<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 September 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
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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, KY 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 20
Total Pages: 21
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of September 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and nine months ended
September 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and nine months ended
September 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 9-19
PART II
1. Legal Proceedings 20
2. Changes in Securities 20
3. Defaults upon Senior Securities 20
4. Submission of Matters to a Vote of Security Holders 20
5. Other Information 20
6. Exhibits and Reports on Form 8-K 20
Signatures 21
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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
September 30, 1996 December 31, 1995*
------------------------------ ----------------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 350,959 $ 276,610
Cash and equivalents - restricted 218,710 61,308
Investment securities -- 404,587
Accounts receivable, net of
allowance for doubtful accounts of
$12,790 (1996) and $15,854 (1995) 407,380 431,772
Land, buildings and amenities, net 14,017,749 14,617,818
Land held for development 297,251 297,251
Other assets 575,493 556,442
-------------------- -------------------
$ 15,867,542 $ 16,645,788
==================== ===================
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 11,373,886 $ 11,592,641
Accounts payable - operations 179,020 212,597
Accounts payable - construction 42,602 36,167
Distributions payable 54,766 90,136
Security deposits 85,465 83,995
Other liabilities 181,418 17,303
-------------------- -------------------
11,917,157 12,032,839
Partners' equity 3,950,385 4,612,949
-------------------- -------------------
$ 15,867,542 $ 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 (41,650) (421) (42,071)
Cash distributions declared to
date (21,586,281) (218,254) (21,804,535)
Repurchase of limited partnership
units (424,595) -- (424,595)
------------ ------------ ------------
Balances at September 30, 1996 $ 4,165,192 $ (214,807) $ 3,950,385
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
-3-
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1996 1995 1996 1995
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income, net of provision
for doubtful accounts of $0
(1996) and $12,197 (1995) $ 905,199 $ 831,255 $ 2,657,231 $ 2,391,920
Interest and other income 4,353 12,797 17,699 42,020
----------- ----------- ----------- -----------
909,552 844,052 2,674,930 2,433,940
EXPENSES:
Operating expenses 186,785 182,195 493,398 445,830
Operating expenses - affiliated 93,726 106,554 282,796 316,927
Write-off of unamortized
building costs -- -- 6,871 --
Write-off of unamortized loan
costs 12,896 -- 12,896 --
Amortization of capitalized
leasing costs 5,209 7,005 15,655 20,286
Interest expense 229,679 251,338 718,231 729,344
Management fees 51,082 47,879 151,265 136,946
Real estate taxes 55,944 54,814 166,113 161,403
Professional and administrative
expenses 23,105 39,417 69,496 105,592
Professional and administrative
expenses - affiliated 36,670 35,927 110,818 106,070
Depreciation and amortization 226,859 230,636 689,462 696,750
----------- ----------- ----------- -----------
921,955 955,765 2,717,001 2,719,148
----------- ----------- ----------- -----------
Net loss $ (12,403) $ (111,713) $ (42,071) $ (285,208)
=========== =========== =========== ===========
Net loss allocated to the
limited partners $ (12,278) $ (110,596) $ (41,650) $ (282,356)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (0.45) $ (3.72) $ (1.47) $ (9.49)
=========== =========== =========== ===========
Weighted average number of units 27,395 29,745 28,348 9,745
=========== =========== =========== ===========
</TABLE>
-4-
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1996 1995 1996 1995
----------- ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (12,403) $ (111,713) $ (42,071) $ (285,208)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Accrued interest on investment
securities -- (2,006) 3,642 (2,006)
Provision for doubtful accounts -- 5,461 -- 12,197
Write-off of unamortized building
costs -- -- 6,871 --
Write-off of unamortized loan costs 12,896 -- 12,896 --
Amortization of capitalized leasing
