<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Exhibit Index: See page 19
Total Pages: 20
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of June 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and six months ended
June 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-18
PART II
1. Legal Proceedings 19
2. Changes in Securities 19
3. Defaults upon Senior Securities 19
4. Submission of Matters to a Vote of Security Holders 19
5. Other Information 19
6. Exhibits and Reports on Form 8-K 19
Signatures 20
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES IV
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1996 December 31, 1995*
------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 139,776 $ 276,610
Cash and equivalents - restricted 161,822 61,308
Investment securities -- 404,587
Accounts receivable, net of
allowance for doubtful accounts of
$13,917 (1996) and $15,854 (1995) 554,209 431,772
Land, buildings and amenities, net 14,186,038 14,617,818
Land held for development 297,251 297,251
Other assets 595,367 556,442
-------------- ------------
$ 15,934,463 $ 16,645,788
============== ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 11,369,118 $ 11,592,641
Accounts payable - operations 166,721 212,597
Accounts payable - construction -- 36,167
Distributions payable 83,985 90,136
Security deposits 83,893 83,995
Other liabilities 122,290 17,303
-------------- ------------
11,826,007 12,032,839
Partners' equity 4,108,456 4,612,949
-------------- ------------
$ 15,934,463 $ 16,645,788
============== ============
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions, net of
offering costs $ 25,834,899 $ -- $ 25,834,899
Net income - prior years 382,819 3,868 386,687
Net loss - current year (29,371) (297) (29,668)
Cash distributions declared to
date (21,532,062) (217,705) (21,749,767)
Repurchase of limited partnership
units (333,695) -- (333,695)
--------------- ---------- ------------
Balances at June 30, 1996 $ 4,322,590 $ (214,134) $ 4,108,456
=============== ========== ============
<FN>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
</FN>
</TABLE>
-3-
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental income, net of provision
for doubtful accounts of $0
(1996) and $6,736 (1995) $ 887,816 $ 796,988 $ 1,752,030 $ 1,560,666
Interest and other income 3,621 14,295 13,347 29,223
-------------- ------------ ----------- -----------
891,437 811,283 1,765,377 1,589,889
EXPENSES:
Operating expenses 150,562 130,337 306,616 263,634
Operating expenses - affiliated 91,940 102,154 189,070 210,373
Write-off of unamortized
building costs 6,871 -- 6,871 --
Amortization of capitalized
leasing costs 5,377 7,005 10,447 13,282
Interest expense 244,227 252,468 488,551 478,006
Management fees 51,011 45,668 100,183 89,069
Real estate taxes 55,227 55,626 110,169 106,589
Professional and administrative
expenses 23,958 28,929 46,391 66,177
Professional and administrative
expenses - affiliated 31,164 35,185 74,148 70,142
Depreciation and amortization 231,875 234,911 462,599 466,114
-------------- ------------ ----------- -----------
892,212 892,283 1,795,045 1,763,386
-------------- ------------ ----------- -----------
Net loss $ (775) $ (81,000) $ (29,668) $ (173,497)
============== ============ =========== ===========
Net loss allocated to the
limited partners $ (767) $ (80,190) $ (29,371) $ (171,762)
============== ============ =========== ===========
Net loss per limited partnership
unit $ (.03) $ (2.70) $ (1.02) $ (5.77)
============== ============ =========== ===========
Weighted average number of units 28,110 29,745 28,834 29,745
============== ============ =========== ===========
</TABLE>
-4-
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (775) $ (81,000) $ (29,668) $ (173,497)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Accrued interest on investment
securities -- -- 3,642 --
Provision for doubtful accounts -- 4,346 -- 6,736
Write-off of unamortized building
costs 6,871 -- 6,871 --
Amortization of capitalized leasing
costs 5,377 7,005 10,447 13,282
Depreciation and amortization 231,875 234,911 462,599 466,114
Changes in assets and liabilities:
Cash and equivalents - restricted (52,620) (53,108) (102,963) (90,761)
Accounts receivable (129,401) 5,586 (122,437) 201,682
Other assets 9,406 22,322 (22,642) 6,843
Accounts payable - operations (24,524) (33,328) (45,876) (14,374)
Security deposits 213 1,009 (102) (3,232)
Other liabilities 50,878 48,395 104,990 14,584
----------- ----------- ----------- -----------
Net cash provided by operating
activities
97,300 156,138 264,861 427,377
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (12,440) (36,870) (59,104) (203,828)
Increase in cash and equivalents -
restricted -- -- -- (20,300)
Decrease in cash and equivalents -
restricted -- -- 2,450 --
Maturity of investment securities -- -- 400,945 --
----------- ----------- ----------- -----------
Net cash provided by (used in)
investing activities (12,440) (36,870) 344,291 (224,128)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages and notes
payable (112,180) (90,457) (223,523) (169,080)
Capital contribution to a joint venture -- -- -- (616,125)
Cash distributions (86,342) (90,136) (176,478) (931,409)
Additions to loan costs (33,612) (1,016) (41,485) (25,852)
Repurchase of limited partnership units (116,700) -- (304,500) --
Decrease in cash and equivalents -
restricted 37,200 -- -- --
----------- ----------- ----------- -----------
Net cash used in financing activities (311,634) (181,609) (745,986) (1,742,466)
----------- ----------- ----------- -----------
Net decrease in cash and equivalents (226,774) (62,341) (136,834) (1,539,217)
CASH AND EQUIVALENTS, beginning of period 366,550 929,098 276,610 2,405,974
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 139,776 $ 866,757 $ 139,776 $ 866,757
=========== =========== =========== ===========
Interest paid on a cash basis $ 245,487 $ 253,900 $ 492,560 $ 477,638
=========== =========== =========== ===========
</TABLE>
-5-
<PAGE>
NTS-PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1995 Annual Report. In the opinion of the general partner, all
adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation have been made to the accompanying financial statements for the
three months and six months ended June 30, 1996 and 1995.
