-----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, BKJoSNFC5chPfxiK4fH3f609rnooEqIo6J2gOR4aW5sSJ0MP30Zpw3U9peeMYWpk i6sElVTrNkWBgyFeXjgtng== 0000830737-96-000007.txt : 19960517 0000830737-96-000007.hdr.sgml : 19960517 ACCESSION NUMBER: 0000830737-96-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96565467 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 March 31, 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) (Zip Code) 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) March 31, 1996
Assets Cash and cash equivalents: Unrestricted cash $ 2,528 Restricted 561 Escrow deposits 624 Other assets 423 Investment properties: Land $ 3,738 Buildings and related personal property 40,957 44,695 Less accumulated depreciation (21,115) 23,580 $ 27,716 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable and accrued expenses $ 414 Tenants' security deposits 166 Mortgage notes payable 18,246 Partners' Capital (Deficit): General partner $ (213) Limited partners (60,517 units issued and outstanding) 9,103 8,890 $ 27,716 See Accompanying Notes to Consolidated Financial Statements
b) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended March 31, 1996 1995 Revenues: Rental income $ 1,740 $ 1,660 Other income 73 47 Total revenues 1,813 1,707 Expenses: Operating 902 840 General and administrative 80 71 Depreciation 414 448 Interest 390 374 Total expenses 1,786 1,733 Net income (loss) $ 27 $ (26) Net income (loss) allocated to general partner (1%) $ -- $ -- Net income (loss) allocated to limited partners (99%) 27 (26) Net income (loss) $ 27 $ (26) Net income (loss) per limited partnership unit $ .44 $ (.43) 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 three months ended March 31, 1996 -- -- 27 27 Partners' (deficit) capital at March 31, 1996 60,517 $ (213) $ 9,103 $ 8,890 See Accompanying Notes to Consolidated Financial Statements
d) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income (loss) $ 27 $ (26) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 414 448 Amortization of loan costs 16 7 Change in accounts: Escrow deposits (33) (103) Other assets 200 21 Accounts payable and accrued expenses 195 70 Tenants' security deposit liabilities (7) 6 Net cash provided by operating activities 812 423 Cash flows from investing activities: Property improvements and replacements (48) (44) Increase in restricted cash (412) (269) Net cash used in investing activities (460) (313) Cash flows from financing activities: Payment of deferred interest payable -- (456) Mortgage principal repayments (78) (78) Loan costs paid (23) (15) Net cash used in financing activities (101) (549) Net increase (decrease) in cash and cash equivalents 251 (439) Cash and cash equivalents at beginning of period 2,277 1,621 Cash and cash equivalents at end of period $ 2,528 $ 1,182 Supplemental information: Interest paid $ 358 $ 824 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 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 month period ended March 31, 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 The Partnership has no employees and is dependent on NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General Partner") and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc. ("NPI, Inc."), and affiliates were charged to expense in 1996 and 1995:
For the Three Months Ended March 31, 1996 1995 Property management fees (included in operating expenses) $ 90,000 $ 84,000 Reimbursement for services of affiliates (included in general and administrative expenses) 53,000 60,000
For the period from January 19, 1996, to March 31, 1996, the Partnership insured its property 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 three months ended March 31, 1995, are insurance premiums of approximately $47,000 which were paid to the Managing General Partner under a master insurance policy arranged for by the Managing General Partner. NPI Equity Investments, Inc. is the general partner of the Partnership. NPI Equity is a wholly-owned subsidiary of NPI, Inc. On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial Group, Inc., a Delaware corporation ("Insignia"), 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 the three months ended March 31, 1996 and 1995: Average Occupancy Property 1996 1995 Fairway View II Apartments Baton Rouge, Louisiana 94% 97% Northwoods Apartments Pensacola, Florida 95% 98% Patchen Place Apartments Lexington, Kentucky 93% 91% The Pines Apartments Roanoke, Virginia 99% 99% South Point Apartments Durham, North Carolina 98% 97% The Managing General Partner attributes the decrease in occupancy at Fairway View II to the fire in 1995 which damaged several apartment units. The units have been completely restored and are currently occupied. The decrease in occupancy at Northwoods Apartments has been the result of military turnover. The Managing General Partner expects a new training program at the local military base and the resulting influx of trainees to increase occupancy in the near future. The Partnership's net income for the three months ended March 31, 1996, was approximately $27,000 versus a net loss of $26,000 for the same period 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 general and administrative expenses 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 March 31, 1996, the Partnership had cash and cash equivalents of approximately $2,528,000 as compared to $1,182,000 at March 31, 1995. Net cash provided by operating activities increased primarily as a result of an increase in accounts payable and prepaid rents shown as accrued expenses. In addition, the decrease in other assets also increased cash provided by operations. Also contributing to the increase was the increase in net income as discussed above. Net cash used in investing activities increased due to increased 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. An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. 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 $18,246,000 is amortized over varying periods with required balloon payments ranging from July 1996 to September 2021, at which time the properties will either be refinanced or sold. Northwoods Apartments' mortgage matured May 1, 1996. An extension to July 1, 1996, was granted and it is expected that the mortgage will be refinanced during the second quarter of 1996. 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 first 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: A Form 8-K dated January 19, 1996, was filed reporting the change in control of the Registrant. 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: May 15, 1996 EX-27 2
5 This schedule contains summary financial information extracted from National Property Investors 7 1996 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000732439 NATIONAL PROPERTY INVESTORS 7 1,000 3-MOS DEC-31-1996 MAR-31-1996 3,089 0 0 0 0 0 44,695 21,115 27,716 0 18,246 0 0 0 8,890 27,716 0 1,813 0 0 1,786 0 390 0 0 0 0 0 0 27 .44 0 The Registrant has an unclassified balance sheet.
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