-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UIn9Fskwn8+YU/+BGVjC3+n5Bc+DdZc8vfZbFJO87otuuFNRgCcERJKywWmcbhEa 1idW/CWvNyHJU1MHGsh2qg== 0000732439-96-000001.txt : 19960816 0000732439-96-000001.hdr.sgml : 19960816 ACCESSION NUMBER: 0000732439-96-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PROPERTY INVESTORS 7 CENTRAL INDEX KEY: 0000732439 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133230613 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13454 FILM NUMBER: 96611719 BUSINESS ADDRESS: STREET 1: 5665 NORTHSIDE DR NW STE 370 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4049169090 10QSB 1 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 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 or [ ] 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 Registrant as specified in its charter) California 13-3230613 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) Issuer's telephone number (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 ITEM 1. FINANCIAL STATEMENTS a) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1996
Assets Cash and cash equivalents: Unrestricted cash $ 2,832 Restricted 405 Escrow deposits 835 Other assets 445 Investment properties: Land $ 3,738 Buildings and related personal property 41,057 44,795 Less accumulated depreciation (21,520) 23,275 $ 27,792 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable and accrued expenses $ 505 Tenants' security deposits 160 Mortgage notes payable 18,166 Partners' Capital (Deficit): General partner $ (212) Limited partners (60,517 units issued and outstanding) 9,173 8,961 $ 27,792 See Accompanying Notes to Consolidated Financial Statements
b) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,754 $ 1,689 $ 3,494 $ 3,349 Other income 95 65 168 112 Total revenues 1,849 1,754 3,662 3,461 Expenses: Operating 912 854 1,814 1,694 Interest 356 399 746 773 Depreciation 415 448 829 896 General and administrative 95 72 175 143 Total expenses 1,778 1,773 3,564 3,506 Net income (loss) $ 71 $ (19) $ 98 $ (45) Net income (loss) allocated to general partner (1%) $ 1 $ -- $ 1 $ -- Net income (loss) allocated to limited partners (99%) 70 (19) 97 (45) $ 71 $ (19) $ 98 $ (45) Net income (loss) per limited partnership unit $ 1.16 $ (.31) $ 1.61 $ (.74) See Accompanying Notes to Consolidated Financial Statements
c) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 60,517 $ 1 $ 30,259 $ 30,260 Partners' (deficit) capital at December 31, 1995 60,517 $ (213) $ 9,076 $ 8,863 Net income for the six months ended June 30, 1996 -- 1 97 98 Partners' (deficit) capital at June 30, 1996 60,517 $ (212) $ 9,173 $ 8,961 See Accompanying Notes to Consolidated Financial Statements
d) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net income (loss) $ 98 $ (45) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 829 896 Amortization of loan costs 23 29 Change in accounts: Escrow deposits (244) (226) Other assets 172 10 Accounts payable and accrued expenses 286 117 Tenants' security deposit liabilities (13) 5 Net cash provided by operating activities 1,151 786 Cash flows from investing activities: Property improvements and replacements (172) (109) Increase in restricted cash (256) (395) Net cash used in investing activities (428) (504) Cash flows from financing activities: Payment of deferred interest payable -- (456) Mortgage principal repayments (158) (162) Loan costs paid (10) (44) Net cash used in financing activities (168) (662) Net increase (decrease) in cash and cash equivalents 555 (380) Cash and cash equivalents at beginning of period 2,277 1,621 Cash and cash equivalents at end of period $ 2,832 $ 1,241 Supplemental information: Interest paid $ 715 $ 1,189 See Accompanying Notes to Consolidated Financial Statements
e) NATIONAL PROPERTY INVESTORS 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements 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 consolidated 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 six month period ended June 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 consolidated 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 National Property Investors 7 (the "Partnership") has no employees and is dependent on NPI Equity Investments, Inc. 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 Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc. ("NPI, Inc."), and affiliates were charged to expense in 1996 and 1995:
For the Six Months Ended June 30, 1996 1995 Property management fees (included in operating expenses) $180,000 $169,000 Reimbursement for services of affiliates (included in general and administrative expenses) 115,000 113,000
