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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission File Number 0-11655
NTS-PROPERTIES IV
(Exact name of registrant as specified in its charter)
Kentucky 61-1026356
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
Exhibit Index: See page 21
Total Pages: 22
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of June 30, 1997 and December 31, 1996 3
Statements of Operations
For the three months and six months ended
June 30, 1997 and 1996 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1997 and 1996 5
Notes To Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-20
PART II
1. Legal Proceedings 21
2. Changes in Securities 21
3. Defaults upon Senior Securities 21
4. Submission of Matters to a Vote of Security Holders 21
5. Other Information 21
6. Exhibits and Reports on Form 8-K 21
Signatures 22
- 2 -
<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, 1997 December 31, 1996*
------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 364,116 $ 346,479
Cash and equivalents - restricted 168,432 68,193
Investment securities 116,928 --
Accounts receivable, net of allowance
for doubtful accounts of $2,372 (1997)
and $7,551 (1996) 314,738 347,133
Land, buildings and amenities, net 13,392,666 13,801,251
Asset held for sale 297,251 297,251
Other assets 519,461 545,979
----------- -----------
$15,173,592 $15,406,286
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $10,960,827 $11,236,625
Accounts payable 145,425 142,163
Security deposits 87,468 83,911
Other liabilities 148,709 26,412
----------- -----------
11,342,429 11,489,111
Commitments and Contingencies
Partners' equity 3,831,163 3,917,175
----------- -----------
$15,173,592 $15,406,286
=========== ===========
</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 337,100 3,406 340,506
Net loss - current year (51,593) (521) (52,114)
Cash distributions declared to
date (21,586,280) (218,253) (21,804,533)
Repurchase of limited
partnership Units (487,595) -- (487,595)
------------ ------------ ------------
Balances at June 30, 1997 $ 4,046,531 $ (215,368) $ 3,831,163
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 31, 1997.
- 3 -
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 890,669 $ 887,816 $ 1,739,222 $ 1,752,030
Interest and other income 8,375 3,621 14,486 13,347
----------- ----------- ----------- -----------
899,044 891,437 1,753,708 1,765,377
EXPENSES:
Operating expenses 197,207 150,562 378,533 306,616
Operating expenses - affiliated 92,949 91,940 192,890 189,070
Write-off of unamortized
building costs -- 6,871 -- 6,871
Amortization of capitalized
leasing costs 5,227 5,377 10,452 10,447
Interest expense 217,048 244,227 433,404 488,551
Management fees 50,243 51,011 98,480 100,183
Real estate taxes 53,737 55,227 108,750 110,169
Professional and administrative
expenses 26,564 23,958 51,583 46,391
Professional and administrative
expenses - affiliated 39,206 31,164 77,988 74,148
Depreciation and amortization 226,009 231,875 453,742 462,599
----------- ----------- ----------- -----------
908,190 892,212 1,805,822 1,795,045
----------- ----------- ----------- -----------
Net loss $ (9,146) $ (775) $ (52,114) $ (29,668)
=========== =========== =========== ===========
Net loss allocated to the
limited partners $ (9,055) $ (767) $ (51,593) $ (29,371)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (.34) $ (.03) $ (1.93) $ (1.02)
=========== =========== =========== ===========
Weighted average number of
limited partnership units 26,689 28,110 26,726 28,834
=========== =========== =========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES IV
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,146) $ (775) $ (52,114) $ (29,668)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Accrued interest on investment
securities -- -- -- 3,642
Write-off of unamortized building
costs -- 6,871 -- 6,871
Amortization of capitalized leasing
costs 5,227 5,377 10,452 10,447
Depreciation and amortization 226,009 231,875 453,742 462,599
Changes in assets and liabilities:
Cash and equivalents - restricted (51,886) (52,620) (99,989) (102,963)
Accounts receivable 31,236 (129,401) 32,395 (122,437)
Other assets 24,607 9,406 4,259 (22,642)
Accounts payable (21,515) (24,524) 3,262 (45,876)
Security deposits 2,330 213 3,557 (102)
Other liabilities 63,584 50,878 122,299 104,990
--------- --------- --------- ---------
Net cash provided by operating
activities 270,446 97,300 477,863 264,861
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (21,200) (12,440) (33,350) (59,104)
Decrease in cash and equivalents -
restricted -- -- -- 2,450
Purchase of investment securities (116,928) -- (116,928) --
Maturity of investment securities -- -- -- 400,945
--------- --------- --------- ---------
Net cash provided by (used in)
investing activities (138,128) (12,440) (150,278) 344,291
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages and notes
payable (140,362) (112,180) (275,798) (223,523)
Cash distributions -- (86,342) -- (176,478)
Additions to loan costs -- (33,612) -- (41,485)
Repurchase of limited partnership Units -- (116,700) (33,900) (304,500)
Decrease in cash and equivalents -
restricted -- 37,200 (250) --
--------- --------- --------- ---------
