10QSB 1 0001.txt FORM 10-QSB 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 September 30, 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 0-14554 NATIONAL PROPERTY INVESTORS 8 (Exact name of small business issuer as specified in its charter) California 13-3254885 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, 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 ITEM 1. FINANCIAL STATEMENTS a) NATIONAL PROPERTY INVESTORS 8 BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 2000
Assets Cash and cash equivalents $ 683 Receivables and deposits 302 Restricted escrows 543 Other assets 340 Investment properties: Land $ 1,970 Buildings and related personal property 29,557 31,527 Less accumulated depreciation (18,499) 13,028 $ 14,896 Liabilities and Partners' Deficit Liabilities Accounts payable $ 219 Tenant security deposit liabilities 73 Accrued property taxes 594 Other liabilities 280 Mortgage notes payable 14,735 Partners' Deficit General partner $ (233) Limited partners (44,882 units issued and outstanding) (772) (1,005) $ 14,896
See Accompanying Notes to Financial Statements b) NATIONAL PROPERTY INVESTORS 8 STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 Revenues: Rental income $ 1,100 $ 1,080 $ 3,314 $ 3,326 Other income 105 83 269 234 Total revenues 1,205 1,163 3,583 3,560 Expenses: Operating 540 434 1,382 1,239 General and administrative 88 62 265 142 Interest 296 229 794 688 Depreciation 336 311 982 919 Property taxes 110 123 359 364 Total expenses 1,370 1,159 3,782 3,352 (Loss) income before extraordinary item (165) 4 (199) 208 Extraordinary loss on early extinguishment of debt -- -- (181) -- Net (loss) income $ (165) $ 4 $ (380) $ 208 Net (loss) income allocated to general partner (1%) (2) -- (4) 2 Net (loss) income allocated to limited partners (99%) (163) 4 (376) 206 $ (165) $ 4 $ (380) $ 208 Per limited partnership unit: (Loss) income before extraordinary item $ (3.63) $ 0.09 $ (4.39) $ 4.59 Extraordinary loss on the early extinguishment of debt -- -- (3.99) -- Net (loss) income $ (3.63) $ 0.09 $ (8.38) $ 4.59 Distributions per limited partnership unit $ 1.52 $ 22.57 $ 97.57 $ 41.33
See Accompanying Notes to Financial Statements c) NATIONAL PROPERTY INVESTORS 8 STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 44,882 $ 1 $22,441 $22,442 Partners' (deficit) capital at December 31, 1999 44,882 $ (185) $ 3,983 $ 3,798 Distributions to partners -- (44) (4,379) (4,423) Net loss for the nine months ended September 30, 2000 -- (4) (376) (380) Partners' deficit at September 30, 2000 44,882 $ (233) $ (772) $(1,005)
See Accompanying Notes to Financial Statements d) NATIONAL PROPERTY INVESTORS 8 STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2000 1999 Cash flows from operating activities: Net (loss) income $ (380) $ 208 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 982 919 Amortization of loan costs 28 28 Extraordinary loss on early extinguishment of debt 181 -- Change in accounts: Receivables and deposits (195) (95) Other assets (59) (44) Accounts payable 7 (25) Tenant security deposit liabilities 1 4 Accrued property taxes 100 89 Other liabilities 57 15 Net cash provided by operating activities 722 1,099 Cash flows from investing activities: Property improvements and replacements (541) (264) Net (deposits to) withdrawals from restricted escrows (442) 693 Net cash (used in) provided by investing activities (983) 429 Cash flows from financing activities: Payments on mortgage note payable (59) (53) Payoff of mortgage note payable (3,364) -- Proceeds from mortgage note payable 7,372 -- Prepayment penalty (168) -- Loan costs paid (157) -- Distributions to partners (4,423) (1,874) Net cash used in financing activities (799) (1,927) Net decrease in cash and cash equivalents (1,060) (399) Cash and cash equivalents at beginning of period 1,743 1,746 Cash and cash equivalents at end of period $ 683 $ 1,347 Supplemental disclosure of cash flow information: Cash paid for interest $ 744 $ 661 At September 30, 2000, approximately $145,000 of property improvements and replacements were included in accounts payable.
