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 March 31, 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
offices) (Zip Code)
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 March 31, 1995 and December 31, 1994 2
Statements of Operations
For the three months ended March 31, 1995 and 1994 3
Statements of Cash Flows
For the three months ended March 31, 1995 and 1994 4
Notes To Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-17
PART II
1. Legal Proceedings 18
2. Changes in Securities 18
3. Defaults upon Senior Securities 18
4. Submission of Matters to a Vote of Security Holders 18
5. Other Information 19
6. Exhibits and Reports on Form 8-K 19
Signatures 20
<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
March 31, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 603,114 $ 228,707
Accounts receivable, net of
allowance for doubtful accounts
of $61,318 (1995) and $44,035
(1994) 894,924 549,755
Land, buildings and amenities, net 27,154,306 17,505,634
Assets held for development, net 3,701,207 2,586,802
Other assets 808,275 576,240
------------ ------------
$ 33,161,826 $ 21,447,138
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 23,386,222 $ 11,743,884
Accounts payable - operations 346,803 148,634
Accounts payable - construction 142,714 164,458
Security deposits 134,353 125,833
Other liabilities 152,992 50,226
------------ ------------
24,163,084 12,233,035
Partners' equity 8,998,742 9,214,103
------------ ------------
$ 33,161,826 $ 21,447,138
============ ============
</TABLE>
<TABLE>
<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 (213,209) (2,154) (215,363)
Cash distributions
declared to date (15,389,204) (155,527) (15,544,731)
Repurchase of limited
partnership units (36,780) -- (36,780)
------------ ----------- ------------
Balances at March 31,
1995 $ 9,101,529 $ (102,787) $ 8,998,742
============ =========== ============
<FN>
* 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
March 31,
1995 1994
<S> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $14,119
(1995) and $11,079 (1994) $ 1,280,164 $ 872,155
Interest and other income 5,132 11,488
----------- -----------
1,285,296 883,643
Expenses:
Operating expenses 210,599 154,603
Operating expenses - affiliated 127,832 109,453
Amortization of capitalized
leasing costs 6,779 3,756
Interest expense 465,104 213,808
Management fees 78,023 52,531
Real estate taxes 117,746 82,473
Professional and administrative
expenses 35,933 31,907
Professional and administrative
expenses - affiliated 38,826 38,400
Depreciation and amortization 419,817 324,649
----------- -----------
1,500,659 1,011,580
----------- -----------
Net loss $ (215,363) $ (127,937)
=========== ===========
Net loss allocated to limited partners $ (213,209) $ (126,658)
=========== ===========
Net loss per limited partnership unit $ (5.94) $ (3.53)
=========== ===========
Weighted average number of units 35,876 35,876
=========== ===========
</TABLE>
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (215,363) $ (127,937)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Provision for doubtful accounts 14,119 11,079
Amortization of capitalized
leasing costs 6,779 3,756
Depreciation and amortization 419,817 324,649
Changes in assets and liabilities:
Accounts receivable 107,137 29,278
Other assets (6,628) (38,363)
Accounts payable - operations 71,194 (78,689)
Security deposits (1,500) 4,565
Other liabilities (232,667) 86,426
----------- ----------
Net cash (used in) provided by
operating activities (162,888) 214,764
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net additions to land, buildings,
and amenities 1,894 (151,851)
Decrease in accounts payable -
construction (21,740) (73,751)
----------- ----------
Net cash used in investing
activities (19,846) (225,602)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
and notes payable (192,068) (163,390)
Capital contribution by a joint
venture partner 519,225 --
Additions to loan costs (95,792) (774)
Cash distributions -- (78,637)
----------- ----------
Net cash provided by (used
in) financing activities 231,365 (242,801)
----------- ----------
Net (decrease) increase in cash
and equivalents 374,407 (253,639)
CASH AND EQUIVALENTS, beginning
of period 228,707 970,979
----------- -----------
CASH AND EQUIVALENTS, end of period $ 603,114 $ 717,340
=========== ===========
Interest paid on a cash basis $ 263,808 $ 229,123
</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 ended March 31, 1995 and 1994.
1. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
March 31, December 31,
1995 1994
Note payable to a bank bearing
interest at the Prime Rate +
7/8%, due March 31, 1996, secured
by certain land and buildings $ 6,852,000 $ 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 2,954,579 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 1,763,928 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 3,992,494 --
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 6,390,621 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 872,990 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 235,383 --
----------- -----------
$23,386,222 $11,743,884
=========== ===========
The Prime Rate was 9% at March 31, 1995 and was 8.5% at December 31, 1994.
<PAGE>
2. Related Party Transactions
Property management fees of $78,023 and $52,531 for the three months
ended March 31, 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 pursuant to the partnership
agreement, NTS Development Company will receive a repair and maintenance
fee equal to 5.9% of costs incurred which relate to capital
improvements. The Partnership has incurred $1,752 and $8,425 as a
repair and maintenance fee during the three months ended March 31, 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 three
months ended March 31, 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:
1995 1994
Administrative $ 51,629 $ 48,830
Leasing agents 39,789 60,288
Property manager 75,566 63,300
Other 3,847 3,548
--------- ---------
$ 170,831 $ 175,966
========= =========
3. 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.
<PAGE>
3. Lakeshore/University II Joint Venture - Continued
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.
4. Contingency
An investor (the "Plaintiff") in the Partnership and in NTS-Properties
IV, an affiliate of the general partner of the Partnership, had
previously asserted claims against her investment advisor and his
company in connection with her investment in eleven limited
partnerships. The Plaintiff invested a total of $158,000 in the
Partnership and NTS-Properties IV. The amended complaint alleged that
the advisor had violated federal securities laws, the Racketeer and
Corrupt Influenced Organizations Act ("RICO"), and common law, related
to the sale to the Plaintiff of interests in the eleven limited
partnerships. The Plaintiff sought compensatory damages in an
unspecified amount, recision and punitive damages plus interest,
attorneys' fees and costs.
On January 22, 1992, the Court issued a final judgment in favor of the
Plaintiff and against the defendants in the amount of $579,678 on the
basis of a jury finding that the defendants had breached their
fiduciary duties to the Plaintiff. The other claims against the
defendants were dismissed.
During 1994, the defendants served an amended third-party complaint
upon certain of the eleven limited partnerships originally sold to the
Plaintiff including the Partnership and NTS-Properties IV and their
respective general partners NTS-Properties Associates V and NTS-
Properties Associates IV. Defendants sought contribution and
indemnification in an unspecified amount from each of the third-party
defendants and has reached settlements with certain of them.
The NTS third-party defendants have filed and served an amended third-
party complaint upon the third-party plaintiff, and have moved to
dismiss the amended third-party complaint. Discovery is currently in
progress with respect to the defendants third-party claims against the
eleven limited partnerships, including the NTS entities.
The general partner of the Partnership believes that the evidence is
clear that there is no basis for the allegations made by the third-
party plaintiff, and that the interests of the Partnership will be
vigorously defended and that cross claims will be pursued against the
third-party plaintiff unless an acceptable mutual settlement is
secured. Management believes that this lawsuit will have no material
adverse effect on the Partnership's operations or financial condition.
<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 March 31 were as
follows:
1995 1994
Wholly-owned Properties
Commonwealth Business Center Phase II 100% 59%
University Business Center Phase I 90% 86%
Properties owned in joint venture
with NTS-Properties IV (Ownership
% at March 31, 1995)
The Willows of Plainview Phase II (90%) 90% 91%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (1) 61%
Property owned in joint venture with
NTS-Properties Plus Ltd. (Ownership
% at March 31, 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 March
31, 1995
Lakeshore Business Center Phase I (69%) 79% See above (1)
Lakeshore Business Center Phase II (69%) 77% 75% (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 13 for a discussion regarding this
change.
(2) As of March 31, 1994, the Partnership did not have an interest in this
property. See page 13 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 ended March 31, 1995 and 1994 was as follows:
1995 1994
Wholly-owned Properties
Commonwealth Business Center Phase II $177,426 $130,007
University Business Center Phase I $339,174 $253,775
Properties owned in joint venture
with NTS-Properties IV (Ownership
% at March 31, 1995)
The Willows of Plainview Phase II (90%) $255,798 $264,836
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) $ 74,043 $182,255
Property owned in joint venture
with NTS-Properties Plus Ltd.
