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 March 31, 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 No.)
incorporation or organization)
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 March 31, 1995 and December 31, 1994 3
Statements of Operations
For the three months ended March 31, 1995 and 1994 4
Statements of Cash Flows
For the three months ended March 31, 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
March 31, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 1,022,916 $ 2,441,839
Accounts receivable, net of
allowance for doubtful accounts
of $5,105 (1995) and $1,788 (1994) 505,479 533,971
Land, buildings and amenities, net 15,044,637 11,974,200
Land held for development 297,251 --
Other assets 619,993 533,531
------------ ------------
$ 17,490,276 $ 15,483,541
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 11,868,029 $ 8,895,313
Accounts payable - operations 150,459 98,263
Accounts payable - construction 22,361 168,473
Distributions payable 90,136 90,136
Security deposits 77,110 75,299
Other liabilities 64,836 4,941
------------ ------------
12,272,931 9,332,425
Partners' equity 5,217,345 6,151,116
------------ ------------
$ 17,490,276 $ 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 (91,575) (925) (92,500)
Cash distributions declared
to date (21,095,733) (213,298) (21,309,031)
Repurchase of limited
partnership units (29,195) -- (29,195)
------------ --------- ------------
Balances at March 31, 1995 $ 5,423,435 $(206,090) $ 5,217,345
============ ========= ============
<FN>
* Reference is made to the audited financial statements in the Form 10-K
as filed with the Commission on March 31, 1995.
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $1,776
(1995) and $2,547 (1994) $ 763,677 $ 525,621
Interest and other income 14,929 34,735
----------- -----------
778,606 560,356
Expenses:
Operating expenses 133,296 114,368
Operating expenses - affiliated 108,219 96,480
Amortization of capitalized
leasing costs 6,278 5,282
Interest expense 225,538 163,904
Management fees 43,400 29,066
Real estate taxes 50,963 36,731
Professional and administrative
expenses 37,247 27,217
Professional and administrative
expenses - affiliated 34,958 35,609
Depreciation and amortization 231,207 145,119
----------- -----------
871,106 653,776
----------- -----------
Net loss $ (92,500) $ (93,420)
=========== ===========
Net loss allocated to limited
partners $ (91,575) $ (92,486)
=========== ===========
Net loss per limited partnership unit $ (3.08) $ (3.11)
=========== ===========
Weighted average number of units 29,745 29,745
=========== ===========
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (92,500) $ (93,420)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Amortization of capitalized
leasing costs 6,278 5,282
Depreciation and amortization 231,207 145,119
Provision for doubtful accounts 1,776 2,547
Changes in assets and liabilities:
Accounts receivable 196,708 69,664
Other assets (15,474) (13,014)
Accounts payable - operations 18,954 (43,506)
Security deposits (4,241) (774)
Other liabilities (33,811) 38,760
----------- -----------
Net cash provided by operating
activities 308,897 110,658
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to land, buildings
and amenities (20,851) (22,293)
Decrease in accounts payable -
construction (146,112) --
----------- -----------
Net cash used in investing
activities (166,963) (22,293)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
and notes payable (78,623) (14,998)
Net capital contribution to a
joint venture (616,125) --
Cash distributions (841,273) (85,930)
Additions to loan costs (24,836) (799)
----------- -----------
Net cash used in financing
activities (1,560,857) (101,727)
----------- -----------
Net decrease in cash and
equivalents (1,418,923) (13,362)
CASH AND EQUIVALENTS, beginning
of period 2,441,839 4,800,842
----------- -----------
CASH AND EQUIVALENTS, end of period $ 1,022,916 $ 4,787,480
=========== ===========
Interest paid on a cash basis $ 194,190 $ 175,798
=========== ===========
</TABLE>
<PAGE>
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 ended March 31, 1995 and 1994.
1. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
March 31, 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 $ 2,823,100 $ 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 2,065,710 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 1,967,342 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 345,152 340,947
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 206,061 203,550
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,414,145 1,434,327
(continued next page)
<PAGE>
1. Mortgages and Notes Payable - Continued
March 31, 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 1,029,410 --
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 1,647,734 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 225,088 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 60,690 --
----------- -----------
$11,868,029 $ 8,895,313
=========== ===========
2. Related Party Transactions
Property management fees of $43,400 and $29,066 for the three months
ended March 31, 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,
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 $667
and $1,378 as a repair and maintenance fee during the three months ended
March 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 was also charged the following
amounts from NTS Development Company for the three months ended March
31, 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 $ 45,282 $ 44,333
Leasing agents 32,326 27,386
Property management 64,334 58,239
Other 2,318 4,727
--------- ---------
$ 144,260 $ 134,685
========= =========
<PAGE>
3. Commitments
As of March 31, 1995, Blankenbaker Business Center 1A, a joint venture
between the Partnership, NTS-Properties VII, Ltd. and NTS-Properties
Plus Ltd., has a commitment for approximately $160,000 of tenant finish
improvements. The commitment is the result of a lease renewal and
expansion signed on April 28, 1994 with its major tenant Prudential
Service Bureau, Inc. ("Prudential"). The lease expands Prudential's
leased space by approximately 15,000 square feet and extends their lease
through July 2005. The Partnership had no other material commitments
for renovations or capital improvements at March 31, 1995.
4. 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>
5. Land Held for Development
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 March 31, 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.
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
partnership. 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 $579,677.85 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 March 31 were as
follows:
1995 1994
Wholly-Owned Properties
Commonwealth Business Center Phase I 81% 62%
Plainview Point Office Center Phases
I and II 74% 43%
The Willows of Plainview Phase I 81% 86%
Properties Owned in Joint Venture with
NTS-Properties V (Ownership % at March
31, 1995)
The Willows of Plainview Phase II (10%) 90% 91%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (2) 61%
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at March
31, 1995)
Golf Brook Apartments (4%) 94% 94%
Plainview Point III Office Center (5%) 48% 89%
Property owned in Joint Venture with
NTS-Properties VII, Ltd. and NTS-
Properties Plus Ltd. (Ownership % at
March 31, 1995)
Blankenbaker Business Center 1A (30%) 100% 100% (1)
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at March
31, 1995)
Lakeshore Business Center Phase I (18%) 79% See above (2)
Lakeshore Business Center Phase II (18%) 77% 73% (3)
University Business Center Phase II (18%) 100% 100% (3)
<F1>
(1) As of March 31, 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.
<F2>
(2) During the first quarter of 1995, the Partnership's ownership interest
in Lakeshore Business Center Phase I changed. See pages 14 and 15 for
a discussion regarding this change.
<F3>
(3) As of March 31, 1994, the Partnership did not have an interest in this
property. See pages 14 and 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 ended March 31, 1995 and 1994 was as follows:
1995 1994
Wholly-Owned Properties
Commonwealth Business Center Phase I $162,136 $121,037
Plainview Point Office Center Phases
I and II $118,283 $ 63,810
The Willows of Plainview Phase I $236,885 $244,792
Properties Owned in Joint Venture with
NTS-Properties V (Ownership % at March
31, 1995)
The Willows of Plainview Phase II (10%) $ 27,478 $ 28,449
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) $ 14,282 $ 35,181
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at March
31, 1995)
Golf Brook Apartments (4%) $ 27,155 $ 26,076
Plainview Point III Office Center (5%) $ 5,734 $ 8,770
Property Owned in Joint Venture with
NTS-Properties VII, Ltd. and NTS-
Properties Plus Ltd. (Ownership % at
March 31, 1995)
Blankenbaker Business Center 1A (30%) $ 67,044 N/A (1)
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at March
31, 1995)
Lakeshore Business Center Phase I (18%) $ 33,692 N/A (2)
Lakeshore Business Center Phase II (18%) $ 36,003 N/A (3)
University Business Center Phase II (18%) $ 38,400 N/A (3)
<F1>
(1) During the three months ended March 31, 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.
