<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
____ For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from_______ to_______
Commission file number 0-11176
NTS-PROPERTIES III
(Exact name of registrant as specified in its charter)
Georgia 61-1017240
------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223 40223
- --------------------------------- --------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (502) 426-4800
---------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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 (Section 229.405 of this chapter) 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]
Exhibit Index: See Page 34
Total Pages: 37
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Items 1 and 2 Business and Properties 3-9
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a Vote
of Security Holders 9
PART II
Item 5 Market for the Registrant's Limited Partnership
Interests and Related Partner Matters 10
Item 6 Selected Financial Data 11
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-18
Item 8 Financial Statements and Supplementary
Data 19-29
Item 9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 30
PART III
Item 10 Directors and Executive Officers of
the Registrant 30-31
Item 11 Management Remuneration and Transactions 31
Item 12 Security Ownership of Certain Beneficial
Owners and Management 32
Item 13 Certain Relationships and Related
Transactions 32-33
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 34-36
Signatures 37
- 2 -
<PAGE>
PART I
Items 1. and 2. Business and Properties
General
NTS-Properties III (the "Partnership") is a limited partnership organized under
the laws of the state of Georgia on June 24, 1982. The general partner is
NTS-Properties Associates, a Georgia limited partnership. As of December 31,
1995, the Partnership owned the following properties:
- Peachtree Corporate Center, a business park with approximately
192,000 net rentable square feet located in Norcross, Georgia, a
suburb of Atlanta. Acquired complete on January 26, 1983.
- Plainview Plaza II, an office complex with approximately 113,000 net
rentable square feet located in Jeffersontown, Kentucky, a suburb of
Louisville. Acquired complete on January 26, 1983.
- Plainview Triad North, an office complex with approximately 89,000
net rentable square feet located in Jeffersontown, Kentucky.
Acquired complete on February 15, 1983.
The Partnership has a fee title interest in the above properties. The General
Partner believes that the Partnership's properties are adequately covered by
insurance.
Plainview Plaza II is encumbered by a permanent mortgage payable to an insurance
company. The outstanding balance at December 31, 1995 was $2,464,619. The
mortgage is payable in monthly installments of $32,335 which includes principal,
interest and property taxes. The mortgage bears a fixed interest rate of 9.125%
and is due November 1, 1998. The outstanding principal balance at maturity based
on the current rate of amortization will be $2,140,539.
The Partnership's properties are encumbered by a mortgage payable to an
insurance company. The loan is secured by a first mortgage on Plainview Triad
North and Peachtree Corporate Center with a second mortgage behind the holder of
the permanent mortgage on Plainview Plaza II. The outstanding balance at
December 31, 1995 was $4,500,000. The mortgage is payable in monthly
installments of $35,187 which includes interest and repair escrow. As part of
the loan agreement, the Partnership is required to place in escrow $6,500 each
month. The Funds will be released as the heating, ventilating and air
conditioning ("HVAC") system and asphalt paving at Peachtree Corporate Center
are replaced. The mortgage bears a variable interest rate which adjusts
quarterly to 60 basis points over the 10-year treasury bill rate. At no time
will the rate exceed 11.65% or be less than 7.65% per annum. The current rate at
December 31, 1995 is 7.65%. The total amount of the loan is due June 1, 2001.
The mortgage is closed to prepayment for the first year. Beginning the second
year through the end of year five, prepayment is allowed based on a 2% penalty
on the outstanding balance. Starting year six, no prepayment penalty will be
charged.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant finish improvements as required by lease
negotiations at the Partnership's properties. Changes to current tenant finish
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to accommodate a tenant's needs,
new carpeting and paint and/or wallcovering. The extent and cost of these
improvements are determined by the size of the space and whether the
improvements are for a new tenant or incurred because of a lease renewal. Tenant
finish improvements will be funded by cash flow from operations and/or cash
reserves. As of December 31, 1995, the Partnership had no material commitments
for tenant finish improvements.
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<PAGE>
Items 1. and 2. Business and Properties
General - Continued
Subsequent to December 31, 1995, the Partnership made a commitment of
approximately $95,000 for tenant finish improvements at Plainview Plaza II as a
result of a lease renewal and expansion. The expansion increases the tenant's
current leased space of approximately 48,000 square feet by approximately 5,400
square feet and the renewal extends the lease for five years. The project is
expected to be completed during the second quarter of 1996. The source of funds
for this project is expected to be cash flow from operations and/or cash
reserves.
The Partnership's plans for renovations and other major capital expenditures
also include the replacement of the HVAC system at Peachtree Corporate Center.
The HVAC system at Peachtree Corporate Center is designed in such a manner that
each suite's system is separate in structure; therefore, individual units are
replaced only as needed. Effective July 1995, new leases and lease renewals at
Peachtree Corporate Center require the tenant to maintain and replace the HVAC
system in the leased space beginning one year from the date of occupancy. As of
December 31, 1995, approximately 16% of the center's tenants were subject to
this lease provision. The Partnership is escrowing cash monthly to fund the HVAC
system replacements at Peachtree Corporate Center. (See the discussion regarding
the repair escrow on page 3.) The balance in the escrow account at December 31,
1995 was $381,871.
At Plainview Plaza II, the Partnership's renovation plans include the remodeling
of common area lobbies. The project is to include an upgrade of current restroom
facilities, improvement of handicap restroom facilities, new carpet and
wallcoverings. The project is anticipated to cost approximately $250,000. A
portion of this project was completed during the first and second quarter of
1995 at a cost of approximately $93,000. As of December 31, 1995, the
Partnership had no commitments for the remaining renovation. The source of funds
for this project is expected to be cash flow from operations and/or cash
reserves.
At Plainview Plaza II, the Partnership also expects to renovate and update the
exterior of the property during 1996. The renovation is designed to make the
property more competitive and enhance its value. The project is anticipated to
cost approximately $900,000. The General Partner of the Partnership anticipates
that the project will be funded with a combination of debt financing, cash
reserves and cash flow from operating activities. As of December 31, 1995, no
commitments had been made in connection with this project.
The Partnership had no other material commitments for renovations and capital
improvements at December 31, 1995 than those previously discussed.
The Partnership is engaged solely in the business of owning and operating
commercial real estate. A presentation of information concerning industry
segments is not applicable.
The current business of the Partnership is consistent with the original purpose
of the Partnership which was to acquire, own and operate Plainview Plaza II,
Peachtree Corporate Center and Plainview Triad North. The Partnership's
properties are in a condition suitable for their intended use.
The Partnership intends to hold the Properties until such time as sale or other
disposition appears to be advantageous with a view to achieving the
Partnership's investment objectives or it appears that such objectives will not
be met. In deciding whether to sell a Property, the Partnership will consider
factors such as potential capital appreciation, cash flow and Federal income tax
considerations, including possible adverse Federal income
- 4 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
tax consequences to the Limited Partners. The General Partner of the Partnership
is currently exploring the marketability of certain of its properties, and has
not yet determined if any of the properties might be sold in the next 12 months.
Plainview Plaza II
Except as indicated in the table below and on page 6, base annual rents, which
include the cost of utilities, currently range from $11.88 to $15.85 per square
foot. The average base annual rental as of December 31, 1995 was approximately
$13.39 per square foot. Office space is ordinarily leased for between one to
five years with the majority of current leases providing for five year terms
(1). Current leases terminate between 1996 and 2004 and provide for renewal
options of between one and five years at rates which are based upon increases in
the consumer price index and/or are negotiated between lessor and lessee. All
leases provide for tenants to contribute toward the payment of increases in
common area maintenance expenses, insurance, utilities and real estate taxes. As
of December 31, 1995, there were 11 tenants leasing office space aggregating
approximately 92,000 square feet of rentable area. The tenants who occupy
Plainview Plaza II are professional service-oriented organizations. The
principal occupations/professions practiced include real estate, architecture, a
payroll processing center and management offices for a regional grocery chain.
Two tenants lease more than 10% of Plainview Plaza II's rentable area: The
Kroger Company (42.5%) and NTS Development Company, an affiliate of the general
partner (20.5%). The lease agreement with NTS Development Company expired
February 1996 and provided for a base rental of $13.50 per square foot. It is
anticipated that this lease will be renewed at current market rates. The lease
terms between the Partnership and NTS Development Company will be on terms no
less favorable than those which could be obtained from an unaffiliated third
party. The occupancy levels as of December 31 were 82% (1995), 88% (1994), 83%
(1993), 83% (1992) and 92% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995.
