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EX-32.2 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex32-2.htm
EX-32.1 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex32-1.htm
EX-31.1 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex31-1.htm
EX-31.3 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex31-3.htm
EX-32.3 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex32-3.htm
EX-31.2 - NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIPv178908_ex31-2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 
For the fiscal year ended
December 31, 2009
 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
Commission File Number
000-24816
 

NATIONAL PROPERTY ANALYSTS MASTER LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

Delaware
23-2610414
(State or other jurisdiction of
(IRS Employer Identification No.)
incorporation or organization)
 

230 S. Broad Street, Mezzanine, Philadelphia, Pennsylvania  19102
(Address of principal executive offices)                               (Zip Code)

Registrant's telephone number, including area code: (215)790-4700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Name of each exchange on
 
which registered
None
N/A

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.                                                                                                                                                  Yes ¨     No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.                                                                                                                                                   Yes ¨     No  x

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or Section 15 (d) of the Exchange Act from their obligations under those Sections.
  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer
¨
Accelerated Filer  ¨
     
Non-Accelerated Filer
¨(Do not check if a smaller reporting company)
Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨  No x

Aggregate Market Value of Voting and Non-Voting Common Equity Held by non-affiliates of the Registrant:   N/A

DOCUMENTS INCORPORATED BY REFERENCE

Part I
Part II
Part III
Part IV
(None)
(None)
(None)
Exhibits from Form 10
     
Registration Statement filed on July 14, 1994;
     
Form 10-K Annual Reports filed on April 1, 1996 and March 31, 2003;
     
and Form 10-Q Quarterly Report;
     
November 11, 2003 -
     
Commission file Number 0-24816.
 

 
INDEX
 
     
Page
PART I
     
       
Item 1.
Business
 
 
I.
Summary
1
 
II.
NPAMLP Objectives and Policies
2
 
III.
Glossary
4
Item 1(A).
Risk Factors
7
Item 1(B).
Unresolved Staff Comments
7
Item 2.
Properties
7
Item 3.
Legal Proceedings
14
Item 4.
Submission of Matters to a Vote of Security Holders
14
       
PART II
     
       
Item 5.
Market for the Registrant's Common
 
 
Equity, Related Stockholder Matters and Issuer
 
 
Purchases of Equity Securities
15
 
I.
No Trading Market
15
 
II.
Distributions of Cash Flow From Operations
15
 
III.
Proceeds of Sales Distributions
15
 
IV.
Certain Income Tax Considerations
15
 
V.
Other
16
Item 6.
Selected Financial Data
16
Item 7.
Management's Discussion and Analysis of
 
 
Financial Condition and Results of Operations
16
 
I.
Liquidity and Capital Resources
16
 
II.
Critical Accounting Policies
18
 
III.
Factors That May Influence Future Results of Operations
18
 
IV.
Results of Operations
19
 
V.
Tabular Disclosure of Contractual Obligations
20
 
VI.
Indebtedness Secured by the Properties
20
Item 7(A)
Quantitative and Qualitative Disclosures
 
 
About Market Risk
23
Item 8.
Financial Statements and Supplementary Data
23
Item 9.
Changes in and Disagreements with Accountants on
 
 
Accounting and Financial Disclosure
23
Item 9(A)T.
Controls and Procedures
23
Item 9(B).
Other Information
24
       
PART III
     
       
Item 10.
Directors, Executive Officers and Corporate
 
 
Governance
25
 
I.
Summary
25
 
II.
Code of Ethics
25
 
III.
Audit Committee Financial Expert
25
Item 11.
Executive Compensation
25
Item 12.
Security Ownership of Certain Beneficial Owners
 
 
and Management and Related Stockholder Matters
26
Item 13.
Certain Relationships and Related Transactions and
 
 
Director Independence
26
 
I.
Compensation and Fees
26
 
II.
Property Management by Affiliate
27
 
III.
Conflicts of Interest
27
 
IV.
Summary of Relationships
28
 
V.
Related Party Transactions
28
 
VI.
Director Independence
29
Item 14.
Principal Accountant Fees and Services
29
 
I.
Audit Fees
29
 
II.
Tax Fees
29
 
III.
All Other Fees
29
 
IV.
Pre-approval Policies and Procedures
29
       
PART IV
     
       
Item 15.
Exhibits, Financial Statement Schedules
30
 
I.
Documents Filed as Part of this Report
30
       
SIGNATURES
 
32
 
 
ii

 
 
Forward-Looking Statements

From time to time, management may provide information, whether orally or in writing, including certain statements in this Annual Report on Form 10-K, which are deemed to be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements reflect management’s current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside management’s control that may cause actual results to differ materially from those projected.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect management’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended or using other similar expressions. Management does not intend to update these forward-looking statements, except as required by law. In accordance with the provisions of the Litigation Reform Act, we are making the limited partners aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Annual Report on Form 10-K, and any exhibits to this Form 10-K. Such factors include, but are not limited to: the outcome of litigation and regulatory proceedings to which NPAMLP may be a party; actions of competitors; changes and developments affecting our industry; quarterly or cyclical variations in financial results; the ability to attract and retain tenants at market rates; interest rates and cost of borrowing; management’s ability to maintain and improve cost efficiency of operations; changes in economic conditions, political conditions,  and other factors that are set forth in the “Legal Proceedings” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 
iii

 

PART I

Item 1.  Business

I.  Summary

The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in the Annual Report.  Reference is made to the Glossary, which appears at the end of this Item for the definition of certain capitalized terms used in the Summary and elsewhere in this Report.

A.  The Master Limited Partnership

National Property Analysts Master Limited Partnership (“NPAMLP”) was organized under the Delaware Revised Uniform Limited Partnership Act in January, 1990 as part of a consolidation of the operation of properties owned by certain limited partnerships (the “Partnerships”) previously sponsored by National Property Analysts, Inc. and its affiliates (“NPA”).  The term of NPAMLP will continue until December 31, 2013, unless sooner terminated in accordance with the terms of the limited partnership agreement of NPAMLP (the “Partnership Agreement”).  See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - V. Indebtedness Secured by the Properties - D. Future Interest Agreement.”

NPAMLP's principal executive offices are located at 230 South Broad Street, Mezzanine, Philadelphia, Pennsylvania 19102 (telephone: 215-790-4700).

B.  The General Partners

The General Partners of NPAMLP are EBL&S, Inc., an affiliate of NPA (the “Managing General Partner”) and Feldman International, Inc. (the “Equity General Partner”).  The Managing General Partner and the Equity General Partner are collectively referred to as the “General Partners”.  The Managing General Partner manages and controls all aspects of the business of NPAMLP.  The Managing General Partner is owned 100% by E & H Properties, Inc., an affiliate of NPA and holds no ownership interest in NPAMLP.  The Equity General Partner holds a 1% general partner interest in NPAMLP.  See “Item 13. Certain Relationships and Related Party Transactions.”

C.  The Properties and Indebtedness Secured by the Properties

NPAMLP owns 24 properties, inclusive of tenant-in-common (“TIC”) interests, as of December 31, 2009, which consist primarily of shopping centers and free standing, single tenant retail stores (the “Properties”).  The Properties are subject to certain indebtedness, which was incurred in connection with the acquisition of the Properties by the Partnerships.  See “Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.”

D.  NPAMLP Objectives and Policies

NPAMLP intends to hold the Properties until such time as it is deemed prudent to dispose of the Properties.  However, the Partnership in accordance with the terms of the Partnership Agreement will terminate on December 31, 2013.  See further discussion under “II. NPAMLP Objectives and Policies”, below; see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - V. Indebtedness Secured by the Properties - D. Future Interest Agreement.”

E.  Limited Partners' Share of Cash Flow from Operations

The Limited Partners will receive, on an annual basis, 99% of the Cash Flow from Operations as defined in the Partnership Agreement.  It is not anticipated that NPAMLP will be in a position to distribute Cash Flow from Operations to its partners in the foreseeable future.

F.  Limited Partners' Share of Proceeds of Sales Distributions

Proceeds of Sales of the Properties available to be distributed by NPAMLP will be distributed 99% to the Limited Partners and 1% to the Equity General Partner.  It is not anticipated that NPAMLP will be in a position to distribute Proceeds of Sales to its partners in the foreseeable future.

 
1

 

G.  Allocations of Profits and Losses

Taxable income from NPAMLP operations or from a capital transaction will be allocated 99% to the Limited Partners and 1% to the Equity General Partner.  Taxable losses from NPAMLP operations or from capital transactions generally have been allocated 99% to the Limited Partners and 1% to the Equity General Partner.

H.  Compensation to the General Partner and Affiliates

The Managing General Partner will receive certain compensation for its services including reimbursement of certain of its expenses and the Equity Partner will receive a portion of Cash Flow from Operations and Proceeds of Sales of the Properties.  An affiliate of the Managing General Partner will receive a management fee for managing the Properties and a leasing fee for obtaining or renewing leases.  See “Item 13.  Certain Relationships and Related Party Transactions - I. Compensation and Fees.”

I.  Fiscal Year

NPAMLP's fiscal year begins on January 1 and ends on December 31 of each year.

II. NPAMLP Objectives and Policies

A.  NPAMLP Objectives

NPAMLP intends to hold the Properties until such time as it is deemed prudent to dispose of one or more or all of the Properties.  The precise timing of disposition of Properties is at the discretion of the Managing General Partner.  However, the Partnership in accordance with the terms of the Partnership Agreement is expected to terminate not later than December 31, 2013.  See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - V. Indebtedness Secured by the Properties - D. Future Interest Agreement.”

