UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number 0-13400
NTS-PROPERTIES V, a Maryland Limited Partnership
(Exact name of registrant as specified in its charter)
Maryland 61-1051452
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO ______
Exhibit Index: See page 19
Total Pages: 20
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of June 30, 1998 and December 31, 1997 3
Statements of Operations
For the three months and six months ended
June 30, 1998 and 1997 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1998 and 1997 5
Notes To Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-18
PART II
Item 3. Defaults Upon Senior Securities 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1998 December 31, 1997*
------------- ------------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 706,248 $ 473,362
Cash and equivalents - restricted 334,785 69,858
Accounts receivable, net of allowance
for doubtful accounts of $10,217 (1998)
and $13,304 (1997) 264,886 291,504
Land, buildings and amenities, net 23,317,989 23,750,773
Asset held for development, net 2,048,320 2,125,246
Asset held for sale 1,152,868 1,152,868
Other assets 791,123 849,287
----------- -----------
$28,616,219 $28,712,898
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages and note payable $21,268,566 $21,662,821
Accounts payable - operations 299,908 284,829
Accounts payable - construction 33,097 34,486
Security deposits 187,137 167,597
Other liabilities 502,534 189,570
----------- -----------
22,291,242 22,339,303
Commitments and Contingencies
Partners' equity 6,324,977 6,373,595
----------- -----------
$28,616,219 $28,712,898
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
PARTNERS' EQUITY
<S> <C> <C> <C>
Capital contributions, net of
offering costs $ 30,582,037 $ 100 $ 30,582,137
Net income (loss) - prior years (8,554,517) 27,388 (8,527,129)
Net income - current year 128,018 1,293 129,311
Cash distributions declared to
date (15,389,204) (155,528) (15,544,732)
Repurchase of limited
partnership Units (314,610) -- (314,610)
------------ ------------ ------------
Balances at June 30, 1998 $ 6,451,724 $ (126,747) $ 6,324,977
============ ============ ============
</TABLE>
*Reference is made to the audited financial statements in the Form 10-K as filed
with the Commission on March 30, 1998.
- 3 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 1,655,016 $ 1,408,207 $ 3,242,388 $ 2,763,953
Interest and other income 10,575 4,878 21,579 11,456
----------- ----------- ----------- -----------
1,665,591 1,413,085 3,263,967 2,775,409
EXPENSES:
Operating expenses 283,057 289,360 581,360 567,355
Operating expenses - affiliated 134,508 128,319 269,494 289,149
Amortization of capitalized
leasing costs 3,701 5,203 7,404 10,404
Interest expense 419,746 447,789 849,562 890,395
Management fees 97,268 83,238 190,892 166,095
Real estate taxes 122,455 133,564 267,913 273,562
Professional and administrative
expenses 35,234 30,398 65,013 58,164
Professional and administrative
expenses - affiliated 52,175 58,022 108,659 114,372
Depreciation and amortization 376,024 411,574 794,359 829,891
----------- ----------- ----------- -----------
1,524,168 1,587,467 3,134,656 3,199,387
----------- ----------- ----------- -----------
Net income (loss) $ 141,423 $ (174,382) $ 129,311 $ (423,978)
=========== =========== =========== ===========
Net income (loss) allocated to
the limited partners $ 140,009 $ (172,638) $ 128,018 $ (419,738)
=========== =========== =========== ===========
Net income (loss) per limited
partnership unit $ 4.04 $ (4.91) $ 3.67 $ (11.95)
=========== =========== =========== ===========
Weighted average number of
limited partnership units 34,624 35,136 34,879 35,136
=========== =========== =========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
----------- ------------ ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ 141,423 $ (174,382) $ 129,311 $ (423,978)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Amortization of capitalized leasing
costs 3,701 5,203 7,404 10,404
Depreciation and amortization 376,024 411,574 794,359 829,891
Changes in assets and liabilities:
Cash and equivalents - restricted (132,987) (121,377) (264,927) (241,865)
Accounts receivable 126,195 52,579 26,618 85,175
Other assets 30,433 41,795 22,925 11,855
Accounts payable - operations (58,675) (39,345) 15,079 23,280
Security deposits 24,810 10,742 19,540 21,611
Other liabilities 130,041 147,251 312,966 292,332
----------- ----------- ----------- -----------
Net cash provided by operating
activities 640,965 334,040 1,063,275 608,705
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (181,923) (90,181) (269,689) (177,168)
----------- ----------- ----------- -----------
Net cash used in investing activities (181,923) (90,181) (269,689) (177,168)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increases in mortgages and note payable -- -- 200,000 --
Principal payments on mortgages and note
payable (306,731) (262,345) (594,255) (522,156)
Decrease in loan costs -- -- 11,485 --
Repurchase of limited partnership Units (177,930) -- (177,930) --
Cash and equivalents - restricted 30,000 -- -- --
----------- ----------- ----------- -----------
Net cash used in financing activities (454,661) (262,345) (560,700) (522,156)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and
equivalents 4,381 (18,486) 232,886 (90,619)
CASH AND EQUIVALENTS, beginning of period 701,867 243,683 473,362 315,816
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 706,248 $ 225,197 $ 706,248 $ 225,197
=========== =========== =========== ===========
Interest paid on a cash basis $ 419,746 $ 447,944 $ 849,255 $ 897,410
=========== =========== =========== ===========
</TABLE>
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<PAGE>
NTS-PROPERTIES V,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1997 Annual Report. In the opinion of the General Partner, all
adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation have been made to the accompanying financial statements for the
three months and six months ended June 30, 1998 and 1997.