<F2>
(2) 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 ended March 31, 1994 is reflected above. See
pages 14 and 15 for a discussion regarding this change.
<F3>
(3) During the first quarter of 1994, the Partnership did not have an
interest in this property. See pages 14 and 15 for a discussion
regarding the change which occurred during the first quarter of 1995.
<PAGE>
Results of Operations - Continued
The 19% increase in occupancy at Commonwealth Business Center Phase I from
March 31, 1994 to March 31, 1995 is attributed to five new leases totalling
approximately 15,300 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 three tenant move-outs at the end
of the lease terms totalling approximately 4,700 square feet. Average
occupancy for the three month period increased from 66% in 1994 to 81% in
1995. Rental and other income at Commonwealth Business Center Phase I
increased for the three months ended March 31, 1995 as compared to the same
period 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 31% increase in occupancy at Plainview Point Office Center Phases I and
II from March 31, 1994 to March 31, 1995 is attributed to five new leases
totalling approximately 18,400 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). Partially
offsetting the new leases is one tenant, who previously occupied
approximately 1,000 square feet, vacating at the end of the lease term.
Average occupancy for the three month period 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 ended March 31, 1995 as
compared to the same period 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.
The Willows of Plainview Phase I's occupancy decreased from 86% as of March
31, 1994 to 81% as of March 31, 1995. Average occupancy decreased from 86%
(1994) to 80% (1995) for the three month period. Rental and other income
at the Willows of Plainview Phase I decreased for the three months ended
March 31, 1995 as compared to the same period 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 91% as of March
31, 1994 to 90% as of March 31, 1995. Average occupancy decreased from 92%
(1994) to 89% (1995) for the three month period. Rental and other income
decreased for the three months ended March 31, 1995 as compared to the same
period in 1994 as a result of the decrease in average occupancy and a
decrease in income from fully furnished units.
The 18% increase in occupancy at Lakeshore Business Center Phase I from
March 31, 1994 to March 31, 1995 can be attributed to 10 new leases
totalling approximately 28,800 square feet, which includes approximately
2,300 square feet in expansions by three current tenants. Included in the
new leases is a five-year approximately 9,400 square foot lease which
commenced during the second quarter of 1994 and a five-year approximately
6,400 square foot lease which commenced during the third quarter of 1994.
The new leases and expansions are partially offset by an approximately 1,200
square foot downsizing by an existing tenant and six tenants, who occupied
approximately 10,100 square feet, vacating at the end of the lease terms.
In addition to the downsizing and move-outs, the business center's leasing
office of approximately 1,500 square feet was relocated to Lakeshore
Business Center Phase II. The leasing office was relocated in order to
<PAGE>
Results of Operations - Continued
accommodate a new lease, approximately 9,400 square feet (as discussed
above). Average occupancy for the three month period increased from 59% in
1994 to 79% in 1995. Rental and other income at Lakeshore Business Center
Phase I increased for the three months ended March 31, 1995 as compared to
the same period 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 pages 14 and 15 for a discussion regarding the change.)
Golf Brook Apartments' occupancy was 94% at March 31, 1994 and 1995.
Average occupancy for the three month period increased from 93% (1994) to
94% (1995). Rental and other income for Golf Brook Apartments increased for
the three months ended March 31, 1995 as compared to the same period in 1994
as a result of increased rental rates and the increase in average occupancy.
The 41% decrease in occupancy at Plainview Point III Office Center from
March 31, 1994 to March 31, 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. The
tenant move-outs are partially offset by a new lease of approximately 2,500
square feet. 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 which will be required to attract new tenants. Average
occupancy for the three month period ended March 31 decreased from 89%
(1994) to 54% (1995). Rental and other income decreased at Plainview Point
III Office Center for the three months ended March 31, 1995 as compared to
the same period in 1994 as a result of the decrease in occupancy.
