UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-11655
NTS-PROPERTIES IV
(Exact name of registrant as specified in its charter)
Kentucky 61-1026356
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (l) 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, and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of June 30, 1995 and December 31, 1994 3
Statements of Operations
For the three months and six months ended
June 30, 1995 and 1994 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1995 and 1994 5
Notes To Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-19
PART II
1. Legal Proceedings 20
2. Changes in Securities 20
3. Defaults upon Senior Securities 20
4. Submission of Matters to a Vote of Security Holders 20
5. Other Information 21
6. Exhibits and Reports on Form 8-K 21
Signatures 22
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES IV
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 993,383 $ 2,441,839
Cash and equivalents - restricted 20,300 --
Accounts receivable, net of
allowance for doubtful accounts
of $9,644 (1995) and $1,788
(1994) 495,545 533,971
Land, buildings and amenities, net 14,863,161 11,974,200
Land held for development 297,251 --
Other assets 584,190 533,531
------------ ------------
$ 17,253,830 $ 15,483,541
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 11,777,571 $ 8,895,313
Accounts payable - operations 117,131 98,263
Accounts payable - construction 31,431 168,473
Distributions payable 90,136 90,136
Security deposits 78,118 75,299
Other liabilities 113,231 4,941
------------ ------------
12,207,618 9,332,425
Partners' equity 5,046,212 6,151,116
------------ ------------
$ 17,253,830 $ 15,483,541
============ ============
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions
net of offering costs
(29,745 units) $ 25,834,899 $ -- $ 25,834,899
Net income - prior years 805,039 8,133 813,172
Net loss - current year (171,762) (1,735) (173,497)
Cash distributions
declared to date (21,184,968) (214,199) (21,399,167)
Repurchase of limited
partnership units (29,195) -- (29,195)
------------ ----------- ------------
Balances at June 30,
1995 $ 5,254,013 $ (207,801) $ 5,046,212
============ =========== ============
<FN>
* Reference is made to the audited financial statements in the Form 10-K
as filed with the Commission on March 31, 1995.
</TABLE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $6,736
(1995) and $2,546 (1994) $ 796,988 $ 573,909 $ 1,560,666 $ 1,099,530
Interest and other income 14,295 41,338 29,223 76,069
---------- ----------- ----------- -----------
811,283 615,247 1,589,889 1,175,599
Expenses:
Operating expenses 130,337 116,872 263,634 231,242
Operating expenses - affiliated 102,154 97,343 210,373 193,823
Amortization of capitalized
leasing costs 7,005 5,121 13,282 10,401
Interest expense 252,468 164,181 478,006 328,086
Management fees 45,668 31,744 89,069 60,810
Real estate taxes 55,626 36,729 106,589 73,456
Professional and administrative
expenses 28,929 28,614 66,177 55,829
Professional and administrative
expenses - affiliated 35,185 35,030 70,142 70,641
Depreciation and amortization 234,911 141,729 466,114 286,847
---------- ---------- ---------- ----------
892,283 657,363 1,763,386 1,311,135
---------- ---------- ---------- ----------
Net loss $ (81,000) $ (42,116) $ (173,497) $ (135,536)
========== ========== ========== ==========
Net loss allocated to limited
partners $ (80,190) $ (41,695) $ (171,762) $ (134,181)
========== ========== ========== ===========
Net loss per limited partnership
unit $ (2.70) $ (1.40) $ (5.77) $ (4.51)
========== ========== ========== ===========
Weighted average number of units 29,745 29,745 29,745 29,745
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (81,000) $ (42,116) $ (173,497) $ (135,536)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Amortization of capitalized leasing
costs 7,005 5,121 13,282 10,401
Depreciation and amortization 234,911 141,729 466,114 286,847
Provision for doubtful accounts 4,346 -- 6,736 2,546
Changes in assets and liabilities:
Accounts receivable 5,586 11,951 201,682 81,615
Other assets 22,322 (32,177) 6,843 (45,106)
Accounts payable - operations (33,328) 631 (14,374) (8,245)
Security deposits 1,009 6,210 (3,232) 5,436
Other liabilities 48,395 29,521 14,584 68,281
---------- ---------- ----------- ----------
Net cash provided by operating
activities 209,246 120,870 518,138 266,239
---------- ---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (45,940) (374,484) (66,786) (396,858)
Accounts payable - construction 9,070 164,325 (137,042) 129,695
Increase in cash and equivalents -
restricted -- -- (20,300) --
---------- ---------- ----------- ----------
Net cash used in investing
activities (36,870) (210,159) (224,128) (267,163)
---------- ---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
and notes payable (90,457) (14,814) (169,080) (29,277)
Increase in mortgages payable -- 32,007 -- 31,472
Net capital contribution to a
joint venture -- -- (616,125) --
Cash distributions (90,136) (85,930) (931,409) (171,860)
Additions to loan costs (1,016) -- (25,852) (799)
---------- --------- ----------- ----------
Net cash used in financing
activities (181,609) (68,737) (1,742,466) (170,464)
---------- --------- ----------- ----------
Net decrease in cash and
equivalents (9,233) (158,026) (1,448,456) (171,388)
CASH AND EQUIVALENTS, beginning of
period 1,002,616 4,787,480 2,441,839 4,800,842
---------- ---------- ----------- ----------
CASH AND EQUIVALENTS, end of period $ 993,383 $ 4,629,454 $ 993,383 $ 4,629,454
========== ========== =========== ==========
Interest paid on a cash basis $ 253,900 $ 164,071 $ 477,638 $ 339,867
========== ========== =========== ==========
</TABLE>
NTS-PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with
the Partnership's 1994 Annual Report. In the opinion of the general
partner, all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation have been made to the accompanying
financial statements for the three months and six months ended June 30, 1995
and 1994.
1. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
June 30, December 31,
1995 1994
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.8%, due October 1, 2004,
secured by land and building $ 2,775,594 $ 2,869,577
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7%, due December 5, 2003,
secured by land, buildings and
amenities 2,058,485 2,072,809
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7%, due December 5, 2003,
secured by land, buildings and
amenities 1,960,462 1,974,103
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.5%, due December 5, 2003,
secured by land, buildings and
amenities 342,724 340,947
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.5%, due December 5, 2003,
secured by land, buildings and
amenities 204,611 203,550
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,393,996 1,434,327
(continued next page)
<PAGE>
1. Mortgages and Notes Payable - Continued
June 30, December 31,
1995 1994
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building $ 1,027,803 $ --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 83,597 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building 1,646,127 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 223,482 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 60,690 --
----------- -----------
$11,777,571 $ 8,895,313
=========== ===========
2. Related Party Transactions
Property management fees of $89,069 and $60,810 for the six months ended
June 30, 1995 and 1994, respectively, were paid to NTS Development
Company, an affiliate of the general partner of the Partnership. The
fee is equal to 5% of the gross revenues from residential properties and
6% of the gross revenues from commercial properties pursuant to an
agreement with the Partnership. Also, as 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 $3,440 and $20,921 as a
repair and maintenance fee during the six months ended June 30, 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 was also charged the following amounts from NTS Development
Company for the six months ended June 30, 1995 and 1994. 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. The charges were as follows:
1995 1994
Administrative $ 91,199 $ 87,896
Leasing agents 60,321 77,646
Property management 127,760 114,334
Other 4,094 9,959
--------- ---------
$ 283,374 $ 289,835
========= =========
<PAGE>
3. Cash and Equivalents - Restricted
Cash and equivalents - restricted represents escrow funds which are to
be released as capital expenditures, leasing commissions and tenant
improvements are incurred at the properties owned by the
Lakeshore/University II Joint Venture.
4. Reclassification of 1994 Financial Statements
Certain reclassifications have been made to the June 30, 1994 financial
statements to conform with the June 30, 1995 classifications. These
reclassifications have no effect on previously reported operations.
5. Lakeshore/University II Joint Venture
On January 23, 1995, a new joint venture known as Lakeshore/University
II Joint Venture (L/U II Joint Venture) was formed among the
Partnership, NTS-Properties V, NTS-Properties Plus Ltd. and NTS/Fort
Lauderdale, Ltd., affiliates of the general partner of the Partnership,
for purposes of owning Lakeshore Business Center Phases I and II,
University Business Center Phase II and certain undeveloped tracts of
land adjacent to the Lakeshore Business Center development. The table
below identifies which properties were contributed to the L/U II Joint
Venture and the respective owners of such properties prior to the
formation of the joint venture.
Property Contributing Owner
Lakeshore Business Center NTS-Properties IV and NTS-Properties
Phase I V
Lakeshore Business Center NTS-Properties Plus Ltd.
Phase II
Undeveloped land adjacent to NTS-Properties Plus Ltd.
the Lakeshore Business Center
development (known as Lakeshore
III and outparcel building
sites)
Undeveloped land adjacent to NTS/Fort Lauderdale, Ltd.
the Lakeshore Business Center
development (known as Tract 12)
University Business Center NTS-Properties V and NTS-Properties
Phase II Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture
subject to existing indebtedness, except for Lakeshore Business Center
Phase I which was contributed to the joint venture free and clear of any
mortgage liens, and all such indebtedness was assumed by the joint
venture. Mortgages have been recorded on Lakeshore Business Center
Phase I in the amount of $5,500,000, and on University Business Center
Phase II in the amount of $3,000,000, in favor of the banks which held
the indebtedness on University Business Center Phase II, Lakeshore
Business Center Phase II and the undeveloped tracts of land prior to the
formation of the joint venture. In addition to the above, the
Partnership also contributed $750,000 to the L/U II Joint Venture. As
a result of the valuation of the properties contributed to the L/U II
Joint Venture, the Partnership obtained an 18% partnership interest in
the joint venture.