1. 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 assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents 1) funds received for
residential security deposits, 2) funds which have been escrowed with
mortgage companies for property taxes in accordance with the loan
agreements and 3) funds reserved by the Partnership for the repurchase of
limited partnership Units.
3. Interest Repurchase Reserve
---------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated
Agreement of the Limited Partnership, the Partnership has established an
Interest Repurchase Reserve. On January 16, 1998, the Partnership elected
to resume the Repurchase Program and fund $30,000 to the Interest
Repurchase Reserve. On April 7, 1998, the Partnership elected to fund an
additional $30,000 to the Interest Repurchase Reserve and on May 12, 1998,
funded an additional $11,850. With these funds, the Partnership was able
to repurchase 479 additional Units at a price of $150 per Unit. On May 26,
1998, the Partnership elected to fund $96,000 to the Interest Repurchase
Reserve and on June 1, 1998, the Partnership elected to fund an additional
$10,080. With the May 26 and June 1, 1998 fundings, the Partnership was
able to repurchase 663 Units at a price of $160 per Unit. The offering
prices per Unit mentioned above were established by the General Partner in
its sole discretion and do not purport to represent the fair market value
or liquidation value of the Unit. From June 28, 1996 (date Interest
Repurchased Reserve was established) to June 30, 1998, the Partnership had
repurchased a total of 1,882 Units for $277,830. Repurchased Units are
retired by the Partnership, thus increasing the percentage of ownership of
each limited partner remaining investor. The Interest Repurchase Reserve
was funded from cash reserves. The balance in the repurchase reserve at
June 30, 1998 was $100.
- 6 -
<PAGE>
4. Mortgages and Note Payable
--------------------------
Mortgages and note payable consist of the following:
June 30, December 31,
1998 1997
-------- ------------
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.65%, due February 1, 2008,
secured by land and building $ 4,436,534 $ 4,588,807
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 3,764,675 3,881,569
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 3,608,464 3,720,508
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 3,499,117 3,607,766
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.2% due January 5, 2013,
secured by land, buildings and
amenities 2,824,213 2,871,146
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.2% due January 5, 2013,
secured by land, buildings and
amenities 1,686,744 1,714,774
Note payable to a bank, bearing
interest at the Prime Rate, due
February 1, 2009, secured by land
and building 1,448,819 1,278,251
----------- -----------
$ 21,268,566 $ 21,662,821
=========== ===========
The Prime Rate was 8.5% at June 30, 1998 and at December 31, 1997.
Based on the borrowing rates currently available to the Partnership for
mortgages with similar terms, the fair value of long-term debt is
approximately $21,300,000.
5. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management fees of
$190,892 and $166,095 for the six months ended June 30, 1998 and 1997,
respectively, were paid to NTS Development Company, an affiliate of the
General Partner of the Partnership. The fee is equal to 5% of gross
revenues from residential properties and 6% of gross revenues from
commercial properties. Also pursuant to an agreement, NTS Development
Company will receive a repair and maintenance fee equal to 5.9% of costs
incurred which relate to capital improvements. The Partnership has
incurred $18,505 and $11,447 as a repair and maintenance fee during the
three months ended June 30, 1998 and 1997, respectively, and has
capitalized this cost as part of land, buildings and amenities.
- 7 -
<PAGE>
5. Related Party Transactions - Continued
--------------------------------------
As permitted by an agreement, the Partnership also was charged the
following amounts from NTS Development Company for the six months ended
June 30, 1998 and 1997. 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.
1998 1997
--------- ---------
Administrative $ 136,730 $ 144,777
Leasing 101,051 116,684
Property manager 169,264 174,326
Other 7,656 1,750
-------- --------
$ 414,701 $ 437,537
======== ========
6. Commitment and Contingencies
----------------------------
As of June 30, 1998, the Lakeshore/University II ("L/U II") Joint Venture
has a commitment for a $450,000 special tenant finish allowance as a
result of lease negotiations with Full Sail Recorders, Inc. ("Full Sail").
Full Sail currently occupies 83% of University Business Center Phase II's
net rentable area. Approximately $92,000 of the total allowance is to be
reimbursed by Full Sail to the L/U II Joint Venture pursuant to the lease
terms. The Partnership's proportionate share of the net commitment
($450,000 less $92,000) is approximately $247,000 or 69%. The tenant
allowance will be due and payable to Full Sail pursuant to the lease
agreements, as appropriate invoices for tenant finish costs incurred by
Full Sail are submitted to the L/U II Joint Venture. The source of funds
for this commitment is expected to be cash flow from operations and/or
cash reserves.