1. Cash and Equivalents - Restricted
- --------------------------------------
Cash and equivalents - restricted represent 1) funds received for
residential security deposits, 2) funds which have been escrowed with
mortgage companies for property taxes and insurance in accordance with the
loan agreements and 3) funds which the Partnership has reserved for the
repurchase of limited partnership units pursuant to Section 16.4 of the
Partnership's Amended and Restated Agreement of Limited Partnership.
Cash and equivalents - restricted at December 31, 1995 also included escrow
funds which were to be released as capital expenditures, leasing
commissions and tenant improvements were incurred at the properties owned
by the Lakeshore/University II Joint Venture. In 1996, these escrow funds
were released.
2. Interest Repurchase Reserve
- --------------------------------
On February 1, 1996, the Partnership established an Interest Repurchase
Reserve in the amount of $297,450 pursuant to Section 16.4 of the
Partnership's Amended and Restated Agreement of Limited Partnership. Under
Section 16.4, limited partners may request the Partnership to repurchase
their respective interests (Units) in the Partnership. With this Interest
Repurchase Reserve, the Partnership will be able to repurchase up to 1,983
Units at a price of $150 per Unit. The Partnership notified the limited
partners by letter dated February 1, 1996 of the establishment of the
Interest Repurchase Reserve and the opportunity to request that the
Partnership repurchase Units at the established price.
On May 24, 1996, the Partnership elected to fund an additional amount of
$277,620 to its Interest Repurchase Reserve. With this funding, the
Partnership will be able to purchase an additional 1,850 Units at a price
of $150 per Unit. As of June 30, 1996, 2,030 Units have been repurchased.
Repurchased Units are being retired by the Partnership, thus increasing the
share of ownership of each remaining investor.
3. New Accounting Pronouncement
- ---------------------------------
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (the "Statement") on accounting for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to assets to
be held and used. The Statement also establishes accounting standards for
long-lived assets and certain identifiable intangibles to be disposed of.
The Partnership adopted the Statement as of January 1, 1996 as required. No
adjustments were required.
-6-
<PAGE>
4. Mortgages and Notes Payable
- --------------------------------
Mortgages and notes payable consist of the following:
June 30, December 31,
1996 1995
---- ----
Mortgage payable with an insurance company
bearing interest at a fixed rate of 8.8%,
due October 1, 2004, secured by land and
building
$ 2,574,800 $ 2,677,397
Mortgage payable with an insurance company
bearing interest at a fixed rate of 7%, due
December 5, 2003, secured by land, buildings
and amenities 2,028,294 2,043,653
Mortgage payable with an insurance company
bearing interest at a fixed rate of 7%, due
December 5, 2003, secured by land, buildings
and amenities 1,931,708 1,946,336
Mortgage payable with an insurance company
bearing interest at a fixed rate of 8.5%, due
November 15, 2005, secured by land and
building 1,309,182 1,353,672
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 332,890 337,832
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 198,740 201,691
Note payable to a bank bearing interest at a
fixed rate of 10.6%, due January 31, 1998,
secured by land and building 1,630,062 1,642,914
Note payable to a bank bearing interest at a
fixed rate of 10.6%, due January 31, 1998,
secured by land and building 1,011,738 1,024,590
Note payable to a bank bearing interest at a
fixed rate of 10.6%, due January 31, 1998,
secured by land 207,417 220,269
Note payable to a bank bearing interest at a
fixed rate of 10.6%, due January 31, 1998,
secured by land 83,597 83,597
Note payable to a bank bearing interest at a
fixed rate of 10.6%, due January 31, 1998,
secured by land 60,690 60,690
------------ ------------
$ 11,369,118 $ 11,592,641
============ ============
Based on the borrowing rates currently available to the Partnership for
mortgages with similar terms and average maturities, the fair value of long
term debt is approximately $13,400,000.