<PAGE>
6. Contingency
An investor (the "Plaintiff") in the Partnership and in NTS-Properties
V, an affiliate of the general partner of the Partnership, had
previously asserted claims against her investment advisor and his
company in connection with her investment in eleven limited
partnerships. The Plaintiff invested a total of $158,000 in the
Partnership and NTS-Properties V. The amended complaint alleged that
the advisor had violated federal securities laws, the Racketeer and
Corrupt Influenced Organizations Act ("RICO"), and common law, related
to the sale to the Plaintiff of interests in the eleven limited
partnerships. The Plaintiff sought compensatory damages in an
unspecified amount, recision and punitive damages plus interest,
attorneys' fees and costs.
On January 22, 1992, the Court issued a final judgment in favor of the
Plaintiff and against the defendants in the amount of $579,678 on the
basis of a jury finding that the defendants had breached their fiduciary
duties to the Plaintiff. The other claims against the defendants were
dismissed.
During 1994, the defendants served an amended third-party complaint upon
certain of the eleven limited partnerships originally sold to the
Plaintiff including the Partnership and NTS-Properties V and their
respective general partners NTS-Properties Associates IV and NTS-
Properties Associates V. Defendants sought contribution and
indemnification in an unspecified amount from each of the third-party
defendants and has reached settlements with certain of them.
The NTS third-party defendants have filed and served an amended third-
party complaint upon the third-party plaintiff, and have moved to
dismiss the amended third-party complaint. Discovery is currently in
progress with respect to the defendants third-party claims against the
eleven limited partnerships, including the NTS entities.
The general partner of the Partnership believes that the evidence is
clear that there is no basis for the allegations made by the third-party
plaintiff, and that the interests of the Partnership will be vigorously
defended and that cross claims will be pursued against the third-party
plaintiff unless an acceptable mutual settlement is secured. Management
believes that this lawsuit will have no material adverse effect on the
Partnership's operations or financial condition.
<PAGE>
Item 2. 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 June 30 were as
follows:
1995 1994
Wholly-Owned Properties
Commonwealth Business Center Phase I 81% 77%
Plainview Point Office Center Phases
I and II 74% 44%
The Willows of Plainview Phase I 84% 95%
Properties Owned in Joint Venture with
NTS-Properties V (Ownership % at June
30, 1995)
The Willows of Plainview Phase II (10%) 89% 94%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (2) 72%
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at June
30, 1995)
Golf Brook Apartments (4%) 93% 95%
Plainview Point III Office Center (5%) 48% 93%
Property owned in Joint Venture with
NTS-Properties VII, Ltd. and NTS-
Properties Plus Ltd. (Ownership % at
June 30, 1995)
Blankenbaker Business Center 1A (30%) 100% 91% (1)
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at June
30, 1995)
Lakeshore Business Center Phase I (18%) 83% See above (2)
Lakeshore Business Center Phase II (18%) 82% 80% (3)
University Business Center Phase II (18%) 100% 100% (3)
(1) As of June 30, 1994, the Partnership did not have an interest in this
property. See page 14 for a discussion regarding the change which
occurred during the third quarter of 1994.
(2) During the first quarter of 1995, the Partnership's ownership interest
in Lakeshore Business Center Phase I changed. See page 15 for a
discussion regarding this change.
(3) As of June 30, 1994, the Partnership did not have an interest in this
property. See page 15 for a discussion regarding the change which
occurred during the first quarter of 1995.
<PAGE>
Results of Operations - Continued
The rental and other income generated by the Partnership's properties for
the three months and six months ended June 30, 1995 and 1994 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Wholly-Owned Properties
Commonwealth Business Center $149,952 $134,810 $312,088 $255,847
Phase I
Plainview Point Office $111,861 $ 63,208 $230,145 $127,017
Center Phases I and II
The Willows of Plainview $250,828 $271,645 $487,712 $516,437
Phase I
Properties Owned in Joint
Venture with NTS-Properties
V (Ownership % at June
30, 1995)
The Willows of Plainview $ 28,076 $ 28,879 $ 55,553 $ 57,327
Phase II (10%)
Lakeshore Business Center N/A (1) $ 41,252 $ 14,282 $ 76,434
Phase I (See L/U II Joint
Venture on page 12)
Properties Owned in Joint
Venture with NTS-Properties
VI (Ownership % at June
30, 1995)
Golf Brook Apartments (4%) $ 27,755 $ 28,414 $ 54,911 $ 54,490
Plainview Point III Office $ 4,890 $ 8,515 $ 10,623 $ 17,285
Center (5%)
Property Owned in Joint
Venture with NTS-Properties
VII, Ltd. and NTS-Properties
Plus Ltd. (Ownership % at
June 30, 1995)
Blankenbaker Business Center $ 69,422 N/A (2) $136,465 N/A (2)
1A (30%)
(continued next page)
(1) During the first quarter of 1995, the Partnership's ownership
interest in Lakeshore Business Center Phase I changed. The
Partnership's proportionate share of rental and other income for the
three months ended June 30, 1995 is reflected on page 12. See page
15 for a discussion regarding this change.
