<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------------------------------------------
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 registrants 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 (Zip Code)
offices)
(502) 426-4800
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of March 31, 2000 and December 31, 1999 3
Statements of Operations
for the three months ended March 31, 2000 and 1999 4
Statements of Cash Flows
for the three months ended March 31, 2000 and 1999 5
Notes To Financial Statements 6-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
PART II
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
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
March 31, 2000 December 31, 1999 *
-------------- -------------------
(Unaudited)
ASSETS
- ------
<S> <C> <C>
Cash and equivalents $ 2,553,496 $ 2,807,198
Cash and equivalents - restricted 149,932 117,220
Accounts receivable 97,191 103,245
Land, buildings and amenities, net 17,193,070 17,008,482
Other assets 509,770 439,664
----------- -----------
TOTAL ASSETS $20,503,459 $20,475,809
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Mortgages payable $11,523,151 $11,726,240
Accounts payable 560,985 280,791
Security deposits 170,948 159,642
Other liabilities 246,052 159,337
----------- -----------
TOTAL LIABILITIES 12,501,136 12,326,010
COMMITMENTS AND CONTINGENCIES (Note 9)
Partners' equity 8,002,323 8,149,799
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $20,503,459 $20,475,809
=========== ===========
</TABLE>
<TABLE>
Limited General
Partners Partner Total
-------- ------- -----
<CAPTION>
PARTNERS' EQUITY
- ----------------
<S> <C> <C> <C>
Capital contributions, net of
offering costs $ 30,582,037 $ 100 $ 30,582,137
Net income (loss) - prior years (4,676,912) 66,556 (4,610,356)
Net loss - current year (146,001) (1,475) (147,476)
Cash distributions declared to
date (16,641,480) (168,177) (16,809,657)
Repurchase of Limited
Partnership Units (1,012,325) -- (1,012,325)
------------ ------------ ------------
Balances at March 31, 2000 $ 8,105,319 $ (102,996) $ 8,002,323
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 31, 2000.
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
<TABLE>
NTS-PROPERTIES V,
-----------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF OPERATIONS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
(Unaudited)
2000 1999
---- ----
REVENUES:
- ---------
<S> <C> <C>
Rental income $ 981,701 $ 935,185
Interest and other income 36,726 50,048
----------- -----------
1,018,427 985,233
----------- -----------
EXPENSES:
- ---------
Operating expenses 223,880 208,661
Operating expenses - affiliated 126,930 133,756
Loss on disposal of assets 146,335 9,833
Interest expense 221,643 220,531
Management fees 55,607 52,367
Real estate taxes 100,201 93,050
Professional and administrative
expenses 34,916 50,414
Professional and administrative
expenses - affiliated 32,578 46,150
Depreciation and amortization . 223,813 200,080
----------- -----------
1,165,903 1,014,842
----------- -----------
Net loss $ (147,476) $ (29,609)
=========== ===========
Net loss allocated
to the Limited Partners $ (146,001) $ (29,313)
=========== ===========
Net loss per Limited
Partnership Unit $ (4.77) $ (0.87)
=========== ===========
Weighted average number of
Limited Partnership Units 30,621 33,674
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
<TABLE>
NTS-PROPERTIES V,
-----------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF CASH FLOWS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
(Unaudited)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net loss $ (147,476) $ (29,609)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Loss on disposal of assets 146,335 9,833
Depreciation and amortization 223,813 200,080
Changes in assets and liabilities:
Cash and equivalents - restricted (90,212) (69,455)
Accounts receivable 6,054 (43,358)
Other assets (70,106) (72,446)
Accounts payable 280,194 98,608
Security deposits 11,306 8,476
Other liabilities 86,714 74,147
----------- -----------
Net cash provided by operating activities 446,622 176,276
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Additions to land, buildings and amenities (554,735) (93,311)
Proceeds from sale of assets -- 216,649
----------- -----------
Net cash (used in) provided by
investing activities (554,735) 123,338
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Principal payments on mortgages payable (203,089) (171,710)
Cash distributions -- (1,264,925)
Repurchase of Limited Partnership Units -- (123,000)
Cash and equivalents - restricted 57,500 123,000
Distribution payable -- 12,649
----------- -----------
Net cash used in financing activities (145,589) (1,423,986)
----------- -----------
Net decrease in cash and equivalents (253,702) (1,124,372)
----------- -----------
CASH AND EQUIVALENTS, beginning of period 2,807,198 4,543,666
----------- -----------
CASH AND EQUIVALENTS, end of period $ 2,553,496 $ 3,419,294
=========== ===========
Interest paid on a cash basis $ 227,481 $ 221,821
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
NTS-PROPERTIES V,
-----------------
A Maryland Limited Partnership
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
The unaudited financial statements and schedules included herein should be read
in conjunction with the Partnership's 1999 Form 10-K as filed with the
Securities Exchange Commission on March 31, 2000. In the opinion of the General
Partner, all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation have been made to the accompanying financial
statements for the three months ended March 31, 2000 and 1999.