-7-
<PAGE>
4. Mortgages and Notes Payable - Continued
- --------------------------------------------
Subsequent to June 30, 1996, the Lakeshore/University II Joint Venture, of
which the Partnership owns an 18% interest, obtained three mortgage loans
from an insurance company totalling $17,400,000 ($6,025,000, $5,775,000 and
$5,600,000). The mortgages bear interest at a fixed rate of 8.125%, are due
August 1, 2008 and are secured by the assets of the Joint Venture. The
repayment of principal will be amortized over 12 years. The proceeds from
the loans were used to pay off the Joint Venture's current debt financings
of approximately $16.8 million which bore interest at a fixed rate of 10.6%
and fund loan closing costs of approximately $280,000. The Partnership's
proportionate interest in the notes which were paid off was approximately
$3,000,000 or 18%. The remaining proceeds will be used to fund Joint
Venture tenant finish improvements and leasing costs.
5. Related Party Transactions
- -------------------------------
Property management fees of $100,183 and $89,069 for the six months ended
June 30, 1996 and 1995, 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
$1,479 and $3,440 as a repair and maintenance fee during the six months
ended June 30, 1996 and 1995, respectively, and has capitalized this cost
as a part of land, buildings and amenities.
As permitted by the Partnership agreement, the Partnership was also charged
the following amounts from NTS Development Company for the six months ended
June 30, 1996 and 1995. 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.
1996 1995
---- ----
Administrative $ 96,538 $ 91,199
Property manager 60,942 60,321
Leasing 120,965 127,760
Other 2,247 4,094
----------- ------------
$ 280,692 $ 283,374
=========== ============
6. Reclassification of 1995 Financial Statements
- --------------------------------------------------
Certain reclassifications have been made to the June 30, 1995 financial
statements to conform with June 30, 1996 classifications. These
reclassifications have no effect on previously reported operations.
-8-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1996 1995
---- ----
Wholly-Owned Properties
- -----------------------
Commonwealth Business Center Phase I 89% 81%
Plainview Point Office Center 86% 74%
Phases I and II
The Willows of Plainview Phase I 92% 84%
Properties Owned in Joint Venture with
NTS-Properties V (Ownership % at
June 30, 1996)
- --------------------------------------
The Willows of Plainview Phase II (10%) 94% 89%
Lakeshore Business Center Phase I See below See below
(See L/U II Joint Venture below) (1) (1)
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at
June 30, 1996)
- --------------------------------------
Golf Brook Apartments (4%) 91% 93%
Plainview Point III Office Center (5%) 87% 48%
Property Owned in Joint Venture with NTS-
Properties VII, Ltd. and NTS-Properties
Plus Ltd. (Ownership % at June 30, 1996)
- ----------------------------------------
Blankenbaker Business Center 1A (30%) 100% 100%
Properties Owned Through
Lakeshore/University II Joint Venture
(L/U II Joint Venture) (Ownership % at
June 30, 1996)
- ----------------------------------------
Lakeshore Business Center Phase I (18%) 99% 83% (1)
Lakeshore Business Center Phase II (18%) 80% 82% (2)
University Business Center Phase II (18%) 100% 100% (2)
(1) During the first quarter of 1995, the Partnership's ownership interest in
Lakeshore Business Center Phase I changed. See below for a discussion
regarding this change.
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding this change.
-9-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The rental and other income generated by the Partnership's properties for the
three months and six months ended June 30, 1996 and 1995 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
Wholly-owned Properties
- -----------------------
Commonwealth Business Center
Phase I $ 165,709 $149,952 $ 334,943 $ 312,088
Plainview Point Office Center
Phases I and II $ 141,984 $111,861 $ 268,785 $ 230,145
The Willows of Plainview
Phase I $ 276,564 $250,828 $ 548,770 $ 487,712
Properties owned in Joint
Venture with NTS-Properties V
(Ownership % at June 30, 1996)
- ------------------------------
The Willows of Plainview
Phase II (10%) $ 30,927 $ 28,076 $ 61,182 $ 55,553
Lakeshore Business Center
Phase I (See L/U II Joint
Venture below) N/A N/A N/A $ 14,282
(1)
Properties Owned in Joint
Venture with NTS-Properties VI
(Ownership % at June 30, 1996)
- ------------------------------
Golf Brook Apartments (4%) $ 27,960 $ 27,755 $ 55,750 $ 54,911
Plainview Point III Office
Center (5%) $ 9,594 $ 4,890 $ 19,871 $ 10,623
Property Owned in Joint Venture
with NTS-Properties VII, Ltd.
and NTS-Properties Plus Ltd.