(2) During the three months and six months ended June 30, 1994, the
Partnership did not have an interest in this property. See page 14
for a discussion regarding the change which occurred during the third
quarter of 1994.
<PAGE>
Results of Operations - Continued
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Properties owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture) (Ownership
% at June 30, 1995)
Lakeshore Business Center $ 49,248 N/A (1) $ 82,940 N/A (1)
Phase I (18%)
Lakeshore Business Center $ 57,264 N/A (2) $ 93,268 N/A (2)
Phase II (18%)
University Business Center $ 53,196 N/A (2) $ 91,596 N/A (2)
Phase II (18%)
(1) During the first quarter of 1995, the Partnership's ownership
interest in Lakeshore Business Center Phase I changed. Rental and
other income for the three months and six months ended June 30, 1994
is reflected on page 11. See page 15 for a discussion regarding this
change.
(2) During the three months and six months ended June 30, 1994, the
Partnership did not have an interest in this property. See page 15
for a discussion regarding the change which occurred during the first
quarter of 1995.
The 4% increase in occupancy at Commonwealth Business Center Phase I from
June 30, 1994 to June 30, 1995 is attributed to two new leases totalling
approximately 6,100 square feet which includes an expansion of approximately
4,500 square feet by a major tenant in the business center. Partially
offsetting the new leases are two tenant move-outs at the end of the lease
terms totalling approximately 3,900 square feet. Average occupancy has
increased for the six months ended June 30 from 68% in 1994 to 81% in 1995
and has increased for the three month period from 70% in 1994 to 81% in
1995. Rental and other income at Commonwealth Business Center Phase I
increased for the three months and six months ended June 30, 1995 as
compared to the same periods in 1994 as a result of the increase in average
occupancy and an increase in common area expense reimbursements. Tenants
at Commonwealth Business Center Phase I reimburse the Partnership for common
area expenses as part of the lease agreements.
The 30% increase in occupancy at Plainview Point Office Center Phases I and
II from June 30, 1994 to June 30, 1995 is attributed to three new leases
totalling approximately 17,000 square feet. Included in this total is an
expansion of approximately 14,000 square feet by ITT Educational Services,
Inc. ("ITT"), a major tenant in the office center. In accordance with ITT's
lease, the lease term was automatically extended for a period of 10
additional years from the date of expansion (July 1994). There were no
tenant move-outs during the 12 month period ended June 30, 1995. Average
occupancy for the three months and six months ended June 30 increased from
43% in 1994 to 74% in 1995. Rental and other income at Plainview Point
Office Center Phases I and II increased for the three months and six months
ended June 30, 1995 as compared to the same periods in 1994 as a result of
the increase in average occupancy and as a result of the increased rental
rate which ITT is paying in accordance with the terms of the 10-year lease.
<PAGE>
Results of Operations - Continued
The Willows of Plainview Phase I's occupancy decreased from 95% as of June
30, 1994 to 84% as of June 30, 1995. Average occupancy decreased from 90%
(1994) to 82% (1995) for the six months ended June 30 and from 94% (1994)
to 84% (1995) for the three month period. Rental and other income at the
Willows of Plainview Phase I decreased for the three months and six months
ended June 30, 1995 as compared to the same periods in 1994 as a result of
the decrease in average occupancy and a decrease in income from fully
furnished units.
The Willows of Plainview Phase II's occupancy decreased from 94% as of June
30, 1994 to 89% as of June 30, 1995. Average occupancy decreased from 93%
(1994) to 90% (1995) for the six months ended June 30 and from 94% (1994)
to 92% (1995) for the three month period. Rental and other income at The
Willows of Plainview Phase II remained fairly constant for the three months
and six months ended June 30, 1995 as compared to the same periods in 1994.
The 11% increase in occupancy at Lakeshore Business Center Phase I from June
30, 1994 to June 30, 1995 can be attributed to eight new leases totalling
approximately 20,000 square feet, which includes approximately 3,000 square
feet in expansions by two current tenants. Included in the new leases is
a five-year approximately 6,400 square foot lease which commenced during the
third quarter of 1994 and a five-year approximately 4,800 square foot lease
which commenced during the fourth quarter of 1994. The new leases and
expansions are partially offset by five tenants, who occupied approximately
9,400 square feet, vacating at the end of the lease terms. Average
occupancy increased from 71% (1994) to 80% (1995) for the three months ended
June 30 and from 65% (1994) to 79% (1995) for the six month period. Rental
and other income at Lakeshore Business Center Phase I increased for the
three months and six months ended June 30, 1995 as compared to the same
periods in 1994 primarily as a result of the increase in average occupancy
and an increase in common area expense reimbursements. The increase in
rental and other income can also be attributed to the Partnership's
increased ownership in Lakeshore Business Center Phase I. (See page 15 for
a discussion regarding the change.)
