UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 June 30, 1995 and December 31, 1994 3
Statements of Operations
For the three months and six months ended
June 30, 1995 and 1994 4
Statements of Cash Flows
For the three months and six months ended
June 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 22
6. Exhibits and Reports on Form 8-K 22
Signatures 23
<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
June 30, 1995 December 31, 1994*
<S> <C> <C>
ASSETS
Cash and equivalents $ 617,904 $ 228,707
Cash and equivalents - restricted 78,730 --
Accounts receivable, net of
allowance for doubtful accounts
of $28,131 (1995) and $44,035
(1994) 894,758 549,755
Land, buildings and amenities, net 26,766,137 17,505,634
Assets held for development, net 3,662,744 2,586,802
Other assets 742,624 576,240
------------ ------------
$ 32,762,897 $ 21,447,138
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 23,204,431 $ 11,743,884
Accounts payable - operations 262,924 148,634
Accounts payable - construction 160,570 164,458
Security deposits 138,270 125,833
Other liabilities 278,483 50,226
------------ ------------
24,044,678 12,233,035
Partners' equity 8,718,219 9,214,103
------------ ------------
$ 32,762,897 $ 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 (490,927) (4,959) (495,886)
Cash distributions
declared to date (15,389,204) (155,527) (15,544,731)
Repurchase of limited
partnership units (36,780) -- (36,780)
------------ ----------- ------------
Balances at June 30,
1995 $ 8,823,811 $ (105,592) $ 8,718,219
============ =========== ============
<FN>
* Reference is made to the audited financial statements in the Form 10-K
as filed with the Commission on March 31, 1995.
</TABLE>
NTS-PROPERTIES V,
<PAGE>
<TABLE>
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income, net of provision
for doubtful accounts of $9,320
(1995) and $21,508 (1994) $ 1,382,229 $ 834,779 $ 2,662,393 $ 1,706,934
Interest and other income 38,611 7,226 43,743 18,714
----------- ----------- ----------- -----------
1,420,840 842,005 2,706,136 1,725,648
Expenses:
Operating expenses 229,811 171,493 440,407 326,096
Operating expenses - affiliated 129,258 104,028 257,091 213,481
Write-off of unamortized tenant
improvements -- 31,610 -- 31,610
Amortization of capitalized
leasing costs 8,978 3,367 15,757 7,123
Interest expense 578,764 240,920 1,043,869 454,728
Management fees 81,874 51,956 159,899 104,488
Real estate taxes 130,770 82,204 248,517 164,674
Professional and administrative
expenses 26,164 32,226 62,097 64,133
Professional and administrative
expenses - affiliated 38,953 37,720 77,779 76,120
Depreciation and amortization 476,785 318,631 896,606 643,282
----------- ----------- ----------- -----------
1,701,357 1,074,155 3,202,022 2,085,735
----------- ----------- ----------- -----------
Net loss $ (280,517) $ (232,150) $ (495,886) $ (360,087)
=========== =========== =========== ===========
Net loss allocated to limited
partners $ (277,712) $ (229,829) $ (490,927) $ (356,486)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (7.74) $ (6.41) $ (13.68) $ (9.94)
=========== =========== =========== ===========
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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (280,517) $ (232,150) $ (495,886) $ (360,087)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Provision for doubtful accounts (4,799) 10,429 9,320 21,508
Write-off of unamortized tenant
improvements -- 31,610 -- 31,610
Amortization of capitalized
leasing costs 8,978 3,367 15,757 7,123
Depreciation and amortization 476,785 318,631 896,606 643,282
Changes in assets and liabilities:
Accounts receivable 4,965 67,649 112,102 96,927
Other assets 39,414 (18,915) 32,786 (58,054)
Accounts payable - operations (83,878) (309) (12,684) (78,998)
Security deposits 3,917 (889) 2,417 3,676
Other liabilities 125,491 67,757 (107,176) 154,183
---------- ---------- ---------- -----------
Net cash provided by operating
activities 290,356 247,180 453,242 461,170
---------- ---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (28,721) (207,657) (26,826) (359,508)
Increase (decrease) in accounts
payable - construction 17,856 (45,596) (3,884) (119,347)
Increase in cash and equivalents -
restricted -- -- (78,730) --
---------- ---------- ---------- -----------
Net cash used in investing
activities (10,865) (253,253) (109,440) (478,855)
---------- ---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
and notes payable (181,791) (196,100) (373,859) (359,490)
Capital contribution by a joint
venture partner -- -- 519,225 --
Additions to loan costs (4,180) -- (99,971) --
Cash distributions -- (78,637) -- (157,274)
---------- ---------- ---------- -----------
Net cash provided by (used in)
financing activities (185,971) (274,737) 45,395 (516,764)
---------- ---------- ---------- ------------
Net increase (decrease) in cash
and equivalents 93,520 (280,810) 389,197 (534,449)
CASH AND EQUIVALENTS, beginning of
period 524,384 717,340 228,707 970,979
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 617,904 $ 436,530 $ 617,904 $ 436,530
=========== =========== =========== ===========
Interest paid on a cash basis $ 584,806 $ 236,248 $ 1,043,172 $ 465,371
=========== =========== =========== ===========
</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 six months ended June 30, 1995
and 1994.
1. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
June 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 $ 6,702,000 $ 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 2,946,377 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 1,759,031 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 3,986,263 --
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 6,384,391 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 866,760 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 235,382 --
----------- -----------
$23,204,431 $11,743,884
=========== ===========
The Prime Rate was 9% at June 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.
3. Related Party Transactions
Property management fees of $159,899 and $104,488 for the six months
ended June 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 $3,359 and $18,936 as a repair and maintenance
fee during the six months ended June 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 six
months ended June 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 $ 104,350 $ 96,912
Leasing agents 79,466 104,825
Property manager 159,261 126,284
Other 4,685 6,969
--------- ---------
$ 347,762 $ 334,990
========= =========
4. 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
<PAGE>
4. Lakeshore/University II Joint Venture - Continued
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.
5. 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.
<PAGE>
5. Contingency - Continued
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.
6. Commitments
As of June 30, 1995, the Lakeshore/University II Joint Venture, a joint
venture between the Partnership, NTS-Properties IV, NTS-Properties Plus
Ltd. and NTS/Fort Lauderdale, Ltd. (affiliates of the general partner
of the Partnership), had a commitment for approximately $61,000 of
tenant finish improvements. The commitment is the result of a five-
year lease renewal with a current tenant. The Partnership's
proportionate share of this commitment is approximately $42,000 or 69%.
7. Subsequent Event
Subsequent to June 30, 1995, the Lakeshore/University II Joint Venture
made a commitment for approximately $86,000 of tenant finish
improvements. The commitment was the result of a five-year lease
renewal and 3,600 square foot expansion by an existing tenant. The
Partnership's proportionate share of this commitment is approximately
$59,300 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 June 30 were as
follows:
1995 1994
Wholly-owned Properties
Commonwealth Business Center Phase II 100% 59%
University Business Center Phase I 91% 86%
Properties owned in joint venture
with NTS-Properties IV (Ownership
% at June 30, 1995)
The Willows of Plainview Phase II (90%) 89% 94%
Lakeshore Business Center Phase I
(See L/U II Joint Venture below) See below (1) 72%
Property owned in joint venture with
NTS-Properties Plus Ltd. (Ownership
% at June 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 June
30, 1995
Lakeshore Business Center Phase I (69%) 83% See above (1)
Lakeshore Business Center Phase II (69%) 82% 80% (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 pages 15 and 16 for a discussion
regarding this change.
(2) As of June 30, 1994, the Partnership did not have an interest in this
property. See pages 15 and 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 six months ended June 30, 1995 and 1994 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Wholly-owned Properties
Commonwealth Business Center $177,299 $ 85,688 $354,725 $215,696
Phase II
University Business Center $356,408 $221,517 $695,582 $475,292
Phase I
Properties owned in joint
venture with NTS-Properties
IV (Ownership % at June
30, 1995)
The Willows of Plainview $261,363 $268,840 $517,161 $533,676
Phase II (90%)
Lakeshore Business Center N/A (1) $213,707 $ 74,043 $395,962
Phase I (See L/U II Joint
Venture below)
Property owned in joint
venture with NTS-Properties
Plus Ltd. (Ownership % at
June 30, 1995)
University Business Center N/A (1) $ 50,068 $ 17,263 $ 98,251
Phase II (See L/U II Joint
Venture below)
Properties owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture)(Ownership
% at June 30, 1995
Lakeshore Business Center $191,004 N/A (2) $321,675 N/A (2)
Phase I (69%)
Lakeshore Business Center $222,096 N/A (3) $361,733 N/A (3)
Phase II (69%)
University Business Center $206,318 N/A (2) $355,248 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 June 30, 1995 is
reflected below (see L/U II Joint Venture). See pages 15 and 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 six months ended June 30, 1994 is reflected above.
See pages 15 and 16 for a discussion regarding this change.
(3) During the three months and six months ended June 30, 1994, the
Partnership did not have an interest in this property. See pages 15
and 16 for a discussion regarding the change which occurred during
the first quarter of 1995.
<PAGE>
Results of Operations - Continued
The 41% increase in occupancy at Commonwealth Business Center Phase II from
June 30, 1994 to June 30, 1995 is a result of five new leases totalling
approximately 25,000 square feet. Included in this total is a short term
lease for approximately 28% of the business center's rentable area. The
tenant is expected to vacate the leased space during the third quarter of
1995. Also included in the total is an approximately 1,900 square foot
expansion by a current tenant. There were no tenant move-outs during the
12 month period ended June 30, 1995. Average occupancy increased from 68%
(1994) to 100% (1995) for the six months ended June 30 and from 59% (1994)
to 100% (1995) for the three month period. The increase in rental and other
income at Commonwealth Business Center Phase II for the three months and six
months ended June 30, 1995 as compared to the same periods 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 5% increase in occupancy at University Business Center Phase I from June
30, 1994 to June 30, 1995 is due to two new leases totalling approximately
4,800 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 June 30, 1995. Average occupancy at
University Business Center Phase I increased from 87% (1994) to 90% (1995)
for the six months ended June 30 and from 86% (1994) to 90% (1995) for the
three month period. The increase in rental and other income at University
Business Center Phase I for the three months and six months ended June 30,
1995 as compared to the same periods 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 three month and six month periods 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 94% as of June
30, 1994 to 89% as of June 30, 1995. Average occupancy decreased from 93%
(1994) to 90% (1995) for the six months ended June 30 and from 94% (1994)
to 92% (1995) for the three month period. Rental and other income at The
Willows of Plainview Phase II decreased for the three months and six months
ended June 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 11% increase in occupancy at Lakeshore Business Center Phase I from June
30, 1994 to June 30, 1995 can be attributed to eight new leases totalling
approximately 20,000 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 6,400 square foot lease which commenced during the
third quarter of 1994 and 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 five tenants, who occupied approximately
9,400 square feet, vacating at the end of the lease terms. Average
occupancy increased from 71% (1994) to 80% (1995) for the three months ended
June 30 and from 65% (1994) to 79% (1995) for the six 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 six
<PAGE>
Results of Operations - Continued
months ended June 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 pages 15 and 16 for a discussion regarding the change.)
Overall, Lakeshore Business Center Phase I's rental and other income
increased for the three months and six months ended June 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.
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 Partnership's proportionate share of the rental and other
income at University Business Center Phase II increased for the three months
and six months ended June 30, 1995 as compared to the same periods in 1994
as a result of the Partnership's increased ownership in the business center.
(See pages 15 and 16 for a discussion regarding the change.) Overall,
rental and other income at University Business Center Phase II for the three
months and six months ended June 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 2% increase in occupancy at Lakeshore Business Center Phase II from June
30, 1994 to June 30, 1995 can be attributed to five new leases for a total
of approximately 8,100 square feet. The new leases are partially offset by
an approximately 2,800 square foot downsizing by a current tenant. In
accordance with the lease agreement, the tenant paid NTS-Properties Plus
Ltd., an affiliate of the general partner of the Partnership and the owner
of the business center prior to its contribution to the L/U II Joint Venture
(see pages 15 and 16), a total of approximately $48,500 during the second
and third quarters of 1994 to compensate NTS-Properties Plus Ltd. for lost
rents and undepreciated renovation costs (recorded as lease buyout income).
The new leases 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. Average occupancy at Lakeshore Business Center Phase II
increased for the six months ended June 30 from 78% (1994) to 80% (1995).
Average occupancy was 81% for both the 1994 and 1995 three month periods.
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.
The increase in interest and other income for the three months and six
months ended June 30, 1995 as compared to the same periods in 1994 is
primarily the result of approximately $21,600 in interest income being
<PAGE>
Results in Operations - Continued
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 for the three month period is also a result of an increase
in excess cash available for investment. Partially offsetting the increase
in interest income for the three month and six 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 six months ended June
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 pages 15 and
16 for a discussion regarding the joint venture.) The increase in operating
expenses for the three months and six 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 six month periods is a decrease in repair costs at the Partnership's
commercial properties. The increase in operating expenses for the six month
period is also partially offset by decreased utility costs at the
Partnership's commercial properties.
The increase in operating expenses - affiliated for the three months and six
months ended June 30, 1995 as compared to the same periods in 1994 is due
to increased commercial leasing costs and the Partnership's interest in the
L/U II Joint Venture (discussed on pages 15 and 16).
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.
The increase in the amortization of capitalized leasing costs and interest
expense for the three months and six months ended June 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 pages 15 and 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.
<PAGE>
Results of Operations - Continued
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 six months ended June 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 pages 15 and 16).
The increase in real estate taxes for the three months and six months ended
June 30, 1995 as compared to the same periods in 1994 is a result of an
increased assessment and tax rates for University Business Center Phase I
and as a result of the Partnership's interest in the L/U II Joint Venture
(discussed on pages 15 and 16).
The decrease in professional and administrative expenses for the three
months and six months ended June 30, 1995 as compared to the same periods
in 1994 is due to decreased external data processing and telephone charges.
Professional and administrative expenses - affiliated remained fairly
constant for the three months and six months ended June 30, 1995 as compared
to the same periods in 1994.
Depreciation and amortization expense has increased for the three months and
six months ended June 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 pages 15 and 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 $453,242 and $461,170 for the six
months ended June 30, 1995 and 1994, respectively. The Partnership made a
.5% (annualized) cash distribution of $78,637 for the six months ended June
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 six months ended June 30, 1995 as a result of a loan
covenant (the $6,702,000 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 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.,
<PAGE>
Liquidity and Capital Resources - Continued
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
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. 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
Liquidity and Capital Resources - Continued
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 $6,702,000 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 pages 15 and 16.
The table below presents that portion of the distributions that represent
a return of capital on a Generally Accepted Accounting Principle basis for
the six months ended June 30, 1995 and 1994. Distributions were funded by
cash flow derived from operating activities.
Net Loss Cash Return of
Allocated Distributions Capital
Limited Partners:
1995 $ (490,927) $ -- $ --
1994 (356,486) 77,851 77,851
General Partner:
1995 $ (4,959) $ -- $ --
1994 (3,601) 786 786
As of June 30, 1995, the Partnership has accrued approximately $142,000
(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 June 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 June 30,
1995.
As of June 30, 1995, the L/U II Joint Venture had a commitment for
approximately $61,000 of tenant finish improvements. The commitment is the
result of a five-year lease renewal with a current tenant. The
Partnership's proportionate share of this commitment is approximately
$42,000 or 69%. Subsequent to June 30, 1995, the L/U II Joint Venture, made
a commitment for approximately $86,000 of tenant finish improvements. The
commitment was the result of a five-year lease renewal and 3,600 square foot
expansion by an existing tenant. The Partnership's proportionate share of
this commitment is approximately $59,300 or 69%. The Partnership had no
other material commitments for renovations or capital improvements as of or
subsequent to June 30, 1995.
As of June 30, 1995, the Partnership had a note payable to a bank in the
amount of $6,702,000. 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
<PAGE>
Liquidity and Capital Resources - Continued
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 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.
As of June 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 $3,289,101 and $1,963,642. The mortgages are recorded as a liability of
the joint venture. The Partnership's proportionate interest in the
mortgages as of June 30, 1995 was $4,705,408 ($2,946,377 and $1,759,031).
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 June 30, 1995, the L/U II Joint Venture had notes payable to banks in
the following amounts: $9,222,000, $5,758,000, $1,252,000, $468,333 and
$340,000. The notes are a liability of the joint venture in accordance with
the Joint Venture Agreement. The Partnership's proportionate interest in
the notes at June 30, 1995 was $6,384,391, $3,986,263, $866,760, $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 June
30, 1995, approximately $87,000 remains to be escrowed of which the
Partnership's proportionate share is $60,000. 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 $9,222,000,
$5,758,000 and $1,252,000 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
$6,702,000 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 17) and as a result of the
$6,702,000 note payable which matures March 31, 1996. Additionally, the
<PAGE>
Liquidity and Capital Resources - Continued
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 57,190 square feet in leases expiring from July 1, 1995
to June 30, 1996 (Commonwealth Business Center Phase II - 27,861 square
feet, University Business Center Phase I - 3,741 square feet, Lakeshore
Business Center Phase I - 13,534 square feet and Lakeshore Business Center
Phase II - 12,054 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.
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 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.
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.
<PAGE>
Liquidity and Capital Resources - Continued
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at June 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
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 three months ended
June 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: August 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1995 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 696,634
<SECURITIES> 0
<RECEIVABLES> 894,758
<ALLOWANCES> 28,131
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 26,766,137
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 32,762,897
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 23,204,431
<COMMON> 0
0
0
<OTHER-SE> 8,718,219
<TOTAL-LIABILITY-AND-EQUITY> 32,762,897
<SALES> 2,662,393
<TOTAL-REVENUES> 2,706,136
<CGS> 0
<TOTAL-COSTS> 2,018,277
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,320
<INTEREST-EXPENSE> 1,043,869
<INCOME-PRETAX> (495,886)
<INCOME-TAX> 0
<INCOME-CONTINUING> (495,886)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (495,886)
<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>