costs 5,209 7,005 15,655 20,286
Depreciation and amortization 226,859 230,636 689,462 696,750
Changes in assets and liabilities:
Cash and equivalents - restricted (52,288) (80,762) (155,251) (168,481)
Accounts receivable 146,832 22,627 24,392 224,309
Other assets 23,255 13,262 611 20,068
Accounts payable - operations 12,299 18,158 (33,577) 3,784
Security deposits 1,572 3,709 1,470 477
Other liabilities 59,123 57,902 164,115 72,486
----------- ----------- ----------- -----------
Net cash provided by operating
activities 423,354 164,279 688,215 594,662
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (13,599) (36,177) (72,703) (240,025)
Increase in cash and equivalents -
restricted -- (128) -- (20,428)
Decrease in cash and equivalents -
restricted -- 4,933 2,450 4,933
Purchase of investment securities -- (297,282) -- (297,282)
Maturity of investment securities -- -- 400,945 --
----------- ----------- ----------- -----------
Net cash provided by (used in) investing
activities (13,599) (328,654) 330,692 (552,802)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages payable 3,105,900 -- 3,105,900 --
Principal payments on mortgages and notes
payable (3,101,132) (92,890) (3,324,655) (261,970)
Capital contribution to a joint venture -- -- -- (616,125)
Cash distributions (83,984) (90,136) (260,462) (1,021,546)
Additions to loan costs (23,856) -- (65,341) (25,796)
Repurchase of limited partnership units (90,900) -- (395,400) --
Increase in cash and equivalents -
restricted (4,600) -- (4,600) --
----------- ----------- ----------- -----------
Net cash used in financing activities (198,572) (183,026) (944,558) (1,925,437)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and
equivalents 211,183 (347,401) 74,349 (1,883,577)
CASH AND EQUIVALENTS, beginning of period 139,776 869,798 276,610 2,405,974
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 350,959 $ 522,397 $ 350,959 $ 522,397
=========== =========== =========== ===========
Interest paid on a cash basis $ 235,470 $ 251,833 $ 728,031 $ 729,521
=========== =========== =========== ===========
</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 nine months ended September 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 was able to repurchase 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 repurchase an additional 1,850 Units at a price
of $150 per Unit. As of September 30, 1996, 2,636 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:
September 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 $ 2,521,791 $ 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 2,020,411 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 1,924,200 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 1,286,220 1,353,672
Mortgage payable with an insurance
company bearing interest at a fixed rate
of 8.125%, due August 1, 2008, secured by
land and building 1,071,029 --
Mortgage payable with an insurance
company bearing interest at a fixed rate
of 8.125%, due August 1, 2008, secured by
land and building 1,026,588 --
Mortgage payable with an insurance
company bearing interest at a fixed rate
of 8.125%, due August 1, 2008, secured by
land and building 995,479 --
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 330,722 337,832
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 197,446 201,691
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January 31,
1998, secured by land and building -- 1,642,914
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January 31,
1998, secured by land and building -- 1,024,590
(continued next page)
-7-
<PAGE>
4. Mortgages and Notes Payable - Continued
September 30, December 31,
1996 1995
-------------- ------------
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January 31,
1998, secured by land $ -- $ 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
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January 31,
1998, secured by land -- 60,690
------------- -----------
$ 11,373,886 $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 $12,900,000.
5. Related Party Transactions
Property management fees of $151,265 and $136,946 for the nine months ended
September 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, pursuant to an 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 $6,945 and
$6,209 as a repair and maintenance fee during the nine months ended
September 30, 1996 and 1995, respectively, and has capitalized this cost as
a part of land, buildings and amenities.