It is anticipated that the forgiveness of Wrap Mortgages, if any, and the process of selling Properties, which are owned by Unaudited Partnerships, and applying sales proceeds to make payments on the Wrap Mortgages will result in the Limited Partners having to report substantial taxable income when the Properties are sold without the corresponding receipt of any cash proceeds therefrom (unless and until the Threshold Amount has been exceeded). The Consolidation and Restructuring was intended to avoid a foreclosure of Properties and to preserve for Limited Partners the potential for deriving an economic benefit from the future sales of the Properties, while at the same time possibly deferring the recognition of taxable income for some Limited Partners.

The objectives of NPAMLP are to implement effective management, leasing, cost control and capital improvement policies and techniques with respect to the Properties, to: (i) preserve and protect NPAMLP's Properties in order to avoid the loss of any Properties to foreclosure; (ii) enhance the potential for appreciation in the value of NPAMLP's Properties; and (iii) eventually provide Cash Flow from Operations.  It is not anticipated that NPAMLP will be in a position to distribute Cash Flow from Operations to its partners in the foreseeable future.

The determination of whether a Property should be sold or otherwise disposed of will be made by the Managing General Partner after consideration of relevant factors, including performance of the Property, market conditions, the financial requirements of NPAMLP and the tax consequences to Limited Partners, with a view toward achieving the principal investment objectives of NPAMLP.  In connection with a sale of a Property, a purchase money obligation secured by a mortgage may be taken as part payment; there are no limitations or restrictions on NPAMLP's taking such purchase money obligations.  The terms of payment to NPAMLP are affected by custom in the area in which each Property is located and the then-prevailing economic conditions.  To the extent the Partnership receives notes and other property instead of cash on sales, such proceeds (other than any interest payable thereon) will not be included in Proceeds of Sales of the Properties until and to the extent the notes or other property are actually paid, sold, refinanced or otherwise disposed of; and therefore, the distribution of such proceeds to NPAMLP may be delayed until such time.
 
 
2

 

NPAMLP may not acquire additional properties.  However, in the Managing General Partner's discretion, NPAMLP may, in appropriate circumstances, exchange Properties for new properties in transactions structured to be non-taxable events in whole or in substantial part under Section 1031 of the Internal Revenue Code, and the proceeds of an involuntary conversion may be invested in property in transactions structured to be non-taxable in whole or in part under Section 1033 of the Internal Revenue Code.

B.  Competition for Tenants

NPAMLP's Properties consist primarily of shopping centers and freestanding, single tenant retail stores located in 14 states.  Of the 24 properties owned by NPAMLP, 14 properties have only 1 or 2 tenants (“Single Tenant Properties”).  The tenants in the Single Tenant Properties are primarily national retailers or supermarkets (“Anchor Tenants”).  The 10 remaining properties are multi-tenant shopping center properties (“Shopping Center Properties”).  The tenants in the Shopping Center Properties generally include Anchor Tenants and a variety of tenants occupying less substantial portions of the property (“Local Tenants”).

1.  Anchor Tenants

The Anchor Tenant leases at lease inception are usually for 15 to 25 years.  These Anchor Tenant leases are at various stages of maturity.  Upon expiration of the initial lease term, renewal options are usually available to the Anchor Tenants.  See "Item 2. Properties."  The high concentration of minimum rent received from Anchor Tenants under the terms of long term leases generally provide NPAMLP with protection against a significant reduction in rental income; however, this also restricts the growth opportunity for NPAMLP.

NPAMLP's primary Anchor Tenants are Sun Microsystems, Sears Holdings  Corporation and its subsidiaries (“Sears”) and CVS Corporation (“CVS”), which in 2009 accounted for approximately 23%, 18% and 14%, respectively, of the rental income received by NPAMLP.  As of December 31, 2009, NPAMLP had 1 lease with Sun Microsystems for approximately 250,000 square feet.  The rent per square foot for the Sun Microsystems lease as of December 31, 2009, was $49.90.  As of December 31, 2009, no balance was due from Sun Microsystems under its lease.  As of December 31, 2009, NPAMLP had 7 leases with Sears aggregating approximately 704,000 square feet.  NPAMLP’s average rent per square foot for all of the Sears leases as of December 31, 2009, was $3.32.  As of December 31, 2009, $92,000 was due from Sears under four (4) of its leases. As of December 31, 2009, NPAMLP had 5 leases with CVS aggregating approximately 57,000 square feet.  NPAMLP’s average rent per square foot for all of the CVS leases as of December 31, 2009, was $31.16.  As of December 31, 2009, there were no amounts due from CVS under its leases.

The Managing General Partner has had periodic discussions with representatives of Sears to review and discuss with them their plans for the various Sears stores.  In the past, in instances where Sears stores were determined to be undersized and inadequate to accommodate Sears’ current needs, expansions of the existing facilities were undertaken wherever possible. Other than noted below, management is currently unaware of any plans of Sears, or any of its other Anchor Tenants, to expand or close any of their stores owned by NPAMLP, although there can be no assurance that Sears, or any other Anchor Tenant, will not close stores in the future.

In 2010, the current lease terms of four Anchor Tenant spaces are scheduled to mature.  The Anchor Tenant at the Kalamazoo, MI property has already indicated it will not exercise an option to renew that lease.  All of the three other Anchor Tenant leases have renewal options available.  Management believes that although the lease option rates for these leases are favorable to the Anchor Tenants, there can be no assurance that the tenants will exercise their renewal options. If the Anchor Tenants elect not to exercise a renewal option, management will endeavor to re-tenant the properties with comparable tenants at rental rates equal to or higher than the existing rate. In the current economic environment it is difficult to predict the availability of replacement tenants or the timing of that replacement (See “Item 2. – Properties”, Schedule 3).

2.  Local Tenants

Marketing of Local Tenant space is accomplished through signage, direct mailing, advertisements and through coordinated listings with local leasing brokers.

 
3

 

The NPAMLP Properties' occupancy rate for Local Tenant space is 64% at December 31, 2009. The lease terms for Local Tenant space typically range from 1 to 3 years.  The competitive conditions applicable to Local Tenant space vary from Property to Property.  However, as a general matter, it can be said that the market for Local Tenant space is highly competitive and, with respect to NPAMLP Properties, is typically a function of NPAMLP's rental rates as compared to the local market.  However, in instances where a multi-tenant Property has Anchor Tenant space and the Anchor Tenant space is vacant (at December 31, 2009, one Shopping Center Property has Anchor Tenant space which is vacant), the vacancy in the Anchor Tenant space makes the rental of the Local Tenant space more difficult.

C.  Prohibited Activities and Investments

NPAMLP does not engage in any business not related to the operations of the Properties.  Additionally, NPAMLP does not: (i) sell additional limited partnership interests in NPAMLP; (ii) issue limited partnership interests in exchange for property; (iii) issue senior securities or make loans or investments in real estate mortgages other than in connection with a contemplated purchase or sale or disposition of the Properties; (iv) make loans to the General Partners or its affiliates; (v) invest in or underwrite the securities of other issuers for any purpose, including investing in securities for the purpose of exercising control; (vi) operate in such a manner as not to be exempt from classification as an “investment company” for purposes of the Investment Company Act of 1940; (vii) purchase or lease any property from or sell or lease any property to the General Partners or its affiliates, except that with respect to leases, the General Partners and its affiliates may lease space in the Properties on terms no more favorable than those offered to non-affiliated persons; (viii) invest in junior mortgages or deeds of trust, except that the acquisition or granting of junior mortgages or deeds of trust in connection with the sale, purchase, financing or refinancing of a Property shall not be deemed to be investing in junior mortgages or deeds of trust; (ix) commingle the funds of NPAMLP with any other person's; (x) invest in limited partnership interests; (xi) construct or develop properties; (xii) enter into joint venture agreements; or (xiii) receive rebates or give-ups in connection with NPAMLP.

D.  Insurance on Properties

NPAMLP has liability insurance covering most of the Properties.  The third party liability coverage insures, among others, NPAMLP and the General Partners.  Property insurance has also been obtained that insures NPAMLP for fire and other casualty losses in an amount that covers the replacement cost of the covered Properties. NPAMLP does not maintain property and liability insurance on Properties for which the Anchor Tenants are responsible for providing such insurance. In addition, NPAMLP is covered under fidelity insurance policies in amounts that the Managing General Partner deems sufficient.  Such insurance coverage is reviewed at least annually and adjusted to account for variations in value.

III.  Glossary

“Capital Improvement” shall mean any improvement to any Property that is required to be capitalized or amortized by NPAMLP, pursuant to accounting principles generally accepted in the United States of America.

“Capital Improvement Debt” shall mean indebtedness incurred by NPAMLP for Capital Improvements.

“Cash Flow from Operations” shall mean, with respect to NPAMLP, Operating Revenues less Operating Cash Expenses and Reserves.

“Consolidation” shall mean the consolidation of the ownership and operations of the Properties in NPAMLP.

“Debt Service” shall mean the aggregate principal and interest payments required on the Third Party Underlying Obligations in calendar year 1990 with respect to the Properties owned by NPAMLP.

“Equity General Partner” shall mean Feldman International, Inc., a Delaware corporation.

“Excess Proceeds” shall mean the Proceeds of Sales of the Properties in excess of the Minimum Payoff Amount and Capital Improvement Debt.

 
4

 

“General Partners” shall mean EBL&S, Inc., the Managing General Partner of NPAMLP and Feldman International, Inc., the Equity General Partner of NPAMLP.

“Investor Note Payments” shall mean the payment by Investor Note Payors of amounts becoming due on or after June 1, 1989 on the Investor Notes.

