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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ]
Confidential, for Use of the
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 7
...............................................................................
(Name of Registrant as Specified in Its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
...............................................................................
(2) Aggregate number of securities to which transaction applies:
...............................................................................
(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
filing fee is calculated and state how it was determined):
...............................................................................
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
...............................................................................
[ ] Amount previously paid:
...............................................................................
[ ] Form, Schedule or Registration Statement no.:
...............................................................................
[ ] Filing Party:
...............................................................................
[ ] Date Filed:
....................................
PRELIMINARY COPY
NATIONAL PROPERTY INVESTORS 7
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 7 (the "Partnership") to extend the term of the Partnership from
December 31, 2008 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 debt secured by the property known as The Pines of Roanoke ("The
Pines"), which is due next month, with a new 20-year loan. The refinancing
is 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 7
By: NPI MANAGEMENT CORPORATION
Managing General Partner
NATIONAL PROPERTY INVESTORS 7
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 Property Investors 7, 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, 2008 to December 31, 2021.
The Amendment will enable the Partnership to refinance the mortgage
debt secured by The Pines with a new 20-year loan 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
Management Corporation, 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 Communication, 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 60,517
Units issued and outstanding. Accordingly, approval of the Amendment will
require the affirmative consent of Limited Partners who own at least 30,259
Units. The Amendment will become effective on the Expiration Date, provided
consents from Limited Partners owning at least 30,259 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
debt secured by The Pines with a new 20-year loan. 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 debt relating to The Pines
consists of (i) a loan with a current principal balance of $3,426,050, that
bears interest at 8.6% per year and matures on February 1, 2001.
The existing debt would be repaid with the proceeds of a new loan
expected to have an original principal amount of approximately $4,225,000
and will mature in 2019. The new loan is 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 12, 1999 would
have been 7.86%. The exact interest rate will be determined in the future.
The new loan would 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 loan would have non funded
reserves for taxes, insurance and replacement reserves. Further, the new
loan could 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 equal to
1% of the principal amount outstanding. As a condition to making the new
loan, 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 loan
would be used to repay the existing mortgage debt and related costs
(expected to be approximately $3,519,303) and to pay other transaction fees
and expenses associated with the Refinancing (expected to be approximately
$105,625). The remainder of the proceeds (estimated to be approximately
$600,072) 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 The Pines matures in February,
2001. The Partnership does not have sufficient cash on hand (or other
liquid assets) to repay this debt. 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, 2008); 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, 2008) 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 The Pines 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, property management fees totalled $369,000 and partnership
management fees totalled $137,000. In addition, the General Partner
receives fees and reimbursement of its expenses for managing the
Partnership. In 1998, reimbursements for services of affiliate totalled
$188,000 and non-accountable reimbursement totalled $91,000. 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 loan was
$3,426,050. The principal amount of the new loan (part of which will be
used to satisfy the existing loans in full) will be $4,225,000, or $798,995
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 $13.20 per Unit. Following the completion of the
refinancing, the Partnership anticipates making a pro rata cash
distribution of approximately $600,072, or $9.92 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. 1,005.00 (1) 1.6%
Insignia Properties 25,339.00 (2) 42.0%
L.P.
- ------------------------------
* 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.)
Insignia Properties, L.P. has entered into an agreement under which
it has agreed to vote its Units (i) on all matters submitted by it or its
affiliates, in proportion to the votes cast by non-affiliated Unitholders
and (ii) against any increase in compensation payable to the General
Partner or its affiliates.
NATIONAL PROPERTY INVESTORS 7
By: NPI MANAGEMENT CORPORATION
Managing General Partner
August ___, 1999
PRELIMINARY COPY APPENDIX
NATIONAL PROPERTY INVESTORS 7
1873 South Bellaire Street
Denver, Colorado 80222
CONSENT OF LIMITED PARTNER
The undersigned, a limited partner of National Property Investors 7
(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 commenced as of the 11th day of October, 1983,
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 7, 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.
