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 September 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 September 30, 1995 and December 31, 1994 3
Statements of Operations
For the three months and nine months ended
September 30, 1995 and 1994 4
Statements of Cash Flows
For the three months and nine months ended
September 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 10-20
PART II
1. Legal Proceedings 21
2. Changes in Securities 21
3. Defaults upon Senior Securities 21
4. Submission of Matters to a Vote of Security Holders 21
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
September 30, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 522,397 $ 2,405,974
Cash and equivalents - restricted 219,841 35,865
Investment securities 299,288 --
Accounts receivable, net of
allowance for doubtful accounts
of $15,097 (1995) and $1,788
(1994) 467,456 533,971
Land, buildings and amenities, net 14,682,954 11,974,200
Land held for development 297,251 --
Other assets 556,038 533,531
------------ ------------
$ 17,045,225 $ 15,483,541
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 11,684,682 $ 8,895,313
Accounts payable - operations 135,286 98,263
Accounts payable - construction 37,796 168,473
Distributions payable 90,136 90,136
Security deposits 81,828 75,299
Other liabilities 171,133 4,941
Commitments and contingency
------------ ------------
12,200,861 9,332,425
Partners' equity 4,844,364 6,151,116
------------ ------------
$ 17,045,225 $ 15,483,541
============ ============
<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 (282,356) (2,852) (285,208)
Cash distributions
declared to date (21,274,203) (215,101) (21,489,304)
Repurchase of limited
partnership units (29,195) -- (29,195)
------------ ----------- ------------
Balances at September 30,
1995 $ 5,054,184 $ (209,820) $ 4,844,364
============ =========== ============
* 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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $12,197
(1995) and $2,546 (1994) $ 831,255 $ 663,055 $ 2,391,920 $ 1,762,586
Interest and other income 12,797 41,290 42,020 117,360
----------- ----------- ----------- -----------
844,052 704,345 2,433,940 1,879,946
Expenses:
Operating expenses 182,195 145,786 445,830 376,831
Operating expenses - affiliated 106,554 109,355 316,927 303,179
Write-off of unamortized tenant
and building improvements -- 47,171 -- 47,369
Amortization of capitalized leasing
costs 7,005 4,889 20,286 15,290
Interest expense 251,338 173,144 729,344 501,230
Management fees 47,879 32,432 136,946 93,242
Real estate taxes 54,814 37,560 161,403 111,016
Professional and administrative
expenses 39,417 42,342 105,592 98,172
Professional and administrative
expenses - affiliated 35,927 31,076 106,070 101,717
Depreciation and amortization 230,636 168,699 696,750 455,546
----------- ----------- ----------- -----------
955,765 792,454 2,719,148 2,103,592
----------- ----------- ----------- -----------
Net loss $ (111,713) $ (88,109) $ (285,208) $ (223,646)
=========== =========== =========== ===========
Net loss allocated to limited
partners $ (110,596) $ (87,228) $ (282,356) $ (221,410)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (3.72) $ (2.93) $ (9.49) $ (7.44)
=========== =========== =========== ===========
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 Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (111,713) $ (88,109) $ (285,208) $ (223,646)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Accrued interest on investment
securities (2,006) -- (2,006) --
Amortization of capitalized leasing
costs 7,005 4,889 20,286 15,290
Write-off of unamortized tenant
and building improvements -- 47,171 -- 47,369
Depreciation and amortization 230,636 168,699 696,750 455,546
Provision for doubtful accounts 5,461 -- 12,197 2,546
Changes in assets and liabilities:
Cash and equivalents - restricted (80,762) (102,380) (168,481) (138,893)
Accounts receivable 22,627 (333,819) 224,309 (252,204)
Other assets 13,262 (31,518) 20,068 (76,821)
Accounts payable - operations 18,158 (148,909) 3,784 (157,153)
Security deposits 3,709 (3,094) 477 2,342
Other liabilities 57,902 35,427 72,486 104,223
----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities 164,279 (451,643) 594,662 (221,401)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to land, buildings
and amenities (42,542) (151,452) (109,348) (548,310)
Increase in cash and equivalents -
restricted (128) -- (20,428) --
Decrease in cash and equivalents -
restricted 4,933 -- 4,933 --
Purchase of investment securities (297,282) -- (297,282) --
Accounts payable - construction 6,365 (86,013) (130,677) 43,682
----------- ----------- ----------- -----------
Net cash used in investing
activities (328,654) (237,465) (552,802) (504,628)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages and note payable -- 2,907,730 -- 2,939,258
Principal payments on mortgages and
note payable (92,890) (3,589,445) (261,970) (3,618,778)
Net capital contribution to a joint
venture -- (597,357) (616,125) (597,357)
Cash distributions (90,136) (85,930) (1,021,546) (257,790)
Additions to loan costs -- (74,997) (25,796) (76,312)
----------- ----------- ----------- -----------
Net cash used in financing
activities (183,026) (1,439,999) (1,925,437) (1,610,979)
----------- ----------- ----------- -----------
Net decrease in cash and
equivalents (347,401) (2,129,107) (1,883,577) (2,337,008)
CASH AND EQUIVALENTS, beginning of
period 869,798 4,574,677 2,405,974 4,782,578
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 522,397 $ 2,445,570 $ 522,397 $ 2,445,570
=========== =========== =========== ===========
Interest paid on a cash basis $ 251,883 $ 200,892 $ 729,521 $ 540,759
=========== =========== =========== ===========
</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 and nine months ended September
30, 1995 and 1994.