Net cash used in financing activities (140,362) (311,634) (309,948) (745,986)
--------- --------- --------- ---------
Net increase (decrease) in cash and
equivalents (8,044) (226,774) 17,637 (136,834)
CASH AND EQUIVALENTS, beginning of period 372,160 366,550 346,479 276,610
--------- --------- --------- ---------
CASH AND EQUIVALENTS, end of period $ 364,116 $ 139,776 $ 364,116 $ 139,776
========= ========= ========= =========
Interest paid on a cash basis $ 217,052 $ 245,487 $ 436,959 $ 492,560
========= ========= ========= =========
</TABLE>
- 5 -
<PAGE>
NTS-PROPERTIES IV
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1996 Annual Report. In the opinion of the general partner, all
adjustments (consisting only 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, 1997 and 1996.
1. Use of Estimates in the Preparation of Financial Statments
----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
Actual results could differ from those estimates.
2. 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.
3. Interest Repurchase Reserve
---------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated
Agreement of Limited partnership, the Partnership established an Interest
Repurchase Reserve. Through June 30, 1997, the Partnership has repurchased
a total of 3,056 Units for $458,400. Repurchased Units are retired by the
Partnership, thus increasing the share of ownership of each remaining
investor. On January 10, 1997, the Partnership indefinitely suspended the
Interest Repurchase Program.
4. Investment Securities
---------------------
Investment Securities represent investments in Certificates of Deposit or
securities issued by the U.S. Government with initial maturities of greater
than three months. The investments are carried at cost which approximates
market value. The Partnership intends to hold the securities until
maturity. During 1996 and 1997, the Partnership sold no investment
securities. As of June 30, 1996, the Partnership held no investment
securities. The following provides details regarding the investment held at
June 30, 1997:
Amortized Maturity Value at
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $ 116,928 09/29/97 $ 118,459
(Notes to Financial Statements continued on next page)
- 6 -
<PAGE>
5. Mortgages Payable
-----------------
Mortgages payable consist of the following:
June 30, December 31,
1997 1996
---------- ----------
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.8%, due October 1, 2004,
secured by land and building $ 2,355,608 $ 2,467,606
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7%, due December 5, 2003,
secured by land, buildings and amenities 1,995,919 2,012,389
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7%, due December 5, 2003,
secured by land, building and amenities 1,900,875 1,916,561
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,214,345 1,262,767
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008
secured by land and building 1,029,753 1,057,548
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 987,024 1,013,666
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 957,115 982,949
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 325,725 327,573
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 194,463 195,566
---------- ----------
$10,960,827 $11,236,625
========== ==========
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 $12,400,000.
- 7 -
<PAGE>
6. Related Party Transactions
--------------------------
Property management fees of $98,480 and $100,183 were paid to NTS
Development Company, an affiliate of the general partner of the
Partnership, for the six months ended June 30, 1997 and 1996, respectively.
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. As permitted by 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 $2,303 and $1,479 as a repair and maintenance fee during the six
months ended June 30, 1997 and 1996, 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 six months ended June 30, 1997 and 1996. These
charges include items which have been expensed as operating expenses -
affiliated or professional and administrative expenses - affiliated and
items which have been capitalized as other assets or as land, buildings and
amenities. The charges were as follows:
1997 1996
-------- --------
Administrative $101,434 $ 96,538
Leasing 53,045 60,942
Property management 124,941 120,965
Other 1,832 2,247
-------- --------
$281,252 $280,692
======== ========
7. Commitments and Contingencies
-----------------------------
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University
Business Center Phase II. The business center is owned by the
Lakeshore/University II (L/U II) Joint Venture in which the Partnership has
an 18% interest. The original lease term was for seven years, and the
tenant took occupancy in April 1991. During 1994, 1995 and 1996, Crosby
sub-leased a portion of the business center. Currently, Crosby has
sub-leased, through the end of their lease term, approximately 85,000
square feet (including approximately 10,000 square feet of mezzanine space)
of University Business Center Phase II's approximately 88,000 square feet
of net rentable area (or 96%). Of the total being sub-leased, approximately
73,000 square feet (or 86%) is being leased by Full Sail Recorder's Inc.