Golf Brook Apartments' occupancy decreased from 95% as of June 30, 1994 to
93% as of June 30, 1995. Average occupancy for the six month period ended
June 30 decreased from 95% (1994) to 94% (1995). Average occupancy for the
three month period decreased from 96% (1994) to 94% (1995). Rental and
other income at Golf Brook Apartments remained fairly constant for the three
months and six months ended June 30, 1995 as compared to the same periods
in 1994.
The 45% decrease in occupancy at Plainview Point III Office Center from June
30, 1994 to June 30, 1995 can be attributed to two tenant move-outs
totalling approximately 26,000 square feet. Of this total, 16,400 square
feet represents a tenant who vacated the office center at the end of the
lease term due to the company's decision to consolidate its Louisville
processing center with one located in another city. The tenant occupied 27%
of the office center's rentable area. Approximately 9,600 square feet of
the total move-outs represents a tenant who vacated the premises January 31,
1995. The tenant's lease was on a month-to-month basis at the time of move-
out. The tenant's original lease term was for a period of four years. The
tenant occupied approximately 16% of the office center's rentable area.
There were no new leases during the 12 month period ended June 30, 1995.
The Partnership is actively seeking new tenants to occupy the vacant space.
At this time, it is unknown the extent and cost of any tenant improvements
<PAGE>
Results of Operations - Continued
which will be required to attract new tenants. Average occupancy for the
six month period ended June 30 decreased from 91% (1994) to 51% (1995).
Average occupancy for the three month period decreased from 93% (1994) to
48% (1995). Rental and other income decreased at Plainview Point III Office
Center for the three months and six months ended June 30, 1995 as compared
to the same periods in 1994 as a result of the decrease in occupancy.
Subsequent to June 30, 1995, a new 63 month lease for approximately 10,300
square feet was signed at Plainview Point III Office Center. The tenant is
expected to take occupancy during the third quarter of 1995. With this new
lease, the building's occupancy will increase to 64%.
As of June 30, 1995, a wholly-owned subsidiary of The Prudential Insurance
Company of America (Prudential Service Bureau, Inc.) has leased 100% of
Blankenbaker Business Center 1A. During 1994, Prudential Service Bureau,
Inc. signed a lease renewal and expansion. The lease expanded Prudential's
leased space by approximately 15,000 square feet and extended the current
lease through July 2005. With the expansion, the tenant occupied 100% of
the business center during the third quarter of 1994.
The 2% increase in occupancy at Lakeshore Business Center Phase II from June
30, 1994 to June 30, 1995 can be attributed to five new leases for a total
of approximately 8,100 square feet. The new leases are partially offset by
an approximately 2,800 square foot downsizing by a current tenant. In
accordance with the lease agreement, the tenant paid NTS-Properties Plus
Ltd., an affiliate of the general partner of the Partnership and the owner
of the business center prior to its contribution to the L/U II Joint Venture
(see page 15), a total of approximately $48,500 during the second and third
quarters of 1994 to compensate NTS-Properties Plus Ltd. for lost rents and
undepreciated renovation costs (recorded as lease buyout income). The new
leases are also partially offset by an approximately 1,400 square foot move-
out by a tenant who vacated at the end of the lease term and an
approximately 2,300 square foot move-out by a tenant who vacated before the
end of the lease term, but continued to make rental payments through the end
of the lease term. There was no write-off of accrued income in connection
with this lease. Average occupancy at Lakeshore Business Center Phase II
increased for the six months ended June 30 from 78% (1994) to 80% (1995).
Average occupancy was 81% for both the 1994 and 1995 three month periods.
In cases of tenants abandoning the premises, the Partnership pursues
collection through the use of collection agencies and other remedies
available by law when practical.
Philip Crosby Associates, Inc. has leased 100% of University Business Center
Phase II. The lease term is for seven years, and the tenant took occupancy
in April 1991. The tenant has currently sub-leased 58% of University
Business Center Phase II. Of the total being sub-leased, 47% is being
leased by a major tenant at University Business Center Phase I, a
neighboring property owned by an affiliate of the general partner of the
Partnership. At this time, it is not known whether Philip Crosby
Associates, Inc. or the sub-lessees will renew the current leases with the
business center when the original lease expires in 1998.
As previously disclosed in the Partnership's Form 10-K for the year ended
December 31, 1994, on August 16, 1994, Blankenbaker Business Center Joint
Venture, a joint venture between NTS-Properties VII, Ltd. and NTS-Properties
Plus Ltd., affiliates of the general partner of the Partnership, amended its
joint venture agreement to admit the Partnership to the Joint Venture. In
<PAGE>
Results of Operations - Continued
accordance with the Joint Venture Agreement, the Partnership contributed
$1,100,000 and NTS-Properties VII, Ltd. contributed $500,000. As a result
of its capital contribution, the Partnership obtained a 30% interest in the
Joint Venture. NTS-Properties Plus Ltd.'s interest in the Joint Venture
decreased from 69% to 39% as a result of the capital contributions made by
NTS-Properties VII, Ltd. and the Partnership. NTS-Properties VII, Ltd.'s
interest in the Joint Venture remained at 31%.