Major Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
---- ---------- ---- ------ -------
The Kroger Company 2004(2) 48,018 (42.5%) $439,764 (43.4%)(3) 3 Five-Year
NTS Development
Company 1996 23,160 (20.5%) $312,660 (30.9%) 1 One-Year
(1) Excluding the Kroger Company lease. The current lease term is for a
period of five years and two months. The Kroger Company has been a tenant
of Plainview Plaza II since 1979. See note (2) for additional information
regarding the Kroger Company's lease.
(2) During 1995, the Partnership negotiated a five-year renewal and expansion
with the Kroger Company. The renewal extends the lease to December 31,
2004 and the expansion is for 5,417 square feet. Occupancy of the
expansion is expected in the second quarter of 1996.
(3) The Kroger Company lease provides that they pay their own electricity and
cleaning costs and thus the base rent is below $11.88 per square foot.
- 5 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Plainview Plaza II - Continued
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- ---- ------ -------
5 1996 9,069 ( 8.0%) $ 95,352 ( 9.4%)(1) 2 Three-Year
2 1997 3,063 ( 2.7%) $ 37,176 ( 3.7%) None
1 1998 3,771 ( 3.3%) $ 45,816 ( 4.5%) None
None 1999 -- -- --
1 2000 5,145 (4.6%) $ 81,564 ( 8.1%) 3 One-Year
(1) Included is a 2,950 square foot tenant whose base rent is below $11.88.
The tenant currently pays $6.78 per square foot as a result of a lease
renegotiation.
Plainview Triad North
Base annual rentals, which include the cost of utilities, currently range from
$10.93 to $15.56 per square foot. The average base rental as of December 31,
1995 was approximately $12.10 per square foot. Office space is ordinarily leased
for one to six years with the majority of current leases providing for six year
terms. Current leases terminate between 1996 and 1999. All leases provide for
tenants to contribute toward the payment of increases in common area maintenance
expenses, insurance, utilities and real estate taxes. As of December 31, 1995,
there were 7 tenants leasing office space aggregating approximately 83,500
square feet of rentable area. The tenants who occupy Plainview Triad North are
professional service- oriented organizations. The principal
occupations/professions practiced include insurance, healthcare and sales. One
tenant leases more than 10% of Plainview Triad North's rentable area: Aetna Life
Insurance Company (74.2%). The occupancy levels at the office building as of
December 31 were 93% (1995), 95% (1994), 91% (1993), 85% (1992) and 75% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995:
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
---- ---------- ---- ------ -------
Aetna Life
Insurance Company 1997 66,337 (74.2%) $795,936 (78.8%) None
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- ---- ------ -------
2 1996 7,555 ( 8.4%) $ 87,216 ( 8.6%) 2 90-Day
1 1997 2,181 ( 2.4%) $ 27,590 ( 2.7%) None
2 1998 5,760 ( 6.4%) $ 73,767 ( 7.3%) None
1 1999 1,670 ( 1.9%) $ 25,992 ( 2.6%) None
- 6 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Peachtree Corporate Center
Base annual rentals, which exclude the cost of utilities, currently range from
$6.92 to $10.53 per square foot for office space, $3.46 to $5.10 per square foot
for warehouse space and $3.41 per square foot for mezzanine storage space. The
average base annual rental for all space leased as of December 31, 1995 was
$6.11 per square foot. Office, warehouse and/or mezzanine storage space is
ordinarily leased for between one and six years with the majority of current
leases providing for three year terms. Current leases terminate between 1996 and
2000. All leases provide for tenants to contribute toward the payment of
increases in common area maintenance expenses, insurance and real estate taxes.
As of December 31, 1995, there were 53 tenants leasing office, warehouse and
storage space aggregating approximately 167,000 (1) square feet of rentable
area, none of which leased more than 10% of the business park's rentable area.
The tenants who occupy Peachtree Corporate Center are professional
service-oriented organizations. The principal occupations/professions practiced
include sales-related services. The occupancy levels at the business park as of
December 31 were 89% (1995), 80% (1994), 82% (1993), 75% (1992) and 90% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area (2) Rental Options
------- ----------- -------------- ---------------- ---------
16 1996 43,640 (23.0%) $252,852 (24.8%) None
11 1997 33,460 (17.4%) $191,568 (18.8%) None
20 1998 46,474 (23.9%) $288,732 (28.1%) None
2 1999 17,941 ( 9.3%) $105,924 (10.3%) None
4 2000 25,511 (13.3%) $184,392 (18.0%) None
(1) Excludes approximately 3,300 square feet which is occupied by the business
park's property management and leasing staff.
(2) Rentable area includes only ground floor square feet (office and warehouse
space).
Additional operating data regarding the Partnership's properties is furnished in
the following table.
Peachtree
Plainview Plainview Corporate
Plaza II Triad North Center
-------- ----------- ------
Federal tax basis $7,359,902 $6,940,972 $9,529,756
Realty tax rate .01141 .01141 .03705
Annual realty taxes $63,248 $49,245 $103,732
Depreciation for book purposes is computed using the straight-line method over
the estimated useful lives of the assets which are 5 - 30 years for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
3 - 30 for amenities. The estimated realty taxes on the proposed exterior
renovation at Plainview Plaza II is approximately $9,000. The estimated realty
taxes on all other planned renovations, primarily tenant improvements, would not
be material.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations (Item 7.) for explanations regarding the fluctuations of
income and occupancy at the Partnership's properties.
- 7 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Competition
The Partnership's properties are subject to competition from similar types of
properties (including, in certain areas, properties owned or managed by
affiliates of the General Partner) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or for new tenants when vacancies occur. The Partnership maintains the
suitability and competitiveness of its properties primarily on the basis of
effective rents and service provided to tenants. Competition is expected to
increase in the future as a result of the construction of additional properties.
As of December 31, 1995, there are no properties under construction in the
respective vicinities in which the properties are located. The Partnership has
not commissioned a formal market analysis of competitive conditions in any
market in which it owns properties, but relies upon the market condition
knowledge of the employees of NTS Development Company who manage and supervise
leasing for each property.
Management of Properties
NTS Development Company, an affiliate of NTS Properties Associates, the general
partner of the Partnership, directs the management of the Partnership's
properties pursuant to a written agreement. NTS Development Company is a
wholly-owned subsidiary of NTS Corporation. Mr. J. D. Nichols has a controlling
interest in NTS Corporation and is a general partner of NTS Properties
Associates. Under the agreement, the Property Manager establishes rental
policies and rates and directs the marketing activity of leasing personnel. It
also coordinates the purchase of equipment and supplies, maintenance activity
and the selection of all vendors, suppliers and independent contractors. As
compensation for its services, the Property Manager received $161,638 for the
year ended December 31, 1995. The fee is equal to 5% of gross revenues from the
Partnership's properties.
In addition, the management agreement requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of the Property Manager in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse the Property Manager for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel.
The term of the Management Agreement between NTS Development Company and the
Partnership was for an initial term of five years, and thereafter for succeeding
one-year periods, unless canceled. The Agreement is subject to cancellation by
either party upon sixty days written notice. As of December 31, 1995, the
Management Agreement is still in effect.
Conflict of Interest
Because the principals of the general partner and/or its affiliates own and/or
operate real estate properties other than those owned by the Partnership that
are or could be in competition with the Partnership, potential conflicts of
interest exist. Because the Partnership was organized and is operated by the
General Partner, these conflicts are not resolved through arm's length
negotiations but through the exercise of the General Partner's good judgment
consistent with its fiduciary responsibility to the Limited Partners and the
Partnership's investment objectives and policies. The General Partner is
accountable to the Limited Partners as a fiduciary and consequently must
exercise good faith and integrity in handling the Partnership's affairs. A
provision has been made in the Partnership Agreement that the General Partner
will not be liable to the Partnership except for acts or omissions performed or
omitted fraudulently,
- 8 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Conflict of Interest - Continued
in bad faith or with negligence. In addition, the Partnership Agreement provides
for indemnification by the Partnership of the General Partner for liability
resulting from errors in judgment or certain acts or omissions. With respect to
these potential conflicts of interest, the general partner and its affiliates
retain a free right to compete with the Partnership's properties including the
right to develop competing properties now and in the future, in addition to
those existing properties which may compete directly or indirectly.
NTS Development Company, the Property Manager and an affiliate of the general
partner, acts in a similar capacity for other affiliated entities in the same
geographic region where the Partnership has property interests. The agreement
with the Property Manager is on terms no less favorable to the Partnership than
those which could be obtained from a third party for similar services in the
same geographical region in which the properties are located. The contract is
terminable by either party without penalty upon 60 days written notice.