On December 30, 1997, Full Sail delivered written notice to the
Partnership that Full Sail had (i) exercised its right of first refusal
under its lease with NTS-Properties V to purchase University Business
Center Phase I ("University I")office building and the Phase III vacant
land adjacent to the University Business Center development, and (ii)
exercised its right of first refusal under its lease with NTS University
Boulevard Joint Venture to purchase University Business Center Phase II
("University II")office building, for an aggregate purchase price for all
three of $18,700,000. Because no binding agreement exists for the purchase
of the properties at this time, there can be no assurance that a mutual
agreement of purchase and sale will be reached among the parties, nor that
the sale of the properties will be consummated. As such, the Partnership
has not determined the use of net proceeds after repayment of outstanding
debt from any such sale nor has it determined the impact on its future
results of operations or financial position. The University II office
building is owned by the L/U II Joint Venture, the successor to the NTS
University Boulevard Joint Venture, in which the Partnership owns a 69%
joint venture interest. Under the terms of the right of first refusal, the
closings of the sale of University I, University II and the Phase III
vacant land are to occur simultaneously.
As of June 30, 1998, Lakeshore Business Center Phase I had a commitment of
approximately $111,000 of tenant finish improvements resulting from a
3,049 square foot expansion by a current tenant. The Partnership's
proportionate share of the commitment is approximately $77,000 or 69%. The
project is expected to be completed during the third quarter of 1998. The
source of funds for this project is expected to be cash flow from
operations and/or cash reserves.
- 8 -
<PAGE>
7. Subsequent Event
----------------
Subsequent to June 30, 1998, the L/U II Joint Venture entered into a
contract for the sale of approximately 2.4 acres of land adjacent to the
Lakeshore Business Center development for a purchase price of $528,405.
Concurrent with the signing of the contract, the purchaser deposited into
an escrow account $10,000. This deposit will be applied to the purchase
price at closing. The purchaser has until November 17, 1998 to determine
if the land is satisfactory for their use. If the purchaser determines
that it is satisfactory, the contract requires that they proceed, at their
cost, to have the property re-zoned to allow for a self-storage facility.
If the purchaser is unable to obtain the re-zoning, they may cancel the
contract. The General Partner of the Partnership has met with city
officials who seem interested in the project and have voiced a willingness
to consider the re-zoning request. If the re-zoning is granted, the
purchaser is to close on the property by February 1, 1999 or deposit an
additional $10,000 with the escrow agent for a 30-day delay. The contract
also allows for an additional deposit of $10,000 for one more delay in
closing to April 3, 1999. The Partnership has a 69% interest in the Joint
Venture. The Partnership has not yet determined what the use of net
proceeds would be from the sale of the land.
- 9 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Management's discussion and analysis of financial condition and results of
operations included herein should be read in conjunction with the Partnership's
1997 Annual Report.
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1998 1997
---- ----
Wholly-owned Properties
- -----------------------
Commonwealth Business Center Phase II 77% 73%
University Business Center Phase I 100% 100%
Property Owned in Joint Venture
with NTS-Properties IV (Ownership
% at June 30, 1998)
- ---------------------------------
The Willows of Plainview Phase II (90%) 83% 94%
Properties Owned Through Lakeshore/
University II Joint Venture (L/U II
Joint Venture) (Ownership % at
June 30, 1998)
- ------------------------------------
Lakeshore Business Center Phase I (69%) 94% 97%
Lakeshore Business Center Phase II (69%) 92% 94%
University Business Center Phase II (69%) 90% 99%
The rental and other income generated by the Partnership's properties for the
three months and six months ended June 30, 1998 and 1997 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
------ ------ ------ ------
Wholly-owned Properties
- -----------------------
Commonwealth Business Center
Phase II $ 152,890 $ 122,750 $ 313,459 $ 263,578
University Business Center Phase I $ 389,899 $ 379,815 $ 782,175 $ 769,235
Property Owned in Joint Venture
with NTS-Properties IV (Ownership
% at June 30, 1998)
- ---------------------------------
The Willows of Plainview
Phase II (90%) $ 289,293 $ 308,835 $ 584,077 $ 597,381
(Continued next page)
- 10 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
----- ------ ------ -----
Properties Owned Through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
(Ownership % at June 30, 1998)
- ------------------------------
Lakeshore Business Center
Phase I (69%) $ 255,375 $ 241,617 $ 577,177 $ 486,526
Lakeshore Business Center $ 377,879 $ 247,402 $ 662,678 $ 477,261
Phase II (69%)
University Business Center $ 196,750 $ 111,303 $ 337,172 $ 176,499
Phase II (69%)
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
The 4% increase in occupancy at Commonwealth Business Center Phase II from June
30, 1997 to June 30, 1998, is a result of seven new leases totaling
approximately 15,600 square feet. Partially offsetting the new leases are two
move-outs totaling 12,900 square feet. This total represents two tenants who
vacated at the end of the lease term. Average occupancy increased from 68%
(1997) to 77% (1998) for the three months ended June 30 and from 72% (1997) to
77% (1998) for the six months ended June 30. The increase in rental and other
income at Commonwealth Business Center Phase II for the three months and six
months ended June 30, 1998 as compared to the same periods in 1997 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.