(Ownership % at March 31, 1995)
University Business Center Phase II
(See L/U II Joint Venture below) $ 17,263 $ 48,183
Properties owned through Lakeshore/
University II Joint Venture (L/U II
Joint Venture)(Ownership % at March
31, 1995
Lakeshore Business Center Phase I (69%) $130,672 N/A (1)
Lakeshore Business Center Phase II (69%) $139,637 N/A (2)
University Business Center Phase II (69%) $148,930 N/A (1)
(1) During the first quarter of 1995, the Partnership's ownership interest
in the property changed. Rental and other income for the three months
ended March 31, 1994 is reflected above. See page 13 for a discussion
regarding this change.
(2) During the first quarter of 1994, the Partnership did not have an
interest in this property. See page 13 for a discussion regarding the
change which occurred during the first quarter of 1995.
The 41% increase in occupancy at Commonwealth Business Center Phase II from
March 31, 1994 to March 31, 1995 is a result of five new leases totalling
approximately 23,100 square feet. Included in this total is a 15-month
lease for approximately 28% of the business center's rentable area. The
lease term ends October 1995. Also included in the total is an
approximately 19,000 square foot expansion by a current tenant. Average
occupancy for the three months ended March 31 increased from 77% in 1994 to
100% in 1995. The increase in rental and other income at Commonwealth
Business Center Phase II for the three months ended March 31, 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.
<PAGE>
<PAGE>
Results of Operations - Continued
The 4% increase in occupancy at University Business Center Phase I from
March 31, 1994 to March 31, 1995 is due to three new leases totalling
approximately 5,600 square feet. Included in this total are expansions of
approximately 3,800 square feet by two current tenants. Partially
offsetting the new leases are two tenant move-outs totalling approximately
4,000 square feet. Of this total, approximately 2,000 square feet
represents one tenant who vacated at the end of the lease term. The
remaining 2,000 square feet represents a tenant who vacated and ceased
making rental payments in breach of the lease agreement. Accrued income
associated with this lease of approximately $7,700 was written-off as
uncollectible after it was determined that the tenant had ceased operations.
The Partnership will continue to pursue collection by attempting to enforce
a personal guarantee made by the tenant's owner. Average occupancy at
University Business Center Phase I for the three month period ended March
31 increased from 87% in 1994 to 90% in 1995. The increase in rental and
other income at University Business Center Phase I for the three months
ended March 31, 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 extends the tenant's lease
through June 2002. The lease concession period ended June 1994. The
increase in rental and other income for the three month period is also due
to the increase in average occupancy, an increase in common area expense
reimbursements, a decrease in the provision for doubtful accounts and an
increase in rental rates.
The Willows of Plainview Phase II's occupancy decreased from 91% as of March
31, 1994 to 90% as of March 31, 1995. Average occupancy decreased from 92%
for the three months ended March 31, 1994 to 89% for the same period in
1995. Rental and other income at The Willows of Plainview Phase II
decreased for the three months ended March 31, 1995 as compared to the same
period in 1994 due to the decrease in average occupancy and a decrease in
income from fully furnished units.
The 18% increase in occupancy at Lakeshore Business Center Phase I from
March 31, 1994 to March 31, 1995 can be attributed to 10 new leases
totalling approximately 28,800 square feet, which includes approximately
2,300 square feet in expansions by three current tenants. Included in the
new leases is a five-year approximately 9,400 square foot lease which
commenced during the second quarter of 1994 and a five-year approximately
6,400 square foot lease which commenced during the third quarter of 1994.
The new leases and expansions are partially offset by an approximately 1,200
square foot downsizing by an existing tenant and six tenants, who occupied
approximately 10,100 square feet, vacating at the end of the lease terms.
In addition to the downsizing and move-outs, the business center's leasing
office of approximately 1,500 square feet was relocated to Lakeshore
Business Center Phase II. The leasing office was relocated in order to
accommodate a new lease, approximately 9,400 square feet (as discussed
above). Average occupancy for the three month period increased from 59% in
1994 to 79% in 1995. Rental and other income at Lakeshore Business Center
Phase I increased for the three months ended March 31, 1995 as compared to
the same period in 1994 primarily as a result of the increase in average
occupancy and an increase in common area expense reimbursements. The
increase in rental and other income is partially offset by the Partnership's
decreased ownership in Lakeshore Business Center Phase I. (See page 13 for
a discussion regarding the change.)