“Investor Note Payors” shall mean the limited partners of Partnerships who made payments which became due on or after June 8, 1989 on the Investor Notes.

“Investor Note Recovery” shall mean the Excess Proceeds available for distribution to NPAMLP after the first $28 million of Excess Proceeds has been retained by NPAMLP, in an amount equal to the lesser of the Investor Note Payments or $25 million.

“Investor Notes” shall mean the promissory notes executed and tendered by Limited Partners as payments for a portion of the purchase price of their interest in a Partnership.

“Limited Partners” shall mean all persons who hold limited partnership interests in NPAMLP.

“Management Agreement” shall mean the agreement entered into by and between NPAMLP and EBL&S Property Management, Inc. pursuant to which the Property Manager will manage the Properties in consideration of a property management fee (equal to five percent (5%) of NPAMLP's gross operating revenues) and a leasing fee (equal to the fee customarily charged in the geographic areas in which the Properties are located).

“Minimum Payoff Amount” shall mean the payment made by NPAMLP pursuant to the Restructuring Agreement equal to the sum of (i) the balance of the Third Party Underlying Obligations on a Property on January 1, 1990 and (ii) any prepayment penalties or premiums.

“Managing General Partner” shall mean EBL&S, Inc, a Delaware corporation.

“MLPG” shall mean Main Line Pension Group, a Delaware limited partnership.

“NPA” shall mean National Property Analysts, Inc. and the corporations and partnerships now or previously controlled by, related to or affiliated with, directly or indirectly, National Property Analysts, Inc. and Mr. Edward Lipkin, including, but not limited to E & H Properties, Inc., National Property Analysts Management Company, and National Property Management Corp.

“NPAEP” shall mean National Property Analysts Employee Partnership, a Delaware limited partnership.

“NPAMLP” shall mean National Property Analysts Master Limited Partnership, a Delaware limited partnership.

“Operating Cash Expenses” shall mean the amount of cash paid by NPAMLP for costs and expenses incurred in the ordinary course of its business including, without limitation, (i) Debt Service, (ii) debt service payments on Capital Improvement Debt, (iii) fees paid to the Property Manager and (iv) repairs and maintenance, utilities, taxes and certain tenant improvements, employee salaries, travel on NPAMLP business, advertising and promotion, supplies, legal, accounting, statistical or bookkeeping services, and printing and mailing of reports and communications.

“Operating Revenues” shall mean the cash receipts of NPAMLP, other than (i) the proceeds of sales of the Properties and (ii) proceeds of borrowings of NPAMLP, received in cash during NPAMLP’s fiscal year.

“Partnership Agreement” shall mean the limited partnership agreement entered into between the General Partners and the Limited Partners of NPAMLP.

“Partnerships” shall mean certain limited partnerships previously sponsored by NPA.

 
5

 

“Pension Groups” shall mean the limited partnerships comprised of various pension and profit sharing trusts which sold the Properties to the Partnerships, and includes Main Line Pension Group (“MLPG”), a Delaware limited partnership which acquired the ownership of the Wrap Mortgages from the original holders and NPAEP and PVPG, both Delaware limited partnerships which subsequently acquired ownership of certain Wrap Mortgages from MLPG.

“Proceeds of Sales Distributions” shall mean the distributions made by NPAMLP from the proceeds of sales of the Properties as defined in the Partnership Agreement.

“Proceeds of Sales of the Properties” shall mean, for purposes of the Restructuring Agreement, at the time of the calculation thereof, (a) the gross sales proceeds (including the then-outstanding principal amount of indebtedness for borrowed money assumed or taken subject to) from the sale of any Property or Properties occurring and after the date the Properties were transferred to NPAMLP, minus (b) all reasonable costs and expenses incurred by a Partnership or a successor to a Partnership (including NPAMLP), in connection with any such sale, including without limitation, brokerage commissions to independent third parties, legal fees and costs, transfer taxes, mortgage taxes, prepayment penalties payable to independent third parties, title insurance and all other customary closing costs and expenses.

“Property” or “Properties” shall mean one, some or all of the parcels of real property owned by NPAMLP (inclusive of tenant-in-common interests).

“PVPG” shall mean Penn Valley Pension Group, a Delaware limited partnership.

“Property Manager” shall mean EBL&S Property Management, Inc.

“Reserves” shall mean the amount determined by the Managing General Partner, in its sole discretion, to be set aside for future requirements of NPAMLP.  At the end of each year, any unexpended reserves not continued as Reserves will be treated as Cash Flow from Operations.

“Restructuring” shall mean the restructuring of the Wrap Mortgages and the Second Mortgages.

“Restructuring Agreement” shall mean the agreement entered into by and between NPAMLP, the Pension Groups and certain NPA affiliates to restructure the Wrap Mortgages and the Second Mortgages.

“Restructured Wrap Mortgages” shall mean the Wrap Mortgages as modified by the Restructuring Agreement.

“Second Mortgage” shall mean any purchase money mortgage or deed of trust created by a Pension Group upon its purchase of a Property that is a subordinate lien against the Property in favor of an NPA affiliate and evidenced by a promissory note.

“Tenant Improvements” shall mean construction to the Properties completed for the benefit of the tenants' use of the Property.

“Third Party Debt Service” shall mean payments of principal and interest on Third Party Underlying Obligations.

“Third Party Underlying Obligations” shall mean those obligations secured by the Property underlying the Wrap Mortgages held by persons or entities other than NPA, or its affiliates.

“Threshold Amount” shall mean payments on the Wrap Mortgages generated by Proceeds of Sales of the Properties in an amount equal to $45,000,000 in excess of the Third Party Underlying Obligations as of January 1, 1990 secured by such Properties.  As of December 31, 2009, approximately $36,602,000 had been applied in reduction of the Threshold Amount.

“Unaudited Partnerships” shall mean the Partnerships included in NPAMLP that were not audited by the Internal Revenue Service.

“Units” shall mean units of limited partnership interest in NPAMLP.

 
6

 

“Wrap Mortgages” shall mean the mortgages securing the Wrap Notes that were delivered to the Pension Groups by the Partnerships at the time of the acquisition of the Property.

“Wrap Notes” shall mean the promissory notes secured by the Wrap Mortgages.

Item 1 (A). Risk Factors

Not applicable

Item 1 (B). Unresolved Staff Comments

None

Item 2.    Properties

NPAMLP's Properties consist primarily of shopping centers and freestanding, single tenant retail stores.  As of December 31, 2009, NPAMLP owned and operated 24 Properties located in 14 states, with 57% of the Properties being Single Tenant Properties and 43% being Shopping Center Properties.

Set forth below are schedules providing information with respect to the Properties and the indebtedness secured by the Properties.  Schedule 1 provides a description of the Properties and certain tenant information.  Schedule 2 provides certain information regarding tenant lease expirations.  Schedule 3 provides information regarding the Third Party Underlying Obligations secured by the Properties.

Under applicable law, in certain circumstances, the owner or operator of real property has an obligation to clean up hazardous and toxic substances on the property.  This obligation is often imposed without regard to the timing, cause or person responsible for such substances on the property.  The presence of such substances on a Property would have an adverse impact on the operating costs and sale or refinancing of such Property.  None of the Properties are presently the subject of any environmental enforcement actions under any such statutes, and the General Partners do not have any information or knowledge about the presence of such substances requiring remediation on any of the Properties.  If it is claimed or determined that such substances do exist on any of such Properties, NPAMLP could be subject to such cleanup obligations. There can be no assurance that hazardous or toxic substances will not be discovered on one or more Properties in the future, or that NPAMLP will not incur environmental clean-up or remediation costs in the future, including in connection with environmental assessments and investigations performed in connection with any future sale of properties.  The presence of such substances may make a Property unmarketable or substantially decrease its value.  Any environmental cleanup expenses incurred in connection with a sale would directly reduce proceeds derived from the sale of the Property.

 
7

 
 
Schedule 1
 
Description of Property Tenant Information

               
Total
   
Average
 
Property
 
Total
   
Occupancy
   
Minimum
   
Rent
 
Location
 
GLA (a)
   
Rate
   
Rent (b)
   
PSF (c)
 
                         
Cottage Grove, MN
    114,609       82.0 %   $ 848,685     $ 9.00  
Dunmore, PA
    26,475       100.0 %     78,696       2.97  
East Haven, CT
    52,852       55.3 %     297,450       10.17  
Federal Way, WA
    37,560       100.0 %     45,000       1.20  
Grand Rapids, MI
    10,880       100.0 %     378,071       34.75  
Huntsville, AL
    104,000       100.0 %     244,400       2.35  
Independence, MO
    134,634       96.3 %     367,482       2.83  
Kalamazoo, MI
    120,958       74.7 %     299,326       3.31  
Lake Mary, FL
    107,400       100.0 %     859,200       8.00  
Lawnside, NJ
    102,552       100.0 %     544,634       5.31  
Lawndale, CA
    14,813       100.0 %     324,024       21.87  
Marquette, MI
    248,256       95.0 %     1,239,111       5.25  
Maryville, MO
    35,179       100.0 %     124,264       3.53  
North Augusta, SC
    109,134       95.3 %     378,200       3.64  
O' Fallon, MO
    91,061       97.8 %     344,354       3.87  
Oak Lawn, IL
    159,233       100.0 %     1,116,834       7.01  
Philadelphia, PA
    128,006       100.0 %     558,250       4.36  
Painesville, OH
    10,125       100.0 %     188,777       18.64  
Rockville, MD (d)
    10,880       100.0 %     521,718       58.48  
San Jose, CA (e)
    249,832       100.0 %     2,979,459       49.90  
Seven Hills, OH
    121,677       100.0 %     318,595       2.62  
Taylorville, IL
    43,127       100.0 %     242,719       5.63  
Urbana, IL
    55,531       18.8 %     65,913       6.30  
Waverly, OH
    8,834       100.0 %     77,006       8.80  
 

 
(a)  Gross Leasable Area.
(b)  Based on leases in effect as of December 31, 2009.
(c)  Based on occupied space.
(d)  NPAMLP owns an 82% interest in this property.  Minimum rent amounts reflects NPAMLP’s percentage ownership.
(e)  NPAMLP owns a 23.9% tenant-in-common interest in this property.  Minimum rent amounts reflects NPAMLP’s  percentage ownership.