As of March 31, 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 renewal extends 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
March 31, 1994 to March 31, 1995 can be attributed to four new leases for
a total of approximately 11,100 square feet, an expansion of approximately
1,900 square feet by a current tenant and the fact that the business
center's leasing office was relocated from Lakeshore Business Center Phase
I (owned by a joint venture between NTS-Properties IV and NTS-Properties V,
affiliates of the general partner of the Partnership at the time of
relocation) to an approximately 1,200 square foot suite in Lakeshore
Business Center Phase II. The increases in occupancy are partially offset
by an approximately 4,700 square foot downsizing by a current tenant. In
accordance with the lease agreement, the tenant paid the Partnership a total
of approximately $48,500 during the second and third quarters of 1994 to
compensate the Partnership for lost rents and undepreciated renovation costs
(recorded as lease buyout income). The increases in occupancy are also
partially offset by an approximately 1,400 square foot move-out by a tenant
<PAGE>
Results of Operations - Continued
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.
Additionally, the increases in occupancy are partially offset by an
approximately 3,600 square foot move-out by a tenant who vacated and ceased
making rental payments in breach of the lease agreement. Accrued income
associated with this lease of approximately $17,000 was written off as
uncollectible after it was determined that there was no possible collection.
The accrued income which was written off is attributed to the straight-line
method of accounting for rental income. Average occupancy at Lakeshore
Business Center Phase II increased for the three month period from 75% in
1994 to 78% in 1995.
In cases of tenants abandoning the premises, the Partnership pursues
collection through the use of collection agencies and other remedies
available by law.
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. 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
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.
<PAGE>
Results of Operations - Continued
Property Contributing Owner
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 Phase II NTS-Properties V and NTS-Properties
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.
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 ended March 31, 1995 as compared to the same period 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 ended March 31, 1995 and 1994 are not
comparable and, therefore, are not included due to the fact that the three
months ended March 31, 1994 do not include the results of operations for the
Blankenbaker Business Center Joint Venture. The Partnership acquired an
interest in the joint venture August 1994 as discussed on page 13.
Comparisons of the results of operations between the 1995 and 1994 three
month periods are also difficult as a result of the Partnership's investment
in the L/U II Joint Venture as discussed on pages 14 and 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 $308,897 and $110,658 for the three months
ended March 31, 1995 and 1994, respectively. These funds, in conjunction
with cash on hand, were used to make a 14.8% and a 1.5% (annualized)
<PAGE>
Liquidity and Capital Resources - Continued
distribution of $841,273 and $85,930 for the three months ended March 31,
1995 and 1994, respectively. The $841,273 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 March 31, 1995, the Partnership had a mortgage payable with an
insurance company in the amount of $2,823,100. 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 March 31, 1995, the Partnership had two mortgage loans each with an
insurance company in the amount of $2,065,710 and $1,967,342. Both
mortgages payable are due December 5, 2003, bear interest at a fixed rate
of 7% for the first 60 months and are secured by the land, buildings and
amenities of The Willows of Plainview Phase I. At the end of the 56th month
from the date of the notes (notes dated November 23, 1993), the insurance
companies will notify the Partnership of the interest rate which is their
then prevailing interest rate for loans with a term of five years on
properties comparable to the apartments (the "Modified Rate"). The
Partnership will have 30 days to accept or reject the Modified Rate. If the
Modified Rate is rejected by the Partnership, the entire unpaid principal
balance is due with the 60th installment of interest. If the Partnership
accepts the Modified Rate, it becomes effective the 61st month from the date
of the note. 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 March 31, 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 $3,299,731 and $1,969,989.