Occupancy at University Business Center I was 100% at June 30, 1997 and June 30,
1998. Average occupancy at University Business Center Phase I remained constant
at 100% for the three months and six months ended June 30. The increase in
rental and other income at University Business Center Phase I for the three
months and six months ended June 30, 1998 as compared to the same periods in
1997 is primarily due to increased rental rates on lease renewals during the
twelve month period.
The Willows of Plainview Phase II's occupancy decreased from 94% at June 30,
1997 to 83% at June 30, 1998. Average occupancy decreased from 94% (1997) to 83%
(1998) for the three months ended June 30 and from 91% (1997) to 84% (1998) for
the six months ended June 30. In the opinion of the General Partner of the
Partnership, the decrease in occupancy at The Willows of Plainview Phase II is
only a temporary fluctuation and does not represent a downward occupancy trend.
Occupancy at residential properties fluctuates on a continuous basis. Period-
ending occupancy percentages represent occupancy only on a specific date;
therefore, it is more meaningful to consider average occupancy percentages which
are representative of the entire period's results. The decrease in rental and
other income at The Willows of Plainview Phase II for the three months and six
months ended June 30, 1998 as compared to the same periods in 1997 is primarily
due to a decrease in average occupancy. The decrease in rental and other income
at The Willows of Plainview Phase II is partially offset by an increase in
income from fully-furnished units. Fully-furnished units are apartments which
rent at an additional premium above base rent. Therefore, it is possible for
average occupancy to decrease and revenues to increase when the number of
fully-furnished units has increased.
The 3% decrease in occupancy at Lakeshore Business Center Phase I from June 30,
1997 to June 30, 1998 can be attributed to six tenant move-outs totaling
approximately 6,100 square feet. One of the six tenants vacated prior to the end
of the lease term. The write-off of accrued income connected with this lease was
not significant. The move-outs are partially offset by two new leases totaling
- 11 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
approximately 2,600 square feet. Average occupancy at Lakeshore Business Center
Phase I decreased from 96% (1997) to 93% (1998) for the three months ended June
30 and from 95% (1997) to 94% (1998) for the six month period. The increase in
rental and other income at Lakeshore Business Center Phase I for the six months
ended June 30, 1998 as compared to the six months ended June 30, 1997 is due
primarily to a $61,000 lease buy-out received in February 1998 (the
Partnership's proportionate share is approximately $42,000 or 69%). The lease
buy-out income was received from a tenant whose lease expires during July 1999;
however, the tenant has notified the Partnership that it will vacate the space
at the end of 1998 due to the fact that it will be consolidating several of its
regional offices. The increase in rental and other income for the six month
period is also due to an increase in common area expense reimbursements. Tenants
at the business center reimburse the Partnership for common area expenses as
part of the lease agreements. The increase in rental income for the three month
period ended June 30, 1998 as compared to the same period in 1997 is due
primarily to an increase in common area expense reimbursements.
As of June 30, 1998, Lakeshore Business Center Phase I has 3,049 square feet of
additional space leased to an existing tenant. The tenant is expected to take
occupancy of the expansion space during the third quarter of 1998. With this
expansion the Business Center's occupancy should improve to 96%. See the
Liquidity and Capital Resources Section of this item for the tenant finish
commitment related to this lease.
The 2% decrease in occupancy at Lakeshore Business Center Phase II from June 30,
1997 to June 30, 1998 can be attributed to two tenant move-outs totaling
approximately 11,000 square feet. The move-outs consist of one tenant vacating
at the end of the lease term (1,200 square feet) and one tenant negotiating a
lease termination (10,000 square feet - tenant paid the L/U II Joint Venture a
lease termination fee {recorded as rental income} of $185,000 of which the
Partnership's proportionate share is approximately $128,000 or 69%). Partially
offsetting the move-outs are four new leases totaling approximately 9,000 square
feet which includes three expansions of approximately 5,000 square feet by
existing tenants. 4,000 square feet of the expansions represents an increase in
the square footage leased by Lambda Physik. Lambda Physik currently leases
nearly 15,000 square feet and is the largest tenant in the building occupying
approximately 15% of the building's total rentable square feet. Average
occupancy at Lakeshore Business Center Phase II increased from 94% (1997) to 95%
(1998) for the three months ended June 30 and increased from 92% (1997) to 97%
(1998) for the six month period. The increase in rental and other income at
Lakeshore Business Center Phase II for the three months and six months ended
June 30, 1998 as compared to the same periods in 1997 is due primarily to the
$185,000 termination fee paid to the L/U II Joint Venture as discussed above.
Also contributing to the increase in rental and other income is an increase in
average occupancy and an increase in common area expense reimbursements. Tenants
at the Business Center reimburse the partnership for common area expenses as
part of the lease agreements.