There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates other than those previously described.
Employees
The Partnership has no employees; however, employees of an affiliate of the
general partner are available to perform services for the Partnership. The
Partnership reimburses this affiliate for the actual costs of providing such
services.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
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<PAGE>
PART II
Item 5. Market for Registrant's Limited Partnership Interests and Related
Partner Matters
The Partnership had 1,148 limited partners as of February 29, 1996. There is no
established trading market for the limited partnership interests, nor is one
likely to develop.
Cash distributions and allocations of net income (loss) are made as described in
Note 1C to the Partnership's 1995 financial statements. Annual distributions
totalling $10.00 (1995) and $2.50 (1994) were paid per limited partnership unit.
The Partnership did not make a cash distribution during 1993. Quarterly
distributions are determined based on current cash balances, cash flow being
generated by operations and required cash reserves, as determined by the general
partner, for future leasing costs, tenant finish costs and capital improvements.
Distributions were paid quarterly as follows:
1995 1994 1993
---------- ---------- -------
First quarter $ 2.50 $ -- $ --
Second quarter 2.50 -- --
Third quarter 2.50 -- --
Fourth quarter 2.50 2.50 --
------- ------ ----
$10.00 $ 2.50 $ --
====== ====== ====
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1995, 1994 and 1993. The General Partner did not
receive a distribution during these years. Distributions were funded by cash
flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1995 $ (86,496) $ 154,125 $ 154,125
1994 (97,062) 39,000 39,000
1993 (214,680) -- --
- 10 -
<PAGE>
Item 6. Selected Financial Data
For the years ended December 31, 1995, 1994, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Total revenues $ 3,073,103 $ 2,960,275 $ 2,830,574 $ 2,739,725 $ 3,005,802
Total expenses (3,262,493) (3,157,866) (3,149,056) (3,175,135) (3,256,841)
----------- ----------- ----------- ----------- -----------
Net loss $ (189,390) $ (197,591) $ (318,482) $ (435,410) $ (251,039)
=========== =========== =========== =========== ===========
Net loss allocated to:
General partner $ (102,894) $ (100,529) $ (103,802) $ (105,100) $ (94,929)
Limited partners $ (86,496) $ (97,062) $ (214,680) $ (330,310) $ (156,110)
Net loss per limited
partnership unit $ (5.48) $ (6.22) $ (13.76) $ (21.17) $ (10.01)
Weighted average number
of limited partnership
units 15,495 15,600 15,600 15,600 15,600
Cumulative net income
(loss) allocated to:
General partner $(2,195,635) $(2,092,741) $(1,992,212) $(1,888,410) $(1,783,310)
Limited partners $ (448,502) $ (362,006) $ (264,944) $ (50,264) $ 280,046
Cumulative taxable
income (loss) allocated to:
General partner $(2,696,785) $(2,545,416) $(2,390,433) $(2,232,893) $(2,075,731)
Limited partners $ (928,736) $ (926,612) $ (719,138) $ (503,072) $ (324,138)
Distributions declared:
General partner $ -- $ -- $ -- $ -- $ --
Limited partners $ 154,125 $ 39,000 $ -- $ 234,000 $ 468,000
Cumulative distributions
declared:
General partner $ 206,985 $ 206,985 $ 206,985 $ 206,985 $ 206,985
Limited partner $11,241,827 $11,087,702 $11,048,702 $11,048,702 $10,814,702
At year end:
Land, buildings and
amenities, net $ 9,585,286 $10,242,936 $10,783,103 $11,530,785 $12,315,307
Total assets $11,120,854 $11,862,286 $12,011,140 $12,391,021 $13,327,837
Mortgages and Notes
Payable $ 6,964,619 $ 7,060,749 $ 7,148,009 $ 7,227,933 $ 7,300,912
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Form 10-K
report.
- 11 -
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The occupancy levels at the Partnership's properties as of December 31 were as
follows:
1995 1994 1993
---- ---- ----
Plainview Plaza II 82% 88% 83%
Plainview Triad North 93% 95% 91%
Peachtree Corporate Center 89% 80% 82%
The rental and other income generated by the Partnership's properties for the
years ended December 31 were as follows:
1995 1994 1993
---- ---- ----
Plainview Plaza II $1,098,934 $1,061,476 $1,060,013
Plainview Triad North $ 953,799 $ 935,643 $ 844,640
Peachtree Corporate Center $ 986,828 $ 939,859 $ 923,727
The 6% decrease in year-ending occupancy from 1994 to 1995 at Plainview Plaza II
can be attributed to five tenants, who had occupied approximately 10,900 square
feet, vacating at the end of the lease terms. Partially offsetting the tenant
move-outs is one new lease totalling approximately 3,800 square feet. The new
tenant took occupancy in June of 1995. Average occupancy increased from 83% in
1994 to 85% in 1995. The increase in rental and other income at Plainview Plaza
II from 1994 to 1995 can be attributed to the increase in average occupancy
during the year.
During 1995, the Partnership negotiated a five-year renewal and expansion with
The Kroger Company, a major tenant at Plainview Plaza II. The renewal extends
the lease to December 31, 2004 and the expansion is for 5,417 square feet. When
The Kroger Company takes occupancy of the additional space (expected during the
second quarter of 1996), Plainview Plaza II will be 86% occupied.
The 5% increase in year-ending occupancy from 1993 to 1994 at Plainview Plaza II
can be attributed to two new leases totalling approximately 5,600 square feet.
The new tenants took occupancy during November (422 square feet) and December
(5,145 square feet) of 1994. Average occupancy at Plainview Plaza II was 83% in
1994 and 1993. The increase in rental and other income from 1993 to 1994 can be
attributed to the increase in occupancy during the fourth quarter and an
increase in pass through expense reimbursements. Leases at Plainview Plaza II
provide for tenants to contribute toward the payment of increases in common area
maintenance expenses, insurance, utilities and real estate taxes. The increase
in income is partially offset by termination penalty income in 1993 of
approximately $12,000. This was collected from an approximately 3,600 square
foot tenant who had, in 1992, vacated its suite prior to the end of the lease
term. The tenant had wanted to expand its existing space; however, no additional
space was available adjacent to their current
- 12 -
<PAGE>
Results of Operations - Continued
location nor was there adequate contiguous space available in Plainview Plaza II
to meet their needs. As a result of these circumstances, and in accordance with
a prior agreement with the tenant, the tenant was released from its obligation
upon payment of the termination penalty. There was no similar income in 1994.
Plainview Triad North's year-ending occupancy decreased 2% from 1994 to 1995 as
a result of move-outs by three tenants (occupied approximately 2,900 square
feet) and the downsizing (3,900 square feet) of one tenant. Partially offsetting
the tenant move-outs and downsizing is a new lease totalling approximately 4,900
square feet. Average occupancy increased from 92% in 1994 to 94% in 1995. Rental
and other income increased from 1994 to 1995 at Plainview Triad North as a
result of the increase in average occupancy during the year.
Plainview Triad North's year-ending occupancy increased 4% from 1993 to 1994 as
a result of four new leases totalling approximately 8,200 square feet all of
which represent expansions by current tenants. Partially offsetting the new
leases are three tenants, who had occupied approximately 4,600 square feet,
vacating at the end of the lease terms. Average occupancy at Plainview Triad
North for the year increased from 88% in 1993 to 92% in 1994. The increase in
rental and other income at Plainview Triad North from 1993 to 1994 is due to the
increase in average occupancy and an increase in rental rates.
Peachtree Corporate Center's year-ending occupancy increased 9% from 1994 to
1995 due to 19 new leases totalling approximately 44,000 square feet. Of this
total, approximately 11,000 square feet represents expansions by five current
tenants. Partially offsetting the new leases are 10 tenant move-outs totalling
approximately 27,000 square feet. Approximately 15,600 square feet of this total
represents five tenants who vacated and ceased making rental payments in breach
of the lease terms due to bankruptcies. Accrued income associated with these
leases of approximately $11,000 was written off as uncollectible. The remaining
11,400 square feet represents five tenants who vacated at the end of the lease
terms. Average occupancy at Peachtree Corporate Center increased from 84% in
1994 to 89% in 1995.
The increase in rental and other income at Peachtree Corporate Center from 1994
to 1995 is due to an increase in average occupancy during 1995. Peachtree
Corporate Center receives rental income from the leasing of both office space
and warehouse space. Office space rents for approximately $8.00 to $9.00 per
square foot compared to $3.50 to $4.50 per square foot for warehouse space.