The mortgages are recorded as a liability of the Joint Venture. The
Partnership's proportionate interest in the mortgages as of March 31, 1995
is $551,213 ($345,152 and $206,061). Both mortgages payable are due
December 5, 2003, bear interest at a fixed rate of 7.5% for the first 60
months and are secured by the land, buildings and amenities of the Joint
Venture. At the end of the 56th month from the date of the notes (notes
dated November 23, 1993), the insurance companies will notify the Joint
Venture of the interest rate which is their then prevailing interest rate
for loans with a term of five years on properties comparable to the
apartments (the "Modified Rate"). The Joint Venture will have 30 days to
accept or reject the Modified Rate. If the Modified Rate is rejected by the
Joint Venture, the entire unpaid principal balance is due with the 60th
installment of interest. If the Joint Venture accepts the Modified Rate,
it becomes effective the 61st month from the date of the note. 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 March 31, 1995, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company (obtained November 1994) in the
amount of $4,710,678. The mortgage is recorded as a liability of the Joint
Venture. The Partnership's proportionate interest in the mortgage at March
<PAGE>
Liquidity and Capital Resources - Continued
31, 1995 is $1,414,145. 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 March 31, 1995, the L/U II Joint Venture (see pages 14 and 15) had
five notes payable, each with a bank, in the amount of $5,767,000, $468,333,
$9,231,000, $1,261,000 and $340,000. The notes are recorded as a liability
of the joint venture. The Partnership's proportionate interest in the notes
as of March 31, 1995 was $3,046,519 ($1,029,410, $83,597, $1,647,734,
$225,088 and $60,690). All of the notes are due January 31, 1998, bear
interest at a fixed rate of 10.6% and are secured by the assets of the joint
venture. In accordance with the debt agreements, principal payments
required on the $9,231,000, $1,261,000 and $5,767,000 notes payable 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.
The Partnership's primary plans for its cash reserves are outlined in the
following discussion. As of March 31, 1995, the Blankenbaker Business
Center Joint Venture has a commitment for approximately $160,000 of tenant
finish improvements. The commitment is the result of a lease renewal and
expansion with Prudential. For details regarding the lease renewal and
expansion see page 8. The total project consists of approximately $1.5
million of tenant finish improvements and leasing costs. The General
Partner also believes that the Partnership needs to reserve funds for tenant
finish improvements at the Partnership's commercial properties which will
result from future lease negotiations and for leasing costs which will
result from these 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
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 financing activities are for cash distributions, payment
of loan costs and principal payments on mortgages and notes 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
<PAGE>
Liquidity and Capital Resources - Continued
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, may be required to be
funded from cash reserves if they exceed cash flow from operating
activities.
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the three months ended March 31, 1995 and 1994.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (91,575) $ 832,860 $ 832,860
1994 (92,486) 85,071 85,071
General Partner:
1995 $ (925) $ 8,413 $ 8,413
1994 (934) 859 859
As of March 31, 1995, Blankenbaker Business Center 1A has a commitment for
approximately $160,000 of tenant finish improvements. The commitment is the
result of a lease renewal and expansion with Prudential. For details
regarding the lease renewal and expansion see Note 3 of the Partnership's
financial statements. The Partnership had no other material commitments for
renovations or capital improvements at March 31, 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.
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
<PAGE>
Liquidity and Capital Resources - Continued
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 March 31, 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 partnership. 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 $579,677.85
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
March 31, 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
John W. Hampton
Senior Vice President
Date: May 11, 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: May 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,022,916
<SECURITIES> 0
<RECEIVABLES> 505,479
<ALLOWANCES> 5,105
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 15,044,637
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 17,490,276
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,868,029
<COMMON> 0
0
0
<OTHER-SE> 5,217,345
<TOTAL-LIABILITY-AND-EQUITY> 17,490,276
<SALES> 763,677
<TOTAL-REVENUES> 778,606
<CGS> 0
<TOTAL-COSTS> 573,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,776
<INTEREST-EXPENSE> 225,538
<INCOME-PRETAX> (92,500)
<INCOME-TAX> 0
<INCOME-CONTINUING> (92,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92,500)
<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-10Q filing.
</FN>
</TABLE>
