UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-13400
NTS-PROPERTIES V, a Maryland Limited Partnership
(Exact name of registrant as specified in its charter)
Maryland 61-1051452
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of September 30, 1995 and December 31, 1994 3
Statements of Operations
For the three months and nine months ended
September 30, 1995 and 1994 4
Statements of Cash Flows
For the three months and nine months ended
September 30, 1995 and 1994 5
Notes To Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-20
PART II
1. Legal Proceedings 21
2. Changes in Securities 21
3. Defaults upon Senior Securities 21
4. Submission of Matters to a Vote of Security Holders 21
5. Other Information 21
6. Exhibits and Reports on Form 8-K 21
Signatures 22
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES V,
A Maryland Limited Partnership
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
September 30, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 469,270 $ 207,600
Cash and equivalents - restricted 359,319 21,107
Accounts receivable, net of
allowance for doubtful accounts
of $46,137 (1995) and $44,035
(1994) 868,745 549,755
Land, buildings and amenities, net 26,413,076 17,505,634
Assets held for development, net 3,624,281 2,586,802
Other assets 688,720 576,240
------------ ------------
$ 32,423,411 $ 21,447,138
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 23,023,909 $ 11,743,884
Accounts payable - operations 289,762 148,634
Accounts payable - construction 198,536 164,458
Security deposits 139,992 125,833
Other liabilities 439,773 50,226
Commitments and contingency
------------ ------------
24,091,972 12,233,035
Partners' equity 8,331,439 9,214,103
------------ ------------
$ 32,423,411 $ 21,447,138
============ ============
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions,
net of offering costs
(35,876 units) $ 30,582,037 $ 100 $ 30,582,137
Net income (loss) - prior
years (5,841,315) 54,794 (5,786,521)
Net loss - current year (873,839) (8,827) (882,666)
Cash distributions
declared to date (15,389,204) (155,527) (15,544,731)
Repurchase of limited
partnership units (36,780) -- (36,780)
------------ ----------- ------------
Balances at September 30,
1995 $ 8,440,899 $ (109,460) $ 8,331,439
============ =========== ============
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 31, 1995.
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $30,605
(1995) and $13,343 (1994) $ 1,345,168 $ 996,018 $ 4,007,560 $ 2,702,951
Interest and other income 8,091 3,921 51,834 22,636
----------- ----------- ----------- -----------
1,353,259 999,939 4,059,394 2,725,587
Expenses:
Operating expenses 271,105 193,050 711,512 519,147
Operating expenses - affiliated 127,001 127,136 384,092 340,617
Write-off of unamortized tenant
improvements -- -- -- 31,610
Amortization of capitalized
leasing costs 8,978 2,382 24,735 9,505
Interest expense 575,755 246,360 1,619,623 701,088
Management fees 80,490 59,169 240,389 163,657
Real estate taxes 143,095 108,128 391,613 272,802
Professional and administrative
expenses 41,430 34,064 103,527 98,197
Professional and administrative
expenses - affiliated 39,954 36,533 117,733 112,653
Depreciation and amortization 452,229 309,214 1,348,836 952,496
----------- ----------- ----------- -----------
1,740,037 1,116,036 4,942,060 3,201,772
----------- ----------- ----------- -----------
Net loss $ (386,778) $ (116,097) $ (882,666) $ (476,185)
=========== =========== =========== ===========
Net loss allocated to limited
partners $ (382,910) $ (114,936) $ (873,839) $ (471,423)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (10.67) $ (3.20) $ (24.35) $ (13.14)
=========== =========== =========== ===========
Weighted average number of units 35,876 35,876 35,876 35,876
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (386,778) $ (116,097) $ (882,666) $ (476,185)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Provision for doubtful accounts 21,285 (8,165) 30,605 13,343
Write-off of unamortized tenant
improvements -- -- -- 31,610
Amortization of capitalized leasing
costs 8,978 2,382 24,735 9,505
Depreciation and amortization 452,229 309,214 1,348,836 952,496
Changes in assets and liabilities:
Cash and equivalents - restricted (126,432) (14,653) (278,115) (45,821)
Accounts receivable 4,728 (25,732) 116,830 71,196
Other assets 23,347 (328) 55,977 (58,001)
Accounts payable - operations 26,837 13,762 14,153 (65,236)
Security deposits 1,722 (1,499) 4,139 2,177
Other liabilities 161,283 115,423 54,107 269,606
----------- ----------- ----------- -----------
Net cash provided by operating
activities 187,199 274,307 488,601 704,690
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (39,120) (129,063) (65,947) (488,571)
Increase (decrease) in accounts
payable - construction 37,966 (22,711) 34,082 (142,058)
Increase in cash and equivalents
- restricted (499) -- (79,229) --
Decrease in cash and equivalents
- restricted 19,132 -- 19,132 --
----------- ----------- ----------- -----------
Net cash provided by (used in)
investing activities 17,479 (151,774) (91,962) (630,629)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
and notes payable (180,522) (157,995) (554,381) (517,485)
Capital contribution by a joint
venture partner -- -- 519,225 --
Additions to loan costs -- -- (99,813) (381)
Cash distributions -- -- -- (157,274)
----------- ----------- ----------- -----------
Net cash used in financing
activities (180,522) (157,995) (134,969) (675,140)
----------- ----------- ----------- -----------
Net increase (decrease) in cash
and equivalents 24,156 (35,462) 261,670 (601,079)
CASH AND EQUIVALENTS, beginning of
period 445,114 390,110 207,600 955,727
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 469,270 $ 354,648 $ 469,270 $ 354,648
=========== =========== =========== ===========
Interest paid on a cash basis $ 578,414 $ 244,446 $ 1,621,586 $ 709,817
=========== =========== =========== ===========
</TABLE>
<PAGE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with
the Partnership's 1994 Annual Report. In the opinion of the general
partner, all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation have been made to the accompanying
financial statements for the three months and nine months ended September
30, 1995 and 1994.
1. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
September 30, December 31,
1995 1994
Note payable to a bank bearing
interest at the Prime Rate +
1%, due March 31, 1996, secured
by certain land and buildings $ 6,552,000 $ 7,002,000
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 2,938,970 2,969,217
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 1,754,608 1,772,667
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building 3,980,033 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 324,227 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land
and building 6,378,160 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 860,529 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 235,382 --
----------- -----------
$23,023,909 $11,743,884
=========== ===========
The Prime Rate was 8.75% at September 30, 1995 and was 8.5% at December
31, 1994.
<PAGE>
1. Mortgages and Notes Payable - Continued
Although there is currently no agreement with the bank, the Partnership
anticipates being able to negotiate a longer term arrangement with the
current bank or obtain permanent financing from other sources for the
note which matures March 31, 1996. There is no assurance that financing
will be available to repay the note upon its maturity, or if extended,
that any available financing will be on favorable terms.
2. Cash and Equivalents - Restricted
Cash and equivalents - restricted represents escrow funds which are to
be released as capital expenditures, leasing commissions and tenant
improvements are incurred at the properties owned by the
Lakeshore/University II Joint Venture, funds received for residential
security deposits and funds which have been escrowed with mortgage
companies for property taxes and insurance in accordance with the loan
agreements.
3. Related Party Transactions
Property management fees of $240,389 and $163,657 for the nine months
ended September 30, 1995 and 1994, respectively, were paid to NTS
Development Company, an affiliate of the general partner of the
Partnership. The fee is equal to 5% of gross revenues from residential
properties and 6% of gross revenues from commercial properties pursuant
to an agreement with the Partnership. Also, as permitted by the
partnership agreement, NTS Development Company will receive a repair and
maintenance fee equal to 5.9% of costs incurred which relate to capital
improvements. The Partnership has incurred $6,157 and $29,169 as a
repair and maintenance fee during the nine months ended September 30,
1995 and 1994, respectively, and has capitalized this cost as part of
land, buildings and amenities.
As permitted by the Partnership Agreement, the Partnership also was
charged the following amounts from NTS Development Company for the nine
months ended September 30, 1995 and 1994. These charges include items
which have been expensed as operating expenses - affiliated or
professional and administrative expenses - affiliated and items which
have been capitalized as other assets or as land, buildings and
amenities. The charges were as follows:
1995 1994
Administrative $ 156,174 $ 142,069
Leasing agents 123,258 156,052
Property manager 242,617 206,692
Other 8,092 11,317
-------- --------
$ 530,141 $ 516,130
======== ========
4. Reclassification of 1994 Financial Statements
Certain reclassifications have been made to the September 30 and
December 31, 1994 financial statements to conform with the September
30, 1995 classifications. These reclassifications have no effect on
previously reported operations.
<PAGE>
5. Lakeshore/University II Joint Venture
On January 23, 1995, a new joint venture known as Lakeshore/University
II Joint Venture (L/U II Joint Venture) was formed among the
Partnership and NTS-Properties IV, NTS-Properties Plus Ltd. and
NTS/Fort Lauderdale, Ltd., affiliates of the general partner of the
Partnership, for purposes of owning Lakeshore Business Center Phases I
and II, University Business Center Phase II and certain undeveloped
tracts of land adjacent to the Lakeshore Business Center development.
The table below identifies which properties were contributed to the L/U
II Joint Venture and the respective owners of such properties prior to
the formation of the joint venture.