(Ownership % at June 30, 1996)
- ------------------------------
Blankenbaker Business Center
1A (30%) $ 69,422 $ 69,422 $ 138,804 $ 136,465
Properties Owned through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
(Ownership % at June 30, 1996)
- ------------------------------
Lakeshore Business Center
Phase I (18%) $ 63,179 $ 49,248 $ 124,321 $ 82,940
Lakeshore Business Center
Phase II (18%) $ 50,980 $ 57,264 $ 97,827 $ 93,268
(2)
University Business Center
Phase II (18%) $ 54,357 $ 53,196 $ 107,227 $ 91,596
(2)
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
(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 from January 23, 1995 to
June 30, 1995 is reflected below (See L/U II Joint Venture).
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding the change.
-10-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 8% increase in occupancy at Commonwealth Business Center Phase I from June
30, 1995 to June 30, 1996 is attributed to three new leases totalling
approximately 6,400 square feet and an expansion by a current tenant of its
existing space of approximately 1,600 square feet. Partially offsetting the new
leases is one tenant move-out at the end of the lease term totalling 1,600
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 increased from 81%
(1995) to 89% (1996) for the three months and six months ended June 30. Rental
and other income at Commonwealth Business Center Phase I increased for the three
months and six months ended June 30, 1996 as compared to the same periods in
1995 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.
During July 1996, Commonwealth Business Center Phase I's occupancy increased to
96% as a result of an approximately 3,600 square foot new lease.
The 12% increase in occupancy at Plainview Point Office Center Phases I and II
from June 30, 1995 to June 30, 1996 is attributed to four new leases totalling
approximately 6,800 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 period. Average occupancy increased for the three months
and six months ended June 30 from 74% in 1995 to 86% in 1996. Rental and other
income at Plainview Point Office Center Phases I and II increased for the three
months and six months ended June 30, 1996 as compared to the same periods in
1995 as a result of the increase in average occupancy.
The Willows of Plainview Phase I's occupancy increased 8% from June 30, 1995 to
June 30, 1996. Average occupancy increased from 84% (1995) to 91% (1996) for the
three months ended June 30 and from 82% (1995) to 89% (1996) for the six month
period. Occupancy at residential properties fluctuates on a continuous basis.
Period-ending occupancy percentages represent occupancy as of a specific date;
therefore, it is more meaningful to consider average occupancy percentages which
are representative of the entire period's results. The increase in rental and
other income at The Willows of Plainview Phase I for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 is a result
of the increase in average occupancy, an increase in rental rates and an
increase in income from fully furnished units. Fully furnished units are
apartments which rent at an additional premium above base rent.
The Willows of Plainview Phase II's occupancy increased from 89% as of June 30,
1995 to 94% as of June 30, 1996. Average occupancy increased from 92% (1995) to
93% (1996) for the three months ended June 30 and from 90% (1995) to 95% (1996)
for the six month period. The increase in rental and other income at The Willows
of Plainview Phase II for the three months and six months ended June 30, 1996 as
compared to the same periods in 1995 is a result of the increase in average
occupancy, an increase in rental rates and an increase in income from fully
furnished units.
Golf Brook Apartments' occupancy decreased 2% from June 30, 1995 to June 30,
1996. Average occupancy decreased from 94% (1995) to 90% (1996) for the three
months ended June 30 and from 94% (1995) to 92% (1996) for the six month period.
The change in rental and other income at Golf Brook Apartments for the three
months and six months ended June 30, 1996 as compared to the same periods in
1995 was not significant.
The 39% increase in occupancy at Plainview Point III Office Center from June 30,
1995 to June 30, 1996 is primarily the result of two new leases for a total of
27,070 square feet. The new leases consist of a 10,343 square foot 63-month
lease (took occupancy September 1, 1995) and a 16,727 square foot five-year
lease
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
(took occupancy December 27, 1995). The increase in occupancy can also be
attributed to an expansion by a current tenant of its existing space by
approximately 4,400 square feet. Partially offsetting the new leases is one
tenant move-out at the end of the lease term totalling 6,900 square feet.
Average occupancy increased from 48% (1995) to 94% (1996) for the three months
ended June 30 and from 51% (1995) to 95% (1996) for the six month period. Rental
and other income increased at Plainview Point III Office Center for the three
months and six months ended June 30, 1996 as compared to the same periods in
1995 as a result of the increase in average occupancy.
A wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential Service Bureau, Inc.) has leased 100% of Blankenbaker Business
Center 1A through July 2005. In addition to monthly rent payments, Prudential
Service Bureau, Inc. is obligated to pay substantially all of the operating
expenses attributable to its space. The change in rental and other income at
Blankenbaker Business Center 1A for the three months and six months ended June
30, 1996 as compared to the same periods in 1995 was not significant.