Rental and other income also increased from 1994 to 1995 because office space
occupied (at a correspondingly higher rental rate) as a percentage of the total
square feet occupied has increased in 1995 as compared to 1994. The increase in
rental and other income is partially offset by an increase in the provision for
doubtful accounts.
Peachtree Corporate Center's occupancy decreased 2% from 1993 to 1994 as a
result of move-outs by 14 tenants who had occupied approximately 34,000 square
feet. Approximately 16,300 square feet of the total move-outs represent eight
tenants who vacated and ceased making rental payments in breach of the lease
terms due to bankruptcies. Accrued income associated with these leases was not
significant. 15,600 square feet of the total move-outs are the result of five
tenants who vacated at the end of the lease terms. The remaining 2,200 square
feet represents a tenant who exercised a termination option. There was no
accrued income associated with this lease. Partially offsetting the tenant
move-outs are 11 new leases totalling approximately 27,000 square feet, of which
approximately 15,000 square feet represent expansions by five current tenants.
Average occupancy at Peachtree Corporate Center increased from 78% in 1993 to
84% in 1994.
- 13 -
<PAGE>
Results of Operations - Continued
The increase in rental and other income at Peachtree Corporate Center from 1993
to 1994 is due to an increase in average occupancy during 1994. Peachtree
Corporate Center receives rental income from the leasing of both office space
and warehouse space. Office space rents for approximately $8.50 to $9.50 per
square foot compared to $4.00 to $4.50 per square foot for warehouse space.
Another factor contributing to the increase in rental and other income from 1993
to 1994 is an increase in rent received from the rental of service space due to
an increase in the amount of service space leased in 1994 over 1993. Partially
offsetting the increase in rental income from 1993 to 1994 is a decrease in the
average rental rate realized from office space leased and a decrease in common
area expense reimbursements from tenants. Tenants at Peachtree Corporate Center
reimburse the Partnership for common area expenses as part of the lease
agreements. The decrease in common area expense reimbursements is a result of a
decrease in operating expenses at the property, principally property taxes, from
1992 to 1993, and due to the large number of new leases signed at the property
which are not subject to the charge until the end of the calendar year following
the commencement of their lease.
In cases of tenants who cease making rental payments or abandon the premises in
breach of their lease, the Partnership pursues collection through the use of
collection agencies or other remedies available by law when practical. In the
case of tenants who vacated Peachtree Corporate Center as a result of
bankruptcy, the Partnership has taken legal action when it was thought there
could be a possible collection. There have been no funds recovered as a result
of these actions. As of December 31, 1995, there were no on-going cases.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties without the need for any additional financing.
Interest and other income includes interest income earned from investments made
by the Partnership with excess cash and from funds escrowed for the replacement
of the heating, ventilating and air conditioning ("HVAC") system and asphalt
paving at Peachtree Corporate Center (see the Liquidity and Capital Resources
section for a further discussion of these Escrow Funds). The increase in
interest income in 1995 as compared to 1994 and in 1994 as compared to 1993 is a
result of an increase in interest earned on the Escrow Funds and an increase in
excess cash available for investment.
Operating expenses decreased from 1994 to 1995 as a result of decreased snow
removal costs at Plainview Plaza II and Plainview Triad North, decreased utility
costs at Triad North, and decreased repair and maintenance costs at Peachtree
Corporate Center. Partially offsetting the decrease in operating expenses from
1994 to 1995 is an increase in landscape replacement costs and exterior building
repairs at Peachtree Corporate Center.
Operating expenses increased from 1993 to 1994 primarily as a result of
increased utility and snow removal costs at Plainview Plaza II and Plainview
Triad North due to the extreme winter weather experienced in 1994, increased
heating and air conditioning repair costs and janitorial costs at Plainview
Triad North and increased exterior painting, roof repairs and landscaping costs
at Peachtree Corporate Center. Partially offsetting the increase in operating
expenses from 1993 to 1994 is a decrease in janitorial costs at Plainview Plaza
II.
The increase in operating expenses - affiliated from 1994 to 1995 is a result of
increased property management salaries at all of the Partnership's properties.
Operating expenses - affiliated are expenses incurred for services performed by
employees of NTS Development Company, an affiliate of the General Partner.
- 14 -
<PAGE>
Results of Operations - Continued
The decrease in operating expenses - affiliated from 1993 to 1994 is due to a
decrease in leasing salaries at all of the Partnership's properties. In
addition, property management salaries decreased at Peachtree Corporate Center
and Plainview Plaza II. Partially offsetting the decrease in operating expenses
- - affiliated from 1993 to 1994 is an increase in property management salaries at
Plainview Triad North.
The 1995 write-off of unamortized building and tenant improvements can be
attributed to Peachtree Corporate Center (tenant and building improvements) and
Plainview Plaza II (building improvements). Changes to current tenant
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to accommodate a tenant's needs,
new carpeting and paint and/or wallcovering. In order to complete the
renovation, it is sometimes necessary to replace improvements which have not
been fully depreciated. This results in a write-off of unamortized tenant
improvements. The write-off of unamortized building improvements at Peachtree
Corporate Center is the result of exterior building renovations. The write-off
of unamortized building improvements at Plainview Plaza II is the result of a
common area lobby renovation. The renovation included an upgrade of current
restroom facilities, improvement of handicap restroom facilities, new carpet and
wallcoverings. The write-off represents the cost of previous renovations which
had not been fully depreciated.
The 1994 write-off of unamortized tenant improvements can be attributed to
Peachtree Corporate Center and Plainview Triad North. The 1993 write-off of
unamortized tenant improvements was not significant.
Interest expense has remained fairly constant from 1993 to 1994 and from 1994 to
1995. See the Liquidity and Capital Resources section of this item for details
regarding the Partnership's debt.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is on the accrual basis. As a result, the
fluctuations of revenues between years will differ from the fluctuations of
management fee expense.
Real estate taxes remained fairly constant from 1994 to 1995. The increase in
real estate taxes from 1993 to 1994 is a result of an increase in the assessment
for Plainview Triad North and an increase in tax rates at all of the
Partnership's properties. Partially offsetting the increase in real estate taxes
from 1993 to 1994 is a decrease in the assessment for Plainview Plaza II. The
assessment at Peachtree Corporate Center was unchanged from 1993 to 1994.
Professional and administrative expenses remained fairly constant from 1994 to
1995. The decrease in professional and administrative expenses from 1993 to 1994
is the result of reduced outside legal fees.
The change in professional and administrative expenses - affiliated from 1994 to
1995 was not significant. Professional and administrative expenses - affiliated
are expenses incurred for services performed by employees of NTS Development
Company, an affiliate of the General Partner.
The increase in professional and administrative expenses - affiliated from 1993
to 1994 was primarily the result of increased accounting salaries.
Depreciation and amortization increased from 1994 to 1995 due to approximately
$564,000 of new assets (principally tenant improvements and lobby renovation)
being placed in service. This is partially offset by a portion of the
Partnership's assets having become fully depreciated. Depreciation is computed
using the straight-line method over the estimated
- 15 -
<PAGE>
Results of Operations - Continued
useful lives of the assets which are 5 - 30 years for land improvements, 30
years for buildings, 5 - 30 years for building improvements and 3 - 30 years for
amenities. The aggregate cost of the Partnership's properties for Federal tax
purposes is approximately $24,000,00.
Depreciation and amortization decreased from 1994 to 1993 due to a portion of
the Partnership's assets having become fully depreciated. This is partially
offset by approximately $307,000 of new assets (principally tenant improvements)
being placed in service.
Liquidity and Capital Resources
The Partnership had cash flow from operations of $1,055,054 (1995), $789,379
(1994) and $773,488 (1993). These funds, in conjunction with cash on hand, were
used to make a 1% (annualized) distribution of $154,125 in 1995 and a .25%
(annualized) distribution of $39,000 in 1994. The annualized distribution rate
is calculated as a percent of the initial equity. The limited partners received
100% of these distributions. The Partnership did not make a cash distribution
during the 12 months ended December 31, 1993 or during the nine months ended
September 30, 1994. The Partnership determined it necessary to temporarily
suspend cash distributions until adequate cash reserves for future leasing
costs, tenant finish and other capital improvements were established, and
sufficient cash was being generated from operations which, in management's
opinion, warranted a cash distribution. Cash reserves (which are unrestricted
cash and equivalents and investment securities as shown on the Partnership's
balance sheet as of December 31) were $729,939, $734,203 and $444,495 at
December 31, 1995, 1994 and 1993, respectively.