On January 23, 1995, a new joint venture known as Lakeshore/University II
Joint Venture (L/U II Joint Venture) was formed among the Partnership, NTS-
Properties V, NTS-Properties Plus Ltd. and NTS/Fort Lauderdale, Ltd.,
affiliates of the general partner of the Partnership, for purposes of owning
Lakeshore Business Center Phases I and II, University Business Center Phase
II and certain undeveloped tracts of land adjacent to the Lakeshore Business
Center development. The table below identifies which properties were
contributed to the L/U II Joint Venture and the respective owners of such
properties prior to the formation of the joint venture.
Property Contributing Owner
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (known as Lakeshore
III and outparcel building sites)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (known as Tract 12)
University Business Center NTS-Properties V and NTS-Properties
Phase II Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture subject
to existing indebtedness, except for Lakeshore Business Center Phase I which
was contributed to the joint venture free and clear of any mortgage liens,
and all such indebtedness was assumed by the joint venture. Mortgages have
been recorded on Lakeshore Business Center Phase I in the amount of
$5,500,000, and on University Business Center Phase II in the amount of
$3,000,000, in favor of the banks which held the indebtedness on University
Business Center Phase II, Lakeshore Business Center Phase II and the
undeveloped tracts of land prior to the formation of the joint venture. In
addition to the above, the Partnership also contributed $750,000 to the L/U
II Joint Venture. As a result of the valuation of the properties
contributed to the L/U II Joint Venture, the Partnership obtained an 18%
partnership interest in the joint venture.
Current occupancy levels are considered adequate to continue the operation
of the Partnership's properties. The low level of occupancy at Plainview
Point Office Center Phases I and II and at Plainview Point III Office Center
are not indicative of trends in the area in which the properties are
located. Based on current leasing activity, the occupancy level of the
properties should improve during the next 12 months, however, there is no
guarantee that this will occur.
<PAGE>
Results of Operations - Continued
Interest and other income includes income from short-term investments made
by the Partnership with excess cash. Interest and other income decreased
for the three months and six months ended June 30, 1995 as compared to the
same periods in 1994 as a result of a decrease in excess cash available for
investment.
The general partner of the Partnership believes that the results of
operations for the three months and six months ended June 30, 1995 and 1994
are not comparable and, therefore, a discussion comparing the results of
operations is not included due to the fact that the three months and six
months ended June 30, 1994 do not include the results of operations for the
Blankenbaker Business Center Joint Venture. The Partnership acquired an
interest in the joint venture during August 1994 as discussed on page 14.
Comparisons of the results of operations between the 1995 and 1994 three
month and six month periods are also difficult as a result of the
Partnership's investment in the L/U II Joint Venture as discussed on page
15. These changes in the Partnership's investments are permanent changes
and will effect future results of operations.
Liquidity and Capital Resources
Cash provided by operations was $518,138 and $266,239 for the six months
ended June 30, 1995 and 1994, respectively. These funds, in conjunction
with cash on hand, were used to make an 8.1% and a 1.5% (annualized)
distribution of $931,409 and $171,860 for the six months ended June 30, 1995
and 1994, respectively. The distribution made during the three months ended
March 31, 1995 included a special $757,576 distribution made from the
Partnership's cash reserves. The Partnership does not anticipate making
another special distribution in the near term. The annualized distribution
rate is calculated as a percent of the original capital contribution less
a return of capital in the amount of $235.64 per limited partnership unit
made from the proceeds of the sale of Sabal Club Apartments in 1988. The
limited partners received 99% and the general partner received 1% of these
distributions.
As of June 30, 1995, the Partnership had a mortgage payable with an
insurance company in the amount of $2,775,594. The mortgage payable is due
October 1, 2004, bears interest at a fixed rate of 8.8% and is secured by
Commonwealth Business Center Phase I. Monthly principal payments are based
upon a 10-year amortization schedule. At maturity, the mortgage will have
been repaid based on the current rate of amortization.
As of June 30, 1995, the Partnership had two mortgage loans each with an
insurance company in the amount of $2,058,485 and $1,960,462. Both
mortgages payable are due December 5, 2003, currently bear interest at a
fixed rate of 7% are secured by the land, buildings and amenities of The
Willows of Plainview Phase I. Current monthly principal payments on both
mortgages are based upon a 27-year amortization schedule. The outstanding
balance at maturity based on the current rate of amortization would be
$3,367,108 ($1,724,617 and $1,642,491).
As of June 30, 1995, The Willows of Plainview Phase II, an apartment joint
venture between the Partnership and NTS-Properties V, had two mortgage loans
each with an insurance company in the amount of $3,289,101 and $1,963,642.
The mortgages are recorded as a liability of the Joint Venture. The
Partnership's proportionate interest in the mortgages as of June 30, 1995
is $547,335 ($342,724 and $204,611). Both mortgages payable are due
December 5, 2003, currently bear interest at a fixed rate of 7.5% and are
<PAGE>
Liquidity and Capital Resources - Continued
secured by the land, buildings and amenities of the Joint Venture.