The 16% increase in occupancy at Lakeshore Business Center Phase I from June 30,
1995 to June 30, 1996 can be attributed to eight new leases totalling
approximately 20,400 square feet, which includes approximately 6,900 square feet
in expansions by three current tenants. The new leases and expansions are
partially offset by two tenants, who occupied a total of approximately 3,400
square feet, vacating the premises at the end of the lease terms. Average
occupancy increased from 80% (1995) to 98% (1996) for the three months ended
June 30 and from 79% (1995) to 98% (1996) for the six month period. Rental and
other income increased at Lakeshore Business Center Phase I for the three months
and six months ended June 30, 1996 as compared to the same periods in 1995
primarily as a result of the increase in average occupancy and a decrease in the
provision for doubtful accounts. The increase in rental and other income for the
six months ended June 30, 1996 can also be attributed to the Partnership's
increased ownership in Lakeshore Business Center Phase I. (See below for a
discussion regarding the change.)
The 2% decrease in occupancy at Lakeshore Business Center Phase II from June 30,
1995 to June 30, 1996 can be attributed to four tenant move-outs totalling
approximately 11,000 square feet and a downsizing by a current tenant of its
existing space of approximately 6,000 square feet. Two of the move-outs,
totalling approximately 5,100 square feet, represent tenants who vacated prior
to the end of the lease term but are continuing to pay rent through the end of
the lease term (September 1996 and August 1997). The third tenant, who occupied
approximately 1,400 square feet, vacated the premises and ceased making rental
payments in breach of the lease terms due to bankruptcy. The write-off of
accrued income connected with this lease was not significant. The fourth tenant,
who occupied approximately 4,500 square feet, vacated the premises at the end of
the lease term. Partially offsetting the tenant move-outs are three new leases
totalling approximately 13,800 square feet and a 3,600 square foot expansion by
a current tenant of its existing space. Average occupancy at Lakeshore Business
Center Phase II decreased from 81% (1995) to 80% (1996) for the three months
ended June 30 and from 80% (1995) to 76% (1996) for the six month period. In the
opinion of the General Partner of the Partnership, the decrease in occupancy at
Lakeshore Business Center Phase II is only a temporary fluctuation and does not
represent a downward occupancy trend. Overall, rental and other income decreased
at Lakeshore Business Center Phase II for the three months and six months ended
June 30, 1996 as compared to the same periods in 1995 primarily due to the
decrease in average occupancy. The Partnership's proportionate share of the
rental and other income at Lakeshore Business Center Phase II, however,
increased for the six months ended June 30, 1996 as compared to the same period
in 1995. This is due to the fact that the Partnership acquired an interest in
Lakeshore Business Center Phase II as a result of the formation of the
Lakeshore/University II Joint Venture (L/U II Joint Venture) on January 23,
1995. (See below for a discussion regarding the Joint Venture.)
-12-
<PAGE>
Results of Operations - Continued
- ---------------------------------
As of June 30, 1996, Lakeshore Business Center Phase II had approximately 3,400
square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the third quarter of 1996. With this new
lease, the business center's occupancy should improve to 83%.
Philip Crosby Associates, Inc. ("PCA") 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 approximately
52,000 square feet (or 67%) of University Business Center Phase II to three
tenants. Of the total being sub-leased, approximately 41,000 square feet (or
79%) is being leased by Full Sail Recorders, Inc. (a major tenant at University
Business Center Phase I, a neighboring property owned by an affiliate of the
General Partner of the Partnership). In December 1995, Full Sail Recorders, Inc.
("Full Sail") signed a 33-month lease with the L/U II Joint Venture for the
approximately 41,000 square feet it currently sub-leases from PCA. The lease
term commences April 1998 when PCA's lease ends. As part of the lease
negotiations, Full Sail will receive a $200,000 tenant finish allowance in 1996,
of which approximately $92,000 will be reimbursed by Full Sail over a 27-month
period beginning January 1996. The Joint Venture has received notice that PCA
will not renew its lease when it expires in 1998. At this time, it is not known
whether the other sublessees will sign lease renewals with the Joint Venture.
The Partnership's proportionate share of the rental and other income at
University Business Center Phase II increased for the six months ended June 30,
1996 as compared to the same period in 1995. This is due to the fact that the
Partnership acquired an interest in University Business Center Phase II as a
result of the formation of the L/U II Joint Venture in January 1995. (See below
for a discussion of the Joint Venture.) Overall, rental and other income at
University Business Center Phase II decreased for the six months ended June 30,
1996 as compared to the same period in 1995 as a result of a decrease in common
area expense reimbursements. Rental and other income increased for the three
months ended June 30, 1996 as compared to the same period in 1995 as a result of
a rent escalation based upon an increase in the consumer price index.