("Full Sail"), a major tenant at University Business Center Phase I, a
neighboring property owned by an affiliate of the General Partner of the
Partnership. Through December 1996, Crosby continued to make rent payments
pursuant to the original lease terms. The Joint Venture received notice
that Crosby did not intend to pay full rental due under the original lease
agreement from and after January 1997. The rental income from this property
accounted for approximately 6% of the partnership's total revenues during
1996. The Joint Venture instituted legal action against Crosby to seek
resolution of this situation. See Note 8 for a further discussion regarding
the current status of this situation. Although the Joint Venture does not
presently have lease agreements (except as noted below) with the
sub-lessees noted above, beginning February 1997 rent payments from these
sub-lessees have been made directly to the Joint Venture. The Joint Venture
is currently negotiating directly with the sub- lessees to enter into lease
agreements for the space presently sublet. At this time, the future leasing
and tenant finish costs which will be required to release this space are
unknown except as noted below for the negotiations with Full Sail.
- 8 -
<PAGE>
7. Commitments and Contingencies - Continued
-----------------------------------------
In December 1995, Full Sail signed a 33 month lease with the L/U II Joint
Venture for approximately 41,000 square feet of the space it currently
sub-leases from Crosby. In November 1996, Full Sail signed a lease
amendment which increased the square footage from 41,000 square feet to
48,000 square feet and extended the lease term from 33 months to 76 months.
In November 1996, Full Sail also signed a 52 month lease for an additional
approximately 21,000 square feet it presently sub-leases from Crosby. Both
lease terms commence April 1998 when the Crosby lease ends. As part of the
lease negotiations, Full Sail will receive a total of $450,000 in special
tenant allowances ($200,000 resulting from the original lease signed
December 1995 and $250,000 resulting from the lease amendment signed
November 1996). Approximately $92,000 of the total allowance is to be
reimbursed by Full Sail to the L/U II Joint Venture. The Partnership's
proportionate share of the net commitment ($450,000 less $92,000) is
approximately $64,000 or 18%. The tenant allowance will be due and payable
to Full Sail pursuant to the previously mentioned lease agreements as
appropriate invoices for tenant finish costs incurred by Full Sail are
submitted to the L/U II Joint Venture. The source of funds for this
commitment is expected to be cash flows from operations and/or cash
reserves.
8. Subsequent Event
----------------
Crosby has abandoned its business and sold all or most of its operating
assets and has informed the Joint Venture that Crosby may be insolvent.
Subsequent to June 30, 1997, a conditional settlement was reached at a
mediation conference with Crosby and its corporate parent, whereby, subject
to the Joint Venture's acceptance of the settlement terms, the corporate
parent has agreed to pay a portion of Crosby's liability to the Joint
Venture in full satisfaction of all claims against Crosby and any of its
affiliates. The amount of any settlement will be substantially less than
the aggregate liability of Crosby to the Joint Venture resulting from
Crosby's default under its lease. As a result, the Joint Venture may be
forced to seek out additional sources of capital to fund ongoing
operations, including, without limitation, from loans, the sale of assets,
additional capital contributions of its partners and/or the admission of a
new partner or partners, or from other sources. There is no present
assurance that any such needed capital will be available.