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the nine months ended
September 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 $ 142,794 $ 136,436
Leasing 88,053 95,086
Property manager 180,601
Other 6,590 9,361
------------------- -------------------
$ 418,038 $ 433,583
=================== ===================
6. Reclassification of 1995 Financial Statements
Certain reclassifications have been made to the September 30, 1995
financial statements to conform with September 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 September 30 were as
follows:
1996 1995
---- ----
Wholly-Owned Properties
- -----------------------
Commonwealth Business Center Phase I 96% 78%
Plainview Point Office Center 86% 78%
Phases I and II
The Willows of Plainview Phase I 91% 93%
Properties Owned in Joint Venture with
- --------------------------------------
NTS-Properties V (Ownership % at
- --------------------------------
September 30, 1996)
- -------------------
The Willows of Plainview Phase II (10%) 96% 94%
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
- ---------------------------------
September 30, 1996)
- -------------------
Golf Brook Apartments (4%) 97% 94%
Plainview Point III Office Center (5%) 91% 65%
Property Owned in Joint Venture with NTS-
- -----------------------------------------
Properties VII, Ltd. and NTS-Properties
- ---------------------------------------
Plus Ltd. (Ownership % at September 30,
- ---------------------------------------
1996)
- -----
Blankenbaker Business Center 1A (30%) 100% 100%
Properties Owned Through
- ------------------------
Lakeshore/University II Joint Venture
- -------------------------------------
(L/U II Joint Venture) (Ownership % at
- --------------------------------------
September 30, 1996)
- -------------------
Lakeshore Business Center Phase I (18%) 97% 87% (1)
Lakeshore Business Center Phase II (18%) 83% 73% (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 nine months ended September 30, 1996 and 1995 was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
1996 1995 1996 1995
----------- ----------- ---------- ---------
Wholly-owned Properties
- -----------------------
Commonwealth Business Center
Phase I $ 174,794 $ 150,389 $ 509,737 $ 462,477
Plainview Point Office Center
Phases I and II $ 136,786 $ 112,804 $ 405,570 $ 342,949
The Willows of Plainview
Phase I $ 287,016 $ 280,547 $ 835,786 $ 768,620
Properties owned in Joint
- -------------------------
Venture with NTS-Properties V
- -----------------------------
(Ownership % at September 30,
- -----------------------------
1996)
- -----
The Willows of Plainview
Phase II (10%) $ 32,641 $ 29,707 $ 93,822 $ 85,261
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 September 30,
- -----------------------------
1996)
- ---------
Golf Brook Apartments (4%) $ 29,967 $ 29,251 $ 85,717 $ 84,162
Plainview Point III Office
Center (5%) $ 9,092 $ 4,991 $ 28,962 $ 15,614
Property Owned in Joint Venture
- -------------------------------
with NTS-Properties VII, Ltd.
- ------------------------------
and NTS-Properties Plus Ltd.
- -----------------------------
(Ownership % at September 30,
- -----------------------------
1996)
- -----
Blankenbaker Business Center
1A (30%) $ 69,422 $ 69,491 $ 208,226 $ 205,957
Properties Owned through
- ------------------------
Lakeshore/University II Joint
- -----------------------------
Venture (L/U II Joint Venture)
- ------------------------------
(Ownership % at September 30,
- -----------------------------
1996)
- -----
Lakeshore Business Center
Phase I (18%) $ 61,331 $ 50,924 $ 185,651 $ 133,863
Lakeshore Business Center
Phase II (18%) $ 51,907 $ 53,046 $ 149,733 $ 146,313
(2)
University Business Center
Phase II (18%) $ 54,342 $ 53,272 $ 161,569 $ 144,868
(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
September 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 18% increase in occupancy at Commonwealth Business Center Phase I from
September 30, 1995 to September 30, 1996 is attributed to four new leases
totalling approximately 10,000 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. Average occupancy increased from 79% (1995) to 96% (1996) for
the three months ended September 30 and increased from 80% (1995) to 91% (1996)
for the nine month period. Rental and other income at Commonwealth Business
Center Phase I increased for the three months and nine months ended September
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.