In cases of tenants who cease making rental payments or abandon the premises in
breach of their lease, the Partnership pursues collection through the use of
collection agencies or other remedies available by law when practical. In cases
where tenants have vacated as a result of bankruptcy, the Partnership has taken
legal action when it was thought there could be a possible collection. There
have been no funds recovered as a result of these actions during the six months
ended June 30, 1996 and 1995. As of June 30, 1996, there were no on-going cases.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties. See the Liquidity and Capital Resources section of
this item for a discussion regarding the requirements of the Partnership's debt
financings.
Interest and other income includes income from investments made by the
Partnership with cash reserves. Interest and other income decreased for the
three months and six months ended June 30, 1996 as compared to the same periods
in 1995 as a result of a decrease in cash reserves available for investment.
The increase in operating expenses for the three months and six months ended
June 30, 1996 as compared to the same periods in 1995 is due primarily to
increased utility costs, landscaping costs and general building maintenance
costs at the Partnership's commercial properties and increased costs connected
with fully furnished units at The Willows of Plainview Phases I and II. The
increase in operating expenses for the six month period is also due to the
Partnership acquiring an interest in the L/U II Joint Venture in January 1995
(see discussion below).
-13-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in operating expenses - affiliated for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 is due
primarily to decreased leasing and property management costs at Plainview Point
Office Center Phases I and II, Commonwealth Business Center Phase I and
Blankenbaker Business Center 1A. Partially offsetting the decrease in operating
expenses - affiliated for the six month period is the Partnership's acquisition
of an interest in the L/U II Joint Venture in January 1995 (see discussion
below). There were no significant fluctuations in operating expenses affiliated
at the Partnership's residential properties. Operating expenses affiliated are
expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner of the Partnership.
The 1996 write-off of unamortized building costs can be attributed to Plainview
Point Office Center Phases I and II. The write-off is the result of an exterior
stair replacement and represents the cost of the stairs which were replaced that
had not been depreciated.
The decrease in amortization of capitalized leasing costs for the three months
and six months ended June 30, 1996 as compared to the same periods in 1995 is
due primarily to costs capitalized during the initial lease-up at University
Business Center Phase II becoming fully amortized in 1995.
Interest expense has increased for the six months ended June 30, 1996 as
compared to the same period in 1995 due primarily to the Partnership's
acquisition of an interest in the L/U II Joint Venture in January 1995
(discussed below). The increase in interest expense for the six month period is
partially offset by continued principal payments on the mortgages and notes
payable of the Partnership and its joint venture properties. These principal
payments also explain the decrease in interest expense for the three months
ended June 30, 1996 as compared to the same period in 1995. See the Liquidity
and Capital Resources section of this item for details regarding the
Partnership's debt.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is recorded on the accrual basis. As a result,
the fluctuations of revenues between periods will differ from the fluctuations
of management fee expense. The increase in management fee expense for the six
months ended June 30, 1996 as compared to the same period in 1995 is also
attributed to the Partnership acquiring an interest in the L/U II Joint Venture
in January 1995 (discussed below).
The increase in real estate taxes for the six months ended June 30, 1996 as
compared to the same period in 1995 is primarily due to the Partnership
acquiring an interest in the L/U II Joint Venture in January 1995 (discussed
below). Real estate taxes did not fluctuate significantly at the Partnership's
other properties. The change in real estate taxes for the three months ended
June 30, 1996 as compared to the same period in 1995 was not significant.
Professional and administrative expenses decreased for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 primarily as
a result of decreased outside legal fees.
The change in professional and administrative expense - affiliated for the three
months and six months ended June 30, 1996 as compared to the same periods in
1995 was not significant. Professional and administrative expenses - affiliated
are expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner.
The change in depreciation and amortization expense for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 was not
significant. Depreciation is computed using the straight-line method of
depreciation over the estimated useful lives of the assets which are 5 - 30
years for land improvements, 30 years for buildings, 5 - 30 years for building
improvements and 5 - 30 years for amenities. The aggregate cost of the
Partnership's properties for Federal tax purposes is approximately $25,000,000.
-14-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations for the six months ended June 30 was $264,861 (1996)
and $427,377 (1995). These funds, in conjunction with cash on hand, were used to
make a 1.57% (annualized) distribution of $170,327 for the six months ended June
30, 1996 and an 8.1% (annualized) distribution of $931,409 for the six months
ended June 30, 1995. The distribution made during the three months ended March
31, 1995 included a special $751,136 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 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. The primary source of future
liquidity and distributions is expected to be derived from cash generated by the
Partnership's properties after adequate cash reserves are established for future
leasing costs, tenant finish costs and capital improvements. Cash reserves
(which are unrestricted cash and equivalents as shown on the Partnership's
balance sheet as of June 30) were $139,776 and $866,757 at June 30, 1996 and
1995, respectively.
As previously disclosed in the Partnership's Form 10-K for the year ended
December 31, 1995, a new joint venture known as Lakeshore/University II Joint
Venture (L/U II Joint Venture) was formed on January 23, 1995 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.