For the period from January 19, 1996, to June 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. Included in operating expenses for the six months ended June 30, 1995, are insurance premiums of approximately $94,000 which were paid to the Managing General Partner under a master insurance policy arranged for by the Managing General Partner. NPI Equity is the general partner of the Partnership. NPI Equity is a wholly-owned subsidiary of NPI. On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to sell to IFGP Corporation, a Delaware corporation and an affiliate of Insignia Financial Group, Inc.("Insignia"), a Delaware corporation , all of the issued and outstanding common stock of NPI, Inc. for an aggregate purchase price of $1,000,000. NPI, Inc. is the sole shareholder of the Managing General Partner. 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, Inc. and the Managing General Partner resigned and IFGP Corporation caused new officers and directors of each of those entities to be elected. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 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 six month periods ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 Fairway View II Apartments Baton Rouge, Louisiana 95% 97% Northwoods Apartments Pensacola, Florida 96% 98% Patchen Place Apartments Lexington, Kentucky 93% 91% The Pines Apartments Roanoke, Virginia 98% 98% South Point Apartments Durham, North Carolina 94% 95% The Partnership's net income for the three and six month periods ended June 30, 1996, was approximately $71,000 and $98,000 respectively, versus net losses of $19,000 and $45,000, respectively for the same periods of 1995. The increase in net income is primarily attributable to an increase in rental income due to rental rate increases at all properties. In addition, other income increased due to the Partnership maintaining higher cash balances in interest-bearing accounts. Partially offsetting these increases to income was an increase in operating expenses and general and administrative expenses. The increase in operating expense was primarily attributable to the completion of repair work related to a fire at Fairway View II in 1995. The increase in general and administrative expense is due to increased professional expenses, such as audit and legal expenses. 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. At June 30, 1996, the Partnership had cash and cash equivalents of approximately $2,832,000 as compared to $1,241,000 at June 30, 1995. Net cash provided by operating activities increased primarily as a result of the increase in net income, as discussed above, an increase in accounts payable and accrued expenses and a decrease in other assets. Net cash used in investing activities decreased due to decreased restricted cash at the Partnership's three U.S. Department of Housing and Urban Development ("HUD") mortgaged properties. Net cash used in financing activities decreased due to the payment of $456,000 in 1995 of deferred interest related to Northwoods Apartments. The Managing General Partner has extended to the Partnership a credit line of up to $500,000. At the present time, the Partnership has no outstanding amounts due under this line of credit. Based on present plans, management 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 property 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 $18,166,000 is amortized over varying periods with required balloon payments ranging from September 1, 1996, to September 2021, at which time the properties will either be refinanced or sold. Currently, the Managing General Partner is working to refinance all of the Partnership's properties with the exception of the Pines Apartments. Northwoods Apartments' mortgage matured May 1, 1996. An extension to July 1, 1996, was granted. The mortgage was refinanced as of July 1, 1996, with Lehman Brothers Holdings Inc.; the new principal amount is $5,000,000 with a maturity date of September 1, 1996. The Managing General Partner is working to secure permanent financing; however, there can be no assurance that this will be achieved in which case the property will either be sold or could be foreclosed. Future cash distributions will depend on the levels of cash generated from operations, property sales, and the availability of cash reserves. No cash distributions were paid in 1995 or during the second quarter of 1996. At this time, it appears that the investment objective of capital growth will not be attained and that investors will not receive a return of all of their invested capital. PART II - OTHER INFORMATION 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 were filed during the quarter ended June 30, 1996. SIGNATURES In accordance with 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 7 By: NPI EQUITY INVESTMENTS, INC. MANAGING GENERAL PARTNER By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: August 13, 1996 EX-27 2
5 This schedule contains summary financial information extracted from National Property Investors 7 1996 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000732439 NATIONAL PROPERTY INVESTORS 7 1,000 6-MOS DEC-31-1996 JUN-30-1996 3,237 0 0 0 0 0 44,795 21,520 27,792 0 18,166 0 0 0 8,961 27,792 0 3,662 0 0 3,564 0 746 0 0 98 0 0 0 98 1.61 0 The Registrant has an unclassified balance sheet. Multipler is 1.
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