See Accompanying Notes to Financial Statements e) NATIONAL PROPERTY INVESTORS 8 NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of National Property Investors 8 (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. ("NPI Equity" or the "Managing General Partner"), the general partner of the Partnership, 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, 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 expenditures were paid or accrued to the Managing General Partner and affiliates during the nine months ended September 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $180 $181 Reimbursement for services of affiliates (included in investment properties and operating and general and administrative expenses) 133 81 Non-accountable partnership reimbursement (included in general and administrative expense) 67 26 Partnership management fee (included in general and administrative expense) 25 -- Loan costs (included in other assets) 74 -- During the nine months ended September 30, 2000 and 1999, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from both of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $180,000 and $181,000 for the nine months ended September 30, 2000 and 1999, respectively. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $133,000 and $81,000 for the nine months ended September 30, 2000 and 1999, respectively. For services relating to the administration of the Partnership and operation of its properties, the Managing General Partner is entitled to receive payment for non-accountable expenses up to a maximum of $150,000 per year of distributions from operations based upon the number of Partnership units sold, subject to certain limitations. The Managing General Partner received approximately $67,000 and $26,000 for the nine months ended September 30, 2000 and 1999, respectively, for non-accountable expense reimbursements. For managing the affairs of the Partnership, the Managing General Partner of the Partnership is entitled to receive a partnership management fee. The fee is equal to 4% of the Partnership's adjusted cash from operations, as defined in the Partnership Agreement, in any year, provided that 50% of the fee shall not be paid until the Partnership has distributed to the limited partners adjusted cash from operations in such year which is equal to 5% of the limited partners' adjusted invested capital, as defined, on a non-cumulative basis. In addition, 50% of the fee shall not be paid until the Partnership has distributed to the limited partners adjusted cash from operations in such year which is equal to 8% of the limited partners' adjusted invested capital on a non-cumulative basis. The fee shall be paid when adjusted cash from operations is distributed to the limited partners. The Managing General Partner was paid approximately $25,000 during the nine months ended September 30, 2000 for such fees. The Managing General Partner was not entitled to receive a similar reimbursement during the nine months ended September 30, 1999. In addition to reimbursement for services of affiliates, the Partnership was charged by an affiliate of the Managing General Partner approximately $74,000 for loan costs related to the refinancing of one of the Partnership's properties during the nine months ended September 30, 2000. These costs were capitalized and are included in other assets on the consolidated balance sheet. The Managing General Partner has established a revolving credit facility (the "Partnership Revolver") to be used to fund deferred maintenance and working capital needs of the Partnership. The maximum draw available to the Partnership under the Partnership Revolver is $500,000. Loans under the Partnership Revolver 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. 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 (whether or not a borrowing under the Partnership Revolver was made with respect to such property); or (iii) the liquidation of the Partnership. The Partnership has not borrowed under the Partnership Revolver to date. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates currently own 25,391 limited partnership units in the Partnership representing 56.57% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates or affiliates of the Managing General Partner. 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, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 56.57% 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 16,352 units, had agreed for the benefit of non-tendering unitholders, that it would vote these 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 unit holders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates right to vote each Unit acquired. Note D - Distributions During the nine months ended September 30, 2000, the Registrant declared and paid distributions of approximately $4,423,000 (approximately $4,379,000 to the limited partners or $97.57 per limited partnership unit) consisting of approximately $1,245,000 (approximately $1,233,000 to the limited partners or $27.48 per limited partnership unit) from operations and approximately $3,178,000 (approximately $3,146,000 to the limited partners or $70.09 per limited partnership unit) from the refinancing proceeds of Huntington Athletic Club Apartments. During the nine months ended September 30, 1999, the Registrant made distributions of approximately $266,000 (approximately $263,000 to the limited partners or $5.86 per limited partnership unit) from operations and approximately $1,608,000 (approximately $1,592,000 to the limited partners or $35.47 per limited partnership unit) from refinancing and property sale proceeds from prior years. Note E - Extraordinary Loss on Early Extinguishment On May 11, 2000, the Partnership refinanced the mortgage encumbering Huntington Athletic Club Apartments. The refinancing replaced indebtedness of approximately $3,364,000 with a new mortgage in the amount of $7,372,000. The new mortgage carries a stated interest rate of 8.15% as compared to the 9.85% interest rate on the old mortgage. Payments on the mortgage loan are due monthly until the loan matures on June 1, 2020 at which time the loan will be fully amortized. In addition, the Partnership was required to establish a repair escrow of approximately $454,000 with the lender for certain capital replacements. Total capitalized loan costs were approximately $157,000 at September 30, 2000. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $181,000 due to the write-off of unamortized loan costs and a prepayment penalty. Note F - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consists of two apartment complexes, one located in each of Indianapolis, Indiana and Morrisville, North Carolina. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Note F - Segment Reporting (continued) Measurement of segment profit or loss: 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. Factors management used to identify the enterprise's reportable segments: The Partnership's reportable segment consists of 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 and nine month periods ended September 30, 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.