The 9% decrease in occupancy at University Business Center Phase II from June
30, 1997 to June 30, 1998 is the result of one of Philip Crosby Associates,
Inc's ("Crosby") sub-tenants (approximately 9,000 square feet) vacating its
space at the end of Crosby's lease term (March 31, 1998). The move-out is
partially offset by an expansion of approximately 1,300 square feet by one of
Crosby's subtenants, Full Sail Recorders, Inc. ("Full Sail"), upon the
commencement (April 1, 1998) of its lease with the L/U II Joint Venture. In 1995
and 1996 Full Sail had signed leases with the Joint Venture for the
approximately 73,000 square feet it was leasing from Crosby. These leases
commenced April 1, 1998. (See below for a discussion regarding Crosby and Full
Sail). Average occupancy at University Business Center Phase II decreased from
99% (1997) to 90% (1998) for the three months ended June 30 and decreased from
99% (1997) to 95% (1998) for the six month period. The increase in rental and
other income at University Business Center Phase II for the six months ended
June 30, 1998 as compared to the same period in 1997 is primarily due to the
fact that approximately $70,000 of accrued income connected with the Crosby
lease was written-off during the first quarter of 1997, of which the
Partnership's proportionate share was approximately $48,000 or 69%. The increase
in rental and other income at University Business Center Phase II for the three
months ended June 30, 1998 as compared to the same period in 1997 is a result of
an increase in common area
- 12 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
expense reimbursements. Sub-tenants at the business center were not required to
reimburse the Partnership for common area expenses. However, as part of Full
Sail's lease agreement, which commenced April 1, 1998, Full Sail is required to
reimburse the Partnership for such expenses, attributing to the increase in
rental and other income for the second quarter of 1998.
Philip Crosby Associates, Inc. ("Crosby") previously leased 100% of University
Business Center Phase II, which is owned by the Lakeshore/University II ("L/U
II") Joint Venture. The original lease term was for seven years, and the tenant
took occupancy in April 1991. During 1994, 1995 and 1996, Crosby sub-leased,
through the end of their lease term, approximately 85,000 square feet (including
approximately 10,000 square feet of mezzanine space) of University Business
Center Phase II's approximately 88,000 square feet of net rentable area (or
96%). Of the total being sub-leased, approximately 73,000 square feet (or 86%)
was leased by Full Sail Recorders, Inc. ("Full Sail"), a major tenant at
University Business Center Phase I, a neighboring property owned by an affiliate
of the General Partner of the Partnership. During this period and through
December 1996, Crosby continued to make rent payments pursuant to the original
lease terms. During 1996, the Joint Venture received notice that Crosby did not
intend to pay full rental due under the original lease agreement, including and
subsequent to January 1997. The Partnership's proportionate share of the rental
income from this property accounted for approximately 15% of the partnership's
total revenues during 1996. Although the Joint Venture did not have formal lease
agreements with the sub-lessees noted above during this period, beginning
February 1997 and through March 31, 1998 rent payments from these sub-lessees
were made directly to the Joint Venture.
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. In cases
where tenants have vacated as a result of bankruptcy, the Partnership has taken
legal action when it was thought there could be possible collection. There have
been no funds recovered as a result of these actions during the six months ended
June 30, 1998 and 1997.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties without the need of any additional financing. See
the Liquidity and Capital Resources section of this item for a discussion
regarding the cash requirements of the Partnership's current debt financings.
Interest and other income includes income from short-term investments made by
the Partnership with cash reserves. Interest and other income increased for the
three months and six months ended June 30, 1998 as compared to the same periods
in 1997 primarily as a result of an increase in cash reserves available for
investment.
Operating expenses for the three months and six months ended June 30, 1998 as
compared to the same periods in 1997 remained fairly constant.
The decrease in operating expenses - affiliated for the six months ended June
30, 1998 as compared to the same period in 1997 is due primarily to decreased
leasing costs at Commonwealth Business Center Phase II and decreased property
management costs at all of the Partnership's properties except for Commonwealth
Business Center Phase II. The increase in operating expenses - affiliated for
the three months ended June 30, 1998 as compared to the same period in 1997 is a
result of increased administrative costs and property maintenance costs at The
Willows of Plainview Phase II, and increased leasing costs at Lakeshore Business
Center Phases I and II. Operating expenses - affiliated are expenses incurred
for services performed by employees of NTS Development Company, an affiliate of
the General Partner of the Partnership.
Amortization of capitalized leasing costs for the three months and six months
ended June 30, 1998 as compared to the same periods in 1997 remained fairly
constant.
- 13 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in interest expense for the three months and six months ended June
30, 1998 as compared to the same periods in 1997 is primarily the result of
continued principal payments on the mortgages and note payable of the
Partnership and its Joint Venture properties. The decrease is partially offset
by an additional draw of $200,000 from a note payable in accordance with the
terms of the note. 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 decrease in real estate taxes for the three months and six months ended June
30, 1998 as compared to the same periods in 1997 is primarily a result of a tax
refund received by Lakeshore Business Center Phase I for 1997 real estate taxes.