Property Contributing Owner
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (known as Lakeshore
III and outparcel building sites)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (known as Tract 12)
University Business Center Phase II NTS-Properties V and NTS-
Properties Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture
subject to existing indebtedness, except for Lakeshore Business Center
Phase I which was contributed to the joint venture free and clear of
any mortgage liens, and all such indebtedness was assumed by the joint
venture. Mortgages have been recorded on Lakeshore Business Center
Phase I in the amount of $5,500,000, and on University Business Center
Phase II in the amount of $3,000,000, in favor of the banks which held
the indebtedness on University Business Center Phase II, Lakeshore
Business Center Phase II and the undeveloped tracts of land prior to
the formation of the joint venture. In addition to the above, NTS-
Properties IV contributed $750,000 to the L/U II Joint Venture. As a
result of the valuation of the properties contributed to the L/U II
Joint Venture, the Partnership obtained a 69% partnership interest in
the joint venture.
6. Contingency
The litigation originally instituted by an investor in the Partnership
against her advisor and involving claims between the investment advisor
and the Partnership, its general partner, and NTS-Properties IV and its
general partner, has been settled.
7. Commitments
As of September 30, 1995, the L/U II Joint Venture had commitments for
approximately $320,000 of tenant finish improvements and leasing costs.
The commitments are the result of two new leases and three lease
renewals. The square footage of these leases range from approximately
2,000 square feet to approximately 8,000 square feet, with lease terms
<PAGE>
7. Commitments - Continued
ranging from three to five years. The Partnership's proportionate
share of these commitments is approximately $222,000 or 69%. As of
September 30, 1995, approximately $89,000 had been incurred toward
these commitments, of which the Partnership's proportionate share is
approximately $62,000 or 69%.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The occupancy levels at the Partnership's properties as of September 30 were
as follows:
1995 1994
Wholly-owned Properties
Commonwealth Business Center Phase II 68% 94%
University Business Center Phase I 92% 86%
Properties owned in joint venture
with NTS-Properties IV (Ownership
% at September 30, 1995)
The Willows of Plainview Phase II (90%) 94% 93%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (1) 74%
Property owned in joint venture with
NTS-Properties Plus Ltd. (Ownership
% at September 30, 1995)
University Business Center Phase II
(See L/U II Joint Venture below) See below (1) 100%
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture)(Ownership % at
September 30, 1995
Lakeshore Business Center Phase I (69%) 87% See above (1)
Lakeshore Business Center Phase II (69%) 73% 78% (2)
University Business Center Phase II (69%) 100% See above (1)
(1) During the first quarter of 1995, the Partnership's ownership interest
in the property changed. See page 16 for a discussion regarding this
change.
(2) As of September 30, 1994, the Partnership did not have an interest in
this property. See page 16 for a discussion regarding this change.
<PAGE>
Results of Operations - Continued
The rental and other income generated by the Partnership's properties for
the three months and nine months ended September 30, 1995 and 1994 was as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Wholly-owned Properties
Commonwealth Business Center $129,221 $124,928 $ 483,946 $345,624
Phase II
University Business Center $333,331 $315,254 $1,028,913 $790,546
Phase I
Properties owned in joint
venture with NTS-Properties
IV (Ownership % at September
30, 1995)
The Willows of Plainview $276,554 $284,957 $ 793,715 $818,634
Phase II (90%)
Lakeshore Business Center N/A (1) $218,475 $ 74,043 $614,437
Phase I (See L/U II Joint
Venture below)
Property owned in joint
venture with NTS-Properties
Plus Ltd. (Ownership % at
September 30, 1995)
University Business Center N/A (1) $ 50,072 $ 17,263 $148,323
Phase II (See L/U II Joint
Venture below)
Properties owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture)(Ownership
% at September 30, 1995
Lakeshore Business Center $197,505 N/A (2) $ 519,180 N/A (2)
Phase I (69%)
Lakeshore Business Center $205,733 N/A (3) $ 567,466 N/A (3)
Phase II (69%)
University Business Center $206,613 N/A (2) $ 561,861 N/A (2)
Phase II (69%)
(1) During the first quarter of 1995, the Partnership's ownership in the
property changed. The Partnership's proportionate share of rental
and other income for the three months ended September 30, 1995 is
reflected below (see L/U II Joint Venture). See page 16 for a
discussion regarding this change.
(2) During the first quarter of 1995, the Partnership's ownership
interest in the property changed. Rental and other income for the
three months and nine months ended September 30, 1994 is reflected
above. See page 16 for a discussion regarding this change.
(3) During the three months and nine months ended September 30, 1994, the
Partnership did not have an interest in this property. See page 16
for a discussion regarding the change which occurred during the first
quarter of 1995.
<PAGE>
Results of Operations - Continued
The 26% decrease in occupancy at Commonwealth Business Center Phase II from
September 30, 1994 to September 30, 1995 is a result of two tenants, who had
occupied approximately 17,500 square feet, vacating the premises prior to
the end of the lease terms. Both tenants exercised termination options.
