day of each
month until the loans mature. The Managing General Partner is currently in the
process of closing the permanent refinancing on all of the affected properties.
The refinancing of Rocky Ridge Apartments replaced indebtedness of approximately
$1,496,000 with a new mortgage in the amount of $1,450,000. The Partnership
paid a prepayment premium of approximately $15,000 and wrote off unamortized
loan costs of approximately $18,000 resulting in an extraordinary loss on
refinancing of approximately $33,000.
The refinancing of Place du Plaintier replaced indebtedness of approximately
$2,358,000 with a new mortgage in the amount of $3,800,000. The Partnership
paid a prepayment premium of approximately $24,000 and wrote off unamortized
loan costs of approximately $2,000 resulting in an extraordinary loss on
refinancing of approximately $26,000.
The refinancing of Fairway View replaced indebtedness of approximately
$2,357,000 with a new mortgage in the amount of $4,000,000. The Partnership
paid a prepayment premium of approximately $24,000 and wrote off loan costs of
approximately $2,000 resulting in an extraordinary loss on refinancing of
approximately $26,000.
The refinancing of Colony at Kenilworth replaced indebtedness of approximately
$7,924,000 with a new mortgage in the amount of $9,000,000. The Partnership
paid a prepayment premium of approximately $193,000 and wrote off loan costs
of approximately $36,000 resulting in an extraordinary loss on refinancing of
approximately $229,000.
NOTE D - EXTRAORDINARY LOSS ON DEBT REFINANCING - (continued)
The refinancing of Alpine Village replaced indebtedness of approximately
$1,895,000 with a new mortgage of $2,100,000. The Partnership paid a prepayment
premium of approximately $19,000 and wrote off unamortized loan costs of
approximately $22,000 resulting in an extraordinary loss on refinancing of
approximately $41,000.
The Managing General Partner secured a mortgage for Ski Lodge Apartments in
the amount of $6,800,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of seven apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Ski Lodge Apartments
Montgomery, Alabama 93% 93%
Rocky Ridge Apartments
Birmingham, Alabama 91% 98%
Place du Plantier Apartments
Baton Rouge, Louisiana 91% 96%
Fairway View Phase I Apartments
Baton Rouge, Louisiana 96% 97%
Colony at Kenilworth Apartments
Towson, Maryland 90% 93%
Alpine Village Apartments
Birmingham, Alabama 94% 98%
The Village Apartments (1)
Voorhees, New Jersey 94% 95%
(1) This property was purchased as a tenancy in common with National Property
Investors 5, an affiliated public partnership, which acquired a 24.028%
undivided interest, with the Partnership owning the remaining 75.972%.
The Managing General Partner attributes the decreases in occupancy at Rocky
Ridge and Alpine Village to layoffs at a large area corporation, an increased
number of home purchases, and the construction of three new apartment
communities in the area. Occupancy decreased at Place du Plantier as a result
of newly constructed units becoming available in the already competitive Baton
Rouge market. Despite the overall drop in occupancy at the Partnership's
properties, rental income for the nine months ended September 30, 1996,
increased as a result of increases in rental rates.
The Partnership's net income for the nine months ended September 30, 1996, was
approximately $565,000 compared to net income of approximately $187,000 for the
corresponding period of 1995. The Partnership incurred a net loss for the three
months ended September 30, 1996, of approximately $146,000 compared to net
income of approximately $38,000 for the three months ended September 30, 1995.
Income before extraordinary loss for the three months ended September 30, 1996,
was approximately $209,000, as compared to approximately $38,000 for the three
months ended September 30, 1995. The extraordinary loss is a result of the
refinancing as discussed in "Item 1, Note D - Extraordinary Loss on Debt
Refinancing." The increase in net income for the nine months ended September 30,
1996, is partially due to increased rental revenues as a result of rental rate
increases at the properties. Other income increased primarily due to increased
interest income resulting from additional cash reserves held by the Partnership.
Also contributing to the increase in other income was an increase in utility
charges and late charges collected from tenants in 1996. In addition to
increased revenues, decreases in depreciation expense and general and
administrative expenses contributed to the increase in net income for the nine
months ended September 30, 1996. Depreciation expense decreased as a result of
certain assets becoming fully depreciated in 1995. General and administrative
expenses were reduced as a result of a decrease in expense reimbursements paid
to affiliates of the Managing General Partner in 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 rent, 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.
At September 30, 1996, the Partnership had unrestricted cash of $16,663,000, as
compared to $4,547,000 at September 30, 1995. Net cash provided by operating
activities increased primarily due to the increase in revenues as discussed
above. The increase in cash used in investing activities is partially due to
increased property improvements and replacements in 1996. Also contributing to
the increase in cash used in investing activities were deposits made to
restricted escrow accounts in 1996, as a result of the debt refinancing. These
escrows will be used for future capital expenditures at the properties
refinanced. Cash provided by financing activities increased due to the proceeds
received from the debt refinancings. This increase in cash is partially offset
by cash used for payments of the prior outstanding mortgage principal balances,
prepayment penalties, and loan costs associated with the refinancings.
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. Based on present plans, the Managing General Partner
does not anticipate the need to borrow in the near future. Other than cash and
cash equivalents, the line of credit is the Partnership's only unused source of
liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various 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 $35,570,000 consists of short-term loans for all of
the properties except The Village, as a result of the refinancings discussed in
"Item 1, Note D - Extraordinary Loss on Debt Refinancing." Future cash
distributions will depend on the levels of net cash generated from operations,
property sales, and the availability of cash reserves. No cash distributions
were made in 1995 or during the first nine months of 1996. Currently, the
Managing General Partner is planning to make a distribution of cash reserves
after permanent refinancing on the short-term loans is secured in the fourth
quarter of 1996.
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K: None filed during the quarter ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL PROPERTY INVESTORS 6
By: NPI EQUITY INVESTMENTS, INC.
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: November 1, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors 6 1996 Third Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000708870
<NAME> NATIONAL PROPERTY INVESTORS 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 16,663
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 77,741
<DEPRECIATION> 46,593
<TOTAL-ASSETS> 50,913
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 35,570
0
0
<COMMON> 0
<OTHER-SE> 14,451
<TOTAL-LIABILITY-AND-EQUITY> 50,913
<SALES> 0
<TOTAL-REVENUES> 10,518
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,800
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (355)
<CHANGES> 0
<NET-INCOME> 565
<EPS-PRIMARY> 5.10<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