Currently monthly principal payments on both mortgages are based upon a 27-
year amortization schedule. The outstanding balance at maturity based on
the current rate of amortization would be $4,449,434 ($2,786,095 and
$1,663,339).
As of June 30, 1995, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company (obtained November 1994) in the
amount of $4,642,012. The mortgage is recorded as a liability of the Joint
Venture and is secured by the assets of the Joint Venture. The
Partnership's proportionate interest in the mortgage at June 30, 1995 is
$1,393,996. The mortgage bears interest at a fixed rate of 8.5% and is due
November 15, 2005. Currently monthly principal payments are based upon an
11-year amortization schedule. At maturity, the mortgage will have been
repaid based on the current rate of amortization.
As of June 30, 1995, the L/U II Joint Venture had notes payable to banks in
the following amounts: $9,222,000, $5,758,000, $1,252,000, $468,333 and
$340,000. The notes are a liability of the joint venture in accordance with
the Joint Venture Agreement. The Partnership's proportionate interest in
the notes at June 30, 1995 was $1,646,127, $1,027,803, $223,482, $83,597 and
$60,690, respectively. As part of the loan agreements with the banks, the
Joint Venture is required to place in escrow funds for capital expenditures,
leasing commissions and tenant improvements at the properties owned by the
Joint Venture. During the term of the loans, the Joint Venture is required
to fund a total of $200,000 to the escrow account. As of June 30, 1995,
approximately $87,000 remains to be escrowed of which the Partnership's
proportionate share is $16,000. The notes bear interest at a fixed rate of
10.6%, are due January 31, 1998 and are secured by the assets of the joint
venture. Principal payments required on the $9,222,000, $5,758,000 and
$1,252,000 notes are as follows:
a) 12 monthly payments of $3,000 each, the first of which was due at
closing. The second through 12th payments are due on the first
day of February through December 1995.
b) 12 monthly payments of $12,000 each, commencing on January 1,
1996 through December 1, 1996.
c) 13 monthly payments of $15,000 each, commencing on January 1,
1997 through January 1, 1998.
d) Balloon payment due at maturity on January 31, 1998.
he Partnership's primary plans for its cash reserves are outlined in the
following discussion. The General Partner believes that the Partnership
needs to reserve funds for tenant finish improvements and leasing costs at
the Partnership's commercial properties which will result from future lease
negotiations. The General Partner also considers it necessary for the
Partnership to retain a cash reserve for future renovations at the
Partnership's properties. A few examples of such renovations are roof
repairs or roof replacement, exterior painting and replacement of asphalt
paving in parking lots. These renovations will be necessary as the
Partnership's properties continue to age.
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 other capital additions and were funded by operating
activities or cash reserves. 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
<PAGE>
Liquidity and Capital Resources - Continued
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
escrowed for capital expenditures, leasing commissions and tenant
improvements at the properties owned by the L/U II Joint Venture. Cash
flows used in financing activities are for cash distributions, payment of
loan costs and principal payments on mortgages and notes payable. Cash
flows provided by financing activities represent an increase in mortgages
payable. The net capital contribution to a joint venture represents the
Partnership's capital contribution to the L/U II Joint Venture net the
Partnership's proportionate interest in the joint venture's capital
contributions. The Partnership utilizes the proportionate consolidation
method of accounting for joint venture properties. The Partnership's
interest in the joint venture's assets, liabilities, revenues, expenses and
cash flows are combined on a line-by-line basis with the Partnership's own
assets, liabilities, revenues, expenses and cash flows. The Partnership
does not expect any material changes in the mix and relative cost of capital
resources except for the following: 1) Interest and principal payments
required by the permanent financing of The Willows of Plainview Phases I and
II, Commonwealth Business Center Phase I and Blankenbaker Business Center
1A as previously discussed; 2) Interest and principal payments required by
the notes payable of the L/U II Joint Venture; and 3) Renovations and other
major capital expenditures, including tenant finish, which may be required
to be funded from cash reserves if they exceed cash flow from operating
activities and the escrow funds (as discussed on page 17).
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the six months ended June 30, 1995 and 1994.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (171,762) $ 922,095 $ 922,095
1994 (134,181) 170,141 170,141
General Partner:
1995 $ (1,735) $ 9,314 $ 9,314
1994 (1,355) 1,719 1,719
The Partnership had no material commitments for renovations or capital
improvements at June 30, 1995.
The primary source of future liquidity and distributions is expected to be
derived from cash generated by the Partnership's operating properties after
adequate cash reserves are established for future leasing and tenant finish
costs. It is anticipated that the cash flow from operations and cash
reserves will be sufficient to meet the needs of the Partnership.
In the next 12 months, the demand on future liquidity is anticipated to
increase as the Partnership continues its efforts in the leasing of the
Partnership's commercial properties. At this time, the future leasing and
tenant finish costs which will be required to renew current leases that
expire during 1995 or obtain new tenants are unknown. However, with certain
properties below stabilized occupancy (see page 10), the Partnership is
anticipating that a significant portion of the cash reserves will be
required to improve the occupancy levels.