- 9 -
<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:
1997 1996
---- ----
Wholly-Owned Properties
- -----------------------
Commonwealth Business Center Phase I 82% 89%
Plainview Point Office Center Phases I and II 82% 86%
The Willows of Plainview Phase I 95% 92%
Property Owned in Joint Venture with NTS-
Properties V (Ownership % at June 30, 1997)
- -------------------------------------------
The Willows of Plainview Phase II (10%) 94% 94%
Properties Owned in Joint Venture with NTS-
Properties VI (Ownership % at June 30, 1997)
- --------------------------------------------
Golf Brook Apartments (4%) 91% 91%
Plainview Point III Office Center (5%) 88% 87%
Property Owned in Joint Venture with NTS-
Properties VII, Ltd. and NTS-Properties Plus
Ltd. (Ownership % at June 30, 1997)
- --------------------------------------------
Blankenbaker Business Center 1A (30%) 100% 100%
Properties Owned through Lakeshore/University
II Joint Venture (L/U II Joint Venture)
(Ownership % at June 30, 1997)
- ---------------------------------------------
Lakeshore Business Center Phase I (18%) 97% 99%
Lakeshore Business Center Phase II (18%) 94% 80%
University Business Center Phase II (18%) 99% 99%
- 10 -
<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, 1997 and 1996 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
Wholly-Owned Properties
- -----------------------
Commonwealth Business Center Phase I $174,447 $165,709 $335,161 $334,943
Plainview Point Office Center Phases I
and II $134,200 $141,984 $273,396 $268,785
The Willows of Plainview Phase I $290,530 $276,564 $564,245 $548,770
Property Owned in Joint Venture with
NTS-Properties V (Ownership % at June
30, 1997)
- --------------------------------------
The Willows of Plainview Phase II
(10%) $ 33,175 $ 30,927 $ 64,170 $ 61,182
Properties Owned in Joint Venture with
NTS-Properties VI (Ownership % at June
30, 1997)
- --------------------------------------
Golf Brook Apartments (4%) $ 26,951 $ 27,960 $ 54,791 $ 55,750
Plainview Point III Office Center (5%) $ 10,148 $ 9,594 $ 19,545 $ 19,871
Property Owned in Joint Venture with
NTS-Properties VII, Ltd. And NTS-
Properties Plus Ltd. (Ownership % at
June 30, 1997)
- ------------------------------------
Blankenbaker Business Center 1A (30%) $ 69,448 $ 69,422 $138,870 $138,804
Properties Owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at June
30, 1997)
- -----------------------------------
Lakeshore Business Center Phase I
(18%) $ 62,298 $ 63,179 $125,444 $124,321
Lakeshore Business Center Phase II
(18%) $ 63,789 $ 50,980 $123,055 $ 97,827
University Business Center Phase II
(18%) $ 28,698 $ 54,357 $ 45,508 $107,227
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
- 11 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 7% decrease in occupancy at Commonwealth Business Center Phase I from June
30, 1996 to June 30, 1997 is attributed to one tenant move-out at the end of the
lease term of approximately 5,500 square feet and one tenant, who had occupied
3,200 square feet, vacating the premises prior to the end of the lease term due
to a downsizing decision by the tenant's parent company. The tenant paid the
Partnership a lease termination fee of $6,300 in the fourth quarter of 1996
(recorded as rental income). There was no accrued income connected with this
lease. Partially offsetting the tenant move-outs are two new leases for a total
of 4,400 square feet. Average occupancy remained constant at 89% for the three
months ended June 30, 1996 and 1997 and decreased from 89% (1996) to 88% (1997)
for the six month period. In the opinion of the General Partner of the
Partnership, the decrease in occupancy is only a temporary fluctuation and does
not represent a downward occupancy trend. The change in rental and other income
at Commonwealth Business Center Phase I for the six months ended June 30, 1997
as compared to the same period in 1996 is not significant. The increase in
rental and other income at Commonwealth Business Center Phase I for the three
months ended June 30, 1997 as compared to the same period in 1996 is a result of
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 4% decrease in occupancy at Plainview Point Office Center Phases I and II
from June 30, 1996 to June 30, 1997 is attributed to three tenant move-outs at
the end of the lease terms totalling approximately 3,000 square feet. Partially
offsetting the move-outs is an expansion by a current tenant of its existing
space by approximately 1,000 square feet. Average occupancy decreased from 86%
(1996) to 83% (1997) for the three months ended June 30 and from 86% (1996) to
85% (1997) for the six month period. The change in rental and other income at
Plainview Point Office Center Phases I and II for the six months ended June 30,
1997 as compared to the same period in 1996 is not significant. Rental and other
income at Plainview Point Office Center Phases I and II decreased for the three
months ended June 30, 1997 as compared to the same period in 1996 as a result of
the decrease in average occupancy.
The Willows of Plainview Phase I's occupancy increased 3% from June 30, 1996 to
June 30, 1997. Average occupancy increased from 91% (1996) to 92% (1997) for the
three months ended June 30 and from 89% (1996) to 91% (1997) for the six month
period. Occupancy at residential properties fluctuates on a continuous basis.
Period-ending occupancy percentages represent occupancy only on 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, 1997 as compared to the same periods in 1996 is due
primarily to the increase in average occupancy.