 
8

 

Schedule 1, Continued
 
Description of Property Tenant Information
 
Major Tenant Information
 
                     
Remaining
Property
           
Annual
 
Lease
 
Tenant
Location
 
Major Tenant Name
 
GLA (a)
   
Rent
 
Expiration
 
Options
                       
Cottage Grove, MN
 
Rainbow Foods
    70,130     $ 606,624  
07/11/16
 
6 / 5 YR
Dunmore, PA
 
Price Chopper
    26,475       78,696  
11/30/10
 
2 / 5 YR
East Haven, CT
 
AutoZone
    9,700       147,925  
02/28/13
 
1 / 5 YR
Federal Way, WA
 
Safeway
    37,560       45,000  
10/31/13
 
4 / 5 YR
Grand Rapids, MI
 
CVS
    10,880       378,071  
01/31/24
 
10 / 5 YR
Huntsville, AL
 
Kmart
    104,000       244,400  
11/30/10
 
4 / 5 YR
Independence, MO
 
Kmart
    116,799       308,634  
03/31/15
 
8 / 5 YR
Kalamazoo, MI
 
Kmart
    84,180       248,770  
02/28/10
 
8 / 5 YR
Lake Mary, FL
 
Gander Mountain Sports
    107,400       859,200  
05/31/21
 
4 / 5 YR
Lawnside, NJ
 
Sears
    102,552       544,634  
09/30/25
 
10 / 5 YR
Lawndale, CA
 
CVS
    14,813       324,024  
05/31/13
 
10 / 5 YR
Marquette, MI
 
Kohl's Department Stores, Inc.
    85,480       170,960  
11/30/24
 
9 / 5 YR
   
Younker's
    44,068       92,543  
10/22/11
 
None
   
J.C. Penney
    33,996       118,286  
02/29/12
 
4 / 5 YR
Maryville, MO
 
J.C. Penney
    22,060       65,502  
10/31/11
 
1 / 5 YR
North Augusta, SC
 
Riverfront Antique Mall
    103,964       378,200  
Various
 
None
O' Fallon, MO
 
Kmart
    83,061       279,415  
11/30/10
 
9 / 5 YR
Oak Lawn, IL
 
Home Depot
    104,622       530,000  
01/31/28
 
5 / 5 YR
   
Jewel Foods
    58,575       586,834  
01/03/14
 
1 / 5 YR
Philadelphia, PA
 
Kmart
    91,033       388,500  
03/31/12
 
8 / 5 YR
   
Supremo Foods
    36,973       168,000  
06/30/35
 
None
Painesville, OH
 
CVS
    10,125       188,777  
01/31/19
 
6 / 5 YR
Rockville, MD (b)
 
CVS
    10,880       521,718  
01/31/24
 
10 / 5 YR
San Jose, CA (c)
 
Sun Microsystems
    249,832       2,979,459  
05/31/13
 
2 / 5 YR
Seven Hills, OH
 
Kmart
    121,677       318,595  
08/31/12
 
7 / 5 YR
Taylorville, IL
 
Grandview Retail Stores
    27,958       120,000  
03/31/18
 
None
   
CVS
    10,069       81,319  
03/31/12
 
4 / 5 YR
Urbana, IL
 
Dollar General
    6,264       39,000  
10/31/12
 
None
Waverly, OH
 
None
    N/A       N/A  
          N/A
 
N/A
 

 
(a)  Gross Leasable Area
(b)  NPAMLP owns an 82% interest in this property.  Annual rent amount reflects NPAMLP’s percentage ownership.
(c) NPAMLP owns a 23.9% tenant-in-common interest in this property.  Annual rent amount reflects NPAMLP’s percentage ownership.
N/A -  Not Applicable

 
9

 

Schedule 2
 
Tenant Lease Expirations
 
               
2010
   
2011
 
         
Total
                         
Property
 
Total
   
Minimum
   
# of
   
Minimum
         
# of
   
Minimum
       
Location
 
GLA (a)
   
Rent (b)
   
Tenants
   
Rent
   
GLA (a)
   
Tenants
   
Rent
   
GLA (a)
 
                                                 
Cottage Grove, MN
    114,609     $ 848,685       1     $ 29,400       2,700                    
Dunmore, PA
    26,475       78,696       1       78,696       26,475                    
East Haven, CT
    52,852       297,450                                            
Federal Way, WA
    37,560       45,000                                            
Grand Rapids, MI
    10,880       378,071                                            
Huntsville, AL
    104,000       244,400       1       244,400       104,000                    
Independence, MO
    134,634       367,482                                            
Kalamazoo, MI
    120,958       299,326       1       248,770       84,180                    
Lake Mary, FL
    107,400       859,200                                            
Lawnside, NJ
    102,552       544,634                                            
Lawndale, CA
    14,813       324,024                                            
Marquette, MI
    248,256       1,239,111       6       175,116       12,646       8     $ 254,374       65,486  
Maryville, MO
    35,179       124,264                               2       82,064       27,104  
North Augusta, SC
    109,134       378,200                                                  
O' Fallon, MO
    91,061       344,354       1       279,415       83,061       1       34,939       3,000  
Oak Lawn, IL
    159,233       1,116,834                                                  
Philadelphia, PA
    128,006       558,250                                                  
Painesville, OH
    10,125       188,777                                                  
Rockville, MD
    10,880       521,718                                                  
San Jose, CA
    249,832       2,979,459                                                  
Seven Hills, OH
    121,677       318,595                                                  
Taylorville, IL
    43,127       242,719       1       14,400       2,100       2       27,000       3,000  
Urbana, IL
    55,531       65,913       1       11,813       1,750       1       8,100       1,050  
Waverly, OH
    8,834       77,006       1       17,200       2,000                          
                                                                 
Totals
    2,097,608     $ 12,442,868       14     $ 1,099,210       318,912       14     $ 406,477       99,640  
                                                                 
Annual % to Total
                            8.8 %     15.2 %             3.3 %     4.8 %
Cumulative %
                            8.8 %     15.2 %             12.1 %     20.0 %
 

(a)  Gross Leasable Area.
(b)  Based on leases in effect as of December 31, 2009.

 
10

 

Schedule 2, Continued
 
Tenant Lease Expirations

               
2012
   
2013
 
         
Total
                         
Property
 
Total
   
Minimum
   
# of
   
Minimum
         
# of
   
Minimum
       
Location
 
GLA (a)
   
Rent (b)
   
Tenants
   
Rent
   
GLA (a)
   
Tenants
   
Rent
   
GLA (a)
 
                                                 
Cottage Grove, MN
    114,609     $ 848,685                         1     $ 37,899       6,075  
Dunmore, PA
    26,475       78,696                                            
East Haven, CT
    52,852       297,450                         1       147,925       9,700  
Federal Way, WA
    37,560       45,000                         1       45,000       37,560  
Grand Rapids, MI
    10,880       378,071                                            
Huntsville, AL
    104,000       244,400                                            
Independence, MO
    134,634       367,482       2     $ 22,848       3,000       1       36,000       9,840  
Kalamazoo, MI
    120,958       299,326                                                  
Lake Mary, FL
    107,400       859,200                                                  
Lawnside, NJ
    102,552       544,634                                                  
Lawndale, CA
    14,813       324,024                                                  
Marquette, MI
    248,256       1,239,111       8       310,373       44,253       1       53,960       2,840  
Maryville, MO
    35,179       124,264       1       12       2,450       1       42,188       5,625  
North Augusta, SC
    109,134       378,200                                                  
O' Fallon, MO
    91,061       344,354                                                  
Oak Lawn, IL
    159,233       1,116,834                                                  
Philadelphia, PA
    128,006       558,250       1       338,500       91,033                          
Painesville, OH
    10,125       188,777                                                  
Rockville, MD
    10,880       521,718                                                  
San Jose, CA
    249,832       2,979,459                               1       3,347,503       249,832  
Seven Hills, OH
    121,677       318,595       1       318,595       121,677                          
Taylorville, IL
    43,127       242,719       1       81,319       10,069                          
Urbana, IL
    55,531       65,913       2       46,000       7,664                          
Waverly, OH
    8,834       77,006                                                  
                                                                 
Totals
    2,097,608     $ 12,442,868       16     $ 1,117,647       280,146       7     $ 3,710,475       321,472  
                                                                 
Annual % to Total
                            9.0 %     13.4 %             29.8 %     15.3 %
Cumulative %
                            21.1 %     33.4 %             50.9 %     48.7 %
 

(a)  Gross Leasable Area.
(b)  Based on leases in effect as of December 31, 2009.
 
 
11

 

Schedule 3

Third Party Underlying Obligations

                 
Principal
 
Property
     
Mortgage
 
Interest
   
Balance at
 
Location
 
Mortgagee(s)
 
Type
 
Rate
   
12/31/09
 
                     
Cottage Grove, MN
 
IDS Life Insurance
 
1st
    5.55 %     3,874,182  
Dunmore, PA
 
NONE
                   
East Haven, CT
 
NONE
                   
Federal Way, WA
 
NONE
                   
Grand Rapids, MI
 
Wells Fargo Bank Northwest, N.A.
 