As of December 31, 1995, the Partnership had a mortgage payable to an insurance
company in the amount of $4,500,000. The mortgage bears a variable interest rate
which adjusts quarterly to 60 basis points over the 10-year treasury bill rate.
At no time will the rate exceed 11.65% or be less than 7.65% per annum. The
current rate at December 31, 1995 was 7.65%. The loan is secured by a first
mortgage on Plainview Triad North and Peachtree Corporate Center with a second
position behind the holder of the permanent mortgage on Plainview Plaza II. The
unpaid balance of the loan is due June 1, 2001.
As of December 31, 1995, the Partnership also had a mortgage payable to an
insurance company in the amount of $2,464,619. The mortgage bears a fixed
interest rate of 9.125% and is due November 1, 1998. The outstanding balance at
maturity based on the current rate of amortization will be $2,140,539.
The General Partner of the Partnership is presently exploring the possibility of
refinancing the current mortgages payable encumbering the Partnership's
properties.
The primary source of future liquidity and distributions is expected to be
derived from cash generated by the Partnership's properties after adequate cash
reserves are established for future leasing and tenant finish costs.
The majority of the Partnership's cash flow is derived from operating
activities. Cash flows used in investing activities are for tenant finish
improvements and reductions in accounts payable - construction and are funded by
operating activities. Changes to current tenant improvements are a typical part
of any lease negotiation. Improvements generally include a revision to the
current floor plan to accommodate a tenant's needs, new carpeting and paint
and/or wallcovering. The extent and cost of these improvements are determined by
the size of the space and whether the improvements are for a new tenant or
incurred because of a lease renewal. Cash flows used in investing activities
also include cash which is being
- 16 -
<PAGE>
Liquidity and Capital Resources - Continued
escrowed for the replacement of the HVAC system and asphalt paving at Peachtree
Corporate Center and purchases of investment securities. As part of its cash
management activities, the Partnership has purchased Certificates of Deposit or
securities issued by the U.S. Government with initial maturities of greater than
three months to improve the return on its excess cash. The Partnership intends
to hold the securities until maturity. Cash flows provided by investing
activities are from the maturity of investment securities. Cash flows used in
financing activities include cash distributions, principal payments on the $2.5
million mortgage payable and repurchases of limited partnership Units. The
Partnership does not expect any material changes in the mix and relative cost of
capital resources.
In the next 12 months, the General Partner expects a demand on future liquidity
as a result of 86,803 square feet in leases expiring during 1996 (Plainview
Plaza II - 32,229 square feet, Plainview Triad North - 10,934 square feet and
Peachtree Corporate Center - 43,640 square feet). At this time, the future
leasing and tenant finish costs which will be required to renew the current
leases or obtain new tenants are unknown. It is anticipated that the cash flow
from operations and cash reserves will be sufficient to meet the needs of the
Partnership. As of December 31, 1995, the Partnership had no material
commitments for tenant finish improvements.
The General Partner also anticipates a demand on future liquidity in the next 12
months, as a result of the Partnership's plans to complete the renovation of the
common area lobbies at Plainview Plaza II. The project is to include an upgrade
of current restroom facilities, improvement of handicap restroom facilities, new
carpet and wallcoverings. The project is anticipated to cost approximately
$250,000. A portion of this project was completed during the first and second
quarter of 1995 at a cost of approximately $93,000. The cost of this project is
expected to be funded from cash reserves and cash flow from operations. As of
December 31, 1995, the Partnership had no commitments for the remaining
renovations.
A demand on future liquidity is also anticipated as the General Partner expects
to renovate and update the exterior of the NTS Plainview Plaza II property
during 1996. The renovation is designed to make the property more competitive
and enhance its value. The project is anticipated to cost approximately
$900,000. The General Partner of the Partnership anticipates the project will be
funded with a combination of debt financing, cash reserves and cash flow from
operating activities. As of December 31, 1995, no commitments had been made in
connection with this project.
On October 3, 1995, the Partnership established an Interest Repurchase Reserve
in the amount of $156,000 pursuant to Section 16.4 of the Partnership's Amended
and Restated Agreement of Limited Partnership. Under Section 16.4, limited
partners may request the Partnership to repurchase their respective interests
(Units) in the Partnership. With this Interest Repurchase Reserve, the
Partnership was able to repurchase 750 Units at a price of $208 per Unit. The
Partnership notified the limited partners of the establishment of the Interest
Repurchase Reserve and the opportunity to request that the Partnership
repurchase Units at the established price pursuant to a letter dated October 3,
1995. Repurchased Units were retired by the Partnership, thereby reducing the
total number of Units outstanding. The Interest Repurchase Reserve was funded
from cash reserves.
Subsequent to December 31, 1995, the Partnership funded an additional $100,000
to its Interest Repurchase Reserve which will enable the Partnership to
repurchase up to an additional 480 Units at a price of $208 per Unit.
- 17 -
<PAGE>
Liquidity and Capital Resources - Continued
Subsequent to December 31, 1995, the Partnership made a commitment of
approximately $95,000 for tenant finish improvements at Plainview Plaza II as a
result of the lease renewal and expansion with The Kroger Company. The expansion
increases the tenant's current leased space of approximately 48,000 square feet
by approximately 5,400 square feet and the renewal extends the lease for five
years. The project is expected to be completed during the second quarter of
1996. The source of funds for this project is expected to be cash flow from
operations and/or cash reserves.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1995, 1994 and 1993. The General Partner did not
receive a distribution during these years. Distributions were funded by cash
flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1995 $ (86,496) $ 154,125 $ 154,125
1994 (97,062) 39,000 39,000
1993 (214,680) -- --
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's properties. At Peachtree Corporate
Center in Norcross, Georgia, the Partnership has an on-site leasing agent, an
employee of NTS Development Company (an affiliate of the general partner), who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local advertising with the assistance of NTS Development Company's
marketing staff. The leasing and renewal negotiations for Plainview Plaza II and
Plainview Triad North are handled by leasing agents, employees of NTS
Development Company, located in Louisville, Kentucky. The leasing agents are
located in the same city as both commercial properties. All advertising for the
Louisville properties is also coordinated by NTS Development Company's marketing
staff located in Louisville, Kentucky.
Leases at all the Partnership's properties provide for tenants to contribute
toward the payment of increases in common area maintenance expenses, insurance,
utilities and real estate taxes. This lease provision should protect the
Partnership's operations from the impact of inflation and changing prices.