There was no accrued income associated with these leases. Partially
offsetting the move-outs is an approximately 1,900 square foot expansion by
a current tenant. The Partnership is actively seeking new tenants to occupy
the vacant space. At this time, the extent and cost of any tenant
improvements which will be required to attract new tenants remains unknown.
Average occupancy increased from 72% (1994) to 93% (1995) for the nine
months ended September 30 and from 79% (1994) to 80% (1995) for the three
month period. The increase in rental and other income at Commonwealth
Business Center Phase II for the nine months ended September 30, 1995 as
compared to the same period in 1994 is a result of the increase in average
occupancy and an increase in common area expense reimbursements. Tenants
at Commonwealth Business Center Phase II reimburse the Partnership for
common area expenses as part of the lease agreements. The change in rental
and other income for the three month period was not significant.
The 6% increase in occupancy at University Business Center Phase I from
September 30, 1994 to September 30, 1995 is due to three new leases
totalling approximately 5,000 square feet. Included in this total is an
expansion of approximately 3,400 square feet by a current tenant. There
were no tenant move-outs during the 12 month period ended September 30,
1995. Average occupancy at University Business Center Phase I increased
from 86% (1994) to 91% (1995) for the nine months ended September 30 and
from 86% (1994) to 92% (1995) for the three month period. The increase in
rental and other income at University Business Center Phase I for the nine
months ended September 30, 1995 as compared to the same period in 1994 is
primarily due to the fact that the 1994 income was reduced by lease
concessions which arose out of negotiations for an 8,000 square foot
expansion and lease renewal by an existing tenant. The lease renewal
extended the tenant's lease through June 2002. The lease concession period
ended June 1994. The increase in rental and other income for the nine month
period is also due to the increase in average occupancy, an increase in
common area expense reimbursements and an increase in rental rates. Rental
and other income at University Business Center Phase I increased for the
three months ended September 30, 1995 as compared to the same period in 1994
as a result of the increase in average occupancy and an increase in common
area expense reimbursements.
The Willows of Plainview Phase II's occupancy increased from 93% as of
September 30, 1994 to 94% as of September 30, 1995. Average occupancy
decreased from 94% (1994) to 91% (1995) for the nine months ended September
30 and from 95% (1994) to 93% (1995) for the three month period. Rental and
other income at The Willows of Plainview Phase II decreased for the three
months and nine months ended September 30, 1995 as compared to the same
periods in 1994 due to the decrease in average occupancy and a decrease in
income from fully furnished units.
The 13% increase in occupancy at Lakeshore Business Center Phase I from
September 30, 1994 to September 30, 1995 can be attributed to 10 new leases
totalling approximately 19,000 square feet, which includes approximately
3,000 square feet in expansions by two current tenants. Included in the new
leases is a five-year approximately 4,800 square foot lease which commenced
during the fourth quarter of 1994. The new leases and expansions are
partially offset by three tenants, who had occupied approximately 4,400
square feet, vacating at the end of the lease terms. Average occupancy
<PAGE>
Results of Operations - Continued
increased from 73% (1994) to 84% (1995) for the three months ended September
30 and from 68% (1994) to 81% (1995) for the nine month period. The
Partnership's proportionate share of the rental and other income at
Lakeshore Business Center Phase I decreased for the three months and nine
months ended September 30, 1995 as compared to the same periods in 1994 as
a result of the Partnership's decreased ownership in Lakeshore Business
Center Phase I. (See page 16 for a discussion regarding the change.)
Overall, Lakeshore Business Center Phase I's rental and other income
increased for the three months and nine months ended September 30, 1995 as
compared to the same periods in 1994 as a result of the increases in average
occupancy and an increase in common area expense reimbursements. Partially
offsetting the increase in rental and other income in both periods is an
increase in the provision for doubtful accounts.
As of September 30, 1995, Lakeshore Business Center Phase I had
approximately 6,000 square feet of additional space leased. It is
anticipated that the tenants will take occupancy during the fourth quarter
of 1995 improving the business center's occupancy to 93%.
Philip Crosby Associates, Inc. has leased 100% of University Business Center
Phase II. The lease term is seven years, and the tenant took occupancy in
April 1991. The tenant has currently sub-leased 64% of University Business
Center Phase II. Of the total being sub-leased, 52% is being leased by a
major tenant of University Business Center Phase I. At this time, it is not
known whether Philip Crosby Associates, Inc. or the sub-lessees will renew
the current leases with the business center when the original lease expires
in 1998. The Partnership's proportionate share of the rental and other
income at University Business Center Phase II increased for the three months
and nine months ended September 30, 1995 as compared to the same periods in
1994 as a result of the Partnership's increased ownership in the business
center. (See page 16 for a discussion regarding the change.) Overall,
rental and other income at University Business Center Phase II for the three
months and nine months ended September 30, 1995 as compared to the same
periods in 1994 increased as a result of an increase in common area expense
reimbursements and a rent escalation based upon an increase in the consumer
price index.