1st
    7.77 %     2,175,352  
Huntsville, AL
 
NONE
                   
Independence, MO
 
NONE
                   
Kalamazoo, MI
 
NONE
                   
Lake Mary, FL
 
Citigroup Capital Markets Group
 
1st
    5.67 %     5,803,297  
Lawndale, CA
 
Wells Fargo Bank Northwest, N.A.
 
1st
    6.04 %     3,658,138  
Lawnside, NJ
 
Wachovia Securities
 
1st
    8.71 %     3,891,566  
Marquette, MI
 
Associated Commercial Bank
 
1st
    6.33 %     4,866,677  
Maryville, MO
 
NONE
                   
North Augusta, SC
 
NONE
                   
O' Fallon, MO
 
NONE
                   
Oak Lawn, IL
 
NONE
                   
Painesville, OH
 
Credit Suisse First Boston
 
1st
    6.48 %     1,323,427  
Philadelphia, PA
 
Kin Properties
 
1st
    9.25 %     182,811  
Rockville, MD (a)
 
Wells Fargo Bank Northwest, N.A.
 
1st
    7.77 %     3,003,514  
San Jose, CA (b)
 
Lehman Ali Inc.
 
1st
    12.50 %     21,854,925  
Seven Hills, OH
 
B & K Properties
 
1st
    9.75 %     701,607  
Taylorville, IL
 
NONE
                   
Urbana, IL
 
NONE
                   
Waverly, OH
 
NONE
                   
 

(a)  NPAMLP owns an 82% interest in the property.  Loan balance reflects NPAMLP’s percentage ownership.
(b)  NPAMLP owns a 23.9% tenant-in-common interest in this property. Loan balance reflects NPAMLP’s percentage ownership.

 
12

 

Schedule 3, Continued

Third Party Underlying Obligations

               
Ownership
 
           
Annual
 
Interest
 
Property
     
Mortgage
 
Debt
 
Fee/
 
Location
 
Mortgagee(s)
 
Type
 
Service
 
Leasehold
 
                   
Cottage Grove, MN
 
IDS Life Insurance
 
1st
    364,697  
Fee
 
Dunmore, PA
 
NONE
           
Leasehold
 
East Haven, Ct
 
NONE
           
Fee
 
Federal Way, WA
 
NONE
           
Fee
 
Grand Rapids, MI
 
Wells Fargo Bank Northwest, N.A.
 
1st
    378,071  
Fee
 
Huntsville, AL
 
NONE
           
Leasehold
 
Independence, MO
 
NONE
           
Fee
 
Kalamazoo, MI
 
NONE
           
Leasehold
 
Lake Mary, FL
 
Citigroup Capital Markets Group
 
1st
    416,520  
Fee
 
Lawndale, CA
 
Wells Fargo Bank Northwest, N.A.
 
1st
    324,000  
Leasehold
 
Lawnside, NJ
 
Wachovia Securities
 
1st
    543,005  
Fee
 
Marquette, MI
 
Associated Commercial Bank
 
1st
    402,318  
Leasehold
 
Maryville, MO
 
NONE
           
Leasehold
 
North Augusta, SC
 
NONE
           
Leasehold
 
O' Fallon, MO
 
NONE
           
Fee
 
Oak Lawn, IL
 
NONE
           
Leasehold
 
Painesville, OH
 
Credit Suisse First Boston
 
1st
    188,777  
Fee
 
Philadelphia, PA
 
Kin Properties
 
1st
    395,220  
Leasehold
 
Rockville, MD (a)
 
Wells Fargo Bank Northwest, N.A.
 
1st
    521,718  
Fee
 
San Jose, CA (b)
 
Lehman Ali Inc.
 
1st
    2,964,532  
Fee
 
Seven Hills, OH
 
B & K Properties
 
1st
    263,917  
Leasehold
 
Taylorville, IL
 
NONE
           
Fee
 
Urbana, IL
 
NONE
           
Fee
 
Waverly, OH
 
NONE
           
Fee
 
 

(a)  NPAMLP owns an 82% interest in the property.  Loan balance and annual debt service reflect NPAMLP’s percentage ownership.
(b)  NPAMLP owns a 23.9% Tenant in Common interest in this property. Loan balance and annual debt service reflect NPAMLP’s percentage ownership.

 
13

 

Item 3.    Legal Proceedings

   NPAMLP is involved in various claims and legal actions arising in the ordinary course of property operations.  In the opinion of the General Partners, the ultimate disposition of these matters will not have a material adverse effect on NPAMLP's financial position, results of operations or liquidity.

Item 4.    Submission of Matters to a Vote of Security Holders

   Not Applicable.

 
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PART II

Item 5.
Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

I.    No Trading Market

There is no trading market for the Units in NPAMLP.  NPAMLP Units are not transferable except by will, inheritance or operation of law.  To date no transfers other than those by will, inheritance and operation of law have been permitted.

In addition, the Partnership Agreement places additional restrictions on the transferability of the Units.  The Limited Partners of NPAMLP are prohibited from selling their Units unless such sale is at the Managing General Partner's direction, is accomplished in a single transaction involving all Limited Partners' interests to a single purchaser, and is accomplished simultaneously with the sale of the Equity General Partner's interest in NPAMLP.

As of December 31, 2009, there were 97,752 Units outstanding held by approximately 2,600 Limited Partners.

II.   Distributions of Cash Flow From Operations

NPAMLP may make annual distributions to its partners in an aggregate amount equal to its Cash Flow from Operations.  NPAMLP has not made any distributions of Cash Flow from Operations to its partners since its organization.  It is not anticipated that NPAMLP will be in a position to distribute Cash Flow from Operations to its partners in the foreseeable future.

NPAMLP may not reinvest Cash Flow from Operations in additional real estate investments.

III.  Proceeds of Sales Distributions

The Proceeds of Sales of the Properties may not be reinvested in additional real properties, except as permitted with respect to transactions that are non-taxable in whole or in substantial part under Section 1031 or 1033 of the Internal Revenue Code.  The Proceeds of Sales of the Properties, after payment of related expenses and indebtedness and provision for reasonable reserves, will be available for NPAMLP purposes, including paying Debt Service or providing for Capital Improvements with respect to other Properties owned by NPAMLP.  After making the payments required by the Restructuring Agreement with respect to the Wrap Mortgages, all proceeds not utilized for NPAMLP purposes will be distributed to the partners of NPAMLP.

The Restructuring Agreement provides for a sharing of cash from the Proceeds of Sales of the Properties after repayment of the Third Party Underlying Obligations once the net Proceeds of Sale of the Properties exceed the Threshold Amount.  Additionally, the Limited Partners of NPAMLP receive 40% of the Cash Flow from Operations, if any, in excess of Debt Service and any Capital Improvements and Reserves as considered necessary.  The remaining cash flow, if any, is applied to the Wrap Mortgages in payment of accrued interest and then principal.

NPAMLP has not made any Proceeds of Sales Distributions to its partners since its organization.  It is not anticipated that NPAMLP will be in a position to distribute Proceeds of Sales to its partners in the foreseeable future.

IV.  Certain Income Tax Considerations

 
A.
Recognition of Gain

It is anticipated that future forgiveness of Wrap Mortgages, if any, and the potential of selling Properties, which are owned by Unaudited Partnerships, and applying sales proceeds to make payments on the Wrap Mortgages may require the Limited Partners to report substantial taxable income when the Properties are sold without the corresponding receipt of any cash proceeds therefrom (unless and until the Threshold Amount has been exceeded).

Limited Partners are allocated their share of NPAMLP's taxable income and gain even if they receive no cash distributions from NPAMLP with which to pay any resulting tax liability, and will be allocated their share of NPAMLP's tax losses, including depreciation deductions.  It is anticipated that NPAMLP will generate gradually increasing amounts (which will ultimately be substantial) of taxable income, inasmuch as interest expense and depreciation expense are gradually decreasing each year.

 
15

 
 
As and when the Properties are sold or otherwise disposed of (and whether or not any cash is distributed to Limited Partners in respect of such sales), all taxable income will be allocated among those Limited Partners who were partners in the Partnership which owned the Property prior to the Consolidation up to the amount by which the fair market value of such Properties exceeded their adjusted basis at the time of contribution to NPAMLP (gain in excess of such amounts will be allocated ratably among all Limited Partners).  This rule does not apply to tax-deferred exchanges except to the extent of cash or “other property” received.
 
B.  Treatment of Distributions by NPAMLP

Cash distributions made to a Limited Partner are not, per se, taxable; rather, they represent a return of capital up to the amount of his adjusted basis in his interest in NPAMLP.  A return of capital generally does not result in any recognition of gain or loss for federal income tax purposes, but reduces the recipient's adjusted basis in his investment.  Certain partners whose returns were audited and adjusted (in connection with their investment in NPA sponsored limited partnerships) may have signed a closing agreement with the Internal Revenue Service (“IRS”); pursuant to the terms of such closing agreement, their tax treatment may vary from the foregoing; such partners are urged to consult with their own tax advisors with respect to this issue.

Distributions, if any, in excess of a Limited Partner's adjusted basis in his NPAMLP interest immediately prior thereto will result in the recognition of gain to that extent.  Unless NPAMLP is treated for tax purposes as a “dealer” in real property, such gain generally should be capital gain.