- 18 -
<PAGE>
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NTS-Properties III:
We have audited the accompanying balance sheets of NTS-Properties III, (a
Georgia limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements and the
schedules referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NTS-Properties III as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules included on pages 35 and 36
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
February 14, 1996
- 19 -
<PAGE>
<TABLE>
<CAPTION>
NTS-PROPERTIES III
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
1995 1994
----------- -----------
ASSETS
<S> <C> <C>
Cash and equivalents $ 626,884 $ 734,203
Cash and equivalents - restricted 387,796 293,623
Investment securities 103,055 --
Accounts receivable, net of allowance
for doubtful accounts of $90,332 (1995)
and $53,828 (1994) 176,811 339,477
Land, buildings and amenities, net 9,585,286 10,242,936
Other assets 241,022 252,047
----------- -----------
Total assets $11,120,854 $11,862,286
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgages payable $ 6,964,619 $ 7,060,479
Accounts payable - operations 72,807 75,234
Accounts payable - construction 1,907 152,093
Distributions payable 37,125 39,000
Security deposits 95,494 84,044
Other liabilities 13,171 16,190
----------- -----------
7,185,123 7,427,040
Partners' equity 3,935,731 4,435,246
----------- -----------
$11,120,854 $11,862,286
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 20 -
<PAGE>
<TABLE>
<CAPTION>
NTS-PROPERTIES III
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income, net of provision for
doubtful accounts of $68,680 (1995),
$-0- (1994) and $33,647 (1993) $ 2,717,965 $ 2,617,879 $ 2,505,585
Rental income - affiliated 312,660 314,750 315,009
Interest and other income 42,478 27,646 9,980
----------- ----------- -----------
3,073,103 2,960,275 2,830,574
Expenses:
Operating expenses 673,969 684,043 613,730
Operating expenses - affiliated 337,133 308,897 339,837
Write-off of unamortized building and
tenant improvements 56,693 11,572 1,810
Interest expense 583,034 589,200 589,278
Management fees 161,638 148,186 142,213
Real estate taxes 216,225 217,257 207,145
Professional and administrative
expenses 56,384 51,709 68,143
Professional and administrative
expenses - affiliated 141,552 138,500 135,071
Depreciation and amortization 1,035,865 1,008,502 1,051,829
----------- ----------- -----------
3,262,493 3,157,866 3,149,056
----------- ----------- -----------
Net loss $ (189,390) $ (197,591) $ (318,482)
=========== =========== ===========
Net loss allocated to the limited
partners $ (86,496) $ (97,062) $ (214,680)
=========== =========== ===========
Net loss per limited partnership $ (5.58) $ (6.22) $ (13.76)
=========== =========== ===========
unit
Weighted average number of limited
partnership units 15,495 15,600 15,600
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 21 -
<PAGE>
<TABLE>
<CAPTION>
NTS-PROPERTIES III
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Limited General
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Balances at December 31, 1992 $ 4,501,034 $ 489,285 $ 4,990,319
Net loss (214,680) (103,802) (318,482)
----------- ----------- -----------
Balances at December 31, 1993 4,286,354 385,483 4,671,837
Net loss (97,062) (100,529) (197,591)
Distributions declared (39,000) -- (39,000)
----------- ----------- -----------
Balances at December 31, 1994 4,150,292 284,954 4,435,246
Net loss (86,496) (102,894) (189,390)
Distributions declared (154,125) -- (154,125)
Repurchase of limited partnership
units (156,000) -- (156,000)
----------- ----------- -----------
Balances at December 31, 1995 $ 3,753,671 $ 182,060 $ 3,935,731
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 22 -
<PAGE>
<TABLE>
<CAPTION>
NTS-PROPERTIES III
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES
Net income $ (189,390) $ (197,591) $ (318,482)
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for doubtful accounts 68,680 -- 33,647
Accrued interest on investment securities (1,402) -- --
Write-off of unamortized building and tenant
improvements 56,693 11,572 1,810
Depreciation and amortization 1,035,865 1,008,502 1,051,829
Change in assets and liabilities:
Cash and equivalents - restricted (5,925) -- --
Accounts receivable 93,986 (27,490) 1,455
Other assets (9,460) (7,141) (3,555)
Accounts payable - operations (2,427) 5,604 (3,337)
Security deposits 11,450 (7,053) 5,934
Other liabilities (3,016) 2,976 4,187
----------- ----------- -----------
Net cash provided by operating activities 1,055,054 789,379 773,488
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (414,426) (454,758) (285,475)
Increase in cash and equivalents - restricted (88,248) (92,123) (78,000)
Increase (decrease) in accounts payable - (150,186) 134,740 11,740
construction
Purchases of investment securities (401,461) -- --
Maturities of investment securities 299,808 -- --
----------- ----------- -----------
Net cash used in investing activities (754,513) (412,141) (351,735)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions (156,000) -- --
Principal payments on mortgage payable (95,860) (87,530) (79,924)
Repurchase of limited partnership units (156,000) -- --
----------- ----------- -----------
Net cash used in financing activities (407,860) (87,530) (79,924)
Net increase (decrease) in cash and
equivalents (107,319) 289,708 341,829
CASH AND EQUIVALENTS, beginning of period 734,203 444,495 102,666
----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 626,884 $ 734,203 $ 444,495
=========== =========== ===========
Interest paid on a cash basis $ 585,825 $ 587,803 $ 589,886
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 23 -
<PAGE>
NTS-PROPERTIES III
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Significant Accounting Policies
A) Organization
NTS-Properties III (the "Partnership") is a limited partnership
organized under the laws of the State of Georgia on June 24, 1982.
The general partner is NTS-Properties Associates, a Georgia limited
partnership. The Partnership is in the business of owning and
operating commercial real estate.
B) Properties
The Partnership owns and operates the following properties:
- Peachtree Corporate Center, a business park with approximately
192,000 net rentable square feet located in Norcross, Georgia, a
suburb of Atlanta.
- Plainview Plaza II, an office complex with approximately 113,000
net rentable square feet located in Jeffersontown, Kentucky, a
suburb of Louisville.
- Plainview Triad North, an office complex with approximately
89,000 net rentable square feet located in Jeffersontown,
Kentucky.
C) Allocation of Net Income (Loss) and Cash Distributions
Net Cash Receipts, as defined in the partnership agreement, will be
distributed, to the extent made available, to the limited partners
in an amount equal to the greater of 10% per year, noncumulative,
of their invested capital or their pro rata share of such Net Cash
Receipts, as defined in the partnership agreement. The balance of
the Net Cash Receipts, as defined in the partnership agreement,
would be available for distribution to the general partner until
the general partner has received its pro rata share of such Net
Cash Receipts. At such time as the limited partners have received
cash distributions equal to their original capital contributions,
cash flow would be distributed 52% to the limited partners and 48%
to the general partner. In general, operating income and losses
(exclusive of depreciation) are allocated to the limited partners
and the general partner in proportion to their respective
distributions of cash. In no event, however, will the portion of
any item of Partnership income, gain, loss, deduction or credit
allocated to the general partner be less than 1%.
Depreciation of the assets acquired on the date operations
commenced is allocated directly to the limited partners and the
general partner based upon their respective tax basis in the
property. Depreciation of assets subsequently acquired is allocated
based on the limited partners' interests of 65% and the general
partner's interest of 35%. In the accompanying Statements of
Operations, net loss was allocated 99% to the limited partners and
1% to the general partner net of the effects of depreciation on
contributed assets in accordance with the Partnership Agreement.
- 24 -
<PAGE>
1. Significant Accounting Policies - Continued
D) Tax Status
The Partnership has received a ruling from the Internal Revenue
Service stating that the Partnership is classified as a limited
partnership for federal income tax purposes. As such, the
Partnership makes no provision for income taxes. The taxable income
or loss is passed through to the holders of interests for inclusion
on their individual income tax returns.
The reconciliation of net loss for financial statement purposes and
for income tax reporting is as follows:
1995 1994 1993
--------- --------- ---------
Net loss $(189,390) $(197,591) $(318,482)
Items handled differently
for tax purposes:
Depreciation (10,224) (34,225) (1,855)
Write-off of unamortized
building and tenant (90,300) (158,028) (91,154)
improvements
Rental income 99,696 50,565 55,091
Allowance for doubtful 36,505 (23,376) (17,206)
accounts
Other 219 198 --
--------- --------- ---------
Taxable loss $(153,494) $(362,457) $(373,606)
========= ========= =========
E) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F) Cash and Equivalents - Restricted
Cash and equivalents - restricted represent escrow funds which are
to be released as the heating, ventilating and air conditioning
("HVAC") system and asphalt paving at Peachtree Corporate Center
are replaced and funds which have been escrowed with a mortgage
company for NTS Plainview Plaza II's property taxes in accordance
with the loan agreements.
G) Investment Securities
Investment securities represent investments in Certificates of
Deposit or securities issued by the U. S. Government with initial
maturities of greater than three months. The investments are
carried at cost which approximates market value. The Partnership
intends to hold the securities until maturity. During 1995, the
Partnership sold no investment securities. The following provides
details regarding the investments held at December 31, 1995:
Amortized Maturity Value At
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $103,055 01/05/96 $103,140
======= =======
The Partnership held no investment securities with initial
maturities greater than three months during 1994 or 1993.
- 25 -
<PAGE>
1. Significant Accounting Policies - Continued
H) Basis of Property and Depreciation
Land, buildings and amenities are stated at cost to the Partnership
as determined by the historical cost of the property to the general
partner for its interest and by the purchase price of the property
to the Partnership for the limited partners' interests.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 5-30 years for land
improvements, 5-30 years for buildings and improvements and 3 - 30
years for amenities.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121 (the "Statement") on accounting for the
impairment of long-lived assets, certain identifiable intangibles,
and goodwill related to assets to be held and used. The Statement
also establishes accounting standards for long-lived assets and
certain identifiable intangibles to be disposed of. The Partnership
is required to adopt the Statement no later than January 1, 1996,
although earlier implementation is permitted. The Statement is
required to be applied prospectively for assets to be held and
used. The initial application of the Statement to assets held for
disposal is required to be reported as the cumulative effect of a
change in accounting principle.
The Partnership plans to adopt the Statement as of January 1, 1996.
Based on a preliminary review, the Partnership does not anticipate
that any material adjustments will be required.
I) Rental Income and Deferred Leasing Commissions
Certain of the Partnership's lease agreements are structured to
include scheduled and specified rent increases over the lease term.
For financial reporting purposes, the income from these leases is
being recognized on a straight-line basis over the lease term.