The 5% decrease in occupancy at Lakeshore Business Center Phase II from
September 30, 1994 to September 30, 1995 can be attributed to three tenant
move-outs totalling approximately 7,200 square feet. Two of the move-outs,
totalling approximately 5,800 square feet, represent tenants who vacated the
premises at the end of the lease term. The third tenant, who occupied
approximately 1,400 square feet, vacated the premises and ceased making
rental payments in breach of the lease term due to bankruptcy. The write-
off of accrued income connected with this lease was not significant.
Partially offsetting the tenant move-outs are four new leases for a total
of approximately 2,900 square feet. Average occupancy at Lakeshore Business
Center Phase II increased for the nine months ended September 30 from 78%
(1994) to 79% (1995). Average occupancy decreased for the three month
period from 78% (1994) to 77% (1995).
In cases of tenants abandoning the premises, the Partnership pursues
collection through the use of collection agencies or other remedies
available by law when practical.
Current occupancy levels are considered adequate to continue the operation
of the Partnership's properties without the need of any additional
financing. The decreased occupancy level at Commonwealth Business Center
<PAGE>
Results in Operations - Continued
Phase II is not indicative of trends in the area in which the property is
located. See the Liquidity and Capital Resources section for a discussion
regarding the cash requirements of the Partnership's current debt
financings.
The increase in interest and other income for the nine months ended
September 30, 1995 as compared to the same period in 1994 is primarily the
result of approximately $21,600 in interest income being recognized during
the second quarter of 1995 on a receivable from a tenant at University
Business Center Phase I. Interest income was not recognized until the
receivable had been repaid in full due to the length of time it has taken
the tenant to reimburse the Partnership. Interest and other income also
includes interest earned from short-term investments made by the Partnership
with excess cash. The increase in interest income earned from short-term
investments for the three month and nine month periods is a result of an
increase in excess cash available for investment. Partially offsetting the
increase in interest income for the three month and nine month periods is
a decrease in interest income received on an account receivable from a
tenant at University Business Center Phase I due to its repayment in
September 1994. The receivable was the result of above standard tenant
improvements made in accordance with the lease agreement. The tenant
reimbursed the Partnership for the cost of these improvements along with
interest.
Operating expenses increased for the three months and nine months ended
September 30, 1995 as compared to the same periods in 1994 primarily as a
result of the Partnership's interest in the L/U II Joint Venture. (See page
16 for a discussion regarding the joint venture.) The increase in operating
expenses for the three months and nine month periods is also a result of
increased landscaping costs at the Partnership's residential property.
Partially offsetting the increase in operating expenses for the three month
and nine month periods is a decrease in repair costs at the Partnership's
commercial properties. The increase in operating expenses for the nine
month period is also partially offset by decreased utility costs at the
Partnership's commercial properties.
The increase in operating expenses - affiliated for the nine months ended
September 30, 1995 as compared to the same period in 1994 is due to the
Partnership's interest in the L/U II Joint Venture (discussed on page 16).
The change in operating expenses for the three month period was not
significant.
The 1994 write-off of unamortized tenant improvements can be attributed
mainly to University Business Center Phase I. At University Business Center
Phase I, a tenant expanded and renewed its lease through April 2001. The
tenant expanded by approximately 400 square feet for a total of
approximately 3,900 square feet. No additional space was available adjacent
to the tenant's current location; therefore, it was necessary to relocate
the tenant to another suite in the business center. As a condition of the
renewal and expansion, the Partnership agreed to renovate the new suite.
In order to complete the renovation, it was necessary to replace
improvements which had not been fully depreciated. This resulted in a
write-off of approximately $31,000. Changes to current tenant 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. In order to complete the
renovation, it is sometimes necessary to replace improvements which have not
been fully depreciated. This results in a write-off of unamortized tenant
improvements.
<PAGE>
Results of Operations - Continued
The increase in the amortization of capitalized leasing costs and interest
expense for the three months and nine months ended September 30, 1995 as
compared to the same periods in 1994 is a result the Partnership's interest
in the L/U II Joint Venture (discussed on page 16). The increase in
interest expense can also be attributed to the increase in the Prime Rate.
See Note 1 of the Partnership's financial statements for details regarding
the Partnership's debt.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is 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 fees for the three
months and nine months ended September 30, 1995 as compared to the same
periods in 1994 can also be attributed to the Partnership's interest in the
L/U II Joint Venture (discussed on page 16).