1. 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, funds received for residential
security deposits and funds which have been escrowed with mortgage
companies for property taxes and insurance in accordance with the loan
agreements.
2. Investment Securities
Investment securities represent investments in Certificates of Deposit
or securities issued by the U.S. Government with initial maturities of
greater than three months. The investments are carried at cost which
approximates market value. The Partnership intends to hold the
securities until maturity. The following provides details regarding the
investments held at September 30, 1995:
Amortized Maturity Value At
Type Cost Date Maturity
Certificate of Deposit $101,023 10/27/95 $101,407
FNMA Discount Note 198,265 11/29/95 200,000
------- -------
$299,288 $301,407
======= =======
The Partnership held no investment securities with initial maturities
greater than three months at December 31, 1994.
3. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
September 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 $ 2,727,033 $ 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 2,051,134 2,072,809
(continued next page)
<PAGE>
3. Mortgages and Notes Payable - Continued
September 30, December 31,
1995 1994
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7%, due December 5, 2003,
secured by land, buildings and
amenities $ 1,953,460 $ 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 339,301 340,947
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 202,568 203,550
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,374,306 1,434,327
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building 1,026,197 --
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 1,644,521 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 221,875 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 60,690 --
----------- -----------
$11,684,682 $ 8,895,313
=========== ===========
4. Related Party Transactions
Property management fees of $136,946 and $93,242 for the nine months
ended September 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
<PAGE>
4. Related Party Transactions - Continued
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
$6,209 and $51,647 as a repair and maintenance fee during the nine
months ended September 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 nine months
ended September 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 $ 136,436 $ 125,845
Leasing agents 95,086 124,051
Property management 192,700 176,066
Other 9,361 12,838
--------- ---------
$ 433,583 $ 438,800
========= =========
5. Reclassification of 1994 Financial Statements
Certain reclassifications have been made to the September 30 and
December 31, 1994 financial statements to conform with the September 30,
1995 classifications. These reclassifications have no effect on
previously reported operations.
6. 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)
<PAGE>
6. Lakeshore/University II Joint Venture - Continued
Property Contributing Owner
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.
7. Contingency
The litigation originally instituted by an investor in the Partnership
against her investment advisor and involving claims between the
investment advisor and the Partnership, its general partner, and NTS-
Properties V and its general partner, has been settled.
8. Commitments
As of September 30, 1995, the Partnership had a commitment for
approximately $95,000 of tenant finish improvements and leasing costs as
a result of a new 10 1/2 year lease for approximately 4,200 square feet,
at Plainview Point Office Center Phases I and II. The Partnership also
had a commitment for approximately $60,000 to renovate the common area
lobbies at the office center. As of September 30, 1995, the L/U II
Joint Venture had commitments for approximately $320,000 of tenant
finish improvements and leasing costs. The commitments are the result
of two new leases and three lease renewals. The square footage of these
leases range from approximately 2,000 square feet to approximately 8,000
square feet, with lease terms ranging from three to five years. The
Partnership's proportionate share of these commitments is approximately
$258,000 or 18%. As of September 30, 1995, approximately $89,000 had
been incurred toward these commitments, of which the Partnership's
proportionate share is approximately $16,000 or 18%.