The 8% increase in occupancy at Plainview Point Office Center Phases I and II
from September 30, 1995 to September 30, 1996 is attributed to two new leases
totalling approximately 4,900 square feet. There were no tenant move-outs during
the period. Average occupancy increased for the three months ended September 30
from 77% in 1995 to 86% in 1996 and increased from 75% in 1995 to 86% in 1996
for the nine month period. Rental and other income at Plainview Point Office
Center Phases I and II increased for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 as a result of the
increase in average occupancy and an increase in rental rates on new leases.
The Willows of Plainview Phase I's occupancy decreased 2% from September 30,
1995 to September 30, 1996. Average occupancy decreased from 93% (1995) to 89%
(1996) for the three months ended September 30 and increased from 86% (1995) to
89% (1996) for the nine 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. In the opinion of the General Partner of the Partnership, the decrease
in period- ending occupancy and the decrease in average occupancy for the three
month period is only a temporary fluctuation and does not represent a downward
occupancy trend. The increase in rental and other income at The Willows of
Plainview Phase I for the nine months ended September 30, 1996 as compared to
the same period 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 increase in rental and other income at the Willows of Plainview
Phase I for the three month period is due primarily to the increase in rental
rates partially offset by the decrease in average occupancy for the period.
The Willows of Plainview Phase II's occupancy increased from 94% as of September
30, 1995 to 96% as of September 30, 1996. Average occupancy increased from 93%
(1995) to 96% (1996) for the three months ended September 30 and from 91% (1995)
to 95% (1996) for the nine month period. The increase in rental and other income
at The Willows of Plainview Phase II for the three months and nine months ended
September 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 increased 3% from September 30, 1995 to
September 30, 1996. Average occupancy increased from 96% (1995) to 97% (1996)
for the three months ended September 30 and decreased from 95% (1995) to 94%
(1996) for the nine month period. The change in rental and other income at Golf
Brook Apartments for the three months and nine months ended September 30, 1996
as compared to the same periods in 1995 was not significant.
The 26% increase in occupancy at Plainview Point III Office Center from
September 30, 1995 to September 30, 1996 is primarily the result of a new
five-year lease for approximately 16,700 square feet. The increase in occupancy
can also be attributed to expansions by three current tenants of existing space
totalling approximately 6,900 square feet. Partially offsetting the new leases
is one tenant move-out at the end of the lease term totalling approximately
6,900 square
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
feet. Average occupancy increased from 54% (1995) to 90% (1996) for the three
months ended September 30 and increased from 52% (1995) to 94% (1996) for the
nine month period. Rental and other income increased at Plainview Point III
Office Center for the three months and nine months ended September 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 nine months ended
September 30, 1996 as compared to the same periods in 1995 was not significant.
The 10% increase in occupancy at Lakeshore Business Center Phase I from
September 30, 1995 to September 30, 1996 can be attributed to seven new leases
totalling approximately 19,500 square feet which includes approximately 6,900
square feet in expansions by three current tenants. The new leases and
expansions are partially offset by three tenants, who occupied a total of
approximately 5,200 square feet, vacating the premises at the end of the lease
terms. Average occupancy increased from 84% (1995) to 97% (1996) for the three
months ended September 30 and increased from 81% (1995) to 98% (1996) for the
nine month period. Rental and other income increased at Lakeshore Business
Center Phase I for the three months and nine months ended September 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 nine months ended September 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.)
Subsequent to September 30, 1996, an approximately 5,000 square foot tenant
vacated Lakeshore Business Center Phase I prior to the end of the lease term. As
a result of this tenant move-out, the business center's occupancy has decreased
to 92%.