The decrease is partially offset by increased property assessments at Lakeshore
Business Center Phases I and II.
The change in professional and administrative expenses and professional and
administrative expenses - affiliated for the three months and six months ended
June 30, 1998 as compared to the same periods in 1997 was not significant.
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 for the three months and six months ended
June 30, 1998 as compared to the same periods in 1997 decreased primarily due to
a portion of the Partnership's assets having become fully depreciated. The
decrease is partially offset by the addition of fixed assets at Lakeshore
Business Center Phase I, Commonwealth Business Center Phase II and The Willows
of Plainview Phase II. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets which are 5 - 30 years for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
5 - 30 years for amenities. The aggregate cost of the Partnership's properties
for Federal tax purposes is approximately $40,000,000.
Liquidity and Capital Resources
- -------------------------------
As of June 30, 1998, the Partnership had a mortgage loan with an insurance
company in the amount of $4,436,534. The mortgage payable is due February 1,
2008, bears interest at a fixed rate of 7.65% and is secured by University
Business Center Phase I. Monthly principal payments are based on a 12-year
amortization schedule. At maturity, the mortgage will have been repaid based on
the current rate of amortization.
As of June 30, 1998, the L/U II Joint Venture had three mortgage loans with an
insurance company. The outstanding balances of the loans at June 30, 1998 were
$5,437,925, $5,212,284 and $5,054,336 for a total of $15,704,545. The loans are
recorded as a liability of the Joint Venture. The Partnership's proportionate
share in the loans at June 30, 1998 was $3,764,675, $3,608,464 and $3,499,117
respectively, for a total of $10,872,256. The mortgages bear interest at a fixed
rate of 8.125%, are due August 1, 2008, and are secured by the assets of the
Joint Venture. Monthly principal payments are based upon a 12-year amortization
schedule. At maturity, the loans will have been repaid based on the current rate
of amortization.
As of June 30, 1998, The Willows of Plainview Phase II Joint Venture had two
mortgage loans each with an insurance company in the amount of $3,142,903 and
$1,877,080. The mortgages are recorded as a liability of the Joint Venture. The
Partnership's proportionate share of the mortgages as of June 30, 1998 was
$4,510,957 ($2,824,213 and $1,686,744). Both mortgages are due January 5, 2013,
currently bear interest at a fixed rate of 7.2% and are secured by the land,
buildings and amenities of the Joint Venture. Current monthly principal payments
on both mortgages are based upon a 15-year amortization schedule. At maturity,
the note will have been repaid based on the current rate of amortization.
- 14 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
As of June 30, 1998, the Partnership had a note payable with a bank in the
amount of $1,448,819. On February 1, 1998, the Partnership received an
additional $200,000 funding from this note payable in accordance with the terms
of the loan agreement. The note payable is due February 1, 2009, bears interest
at the Prime Rate and is secured by Commonwealth Business Center Phase II.
Monthly principal payments are based on a 13-year amortization schedule. At
maturity, the note will have been repaid based on the current rate of
amortization.
Cash provided by operating activities was $1,063,275 and $608,705 for the six
months ended June 30, 1998 and 1997, respectively. No distribution has been
declared since March 31, 1994. 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 June 30) were $706,248 and $225,197 at June 30, 1998 and 1997,
respectively.
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. 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 provided by financing activities are from
a decrease in loan costs (refund of application fee) and from a debt funding
received in 1998 (loan secured by the assets of Commonwealth Business Center
Phase II). Cash flows used in financing activities are for principal payments on
mortgages and note payable and cash which has been reserved by the Partnership
for the repurchase of limited partnership Units. The Partnership does not expect
any material changes in the mix and relative cost of capital resources.
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.
Due to the fact that no distributions were made during the six months ended June
30, 1998 and 1997, the table which presents that portion of the distribution
that represents a return of capital on a Generally Accepted Accounting Principle
basis has been omitted.
As of June 30, 1998, the Lakeshore/University II ("L/U II") Joint Venture has a
commitment for a $450,000 special tenant finish allowance as a result of lease
negotiations with Full Sail Recorders, Inc. ("Full Sail"). Full Sail currently
occupies 83% of University Business Center Phase II's net rentable area.
Approximately $92,000 of the total allowance is to be reimbursed by Full Sail to
the L/U II Joint Venture pursuant to the lease terms. The Partnership's
proportionate share of the net commitment ($450,000 less $92,000) is
approximately $247,000 or 69%. The tenant allowance will be due and payable to
Full Sail pursuant to the lease agreements, as appropriate invoices for tenant
finish costs incurred by Full Sail are submitted to the L/U II Joint Venture.
The source of funds for this commitment is expected to be cash flow from
operations and/or cash reserves.