<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 September 30 were
as follows:
1995 1994
Wholly-Owned Properties
Commonwealth Business Center Phase I 78% 77%
Plainview Point Office Center Phases
I and II 78% 69%
The Willows of Plainview Phase I 93% 97%
Properties Owned in Joint Venture with
NTS-Properties V (Ownership % at September
30, 1995)
The Willows of Plainview Phase II (10%) 94% 93%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (2) 74%
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at
September 30, 1995)
Golf Brook Apartments (4%) 94% 93%
Plainview Point III Office Center (5%) 65% 93%
Property owned in Joint Venture with
NTS-Properties VII, Ltd. and NTS-
Properties Plus Ltd. (Ownership % at
September 30, 1995)
Blankenbaker Business Center 1A (30%) 100% 100% (1)
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at September
30, 1995)
Lakeshore Business Center Phase I (18%) 87% See above (2)
Lakeshore Business Center Phase II (18%) 73% 78% (3)
University Business Center Phase II (18%) 100% 100% (3)
(1) The Partnership acquired an interest in this property during the third
quarter of 1994. See page 15 for a discussion regarding this capital
contribution.
(2) During the first quarter of 1995, the Partnership's ownership interest
in Lakeshore Business Center Phase I changed. See pages 15 and 16 for
a discussion regarding this change.
(3) As of September 30, 1994, the Partnership did not have an interest in
this property. See pages 15 and 16 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 nine months ended September 30, 1995 and 1994 was as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Wholly-Owned Properties
Commonwealth Business Center $150,389 $157,479 $462,477 $413,326
Phase I
Plainview Point Office $112,804 $ 99,838 $342,949 $226,855
Center Phases I and II
The Willows of Plainview $280,547 $278,918 $768,620 $795,354
Phase I
Properties Owned in Joint
Venture with NTS-Properties
V (Ownership % at September
30, 1995)
The Willows of Plainview $ 29,707 $ 30,610 $ 85,261 $ 87,937
Phase II (10%)
Lakeshore Business Center N/A (1) $ 42,142 $ 14,282 $118,575
Phase I (See L/U II Joint
Venture on page 12)
Properties Owned in Joint
Venture with NTS-Properties
VI (Ownership % at September
30, 1995)
Golf Brook Apartments (4%) $ 29,251 $ 27,110 $ 84,162 $ 81,600
Plainview Point III Office $ 4,991 $ 8,873 $ 15,614 $ 26,158
Center (5%)
Property Owned in Joint
Venture with NTS-Properties
VII, Ltd. and NTS-Properties
Plus Ltd. (Ownership % at
September 30, 1995)
Blankenbaker Business Center $ 69,491 $21,499(2) $205,957 $21,499(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 September 30, 1995 is reflected on page 12. See
pages 15 and 16 for a discussion regarding this change.
(2) The Partnership acquired an interest in this property during the
third quarter of 1994. See page 15 for a discussion regarding this
capital contribution.
<PAGE>
Results of Operations - Continued
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Properties owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture) (Ownership
% at September 30, 1995)
Lakeshore Business Center $ 50,924 N/A (1) $133,863 N/A (1)
Phase I (18%)
Lakeshore Business Center $ 53,046 N/A (2) $146,313 N/A (2)
Phase II (18%)
University Business Center $ 53,272 N/A (2) $144,868 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 nine months ended September 30,
1994 is reflected on page 11. See pages 15 and 16 for a discussion
regarding this change.
(2) During the three months and nine months ended September 30, 1994, the
Partnership did not have an interest in this property. See pages 15
and 16 for a discussion regarding the change which occurred during
the first quarter of 1995.
The 1% increase in occupancy at Commonwealth Business Center Phase I from
September 30, 1994 to September 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 and one tenant,
who had occupied 1,600 square feet, vacating the premises prior to the end
of the lease term due to bankruptcy. There was no accrued income connected
with this lease. Average occupancy has increased for the nine months ended
September 30 from 71% in 1994 to 80% in 1995 and has increased for the three
month period from 77% in 1994 to 79% in 1995. Rental and other income at
Commonwealth Business Center Phase I increased for the nine months ended
September 30, 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.
Partially offsetting the increase in rental and other income for the nine
month period is an increase in the provision for doubtful accounts. The
decrease in rental and other income for the three month period is primarily
due to an increase in the provision for doubtful accounts.
The 9% increase in occupancy at Plainview Point Office Center Phases I and
II from September 30, 1994 to September 30, 1995 is attributed to four new
leases totalling approximately 5,100 square feet. Included in this total
is an expansion of approximately 1,000 square feet by an existing tenant.
There were no tenant move-outs during the 12 month period ended September
30, 1995. Average occupancy for the nine months ended September 30
increased from 51% in 1994 to 75% in 1995 and increased for the three month
<PAGE>
Results of Operations - Continued
period from 69% in 1994 to 77% in 1995. Rental and other income at
Plainview Point Office Center Phases I and II increased for the three months
and nine months ended September 30, 1995 as compared to the same periods in
1994 as a result of the increase in average occupancy and as a result of
increased rental rates on lease renewals.