The 10% increase in occupancy at Lakeshore Business Center Phase II from
September 30, 1995 to September 30, 1996 can be attributed to three new leases
totalling approximately 13,800 square feet and expansions by two current tenants
totalling approximately 7,000 square feet. Partially offsetting the new leases
are two tenant move-outs totalling approximately 5,100 square feet and a
downsizing by a current tenant of its existing space of approximately 6,000
square feet. The move-outs represent tenants who vacated prior the end of the
lease term but are continuing to pay rent through the end of the lease term
(September 1996 and August 1997). Average occupancy at Lakeshore Business Center
Phase II increased from 77% (1995) to 81% (1996) for the three months ended
September 30 and decreased from 79% (1995) to 78% (1996) for the nine month
period. Overall, rental and other income decreased at Lakeshore Business Center
Phase II for the nine months ended September 30, 1996 as compared to the same
period in 1995 primarily as a result of a decrease in rental rates on lease
renewals. As discussed in prior filings, prior to the Ft. Lauderdale area
experiencing an economic downturn, the property was able to negotiate higher net
effective rental rates than current market rental rates. As a result, the leases
that were renewed at the end of 1995 and the beginning of 1996 renewed at a
lower net effective rental rate. The Partnership's proportionate share of the
rental and other income at Lakeshore Business Center Phase II, however,
increased for the nine months ended September 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.) Overall, rental
and other income at Lakeshore Business Center Phase II remained fairly constant
for the three month period ended September 30, 1996 as compared to the same
period in 1995.
-12-
<PAGE>
Results of Operations - Continued
- ---------------------------------
As of September 30, 1996, Lakeshore Business Center Phase II had approximately
3,900 square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the fourth quarter of 1996. With this new
lease, the business center's occupancy should improve to 87%.
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. PCA has currently sub-leased approximately 70,000
square feet (or 91%) of University Business Center Phase II to three tenants. Of
the total being sub-leased, approximately 59,000 square feet (or 84%) 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 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, of which approximately $92,000
will be reimbursed by Full Sail over a 27-month period which began 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 nine months ended
September 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 nine
months ended September 30, 1996 as compared to the same period in 1995 as a
result of a decrease in common area expense reimbursements. The decrease in
rental and other income for the nine month period is partially offset by a rent
escalation based upon an increase in the consumer price index. The change in
rental and other income for the three month period at University Business Center
Phase II was not significant.
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 nine months
ended September 30, 1996 and 1995.
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 nine months ended September 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 nine months ended September 30, 1996
as compared to the same period in 1995 is due primarily to increased utility
costs, landscaping costs and general building maintenance costs at the
Partnership's commercial properties, increased costs connected with fully
furnished units at The Willows of Plainview Phases I and II and increased
interior and exterior replacement costs at Golf Brook Apartments. The increase
-13-
<PAGE>
Results of Operations - Continued
- ---------------------------------
in operating expenses for the nine month period is also due to the Partnership
acquiring an interest in the L/U II Joint Venture in January 1995 (see
discussion below). The increase in operating expenses for the nine month period
is partially offset by decreased exterior painting costs at the Willows of
Plainview Phases I and II. The change in operating expenses for the three month
period was not significant.
The decrease in operating expenses - affiliated for the three months and nine
months ended September 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 nine 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 in either the three month or nine
month periods. 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 1996 write-off of unamortized loan costs relate to loan costs associated
with the Lakeshore/University II Joint Venture's notes payable. The unamortized
loan costs were expensed due to the fact that the notes were retired in 1996
prior to their maturity (January 31, 1998). See the Liquidity and Capital
Resources section for further discussion.
The decrease in amortization of capitalized leasing costs for the three months
and nine months ended September 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 decreased for the three months and nine months ended
September 30, 1996 as compared to the same period in 1995 due primarily to
continued principal payments on the mortgages and notes payable of the
Partnership and its joint venture properties. The decrease in interest expense
for both periods can also be attributed to a lower interest rate on the
permanent financings obtained by the L/U II Joint Venture on July 23, 1996. 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 nine
months ended September 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 nine months ended September 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). The change in real estate taxes for the three months ended September 30,
1996 as compared to the same period in 1995 was not significant.