<PAGE>
Liquidity and Capital Resources - Continued
The following describes the efforts being taken by the Partnership to
increase the occupancy levels at the Partnership's commercial properties.
Extremely weak economic conditions in Ft. Lauderdale, Florida have caused
the low occupancy levels at the Lakeshore Business Center development. In
the opinion of the general partner, leasing activity is improving in this
part of Florida. In an effort to continue to improve the occupancy at the
Lakeshore Business Center development, the Partnership has an on-site
leasing agent, an employee of NTS Development Company (an affiliate of the
general partner of the Partnership), 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 the Partnership's remaining commercial
properties are handled by leasing agents, employees of NTS Development
Company, located in Louisville, Kentucky. The leasing agents are located
in the same city as the commercial properties. All advertising for these
properties is coordinated by NTS Development Company's marketing staff
located in Louisville, Kentucky.
In an effort to continue to improve occupancy at the Partnership's
residential properties, the Partnership has an on-site leasing staff,
employees of NTS Development Company, at each of the apartment communities.
The staff handles all on-site visits from potential tenants, coordinates
local advertising with NTS Development Company's marketing staff, makes
visits to local companies to promote fully furnished units and negotiates
lease renewals with current residents.
Leases at Commonwealth Business Center Phase I, Blankenbaker Business Center
1A, University Business Center Phase II and Lakeshore Business Center Phases
I and II provide for tenants to contribute toward the payment of common area
expenses, insurance and real estate taxes. Leases at Lakeshore Business
Center Phases I and II and University Business Center Phase II also provide
for rent increases which are based upon increases in the consumer price
index. Leases at Plainview Point Office Center Phases I and II and
Plainview Point III Office Center provide for tenants to contribute toward
the payment of increases in common area maintenance expenses, insurance,
utilities and real estate taxes. These lease provisions, along with the
fact that residential leases are generally for a period of one year, should
protect the Partnership's operations from the impact of inflation and
changing prices.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at June 30, 1995 in the land held for
development is approximately $300,000. The Joint Venture intends to hold
the property until the market for undeveloped land improves in the Ft.
Lauderdale, Florida area.
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
An investor (the "Plaintiff") in the Partnership and in NTS-
Properties V, an affiliate of the general partner of the Partnership,
had previously asserted claims against her investment advisor and his
company in connection with her investment in eleven limited
partnerships. The Plaintiff invested a total of $158,000 in the
Partnership and NTS-Properties V. The amended complaint alleged that
the advisor had violated federal securities laws, the Racketeer and
Corrupt Influenced Organizations Act ("RICO"), and common law,
related to the sale to the Plaintiff of interests in the eleven
limited partnerships. The Plaintiff sought compensatory damages in
an unspecified amount, recision and punitive damages plus interest,
attorneys' fees and costs.
On January 22, 1992, the Court issued a final judgment in favor of
the Plaintiff and against the defendants in the amount of $579,678
on the basis of a jury finding that the defendants had breached their
fiduciary duties to the Plaintiff. The other claims against the
defendants were dismissed.
During 1994, the defendants served an amended third-party complaint
upon certain of the eleven limited partnerships originally sold to
the Plaintiff including the Partnership and NTS-Properties V and
their respective general partners NTS-Properties Associates IV and
NTS-Properties Associates V. Defendants sought contribution and
indemnification in an unspecified amount from each of the third-party
defendants and has reached settlements with certain of them.
The NTS third-party defendants have filed and served an amended
third-party complaint upon the third-party plaintiff, and have moved
to dismiss the amended third-party complaint. Discovery is currently
in progress with respect to the defendants third-party claims against
the eleven limited partnerships, including the NTS entities.
The general partner of the Partnership believes that the evidence is
clear that there is no basis for the allegations made by the third-
party plaintiff, and that the interests of the Partnership will be
vigorously defended and that cross claims will be pursued against the
third-party plaintiff unless an acceptable mutual settlement is
secured. Management believes that this lawsuit will have no material
adverse effect on the Partnership's operations or financial
condition.
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
June 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTS-PROPERTIES IV
(Registrant)
By:NTS-Properties Associates IV
By: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1995 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,013,683
<SECURITIES> 0
<RECEIVABLES> 495,545
<ALLOWANCES> 9,644
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,863,161
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 17,253,830
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,777,571
<COMMON> 0
0
0
<OTHER-SE> 5,046,212
<TOTAL-LIABILITY-AND-EQUITY> 17,253,830
<SALES> 1,560,666
<TOTAL-REVENUES> 1,589,889
<CGS> 0
<TOTAL-COSTS> 1,149,061
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,736
<INTEREST-EXPENSE> 478,006
<INCOME-PRETAX> (173,497)
<INCOME-TAX> 0
<INCOME-CONTINUING> (173,497)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (173,497)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet; therefore, the value
is $0.
<F2>This information is not disclosed in the Partnership's Form 10-Q filing.
</FN>
</TABLE>