The increase in real estate taxes for the three months and nine months ended
September 30, 1995 as compared to the same periods in 1994 is primarily a
result of the Partnership's interest in the L/U II Joint Venture (discussed
on page 16). The increase in real estate taxes for both periods is also due
to an increase in the 1995 property tax assessment for Commonwealth Business
Center Phase II as compared to the 1994 assessment.
The increase in professional and administrative expenses for the three
months and nine months ended September 30, 1995 as compared to the same
periods in 1994 is due to increased external legal fees. The increase in
professional and administrative expenses for the nine month period is
partially offset by decreased external data processing charges.
The increase in professional and administrative expenses - affiliated for
the three months and nine months ended September 30, 1995 as compared to the
same periods in 1994 is due to increased accounting salaries.
Depreciation and amortization expense has increased for the three months and
nine months ended September 30, 1995 as compared to the same periods in 1994
as a result of the Partnership's interest in the L/U II Joint Venture
(discussed on page 16). The increase in depreciation and amortization
expense for both periods is partially offset by a portion of the
Partnership's assets having become fully depreciated.
Liquidity and Capital Resources
Cash provided by operating activities was $488,601 and $704,690 for the nine
months ended September 30, 1995 and 1994, respectively. The Partnership
made a .33% (annualized) cash distribution of $78,637 for the nine months
ended September 30, 1994. The annualized distribution rate is calculated
as a percent of the original capital contribution less a return of capital
in the amount of $131.87 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 was declared during the nine months ended September 30, 1995
as a result of a loan covenant (the $6,552,000 note payable) which requires
the Partnership to have $500,000 remaining in cash or cash equivalents
(excluding residential security deposits and cash escrowed with a lending
institution for the payment of property taxes) following a distribution.
The Partnership plans to resume distributions once cash reserves are
<PAGE>
Liquidity and Capital Resources - Continued
adequate to meet the loan covenant requirement, the Partnership has
established adequate cash reserves, which would include funds for future
tenant finish improvements, and the cash flow from operations is sufficient,
in management's opinion, to pay 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 and tenant finish costs.
On January 23, 1995, a new joint venture known as Lakeshore/University II
Joint Venture (L/U II Joint Venture) was formed among the Partnership and
NTS-Properties IV, NTS-Properties Plus Ltd. and NTS/Fort Lauderdale, Ltd.,
affiliates of the general partner of the Partnership, for purposes of owning
Lakeshore Business Center Phases I and II, University Business Center Phase
II and certain undeveloped tracts of land adjacent to the Lakeshore Business
Center development. The table below identifies which properties were
contributed to the L/U II Joint Venture and the respective owners of such
properties prior to the formation of the joint venture.
Property Contributing Owner
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to NTS-Properties Plus Ltd.
the Lakeshore Business Center
development (known as Lakeshore
III and outparcel building sites)
Undeveloped land adjacent to NTS/Fort Lauderdale, Ltd.
the Lakeshore Business Center
development (known as Tract 12)
University Business Center Phase II NTS-Properties V and NTS-Properties
Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture subject
to existing indebtedness, except for Lakeshore Business Center Phase I which
was contributed to the joint venture free and clear of any mortgage liens,
and all such indebtedness was assumed by the joint venture. Mortgages have
been recorded on Lakeshore Business Center Phase I in the amount of
$5,500,000, and on University Business Center Phase II in the amount of
$3,000,000, in favor of the banks which held the indebtedness on University
Business Center Phase II, Lakeshore Business Center Phase II and the
undeveloped tracts of land prior to the formation of the joint venture. In
addition to the above, NTS-Properties IV contributed $750,000 to the L/U II
Joint Venture. As a result of the valuation of the properties contributed
to the L/U II Joint Venture, the Partnership obtained a 69% partnership
interest in the joint venture.
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 for other capital additions and are funded by operating
activities and 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
<PAGE>
Liquidity and Capital Resources - Continued
carpeting and paint and/or wallcovering. The extent and cost of these
improvements are determined by the size of the space and whether the
improvements are for a new tenant or incurred because of a lease renewal.
Cash flows used in investing activities also include cash which is being
escrowed for capital expenditures, leasing commissions and tenant
improvements at the properties by the L/U II Joint Venture as required by
the loan agreements discussed on page 18. Cash flows provided by investing
activities were the result of a release of these escrow funds. Cash flows
used in financing activities are for cash distributions, loan costs and
principal payments on mortgages and notes payable. The capital contribution
by a joint venture partner represents the Partnership's interest in the L/U
II Joint Venture's increase in cash which resulted from a capital
contribution. The Partnership utilizes the proportionate consolidation
method of accounting for joint venture properties. The Partnership's
interest in the joint venture's assets, liabilities, revenues, expenses and
cash flows are combined on a line-by-line basis with the Partnership's own
assets, liabilities, revenues, expenses and cash flows. The Partnership
does not expect any material changes in the mix and relative cost of capital
resources except for the change in the $6,552,000 note payable interest rate
on May 1, 1995 (from Prime + 7/8% to Prime + 1%) and the changes resulting
from the investment in the L/U II Joint Venture. See the discussion of the
Joint Venture formation on page 16. The Partnership also expects a change
in the cost of capital resources as a result of the $6,552,000 note payable
which matures March 31, 1996. The Partnership is currently in the process
of negotiating financing to replace the maturing note; the terms of which
have not been finalized.