As of June 30, 1996, the Partnership has a mortgage payable with an insurance
company in the amount of $2,574,800. The mortgage payable is due October 1,
2004, bears interest at a fixed rate of 8.8% and is secured by Commonwealth
Business Center Phase I. Monthly principal payments are based upon a 10-year
amortization schedule. At maturity, the mortgage will have been repaid based on
the current rate of amortization.
As of June 30, 1996, the Partnership had two mortgage loans each with an
insurance company in the amount of $2,028,294 and $1,931,708. 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 notes are based upon a 27-
year amortization schedule. The outstanding balance at maturity based on the
current rate of amortization would be $3,367,108 ($1,724,617 and $1,642,491).
As of June 30, 1996, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company in the amount of $4,352,334. The
mortgage is recorded as a liability of the Joint Venture and is secured by the
assets of the Joint Venture. The Partnership's proportionate interest in the
mortgage at June 30, 1996 is $1,309,182. The mortgage bears interest at a fixed
rate of 8.5% and is due November 15, 2005. Monthly principal payments are based
upon an 11-year amortization schedule. At maturity, the mortgage will have been
repaid based on the current rate of amortization.
As of June 30, 1996, 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 $3,244,538 and $1,937,037. The
mortgages are recorded as a liability of the Joint Venture. The Partnership's
proportionate interest in the mortgages as of June 30, 1996 is $531,630
($332,890 and $198,740). Both mortgages 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. Current monthly principal payments on both notes
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).
-15-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
As of June 30, 1996, the L/U II Joint Venture had notes payable to banks in the
following amounts: $9,132,000, $5,668,000, $1,162,000, $468,333 and $340,000.
The notes are a liability of the Joint Venture in accordance with the Joint
Venture Agreement. The Partnership's proportionate interest in the notes at June
30, 1996 was $1,630,062, $1,011,738, $207,417, $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. The Joint Venture met this funding
requirement in 1995. In 1996, all funds in the escrow account had been released.
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 $9,132,000, $5,668,000 and $1,162,000 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 were 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.
Subsequent to June 30, 1996, the L/U II Joint Venture obtained three mortgage
loans from an insurance company totalling $17,400,000 ($6,025,000, $5,775,000
and $5,600,000). The mortgages bear interest at a fixed rate of 8.125%, are due
August 1, 2008, and are secured by the assets of the Joint Venture. The
repayment of principal will be amortized over twelve years, with monthly
payments of principal and interest totalling approximately $190,000. The
proceeds from the loans were used to pay off the Joint Venture's current debt
financings of approximately $16.8 million which bore interest at a fixed rate of
10.6% and to fund loan closing costs of approximately $280,000. The
Partnership's proportionate interest in the notes which were paid off was
approximately $3,000,000 or 18%. The remaining proceeds will be used to fund
Joint Venture tenant finish improvements and leasing costs.
The majority of the Partnership's cash flow is derived from operating
activities. Cash flows used in investing activities are for tenant finish
improvements and 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 provided by investing activities were the result of a
release of these escrow funds. Cash flows provided by investing activities are
also from the maturity 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 and its agencies with initial maturities of
greater than three months to improve the return on its cash reserves. The
Partnership held the securities until maturity. Cash flows used in financing
activities are for cash distributions, payment of loan costs, principal payments
on mortgages and notes payable and repurchases of limited partnership Units.
Cash flows provided by financing activities were the result of a decrease in
funds reserved by the Partnership for the repurchase of limited partnership
units. The capital contribution to a joint venture represents the Partnership's
capital contribution to the L/U II Joint Venture net the Partnership's
proportionate interest in the joint venture's capital contributions. The
Partnership utilizes the proportionate consolidation method of accounting for
joint venture properties. The Partnership's interest in the joint venture's
assets, liabilities, revenues, expenses and cash flows are combined on a
line-by-line basis with the Partnership's own assets, liabilities, revenues,
expenses and cash flows. The
-16-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Partnership does not expect any material changes in the mix and relative cost of
capital resources except for interest and principal payments required by the
debt financings obtained by the L/U II Joint Venture subsequent to June 30, 1996
(see discussion above) and 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.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the six
months ended June 30, 1996 and 1995.
Cash
Net Loss Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1996 $ (29,371) $ 168,624 $ 168,624
1995 (171,762) 922,095 922,095
General Partner:
1996 $ (297) $ 1,703 $ 1,703
1995 (1,735) 9,314 9,314
As of June 30, 1996, the L/U II Joint Venture had a commitment for a $200,000
special tenant finish allowance, of which approximately $92,000 will be
reimbursed by the tenant over a 27-month period beginning in January 1996. This
commitment is the result of lease negotiations with Full Sail Recorders, Inc.