Accrued income connected with these leases is included in accounts
receivable and totalled $110,401 and $213,117 at December 31, 1995
and 1994, respectively. All commissions paid to leasing agents are
deferred and amortized on a straight-line basis over the term of
the lease to which they apply.
J) Statements of Cash Flows
For purposes of reporting cash flows, cash and equivalents include
cash on hand and short-term, highly liquid investments with initial
maturities of three months or less.
2. Concentration of Credit Risk
NTS-Properties III is a limited partnership which owns and operates
commercial properties in Norcross, Georgia, a suburb of Atlanta, and
Jeffersontown, Kentucky, a suburb of Louisville. Substantially all of the
Partnership's tenants are local businesses or are businesses which have
operations in the location in which they lease space.
3. Interest Repurchase Reserve
On October 3, 1995, the Partnership established an Interest Repurchase
Reserve in the amount of $156,000 pursuant to Section 16.4 of the
Partnership's Amended and Restated Agreement of Limited Partnership.
Under Section 16.4, limited partners may request the Partnership to
repurchase their respective interests (Units) in the Partnership. With
this Interest Repurchase Reserve, the Partnership was able to
- 26 -
<PAGE>
3. Interest Repurchase Reserve - Continued
repurchase 750 Units at a price of $208 per Unit. The Partnership
notified the limited partners of the establishment of the Interest
Repurchase Reserve and the opportunity to request that the Partnership
repurchase Units at the established price pursuant to a letter dated
October 3, 1995. Repurchased Units were retired by the Partnership,
thereby reducing the total number of Units outstanding. The Interest
Repurchase Reserve was funded from cash reserves.
Subsequent to December 31, 1995, the Partnership funded an additional
$100,000 to its Interest Repurchase Reserve which will enable the
Partnership to repurchase up to an additional 480 Units at a price of
$208 per unit.
4. Land, Buildings and Amenities
The following schedule provides an analysis of the Partnership's
investment in property held for lease as of December 31:
1995 1994
----------- -----------
Land and improvements $ 4,411,387 $ 4,368,903
Buildings and improvements 19,296,603 19,201,379
Amenities 124,041 124,041
---------- ----------
23,832,031 23,694,323
Less accumulated depreciation 14,246,745 13,451,387
---------- ----------
$ 9,585,286 $10,242,936
========== ==========
5. Mortgages Payable
Mortgages payable as of December 31 consist of the following:
1995 1994
----------- ----------
Mortgage payable to an insurance
company bearing interest at 9.125%,
maturing November 1, 1998, secured
by land and building $ 2,464,619 $ 2,560,479
Mortgage payable to an insurance
company maturing June 1, 2001,
secured by land and buildings,
bearing a variable interest rate
based on the 10-year treasury bill
rate plus 60 basis points. The rate
is adjusted quarterly (not to exceed
11.65% or be less than 7.65%). The
current rate at December 31, 1995
is 7.65% 4,500,000 4,500,000
---------- ----------
$ 6,964,619 $ 7,060,479
========== ==========
- 27 -
<PAGE>
5. Mortgages Payable - Continued
The $2,464,619 mortgage is payable in monthly installments of $32,335,
which includes principal, interest and property tax escrow. The
$4,500,000 mortgage is payable in monthly installments of $35,187 which
includes interest and repair escrow. Scheduled maturities of debt are as
follows:
For the Years Ended December 31, Amount
-------------------------------- -----------
1996 $ 104,982
1997 114,973
1998 2,244,664
1999 --
2000 --
Thereafter 4,500,000
---------
$ 6,964,619
=========
Based on the borrowing rates currently available to the Partnership for
mortgages with similar terms and average maturities, the fair value of
long-term debt is approximately $7,450,000.
6. Rental Income Under Operating Leases
The following is a schedule of minimum future rental income on
noncancellable operating leases as of December 31, 1995:
For the Years Ended December 31, Amount
-------------------------------- ---------
1996 $ 2,436,182
1997 1,793,115
1998 1,042,234
1999 740,668
2000 129,953
Thereafter --
----------
$ 6,142,152
==========
7. Related Party Transactions
Property management fees of $161,638 (1995), $148,186 (1994) and $142,213
(1993) were paid to NTS Development Company, an affiliate of the general
partner, pursuant to an agreement with the Partnership. The fee is equal
to 5% of gross revenues from the Partnership's properties. Also permitted
by the partnership agreement, NTS Development Company will receive a
repair and maintenance fee equal to 5.9% of costs incurred which relate
to capital improvements. The Partnership has incurred $25,498 and $28,759
as a repair and maintenance fee during the years ended December 31, 1995
and 1994, respectively, and has capitalized this cost as a part of land,
buildings and amenities. As permitted by the partnership agreement, the
Partnership also was charged the following amounts from NTS Development
Company for the years ended December 31, 1995, 1994 and 1993. These
charges include items which have been expensed as operating expenses -
affiliated or professional and administrative expenses - affiliated and
items which have been capitalized as other assets or as land, buildings
and amenities. These charges were as follows:
1995 1994 1993
-------- -------- --------
Leasing agents $124,826 $134,561 $171,705
Administrative 172,070 168,003 162,365
Property manager 214,574 178,648 175,022
Other 7,838 14,767 17,055
------- ------- -------
$519,308 $495,979 $526,147
======= ======= =======
- 28 -
<PAGE>
7. Related Party Transactions - Continued
During the years ended December 31, 1995, 1994 and 1993, NTS Development
Company leased approximately 23,000 square feet of the available space in
the Plainview Plaza II property at a base rent of approximately $13.50
per square foot. The Partnership has received approximately $315,000 in
rental payments from NTS Development Company during 1995, 1994 and 1993.
The lease expires in February 1996.
- 29 -
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Because the Partnership is a limited partnership and not a corporation, it has
no directors or officers as such. Management of the Partnership is the
responsibility of the general partner, NTS-Properties Associates. The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the general partner, to provide property management services.
The general partners of NTS-Properties Associates are as follows:
J. D. Nichols
Mr. Nichols (age 54) is the managing general partner of NTS-Properties
Associates and is Chairman of the Board of NTS Corporation (since 1985) and NTS
Development Company (since 1977).
L. C. Aroh
Mr. Aroh (age 64) has been an independent real estate developer for the past
eight years. He is a partner in a number of real estate developments with the
principals of NTS Development Company.
NTS Capital Corporation
NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979. J. D. Nichols is Chairman of the Board and the sole
director of NTS Capital Corporation.
Alliance Realty Corporation
Alliance Realty Corporation was formed in September 1982, and is a wholly-
owned subsidiary of SN Alliance, Inc. SN Alliance, Inc. is also the parent
corporation of Stifel, Nicolaus & Company, Inc. which acted as the Dealer
Manager in connection with the offering for the interests.
Gary D. Adams
Mr. Adams (age 49) is Senior Vice President of NTS Development Company.
Since joining the NTS organization in May 1977, Mr. Adams has been involved
in the development, construction and management of properties in the
southeast region.
A. Toni Rizzo
Mr. Rizzo (age 48) joined Abel Construction during 1995 as the Director of
Business Development. From 1985 to 1995, Mr. Rizzo was an officer of the
Hunnington Group and prior to 1985 was an employee of NTS Development Company.
The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J. D. Nichols,
Richard L. Good and John W. Hampton.
- 30 -
<PAGE>
Item 10. Directors and Executive Officers of the Registrant - Continued
Richard L. Good
Mr. Good (age 56), President and Chief Operating Officer of NTS Corporation,
President of NTS Development Company and Chairman of the Board of NTS
Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he
was Executive Vice President of Jacques-Miller, Inc., a real estate syndication,
property management and financial planning firm in Nashville, Tennessee.
John W. Hampton
Mr. Hampton (age 46) is Senior Vice President of NTS Development Company with
responsibility for all accounting operations. Before joining the Manager in
March 1991, Mr. Hampton was Vice President - Finance and Chief Financial Officer
of the Sturgeon-Thornton-Marrett Development Company in Louisville for nine
years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is
a Certified Public Accountant and a graduate of the University of Louisville
with a Bachelor of Science degree in Commerce. He is a member of the American
Institute of CPA's and the Kentucky Society of CPA's.
Item 11. Management Remuneration and Transactions
The officers and/or directors of the corporate general partner receive no direct
remuneration in such capacities. The Partnership is required to pay a property
management fee based on gross rentals to NTS Development. The Partnership is
also required to pay to NTS Development company a repair and maintenance fee on
costs related to specific projects. Also, NTS Development Company provides
certain other services to the Partnership. See Note 6 to the financial
statements which sets forth transactions with NTS Development Company for the
years ended December 31, 1995, 1994 and 1993.