The Partnership has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 Issue and is
developing an implementation plan to resolve the issue. The Year 2000 Issue, a
worldwide problem, is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Partnership's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in major systems
failures or miscalculations. The Partnership presently believes that, with
modifications
- 15 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
to existing software and conversions to new software, the Year 2000 problem will
not pose significant operational problems for the Partnership's computer
systems. The Partnership continues to evaluate appropriate courses of corrective
action, including replacement of certain systems whose associated costs would be
recorded as assets and amortized. The Partnership does not expect the costs
associated with the resolution of the Year 2000 Issue to have a material effect
on its financial position or results of operations. The associated costs will be
funded by cash flow from operations and cash reserves. The amount expensed in
1998 was immaterial.
As of June 30, 1998, Lakeshore Business Center Phase I had a commitment for
approximately $111,000 of tenant finish improvements resulting from a 3,049
square foot expansion by a current tenant. The Partnership's proportionate share
of the commitment is approximately $77,000 or 69%. The project is expected to be
completed during the third quarter of 1998. The source of funds for this project
is expected to be cash flow from operations and/or cash reserves.
The Partnership had no other material commitments for renovations or capital
improvements at June 30, 1998.
In the next twelve months, the demand on future liquidity is anticipated to
increase as a result of the commitments made for a special tenant finish
allowance(see discussions above). The Partnership also expects the demand on
future liquidity to increase as a result of future leasing activity at
Commonwealth Business Center Phase II, University Business Center Phases I and
II and Lakeshore Business Center Phases I and II. At this time, the future
leasing and tenant finish costs which will be required to renew the current
leases or obtain new tenants are unknown. It is anticipated that the cash flow
from operations and cash reserves will be sufficient to meet the needs of the
Partnership.
The Partnership also anticipates a demand of future liquidity as a result of a
planned renovation of the community's clubhouse at The Willows of Plainview. At
this time, the cost and extent of the renovation has not been determined. The
cost of the common clubhouse renovation will be shared proportionately by Phase
I and Phase II of The Willows of Plainview. The source of funds for this project
will be cash flow from operations and/or cash reserves.
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
the Limited Partnership, the Partnership has established an Interest Repurchase
Reserve. On January 16, 1998, the Partnership elected to resume the Repurchase
Program and fund an additional $30,000 to the Interest Repurchase Reserve. On
April 7, 1998, the Partnership elected to fund $30,000 to the Interest
Repurchase Reserve and on May 12, 1998, funded an additional $11,850. With these
funds, the Partnership was able to repurchase 479 additional Units at a price of
$150 per Unit. On May 26, 1998, the Partnership elected to fund $96,000 to the
Interest Repurchase Reserve and on June 1, 1998, the Partnership elected to fund
an additional $10,080. With the May 26 and June 1, 1998 fundings, the
Partnership was able to repurchase 663 Units at a price of $160 per Unit. The
offering prices per Unit mentioned above were established by the General Partner
in its sole discretion and do not purport to represent the fair market value or
liquidation value of the Unit. From June 28, 1996 (date Interest Repurchased
Reserve was established) to June 30, 1998, the Partnership had repurchased a
total of 1,882 Units for $277,830. Repurchased Units are retired by the
Partnership, thus increasing the percentage of ownership of each limited partner
remaining investor. The Interest Repurchase Reserve was funded from cash
reserves. The balance in the repurchase reserve at June 30, 1998 was $100.
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's properties. At Commonwealth Business
Center Phase II, the leasing and renewal negotiations are handled by leasing
agents, employees of NTS Development Company, located in Louisville, Kentucky.
The leasing agents are located in the same city as the property. All advertising
is coordinated by NTS Development Company's marketing staff located in
Louisville, Kentucky. At University Business Center Phase 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
- 16 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
renewals with current tenants and manages local advertising with the assistance
of the 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 $2,048,320 is land cost, capitalized
interest and common area costs. At the current time, the Partnership is
negotiating the sale of the Phase III vacant land along with University Business
Center Phases I and II to Full Sail Recorders, Inc. See below for a further
discussion of the possible sale. If this transaction does not occur, the
Partnership will continue to evaluate the possibility of building University
Business Center Phase III on the vacant land. The decision to build will be
based on market conditions, availability of financing and availability of the
necessary resources from the Partnership. In management's opinion, the net book
value of the asset approximates its fair market value.
On December 30, 1997, Full Sail delivered written notice to the Partnership that
Full Sail had (i) exercised its right of first refusal under its lease with NTS-
Properties V to purchase University Business Center Phase I ("University I")
office building and the Phase III vacant land, and (ii) exercised its right of
first refusal under its lease with NTS University Boulevard Joint Venture to
purchase University Business Center II ("University II")office building, for an
aggregate purchase price for all three of $18,700,000. Because no binding
agreement exists for the purchase of the properties at this time, there can be
no assurance that a mutual agreement of purchase and sale will be reached among
the parties, nor that the sale of the properties will be consummated. As such,
the Partnership has not determined the use of net proceeds after repayment of
outstanding debt from any such sale nor has it determined the impact on its
future results of operations or financial position. The University II office
building is owned by the L/U II Joint Venture, the successor to the NTS
University Boulevard Joint Venture, in which the Partnership owns a 69% joint
venture interest. Under the terms of the right of first refusal, the closings of
the sale of University I, University II and the Phase III vacant land are to
occur simultaneously.