("Full Sail") which currently sub-leases approximately 41,000 square feet from
Philip Crosby Associates, Inc. ("PCA") at University Business Center Phase II.
Full Sail is also a major tenant at University Business Center Phase I, a
neighboring property owned by an affiliate of the General Partner of the
Partnership. PCA currently leases 100% of the business center through April
1998. Full Sail's lease term with the Joint Venture is for 33 months (April 1998
to December 2000). The Partnership's proportionate share of the net commitment
($200,000 less $92,000) is approximately $19,000 or 18%.
The Partnership had no other material commitments for renovations or capital
improvements as of June 30, 1996.
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 1996 or obtain
new tenants are unknown.
On February 1, 1996, the Partnership established an Interest Repurchase Reserve
in the amount of $297,450 pursuant to Section 16.4 of the Partnership's Amended
and Restated Agreement of Limited Partnership. Under Section 16.4, limited
partners may request the Partnership to repurchase their respective interests
(Units) in the Partnership. With this Interest Repurchase Reserve, the
Partnership will be able to repurchase up to 1,983 Units at a price of $150 per
Unit. The Partnership notified the limited partners by letter dated February 1,
1996 of the establishment of the Interest Repurchase Reserve and the opportunity
to request that the Partnership repurchase Units at the established price.
-17-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
On May 24, 1996, the Partnership elected to fund an additional amount of
$277,620 to its Interest Repurchase Reserve. With this funding, the Partnership
will be able to purchase an additional 1,850 Units at a price of $150 per Unit.
As of June 30, 1996, 2,030 Units have been repurchased. Repurchased Units are
being retired by the Partnership, thus increasing the share of ownership of each
remaining investor. The Interest Repurchase Reserve was funded from cash
reserves.
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's commercial properties. The leasing and
renewal negotiations at the Lakeshore Business Center development are handled by
an on-site leasing agent, an employee of NTS Development Company (an affiliate
of the General Partner of the Partnership), who makes calls to potential
tenants, negotiates lease renewals with current tenants and manages local
advertising with the assistance of NTS Development Company's marketing staff.
The leasing and renewal negotiations at University Business Center Phase II are
handled by a leasing agent, an employee of NTS Development Company, located at
the University Business Center development. The leasing and renewal negotiations
for the Partnership's remaining commercial properties are handled by leasing
agents, employees of NTS Development Company, located in Louisville, Kentucky.
The leasing agents are located in the same city as the commercial properties.
All advertising for these properties is coordinated by NTS Development Company's
marketing staff located in Louisville, Kentucky.
In an effort to continue to improve occupancy at the Partnership's residential
properties, the Partnership has an on-site leasing staff, employees of NTS
Development Company, at each of the apartment communities. The staff handles all
on-site visits from potential tenants, coordinates local advertising with NTS
Development Company's marketing staff, makes visits to local companies to
promote fully furnished units and negotiates lease renewals with current
residents.
Leases at Commonwealth Business Center Phase I, Blankenbaker Business Center 1A,
University Business Center Phase II and Lakeshore Business Center Phases I and
II provide for tenants to contribute toward the payment of common area expenses,
insurance and real estate taxes. Leases at Lakeshore Business Center Phases I
and II and University Business Center Phase II also provide for rent increases
which are based upon increases in the consumer price index. Leases at Plainview
Point Office Center Phases I and II and Plainview Point III Office Center
provide for tenants to contribute toward the payment of increases in common area
maintenance expenses, insurance, utilities and real estate taxes. These lease
provisions, along with the fact that residential leases are generally for a
period of one year, should protect the Partnership's operations from the impact
of inflation and changing prices.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at June 30, 1996 in the land held for
development is approximately $300,000. The Joint Venture currently has a
contract for the sale of .7 acres of this land at a price of $175,000.
-18-
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
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
Form 8-K, dated May 14, 1996, was filed to report in Item 5 that
the Lakeshore/University II Joint Venture had obtained a
commitment for permanent financing from an insurance company
totalling $17,400,000.
Form 8-K, dated May 24, 1996, was filed to report in Item 5 that
the Partnership has elected to increase its Interest Repurchase
Reserve by an additional amount of $277,620.
-19-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NTS-PROPERTIES IV
(Registrant)
BY: NTS-Properties Associates IV
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 13 , 1996
-20-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF JUNE 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 301,598
<SECURITIES> 0
<RECEIVABLES> 554,209
<ALLOWANCES> 13,917
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,186,038
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 15,934,463
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,369,118
0
0
<COMMON> 0
<OTHER-SE> 4,108,456
<TOTAL-LIABILITY-AND-EQUITY> 15,934,463
<SALES> 1,752,030
<TOTAL-REVENUES> 1,765,377
<CGS> 0
<TOTAL-COSTS> 1,185,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 488,551
<INCOME-PRETAX> (29,668)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,668)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,668)
<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>