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the nine months ended September 30, 1995 and 1994. Distributions were
funded by cash flow derived from operating activities.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (873,839) $ -- $ --
1994 (471,423) 77,851 77,851
General Partner:
1995 $ (8,827) $ -- $ --
1994 (4,762) 786 786
As of September 30, 1995, the Partnership has accrued approximately $145,000
(included in the accounts payable - construction balance) for certain
improvements to the undeveloped land at the University Place development.
The purchaser of the approximately 1 acre tract of land at the University
Place development has paid the cost of these improvements. The Partnership
will reimburse the purchaser for these costs, along with interest at the
Prime Rate, at the earlier of (1) the start of construction of University
Business Center Phase III, (2) the sale by the Partnership of any portion
of the remaining undeveloped land, or (3) five years from the date of the
Agreement (agreement dated November 1992).
The remaining balance in accounts payable - construction at September 30,
1995 represents payables that are a result of tenant finish improvements.
Tenant finish improvements are a typical part of any lease negotiation.
None of the Partnership's properties were in the construction stage as of
September 30, 1995.
<PAGE>
Liquidity and Capital Resources - Continued
As of September 30, 1995, the L/U II Joint Venture had commitments for
approximately $320,000 of tenant finish improvements and leasing costs. The
commitments are the result of two new leases and three lease renewals. The
square footage of these leases range from approximately 2,000 square feet
to approximately 8,000 square feet, with lease terms ranging from three to
five years. The Partnership's proportionate share of these commitments is
approximately $222,000 or 69%. As of September 30, 1995, approximately
$89,000 had been incurred toward these commitments, of which the
Partnership's proportionate share is approximately $62,000 or 69%. The
Partnership had no other material commitments for renovations or capital
improvements as of September 30, 1995.
As of September 30, 1995, the Partnership had a note payable to a bank in
the amount of $6,552,000. The note is secured by the land and buildings of
Commonwealth Business Center Phase II and University Business Center Phase
I. The note is due March 31, 1996. The note currently bears interest at
the Prime Rate + 1%. The Partnership currently makes monthly principal
payments of $50,000 as part of the loan extension agreement (July 1993).
However, the Partnership will not be in default so long as it repays at
least $30,000 in principal every calendar quarter. The outstanding
principal balance at maturity based on the current rate of amortization
($50,000 principal payment each month) is $6,252,000. Although there is
currently no agreement with the bank, the Partnership anticipates being able
to negotiate a longer term arrangement with the current bank or obtain
permanent financing from other sources. There is no assurance that
financing will be available to repay the note upon its maturity, or if
extended, that any available financing will be on favorable terms.
As of September 30, 1995, The Willows of Plainview Phase II, a joint venture
between the Partnership and NTS-Properties IV, an affiliate of the general
partner, had two mortgage loans each with an insurance company in the amount
of $3,278,271 and $1,957,176. The mortgages are recorded as a liability of
the joint venture. The Partnership's proportionate interest in the
mortgages as of September 30, 1995 was $4,693,578 ($2,938,970 and
$1,754,608). 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
mortgages are based upon a 27-year amortization schedule. The outstanding
balance at maturity based on the current rate of amortization would be
$4,449,434 ($2,786,095 and $1,663,339).
As of September 30, 1995, the L/U II Joint Venture had notes payable to
banks in the following amounts: $9,213,000, $5,749,000, $1,243,000,
$468,333 and $340,000. The notes are a liability of the joint venture in
accordance with the Joint Venture Agreement. The Partnership's
proportionate interest in the notes at September 30, 1995 was $6,378,160,
$3,980,033, $860,529, $324,227 and $235,382, respectively. As part of the
loan agreements with the banks, the Joint Venture is required to place in
escrow funds for capital expenditures, leasing commissions and tenant
improvements at the properties owned by the Joint Venture. During the term
of the loans, the Joint Venture is required to fund a total of $200,000 to
the escrow account. As of September 30, 1995, approximately $87,000 remains
to be escrowed of which the Partnership's proportionate share is $60,000.