C.  Operating Income (Loss) of NPAMLP

Each Limited Partner will receive an annual Schedule K-1 (U.S. Form 1065) to indicate his share of NPAMLP's taxable income or loss for each tax year.  Such income or loss, rather than the distributions described in Part B above, is reportable by the Limited Partner.  Since any loss generated by NPAMLP is, with respect to Limited Partners, a passive loss, the deductibility of such loss is governed by Section 469 of the Internal Revenue Code of 1986, and may be limited thereby.

Certain Partnerships were audited by the IRS (the “Audited Partnerships”) and the partners thereof executed an agreement relating to their past and future federal tax liability (the “Closing Agreement”).  The foregoing paragraph applies to those investors who have not signed a Closing Agreement with IRS with respect to their Units. As to those Limited Partners who have signed such a Closing Agreement, the appropriate tax treatment may differ from the foregoing and is governed by the Closing Agreement.

V. Other

NPAMLP did not purchase any of its units that are registered pursuant to Section 12 of the Exchange Act.

Item 6.    Selected Financial Data

Not applicable

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with NPAMLP's combined financial statements and notes thereto appearing elsewhere in this Report.

I.  Liquidity and Capital Resources

A.  General

As previously noted, the Properties owned by NPAMLP are encumbered by the Wrap Mortgages.  As a result of the Restructuring, the Debt Service on the Wrap Mortgages was adjusted to be the same as the 1990 debt service required on the Third Party Underlying Obligations.  NPAMLP's ability to meet its obligations on the Wrap Mortgages is dependent on the Properties generating sufficient cash flow to meet the Debt Service.

B.  Third Party Debt Service

As of December 31, 2009, the Third Party Underlying Obligations were current for all the Properties.  See “Item 7. Management’s Discussion and Analysis of Financial Condition - II Critical Accounting Policies.”

 
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C.  Working Capital

As of December 31, 2009, NPAMLP has working capital of approximately $3,156,000 excluding amounts due to the Managing General Partner and the Pension Groups of $2,382,000 and $3,292,000, respectively. In 2009, NPAMLP’s operations resulted in a $485,000 reduction in cash. This reduction was primarily due to a $237,000 settlement with a ground lessor for participation due in prior years on certain leases.  In addition, additional vacancy at the property in Kalamazoo, Michigan contributed to the reduction in cash. NPAMLP's property operating budget for 2010, excluding capital expenditures, audit fees and certain insurance costs, projects negative cash flow of approximately $391,000. The budgeted negative cash flow is primarily the result of recent tenant vacancy at two properties, including the Anchor Tenancy vacancy discussed above in Item I, Anchor Tenants. Management is endeavoring to lease the vacant space, however the current economic environment will, in all probability, lengthen the time to do so. Management believes however that NPAMLP has sufficient working capital to meet its operating needs.

To date, NPAMLP has replenished its working capital reserves through the sale of Properties.  This has occurred when holders of the Second Mortgage and Wrap Mortgage have released their liens on Properties which have been sold, notwithstanding that pursuant to the terms of the Restructuring Agreement the proceeds were payable to the holders of the Second Mortgage and the Wrap Mortgage.  They have agreed in certain instances to release their liens and provide proceeds from the sale to NPAMLP because their mortgages are cross-collateralized against all of the Properties and because the proceeds from the sale of such Properties have been utilized for the remaining Properties.  Although the Second Mortgage lenders are not obligated to subordinate or release their mortgages, their continued cooperation in this regard currently is expected by management, although there can be no assurance that such Second Mortgage lenders will not change their behavior in the future.  Pursuant to the 2003 Agreement (See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - V. Indebtedness Secured by the Properties - D. Future Interest Agreement”), the holders of the Wrap Mortgages are obligated to release their mortgages in the event of a sale of Property. As of December 31, 2009, the Managing General Partner has advanced approximately $2,382,000 to NPAMLP but may require the repayment of the advances for its own operational needs.

D.  Loan Obligations
 
Although all the Third Party Underlying Obligations on which balloon payments have become due to date have ultimately been refinanced, there can be no assurance that loan extensions will be successfully negotiated with the lenders holding the Third Party Underlying Obligations on these Properties. In the event that NPAMLP is not able to obtain refinancing commitments from alternative lenders or loan extensions from the lenders holding the existing Third Party Underlying Obligations, the properties could be lost to foreclosure. For the year ended December 31, 2010, there are no balloon payments due on the Third Party Underlying Mortgage Obligations. See “Item 2. Properties.”
 
E.  Capital Requirements

The average age of the Properties owned by NPAMLP is in excess of 20 years.  Due to the age of the Properties, there is a continuing need for capital expenditures in order to properly maintain the Properties.  At December 31, 2009, there were no capital commitments for repairs to the Properties. During 2009, NPAMLP had an outstanding line of credit with E&H Properties of Delaware, Inc., an affiliate of NPA (“EHD”), under which EHD would advance up to $2.5 million to NPAMLP for purposes of making Capital and Tenant Improvements (the “NPAMLP Line”). Pursuant to the NPAMLP Line, the obligation of EHD to make advances to NPAMLP is at all times in the sole and absolute discretion of EHD. At December 31, 2009, availability under the EHD Firstrust Line permitted EHD to borrow up to $1,394,000 which it can loan to NPAMLP.
 
Amounts advanced pursuant to the NPAMLP Line bear interest at the Prime Rate as published in the Wall Street Journal’s “Money Rates” section (3.25% at December 31, 2009).

In 1999, EHD secured a line of credit with Firstrust Bank of Conshohocken, PA (“Firstrust Bank”), which will enable EHD to fund the NPAMLP Line in order to finance Capital and Tenant Improvements (the “EHD Firstrust Line”).  At December 31, 2009 there is $4,298,000 due under the EHD Firstrust Line. Pursuant to the promissory note executed with respect to the EHD Firstrust Line (the “Firstrust Note”), the amounts advanced pursuant to the Firstrust Note bear interest at the Prime Rate as published in the Wall Street Journal’s “Money Rates” section (the “EHD Firstrust Borrowing Rate”).  The EHD Firstrust Borrowing Rate at December 31, 2009 is 3.25%.

The Firstrust Note is secured by an assignment of certain Wrap Notes and Second Mortgages and certain Guaranty and Suretyship Agreements executed by EBL&S Property Management, Inc. and Edward B. Lipkin.  Additionally, the Firstrust Note contains a confession of judgment against EHD and the Guaranty and Suretyship Agreements contain a confession of judgment against EBL&S Property Management, Inc. and Edward B. Lipkin. At December 31, 2009, $194,000 has been advanced and $126,000 in accrued interest was due under the NPAMLP Line.

 
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F.  Tenant Improvements

The current retail rental market is such that proposed tenants for vacant space and those tenants whose leases are scheduled for renewal are aware of the pressure landlords are under to obtain and keep tenants and in certain instances are able to negotiate lease terms at reduced rental rates.  Many of these tenants insist on substantial tenant improvement contributions from landlords.  In the event that the tenants pay for their own improvements, they may pay a correspondingly lower rental rate than they would otherwise pay or are allowed rental abatements during the term of their leases.  For the year ending December 31, 2009, there were no rental abatements.

II.  Critical Accounting Policies

NPAMLP uses estimates and assumptions that can have a significant effect on the amounts that are reported in its financial statements.  Management believes the following are its most significant accounting policies as they may require a higher degree of judgment and estimation.

Rental Properties:  Rental properties are stated at original cost.  Depreciation on buildings and building improvements is calculated on the straight-line method over their estimated useful lives of 30 years and 15 to 39 years, respectively. In accordance with FASB authoritative guidance, rental properties are reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of rental properties is measured by comparison of the carrying amount of the properties to future net cash flows expected to be generated by the properties or to an appraised amount. The determination of future undiscounted cash flows requires significant estimates by management, including the expected course of action at the balance sheet date that would lead to such cash flows. Subsequent changes in estimated undiscounted cash flows arising from changes in anticipated action to be taken with respect to the property could impact the determination of whether an impairment exists and whether the effects could materially impact NPAMLP’s net income.  If any property is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property exceeds its fair value.  Properties to be disposed are reported at the lower of the carrying amount or the fair value less costs to sell.

Rental income:  Rental income is recognized on a straight-line basis over the terms of the respective leases.  Unbilled rent receivable represents the amount by which the straight-line rentals exceed the current rent collectible under the payment terms of the lease agreements.  Percentage rent represents rental income that the tenant pays based on a percentage of its sales, either as a percentage of total sales or as a percentage of sales in excess of a threshold amount. Percentage rent and tenant pass-through charges including common area maintenance, real estate taxes and property insurance are recognized in income when earned.

Discount on wraparound mortgages:  The discount on wraparound mortgages represents the difference between the present value of mortgage payments at the stated interest rate of 4.1% and the imputed rate of 12%.  NPAMLP adjusts the discount on wraparound mortgages for changes in the projected cash flows.  The resultant increase or decrease in the discount is recorded as interest expense in the year of the adjustment. The discount is amortized using the interest method over the terms of the mortgages and is recorded as interest expense.  In accordance with the FASB authoritative guidance, NPAMLP accounts for the unamortized discount on wraparound mortgages related to wraparound mortgages that have been extinguished as losses or gains in the period of extinguishment.

Fair value of Financial Instruments:  The FASB’s authoritative guidance requires disclosure of the fair value of certain financial instruments.  Cash, investment securities, tenant accounts receivable, accounts payable and other liabilities as reflected in the combined financial statements of NPAMLP approximate fair value because of the short-term maturity of these instruments. In accordance with this guidance, NPAMLP has determined the estimated fair value of its wraparound mortgages based on discounted future cash flows at a current market rate.