As of September 30, 1995, Plainview Point Office Center Phases I and II had
approximately 4,200 square feet of additional space leased. The lease term
is for 10 1/2 years. It is anticipated that the tenant will take occupancy
during the fourth quarter of 1995 improving the office center's occupancy
to 85%.
The Willows of Plainview Phase I's occupancy decreased from 97% as of
September 30, 1994 to 93% as of September 30, 1995. Average occupancy
decreased from 91% (1994) to 86% (1995) for the nine months ended September
30 and from 95% (1994) to 93% (1995) for the three month period. Rental and
other income at the Willows of Plainview Phase I decreased for the nine
months ended September 30, 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. Rental income remained fairly constant for the three
month period.
The Willows of Plainview Phase II's occupancy increased from 93% as of
September 30, 1994 to 94% as of September 30, 1995. Average occupancy
decreased from 94% (1994) to 91% (1995) for the nine months ended September
30 and from 95% (1994) to 93% (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 nine months ended September 30, 1995 as compared
to the same periods in 1994.
The 13% increase in occupancy at Lakeshore Business Center Phase I from
September 30, 1994 to September 30, 1995 can be attributed to 10 new leases
totalling approximately 19,000 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 4,800 square foot lease which commenced
during the fourth quarter of 1994. The new leases and expansions are
partially offset by three tenants, who had occupied approximately 4,400
square feet, vacating at the end of the lease terms. Average occupancy
increased from 73% (1994) to 84% (1995) for the three months ended September
30 and from 68% (1994) to 81% (1995) for the nine month period. Rental and
other income at Lakeshore Business Center Phase I increased for the three
months and nine months ended September 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 pages 15 and
16 for a discussion regarding the change.) Partially offsetting the
increase in rental and other income at Lakeshore Business Center I for both
the three month and nine month periods is an increase in the provision for
doubtful accounts.
As of September 30, 1995, Lakeshore Business Center Phase I had
approximately 6,000 square feet of additional space leased. It is
anticipated that the tenants will take occupancy during the fourth quarter
of 1995 improving the business center's occupancy to 93%.
<PAGE>
Results of Operations - Continued
Golf Brook Apartments' occupancy increased from 93% as of September 30, 1994
to 94% as of September 30, 1995. Average occupancy for the nine month
period ended September 30 increased from 94% (1994) to 95% (1995). Average
occupancy for the three month period increased from 94% (1994) to 96% (1995)
for the three month period. Rental and other income at Golf Brook
Apartments remained fairly constant for the three months and nine months
ended September 30, 1995 as compared to the same periods in 1994.
The 28% decrease in occupancy at Plainview Point III Office Center from
September 30, 1994 to September 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. The
decrease in occupancy is partially offset by a new 10,343 square foot 63-
month lease. 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 nine month period ended September 30 decreased from 92%
(1994) to 52% (1995). Average occupancy for the three month period
decreased from 93% (1994) to 54% (1995). Rental and other income decreased
at Plainview Point III Office Center for the three months and nine months
ended September 30, 1995 as compared to the same periods in 1994 as a result
of the decrease in occupancy.
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 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 5% decrease in occupancy at Lakeshore Business Center Phase II from
September 30, 1994 to September 30, 1995 can be attributed to three tenant
move-outs totalling approximately 7,200 square feet. Two of the move-outs,
totalling approximately 5,800 square feet, represent tenants who vacated the
premises at the end of the lease term. The third tenant, who occupied
approximately 1,400 square feet, vacated the premises and ceased making
rental payments in breach of the lease term due to bankruptcy. The write-
off of accrued income connected with this lease was not significant.
Partially offsetting the tenant move-outs are four new leases for a total
of approximately 2,900 square feet. Average occupancy at Lakeshore Business
Center Phase II increased for the nine months ended September 30 from 78%
(1994) to 79% (1995). Average occupancy decreased for the three month
period from 78% (1994) to 77% (1995).
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 64% of University
Business Center Phase II. Of the total being sub-leased, 52% is being
leased by a major tenant at University Business Center Phase I, a
<PAGE>
Results of Operations - Continued
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.
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.
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.
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
<PAGE>
Results of Operations - Continued
$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, Plainview Point III Office Center and
Commonwealth Business Center Phase I 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 and nine months ended September 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 nine months ended September 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 Partnership acquired
an interest in the Blankenbaker Business Center Joint Venture on August 16,
1994 as discussed on page 15. Comparisons of the results of operations
between the 1995 and 1994 three month and nine month periods are also
difficult as a result of the Partnership's investment in the L/U II Joint
Venture as discussed on pages 15 and 16. These changes in the Partnership's
investments are permanent changes and will effect future results of
operations.