<PAGE>
Results of Operations - Continued
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 58% of University Business
Center Phase II. Of the total being sub-leased, 47% 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 increase in rental and other income at University Business
Center Phase II for the three months ended March 31, 1995 as compared to the
same period in 1994 as a result of an increase in common area expense
reimbursements, a rent escalation based upon an increase in the consumer
price index and the Partnership's change in ownership. (See page 13 for a
discussion regarding the change.)
The 2% increase in occupancy at Lakeshore Business Center Phase II from
March 31, 1994 to March 31, 1995 can be attributed to four new leases for
a total of approximately 11,100 square feet, an expansion of approximately
1,900 square feet by a current tenant and the fact that the business
center's leasing office was relocated from Lakeshore Business Center Phase
I (owned by a joint venture between NTS-Properties IV and NTS-Properties V,
affiliates of the general partner of the Partnership at the time of
relocation) to an approximately 1,200 square foot suite in Lakeshore
Business Center Phase II. The increases in occupancy are partially offset
by an approximately 4,700 square foot downsizing by a current tenant. In
accordance with the lease agreement, the tenant paid the Partnership a total
of approximately $48,500 during the second and third quarters of 1994 to
compensate the Partnership for lost rents and undepreciated renovation costs
(recorded as lease buyout income). The increases in occupancy are also
partially offset by an approximately 1,400 square foot move-out by a tenant
who vacated at the end of the lease term and an approximately 2,300 square
foot move-out by a tenant who vacated before the end of the lease term, but
continued to make rental payments through the end of the lease term. There
was no write-off of accrued income in connection with this lease.
Additionally, the increases in occupancy are partially offset by an
approximately 3,600 square foot move-out by a tenant who vacated and ceased
making rental payments in breach of the lease agreement. Accrued income
associated with this lease of approximately $17,000 was written off as
uncollectible after it was determined that there was no possible collection.
The accrued income which was written off is attributed to the straight-line
method of accounting for rental income. Average occupancy at Lakeshore
Business Center Phase II increased for the three month period from 75% in
1994 to 78% in 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. See the Liquidity and Capital Resources section for a discussion
regarding the cash requirements of the Partnership's current debt
financings.
Interest and other income includes interest earned from short-term
investments made by the Partnership with excess cash. The decrease in
interest income for the three months ended March 31, 1995 as compared to the
same period in 1994 is a result of a decrease in excess cash available for
investment. Interest income decreased for the three month period also as
<PAGE>
Results of Operations - Continued
a result of decreased 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 ended March 31, 1995 as
compared to the same period in 1994 as a result of increased janitorial and
repair costs at the Partnership's commercial properties and increased
landscaping and replacement costs at the Partnership's residential property.
The increase in operating expenses is also a result of the Partnership's
interest in the Lakeshore/University II Joint Venture (L/U II Joint
Venture). See page 13 for a discussion regarding the joint venture.
The increase in operating expenses - affiliated for the three months ended
March 31, 1995 as compared to the same period in 1994 is due to increased
commercial leasing costs and the Partnership's interest in the L/U II Joint
Venture (discussed on page 13).
The increase in the amortization of capitalized leasing costs and interest
expense for the three month period is a result the Partnership's interest
in the L/U II Joint Venture (discussed on page 13). 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
month period can also be attributed to the Partnership's interest in the L/U
II Joint Venture (discussed on page 13).
The increase in real estate taxes for the three months ended March 31, 1995
as compared to the same period in 1994 is a result of an increased
assessment and tax rates for University Business Center Phase I and the
Partnership's interest in the L/U II Joint Venture (discussed on page 13).
The increase in professional and administrative expenses for the three
months ended March 31, 1995 as compared to the same period in 1994 is due
to increased outside legal and accounting fees. The change in professional
and administrative expenses - affiliated for the three months ended March
31, 1995 as compared to the same period in 1994 was not significant.