III. Factors That May Influence Future Results of Operations

A.   Real Estate Valuation

General economic conditions and the resulting impact on market conditions or a downturn in tenants’ businesses may adversely affect the value of NPAMLP’s assets. Periods of economic slowdown or recession in the U.S., a decrease in market rental rates and/or market values of real estate assets, could have a negative impact on the value of NPAMLP properties and related tenant improvements.  If NPAMLP was required under Generally Accepted Accounting Pronouncements to write down the carrying value of any properties to the lower of cost or market due to impairment, or if as a result of an early lease termination we were required to remove and dispose of material amounts of tenant improvements that are not reusable to another tenant, NPAMLP’s results of operations would be negatively affected.

 
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B.   Leasing Activity and Rental Rates

During the next twelve months 14 leases representing 8.8% of the net leasable square footage of all NPAMLP properties, are scheduled to expire. The amount of net rental income generated by NPAMLP properties depends principally on the ability to maintain the occupancy rates of currently leased space and to lease currently available space, and space available from unscheduled lease terminations. The amount of rental income generated also depends on the ability to maintain or increase rental rates at the properties. Negative trends in one or more of these factors could adversely affect rental income in future periods.

In September 2009, the anchor tenant at the property in Kalamazoo, Michigan elected not to exercise a five year option to extend its lease, and accordingly the anchor tenant space will become vacant effective March 1, 2010.  Although there is no third party underlying indebtedness on the property, if NPAMLP is unable to find a new tenant NPAMLP may be unable to meet its obligations under the ground lease and the property may be lost due to a termination of the ground lease.

C.   Tenant Credit Risk

In the event of a tenant default, NPAMLP may experience delays in enforcing its rights as a landlord and may incur substantial costs in protecting its investment. NPAMLP management regularly evaluates its accounts receivable reserve policy in light of its tenant base and general and local economic conditions. If economic conditions persist or deteriorate further, NPAMLP may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect NPAMLP’s future net income and cash flows and could have a material adverse effect on NPAMLP’s financial condition

IV. Results of Operations

A.  Property Dispositions and Acquisitions During Fiscal 2008

NPAMLP owned 24 properties at December 31, 2009 and December 31, 2008.  There were no property dispositions in 2009. See “Item 1. Business - II. NPAMLP Objectives and Policies - B. Competition for Tenants - Anchor Tenants.”

In January 2008, NPAMLP sold the property in Yazoo City, Mississippi. As a result of this transaction, NPAMLP recognized a net gain on sale in the amount of $1,515,000. The sale generated $2,072,000 in net proceeds (excluding a 7% promissory note of $300,000 due in 2013. This note was paid off in full in March 2009), of which $2,000,000 were remitted to NPAEP and applied as a principal reduction on the balance of the wraparound mortgage. The principal balance of the wraparound mortgage on the Yazoo City property, in the amount of $1,019,000, remains a liability of NPAMLP. In March 2008, NPAMLP sold the remaining property in Wheelersburg, Ohio that was not sold in December 2007. As a result of this transaction, NPAMLP recognized a net loss on sale of $41,000. The net proceeds from this transaction in the amount of $27,000 were retained by NPAMLP. The principal balance of the wraparound mortgage on the Wheelersburg property, in the amount of $1,094,000, remains a liability of NPAMLP.

 
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B.  Full Fiscal Years

Over the two year period ended December 31, 2009, NPAMLP disposed of 2 Properties and did not acquire any properties.  The numbers of Properties acquired and disposed of by year are as follows:

   
2009
   
2008
 
             
Beginning of year
    24       26  
                 
Properties acquired
    0       0  
                 
Properties disposed
    0       (2 )
                 
End of year
    24       24  

The disposition of Properties resulted in “Gain on disposition of properties, net, as reflected in the financial statements. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – II. Critical Accounting Policies”.

The following table reflects the operating results (in thousands) for NPAMLP for the years ended December 31, 2009 and December 31, 2008, excluding the operating results for the 2 properties that were disposed of during the two year period.  The table is presented in order to facilitate an understanding of the operating results and trends of NPAMLP.

   
(in Thousands)
 
   
2009
   
2008
 
Income:
           
Rental income
  $ 13,042     $ 12,816  
Other charges to tenants
    3,242       3,283  
Interest income
    236       137  
Total income
    16,520       16,236  
                 
Operating expenses:
               
Interest expense
    12,313       11,466  
Other operating expenses
    6,863       6,843  
Depreciation and amortization
    4,104       4,108  
Total operating expense
    23,280       22,417  
                 
Operating loss
  $ (6,760 )   $ (6,181 )

The increase in rental income and other charges in 2009 is primarily due to a increase in recognized revenue as a result of scheduled rent increases from the Anchor Tenants at the Oak Lawn, Illinois and San Jose, California properties. This was partially offset by local tenant vacancies at the Kalamazoo, Michigan property.

The increase in Interest expense is due to primarily due to a reduction in interest expense in 2008. NPAMLP adjusts the discount on wraparound mortgages for changes in the projected cash flows.  In 2008, the resultant increase in the discount resulted in a reduction to interest expense in that year. (see “II. Critical Accounting Policies”).

V.  Tabular Disclosure of Contractual Obligations

Not applicable

VI.   Indebtedness Secured by the Properties

The Properties are subject to certain indebtedness that was incurred in connection with the acquisition of the Properties by the Partnerships.  As of December 31, 2009, the aggregate indebtedness of NPAMLP pursuant to the Wrap Mortgages was approximately $157 million, of which approximately $51 million constituted indebtedness under the Third Party Underlying Obligations and $8 million constituted indebtedness under the Second Mortgages.  As of December 31, 2009, the aggregate historical cost of the Properties securing the indebtedness of NPAMLP mortgages was approximately $137 million.  The original acquisition of the Properties by the Partnerships was typically structured as set forth below.

 
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Typically, NPA acquired a Property from an unaffiliated seller.  NPA thereafter sold the Property to a Pension Group.  The Partnership acquired the Property from the Pension Group.In both the original acquisition and the purchase by the Pension Group, the purchasers (i.e., NPA and the Pension Group) took the Properties subject to existing mortgages in favor of the sellers or unaffiliated third parties.  Consequently, as a general matter, at the time it was acquired by the Partnership, each Property was subject to a Third Party Underlying Obligation and a Second Mortgage.

The Partnerships typically paid the purchase price for the Properties in part by delivering to the Pension Group a Wrap Mortgage.  The Wrap Mortgage represented a lien on the Property subordinate to the Third Party Underlying Obligation and the Second Mortgage.  Neither the Third Party Underlying Obligation nor the Second Mortgage represented direct financial obligations of the Partnership.  Rather, the Wrap Mortgage required the Pension Group to use the payments made thereunder to make the required payments under the Third Party Underlying Obligation and the Second Mortgage.  The Third Party Underlying Obligation and the Second Mortgage continued, however, as liens against the Property.  The Wrap Mortgage obligated the Partnership to comply with all the terms and conditions of the Third Party Underlying Obligation and the Second Mortgage.

The Properties whose ownership was combined in NPAMLP remain subject to the Third Party Underlying Obligations, Second Mortgages and Wrap Mortgages incurred in connection with the acquisition of the Properties.  However, the Wrap Mortgages and Second Mortgages have been restructured pursuant to the Restructuring Agreement. See “ Section V. C. The Wrap Mortgages” below

A.  Third Party Underlying Obligations

Information relating to the Third Party Underlying Obligations is included in Schedule 3, which appears under “Item 2. Properties” above.

B.  The Second Mortgages and Notes

Under the terms of the Restructuring Agreement, no payments are currently due on the Second Mortgages.  The outstanding principal balance of the Second Mortgages as of December 31, 2009, was approximately $8 million.  The Restructuring Agreement provides that this indebtedness will be paid from proceeds realized from the sale of property subject to the sharing arrangement established in the Restructuring Agreement.

C.  The Wrap Mortgages

The Wrap Mortgages represent an obligation of NPAMLP and a lien against the Properties in favor of the NPAEP.  The lien is subordinate to the Third Party Underlying Obligations and the Second Mortgages, if any.

The Restructuring Agreement amended and restructured each Wrap Note to provide that each Wrap Note would consist of the obligation to pay two principal balances, an interest-bearing principal balance equal to the original principal indebtedness when the Wrap Note was first executed and delivered by the Partnership less amounts of principal, if any, paid prior to January 1, 1990, and an non-interest bearing principal balance equal to the amount of interest accrued and unpaid under the Wrap Note prior to January 1, 1990.  The Restructuring Agreement adjusted the interest rate on the Wrap Notes in such a way that the interest bearing principal balance earns interest at a rate elected by the Managing General Partner to assure that there will be adequate interest paid over the life of the Wrap Note to comply with applicable Internal Revenue Code requirements in order to prevent the imputation of interest. At December 31, 2009, the interest rate on the Wrap Mortgages was 4.1% (see “D. Future Interest Agreement”). The Wrap Notes mature on December 31, 2013.

Each Wrap Note requires a minimum annual payment from NPAMLP in an amount equal to the 1990 Debt Service payable on the Third Party Underlying Obligations secured by the same Properties as the Wrap Mortgages that secured such Wrap Note prior to the Restructuring.  These minimum payments are applied first to past due interest and principal payments under the Wrap Notes, if any, then to current interest and principal payments due on the Wrap Notes, then against the interest-bearing principal balances of the Wrap Notes, allocated among the Wrap Notes as NPAEP elects, and finally to the non-interest-bearing principal balances, allocated among the Wrap Notes as NPAEP elects.  The Restructuring Agreement requires NPAMLP to make additional payments on the Wrap Notes on April 10th of each year equal to sixty percent (60%) of the amounts by which Cash Flow from Operations for the previous year exceeded the sum of the minimum annual payment in such year plus the current payments due in such year on any indebtedness incurred after January 1, 1990 for Capital Improvements to any of the Properties.  The holder of the Wrap Notes applies the minimum annual payments to pay the current payments due on the Third Party Underlying Obligations.