Liquidity and Capital Resources
Cash provided by (used in) operations was $594,662 and $(221,401) for the
nine months ended September 30, 1995 and 1994, respectively. These funds,
in conjunction with cash on hand, were used to make a 5.9% and a 1.5%
(annualized) distribution of $1,021,546 and $257,790 for the nine months
ended September 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 September 30, 1995, the Partnership had a mortgage payable with an
insurance company in the amount of $2,727,033. 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.
<PAGE>
Liquidity and Capital Resources - Continued
As of September 30, 1995, the Partnership had two mortgage loans each with
an insurance company in the amount of $2,051,134 and $1,953,460. Both
mortgages payable are due December 5, 2003, currently bear interest at a
fixed rate of 7% and 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 September 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 $3,278,271 and
$1,957,176. The mortgages are recorded as a liability of the Joint Venture.
The Partnership's proportionate interest in the mortgages as of September
30, 1995 is $541,869 ($339,301 and $202,568). Both mortgages payable are
due December 5, 2003, currently bear interest at a fixed rate of 7.5% and
are 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 September 30, 1995, the Blankenbaker Business Center Joint Venture had
a mortgage payable with an insurance company (obtained November 1994) in the
amount of $4,571,876. 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 September 30, 1995
is $1,374,306. 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 September 30, 1995, the L/U II Joint Venture had notes payable to
banks in the following amounts: $9,213,000, $5,749,000, $1,243,000,
$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 September 30, 1995 was $1,644,521,
$1,026,197, $221,875, $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 September 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 $9,213,000, $5,749,000 and $1,243,000 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.
<PAGE>
Liquidity and Capital Resources - Continued
The 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
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 investing activities are also for the purchase of investment
securities. As part of its cash management activities, the Partnership has
purchased Certificates of Deposit or securities issued by the U.S.
Government with initial maturities of greater than three months to improve
the return on its excess cash. The Partnership intends to hold the
securities until maturity. Cash flows 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 1995 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 1994 net capital
contribution to a joint venture represents the Partnership's capital
contribution to the Blankenbaker Business Center Joint Venture net the
Partnership's proportionate interest in the joint venture's 1994 third
quarter 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 19).
<PAGE>
Liquidity and Capital Resources - Continued
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the nine months ended September 30, 1995 and 1994.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (282,356) $1,011,330 $1,011,330
1994 (221,410) 255,212 255,212
General Partner:
1995 $ (2,852) $ 10,215 $ 10,215
1994 (2,236) 2,578 2,578
As of September 30, 1995, the Partnership had a commitment for approximately
$95,000 of tenant finish improvements and leasing costs as a result of a new
10 1/2 year lease for approximately 4,200 square feet at Plainview Point
Office Center Phases I and II. The Partnership also had a commitment for
approximately $60,000 to renovate the common area lobbies at the office
center. As of September 30, 1995, the L/U II Joint Venture had commitments
for approximately $320,000 of tenant finish improvements and leasing costs.
The commitments are the result of two new leases and three lease renewals.
The square footage of these leases range from approximately 2,000 square
feet to approximately 8,000 square feet, with lease terms ranging from three
to five years. The Partnership's proportionate share of these commitments
is approximately $258,000 or 18%. As of September 30, 1995, approximately
$89,000 had been incurred toward these commitments, of which the
Partnership's proportionate share is approximately $16,000 or 18%. The
Partnership had no other material commitments for renovations or capital
improvements at September 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 the next 12 months 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.
Historically, extremely weak economic conditions in Ft. Lauderdale, Florida
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
<PAGE>
Liquidity and Capital Resources - Continued
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 September 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
The litigation originally instituted by an investor in the
Partnership against her investment advisor and involving claims
between the investment advisor and the Partnership, its general
partner, and NTS-Properties V and its general partner, has been
settled.
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
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
September 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: November 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND FROM THE STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 742,238
<SECURITIES> 299,288
<RECEIVABLES> 467,456
<ALLOWANCES> 15,097
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,682,954
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 17,045,225
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,684,682
<COMMON> 0
0
0
<OTHER-SE> 4,844,364
<TOTAL-LIABILITY-AND-EQUITY> 17,045,225
<SALES> 2,391,920
<TOTAL-REVENUES> 2,433,940
<CGS> 0
<TOTAL-COSTS> 1,778,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,197
<INTEREST-EXPENSE> 729,344
<INCOME-PRETAX> (285,208)
<INCOME-TAX> 0
<INCOME-CONTINUING> (285,208)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285,208)
<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>