Depreciation and amortization expense has increased for the three months
ended March 31, 1995 as compared to the same period in 1994 as a result of
the Partnership's interest in the L/U II Joint Venture (discussed on page
13). The increase in depreciation and amortization expense for the three
month period 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 $162,888 and $214,764 for the
three months ended March 31, 1995 and 1994, respectively. The Partnership
made a 1% (annualized) cash distribution of $78,637 for the three months
ended March 31, 1994. The annualized distribution rate is calculated as a
<PAGE>
Liquidity and Capital Resources - Continued
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 three months ended March 31, 1995 as a result of a
loan covenant (the $6,852,000 note payable) which requires the Partnership
to have $500,000 remaining in cash or cash equivalents following a
distribution. The Partnership plans to resume distributions once cash
reserves are 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
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
<PAGE>
Liquidity and Capital Resources - Continued
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, reductions to accounts payable - construction and for other
capital additions and are funded by operating activities. Changes to
current tenant finish improvements are a typical part of any lease
negotiation. Improvements generally include a revision to the current floor
plan to accommodate a tenant's needs, new carpeting and paint and/or
wallcovering. The extent and cost of these improvements are determined by
the size of the space and whether the improvements are for a new tenant or
incurred because of a lease renewal. Cash flows used in 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. Partnership does not expect
any material changes in the mix and relative cost of capital resources
except for the change in the $6,852,000 note payable interest rate on May
1, 1995 (discussed below) and the changes resulting from the investment in
the L/U II Joint Venture. See the discussion of the Joint Venture formation
on page 13.
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the three months ended March 31, 1995 and 1994. Distributions were funded
by cash flow derived from operating activities.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (213,209) $ -- $ --
1994 (126,658) 77,851 77,851
General Partner:
1995 $ (2,154) $ -- $ --
1994 (1,279) 786 786
As of March 31, 1995, the Partnership has accrued approximately $139,000
(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).
<PAGE>
Liquidity and Capital Resources - Continued
The remaining balance in accounts payable - construction at March 31, 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 March 31,
1995.
As of March 31, 1995, the Partnership had no material commitments for
renovations or capital improvements.
As of March 31, 1995, the Partnership had a note payable to a bank in the
amount of $6,852,000. 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. Interest on the note was charged at the
Prime Rate + 5/8% from the date of the loan extension agreement (July 1993)
through April 30, 1994. Beginning May 1, 1994 and continuing through April
30, 1995, the note will bear interest at the Prime Rate + 7/8%. Beginning
May 1, 1995 and continuing through March 31, 1996, the note will bear
interest at the Prime Rate + 1%. Beginning July 1, 1993, the Partnership
agreed to make monthly principal payments of $50,000 as part of the loan
extension agreement. However, the Partnership will not be in default so
long as it repays at least $30,000 in principal every calendar quarter
beginning July 1, 1993. The outstanding principal balance at maturity based
on the current rate of amortization ($50,000 principal payment each month)
is $6,252,000.
As of March 31, 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 $3,299,731 and $1,969,989. The mortgages are recorded as a liability of
the joint venture. The Partnership's proportionate interest in the
mortgages as of March 31, 1995 was $4,718,507 ($2,954,579 and $1,763,928).
Both mortgages are due December 5, 2003, bear interest at a fixed rate of
7.5% for the first 60 months and are secured by the land, buildings and
amenities of the Joint Venture. At the end of the 56th month from the date
of the notes, the insurance companies will notify the Joint Venture of the
interest rate which is their then prevailing interest rate for loans with
a term of five years on properties comparable to the apartments (the
"Modified Rate"). The Joint Venture will have 30 days to accept or reject
the Modified Rate. If the Modified Rate is rejected by the Joint Venture,
the entire unpaid principal balance is due with the 60th installment of
interest. If the Joint Venture accepts the Modified Rate, it becomes
effective the 61st month from the date of the note. (Notes dated November
23, 1993.) Current monthly principal payments on both mortgages are based
upon a 27-year amortization schedule. If the Joint Venture accepts the
Modified Rate, the remaining principal balance of both mortgages will be
amortized using a 22-year amortization schedule beginning the 61st month.