Three Months Ended September 30, 2000 Residential Other Totals Rental income $ 1,100 $ -- $ 1,100 Other income 96 9 105 Interest expense 296 -- 296 Depreciation 336 -- 336 General and administrative expense -- 88 88 Segment loss (86) (79) (165) Nine Months Ended September 30, 2000 Residential Other Totals Rental income $ 3,314 $ -- $ 3,314 Other income 248 21 269 Interest expense 794 -- 794 Depreciation 982 -- 982 General and administrative expense -- 265 265 Extraordinary loss on early extinguishment of debt (181) -- (181) Segment loss (136) (244) (380) Total assets 14,551 345 14,896 Capital expenditures for investment properties 686 -- 686 Three Months Ended September 30, 1999 Residential Other Totals Rental income $ 1,080 $ -- $ 1,080 Other income 78 5 83 Interest expense 229 -- 229 Depreciation 311 -- 311 General and administrative expense -- 62 62 Segment profit (loss) 61 (57) 4 Nine Months Ended September 30, 1999 Residential Other Totals Rental income $ 3,326 $ -- $ 3,326 Other income 212 22 234 Interest expense 688 -- 688 Depreciation 919 -- 919 General and administrative expense -- 142 142 Segment profit (loss) 328 (120) 208 Total assets 15,387 108 15,495 Capital expenditures for investment properties 264 -- 264
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, its 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 of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. 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 owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. 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. 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 operations. 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 two apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2000 and 1999: Average Occupancy Property 2000 1999 Williamsburg on the Lake Apartments 93% 93% Indianapolis, Indiana Huntington Athletic Club Apartments 89% 92% Morrisville, North Carolina The Managing General Partner attributes the decrease in occupancy at Huntington Athletic Club Apartments to increased competition in the area from six new apartment complexes and a plumbing project which causes several units at a time to be vacant as the work is being completed. Results of Operations The Registrant's net loss for the nine months ended September 30, 2000 was approximately $380,000 as compared to net income of approximately $208,000 for the nine months ended September 30, 1999. The Registrant's net loss for the three month period ended September 30, 2000 was approximately $165,000 as compared to net income of approximately $4,000 for the three month period ended September 30, 1999. The increase in net loss for the nine month period ended September 30, 2000 was due to the recognition in 2000 of an extraordinary loss on early extinguishment of debt, as well as an increase in total expenses, partially offset by an increase in total revenues. The extraordinary loss on early extinguishment of debt relates to the refinancing of the mortgage at Huntington Athletic Club Apartments (see discussion below). The increase in net loss for the three month period ended September 30, 2000 was due to an increase in total expenses partially offset by an increase in total revenues. Total revenues increased for the nine month period ended September 30, 2000 due to an increase in other income which was partially offset by a decrease in rental income. Total revenues increased for the three month period ended September 30, 2000 due to an increase in other income and rental income. Other income increased for the three and nine month periods ended September 30, 2000 due to an increase in tenant charges at Williamsburg on the Lake Apartments, increased corporate housing revenue at Huntington Athletic Club Apartments and increased local telephone commissions at both properties. Rental income decreased for the nine months ended September 30, 2000 due to decreased occupancy at Huntington Athletic Club Apartments and increased concessions and bad debt expenses at Williamsburg on the Lake Apartments which was partially offset by increased average rental rates at Williamsburg on the Lake Apartments and decreased concessions at Huntington Athletic Club Apartments. Rental income increased for the three month period ended September 30, 2000 due to increased average rental rates at Williamsburg on the Lake Apartments and decreased concessions at Huntington Athletic Club Apartments, partially offset by increased bad debt expense at Williamsburg on the Lake Apartments. Total expenses increased for the three and nine month periods ended September 30, 2000 due to an increase in operating, interest, depreciation, and general and administrative expenses. Operating expenses increased primarily due to an increase in payroll expenses, collection costs, and interior painting at both of the Partnership's properties. Interest expense increased due to the refinancing of Huntington Athletic Club Apartments, as discussed below. Depreciation expense increased due to property additions during the past twelve months. General and administrative expenses increased over the comparable period due to an increase in the non-accountable partnership reimbursement and partnership management fees paid to the Managing General Partner from distributions from operations as provided in the Partnership Agreement, an increase in the cost of services included in the management reimbursements to the Managing General Partner as allowed under the Partnership Agreement, and increased professional fees necessary to manage the Partnership. Included in general and administrative expenses at both September 30, 2000 and 1999 are management reimbursements to the Managing General Partner allowed under the Partnership Agreement. In addition, 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. 