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 March 31, 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 0-13454
NATIONAL PROPERTY INVESTORS 7
(Exact name of small business issuer as specified in its charter)
California 13-3230613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office 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 7
BALANCE SHEET
(Unaudited)
(in thousands, except per unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,876
Receivables and deposits 124
Restricted escrows 458
Other assets 517
Investment properties:
Land $ 3,738
Buildings and related personal property 43,580
47,318
Less accumulated depreciation (28,069) 19,249
$ 22,224
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 107
Tenant security deposit liabilities 103
Accrued property taxes 85
Other liabilities 273
Mortgage notes payable 21,010
Partners' (Deficit) Capital:
General partner $ (296)
Limited partners (60,517 units
issued and outstanding) 942 646
$ 22,224
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
b)
NATIONAL PROPERTY INVESTORS 7
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Revenues:
<S> <C> <C>
Rental income $1,751 $1,813
Other income 73 64
Total revenues 1,824 1,877
Expenses:
Operating 704 716
General and administrative 91 71
Depreciation 484 432
Interest 420 409
Property taxes 106 110
Total expenses 1,805 1,738
Net income $ 19 $ 139
Net income allocated to general partner (1%) $ -- $ 1
Net income allocated to limited partners (99%) 19 138
$ 19 $ 139
Net income per limited partnership unit $ 0.31 $ 2.28
Distributions per limited partnership unit $19.96 $ 4.91
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
c)
NATIONAL PROPERTY INVESTORS 7
STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except per unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 60,517 $ 1 $30,259 $30,260
Partners' (deficit) capital at
December 31, 1999 60,517 $ (284) $ 2,131 $ 1,847
Distribution to partners -- (12) (1,208) (1,220)
Net income for the three months
ended March 31, 2000 -- -- 19 19
Partners' (deficit) capital
at March 31, 2000 60,517 $ (296) $ 942 $ 646
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
d)
NATIONAL PROPERTY INVESTORS 7
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 19 $ 139
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 484 432
Amortization of loan costs 28 28
Change in accounts:
Receivables and deposits 213 97
Other assets (23) (32)
Accounts payable (59) 2
Tenant security deposit liabilities (4) (5)
Accrued property taxes 18 (94)
Other liabilities (28) 8
Net cash provided by operating activities 648 575
Cash flows from investing activities:
Property improvements and replacements (303) (91)
Net deposits to restricted escrows (11) (24)
Net cash used in investing activities (314) (115)
Cash flows from financing activities:
Payments on mortgage note payable (15) (10)
Loan costs paid (16) --
Distributions to partners (1,220) (300)
Net cash used in financing activities (1,251) (310)
Net (decrease) increase in cash and cash equivalents (917) 150
Cash and cash equivalents at beginning of period 2,793 1,074
Cash and cash equivalents at end of period $ 1,876 $ 1,224
Supplemental disclosure of cash flow information:
Cash paid for interest $ 334 $ 382
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
e)
NATIONAL PROPERTY INVESTORS 7
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of National Property Investors 7
(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. (the "Managing General Partner"
or "NPI Equity"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 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 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 payments were made to the Managing General Partner and its
affiliates during the three month periods ended March 31, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 90 $ 96
Reimbursement for services of affiliates (included in
investment properties and general and administrative
expenses) 43 44
Non-accountable reimbursement (included in general and
administrative expenses) 30 --
During the three months ended March 31, 2000 and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Partnership's properties as compensation for providing property
management services. The Registrant paid to such affiliates approximately
$90,000 and $96,000 for the three months ended March 31, 2000 and 1999,
respectively.
<PAGE>
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $43,000 and
$44,000 for the three months ended March 31, 2000 and 1999, respectively.
For services relating to the administration of the Partnership and operation of
Partnership properties, the Managing General Partner is entitled to receive
payment for non-accountable expenses up to a maximum of $150,000 per year from
distributions from operations, based upon the number of Partnership units sold,
subject to certain limitations. The Managing General Partner received
approximately $30,000 in reimbursements for the three months ended March 31,
2000. The Managing General Partner was not entitled to receive a similar
reimbursement during the three months ended March 31, 1999 because there were no
distributions from operations.
The Managing General Partner has extended to the Partnership a line of credit of
up to $500,000. Loans under the line of credit 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 Chase Manhattan 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); (ii) the sale or
refinancing of a property by the Partnership; or (iii) the liquidation of the
Partnership. At the present time, the Partnership has no outstanding amounts due
under this line of credit.
AIMCO and its affiliates currently own 38,400 limited partnership units in the
Partnership representing 63.453% 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. As a result of its
ownership of 63.453% 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, DeForest Ventures II
L.P., from whom AIMCO, through its merger with Insignia, acquired significantly
all of its Units, had agreed for the benefit of non-tendering unit holders, that
it would vote its Units: (i) against any increase in compensation payable to the
Managing General Partner or to affiliates; and (ii) on all other matters
submitted by it or its affiliates, in proportion to the votes cast by
non-tendering units holders. Except for the foregoing, no other limitations are
imposed on Insignia Properties, L.P.'s right to vote each Unit acquired.
Note D - Distributions
During the three months ended March 31, 2000, the Partnership declared and paid
a distribution of approximately $1,220,000 (approximately $1,208,000 to the
limited partners or $19.96 per limited partnership unit) consisting of
approximately $335,000 (approximately $332,000 to the limited partners or $5.49
per limited partnership unit) of cash from operations and approximately $885,000
(approximately $876,000 to the limited partners or $14.47 per limited
partnership unit) of cash from the refinance proceeds of The Pines Apartments
and from refinancing proceeds in prior years. A distribution of approximately
$300,000 (approximately $297,000 to the limited partners or $4.91 per limited
partnership unit) from refinancing proceeds in prior years was paid during the
three months ended March 31, 1999.
<PAGE>
Note E - Refinancing of Mortgage Note Payable
On December 13, 1999, the Partnership refinanced the mortgage encumbering The
Pines Apartments. The refinancing replaced indebtedness of approximately
$3,406,000 with a new mortgage in the amount of $4,225,000. The interest rate on
the new mortgage is 7.97% as compared to 8.56% on the previous debt. The new
loan requires monthly principal and interest payments and is being amortized
over 20 years. Total capitalized loan costs were approximately $88,000 during
the year ended December 31, 1999. Additional loan costs of approximately $16,000
were capitalized during the three months ended March 31, 2000.
Note F - Segment Reporting
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of five apartment complexes
located in the Southeast. The Partnership rents apartment units to tenants for
terms that are typically twelve months or less.
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 fiscal year ended December 31, 1999.
The Partnership's reportable segment is investment properties that offer similar
products and services. Although each of the investment properties is 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 months ended March 31, 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.
<TABLE>
<CAPTION>
2000 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 1,751 $ -- $ 1,751
Other income 65 8 73
Interest expense 420 -- 420
Depreciation 484 -- 484
General and administrative expense -- 91 91
Segment profit (loss) 102 (83) 19
Total assets 21,602 622 22,224
Capital expenditures for investment
properties 303 -- 303
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 1,813 $ -- $ 1,813
Other income 60 4 64
Interest expense 409 -- 409
Depreciation 432 -- 432
General and administrative expense -- 71 71
Segment profit (loss) 206 (67) 139
Total assets 21,940 297 22,237
Capital expenditures for investment
properties 91 -- 91
</TABLE>
Note G - 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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). 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 own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, 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 class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. 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 Registrant from time to time. The
discussion of the Registrant'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 Registrant's business and results of
operation. 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 five apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the three month periods ended March 31, 2000 and 1999:
Average Occupancy
2000 1999
Fairway View II Apartments 93% 96%
Baton Rouge, Louisiana
The Pines Aparments 97% 95%
Roanoke, Virginia
Patchen Place Apartments 93% 95%
Lexington, Kentucky
Northwoods I and II Apartments 90% 95%
Pensacola, Florida
South Point Apartments 89% 96%
Durham, North Carolina
The Managing General Partner attributes the decrease in occupancy at Fairway
View II Apartments to tenants temporarily moving in during 1999 because of a
fire at a neighboring complex owned by an affiliated Partnership, which inflated
occupancy for the period. The Managing General Partner attributes the decrease
in occupancy at Northwoods Apartments to a current road expansion project.
Traffic issues and road barriers have impacted new prospect traffic as well as
additional move outs due to this project. The Managing General Partner
attributes the decrease in occupancy at South Point Apartments to increased
competition in the Durham, North Carolina area.
Results of Operations
The Registrant's net income for the three months ended March 31, 2000 was
approximately $19,000 compared to approximately $139,000 for the three months
ended March 31, 1999. The decrease in net income was due to a decrease in total
revenues and an increase in total expenses. Total revenues decreased due to a
decrease in rental income which was partially offset by an increase in other
income. Rental income decreased primarily due to decreased occupancy at Fairway
View II, Northwoods I and II, Patchen Place, and South Point Apartments, as well
as decreased average rental rates at Fairway View II and Patchen Place
Apartments. In addition, concessions increased at Fairway View II and Northwoods
I and II Apartments and bad debt expense increased at Patchen Place and
Northwoods I and II Apartments. The increase in other income was primarily due
to an increase in interest income as a result of higher interest bearing average
cash balances held by the Partnership during 2000.
<PAGE>
Total expenses increased due to increases in depreciation expense and general
and administrative expenses which were partially offset by a decrease in
operating expenses. Depreciation expense increased due to property improvements
and replacements completed during the last twelve months which are now being
depreciated. General and administrative expenses increased primarily due to fees
paid to the Managing General Partner in connection with the distributions from
operations made during the three months ended March 31, 2000. For the three
months ended March 31, 1999, no similar fees were paid because the distribution
paid during this period was entirely from refinancing proceeds. Included in
general and administrative expenses at both March 31, 2000 and 1999, are
management reimbursements to the Managing General Partner allowed under the
Partnership Agreement. Costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are also included. Operating expenses
decreased primarily due to decreased utility expenses primarily at The Pines and
Northwoods I and II Apartments and to decreased salary expense at all of the
Partnership's properties.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Registrant 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.
Liquidity and Capital Resources
At March 31, 2000, the Partnership had cash and cash equivalents of
approximately $1,876,000 as compared to approximately $1,224,000 at March 31,
1999. Cash and cash equivalents decreased by approximately $917,000 from the
Partnership's year ended December 31, 1999 due to approximately $1,251,000 of
cash used in financing activities and approximately $314,000 of cash used in
investing activities, which more than offset approximately $648,000 of cash
provided by operating activities. Cash used in financing activities consisted of
partner distributions and, to a lesser extent, the payment of loan costs and
payments of principal made on the mortgage encumbering The Pines Apartments.
Cash used in investing activities consisted of property improvements and
replacements and, to a lesser extent, net deposits to escrow accounts maintained
by the mortgage lender.
The Managing General Partner has extended to the Partnership a $500,000 line of
credit. 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 against the line of credit 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 Registrant and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
for each of the Registrant's properties are detailed below.
<PAGE>
Fairway View II
During the three months ended March 31, 2000, the Partnership completed
approximately $27,000 of capital improvements at Fairway View II, consisting
primarily of carpet and vinyl replacements and structural improvements. These
improvements were funded from operating cash flow. The Partnership evaluated the
capital improvement needs of the property for the current year. The amount
budgeted is approximately $79,000, consisting primarily of air conditioning unit
replacement, appliances, carpet and vinyl replacements, and structural
improvements. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The Pines
During the three months ended March 31, 2000, the Partnership completed
approximately $21,000 of capital improvements at The Pines, consisting primarily
of carpet replacement, major landscaping, and swimming pool upgrades. These
improvements were funded from operating cash flow. The Partnership evaluated the
capital improvement needs of the property for the current year. The amount
budgeted is approximately $65,000, consisting primarily of air conditioning unit
replacement, window treatments, appliances, and carpet replacement. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Patchen Place
During the three months ended March 31, 2000, the Partnership completed
approximately $45,000 of capital improvements at Patchen Place, consisting
primarily of carpet and vinyl replacement, electrical upgrades, submetering
improvements, and major landscaping. These improvements were funded from
operating cash flow. The Partnership evaluated the capital improvement needs of
the property for the current year. The amount budgeted is approximately
$115,000, consisting primarily of air conditioning unit replacement, appliances,
carpet and vinyl replacement, structural improvements, and plumbing upgrades.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Northwoods I and II
During the three months ended March 31, 2000, the Partnership completed
approximately $190,000 of capital improvements at Northwoods I & II, consisting
primarily of carpet replacements, exterior painting, and structural
improvements. These improvements were funded from Partnership reserves and
operating cash flow. The Partnership evaluated the capital improvement needs of
the property for the current year. The amount budgeted is approximately
$328,000, consisting primarily of air conditioning unit replacement, carpet and
vinyl replacements, electrical upgrades, major landscaping, parking lot
improvements, appliances, sprinkler systems, and plumbing upgrades. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
South Point
During the three months ended March 31, 2000, the Partnership completed
approximately $20,000 of capital improvements at South Point, consisting
primarily of carpet and vinyl replacement, golf carts, and appliances. These
improvements were funded from operating cash flow. The Partnership evaluated the
capital improvement needs of the property for the current year. The amount
budgeted is approximately $59,000, consisting primarily of appliances and carpet
and vinyl replacement. Additional improvements may be considered and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The additional capital improvements 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 13, 1999, the Partnership refinanced the mortgage encumbering The
Pines Apartments. The refinancing replaced indebtedness of approximately
$3,406,000 with a new mortgage in the amount of $4,225,000. The interest rate on
the new mortgage is 7.97% as compared to 8.56% on the previous debt. The new
loan requires monthly principal and interest payments and is being amortized
over 20 years. Total capitalized loan costs were approximately $88,000 during
the year ended December 31, 1999. Additional loan costs of approximately $16,000
were capitalized during the three months ended March 31, 2000.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $4,210,000 encumbering The Pines is amortized over
20 years. The mortgage indebtedness of $16,800,000 encumbering the remaining
properties is interest only with required balloon payments due November 1, 2003.
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 Registrant may risk losing such
properties through foreclosure.
During the three months ended March 31, 2000, the Partnership declared and paid
a distribution of approximately $1,220,000 (approximately $1,208,000 to the
limited partners or $19.96 per limited partnership unit) consisting of
approximately $335,000 (approximately $332,000 to the limited partners or $5.49
per limited partnership unit) of cash from operations and approximately $885,000
(approximately $876,000 to the limited partners or $14.47 per limited
partnership unit) of cash from the refinance proceeds of The Pines Apartments
and from refinancing proceeds in prior years. A distribution of approximately
$300,000 (approximately $297,000 to the limited partners or $4.91 per limited
partnership unit) from refinancing proceeds in prior years was paid during the
three months ended March 31, 1999. 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. The
Registrant's distribution policy is reviewed on a semi-annual basis. There can
be no assurance, however, that the Partnership will generate sufficient funds
from operations after required capital expenditures to permit any additional
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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). 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 own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the Managing General Partner and its
affiliates terminated the proposed settlement. Certain plaintiffs have filed a
motion to disqualify some of the plaintiffs' counsel in the action. 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 filed during the first quarter of 2000:
None.
<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 7
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:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from NATIONAL
PROPERTY INVESTORS 7 2000 First Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000732439
<NAME> NATIONAL PROPERTY INVESTORS 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,876
<SECURITIES> 0
<RECEIVABLES> 124
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 47,318
<DEPRECIATION> (28,069)
<TOTAL-ASSETS> 22,224
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 21,010
0
0
<COMMON> 0
<OTHER-SE> 646
<TOTAL-LIABILITY-AND-EQUITY> 22,224
<SALES> 0
<TOTAL-REVENUES> 1,824
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,805
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 420
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-BASIC> 0.31 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