The Willows of Plainview Phase II's occupancy was at 94% at June 30, 1996 and
1997. Average occupancy increased from 93% (1996) to 94% (1997) for the three
months ended June 30 and decreased from 95% (1996) to 91% (1997) for the six
month period. The change in rental and other income at The Willows of Plainview
Phase II for the three months and six months ended June 30, 1997 as compared to
the same periods in 1996 was not significant.
Golf Brook Apartments occupancy was 91% at June 30, 1996 and 1997. Average
occupancy decreased from 90% (1996) to 89% (1997) for the three months ended
June 30 and decreased from 92% (1996) to 91% (1997) for the six month period.
Rental and other income at Golf Brook Apartments remained fairly constant for
the three months and six months ended June 30, 1997 as compared to the same
periods in 1996.
- 12 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 1% increase in occupancy at Plainview Point III Office Center from June 30,
1996 to June 30, 1997 is the result of expansions by two tenants of their
existing space for a total of approximately 2,500 square feet. Partially
offsetting the expansions is one tenant vacating approximately 1,600 square feet
due to a downsizing of current space. The downsizing was done in conjunction
with a lease renewal, so there was no write-off of accrued income. Average
occupancy decreased from 94% (1996) to 89% (1997) for the three months ended
June 30 and from 95% (1996) to 91% (1997) for the six month period. Rental and
other income remained fairly constant at Plainview Point III Office Center for
the three months and six months ended June 30, 1997 as compared to the same
periods in 1996.
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, 1997 as compared to the same periods in 1996 was not significant.
The 2% decrease in occupancy at Lakeshore Business Center Phase I from June 30,
1996 to June 30, 1997 can be attributed to five tenant move-outs totalling
approximately 10,300 square feet. The five move-outs consist of one tenant
vacating at the end of the lease term (1,800 square feet), one tenant exercising
a termination option (1,600 square feet - no termination fee was required) and
three tenants vacating prior to the end of the lease term - one due to a
business decision to consolidate its office space at another location (700
square feet tenant paid rent through end of lease), one due to a downsizing
decision by the tenant's parent company (1,200 square feet - tenant paid the L/U
II Joint Venture a lease termination fee (recorded as rental income) of
approximately $7,000 of which the Partnership's proportionate share is $1,300 or
18%) and one due to bankruptcy (5,000 square feet - tenant ceased rental
payments). The write-off of accrued income connected with these leases was not
significant. The move-outs are partially offset by five new leases totalling
approximately 6,400 square feet and an expansion by a current tenant of its
existing space totalling approximately 2,100 square feet. Average occupancy at
Lakeshore Business Center Phase I decreased from 98% (1996) to 96% (1997) for
the three months ended June 30 and from 98% (1996) to 95% (1997) for the six
month period. The change in rental and other income at Lakeshore Business Center
Phase I for the three months and six months ended June 30, 1997 as compared to
the same periods in 1996 was not significant.
The 14% increase in occupancy at Lakeshore Business Center Phase II from June
30, 1996 to June 30, 1997 can be attributed to six new leases totalling
approximately 17,400 square feet which includes approximately 7,000 square feet
in expansions by two current tenants. One tenant, Lambda Physik, accounts for
nearly 11,000 square feet of the total new leases and has become the largest
tenant in the building; occupying approximately 11% of the total building
rentable square feet. Partially offsetting the new leases is a downsizing by a
current tenant of its existing space of approximately 3,600 square feet. The
downsizing was the result of a decision by the tenant's management to centralize
its warehouse operation with another location. The downsizing was done in
conjunction with a lease renewal; therefore, there was no write-off of accrued
income. Average occupancy at Lakeshore Business Center Phase II increased from
80% (1996) to 94% (1997) for the three months ended June 30 and from 76% (1996)
to 92% (1997) for the six month period. The increase in rental and other income
at Lakeshore Business Center Phase II for the three months and six months ended
June 30, 1997 as compared to the same periods in 1996 is due primarily to the
increase in average occupancy.
- 13 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
As of June 30, 1997, Lakeshore Business Center Phase II has approximately 1,800
square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the fourth quarter of 1997.
Subsequent to June 30, 1997, a lease for approximately 4,200 square feet was
signed at Lakeshore Business Center Phase II with a tenant who currently
occupies approximately 1,300 square feet in Lakeshore Business Center Phase I.