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 Registrant from increases in expenses. 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 September 30, 2000, the Partnership held cash and cash equivalents of approximately $683,000 compared to approximately $1,347,000 at September 30, 1999. The decrease of approximately $1,060,000 in cash and cash equivalents since December 31, 1999 is due to approximately $799,000 of cash used in financing activities and approximately $983,000 of cash used in investing activities which was partially offset by approximately $722,000 of cash provided by operating activities. Cash used in financing activities consisted of distributions to the partners, the payoff of the previous debt encumbering Huntington Athletic Club Apartments, payments of principal made on the mortgage encumbering Huntington Athletic Club Apartments, the payment of loan costs, and a prepayment penalty relating to the refinance of Huntington Athletic Club Apartments partially offset by proceeds from the refinancing of the mortgage encumbering Huntington Athletic Club Apartments. Cash used in investing activities consisted of property improvements and replacements and net deposits to escrow accounts maintained by the mortgage lender. The Partnership invests its working capital reserves in money market accounts. On May 11, 2000, the Partnership refinanced the mortgage encumbering Huntington Athletic Club Apartments. The refinancing replaced indebtedness of approximately $3,364,000 with a new mortgage in the amount of $7,372,000. The new mortgage carries a stated interest rate of 8.15% as compared to the 9.85% interest rate on the old mortgage. Payments on the mortgage loan are due monthly until the loan matures on June 1, 2020 at which time the loan will be fully amortized. In addition, the Partnership was required to establish a repair escrow of approximately $454,000 with the lender for certain capital replacements. Total capitalized loan costs were approximately $157,000 at September 30, 2000. The Partnership recognized an extraordinary loss on early extinguishment of debt of approximately $181,000 due to the write-off of unamortized loan costs and a prepayment penalty. 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. Williamsburg on the Lake Apartments During the nine months ended September 30, 2000, the Partnership completed approximately $381,000 of capital expenditures at Williamsburg on the Lake Apartments consisting primarily of carpet and vinyl replacements, submetering improvements, structural improvements, appliances, and major landscaping. These improvements were funded from operating cash flow and the Partnership's reserves. The Partnership has evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $512,000, consisting primarily of parking area improvements, air conditioning unit replacement, appliances, carpet replacements, major landscaping, submetering improvements, 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. Huntington Athletic Club Apartments During the nine months ended September 30, 2000, the Partnership completed approximately $305,000 of capital expenditures at Huntington Athletic Club Apartments consisting primarily of swimming pool upgrades, floor covering replacements, appliances, and structural improvements. These improvements were funded from operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year 2000. The amount budgeted is approximately $611,000, consisting primarily of appliances, carpet replacement, 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 additional capital expenditures 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 Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. Huntington Athletic Club Apartment's mortgage indebtedness of approximately $7,335,000 is amortized over 20 years and matures June 1, 2020. The mortgage encumbering the Williamsburg on the Lake Apartments requires interest only payments with the principal balance of $7,400,000 due in November 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 nine months ended September 30, 2000, the Registrant declared and paid distributions of approximately $4,423,000 (approximately $4,379,000 to the limited partners or $97.57 per limited partnership unit) consisting of approximately $1,245,000 (approximately $1,233,000 to the limited partners or $27.48 per limited partnership unit) from operations and approximately $3,178,000 (approximately $3,146,000 to the limited partners or $70.09 per limited partnership unit) from the refinancing proceeds of Huntington Athletic Club Apartments. During the nine months ended September 30, 1999, the Registrant made distributions of approximately $266,000 (approximately $263,000 to the limited partners or $5.86 per limited partnership unit) from operations and approximately $1,608,000 (approximately $1,592,000 to the limited partners or $35.47 per limited partnership unit) from refinancing and property sale proceeds from prior years. 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 quarterly basis. There can be no assurance, however, that the Registrant will generate sufficient funds from operations after required capital improvements to permit further distributions to its partners during the remainder of 2000 or subsequent periods. 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, its 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 of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. 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 owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. 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 quarter ended September 30, 2000: None. 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 8 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: