<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223
-------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 426-4800
---------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Exhibit Index: See page 51
Total Pages: 55
<PAGE>
TABLE OF CONTENTS
-----------------
Pages
-----
PART I
Items 1 and 2 Business and Properties 3-16
Item 3 Legal Proceedings 17
Item 4 Submission of Matters to a Vote
of Security Holders 17
PART II
Item 5 Market for the Registrant's Limited
Partnership Interests and Related
Partner Matters 18
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 20-34
Item 8 Financial Statements and Supplementary
Data 35-48
Item 9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 49
PART III
Item 10 Directors and Executive Officers of
the Registrant 49
Item 11 Management Remuneration and Transactions 49-50
Item 12 Security Ownership of Certain Beneficial
Owners and Management 50
Item 13 Certain Relationships and Related
Transactions 50
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 51-54
Signatures 55
- 2 -
<PAGE>
PART I
Items 1. and 2. Business and Properties
General
- -------
NTS-Properties V, a Maryland Limited Partnership, (the "Partnership") is a
limited partnership organized under the laws of the State of Maryland on April
30, 1984. The general partner is NTS-Properties Associates V (a Kentucky limited
partnership). As of December 31, 1995, the Partnership owned the following
properties:
- Commonwealth Business Center Phase II, a business center with
approximately 61,000 net rentable ground floor square feet and
approximately 8,000 net rentable mezzanine square feet located in
Louisville, Kentucky, constructed by the Partnership.
- University Business Center Phase I, a business center with
approximately 82,000 net rentable first floor (office and service) and
second floor office square feet and approximately 16,000 net rentable
mezzanine square feet located in Orlando, Florida, constructed by the
Partnership.
- A joint venture interest in The Willows of Plainview Phase II, a
144-unit luxury apartment complex located in Louisville, Kentucky,
constructed by the joint venture between the Partnership and NTS-
Properties IV, an affiliate of the General Partner of the Partnership.
The Partnership's percentage interest in the joint venture was 90% at
December 31, 1995.
- A joint venture interest in the Lakeshore/University II Joint Venture
(L/U II Joint Venture). The L/U II Joint Venture was formed on January
23, 1995 among the Partnership and NTS-Properties IV, NTS-Properties
Plus Ltd. and NTS/Fort Lauderdale, Ltd., affiliates of the General
Partner of the Partnership. The Partnership's percentage interest in
the joint venture was 69% at December 31, 1995. A description of the
properties owned by the L/U II Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center with
approximately 103,000 net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by the joint venture.
- Lakeshore Business Center Phase II - a business center with
approximately 97,000 net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by the joint venture.
- University Business Center Phase II - a business center with
approximately 78,000 net rentable first floor (office and
service) and second floor office square feet and approximately
10,000 net rentable mezzanine square feet located in Orlando,
Florida, acquired complete by the joint venture.
- Outparcel Building Sites - approximately 6.2 acres of undeveloped
land adjacent to the Lakeshore Business Center development which
is zoned for commercial development.
The Partnership also owns approximately 6.21 acres of land, adjacent to the
University Place development (University Business Center III), in Orlando,
Florida, which is zoned for commercial development.
The Partnership or the joint venture in which the Partnership is a partner has a
fee title interest in the above properties. In the opinion of the Partnership's
management, the properties are adequately covered by insurance.
- 3 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
- -------------------
Commonwealth Business Center Phase II and University Business Center Phase I are
encumbered by a note payable to a bank. The outstanding balance of the note at
December 31, 1995 was $6,402,000. The note is due March 31, 1996 and currently
bears interest at the Prime Rate + 1%. The outstanding principal balance at
maturity based on the current rate of amortization ($50,000 principal payment
each month) will be $6,252,000.
Subsequent to December 31, 1995, the Partnership obtained permanent financing
from two insurance companies totalling $6,500,000 ($5,100,000 and $1,400,000).
The $5,100,000 mortgage payable is secured by University Business Center Phase I
and the $1,400,000 mortgage payable is secured by Commonwealth Business Center
Phase II. The proceeds were used to retire the Partnership's $6,402,000 note
payable (discussed above), to fund closing costs and to increase the
Partnership's cash reserves. The $5,100,000 mortgage is due February 1, 2008 and
bears interest at a fixed rate of 7.5%. The repayment of principal will be
amortized over 144 months with equal monthly payments of principal and interest
($54,231). The $1,400,000 mortgage is due February 1, 2009 and bears interest at
the Prime Rate (which was 8.5% on the date of closing). Monthly principal
payments will be based upon a 13-year amortization schedule.
The Willows of Plainview Phase II, a joint venture between the Partnership and
NTS-Properties IV, is encumbered by permanent mortgages with two insurance
companies. The outstanding balance of the mortgages at December 31, 1995 was
$5,217,824 ($3,267,236 and $1,950,588). The mortgages are recorded as a
liability of the Joint Venture. The Partnership's proportionate interest in the
mortgages at December 31, 1995 is $4,678,301 ($2,929,404 and $1,748,897). Both
mortgages currently bear a fixed interest rate of 7.5% and are due December 5,
2003. The outstanding balance at maturity based on the current rate of
amortization would be $4,449,434 ($2,786,095 and $1,663,339) of which the
Partnership's proportionate share would be $4,017,839 ($2,515,844 and
$1,501,995).
The properties owned by the Lakeshore/University II Joint Venture, a joint
venture between the Partnership, NTS-Properties IV, NTS-Properties Plus Ltd. and
NTS/Fort Lauderdale, Ltd., are encumbered by notes payable to banks as follows:
Note Balance
at 12/31/95 Encumbered Property
------------ -------------------
$9,204,000 Lakeshore Business Center Phase II
$5,740,000 University Business Center Phase II
$1,234,000 Outparcel building sites (3.8 acres)
$ 468,333 Outparcel building sites (3.8 acres)
$ 340,000 Outparcel building sites (2.4 acres)
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
December 31, 1995 was $6,371,930, $3,973,802, $854,298, $324,227 and $235,382,
respectively. 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 $9,204,000, $5,740,000 and $1,234,000 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.
- 4 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
- -------------------
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.
A mortgage has been recorded on Lakeshore Business Center Phase I in the amount
of $5,500,000 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 L/U II Joint Venture. Lakeshore
Business Center Phase I was contributed to the joint
venture free and clear of any mortgage liens.
For a further discussion regarding the terms of the debt financings see
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7).
Subsequent to December 31, 1995, the L/U II Joint Venture submitted an
application with an insurance company for $17.4 million of debt financing. The
proceeds from the loan will be used to pay off the Joint Venture's current debt
financings of approximately $16.9 million. The remaining proceeds will be used
to fund Joint Venture tenant finish improvements, leasing costs and loan closing
costs. The Joint Venture anticipates that the financing will be completed during
mid-1996.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant finish improvements as required by lease
negotiations at the Partnership's commercial properties. 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. The tenant finish improvements will be funded by cash flow from
operations and, if needed, cash reserves. As of December 31, 1995, the
Partnership had a commitment for a $30,000 special tenant finish allowance at
University Business Center Phase I as a result of a current tenant extending its
existing lease from December 1995 to July 2003.
As of December 31, 1995, the L/U II Joint Venture had commitments for
approximately $200,000 of tenant finish improvements and leasing costs. The
commitments are the result of an 8,200 square foot new lease and a 7,100 square
foot lease renewal. Both leases are for a period of five years. The
Partnership's proportionate share of these commitments is approximately $135,000
or 69%. As of December 31, 1995, approximately $130,000 had been incurred toward
these commitments, of which the Partnership's proportionate share is
approximately $90,000 or 69%.
As of December 31, 1995, the L/U II Joint Venture also had a commitment for a
$200,000 special tenant finish allowance, of which approximately $92,000 will be
reimbursed by the tenant over a 27-month period beginning in January 1996. This
commitment is the result of lease negotiations with Full Sail Recorders, Inc.
("Full Sail") which currently sub-leases approximately 41,000 square feet from
Philip Crosby Associates, Inc. ("PCA") at University Business Center Phase II.
PCA currently leases 100% of the business center through April 1998. Full Sail's
lease term with the Joint Venture is for 33 months (April 1998 to December
2000).
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Business Center Phase II for approximately 7,000 square feet. As a result of the
new lease, the L/U II Joint Venture has a commitment for approximately $105,000
of tenant finish improvements, of which the Partnership's proportionate share is
approximately $72,000 or 69%.
- 5 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
- -------------------
The Partnership had no other material commitments as of December 31, 1995.
The Partnership is engaged solely in the business of developing, constructing,
owning and operating residential apartments and commercial real estate. A
presentation about industry segments is not applicable.
The current business of the Partnership is consistent with the original purpose
of the Partnership which was to invest in real property, which was either under
development or proposed for development, on which it would develop, construct,
own and operate apartment complexes, business parks, and retail, industrial and
office buildings. The Partnership's properties are in a condition suitable for
their intended use.
The Partnership intends to hold the properties until such time as sale or other
disposition appears to be advantageous with a view to achieving the
Partnership's investment objectives or it appears that such objectives will not
be met. In deciding whether to sell a property, the Partnership will consider
factors such as potential capital appreciation, cash flow and Federal income tax
considerations, including possible adverse Federal income tax consequences to
the Limited Partners. The General Partner of the Partnership is currently
exploring the marketability of certain of its properties, and has not yet
determined if any of the properties might be sold in the next 12 months.
Additionally the outparcel building sites owned by the L/U II Joint Venture are
being marketed for sale. The Joint Venture currently has a contract for the sale
of .7 acres of this land for $175,000.
Commonwealth Business Center Phase II
- -------------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$7.08 to $9.78 per square foot for ground floor office space, $3.42 to $4.77 per
square foot for ground floor warehouse space, $6.38 to $8.01 per square foot for
mezzanine office space and 2.84 to $3.56 per square foot for mezzanine storage
space. The average base annual rental for all space leased as of December 31,
1995 was $7.31. Space is ordinarily leased for between one and six years with
the majority of current square footage being leased for a term of five years.
Current leases terminate between 1996 and 2000. All leases provide for tenants
to contribute toward the payment of common area expenses, insurance and real
estate taxes. As of December 31, 1995, there were 10 tenants leasing office,
warehouse and storage space aggregating approximately 40,265 square feet of
rentable area (1). The tenants who occupy Commonwealth Business Center Phase II
are professional service oriented organizations. The principal
occupations/professions practiced include engineering and insurance. Two tenants
lease more than 10% of Commonwealth Business Center Phase II's rentable area:
Ogden Environmental (10.5%) and Allstate Insurance Company (30.5%). The
occupancy levels at the business center as of December 31 were 67% (1995), 100%
(1994), 81% (1993), 85% (1992) and 94% (1991).
- 6 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Commonwealth Business Center Phase II - Continued
- -------------------------------------------------
The following table contains approximate data concerning the leases in effect on
December 31, 1995.
Major Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area(1) Rental Options
---- ---------- ------- ------ -------
Ogden Environmental 1999 6,325 (10.5%) $ 72,768 (20.5%) None
Allstate Insurance
Company 1997 18,400 (30.5%) $163,416 (46.0%)(2) 1 Five-Year
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area(1) Rental Options
------- ---------- ------- ------ -------
4 1996 6,075 ( 9.9%) $ 50,331 (14.2%) 1 Five-Year
1 1997 1,600 ( 2.6%) $ 11,604 ( 3.3%) None
1 1998 1,600 ( 2.6%) $ 11,004 ( 3.1%) None
1 1999 3,494 ( 5.8%) $ 25,200 ( 7.1%) None
1 2000 2,771 ( 4.6%) $ 20,868 ( 5.9%) None
(1) Rentable area includes only ground floor square feet (office and warehouse
space).
(2) Additionally, Allstate Insurance Company pays $2,760 annually as part of a
maintenance agreement to repair and maintain all mechanical systems.
University Business Center Phase I
- ----------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$9.00 to $12.35 per square foot for first floor office space, $7.13 per square
foot for first floor service space, $9.48 to $12.22 per square foot for second
floor office space and $9.48 to $11.75 per square foot for mezzanine storage
space. The average base rental for all types of space leased as of December 31,
1995 was $11.24. Space is ordinarily leased for between two and eight years with
the majority of current square footage being leased for a term of eight years
(1). Current leases expire between 1996 and 2002 (2). All leases provide for
tenants to contribute toward the payment of common area expenses, insurance and
real estate taxes. As of December 31, 1995, there were 11 tenants leasing office
(first and second floor) and service space aggregating approximately 75,165
square feet (3) of rentable area. The tenants who occupy University Business
Center Phase I are professional service-oriented organizations. The principal
occupations/professions practiced include insurance, management offices for a
utility company and an audio/video school and studio. Three tenants lease more
than 10% of University Business Center Phase I's rentable area: Florida Power
Corporation (13.2%), Full Sail Recorders, Inc. (30.0%) and Combined Risk &
Insurance Management Services, Inc. (30.4%). The occupancy levels at the
business center as of December 31 were 95% (1995), 90% (1994), 88% (1993), 94%
(1992) and 96% (1991).
- 7 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
University Business Center Phase I - Continued
- ----------------------------------------------
The following table contains approximate data concerning the leases in effect on
December 31, 1995.
Major Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area(1) Rental Options
---- ---------- ------- ------ -------
Florida Power
Corporation 1997 10,830 (13.2%) $144,468 (14.1%) 3 One-Year
Full Sail Recorders,
Inc. (4) 24,542 (30.0%) $357,624 (34.9%) None
Combined Risk &
Insurance
Management
Services, Inc. 2002 24,866 (30.4%) $368,412 (36.0%) None
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area(1) Rental Options
------- ---------- ------- ------ -------
1 1996 261 ( 0.3%) $ 2,352 ( 0.2%) None
2 1997 4,120 ( 5.0%) $ 45,684 ( 4.4%) 1 Two-Year
2 1998 3,890 ( 4.7%) $ 39,540 ( 3.8%) None
2 1999 2,806 ( 3.4%) $ 28,056 ( 2.7%) None
None 2000 -- -- --
1 2001 3,850 ( 4.7%) $ 38,580 ( 3.8%) None
(1) Rentable area includes only ground floor square feet (office and warehouse
space).
(2) Excluding the Full Sail Recorders, Inc. lease. This company leases five
suites with various terms. The majority of the space (approximately
17,556 square feet) is leased for a period of 14 years with the lease
expiring in 2003.
(3) Excludes approximately 2,294 square feet which is occupied by the business
center's property management and leasing staff.
(4) Full Sail Recorders, Inc. leases five suites with various terms. The
majority of the space (approximately 17,556 square feet) is leased for a
period of 14 years with the lease expiring in 2003.
The Willows of Plainview Phase II
- ---------------------------------
Units at The Willows of Plainview Phase II include one and two-bedroom loft and
deluxe apartments and two-bedroom townhomes. All units have wall-to-wall
carpeting, individually controlled heating and air conditioning, dishwashers,
ranges, refrigerators and garbage disposals. All units, except one-bedroom
lofts, have washer/dryer hook-ups. The one-bedroom lofts have stackable washers
and dryers. Tenants have access to and the use of coin-operated washer/dryer
facilities, clubhouse, management offices, swimming pool, whirlpool and tennis
courts.
Monthly rental rates at The Willows of Plainview Phase II start at $599 for
one-bedroom apartments, $849 for two-bedroom apartments and $949 for two-bedroom
townhomes, with additional monthly rental amounts for special features and
locations. Tenants pay all costs of heating, air conditioning and electricity.
Most leases are for a period of one year. Units will be rented in some cases,
however, on a shorter term basis at an additional charge. The occupancy levels
at the apartment complex as of December 31 were 94% (1995), 93% (1994), 91%
(1993), 90% (1992) and 85% (1991).
- 8 -
<PAGE>
Items 1 and 2. Business and Properties - Continued
Lakeshore Business Center Phase I
- ---------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$7.71 to $12.01 per square foot for first floor office space, $5.69 to $7.50 per
square foot for first floor service space and $8.75 to $11.93 per square foot
for second floor office space. The average base rental for all space leased as
of December 31, 1995 was $9.96. Space is ordinarily leased for between one and
eight years with the majority of current square footage being leased for a term
of five years. Current leases expire between 1996 and 2000. All leases provide
for tenants to contribute toward the payment of common area expenses, insurance
and real estate taxes. As of December 31, 1995, there were 35 tenants leasing
office space (first and second floor) and service space aggregating
approximately 95,069 square feet of rentable area. The tenants who occupy
Lakeshore Business Center Phase I are professional service oriented
organizations. The principal occupations/professions practiced include
healthcare services, financial services and management offices for both a
cellular communications chain and a soft drink company. One tenant leases more
than 10% of Lakeshore Business Center Phase I's rentable area: U. S. Homecare
Infusion Therapy Products of Florida (11.7%). The occupancy levels at the
business center as of December 31 were 92% (1995), 80% (1994), 58% (1993), 55%
(1992) and 52% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995.
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
---- ---------- ---- ------ -------
U.S. Homecare
Infusion Therapy
Products of
Florida 1998 12,081 (11.7%) $135,912 (14.3%) (1)
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- ---- ------ -------
8 1996 13,153 (12.7%) $129,384 (13.6%) (2)
8 1997 16,249 (15.7%) $153,120 (16.1%) 2 Two-Year
7 1998 12,960 (12.7%) $125,736 (13.4%) None
7 1999 32,400 (31.4%) $330,240 (34.8%) 4 Three-Year
4 2000 8,226 ( 7.9%) $ 72,756 ( 7.7%) 2 Three-Year
(1) Tenant has option to renew its lease for an unspecified period of time.
(2) 1 Two-Year, 1 Three-Year
Lakeshore Business Center Phase II
- ----------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$8.84 to $14.00 per square foot for first floor office space, $6.52 per square
foot for first floor service space and $9.50 to $14.95 per square foot for
second floor office space. The average base rental for all space leased as of
December 31, 1995 was $11.19. Space is ordinarily leased for between one and ten
years with the majority of current square footage being leased for a term of
five years. Current leases expire between 1996 and
- 9 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Lakeshore Business Center Phase II - Continued
- ----------------------------------------------
2000. Three leases provide for renewal options at rates which are based upon
increases in the consumer price index and/or are negotiated between lessor and
lessee. All leases provide for tenants to contribute toward the payment of
common area expenses, insurance and real estate taxes. As of December 31, 1995,
there were 18 tenants leasing office space (first and second floor) and service
space aggregating approximately 68,425 square feet of rentable area (1). The
tenants who occupy Lakeshore Business Center Phase II are professional service
oriented organizations. The principal occupations/professions practiced include
healthcare services, insurance, business machine sales and management offices
for the Florida state lottery. One tenant leases more than 10% of Lakeshore
Business Center Phase II's rentable area: Kimberly Home Health Care, Inc.
(10.4%). The occupancy levels at the business center as of December 31 were 72%
(1995), 78% (1994), 75% (1993), 84% (1992) and 71% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995:
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
---- ---------- ---- ------ -------
Kimberly Home
Health Care,
Inc. 1997 10,132 (10.4%) $120,636 (15.8%) None
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- -------------- ---------------- ----------
2 1996 6,930 ( 7.1%) $ 85,500 (11.2%) None
4 1997 18,121 (18.7%) $198,366 (25.9%) None
4 1998 16,007 (16.4%) $164,464 (21.5%) (2)
2 1999 3,962 ( 4.1%) $ 39,292 ( 5.2%) None
5 2000 13,273 (13.7%) $157,630 (20.6%) None
(1) Excludes approximately 1,218 square feet which is occupied by the business
center's property management and leasing staff.
(2) 1 Two-Year and 2 Three-Year.
University Business Center Phase II
- -----------------------------------
Philip Crosby Associates, Inc. has leased 100% of University Business Center
Phase II. The annual base rent, which does not include the cost of utilities, is
$13.00 per square foot for first floor office space, $8.50 per square foot for
first floor service space, $14.00 per square foot for second floor office space
and $13.00 per square foot for mezzanine office space. The average base annual
rental for all types of space leased as of December 31, 1995 was $12.43. The
lease term is for seven years and expires in 1998.
Philip Crosby Associates, Inc. is a professional service oriented organization
which specializes in quality control seminars. The lease provides for the tenant
to contribute toward the payment of common area expenses, insurance and real
estate taxes. The occupancy level at the business center as of December 31,
1995, 1994, 1993, 1992 and 1991 was 100%.
- 10 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
The following table contains approximate data concerning the lease in effect as
of December 31, 1995.
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area(1) Rental Options
---- ---------- ------- ------ -------
Philip Crosby
Associates, Inc. 1998 75,975 (100%) $1,072,920 (100%) 1 Five-Year
(1) Rentable area includes only first floor (office and service) square feet
and second floor office square feet.
Additional operating data regarding the Partnership's properties is furnished in
the following table.
Federal Realty Annual
Tax Basis Tax Rate Realty Taxes
--------- -------- ------------
Wholly-Owned Properties
- -----------------------
Commonwealth Business
Center Phase II $4,221,272 $.011410 $ 47,330
University Business
Center Phase I 7,495,292 .023120 117,477
Property Owned in Joint
Venture with NTS-
Properties IV
- -------------
The Willows of
Plainview Phase II 7,858,570 .011410 59,528
Properties Owned
Through Lakeshore/
University II Joint
Venture (L/U II Joint
Venture)
- --------
Lakeshore Business
Center Phase I 10,021,413 .027197 138,990
Lakeshore Business
Center Phase II 11,999,046 .027197 128,497
University Business
Center Phase II 7,104,723 .023212 106,191
Percentage ownership has not been applied to the information in the above table
for properties owned through a joint venture.
Depreciation for book purposes is computed using the straight-line method over
the estimated useful lives of the assets which are 10 - 30 years for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
5 - 30 for amenities. The estimated realty taxes on planned renovations,
primarily tenant improvements, is not material.
- 11 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
See Management's Discussion and Analysis of Financial Condition and Results
of Operations (Item 7) for explanations regarding the fluctuations of income
and occupancy at the Partnership's properties.
Investment in Joint Ventures
- ----------------------------
NTS Willows Phase II Joint Venture - On September 1, 1984, the Partnership
entered into a joint venture agreement with NTS-Properties IV to develop,
construct, own and operate a 144-unit luxury apartment complex on an 8.29 acre
site in Louisville, Kentucky known as The Willows of Plainview Phase II. The
term of the Joint Venture shall continue until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the assets of the Partnership, other than its
cash and cash-equivalent assets;
(c) the vote or consent of each of the Partners to dissolve the
Partnership; or
(d) September 30, 2028.
The Partnership contributed approximately $7,455,000, the construction and
carrying costs of the apartment complex, and NTS-Properties IV contributed land
valued at $800,000. No future contributions are anticipated as of December 31,
1995.
The apartment complex is encumbered by permanent mortgages with two insurance
companies. Both loans are secured by a first mortgage on the property. The
outstanding balance of the mortgages at December 31, 1995 is $5,217,824
($3,267,236 and $1,950,588). The mortgages are recorded as a liability of the
Joint Venture. The Partnership's proportionate interest in the mortgages at
December 31, 1995 is $4,678,301 ($2,929,404 and $1,748,897). Both mortgages
currently bear a fixed interest rate of 7.5% and are due December 5, 2003. See
Managements's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7) for a further discussion regarding the terms of the debt
financings.
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interest. The term Net Cash Flow
means the excess, if any, of (A) the gross receipts from the operations of the
Joint Venture Property (including investment income) for such period plus any
funds released from previously established reserves (referred to in clause (iv)
below), over (B) the sum of (i) all cash operating expenses paid by the Joint
Venture Property during such period in the course of business, (ii) capital
expenditures during such period not funded by capital contributions, loans or
paid out of previously established reserves, (iii) payments during such period
on account of amortization of the principal of any debts or liabilities of the
Joint Venture Property and (iv) reserves for contingent liabilities and future
expenses of the Joint Venture Property. Percentage Interest means that
percentage which the capital contributions of a Partner bears to the aggregate
capital contributions of all the Partners.
Net income or net loss is allocated between the Partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 90%
at December 31, 1995.
- 12 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
The Partnership had no liability for funding losses of the joint venture as of
December 31, 1995.
NTS Ft. Lauderdale Office Joint Venture - On April 1, 1985, the Partnership
entered into a joint venture agreement with NTS-Properties IV to develop,
construct, own and operate an office warehouse building in Ft. Lauderdale,
Florida known as Lakeshore Business Center Phase I.
The Partnership contributed approximately $9,170,000, the cost of constructing
and leasing the building and NTS-Properties IV contributed land valued at
$1,752,982. On January 23, 1995, the partners of the NTS Ft. Lauderdale Office
Joint Venture contributed Lakeshore Business Center Phase I to the newly formed
Lakeshore/University II (L/U II) Joint Venture. See below for a further
discussion of the Lakeshore/University II Joint Venture.
NTS University Boulevard Joint Venture - On January 3, 1989, the Partnership
entered into a joint venture agreement with NTS-Properties Plus Ltd. to develop,
construct, own and operate Phase II of the University Business Center
development in Orlando, Florida.
The Partnership contributed land valued at $1,460,000 and NTS-Properties Plus
Ltd. contributed development and carrying costs of approximately $8 million. In
connection with the construction of University Business Center Phase I, the
Partnership incurred the cost of developing certain common areas which are used
by both University Business Center Phase I and Phase II. In 1989, NTS-Properties
Plus Ltd. paid approximately $747,000 to the Partnership for Phase II's share of
the common area costs. During the second quarter of 1994, the Partnership made
an approximately $79,000 capital contribution to the Joint Venture. The capital
contribution increased the Partnership's ownership percentage in the Joint
Venture from approximately 16% to approximately 17%. The contribution was made
to fund a portion of the Joint Venture's operating costs. On January 23, 1995,
the partners of the NTS University Boulevard Joint Venture contributed
University Business Center Phase II to the newly formed L/U II Joint Venture.
See below for a further discussion of the L/U II Joint Venture.
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 (3.8 acres)
(continued next page)
- 13 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
Property Contributing Owner
-------- ------------------
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres)
University Business Center Phase II NTS-Properties V and NTS-
Properties Plus Ltd.
The term of the Joint Venture shall continued until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the Real Property and the sale and/or
collection of any evidences of indebtedness received in connection
therewith;
(c) the vote or consent of each of the Partners to dissolve the
Partnership; or
(d) December 31, 2030.
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 properties of the L/U II Joint Venture are encumbered by notes payable to
banks as follows:
Note Balance
at 12/31/95 Encumbered Property
------------ -------------------
$9,204,000 Lakeshore Business Center Phase II
$5,740,000 University Business Center Phase II
$1,234,000 Outparcel building sites (3.8 acres)
$ 468,333 Outparcel building sites (3.8 acres)
$ 340,000 Outparcel building sites (2.4 acres)
The notes are recorded as liabilities of the Joint Venture. The Partnership's
proportionate interest in the notes at December 31, 1995 is $11,759,639
($6,371,930, $3,973,802, $854,298, $324,227 and $235,382). The notes bear a
fixed interest rate of 10.6% and are due January 31, 1998. See Management's
Discussion and Analysis of Financial Condition and Results of Operations (Item
7) for a further discussion regarding the terms of the debt financing.
- 14 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interest. The term Net Cash Flow
means the excess, if any, of (A) the sum of (i) the gross receipts of the Joint
Venture Properties for such period (including loan proceeds), other than capital
contributions, plus (ii) any funds released from previously established reserves
(referred to in clause (B)(iv) below), over (B) the sum of (i) all cash
operating expenses paid by the Joint Venture during such period in the course of
business, (ii) capital expenditures paid in cash during such period, (iii)
payments during such period on account of amortization of the principal of any
debts or liabilities of the Joint Venture and (iv) reserves for contingent
liabilities and future expenses of the Joint Venture, as established by the
Partners; provided, however, that the amounts referred to in (B)(i), (ii) and
(iii) above shall only be taken into account to the extent not funded by capital
contributions or paid out of previously established reserves. Percentage
Interest means that percentage which the capital contributions of a Partner
bears to the aggregate capital contributions of all the Partners.
Net income or net loss is allocated between the partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 69%
at December 31, 1995.
The Partnership had no liability for funding losses of the joint venture as of
December 31, 1995.
Competition
- -----------
The Partnership's properties are subject to competition from similar types of
properties (including, in certain areas, properties owned or managed by
affiliates of the General Partner) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or for new tenants when vacancies occur. The Partnership maintains the
suitability and competitiveness of its properties primarily on the basis of
effective rents, amenities and services provided to tenants. Competition is
expected to increase in the future as a result of the construction of additional
properties. As of December 31, 1995, there are no properties under construction
in the respective vicinities in which the properties are located. The
Partnership has not commissioned a formal market analysis of competitive
conditions in any market in which it owns properties, but relies upon the market
condition knowledge of the employees of NTS Development Company who manage and
supervise leasing for each property.
Management of Properties
- ------------------------
NTS Development Company, an affiliate NTS-Properties Associates V, the general
partner of the Partnership, directs the management of the Partnership's
properties pursuant to a written agreement. NTS Development Company is a
wholly-owned subsidiary of NTS Corporation. Mr. J. D. Nichols has a controlling
interest in NTS Corporation and is a general partner of NTS-Properties
Associates V. Under the agreement, the Property Manager establishes rental
policies and rates and directs the marketing activity of leasing personnel. It
also coordinates the purchase of equipment and supplies, maintenance activity
and the selection of all vendors, suppliers and independent contractors. As
compensation for its services, the Property Manager received a total of $322,257
for the year ended December 31, 1995. $269,129 was received from commercial
properties and $53,128 was received from residential property. The fee is equal
to 6% of gross revenues from commercial properties and 5% of gross revenues from
residential properties.
- 15 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Management of Properties - Continued
- ------------------------------------
In addition, the management agreement requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of the Property Manager in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse the Property Manager for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel.
The term of the Management Agreement between NTS Development Company and the
Partnership was for an initial period of five years, and thereafter for
succeeding one-year periods, unless cancelled. The Agreement is subject to
cancellation by either party upon sixty days written notice. As of December 31,
1995, the Management Agreement is still in effect.
Conflict of Interest
- --------------------
Because the principals of the general partner and/or its affiliates own and/or
operate real estate properties other than those owned by the Partnership that
are or could be in competition with the Partnership, potential conflicts of
interest exist. Because the Partnership was organized by and is operated by the
General Partner, these conflicts are not resolved through arm's length
negotiations but through the exercise of the General Partner's good judgement
consistent with its fiduciary responsibility to the Limited Partners and the
Partnership's investment objectives and policies. The General Partner is
accountable to the Limited Partners as a fiduciary and consequently must
exercise good faith and integrity in handling the Partnership's affairs. A
provision has been made in the Partnership Agreement that the General Partner
will not be liable to the Partnership except for acts or omissions performed or
omitted fraudulently, in bad faith or with negligence. In addition, the
Partnership Agreement provides for indemnification of the General Partner by the
Partnership for liability resulting from errors in judgement or certain acts or
omissions. The general partner and its affiliates retain a free right to compete
with the Partnership's properties including the right to develop competing
properties now and in the future in addition to those existing properties which
may compete directly or indirectly.
NTS Development Company, the Property Manager and an affiliate of the general
partner, acts in a similar capacity for other affiliated entities in the same
geographic region where the Partnership has property interests. The agreement
with the Property Manager is on terms no less favorable to the Partnership than
those which could be obtained from third parties for similar services in the
same geographical region in which the properties are located. The contract is
terminable by either party without penalty upon 60 days written notice.
There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates than those previously described.
Employees
- ---------
The Partnership has no employees; however, employees of an affiliate of the
general partner are available to perform services for the Partnership. The
Partnership reimburses this affiliate for the actual costs of providing such
services.
- 16 -
<PAGE>
Item 3. Legal Proceedings
The litigation originally instituted by an investor in the Partnership against
her investment advisor and involving claims between the investment advisor and
the Partnership, its general partner and NTS-Properties IV, an affiliate of the
General Partner of the Partnership, and its general partner, has been settled.
See Item 7 for further details regarding the settlement.
Item 4. Submission of Matters to a Vote of Security Holders
None.
- 17 -
<PAGE>
PART II
Item 5. Market for Registrant's Limited Partnership Interests and Related
Partner Matters
There is no established trading market for the limited partnership interests,
nor is one likely to develop. The Partnership had 3,033 limited partners as of
February 29, 1996. Cash distributions and allocations of net income (loss) are
made as described in Note 1C to the Partnership's 1995 financial statements.
Annual distributions totalling $2.17 (1994) and $8.68 (1993) were paid per
limited partnership unit. The Partnership did not make a cash distribution
during 1995. Quarterly distributions are determined based on current cash
balances, cash flow being generated by operations and cash reserves needed, as
determined by the general partner, for future leasing costs, tenant finish costs
and capital improvements. Distributions were paid quarterly as follows:
1995 1994 1993
---------- ---------- ---------
First quarter $ -- $ 2.17 $ 2.17
Second quarter -- -- 2.17
Third quarter -- -- 2.17
Fourth quarter -- -- 2.17
------ ----- -----
$ -- $ 2.17 $ 8.68
====== ====== =====
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1995, 1994 and 1993. Distributions were funded by cash
flow derived from operating activities.
Cash
Net Loss Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1995 $(1,283,648) $ -- $ --
1994 (449,890) 77,851 77,851
1993 (485,550) 311,403 311,403
General Partner:
1995 $ (12,966) $ -- $ --
1994 (5,049) 786 786
1993 (4,905) 3,145 3,145
- 18 -
<PAGE>
<TABLE>
Item 6. Selected Financial Data
For the years ended December 31, 1995, 1994, 1993, 1992 and 1991.
<CAPTION>
1995 1994 1993 1992 1991
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Rental and other income $ 5,388,726 $ 3,787,118 $ 3,826,917 $ 3,970,482 $ 3,797,408
Gain (loss) on sale of
property -- -- -- (158,957) --
Total expenses (6,685,340) (4,292,057) (4,317,372) (4,275,902) (5,062,463)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (1,296,614) $ (504,939) $ (490,455) $ (464,377) $ (1,265,055)
============ ============ ============ ============ ============
Net income (loss)
allocated to:
General partner $ (12,966) $ (5,049) $ (4,905) $ (4,644) $ (12,651)
Limited partners $ (1,283,648) $ (499,890) $ (485,550) $ (459,733) $ (1,252,404)
Net income (loss) per
limited partnership unit $ (35.78) $ (13.93) $ (13.53) $ (12.81) $ (34.91)
Weighted average number
of limited partnership
units 35,876 35,876 35,876 35,876 35,876
Cumulative net income
(loss) allocated to:
General partner $ 41,828 $ 54,794 $ 59,843 $ 64,748 $ 69,392
Limited partners $ (7,124,963) $ (5,841,315) $ (5,341,425) $ (4,855,875) $ (4,396,142)
Cumulative taxable income
(loss) allocated to:
General partner $ 145,990 $ 148,475 $ 145,430 $ 146,019 $ 115,374
Limited partners $ (6,835,826) $ (6,069,120) $ (5,601,973) $ (5,144,495) $ (4,910,004)
Distributions declared:
General partner $ -- $ 786 $ 3,145 $ 1,573 $ 363
Limited partners $ -- $ 77,851 $ 311,403 $ 155,711 $ 35,876
Cumulative distributions
declared:
General partner $ 155,527 $ 155,527 $ 154,741 $ 151,596 $ 150,023
Limited partners $ 15,397,262 $ 15,397,262 $ 15,319,411 $ 15,008,008 $ 14,852,297
At year end:
Land, buildings and
amenities, net $ 26,149,956 $ 17,505,634 $ 18,082,922 $ 18,663,964 $ 19,760,000
Total assets $ 31,537,473 $ 21,447,138 $ 23,031,297 $ 23,982,298 $ 24,796,175
Mortgages and notes
payable $ 22,839,940 $ 11,743,884 $ 12,419,675 $ 12,819,410 $ 13,217,000
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Form 10-K
report.
- 19 -
<PAGE>
Item 7. 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 December 31 were as
follows:
Percentage
Ownership at
12/31/95 1995 1994 1993
------------ ---- ---- ----
Wholly-owned Properties
- -----------------------
Commonwealth Business Center
Phase II 100% 67% 100% 81%
University Business Center
Phase I 100% 95% 90% 88%
Properties Owned in Joint
Venture with NTS-Properties
IV
- ---------------------------
The Willows of Plainview
Phase II 90% 94% 93% 91%
Lakeshore Business Center Phase
I N/A See
below
(1) 80% 58%
Property Owned in Joint Venture
with NTS-Properties Plus Ltd.
- -----------------------------
University Business Center Phase
II N/A See
below
(1) 100% 100%
Properties Owned Through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
- ------------------------------
Lakeshore Business Center
Phase I 69% 92% See See
above above
(1) (1)
Lakeshore Business Center
Phase II 69% 72% 78% 75%
(2) (2)
University Business Center
Phase II 69% 100% See See
above above
(1) (1)
(1) During the first quarter of 1995, the Partnership's ownership interest in
the property changed. See page 29 for a discussion regarding this change.
(2) As of December 31, 1994 and 1993, the Partnership did not have an
interest in this property. See page 29 for a discussion regarding this
change.
- 20 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The rental and other income generated by the Partnership's properties for the
years ended December 31, 1995, 1994 and 1993 were as follows:
Percentage
Ownership
at 12/31/95 1995 1994 1993
----------- ---------- ---------- ----------
Wholly-owned Properties
- -----------------------
Commonwealth Business
Center Phase II 100% $ 587,304 $ 512,547 $ 595,716
University Business
Center I 100% $1,359,802 $1,114,924 $1,277,530
Properties Owned in Joint
Venture with NTS-
Properties IV
- -------------
The Willows of Plainview
Phase II 90% $1,074,104 $1,102,210 $1,027,110
Lakeshore Business Center
Phase I N/A $ 74,043 $ 845,406 $ 700,116
(1)
Property Owned in Joint
Venture with NTS-
Properties Plus Ltd.
- --------------------
University Business
Center Phase II N/A $ 17,263 $ 198,421 $ 189,548
(1)
Properties Owned Through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture)
- --------------
Lakeshore Business Center
Phase I 69% $ 743,824 N/A (2) N/A (2)
Lakeshore Business Center
Phase II 69% $ 745,307 N/A (3) N/A (3)
University Business
Center Phase I 69% $ 768,180 N/A (2) N/A (2)
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
(1) During the first quarter of 1995, the Partnership's ownership in the
property changed. The Partnership's proportionate share of rental and
other income from January 23, 1995 to December 31, 1995 is reflected
below (see L/U II Joint Venture). See page 29 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 1994 and 1993 is
reflected above. See page 29 for a discussion regarding this change.
(3) During 1994 and 1993, the Partnership did not have an interest in this
property. See page 29 for a discussion regarding the change which
occurred during the first quarter of 1995.
- 21 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 33% decrease in year-ending occupancy at Commonwealth Business Center Phase
II from 1994 to 1995 is a result of four tenant move-outs totalling
approximately 22,000 square feet. Included in this total is one tenant of 1,600
square feet which vacated at the end of the lease term. The other three tenants,
who had occupied approximately 20,000 square feet, vacated the premises prior to
the end of the lease terms. Two of the three tenants, who occupied approximately
19,000 square feet, exercised termination options. The third tenant, who had
occupied approximately 1,000 square feet, is continuing to pay rent through the
end of its lease term. There was no accrued income associated with these leases.
Partially offsetting the move-outs is one new lease for 1,600 square feet. The
Partnership is actively seeking new tenants to occupy the vacant space. At this
time, the extent and cost of any tenant improvements which will be required to
attract new tenants remains unknown. In the opinion of the General Partner of
the Partnership, the decrease in year-ending occupancy is only a temporary
fluctuation and does not represent a downward occupancy trend. Average occupancy
increased from 78% (1994) to 84% (1995). The increase in rental and other income
at Commonwealth Business Center Phase II from 1994 to 1995 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 19% increase in year-ending occupancy at Commonwealth Business Center Phase
II from 1993 to 1994 is the result of six new leases totalling approximately
27,000 square feet. Included in this total is a 15-month lease for approximately
28% of the business center's rentable area. Also included in the new leases is
an approximately 1,900 square foot expansion by a current tenant. Partially
offsetting the new leases is one tenant who had occupied approximately 16,000
square feet vacating at the end of the lease term. Although there was an
increase in year-ending occupancy, average occupancy decreased from 83% in 1993
to 78% in 1994. The decrease in rental and other income from 1993 to 1994 at
Commonwealth Business Center Phase II is due to the decrease in average
occupancy and a decrease in rental rates. Another factor contributing to the
decrease in rental and other income is a decrease in common area expense
reimbursements.
The 5% increase in year-ending occupancy at University Business Center Phase I
from 1994 to 1995 is a result of six new leases totalling approximately 9,400
square feet. Partially offsetting the new leases is a tenant move-out of
approximately 2,500 square feet at the end of the lease term and one tenant, who
occupied approximately 2,800 square feet, vacating the premises prior to the end
of the lease term due to bankruptcy. Accrued income of approximately $3,800
associated with this lease was written-off as uncollectible. Average occupancy
at University Business Center Phase I increased from 87% (1994) to 91% (1995).
The increase in rental and other income at University Business Center Phase I
from 1995 as compared to 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 from 1994 to 1995 is also due
to the increase in average occupancy, an increase in common area expense
reimbursements and an increase in rental rates.
The 2% increase in year-ending occupancy at University Business Center Phase I
from 1993 to 1994 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
- 22 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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 was unchanged from 1994 to 1993 at 87%.
The decrease in rental and other income at University Business Center Phase I
from 1993 to 1994 is due to an increase in the provision for doubtful accounts.
Another factor contributing to the decrease in rental and other income are lease
concessions which arose out of negotiations of the 8,000 square foot expansion
and lease renewal by an existing tenant discussed above. Partially offsetting
the decrease in rental and other income is an increase in rental rates.
The Willows of Plainview Phase II's year-ending occupancy increased from 93% in
1994 to 94% in 1995. However, average occupancy from 1994 to 1995 decreased from
94% to 92%, respectively. Occupancy at residential properties fluctuate on a
continuous basis. Year-ending occupancy percentages represent occupancy only on
a specific date; therefore, it is more meaningful to consider average occupancy
percentages which are representative of the entire year's results. The decrease
in average occupancy along with a decrease in income from fully furnished units
at The Willows of Plainview Phase II resulted in a decrease in rental and other
income. Fully furnished units are apartments which rent at an additional premium
above base rent. It is possible for occupancy to increase and revenues to
decrease when the number of fully furnished units has decreased.
Year-ending occupancy at The Willows of Plainview Phase II increased from 91% in
1993 to 93% in 1994. Average occupancy increased from 89% in 1993 to 94% in
1994. Rental and other income at The Willows of Plainview Phase II increased
from 1993 to 1994 as a result of the increase in average occupancy and an
increase in rental rates. The increase in rental and other income from 1993 to
1994 is partially offset by a decrease in income from fully furnished units.
The 12% increase in year-ending occupancy at Lakeshore Business Center Phase I
from 1994 to 1995 can be attributed to 11 new leases, totalling approximately
19,000 square feet which includes approximately 6,400 square feet in expansions
by two current tenants. The new leases and expansions are partially offset by
four tenant move-outs, who vacated at the end of the lease terms, totalling
approximately 6,100 square feet. Average occupancy increased from 70% (1994) to
84% (1995). The Partnership's proportionate share of the rental and other income
at Lakeshore Business Center Phase I decreased in 1995 as compared to 1994 as a
result of the Partnership's decreased ownership in Lakeshore Business Center
Phase I. (See page 27 for a discussion regarding the change.) Overall, Lakeshore
Business Center Phase I's rental and other income increased in 1995 as compared
to 1994 primarily as a result of the increases in average occupancy and an
increase in common area expense reimbursements. Partially offsetting the
increase in rental and other income is an increase in the provision for doubtful
accounts.
During January 1996, Lakeshore Business Center Phase I's occupancy increased to
98% as a result of approximately 6,400 square feet of expansions by two current
tenants.
The 22% increase in year-ending occupancy at Lakeshore Business Center Phase I
from 1993 to 1994 can be attributed to 12 new leases totalling approximately
32,700 square feet which includes approximately 3,100 square feet in expansions
by three current tenants. Included in the new leases is
- 23 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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 four tenants, who occupied approximately 7,300 square feet,
vacating at the end of the lease terms. In addition to the move-outs and
downsizing, the business center's leasing office of approximately 1,500 square
feet was relocated to Lakeshore Business Center Phase II (in 1994 owned by
NTS-Properties Plus Ltd., an affiliate of the general partner). The leasing
office was relocated in order to accommodate an approximately 9,400 square foot
new lease. Average occupancy at Lakeshore Business Center Phase I increased from
56% (1993) to 70% (1994). The increase in rental and other income at Lakeshore
Business Center Phase I from 1993 to 1994 is primarily due to the increase in
average occupancy and an increase in rental rates on new leases. Another factor
contributing to the increase in rental and other income is the fact that in 1993
approximately $27,000 of accrued income was written off which related to two
tenants who had vacated the premises and ceased making rental payments in breach
of the lease terms due to bankruptcies. The two tenants had occupied
approximately 4,600 square feet. There were no similar write-offs in 1994.
Partially offsetting the increase in rental and other income is a decrease in
rental rates on lease renewals.
Philip Crosby Associates, Inc. ("PCA") 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 approximately 50,000 square feet
(or 64%) of University Business Center Phase II. Of the total being sub-leased,
approximately 41,000 square feet (or 52%) is being leased by Full Sail
Recorders, Inc. (a major tenant at University Business Center Phase I). Prior to
December 31, 1995, Full Sail Recorders, Inc. ("Full Sail") signed a 33 month
lease with the L/U II Joint Venture for the approximately 41,000 square feet it
currently sub-leases from PCA. The lease term commences April 1998 when PCA's
lease ends. As part of the lease negotiations, Full Sail will receive a $200,000
tenant finish allowance in 1996, of which approximately $92,000 will be
reimbursed by Full Sail over a 27-month period beginning January 1996. At this
time, it is not known whether PCA or the other sub-lessee will renew the current
lease with the business center when the original lease expires in 1998. In
August 1990, the tenant paid an $80,000 security deposit which was to be
returned three years from the date of occupancy. The security deposit plus
interest was returned to Philip Crosby Associates, Inc. in April 1994.
The Partnership's proportionate share of the rental and other income at
University Business Center Phase II increased in 1995 as compared to 1994 as a
result of the Partnership's increased ownership in the business center. (See
page 29 for a discussion regarding the change.) Overall, rental and other income
at University Business Center Phase II increased in 1995 as compared to 1994 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 increase in rental and other income at University Business Center Phase II
from 1993 to 1994 is a result of the Partnership increasing its ownership in the
joint venture from approximately 16% to approximately 17%. The increase in
ownership is a result of an approximately $79,000 capital contribution made
during the second quarter of 1994. The contribution was made to fund a portion
of the joint venture's operating costs. The Partnership did not make any
additional capital contributions to the joint venture during 1994. The increase
in rental and other income from 1993 to 1994 is also a result of a rent
escalation which was based upon an increase in the consumer price index.
- 24 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The Partnership obtained an interest in Lakeshore Business Center Phase II as a
result of the formation of the L/U II Joint Venture in 1995. See page 29 for a
discussion regarding the change which occurred during the first quarter of 1995.
Therefore, no discussion of the fluctuations in rental and other income from
1993 to 1994 and from 1994 to 1995 is being presented. See below for a
discussion of the changes in year-ending occupancy for these periods.
The 6% decrease in year-ending occupancy at Lakeshore Business Center Phase II
from 1994 to 1995 can be attributed to four tenant move-outs totalling
approximately 9,600 square feet and a downsizing by a current tenant of its
existing space of approximately 6,000 square feet. Two of the move-outs,
totalling approximately 5,800 square feet, represent tenants who vacated the
premises at the end of the lease term. The third tenant, who occupied
approximately 1,400 square feet, vacated the premises and ceased making rental
payments in breach of the lease terms due to bankruptcy. The write-off of
accrued income connected with this lease was not significant. The fourth tenant,
who occupied approximately 2,400 square feet, vacated the premises prior to the
end of the lease term but is continuing to pay rent through the end of the lease
term. Partially offsetting the tenant move- outs are six new leases for a total
of approximately 9,700 square feet. Average occupancy at Lakeshore Business
Center Phase II decreased from 78% (1994) to 76% (1995). In the opinion of the
General Partner of the Partnership, the decrease in occupancy is only a
temporary fluctuation and does not represent a downward occupancy trend.
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Business Center Phase II for approximately 7,000 square feet. The tenant is
expected to take occupancy during the second quarter of 1996. With this new
lease, the building's occupancy will increase to 79%.
Lakeshore Business Center Phase II's year-ending occupancy increased 3% from
1993 to 1994 and average occupancy increased from 75% in 1993 to 78% in 1994.
There were no significant new leases or tenant move-outs during 1994. A detail
discussion of the tenant activity has been omitted due to the fact that the
Partnership had no interest in this property during 1994 or 1993.
In cases of tenants who cease making rental payments or abandon the premises in
breach of their lease, the Partnership pursues collection through the use of
collection agencies or other remedies available by law when practical.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties without the need of any additional financing. In
the opinion of the General Partner of the Partnership, the decreased occupancy
level at Commonwealth Business Center Phase II is not indicative of trends in
the area in which the property is located. See the Liquidity and Capital
Resources section for a discussion regarding the cash requirements of the
Partnership's current debt financings.
The increase in interest and other income in 1995 as compared to 1994 is
primarily the result of approximately $21,600 in interest income being
recognized during the second quarter of 1995 on a receivable from a tenant at
University Business Center Phase I. Interest income was not recognized until the
receivable had been repaid in full due to the length of time it has taken the
tenant to reimburse the Partnership. Interest and other income also includes
interest earned from investments made by the Partnership with excess cash. The
increase in interest income earned from investments in 1995 as compared to 1994
is a result of an increase in excess cash available for investment. Partially
offsetting the increase in interest income in 1995 as compared to 1994 is a
decrease in interest income received on an account receivable from a tenant at
University Business
- 25 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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.
The decrease in interest income from 1993 to 1994 is a result of a decrease in
excess cash available for investment. Interest income decreased from 1993 to
1994 also as a result of decreased interest income received on an account
receivable from a tenant at University Business Center Phase I due to continued
principal paydowns. The receivable was the result of above standard tenant
improvements made in accordance with the lease agreement (discussed above).
Operating expenses increased from 1994 to 1995 primarily as a result of the
Partnership's interest in the L/U II Joint Venture. (See page 29 for a
discussion regarding the joint venture.) The increase in operating expenses from
1994 to 1995 is also a result of increased landscaping costs at all of the
Partnership's properties and increased wallcovering and other replacement costs
at the Partnership's residential property. Partially offsetting the increase in
operating expenses from 1994 to 1995 is an overall decrease in repair costs and
utility costs at the Partnership's commercial properties.
Operating expenses decreased from 1993 to 1994 as a result of decreased
commercial legal fees, a decrease in carpet replacement, vinyl replacement and
other maintenance costs at The Willows of Plainview Phase II and a decrease in
parking lot repairs and maintenance costs at University Business Center Phases I
and II. The decreases in operating expenses from 1993 to 1994 are partially
offset by increased snow removal costs at Commonwealth Business Center Phase II
and The Willows of Plainview Phase II, increased vacant suite utility costs at
Commonwealth Business Center Phase II, increased exterior painting costs at
University Business Center Phases I and II and The Willows of Plainview Phase II
and increased janitorial costs at Lakeshore Business Center Phase I.
The increase in operating expenses - affiliated from 1994 to 1995 is due to the
Partnership's interest in the L/U II Joint Venture (discussed on page 29). The
change in operating expenses - affiliated from 1993 to 1994 was not significant.
Operating expenses - affiliated are expenses incurred for services performed by
employees of NTS Development Company, an affiliate of the General Partner of the
Partnership.
The 1995 write-off of unamortized tenant improvements was not significant. The
1994 write-off of unamortized tenant improvements can be attributed mainly to
University Business Center Phase I. At University Business Center Phase I, a
tenant expanded and renewed its lease through April 2001. The tenant expanded by
approximately 400 square feet for a total of approximately 3,900 square feet. No
additional space was available adjacent to the tenant's current location;
therefore, it was necessary to relocate the tenant to another suite in the
business center. As a condition of the renewal and expansion, the Partnership
agreed to renovate the new suite. In order to complete the renovation, it was
necessary to replace improvements which had not been fully depreciated. This
resulted in a write-off of approximately $31,000. Changes to current tenant
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to accommodate a tenant's needs,
new carpeting and paint and/or wallcovering. In order to complete the
renovation, it is sometimes necessary to replace improvements which have not
been fully depreciated. This results in a write-off of unamortized tenant
improvements.
- 26 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 1993 write-off of unamortized tenant improvements is related mainly to
University Business Center Phase I. University Business Center Phase I had a
tenant expand its current space by approximately 8,000 square feet; raising its
total square footage to approximately 35,000 square feet (first floor, second
floor and mezzanine office space). The tenant also renewed its lease for eight
years. As a condition of the lease, the Partnership agreed to renovate the space
leased to the tenant. In order to complete the renovations, it was necessary to
replace improvements which had not been fully depreciated.
The increase in the amortization of capitalized leasing costs and interest
expense from 1994 to 1995 is primarily a result the Partnership's interest in
the L/U II Joint Venture (discussed on page 29). The increase in interest
expense can also be attributed to the increase in the Prime Rate.
The decrease in the amortization of capitalized leasing costs from 1993 to 1994
is the result of a portion of the costs capitalized during start-up having
become fully amortized at all the Partnership's properties except University
Business Center Phase II.
The increase in interest expense from 1993 to 1994 is due to the higher interest
rate on the permanent financings which were obtained in November 1993 (secured
by The Willows of Plainview Phase II). The purpose of the debt refinancing was
to take advantage of the attractive permanent mortgage rates which were
available in the market and to enable the Partnership to reduce its note payable
to the required level ($7,602,000) in accordance with the second quarter 1993
loan extension agreement by December 31, 1993 in order to extend the note to
March 31, 1996. Also contributing to the increase in interest expense from 1993
to 1994 is an increase in the Prime interest rate. Another factor contributing
to the increase in interest expense from 1993 to 1994 is that the interest rate
on the $7,002,000 note payable increased from the Prime Rate + 3/8% to the Prime
Rate + 5/8% in July 1993 and to the Prime Rate + 7/8% in May 1994 as a result of
loan extension negotiations during the second quarter of 1993. Partially
offsetting the increase in interest expense is the fact that the Partnership's
level of debt has decreased approximately $676,000 during 1994. See the
Liquidity and Capital Resources section of this item for details regarding the
Partnership's debt.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is 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 real estate taxes from 1994 to 1995 is primarily a result of the
Partnership's interest in the L/U II Joint Venture (discussed on page 29). The
increase in real estate taxes from 1994 to 1995 is also due to an increase in
the 1995 property tax assessment for Commonwealth Business Center Phase II as
compared to the 1994 assessment.
The increase in real estate taxes from 1993 to 1994 is due to an increase in the
assessments for University Business Center Phases I and II and an increase in
tax rates at all of the Partnership's properties. Assessments at the
Partnership's other properties remained unchanged. Another factor contributing
to the increase in real estate taxes from 1993 to 1994 is the refund of 1992
taxes the Partnership received in June 1993 related to Lakeshore Business Center
Phase I. The refund resulted from a decrease in Lakeshore Business Center I's
assessment subsequent to the payment of real estate taxes.
- 27 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The increase in professional and administrative expenses from 1994 to 1995 is
due mainly to an increase in outside legal fees and litigation settlement
expense. The litigation originally instituted by an investor in the Partnership
against her investment advisor and involving claims between the investment
advisor and the Partnership, its general partner and NTS- Properties IV, an
affiliate of the General Partner of the Partnership, and its general partner was
settled during 1995. At a settlement conference before the Court (U.S.D.C., S.D.
NY), the parties agreed on a confidential basis to settle the litigation, and
any and all other claims of Third-Party Plaintiffs in exchange for the payment
by the Partnership and NTS-Properties IV of the sum of $45,000 each.
The increase in professional and administrative expenses from 1993 to 1994 is
due mainly to an increase in outside legal fees.
Professional and administrative expenses - affiliated increased from 1994 to
1995 as a result of increased accounting salaries and increased legal fees.
Professional and administrative expenses - affiliated decreased from 1993 to
1994 as a result of decreased legal fees and accounting costs. Professional and
administrative expenses - affiliated are expenses incurred for services
performed by employees of NTS Development Company, an affiliate of the General
Partner.
Depreciation and amortization expense has increased from 1994 to 1995 as a
result of the Partnership's interest in the L/U II Joint Venture (discussed on
page 29). The increase in depreciation and amortization expense from 1994 to
1995 is partially offset by a portion of the Partnership's assets having become
fully depreciated. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets which are 10 - 30 years for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
5 - 30 years for amenities. The aggregate cost of the Partnership's properties
for Federal tax purposes is approximately $41,400,000.
Depreciation and amortization decreased from 1993 to 1994 due to a portion of
the Partnership's assets having become fully depreciated. The decrease in
depreciation and amortization from 1993 to 1994 is partially offset by
approximately $530,000 of new assets, primarily tenant improvements, being
placed in service during 1994.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities was $562,363 (1995), $772,998 (1994) and
$1,146,807 (1993). These funds in conjunction with cash on hand were used to
make a .25% and 1% (annualized) cash distribution of $78,637 (1994) and $314,548
(1993), respectively. 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 last nine months of 1994 and all of 1995 as a result of a loan
covenant (the $6,402,000 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 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.
Cash reserves (which are unrestricted cash and equivalents as shown on the
Partnership's balance sheet at December 31) were $218,331, $207,600 and $955,727
at December 31, 1995, 1994 and 1993, respectively.
- 28 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
The primary source of future liquidity and distributions is expected to be
derived from cash generated by the Partnership's properties after adequate cash
reserves are established for future leasing costs, tenant finish costs and
capital improvements.
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 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 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
(3.8 acres)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center development
(2.4 acres)
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 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 owned by the L/U II Joint Venture as required by the loan agreements
discussed on pages 32 - 33. Cash flows provided by
- 29 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
investing activities were the result of a release of these escrow funds. Cash
flows provided by financing activities are from debt refinancings. Cash flows
used in financing activities are for cash distributions, loan costs and
principal payments on mortgages and notes payable. The capital contribution by a
joint venture partner represents the Partnership's interest in the L/U II Joint
Venture's increase in cash which resulted from a capital contribution. The
Partnership utilizes the proportionate consolidation method of accounting for
joint venture properties. The Partnership's interest in the joint venture's
assets, liabilities, revenues, expenses and cash flows are combined on a
line-by-line basis with the Partnership's own assets, liabilities, revenues,
expenses and cash flows. The use of proportionate consolidation method also
explains why the $79,000 capital contribution made from 1994 to 1995 by the
Partnership to the University Business Center Phase II Joint Venture in 1994 (as
discussed on page 33) is not shown as a separate line on the statement of cash
flows. The Partnership does not expect any material changes in the mix and
relative cost of capital resources except for the changes resulting from the
investment in the L/U II Joint Venture. See the discussion of the Joint Venture
formation on page 29. The Partnership also expects a change in the cost of
capital resources as a result of the refinancing of the $6,402,000 note payable
subsequent to December 31, 1995. See the discussion of the refinancings on page
32.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1995, 1994 and 1993. Distributions were funded by cash
flow derived from operating activities.
Cash
Net Loss Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1995 $(1,283,648) $ -- $ --
1994 (449,890) 77,851 77,851
1993 (485,550) 311,403 311,403
General Partner:
1995 $ (12,966) $ -- $ --
1994 (5,049) 786 786
1993 (4,905) 3,145 3,145
As of December 31, 1995, the Partnership has accrued approximately $148,000
(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 December 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 December 31, 1995.
- 30 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
As of December 31, 1995, the Partnership had a commitment for a $30,000 special
tenant finish allowance at University Business Center Phase I as a result of a
current tenant extending its existing lease from December 1995 to July 2003.
As of December 31, 1995, the L/U II Joint Venture had commitments for
approximately $200,000 of tenant finish improvements and leasing costs. The
commitments are the result of an 8,200 square foot new lease and 7,100 square
foot lease renewal. Both leases are for a period of five years. The
Partnership's proportionate share of these commitments is approximately $135,000
or 69%. As of December 31, 1995, approximately $130,000 had been incurred toward
these commitments, of which the Partnership's proportionate share is
approximately $90,000 or 69%.
As of December 31, 1995, the L/U II Joint Venture also had a commitment for a
$200,000 special tenant finish allowance, of which approximately $92,000 will be
reimbursed by the tenant over a 27-month period beginning in January 1996. This
commitment is the result of lease negotiations with Full Sail Recorders, Inc.
("Full Sail") which currently sub-leases approximately 41,000 square feet from
Philip Crosby Associates, Inc. ("PCA") at University Business Center Phase II.
PCA currently leases 100% of the business center through April 1998. Full Sail's
lease term with the Joint Venture is for 33 months (April 1998 to December
2000).
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Business Center Phase II for approximately 7,000 square feet. As a result of the
new lease, the L/U II Joint Venture has a commitment for approximately $105,000
of tenant finish improvements, of which the Partnership's proportionate share is
approximately $72,000 or 69%.
The Partnership had no other material commitments for renovations or capital
improvements at December 31, 1995.
As a result of the 1993 loan extension agreement, the Partnership had the right
to extend the maturity date of the notes (which had balances of $11,819,410 and
$1,000,000 at the time of extension) from December 31, 1993 to March 31 1996,
provided that the Partnership was not in default and the principal balance
outstanding on the $11,819,410 note payable was equal to or less than $7,602,000
by December 31, 1993. The Partnership was able to reduce the principal balance
of the $11,819,410 note payable to $7,602,000 by December 31, 1993. The
Partnership accomplished this by making $300,410 of monthly principal payments
and by making a $3,917,000 principal payment on November 23, 1993 from a cash
distribution received from the NTS Willows Phase II Joint Venture. The Joint
Venture made the cash distribution from the proceeds of the permanent financings
secured by The Willows of Plainview Phase II. (See the discussion regarding this
financing below.) On November 23, 1993, the Partnership also retired the
$1,000,000 note payable using the remaining funds from the cash distribution
(approximately $833,000) and cash reserves. On December 31, 1993, the bank
extended the maturity date of the $7,602,000 note to March 31, 1996 as both
conditions required for the extension were met. For further information
regarding the $7,602,000 note see the following paragraph. As of December 31,
1995, the note has a balance of $6,402,000.
As of December 31, 1995, the Partnership had a note payable to a bank in the
amount of $6,402,000. 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 bore interest at the Prime Rate + 7/8%. Beginning May 1, 1995 and
continuing through March 31, 1996, the note will bear interest
- 31 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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.
Subsequent to December 31, 1995, the Partnership obtained permanent financing
from two insurance companies totalling $6,500,000 ($5,100,000 and $1,400,000).
The $5,100,000 mortgage payable is secured by University Business Center Phase I
and the $1,400,000 mortgage payable is secured by Commonwealth Business Center
Phase II. The proceeds were used to retire the Partnership's $6,402,000 note
payable, to fund closing costs and to increase the Partnership's cash reserves.
The $5,100,000 mortgage is due February 1, 2008 and bears interest at a fixed
rate of 7.5%. The repayment of principal will be amortized over 144 months with
equal monthly payments of principal and interest ($54,231). The $1,400,000
mortgage is due February 1, 2009 and bears interest at the Prime Rate (which was
8.5% on the date of closing). Monthly principal payments will be based on a
13-year amortization schedule.
As of December 31, 1995, The Willows of Plainview Phase II, a joint venture
between the Partnership and NTS-Properties IV, had two mortgage loans each with
an insurance company in the amount of $3,267,236 and $1,950,588. The mortgages
are recorded as a liability of the joint venture. The Partnership's
proportionate share of the mortgages as of December 31, 1995 was $4,678,301
($2,929,404 and $1,748,897). 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 notes. (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).
The Partnership received approximately $4,750,000 of the mortgage proceeds from
the NTS Willows Phase II Joint Venture as a cash distribution in 1993. This
amount represents the Partnership's proportionate interest in the mortgages less
loan costs which were incurred in connection with the financings. These funds
along with cash reserves were used to make a $3,917,000 principal payment on the
Partnership's $11,819,410 note payable and retire the $1,000,000 note payable
(see the discussion on page 31). These principal payments were required in order
to release the bank's mortgage on the apartment complex.
As of December 31, 1995, the L/U II Joint Venture had notes payable to banks in
the following amounts: $9,204,000, $5,740,000, $1,234,000, $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 December 31, 1995 was $6,371,930, $3,973,802, $854,298, $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
- 32 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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
December 31, 1995, the Joint Venture had met this funding requirement.
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 $9,204,000, $5,740,000 and $1,234,000 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.
Subsequent to December 31, 1995, the L/U II Joint Venture submitted an
application with an insurance company for $17.4 million of debt financing. The
proceeds from the loan will be used to pay off the Joint Venture's current debt
financings of approximately $16.9 million. The remaining proceeds will be used
to fund Joint Venture tenant finish improvements, leasing costs and loan closing
costs. The Joint Venture anticipates that the financing will be completed during
mid-1996.
During the second quarter of 1994, the Partnership made an approximately $79,000
capital contribution to University Business Center Phase II, a joint venture
between the Partnership and NTS-Properties Plus Ltd. (at the time of the
contribution). The capital contribution increased the Partnership's ownership
percentage in the joint venture from approximately 16% to approximately 17%. The
contribution was made to fund a portion of the joint venture's operating costs.
In the next 12 months, the demand on future liquidity is anticipated to increase
as a result of the principal and interest payments required on the permanent
mortgages obtained by the Partnership subsequent to year-end, 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 and
commitments made for tenant finish improvements (see page 31). Additionally, the
Partnership will continue its efforts to lease current unoccupied space at its
commercial properties. The Partnership also expects a demand on future liquidity
based on 27,686 square feet in leases expiring in 1996 (Commonwealth Business
Center Phase II - 6,075 square feet, University Business Center Phase I - 3,828
square feet, Lakeshore Business Center Phase I - 10,853 square feet and
Lakeshore Business Center Phase II - 6,930 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.
Cash in the amount of $50,000 will also be required to fund the Interest
Repurchase Reserve which the Partnership will establish on June 30, 1996
pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership. Under Section 16.4, limited partners may request the
Partnership to repurchase their respective interests (Units) in the Partnership.
With this Interest Repurchase Reserve, the Partnership will be able to
repurchase up to 370 Units at a currently contemplated price of $135 per Unit.
The Partnership notified the limited partners by letter dated February 1, 1996
of the establishment of the Interest Repurchase Reserve and the opportunity to
request that the Partnership repurchase Units at the established price.
Repurchased Units will be retired by the Partnership, thereby reducing the total
number of Units outstanding. The Partnership plans to fund the Interest
Repurchase Reserve from cash reserves.
- 33 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
It is anticipated that the cash flow from operations, cash reserves and the
escrow funds (as discussed on page 33 will be sufficient to meet the needs of
the Partnership.
Historically, 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 General Partner of the Partnership), who makes calls to
potential tenants, negotiates lease renewals with current tenants and manages
local advertising with the assistance of NTS Development Company's marketing
staff.
The 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 Phases I and II 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. The leasing and renewal
negotiations at Lakeshore Business Center Phases I and II are handled by a
leasing agent, an employee of NTS Development Company, located at the Lakeshore
Business Center development. 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.
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 6.21 acres of land, adjacent to the
University Place development, in Orlando, Florida which is zoned for commercial
development. Included in the cost of $2.4 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 6.2 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at December 31, 1995 in the land held for
development is approximately $1.1 million. The Joint Venture currently has a
contract for the sale of .7 acres of this land for $175,000.
- 34 -
<PAGE>
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To NTS-Properties V, a Maryland Limited Partnership:
We have audited the accompanying balance sheets of NTS-Properties V, a Maryland
Limited Partnership, as of December 31, 1995 and 1994, and the related
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements and the
schedules referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NTS-Properties V, a Maryland
Limited Partnership, as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules included on pages 52
through 54 are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
February 14, 1996
- 35 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<CAPTION>
1995 1994
------------ -----------
ASSETS
<S> <C> <C>
Cash and equivalents $ 218,331 $ 207,600
Cash and equivalents - restricted 56,318 21,107
Accounts receivable, net of allowance 766,624 549,755
for doubtful accounts of $53,582 (1995)
and $44,035 (1994)
Land, buildings and amenities, net 26,149,956 17,505,634
Assets held for development, net 3,585,818 2,586,802
Other assets 760,426 576,240
----------- -----------
$31,537,473 $21,447,138
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $22,839,940 $11,743,884
Accounts payable - operations 365,431 148,634
Accounts payable - construction 231,566 164,458
Security deposits 147,330 125,833
Other Liabilities 35,717 50,226
----------- -----------
23,619,984 12,233,035
Partners' equity 7,917,489 9,214,103
----------- -----------
$31,537,473 $21,447,138
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 36 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income, net of provision for
doubtful accounts of $34,423 (1995),
$12,593 (1994) and $11,107 (1993) $ 5,328,772 $ 3,753,848 $ 3,713,638
Interest and other income 59,954 33,270 113,279
----------- ----------- -----------
5,388,726 3,787,118 3,826,917
Expenses:
Operating expenses 960,770 693,633 720,330
Operating expenses - affiliated 504,206 446,642 445,304
Write-off of unamortized tenant
improvements 4,719 32,649 30,118
Amortization of capitalized leasing
costs 30,880 11,888 16,318
Interest expense 2,189,900 955,956 863,990
Management fees 322,257 226,081 231,821
Real estate taxes 526,099 365,306 316,275
Professional and administrative
expenses 203,413 150,503 133,788
Professional and administrative
expenses - affiliated 154,275 149,295 156,057
Depreciation and amortization 1,788,821 1,260,104 1,403,371
----------- ----------- -----------
6,685,340 4,292,057 4,317,372
----------- ----------- -----------
Net loss $(1,296,614) $ (504,939) $ (490,455)
=========== =========== ===========
Net loss allocated to the limited
partners $(1,283,648) $ (499,890) $ (485,550)
=========== =========== ===========
Net loss per limited partnership $ (35.78) $ (13.93) $ (13.53)
=========== =========== ===========
unit
Weighted average number of limited 35,876 35,876 35,876
=========== =========== ===========
partnership units
The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>
- 37 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Limited General
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Balances at December 31, 1992 $ 10,689,430 $ (86,748) $ 10,602,682
Net loss (485,550) (4,905) (490,455)
Distributions declared (311,403) (3,145) (314,548)
------------ ------------ ------------
Balances at December 31, 1993 9,892,477 (94,798) 9,797,679
Net loss (499,890) (5,049) (504,939)
Distributions declared (77,851) (786) (78,637)
------------ ------------ ------------
Balances at December 31, 1994 9,314,736 (100,633) 9,214,103
Net loss (1,283,648) (12,966) (1,296,614)
------------ ------------ ------------
Balances at December 31, 1995 $ 8,031,088 $ (113,599) $ 7,917,489
============ ============ ============
The accompanying notes to financial statements are an integral part of these
statements.
</TABLE>
- 38 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,296,614) $ (504,939) $ (490,455)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Provision for doubtful accounts 34,423 12,593 11,107
Write-off of unamortized tenant improvements 4,719 32,649 30,118
Amortization of capitalized leasing costs 30,880 11,888 16,318
Depreciation and amortization 1,788,821 1,260,104 1,403,371
Changes in assets and liabilities:
Cash and equivalents - restricted (25,712) (5,855) (7,683)
Accounts receivable 215,134 91,284 251,998
Other assets 60,074 (55,093) (139,944)
Accounts payable - operations 89,104 (78,869) 73,736
Security deposits 11,477 (555) (14,400)
Other liabilities (349,943) 9,791 12,641
----------- ----------- -----------
Net cash provided by operating activities 562,363 772,998 1,146,807
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and amenities (187,600) (511,043) (675,142)
Increase (decrease) in accounts payable -
construction 67,112 (176,522) 181,760
Increase in cash and equivalents - restricted (140,281) -- --
Decrease in cash and equivalents - restricted 130,782 -- --
----------- ----------- -----------
Net cash used in investing activities (129,987) (687,565) (493,382)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages and notes
payable (738,350) (675,791) (5,217,410)
Increase in mortgages payable -- -- 4,817,675
Capital contribution by a joint venture partner 519,225 -- --
Cash distributions -- (157,274) (314,548)
Additions to loan costs (202,520) (495) (198,387)
----------- ----------- -----------
Net cash used in financing activities (421,645) (833,560) (912,670)
----------- ----------- -----------
Net increase (decrease) in cash and
equivalents 10,731 (748,127) (259,245)
CASH AND EQUIVALENTS, beginning of year 207,600 955,727 1,214,972
----------- ----------- -----------
CASH AND EQUIVALENTS, end of year $ 218,331 $ 207,600 $ 955,727
=========== =========== ===========
Interest paid on a cash basis $ 2,188,847 $ 959,537 $ 845,688
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 39 -
<PAGE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Significant Accounting Policies
-------------------------------
A) Organization
------------
NTS-Properties V, a Maryland limited partnership, (the
"Partnership") is a limited partnership organized on April 30,
1984. The general partner is NTS-Properties Associates V, a
Kentucky limited partnership. The Partnership is in the business of
developing, constructing, owning and operating residential
apartments and commercial real estate.
B) Properties
----------
The Partnership owns and operates the following properties:
- Commonwealth Business Center Phase II, a business center with
approximately 61,000 net rentable ground floor square feet and
approximately 8,000 net rentable mezzanine square feet located
in Louisville, Kentucky
- University Business Center Phase I, a business center with
approximately 82,000 net rentable first floor (office and
service) and second floor office square feet and approximately
16,000 net rentable mezzanine square feet located in Orlando,
Florida
- A 90% joint venture interest in The Willows of Plainview Phase
II, a 144-unit luxury apartment complex located in Louisville,
Kentucky
- A 69% joint venture interest in the Lakeshore/University II
Joint Venture. A description of the properties owned by the
Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center with
approximately 103,000 net rentable square feet located in
Fort Lauderdale, Florida.
- Lakeshore Business Center Phase II - a business center with
approximately 97,000 net rentable square feet located in
Fort Lauderdale, Florida.
- University Business Center Phase II - a business center with
approximately 78,000 net rentable first floor (office and
service) and second floor office square feet and
approximately 10,000 net rentable mezzanine square feet
located in Orlando, Florida.
- Outparcel Building Sites - approximately 6.2 acres of
undeveloped land adjacent to the Lakeshore Business Center
development, which is zoned for commercial development.
The Partnership also owns approximately 6.21 acres of land,
adjacent to the University Place development (University Place
Phase III), in Orlando, Florida which is zoned for commercial
development.
- 40 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
C) Allocation of Net Income (Loss) and Cash Distributions
------------------------------------------------------
Operating Net Cash Receipts, as defined in the partnership
agreement and which are made available for distribution, will be
distributed 1) 99% to the limited partners and 1% to the general
partner until the limited partners have received their 8% Preferred
Return as defined in the partnership agreement; 2) to the general
partner in an amount equal to approximately 10% of the limited
partners 8% Preferred Return; 3) the remainder, 90% to the limited
partners and 10% to the general partner.
Net operating income (loss), exclusive of depreciation, is
allocated to the limited partners and the general partner in
proportion to their respective cash distributions. Net operating
income, exclusive of depreciation, in excess of cash distributions
shall be allocated as follows: (1) pro rata to all partners with a
negative capital account in an amount to restore their respective
negative capital account to zero; (2) 99% to the limited partners
and 1% to the general partner until the limited partners have
received cash distributions from all sources equal to their
original capital; (3) the balance, 75% to the limited partners and
25% to the general partner. Depreciation expense is allocated 99%
to the limited partners and 1% to the general partner.
D) Tax Status
----------
The Partnership has received a ruling from the Internal Revenue
Service stating that the Partnership is classified as a limited
partnership for federal income tax purposes. As such, the
Partnership makes no provision for income taxes. The taxable income
or loss is passed through to the holders of the partnership
interests for inclusion on their individual income tax returns.
A reconciliation of net loss for financial statement purposes
versus that for income tax reporting is as follows:
1995 1994 1993
----------- --------- ---------
Net loss $(1,296,614) $(504,939) $(490,455)
Items handled differently
for tax purposes:
Depreciation and
amortization 422,071 145,662 274,215
Capitalized leasing
costs 514 7,775 7,370
Rental income 145,460 35,622 92,596
Allowance for doubtful
accounts 5,249 12,364 (9,621)
Write-off of unamortized
tenant improvements (45,871) (160,586) (332,172)
--------- --------- ---------
Taxable loss $(769,191) $(464,102) $(458,067)
========= ========= =========
E) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
- 41 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
E) Use of Estimates in the Preparation of Financial Statements -
-------------------------------------------------------------
Continued
---------
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F) Joint Venture Accounting
------------------------
The Partnership has adopted the proportionate consolidation method
of accounting for joint venture properties. The Partnership's
proportionate interest in the 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. All intercompany accounts and transactions
have been eliminated in consolidation.
G) Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents the following: 1)
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, 2)
Funds received for residential security deposits and 3) Funds which
have been escrowed with mortgage companies for property taxes in
accordance with the loan agreements.
H) Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at cost to the
Partnership. Costs directly associated with the acquisition,
development and construction of a project are capitalized.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 10 - 30 years for
land improvements, 5-30 years for building and improvements and 5 -
30 years for amenities.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121 (the "Statement") on accounting for the
impairment of long-lived assets, certain identifiable intangibles,
and goodwill related to assets to be held and used. The Statement
also establishes accounting standards for long-lived assets and
certain identifiable intangibles to be disposed of. The Partnership
is required to adopt the Statement no later than January 1, 1996,
although earlier implementation is permitted. The Statement is
required to be applied prospectively for assets to be held and
used. The initial application of the Statement to assets held for
disposal is required to be reported as the cumulative effect of a
change in accounting principle.
The Partnership plans to adopt the Statement as of January 1, 1996.
Based on a preliminary review, the Partnership does not anticipate
that any material adjustments will be required.
I) Rental Income and Capitalized Leasing Costs
-------------------------------------------
Certain of the Partnership's lease agreements for the commercial
properties are structured to include scheduled and specified rent
increases over the lease term. For financial reporting purposes,
- 42 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
I) Rental Income and Capitalized Leasing Costs - Continued
-------------------------------------------------------
the income from these leases is being recognized on a straight-line
basis over the lease term. Accrued income connected with these
leases is included in accounts receivable and totalled $682,189 and
$376,501 as of December 31, 1995 and 1994, respectively.
All commissions paid to commercial leasing agents and incentives
paid to tenants are deferred and amortized on a straight-line basis
over the applicable lease term. In addition, certain other costs
associated with initial leasing of the properties are capitalized
and amortized over a five year period.
J) Statements of Cash Flows
------------------------
For purposes of reporting cash flows, cash and equivalents include
cash on hand and short-term, highly liquid investments with initial
maturities of three months or less.
K) Reclassifications of 1994 and 1993 Financial Statements
-------------------------------------------------------
Certain reclassifications have been made to the December 31, 1994
and 1993 financial statements to conform with December 31, 1995
classifications. These reclassifications have no effect on
previously reported operations.
2. Concentration of Credit Risk
----------------------------
NTS-Properties V owns and operates or has a joint venture investment in
commercial properties in Kentucky (Louisville) and Florida (Orlando and
Ft. Lauderdale). Substantially all of the tenants are local businesses or
are businesses which have operations in the location in which they lease
space. The Partnership also has a joint venture investment in a
residential property in Louisville, Kentucky. The apartment unit is
generally the principal residence of the tenant.
3. Investment in Joint Ventures
----------------------------
Investment in joint ventures consist of the following:
A) NTS Willows Phase II Joint Venture
----------------------------------
In 1984, the Partnership entered into a joint venture agreement
with NTS-Properties IV, an affiliate of the General Partner of the
Partnership, to develop and construct a 144 unit luxury apartment
complex on an 8.29-acre site in Louisville, Kentucky known as The
Willows of Plainview Phase II. NTS-Properties IV contributed land
valued at $800,000 and the Partnership contributed approximately
$7,455,000, the construction and carrying costs of the apartment
complex. The project was completed in August 1985. Net income or
net loss is allocated each calendar quarter based on the respective
partnership's contribution. The Partnership's ownership share was
90% at December 31, 1995 The Partnership's share of the joint
venture's net operating income was $39,402 (1995), $77,452 (1994)
and $81,542 (1993).
B) NTS Ft. Lauderdale Office Joint Venture
---------------------------------------
In 1985, the Partnership entered into a joint venture agreement
with NTS-Properties IV to develop an approximately 103,000
square-foot commercial business center known as Lakeshore Business
Center Phase I, located in Fort Lauderdale, Florida.
- 43 -
<PAGE>
3. Investment in Joint Ventures - Continued
----------------------------------------
B) NTS Ft. Lauderdale Office Joint Venture - Continued
---------------------------------------------------
NTS-Properties IV contributed land valued at $1,752,982 and the
Partnership contributed approximately $9,170,000, the construction
and carrying costs of the business center. The net income or net
loss is allocated each calendar quarter based on the respective
partnership's contribution. The Partnership's share of the joint
venture's net operating income (loss) was $10,809 (1995), $93,602
(1994) and $(122,847) (1993).
On January 23, 1995, the partners of the NTS Ft. Lauderdale Office
Joint Venture contributed Lakeshore Business Center Phase I to the
newly formed Lakeshore/University II (L/U II) Joint Venture. For a
further discussion of the new joint venture, see Note 3D to the
Partnership's 1995 financial statements.
C) NTS University Boulevard Joint Venture
--------------------------------------
In 1989, the Partnership entered into a joint venture agreement
with NTS-Properties Plus Ltd., an affiliate of the general partner
of the Partnership, to develop an approximately 78,000 square-foot
commercial business center known as University Business Center
Phase II, located in Orlando, Florida. The Partnership contributed
land valued at $1,460,000 and NTS-Properties Plus Ltd. contributed
development and carrying costs of approximately $8 million. In
connection with the construction of University Business Center
Phase I, the Partnership incurred the cost of developing certain
common areas which are used by both University Business Center
Phase I and Phase II. In 1989, NTS-Properties Plus Ltd. paid
approximately $747,000 to the Partnership for Phase II's share of
the common area costs. The net income or net loss is allocated each
calendar quarter based on the respective partnership's
contribution. The Partnership's share of the joint venture's net
operating income was $2,722 (1995), $29,617 (1994) and $33,671
(1993).
On January 23, 1995, the partners of the NTS University Boulevard
Joint Venture contributed University Business Center Phase II to
the newly formed L/U II Joint Venture. For a further discussion of
the new joint venture, see Note 3D to the Partnership's 1995
financial statements.
D) 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 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 (Net Asset Contributed) Owner
-------------------------------- -----
Lakeshore Business Center NTS-Properties IV and NTS-
Phase I ($6,249,667) Properties V
Lakeshore Business Center NTS-Properties Plus Ltd.
Phase II (-$1,023,535)
(continued next page)
- 44 -
<PAGE>
3. Investment in Joint Ventures - Continued
-- ----------------------------------------
D) Lakeshore/University II Joint Venture
-- -------------------------------------
Property (Net Asset Contributed) Owner
-------------------------------- -----
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)(-$670,709)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres)($27,104)
University Business Center NTS-Properties V and NTS-
Phase II ($953,236) 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 L/U II 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 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. The Partnership's ownership share was 69%
at December 31, 1995. The Partnership's share of the joint ventures
net operating loss was $856,189 in 1995.
4. Land, Buildings and Amenities
-----------------------------
The following schedule provides an analysis of the Partnership's
investment in property held for lease as of December 31:
1995 1994
----------- -----------
Land and improvements $ 9,765,122 $ 6,482,973
Buildings and improvements 32,297,041 22,694,247
Amenities 326,124 330,026
---------- ----------
42,388,287 29,507,246
Less accumulated depreciation 16,238,331 12,001,612
---------- ----------
$26,149,956 $17,505,634
========== ==========
5. Assets Held for Development
---------------------------
As of December 31, 1995, the Partnership owned approximately 6.21 acres
of land adjacent to the University Place development, in Orlando, Florida
which is zoned for commercial development. Included in the cost of $2.4
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.
- 45 -
<PAGE>
5. Assets Held for Development
---------------------------
As of December 31, 1995, the L/U II Joint Venture owned approximately 6.2
acres of land adjacent to the Lakeshore Business Center development in
Ft. Lauderdale, Florida. The Partnership's proportionate interest at
December 31, 1995 in the land held for development is approximately $1.1
million. The Joint Venture currently has a contract for the sale of .7
acres of this land for $175,000.
6. Mortgages and Notes Payable
---------------------------
Mortgages and notes payable as of December 31 consist of the following:
1995 1994
----------- -----------
Note payable to a bank bearing
interest at the Prime Rate + 1%, due
March 31, 1996, secured by certain
land and buildings $ 6,402,000 $ 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 2,929,404 2,969,217
amenities
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 1,748,897 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 3,973,802 --
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 6,371,930 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 854,298 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by land 235,382 --
---------- ----------
$22,839,940 $11,743,884
========== ==========
The Prime Rate was 8.5% at December 31, 1995 and 1994.
- 46 -
<PAGE>
6. Mortgages and Notes Payable - Continued
---------------------------------------
Beginning July 1, 1993, the Partnership agreed to make monthly principal
payments of $50,000 plus interest on the $6,402,000 note payable.
However, the Partnership will not be in default as long as it repays
$30,000 in principal every calendar quarter. The two mortgages are
payable in monthly installments totalling $39,000, which includes
principal, interest and property tax escrow.
Subsequent to December 31, 1995, the Partnership obtained permanent
financing from two insurance companies totalling $6,500,000 ($5,100,000
and $1,400,000). The proceeds were used to retire the Partnership's
$6,402,000 note payable, to fund closing costs and to increase the
Partnership's cash reserves. The $5,100,000 mortgage is due February 1,
2008 and bears interest at a fixed rate of 7.5%. The repayment of
principal will be amortized over 144 months with equal monthly payments
of principal and interest ($54,231). The $1,400,000 mortgage is due
February 1, 2009 and bears interest at the Prime Rate (which was 8.5% on
the date of closing). Monthly principal payments will be based on a
13-year amortization schedule.
Considering the effects of the refinancing discussed above, scheduled
maturities of debt are as follows:
For the Years Ended December 31, Amount
-------------------------------- -----------
1996 $ 639,840
1997 779,046
1998 11,546,110
1999 496,324
2000 536,238
Thereafter 8,920,381
Based on the borrowing rates currently available to the Partnership for
mortgages with similar terms and average maturities, the fair value of
long-term debt is approximately $27,100,000.