(continued next page)
<PAGE>
Liquidity and Capital Resources - Continued
The notes bear interest at a fixed rate of 10.6%, are due January 31, 1998
and are secured by the assets of the joint venture. Principal payments
required on the $9,213,000, $5,749,000 and $1,243,000 notes are as follows:
a) 12 monthly payments of $3,000 each, the first of which was due at
closing. The second through 12th payments are due on the first
day of February through December 1995.
b) 12 monthly payments of $12,000 each, commencing on January 1, 1996
through December 1, 1996.
c) 13 monthly payments of $15,000 each, commencing on January 1, 1997
through January 1, 1998.
d) Balloon payment due at maturity on January 31, 1998.
In the next 12 months, the demand on future liquidity is anticipated to
increase as a result of the required principal payments pursuant to the
$6,552,000 loan extension agreement, principal payments required on the
permanent mortgages of the NTS Willows Phase II Joint Venture, principal
payments required on the notes of the L/U II Joint Venture, commitments made
for tenant finish improvements (see page 18) and as a result of the
$6,552,000 note payable which matures March 31, 1996. Additionally, the
Partnership will continue its efforts to lease current unoccupied space at
its commercial properties. The Partnership also expects a demand on future
liquidity based on 35,968 square feet in leases expiring from October 1,
1995 to September 30, 1996 (Commonwealth Business Center Phase II - 8,725
square feet, University Business Center Phase I - 6,113 square feet,
Lakeshore Business Center Phase I - 11,862 square feet and Lakeshore
Business Center Phase II - 9,268 square feet). At this time, the future
leasing and tenant finish costs which will be required to renew the current
leases or obtain new tenants are unknown. It is anticipated that the cash
flow from operations, cash reserves and the escrow funds (as discussed on
page 18) will be sufficient to meet the needs of the Partnership.
Historically, extremely weak economic conditions in Ft. Lauderdale, Florida
caused the low occupancy levels at Lakeshore Business Center Phases I and
II. In the opinion of the general partner, leasing activity is improving
in this part of Florida. In an effort to improve the occupancy at the
business center, the Partnership has an on-site leasing agent, an employee
of NTS Development Company (an affiliate 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 following describes the efforts being taken by the Partnership to
increase the occupancy levels at the Partnership's other properties. At
Commonwealth Business Center Phase II, the leasing and renewal negotiations
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 property. All advertising is coordinated by NTS Development
Company's marketing staff located in Louisville, Kentucky. At University
Business Center Phase I in Orlando, Florida, the Partnership has an on-site
leasing agent, an employee of NTS Development Company, 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. At The Willows of Plainview Phase II, the Partnership has
an on-site leasing staff, employees of NTS Development Company, who handle
all on-site visits from potential residents, make visits to local companies
to promote fully furnished units, negotiate lease renewals with current
residents and coordinate all local advertising with NTS Development
Company's marketing staff.
<PAGE>
Liquidity and Capital Resources - Continued
Leases at the Partnership's commercial properties provide for tenants to
contribute toward the payment of common area expenses, insurance and real
estate taxes. Leases at the Partnership's Florida commercial properties
also provide for rent increases which are based upon increases in the
consumer price index. 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 Partnership owns approximately 6 acres of land, adjacent to the
University Place development, in Orlando, Florida which is zoned for
commercial development. Included in the cost of $2.5 million is land cost,
capitalized interest and common area costs. The Partnership plans to use
the land to build University Business Center Phase III but this decision
will be based on market conditions, availability of financing and
availability of the necessary resources from the Partnership.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at September 30, 1995 in the land held
for development is approximately $1.1 million. The Joint Venture intends
to hold the property until the market for undeveloped land improves in the
Ft. Lauderdale, Florida area.
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
The litigation originally instituted by an investor in the
Partnership against her investment advisor and involving claims
between the investment advisor and the Partnership, its general
partner and NTS-Properties IV and its general partner, has been
settled.
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
September 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, NTS-Properties V has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES V, a Maryland Limited
Partnership
(Registrant)
By: NTS-Properties Associates V
By: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: November 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
balance sheet as of September 30, 1995 and from the statement of operations
for the nine months ended September 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 828,589
<SECURITIES> 0
<RECEIVABLES> 868,745
<ALLOWANCES> 46,137
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 26,413,076
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 32,423,411
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 23,023,909
<COMMON> 0
0
0
<OTHER-SE> 8,331,439
<TOTAL-LIABILITY-AND-EQUITY> 32,423,411
<SALES> 4,007,560
<TOTAL-REVENUES> 4,059,394
<CGS> 0
<TOTAL-COSTS> 3,101,177
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30,605
<INTEREST-EXPENSE> 1,619,623
<INCOME-PRETAX> (882,666)
<INCOME-TAX> 0
<INCOME-CONTINUING> (882,666)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (882,666)
<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>