 
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The Restructuring Agreement provides that all the Wrap Notes that were originally secured by Wrap Mortgages on the Properties that NPAMLP acquired from partnerships audited by the Internal Revenue Service will be secured by all of those Wrap Mortgages and will not be secured by Wrap Mortgages on the Properties that NPAMLP acquired from the Unaudited Partnerships.  All of the Wrap Notes that were originally secured by Wrap Mortgages on the Properties that NPAMLP acquired from Unaudited Partnerships are secured by all of those Wrap Mortgages and are not secured by Wrap Mortgages on the Properties that NPAMLP acquired from partnerships audited by the Internal Revenue Service.  The holder of the Wrap Mortgages agreed in the Restructuring Agreement to release from the lien of the Wrap Mortgages any Property sold by NPAMLP, upon payment to the holder of the Wrap Mortgages, as a pre-payment of the Wrap Notes, an amount equal to all of the Proceeds of Sales of the Properties not permitted by the Restructuring Agreement to be retained by NPAMLP.

The Restructuring Agreement permits NPAMLP to have the opportunity to retain, in certain circumstances, a portion of the Excess Proceeds.  In accordance with the Restructuring Agreement the Excess Proceeds derived from the Proceeds of Sales of the Properties are applied as follows:  (a) 100% of the Excess Proceeds are applied in payment of the Wrap Mortgages until the Threshold Amount has been paid; (b) the next $70 million of Excess Proceeds are allocated 60% to the payment of the Wrap Mortgage and 40% are retained by NPAMLP; (c) 100% of the next Excess Proceeds up to an amount equal to the Investor Note Recovery or $25 million, whichever is less, are retained by NPAMLP and distributed by NPAMLP to the Investor Note Payors; (d) the next Excess Proceeds are allocated by 60% to the payment of the Wrap Mortgages and 40% are retained by NPAMLP up to an amount equal to the outstanding balances for the Wrap Mortgages on January 1, 1990 less the sum of:  (i) the aggregate amount of the sums previously paid as Minimum Payoff Amounts; (ii) the Investor Note Recovery, and (iii) $70 million; (e) 100% of the next Excess Proceeds are applied in payment of the Wrap Mortgages in the amount equal to (i) the amount necessary to pay in full the Wrap Mortgages on Properties acquired from partnerships audited by the Internal Revenue Service, in the case of Excess Proceeds generated by the sale of such a Property, and (ii) the amount necessary to pay in full the Wrap Mortgages on Properties acquired from Unaudited Partnerships, in the case of Excess Proceeds generated by the sale of such a Property; and (f) 100% of any additional Excess Proceeds are retained by NPAMLP.

The Restructuring Agreement provides for indebtedness which may be incurred to finance Capital Improvements to the Properties after January 1, 1990, and requires that in connection with any sale of Property by NPAMLP, the loans for Capital Improvements to such Property must either be paid in full or assumed by the purchaser of the Property before the Wrap Mortgage on such Property will be released.

The Restructuring Agreement permits the holders of the Wrap Mortgages to refinance or negotiate modifications to the Third Party Underlying Obligations, so long as the aggregate amount of all Third Party Underlying Obligations is not increased.  The fees and expenses associated with any such refinancing or modification are required to be borne by the holders of the Wrap Mortgages.

The Restructuring Agreement spreads the lien securing each of the Second Mortgages to all of the Properties owned by NPAMLP and all of the Second Mortgages have been “wrapped” or included within all of the Wrap Mortgages.

D.  Future Interest Agreement

In March 2003 NPAMLP, NPAEP and PVPG, entered into an Agreement, effective as of January 1, 2003 (the “2003 Agreement”), in which NPAEP and PVPG agreed with NPAMLP to modify the terms of Wrap Mortgages held by NPAEP and PVPG. The terms of the 2003 Agreement provided that NPAEP and PVPG: (a) reduce to 4.1% per year the annual interest rate payable on any NPAEP Wrap Note or PVPG Wrap Note that bears a stated annual interest rate in excess of that amount; (b) remove certain of the properties secured by the NPAEP and PVPG Wrap Mortgages from the burden of the cross-default and cross-collateralization provisions currently contemplated by the Restructuring Agreement effective as of January 1, 1990 by and among MLPG, NPAMLP, National Property Analysts, Inc. and others; and (c) agree to release the lien of the Wrap Mortgages from the Properties upon a sale of or the agreement of a leasehold estate in any Property prior to the maturity of the applicable Wrap Note.  In consideration for the above, NPAMLP will modify the NPAEP Wrap Mortgages and the PVPG Wrap Mortgages to provide that (i) there is an event of default under the applicable NPAEP Wrap Mortgages or PVPG Wrap Mortgages, as the case may be, if a judgment or other lien is entered against the title or lease-holding entity thereby entitling NPAEP or PVPG, as the case may be, to avail itself of the post-default rights or remedies under the relevant security document; and (ii) for cross-default and cross-collateralization among the Unaudited Partnerships and, separately, among the Audited Partnerships.  In addition NPAMLP shall execute and deliver to NPAEP or PVPG, as the case may be, a currently recordable deed of future interest (or assignment of future leasehold interest) sufficient to convey to NPAEP or PVPG, as the case may be, all of NPAMLP’s right, title, interest and estate in and to its fee or leasehold interest in the encumbered properties effective upon the maturity on December 31, 2013 of the NPAEP Wrap Mortgages and the PVPG Wrap Mortgages unless the Wrap Mortgages have previously been paid in full.

 
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The Managing General Partner believes that the execution and delivery of the 2003 Agreement will have the following effects for NPAMLP: as a result of the reduction in the annual interest rate on the NPAEP Wrap Notes and the PVPG Wrap Notes (i) NPAMLP expects to realize significant reductions in interest that it otherwise would have been obligated to pay during the period between January 1, 2003 and December 31, 2013 when these loans mature and (ii) NPAMLP will be able to allocate a greater portion of its available cash flow to principal repayments.  As a result of the faster repayment of principal, the Limited Partners will recognize additional taxable income (or smaller tax losses) in each year from 2003 until the maturity of the NPAEP Wrap Mortgages and the PVPG Wrap Mortgages.  In addition, the anticipated date of dissolution of NPAMLP will now occur in 2013 rather than 2015.  Further, because the reduced interest rate is below the Applicable Federal Rate (“AFR”) prescribed under Section 1274 of the Internal Revenue Code of 1986, as amended, investors in Unaudited Partnerships recognized non-recurring ordinary income (forgiveness of indebtedness) 2003.  The tax impact of this recognition depended upon numerous factors related to each investor’s particular tax situation, including his marginal tax rate and his suspended passive losses from prior years.

Under the terms of the Restructuring Agreement, all Wrap Mortgages owned by NPAEP or PVPG are due and payable in substantial “balloon” amounts on December 31, 2013.  Assuming no sales of Properties by NPAMLP in the interim period (2010 through 2013) the projected balance due for all of the Wrap Mortgages at December 31, 2013 is expected to approximate $109,000,000.  As described above, in return for the reduction in interest rate and other consideration set forth above, including the satisfaction of the Wrap Mortgages due on December 31, 2013, NPAMLP’s general partner has agreed to deliver deeds of future interest and assignments of leasehold interest, to be recorded currently, effective December 31, 2013, to NPAEP and PVPG.  NPAMLP’s general partner has determined that it is in the best interests of NPAMLP and its partners to do so.  The effect of these deeds and assignments will be to facilitate a transfer of fee and leasehold ownership to the holders of the Wrap Mortgages at maturity (unless the Wrap Mortgages have been previously paid in full).  Notwithstanding the foregoing, NPAEP and PVPG have agreed in the 2003 Agreement to (a) release the liens of the Wrap Mortgages and (b) deliver such deeds of future interest, assignments of leasehold interests, or other documents or instruments as are necessary to facilitate or effect such sales of the Properties prior to December 31, 2013 as the Managing General Partner shall otherwise deem desirable.  The costs incurred arising from the recordation of any of the documents described in the 2003 Agreement shall be borne by NPAEP or PVPG, as the case may be.  The Managing General Partner believes that the result of the forgoing actions taken pursuant to the 2003 Agreement will preserve all rights of the Limited Partners under the Restructuring Agreement, including their right to share in certain sales proceeds or cash flows prior to maturity of the Wrap Mortgages.

Item 7(a). Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8.    Financial Statements and Supplementary Data

The combined financial statements, including the notes thereto and the report of the independent registered public accounting firm, are included in Part IV, Item 15 of this Form 10-K.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.
 
Item 9A (T): Controls  and Procedures

Management's Report on Internal Control over Financial Reporting.  It is the responsibility of the General Partner to establish and maintain adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. The Managing General Partner’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of NPAMLP; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of NPAMLP are being made only in accordance with authorizations of management and directors of the Managing General Partner; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of NPAMLP’s assets that could have a material effect on the financial statements.

 
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the NPAMLP’s internal control over financial reporting at December 31, 2009. Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of the NPAMLP’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Managing General Partner.

Based on our assessment, management determined that, at December 31, 2009, NPAMLP maintained effective internal control over financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.  There has been no change in internal controls over financial reporting that occurred during the quarter ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, NPAMLP's internal control over financial reporting.

This annual report does not include an attestation report of NPAMLP's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by NPAMLP’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit NPAMLP to provide only management's report in this annual report.

Item 9(B). Other Information

None