-14-
<PAGE>
Results of Operations - Continued
- ---------------------------------
Professional and administrative expenses decreased for the three months and nine
months ended September 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 expenses - affiliated for the
three months and nine months ended September 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
nine months ended September 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.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations for the nine months ended September 30 was $688,215
(1996) and $594,662 (1995). These funds, in conjunction with cash on hand, were
used to make a 1.39% (annualized) distribution of $225,093 for the nine months
ended September 30, 1996 and a 5.9% (annualized) distribution of $1,021,546 for
the nine months ended September 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 and investment securities as shown
on the Partnership's balance sheet as of September 30) were $350,959 and
$821,685 at September 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.
On July 23, 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 outstanding balances of the loans at September 30, 1996 were $6,000,163,
$5,751,193 and $5,576,915, respectively. The loans are recorded as a liability
of the Joint Venture. The Partnership's proportionate interest in the loans at
September 30, 1996 was $1,071,029, $1,026,588 and $995,479, respectively. 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. Monthly principal payments are
based upon a 12-year amortization schedule. At maturity, the loans will have
been repaid based on the current rate of amortization. The proceeds from the
loans were used to pay off the Joint Venture's notes payable of approximately
$16.8 million which bore interest at a fixed rate of 10.6% and to fund loan
closing
-15-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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 notes which
were paid off had a maturity date of January 31, 1998. The remaining proceeds
will be used to fund Joint Venture tenant finish improvements and leasing costs.
As of September 30, 1996, the Partnership has a mortgage payable with an
insurance company in the amount of $2,521,791. 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 September 30, 1996, the Partnership had two mortgage loans each with an
insurance company in the amount of $2,020,411 and $1,924,200. 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 September 30, 1996, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company in the amount of $4,275,998. 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, 1996 is $1,286,220. 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 September 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 $3,232,866 and $1,930,069. The
mortgages are recorded as a liability of the Joint Venture. The Partnership's
proportionate interest in the mortgages as of September 30, 1996 is $528,168
($330,722 and $197,446). 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).
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 in
1995 also included cash which was escrowed for capital expenditures, leasing
commissions and tenant improvements at the properties owned by the L/U II Joint
Venture and 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 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
provided by investing activities were the result of a release of the escrow
funds discussed above and from the maturity of investment securities. Cash flows
used in financing activities are for cash
-16-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
distributions, payment of loan costs, principal payments on mortgages and notes
payable, repurchases of limited partnership Units, and an increase in funds
reserved by the Partnership for the repurchase of limited partnership units.
Cash flows provided by financing activities were the result of increases in
mortgages payable. 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 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 on July 23, 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
nine months ended September 30, 1996 and 1995.
Cash
Net Loss Distributions Return of
Allocated Declared Capital
--------------- --------------- --------------
Limited Partners:
1996 $ (41,650) $ 222,842 $ 222,842
1995 (282,356) 1,011,330 1,011,330
General Partner:
1996 $ (421) $ 2,251 $ 2,251
1995 (2,852) 10,215 10,215
As of September 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 which began in January 1996.
This commitment is the result of lease negotiations with Full Sail Recorders,
Inc. ("Full Sail") which currently sub-leases approximately 59,000 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. The Joint Venture anticipates that the allowance will be paid to
Full Sail during the fourth quarter of 1996 and/or early 1997. 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 September 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.
-17-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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.
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 was able to repurchase 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 repurchase an additional 1,850 Units at a price of $150 per
Unit. As of September 30, 1996, 2,636 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.
-18-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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, 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.
-19-
<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
None.
-20-
<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: November 11 , 1996
-21-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 569,669
<SECURITIES> 0
<RECEIVABLES> 407,380
<ALLOWANCES> 12,790
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,017,749
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 15,867,542
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,373,886
0
0
<COMMON> 0
<OTHER-SE> 3,950,385
<TOTAL-LIABILITY-AND-EQUITY> 15,867,542
<SALES> 2,657,231
<TOTAL-REVENUES> 2,674,930
<CGS> 0
<TOTAL-COSTS> 1,818,456
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 718,231
<INCOME-PRETAX> (42,071)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,071)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,071)
<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>