7. Rental Income Under Operating Leases
------------------------------------
The following is a schedule of minimum future rental income on
noncancellable operating leases as of December 31, 1995:
For the Years Ended December 31, Amount
-------------------------------- -----------
1996 $ 2,888,069
1997 2,429,226
1998 1,670,666
1999 1,150,945
2000 824,461
Thereafter 1,232,926
-----------
$10,196,293
===========
8. Related Party Transactions
--------------------------
Pursuant to the partnership agreement, property management fees of
$322,257 (1995), $226,081 (1994) and $231,821 (1993) were paid to NTS
Development Company, an affiliate of the general partner. 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 $14,046 and $31,345 as a repair and maintenance fee during the
years ended December 31, 1995 and 1994, respectively, and has capitalized
this cost as part of land, buildings and amenities.
- 47 -
<PAGE>
8. Related Party Transactions - Continued
--------------------------------------
As permitted by the Partnership agreement, the Partnership was also
charged the following amounts from NTS Development Company for the years
ended December 31, 1995, 1994 and 1993; 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 1993
-------- -------- --------
Leasing agents $206,008 $189,587 $190,284
Administrative 175,982 201,485 176,831
Property manager 315,575 270,058 252,203
Other 9,108 13,954 83,850
------- ------- -------
$706,673 $675,084 $730,168
======= ======= =======
- 48 -
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Because the Partnership is a limited partnership and not a corporation, it has
no directors or officers as such. Management of the Partnership is the
responsibility of the general partner, NTS-Properties Associates V. The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the general partner, to provide property management services.
The partners of NTS-Properties Associates V are as follows:
J. D. Nichols
- -------------
Mr. Nichols (age 54) is the managing general partner of NTS-Properties
Associates V and is Chairman of the Board of NTS Corporation (since 1985) and
NTS Development Company (since 1977).
NTS Capital Corporation
- -----------------------
NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979. J. D. Nichols is Chairman of the Board and the sole
director of NTS Capital Corporation.
The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J. D. Nichols,
Richard L. Good, and John W. Hampton.
Richard L. Good
- ---------------
Mr. Good (age 56), President and Chief Operating Officer of NTS Corporation,
President of NTS Development Company and Chairman of the Board of NTS
Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he
was President of Jacques-Miller, Inc., a real estate syndication, property
management and financial planning firm in Nashville, Tennessee.
John W. Hampton
- ---------------
Mr. Hampton (age 46) is Senior Vice President of NTS Corporation with
responsibility for all accounting operations. Before joining NTS in March 1991,
Mr. Hampton was Vice President - Finance and Chief Financial Officer of the
Sturgeon-Thornton-Marrett Development Company in Louisville, Kentucky for nine
years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is
a Certified Public Accountant and a graduate of the University of Louisville
with a Bachelor of Science degree in Commerce. He is a member of the American
Institute of CPA's and the Kentucky Society of CPA's.
Item 11. Management Remuneration and Transactions
The officers and/or directors of the corporate general partner receive no direct
remuneration in such capacities. The Partnership is required to pay a property
management fee based on gross rentals to NTS Development Company, an affiliate
of the general partner. The Partnership is also required to pay to NTS
Development Company a repair and maintenance fee on costs related to specified
projects. NTS Development Company provides certain other services to the
Partnership. See Note 8 to the financial statements which sets forth
transactions with affiliates of the general partner for the years ended December
31, 1995, 1994 and 1993.
- 49 -
<PAGE>
Item 11. Management Remuneration and Transactions - Continued
The general partner is entitled to receive cash distributions and allocations of
profits and losses from the Partnership. See Note 1C to the financial statements
which describes the methods used to determine income allocation and cash
distributions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The general partner is NTS-Properties Associates V, a Kentucky limited
partnership, 10172 Linn Station Road, Louisville, Kentucky 40223. The partners
of the general partner and their total respective interests in
NTS-Properties Associates V are as follows:
J. D. Nichols 59.90%
10172 Linn Station Road
Louisville, Kentucky 40223
NTS Capital Corporation .10%
10172 Linn Station Road
Louisville, Kentucky 40223
The remaining 40% interests are owned by various limited partners of NTS-
Properties Associates V.
Item 13. Certain Relationships and Related Transactions
Pursuant to the partnership agreement, property management fees of $322,257
(1995), $226,081 (1994) and $231,821 (1993) were paid to NTS Development
Company, an affiliate of the general partner. 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 $14,046 and $31,345 as a repair and
maintenance fee during the years ended December 31, 1995 and 1994, respectively,
and has capitalized this cost as a part of land, buildings and amenities.
As permitted by the Partnership agreement, the Partnership was also charged the
following amounts from NTS Development Company for the years ended December 31,
1995, 1994 and 1993. 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 1993
-------- -------- --------
Leasing agents $206,008 $189,587 $190,284
Administrative 175,982 201,485 176,831
Property manager 315,575 270,058 252,203
Other 9,108 13,954 83,850
------- ------- -------
$706,673 $675,084 $730,168
======= ======= =======
There were no other agreements or relationships between the Partnership, the
General Partner and its affiliates than those previously described.
- 50 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
1. Financial statements
The financial statements for the years ended December 31, 1995, 1994 and
1993 together with the report of Arthur Andersen LLP, dated February 14,
1996, appear in Item 8. The following financial statement schedules
should be read in conjunction with such financial statements.
2. Financial statement schedules
Schedules: Page No.
---------- --------
III-Real Estate and Accumulated Depreciation 52-54
All other schedules have been omitted because they are not applicable,
are not required, or because the required information is included in the
financial statements or notes thereto.
3. Exhibits
Exhibit No. Page No.
----------- --------
3. Amended and Restated Agreement and *
Certificate of Limited Partnership
of NTS-Properties V, a Maryland
limited partnership
3a. First Amendment to Amended and Restated **
Agreement of Limited Partnership of
NTS-Properties V, a Maryland limited
partnership
10. Management Agreement between NTS *
Development Company and NTS-Properties
V, a Maryland limited partnership
27. Financial Data Schedule Included
herewith
* Incorporated by reference to documents filed with the
Securities and Exchange Commission in connection with
the filing of the Registration Statements on Form
S-11 on May 1, 1984 (effective August 1, 1984) under
Commission File
No. 2-90818.
** Incorporated by reference to Form 10-K filed with the
Securities and Exchange Commission for the fiscal year
ended December 31, 1987 under Commission File No. 0-
13400.
4. Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended December 31,
1995.
- 51 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<CAPTION>
Commonwealth University Lakeshore
Business Business The Willows Business
Center Center of Plainview Center
Phase II Phase I Phase II Phase I
<S> <C> <C> <C> <C>
Encumbrances (A) (A) (B) (A)
Initial cost to partnership:
Land $ 946,039 $ 1,576,346 $ 1,604,739 $ 2,250,741
Buildings and improvements 1,574,747 2,650,105 5,654,188 3,592,918
Cost capitalized subsequent to
acquisition
Improvements 1,817,569 3,513,373 35,069 2,938,877
Other (C) -- -- -- (1,351,170)
Carrying costs -- -- -- --
Gross amount at which carried
December 31, 1995:
Land $ 994,796 $ 1,630,177 $ 1,591,958 $ 1,858,583
Buildings and improvements 3,343,559 6,109,647 5,702,038 5,572,783
----------- ----------- ----------- -----------
Total $ 4,338,355 $ 7,739,824 $ 7,293,996 $ 7,431,366
=========== =========== =========== ===========
Accumulated depreciation $ 2,395,051 $ 3,268,298 $ 3,055,493 $ 3,125,589
=========== =========== =========== ===========
Date of construction 09/85 02/87 08/85 05/86
Date Acquired N/A N/A N/A N/A
Life at which depreciation in
latest income statement is
computed (D) (D) (D) (D)
<FN>
(A) First mortgage held by a bank.
(B) First mortgage held by an insurance company.
(C) Represents NTS-Properties V's decreased interest in Lakeshore Business
Center Phase I as a result of the formation of the Lakeshore/University
II Joint Venture in 1995.
(D) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 10 - 30 years for land
improvements, 5 - 30 years for buildings and improvements and 5 - 30
years for amenities.
</FN>
</TABLE>
- 52 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<CAPTION>
University Lakeshore
Business Business
Center Center Total
Phase II Phase II Pages 52-53
-------- -------- -----------
<S> <C> <C> <C>
Encumbrances (A) (A)
Initial cost to partnership:
Land $ 356,625 $ 2,554,955 $ 9,289,445
Buildings and improvements 1,038,524 5,849,946 20,360,428
Cost capitalized subsequent to
acquisition
Improvements 33,807 49,231 8,387,926
Other (B) 5,701,658 -- 4,350,488
Carrying costs -- -- --
Gross amount at which carried
December 31, 1995 (C):
Land $ 1,134,653 $ 2,554,955 $ 9,765,122
Buildings and improvements 5,995,961 5,899,177 32,623,165
----------- ----------- -----------
Total $ 7,130,614 $ 8,454,132 $42,388,287
=========== =========== ===========
Accumulated depreciation $ 1,663,281 $ 2,730,619 $16,238,331
=========== =========== ===========
Date of construction 12/90 N/A
Date Acquired N/A 01/95
Life at which depreciation in
latest income statement is
computed (D) (D)
<FN>
(A) First mortgage held by a bank.
(B) Represents NTS-Properties V's increased interest in University Business
Center Phase II as a result of the formation of the Lakeshore/University
II Joint Venture in 1995.
(C) Aggregate cost of real estate for tax purposes is $41,423,965.
(D) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 10 - 30 years for land
improvements, 5 - 30 years for buildings and improvements and 5 - 30
years for amenities.
</FN>
</TABLE>
- 53 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Real Accumulated
Estate Depreciation
------ ------------
<S> <C> <C>
Balances at December 31, 1992 $ 29,279,160 $ 10,615,196
Additions during period:
Improvements (a) 659,505 --
Depreciation (b) -- 1,210,429
Deductions during period:
Retirements (628,948) (598,830)
------------ ------------
Balances at December 31, 1993 29,309,717 11,226,795
Additions during period:
Improvements (a) 511,919 --
Depreciation (b) -- 1,056,551
Deductions during period:
Retirements (314,390) (281,734)
------------ ------------
Balances at December 31, 1994 29,507,246 12,001,612
Additions during period:
Improvements (a) 190,456 --
Depreciation (b) -- 1,554,907
Other (c) 14,106,559 3,366,067
Deductions during period:
Retirements (64,804) (60,086)
Other (d) (1,351,170) (624,169)
------------ ------------
Balances at December 31, 1995 $ 42,388,287 $ 16,238,331
============ ============
<FN>
(a) The additions to real estate on this schedule will differ from the
expenditures for land, buildings and amenities on the Statements of Cash
Flows as a result of minor changes in the Partnership's joint venture
investment ownership percentages. Changes that may occur in the
ownership percentages are less than one percent.
(b) The additions charged to accumulated depreciation on this schedule will
differ from the depreciation and amortization on the Statements of Cash
Flows due to the amortization of loan costs.
(c) Represents the increase in the Partnership's proportionate share of
University Business Center Phase II's property and equipment plus the
Partnership's proportionate share of Lakeshore Business Center Phase
II's property and equipment under the proportionate consolidation
method. Both are the result of the formation of the Lakeshore/University
II Joint Venture.
(d) Represents the decrease in the Partnership's proportionate share of
Lakeshore Business Center Phase I's property and equipment under the
proportionate consolidation method as a result of the formation of the
Lakeshore/University II Joint Venture.
</FN>
</TABLE>
- 54 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, NTS-Properties V, a Maryland Limited Partnership, 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, General
Partner,
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: March 29 , 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Form 10-K has been signed below by the following persons on behalf of the
registrant in their capacities and on the date indicated above.
Signature Title
--------- -----
/s/ J. D. Nichols General Partner of NTS-Properties
J. D. Nichols Associates V and Chairman of the
Board and Sole Director of
NTS Capital Corporation
/s/ Richard L. Good President of NTS Capital Corporation
Richard L. Good
/s/ John W. Hampton Senior Vice President of NTS Capital
John W. Hampton Corporation
The Partnership is a limited partnership and no proxy material has been sent to
the limited partners.
- 56 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF DECEMBER 31, 1995 AND FROM THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN TIS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 274,649
<SECURITIES> 0
<RECEIVABLES> 766,624
<ALLOWANCES> 53,582
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 42,388,287
<DEPRECIATION> 16,238,331
<TOTAL-ASSETS> 31,537,473
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 22,839,940
0
0
<COMMON> 0
<OTHER-SE> 7,917,489
<TOTAL-LIABILITY-AND-EQUITY> 31,537,473
<SALES> 5,328,772
<TOTAL-REVENUES> 5,388,726
<CGS> 0
<TOTAL-COSTS> 4,137,752
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 34,423
<INTEREST-EXPENSE> 2,189,900
<INCOME-PRETAX> (1,296,614)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,296,614)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,296,614)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE
IS $0.
</FN>
</TABLE>