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 March 31, 1995, the L/U II Joint Venture (see page 13) had five notes
payable, each with a bank, in the amount of $5,767,000, $468,333,
$9,231,000, $1,261,000 and $340,000. The notes are recorded as a liability
of the joint venture. The Partnership's proportionate interest in the notes
as of March 31, 1995 was $11,815,715 ($3,992,494, $324,227, $6,390,621,
$872,990 and $235,383). All of the notes are due January 31, 1998, bear
<PAGE>
Liquidity and Capital Resources - Continued
interest at a fixed rate of 10.6% and are secured by the assets of the joint
venture. In accordance with the debt agreements, principal payments
required on the $9,231,000, $1,261,000 and $5,767,000 notes payable 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 loan
extension agreement, principal payments required on the permanent mortgages
of the NTS Willows Phase II Joint Venture and principal payments required
on the notes of the L/U II Joint Venture. Additionally, the Partnership
will continue its efforts to lease current unoccupied space at its
commercial properties. Also the Partnership expects a demand on future
liquidity based on 69,953 square feet in leases expiring from April 1, 1995
to March 31, 1996 (Commonwealth Business Center Phase II - 27,861 square
feet, University Business Center Phase I - 5,461 square feet, Lakeshore
Business Center Phase I - 14,107 square feet and Lakeshore Business Center
Phase II - 22,524 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 and cash reserves will be sufficient to meet the needs of the
Partnership.
Extremely weak economic conditions in Ft. Lauderdale, Florida have 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 tenants, 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 remaining 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 March 31, 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
An investor (the "Plaintiff") in the Partnership and in NTS-
Properties IV, an affiliate of the general partner of the
Partnership, had previously asserted claims against her investment
advisor and his company in connection with her investment in eleven
limited partnerships. The Plaintiff invested a total of $158,000 in
the Partnership and NTS-Properties IV. The amended complaint alleged
that the advisor had violated federal securities laws, the Racketeer
and Corrupt Influenced Organizations Act ("RICO"), and common law,
related to the sale to the Plaintiff of interests in the eleven
limited partnerships. The Plaintiff sought compensatory damages in
an unspecified amount, recision and punitive damages plus interest,
attorneys' fees and costs.
On January 22, 1992, the Court issued a final judgment in favor of
the Plaintiff and against the defendants in the amount of $579,678
on the basis of a jury finding that the defendants had breached their
fiduciary duties to the Plaintiff. The other claims against the
defendants were dismissed.
During 1994, the defendants served an amended third-party complaint
upon certain of the eleven limited partnerships originally sold to
the Plaintiff including the Partnership and NTS-Properties IV and
their respective general partners NTS-Properties Associates V and
NTS-Properties Associates IV. Defendants sought contribution and
indemnification in an unspecified amount from each of the third-party
defendants and has reached settlements with certain of them.
The NTS third-party defendants have filed and served an amended
third-party complaint upon the third-party plaintiff, and have moved
to dismiss the amended third-party complaint. Discovery is currently
in progress with respect to the defendants third-party claims against
the eleven limited partnerships, including the NTS entities.
The general partner of the Partnership believes that the evidence is
clear that there is no basis for the allegations made by the third-
party plaintiff, and that the interests of the Partnership will be
vigorously defended and that cross claims will be pursued against the
third-party plaintiff unless an acceptable mutual settlement is
secured. Management believes that this lawsuit will have no material
adverse effect on the Partnership's operations or financial
condition.
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
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 quarter ended
March 31, 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: May 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 603,114
<SECURITIES> 0
<RECEIVABLES> 894,924
<ALLOWANCES> 61,318
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 27,154,306
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 33,161,826
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 23,386,222
<COMMON> 0
0
0
<OTHER-SE> 8,998,742
<TOTAL-LIABILITY-AND-EQUITY> 33,161,826
<SALES> 1,280,164
<TOTAL-REVENUES> 1,285,296
<CGS> 0
<TOTAL-COSTS> 960,796
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14,119
<INTEREST-EXPENSE> 465,104
<INCOME-PRETAX> (215,363)
<INCOME-TAX> 0
<INCOME-CONTINUING> (215,363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (215,363)
<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'd Form-10Q filing.
</FN>
</TABLE>