The general partner is entitled to receive cash distributions and allocations of
profits and losses from the Partnership. Generally, the general partner is
entitled to a 10% noncumulative annual return on its capital contributions from
the cash income of the Partnership (after payment of a like amount to the
limited partners). At such time as the limited partners have received cash
distributions from all sources equal to their original capital contributions,
cash flow will be distributed 52% to limited partners and 48% to the general
partner. In no event, however, will the portion of any item of Partnership
income, gain, loss, deduction or credit allocated to the general partner be less
than 1%.
- 31 -
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The general partner is NTS-Properties Associates, a Georgia limited partnership,
10172 Linn Station Road, Louisville, Kentucky 40223. The partners of the general
partner and their total respective interests in
NTS-Properties Associates are as follows:
J. D. Nichols
10172 Linn Station Road 86.07%
Louisville, Kentucky 40223
L. C. Aroh
10904 Old Bridge Place 8.64%
Louisville, Kentucky 40223
Gary D. Adams
3300 University Boulevard, Suite 150 1.26%
Winter Park, Florida 32792
A. Toni Rizzo
515 Willowhurst Place 1.26%
Louisville, Kentucky 40223
NTS Capital Corporation
10172 Linn Station Road 2.67%
Louisville, Kentucky 40223
Alliance Realty Corporation
500 North Broadway 0.10%
St. Louis, Missouri 63102
Item 13. Certain Relationships and Related Transactions
Property management fees of $161,638 (1995),$148,186 (1994) and $142,213 (1993)
were paid to NTS Development Company, an affiliate of the general partner,
pursuant to an agreement with the Partnership. The fee is equal to 5% of gross
revenues from the Partnership's properties. Also permitted by the partnership
agreement, NTS Development Company will receive a repair and maintenance fee
equal to 5.9% of costs incurred which relate to capital improvements. The
Partnership has incurred $25,498 and $28,759 as a repair and maintenance fee
during the years ended December 31, 1995 and 1994, respectively, and has
capitalized this cost as a part of land, buildings and amenities. As permitted
by the partnership agreement, the Partnership also was charged the following
amounts from NTS Development Company for the years ended December 31, 1995, 1994
and 1993. These charges include items which have been expensed as operating
expenses - affiliated or professional and administrative expenses - affiliated
and items which have been capitalized as other assets or as land, buildings and
amenities. These charges were as follows:
1995 1994 1993
-------- -------- --------
Leasing agents $124,826 $134,561 $171,705
Administrative 172,070 168,003 162,365
Property manager 214,574 178,648 175,022
Other 7,838 14,767 17,055
------- ------- -------
$519,308 $495,979 $526,147
======= ======= =======
- 32 -
<PAGE>
Item 13. Certain Relationships and Related Transactions - Continued
During the years ended December 31, 1995, 1994 and 1993, NTS Development Company
leased approximately 23,000 square feet of the available space in the Plainview
Plaza II property at a base rent of approximately $13.50 per square foot. The
Partnership has received approximately $315,000 in rental payments from NTS
Development Company during 1995, 1994 and 1993. The lease expires in February
1996.
There are no other reportable business relationships between the Partnership's
creditors, customers, and suppliers and officers of the Manager or the general
partner as of December 31, 1995.
- 33 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
1. Financial statements
The financial statements for the years ended December 31, 1995, 1994,
1993 together with the report of Arthur Andersen LLP dated February 14,
1996, appear in Item 8. The following financial statement schedules
should be read in conjunction with such financial statements.
2. Financial statement schedules
Schedules: Page No.
---------- --------
III - Real Estate and Accumulated Depreciation 35-36
All other schedules have been omitted because they are not applicable,
or not required, or because the required information is included in the
financial statements or notes thereto.
3. Exhibits
Exhibit No. Page No.
----------- --------
3. Amended and Restated *
Agreement and Certificate
of Limited Partnership of
NTS-Properties III
10. Management Agreement between *
NTS Development Company and
NTS-Properties III
27. Financial Data Schedule Included
herewith
* Incorporated by reference to documents filed with the Securities
and Exchange Commission in connection with the filing of
Registration Statements on Form S-11 on June 25, 1982 (effective
October 13, 1982) under Commission File No. 2-78152.
4. Reports on Form 8-K
Form 8-K, dated October 3, 1995, was filed to report the fact that the
Partnership has established an Interest Repurchase Reserve pursuant to
Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership.
- 34 -
<PAGE>
<TABLE>
<CAPTION>
NTS PROPERTIES III
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
Peachtree
Plainview Plainview Corporate
Plaza II Triad North Center Total
-------- ----------- ------ -----
<S> <C> <C> <C> <C>
Encumbrances (A) (B) (B)
Initial cost to partnership:
Land $ 1,379,172 $ 1,217,886 $ 1,408,375 $ 4,005,433
Buildings and improvements 4,963,604 4,512,172 6,231,114 15,706,890
Cost capitalized subsequent to acquisition:
Improvements 1,018,528 1,210,914 1,890,266 4,119,708
Carrying costs -- -- -- --
Gross amount at which carried December 31, 1995 (C):
Land $ 1,478,820 $ 1,261,160 $ 1,671,407 $ 4,411,387
Buildings and improvements 5,882,484 5,679,812 7,858,348 19,420,644
----------- ----------- ----------- -----------
Total $ 7,361,304 $ 6,940,972 $ 9,529,755 $23,832,031
=========== =========== =========== ===========
Accumulated depreciation $ 4,552,781 $ 3,714,418 $ 5,979,546 $14,246,745
=========== =========== =========== ===========
Date of construction N/A N/A N/A
Date Acquired 01/83 02/83 01/83
Life at which depreciation in
latest income statement is
computed (D) (D) (D)
(A) First and second mortgage held by two insurance companies.
(B) First mortgage held by an insurance company.
(C) Aggregate cost of real estate for tax purposes is $23,832,032.
(D) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 5 - 30 years for land
improvements, 5 - 30 years for buildings and improvements and 3 - 30
years for amenities.
</TABLE>
- 35 -
<PAGE>
NTS-PROPERTIES III
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Real Accumulated
Estate Depreciation
------------ ------------
Balances at December 31, 1992 $ 23,489,213 $ 11,958,428
Additions during period:
Improvements 285,475 --
Depreciation (a) -- 1,031,347
Deductions during period:
Retirements (226,061) (224,251)
------------ ------------
Balances at December 31, 1993 23,548,627 12,765,524
Additions during period:
Improvements 454,958 --
Depreciation (a) -- 983,352
Deductions during period:
Retirements (309,262) (297,489)
------------ ------------
Balances at December 31, 1994 23,694,323 13,451,387
Additions during period:
Improvements 414,424 --
Depreciation (a) -- 1,015,382
Deductions during period:
Retirements (276,716) (220,024)
------------ ------------
Balances at December 31, 1995 $ 23,832,031 $ 14,246,745
============ ============
(a) The additions charged to accumulated depreciation on this schedule will
differ from the depreciation and amortization on the Statements of Cash
Flows due to the amortization of loan costs.
- 36 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, NTS-Properties III has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES III
(Registrant)
BY: NTS-Properties Associates, General
Partner,
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: March 27 , 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Form 10-K has been signed below by the following persons on behalf of the
registrant in their capacities and on the date indicated above.
Signature Title
--------- -----
/s/ J. D. Nichols General Partner of NTS-Properties
J. D. Nichols Associates and Chairman of the Board and
Sole Director of NTS Capital Corporation
/s/ Richard L. Good President of NTS Capital Corporation
Richard L. Good
/s/ John W. Hampton Senior Vice President of NTS Capital
John W. Hampton Corporation
The Partnership is a limited partnership and no proxy material has been sent to
the limited partners.
- 37 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF DECEMBER 31, 1995 AND FROM THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,014,680
<SECURITIES> 103,055
<RECEIVABLES> 176,811
<ALLOWANCES> 90,332
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,832,031
<DEPRECIATION> 14,246,745
<TOTAL-ASSETS> 11,120,854
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 6,964,619
0
0
<COMMON> 0
<OTHER-SE> 3,935,731
<TOTAL-LIABILITY-AND-EQUITY> 11,120,854
<SALES> 3,030,625
<TOTAL-REVENUES> 3,073,103
<CGS> 0
<TOTAL-COSTS> 2,481,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 68,680
<INTEREST-EXPENSE> 583,034
<INCOME-PRETAX> (189,390)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,390)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,390)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE THE VALUE
IS $0.
</FN>
</TABLE>