The lease is for six years and the tenant is expected to take occupancy near the
end of the third quarter of 1997. With the new leases, the business center's
occupancy should improve to 100%. See the Liquidity and Capital Resources
section of this item for the tenant finish commitment related to this lease.
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original lease term was for seven years and the tenant took
occupancy in April 1991. As a result of Crosby downsizing and sub-leasing a
portion of its leased space, occupancy has decreased to 99% at June 30, 1997 and
1996. During January 1997, Crosby vacated the remaining space it occupied at the
business center. See below for a further discussion of Crosby and its leased
space.
The decrease in rental and other income at University Business Center Phase II
for the three months and six months ended June 30, 1997 as compared to the same
periods in 1996 is due to the following. Through the end of 1996, Crosby
continued to make rent payments pursuant to the original lease term. The Joint
Venture has received notice that Crosby does not intend to pay full rental due
under the lease agreement from and after January 1997. Although the Joint
Venture does not presently have lease agreements (except as noted below) with
Crosby's sub-tenants, beginning February 1997, rent payments from Crosby's
sub-tenants (see discussion below) are being made directly to the Joint Venture,
which are substantially less than what Crosby owed. Currently, the Joint Venture
is recognizing income to the extent of what is being collected from the
sub-tenants. The decrease in rental and other income for the six month period is
also due to the fact that approximately $70,000 of accrued income connected with
the Crosby lease was written-off during the first quarter of 1997, of which the
Partnership's proportionate share is approximately $13,000 or 18%.
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 and 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 has 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, 1997 or 1996.
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 Partnership's debt financing.
Interest and other income includes income from investments made by the
Partnership with cash reserves. Interest income increased for the three months
and six months ended June 30, 1997 as compared to the same periods in 1996 as a
result of an increase in cash reserves available for investment.
The increase in operating expenses for the three months and six months ended
June 30, 1997 as compared to the same periods in 1996 is due mainly to increased
utility costs, landscaping costs, general building maintenance costs and legal
expenses at the Partnership's commercial properties and increased costs for
advertising at The Willows of Plainview Phases I and II. There were no
significant fluctuations in operating expenses at Golf Brook Apartments for the
three months and six months ended June 30, 1997 as compared to the same periods
in 1996.
- 14 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The change in operating expenses - affiliated for the three months and six
months ended June 30, 1997 as compared to the same periods in 1996 is not
significant. 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 change in amortization of capitalized leasing costs for the three months and
six months ended June 30, 1997 as compared to the same periods in 1996 is not
significant.
Interest expense decreased for the three months and six months ended June 30,
1997 as compared to the same periods in 1996 due primarily to a lower interest
rate on the permanent financing obtained by the L/U II Joint Venture in July
1996 (8.125% compared to a rate of 10.6% on the previous debt). The decrease is
also due to continued principal payments on the mortgages payable by the
Partnership and its Joint Venture properties. 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 changes in real estate taxes and professional and administrative expenses
for the three months and six months ended June 30, 1997 as compared to the same
periods in 1996 are not significant.
The increase in professional and administrative expense - affiliated for the
three months an six months ended June 30, 1997 as compared to the same periods
in 1996 is due to increased salary costs. 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, 1997 as compared to the same periods in 1996 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 $24,700,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations for the six months ended June 30 was $477,863 (1997)
and $264,861 (1996). 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. 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. No distribution has been made since the quarter ended
September 30, 1996 due to uncertainties involving the Crosby lease as discussed
below. Distributions will be resumed once the Partnership has established
adequate cash reserves and is generating cash from operations which, in
management's opinion, is sufficient to warrant future 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
- 15 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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 June 30)
were $481,044 and $139,776 at June 30, 1997 and 1996, respectively.
As of June 30, 1997, the Partnership has a mortgage payable with an insurance
company in the amount of $2,355,608. 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, 1997, the Partnership had two mortgage loans each with an
insurance company in the amount of $1,995,919 and $1,900,875. 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, 1997, the Blankenbaker Business Center Joint Venture, in which
the Partnership has a joint venture interest, had a mortgage payable with an
insurance company in the amount of $4,037,051. 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,
1997 is $1,214,345. 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, 1997, the L/U II Joint Venture had three mortgage loans with an
insurance company. The outstanding balances of the loans at June 30, 1997 were
$5,768,923, $5,529,548 and $5,361,986 for a total of $16,660,457. The loans are
recorded as a liability of the Joint Venture. The Partnership's proportionate
share in the loans at June 30, 1997 was $1,029,753, $987,024 and $957,115,
respectively, for a total of $2,973,892. 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.