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 June 30, 1998 in the asset held for sale
is $1,152,868. The Joint Venture continues to actively market the asset for
sale. In management's opinion, the net book value of the asset held for sale
approximates the fair market value less cost to sell. See below for information
regarding a contract for the sale of a portion of this land.
Subsequent to June 30, 1998, the L/U II Joint Venture entered into a contract
for the sale of approximately 2.4 acres of land adjacent to the Lakeshore
Business Center development for a purchase price of $528,405. Concurrent with
the signing of the contract, the purchaser deposited into an escrow account
$10,000. This deposit will be applied to the purchase price at closing. The
purchaser has until November 17, 1998 to determine if the land is satisfactory
for their use. If the purchaser determines that it is satisfactory, the contract
requires that
- 17 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
they proceed, at their cost, to have the property re-zoned to allow for a
self-storage facility. If the purchaser is unable to obtain the re-zoning, they
may cancel the contract. The General Partner of the Partnership has met with
city officials who seem interested in the project and have voiced a willingness
to consider the re-zoning request. If the re-zoning is granted, the purchaser is
to close on the property by February 1, 1999 or deposit an additional $10,000
with the escrow agent for a 30-day delay. The contract also allows for an
additional deposit of $10,000 for one more delay in closing to April 3, 1999.
The Partnership has a 69% interest in the Joint Venture. The Partnership has not
yet determined what the use of net proceeds would be from the sale of the land.
Some of the statements included in Item 2, Management's Discussion and Analysis
of Financial Condition and Results of Operations, may be considered to be
"forward-looking statements" since such statements relate to matters which have
not yet occurred. For example, phrases such as the Partnership "anticipates ",
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such event not occur, then the result
which the Partnership expected also may not occur or occur in a different
manner, which may be more or less favorable to the Partnership. The Partnership
does not undertake any obligations to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
Any forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, or elsewhere in this report,
which reflect management's best judgement based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking statements as a result of a number of factors, including
but not limited to those discussed below. Any forward-looking information
provided by the Partnership pursuant to the safe harbor established by recent
securities legislation should be evaluated in the context of these factors.
The Partnership's principal activity is the leasing and management of commercial
office buildings, business centers and an apartment complex. If a major
commercial tenant or a large number of apartment lessees default on their
leases, the Partnership's ability to make payments due under its debt
agreements, payment of operating costs and other partnership expenses would be
directly impacted. A lessee's ability to make payments are subject to risks
generally associated with real estate, many of which are beyond the control of
the Partnership, including general or local economic conditions, competition,
interest rates, real estate tax rates, other operating expenses and acts of God.
A portion of the Partnership's debt service is based on variable interest rates;
any fluctuations in the rate are beyond the control of the Partnership. These
variances could, for example, impact the Partnership's projected cash flow and
cash requirements as well as its ability to pay distributions to the limited
partners.
- 18 -
<PAGE>
PART II. OTHER INFORMATION
3. Defaults Upon Senior Securities
-------------------------------
None.
6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K was filed on April 7, 1998 to report in Item 5 that
the Partnership has elected to fund an additional amount of
$30,000 to its Interest Repurchase Reserve.
Form 8-K was filed on May 18, 1998 to report in Item 5 that the
Partnership has elected to fund an additional amount of $11,850
to its Interest Repurchase Reserve.
Form 8-K was filed on May 26, 1998 to report in Item 5 that the
Partnership has elected to fund an additional amount of $96,000
to its Interest Repurchase Reserve.
Form 8-K was filed on June 2, 1998 to report in Item 5 that the
Partnership has elected to fund an additional amount of $10,080
to its Interest Repurchase Reserve.
Items 1,2,4 and 5 are not applicable and have been omitted.
- 19 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, NTS-Properties V has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES V, a Maryland Limited
Partnership
------------------------------------
(Registrant)
By: NTS-Properties Associates V,
General Partner
By: NTS Capital Corporation,
General Partner
/s/ Richard L. Good
-------------------
Richard L. Good
President
/s/ Lynda J. Wilbourn
---------------------
Lynda J. Wilbourn
Vice President
Principal Accounting Officer
Date: August 12, 1998
---------------
- 20 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1998 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,041,033
<SECURITIES> 0
<RECEIVABLES> 264,886
<ALLOWANCES> 10,217
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,317,989
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 28,616,219
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,268,566
0
0
<COMMON> 0
<OTHER-SE> 6,324,977
<TOTAL-LIABILITY-AND-EQUITY> 28,616,219
<SALES> 3,242,388
<TOTAL-REVENUES> 3,263,967
<CGS> 0
<TOTAL-COSTS> 2,285,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 849,562
<INCOME-PRETAX> 129,311
<INCOME-TAX> 0
<INCOME-CONTINUING> 129,311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,311
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE IS
$0.
<F2>THIS INFORMATION IS NOT DISCLOSED IN THE PARTNERSHIP'S FORM 10-Q FILING.
</FN>
</TABLE>