As of June 30, 1997, 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 $3,196,514 and $1,908,366. The
mortgages are recorded as a liability of the Joint Venture. The Partnership's
proportionate interest in the mortgages as of June 30, 1997 is $520,188
($325,725 and $194,463). 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
- 16 -`
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
renewal. Cash flows used in investing activities in 1997 are also for the
purchase of investment securities. As part of its cash management activities,
the Partnership has purchased Certificates of Deposit or securities issued by
the U.S. Government with initial maturities of greater than three months to
improve the return on its cash reserves. The Partnership intends to hold the
securities until maturity. Cash flows provided by investing activities during
the six months ended June 30, 1996 are from the maturity of investment
securities. Cash flows provided by investing activities during the six months
ended June 30, 1996 are also the result of a release of escrowed funds for
capital expenditures, leasing commissions and tenant improvements at the
properties owned by the L/U II Joint Venture as required by a 1995 loan
agreement. Cash flows used in financing activities are for principal payments on
mortgages and notes payable and repurchases of limited partnership Units. Cash
flows used in financing activities during the six months ended June 30, 1996
were also for cash distributions and payment of loan costs. Cash flows provided
by financing activities during the three months ended June 30, 1996 represents
the utilization of cash which has been reserved by the Partnership for the
repurchase of limited partnership Units. The Partnership does not expect any
material changes in the mix and relative cost of capital resources except for
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, 1997 and 1996.
Cash Return
Net Loss Distributions of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1997 $ (51,593) $ -- $ --
1996 (29,371) 168,624 168,624
General Partner:
1997 $ (521) $ -- $ --
1996 (297) 1,703 1,703
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original lease term was for seven years and the tenant took
occupancy in April 1991. During the years 1994 through 1996, Crosby sub-leased a
portion of the business center. Currently, Crosby has sub-leased, through the
end of their lease term, approximately 85,000 square feet (including
approximately 10,000 square feet of mezzanine space) of University Business
Center Phase II's approximately 88,000 square feet of net rentable area (or
96%). Of the total being sub-leased, approximately 73,000 square feet (or 86%)
is being leased by Full Sail Recorders, Inc. ("Full Sail"), a major tenant at
University Business Center Phase I, a neighboring property owned by an affiliate
of the General Partner of the Partnership. Through December 1996, Crosby
continued to make rent payments pursuant to the original lease terms. The Joint
Venture received notice that Crosby did not intend to pay full rental due under
the original lease agreement from and after January 1997. The rental income from
this property accounted for approximately 6% of the partnership's total revenues
during 1996. The Joint Venture instituted legal action against Crosby to seek
resolution of this situation. See below for a further discussion regarding the
current status of this situation. Although the Joint Venture does not presently
have lease agreements (except as noted below) with the sub-lessees noted above,
beginning February 1997 rent payments from these sub-lessees have been made
directly to the Joint Venture. The Joint Venture is currently negotiating
directly with the sub-lessees to enter into lease agreements for the space
presently sublet. At this time, all future leasing and tenant finish costs which
will be required to release this space are unknown except as noted below for
negotiations with Full Sail.
- 17 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Crosby has abandoned its business and sold all or most of its operating assets
and has informed the Joint Venture that Crosby may be insolvent. Subsequent to
June 30, 1997, a conditional settlement was reached at a mediation conference
with Crosby and its corporate parent, whereby, subject to the Joint Venture's
acceptance of the settlement terms, the corporate parent has agreed to pay a
portion of Crosby's liability to the Joint Venture in full satisfaction of all
claims against Crosby and any of its affiliates. The amount of any settlement
will be substantially less than the aggregate liability of Crosby to the Joint
Venture resulting from Crosby's default under its lease. As a result, the Joint
Venture may be forced to seek out additional sources of capital to fund ongoing
operations, including, without limitation, from loans, the sale of assets,
additional capital contributions of its partners and/or the admission of a new
partner or partners, or from other sources. There is no present assurance that
any such needed capital will be available.
In December 1995, Full Sail signed a 33 month lease with the L/U II Joint
Venture for approximately 41,000 square feet of the space it currently
sub-leases from Crosby. In November 1996, Full Sail signed a lease amendment
which increased the square footage from 41,000 square feet to 48,000 square feet
and extended the lease term from 33 months to 76 months. In November 1996, Full
Sail also signed a 52 month lease for an additional approximately 21,000 square
feet it presently sub-leases from Crosby. Both lease terms commence April 1998
when the Crosby lease ends. As part of the lease negotiations, Full Sail will
receive a total of $450,000 in special tenant allowances ($200,000 resulting
from the original lease signed December 1995 and $250,000 resulting from the
lease amendment signed November 1996). Approximately $92,000 of the total
allowance is to be reimbursed by Full Sail to the L/U II Joint Venture. The
Partnership's proportionate share of the net commitment ($450,000 less $92,000)
is approximately $64,000 or 18%. The tenant allowance will be due and payable to
Full Sail pursuant to the previously mentioned lease agreements as appropriate
invoices for tenant finish costs incurred by Full Sail are submitted to the L/U
II Joint Venture. The source of funds for this commitment is expected to be cash
flow from operations and/or cash reserves.
The Partnership had no other material commitments for renovations or capital
improvements as of June 30, 1997.
Subsequent to June 30, 1997, the L/U II Joint Venture made a commitment of
approximately $100,000 for tenant finish improvements and leasing costs at
Lakeshore Business Center Phase II. The commitment is the result of a new six
year lease for approximately 4,200 square feet. The tenant is expected to take
occupancy of the space near the end of the third quarter. The Partnership's
proportionate share of this commitment is approximately $18,000 or 18%.
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.
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.
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve.
Through June 30, 1997, the Partnership has repurchased a total of 3,056 Units
for $458,400. Repurchased Units are retired by the Partnership, thus increasing
the share of ownership of each remaining investor. On January 10, 1997, the
Partnership indefinitely suspended the Interest Repurchase Program. See below
for further discussion.
- 18 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Due to uncertainties involving the Crosby lease as discussed above, the
Partnership suspended distributions effective December 30, 1996 and suspended
the repurchase of limited partnership Units effective January 10, 1997. Once it
is clear that, in the general partner's opinion, the Partnership has the
necessary cash reserve to meet future leasing and tenant finish costs and has
rebuilt cash reserves to meet the ongoing needs of the Partnership, the general
partner will determine whether to reinstate repurchases and distributions.
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 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, 1997 in the asset held for sale
is $297,251. The Joint Venture continues to actively market the asset for sale.
In management's opinion, the net book value approximates the fair market value
less cost to sell.
Some of the statements included in Item 2, Management's Discussion and Analysis
of Financial Condition and Results of Operations, may be considered to be
"forward-looking statements" since such statements relate to matters which have
not yet occurred. For example, phrases such as the Partnership "anticipates",
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such events not occur, then the
result which the Partnership expected also may not occur or occur in a different
manner, which may be more or less favorable to the Partnership. The Partnership
does not undertake any obligations to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
- 19 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Any forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, or elsewhere in this report,
which reflect management's best judgement based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking statements as a result of a number of factors, including
but not limited to those discussed below. Any forward-looking information
provided by the Partnership pursuant to the safe harbor established by recent
securities legislation should be evaluated in the context of these factors.
The Partnership's principal activity is the leasing and management of commercial
office buildings, business centers and apartment complexes. If a major
commercial tenant or a large number of apartment lessees default on their
leases, the Partnership's ability to make payments due under its debt
agreements, payment of operating costs and other partnership expenses would be
directly impacted. A lessees ability to make payments are subject to risks
generally associated with real estate, many of which are beyond the control of
the Partnership, including general or local economic conditions, competition,
interest rates, real estate tax rates, other operating expenses and acts of God.
- 20 -
<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
No reports on Form 8-K were filed during the three months ended
June 30, 1997.
- 21 -
<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,
General Partner
By: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 11 , 1997
- 22 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1997 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 532,548
<SECURITIES> 116,928
<RECEIVABLES> 314,738
<ALLOWANCES> 2,372
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 13,392,666
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 15,173,592
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 10,960,827
0
0
<COMMON> 0
<OTHER-SE> 3,831,163
<TOTAL-LIABILITY-AND-EQUITY> 15,173,592
<SALES> 1,739,222
<TOTAL-REVENUES> 1,753,708
<CGS> 0
<TOTAL-COSTS> 4,242,847
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 433,404
<INCOME-PRETAX> (52,114)
<INCOME-TAX> 0
<INCOME-CONTINUING> (52,114)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,114)
<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>