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. Concentration of Credit Risk
----------------------------
NTS-Properties V owns and operates or has a Joint Venture investment
in commercial rental properties in Kentucky (Louisville) and Florida
(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 rental property in Louisville, Kentucky.
3. 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 with said mortgage companies, and 3) funds reserved by the
Partnership for repurchase of Limited Partnership Units (1999 balance
only).
4. Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at historical cost less
accumulated depreciation 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 buildings and improvements, 5-30
years for amenities and the applicable lease term for tenant
improvements.
6
<PAGE>
4. Basis of Property and Depreciation - Continued
----------------------------------------------
Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," specifies circumstances in which certain
long-lived assets must be reviewed for impairment. If the carrying
amount of an asset exceeds the sum of its expected future cash flows,
the asset's carrying value must be written down to fair value.
Application of this standard during the periods ended March 31, 2000
and 199 did not result in any impairment loss.
5. Mortgages Payable
-----------------
Mortgages payable consist of the following:
March 31, December 31,
2000 1999
---- ----
Mortgage payable with an
insurance company, bearing
interest at a fixed rate of
8.125%, due August 1, 2008,
secured by land and building. $ 3,805,727 $ 3,883,797
Mortgage payable with an
insurance company, bearing
interest at fixed rate of 8.125%,
due August 1, 2008, secured by
land and building. 3,537,273 3,609,836
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. 2,617,102 2,649,944
Mortgage payable with an
insurance company, bearing
interest at fixed rate of 7.2%,
due January 5, 2013, secured by
land, buildings and amenities.
1,563,049 1,582,663
------------ ------------
$ 11,523,151 $ 11,726,240
============ ============
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 $11,244,000.
6. Reclassification of 1999 Financial Statements
---------------------------------------------
Certain reclassifications have been made to the March 31, 1999 and
December 31, 1999 financial statements to conform to the March 31,
2000 classifications. These reclassifications have no effect on
previously reported operations.
7
<PAGE>
7. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management
fees of $55,607 and $52,367 for the three months ended March 31, 2000
and 1999, 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 of the residential properties and 6% of the
gross revenues of the commercial properties. Also permitted by an
agreement, NTS Development Company will receive a repair and
maintenance fee equal to 5.9% of costs which relate to capital
improvements. The Partnership incurred $29,263 and $3,221 as repair
and maintenance fees for the three months ended March 31, 2000 and
1999, respectively, and has capitalized these costs as part of land,
buildings and amenities.
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the three months
ended March 31, 2000 and 1999. 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.
Three Months Ended
March 31,
---------
2000 1999
---- ----
Administrative $ 49,996 $ 55,524
Leasing 59,410 68,600
Property Management 81,098 73,288
Other 537 10,049
--------- ---------
$ 191,041 $ 207,461
========= =========
On February 7, 2000, ORIG, LLC., (the "Affiliate") purchased Interests
in the Partnership pursuant to an Agreement, Bill of Sale and
Assignment, by and among the Affiliate and four investors in the
Partnership (the "Purchase Agreement"). The Affiliate purchased 1,604
Interests in the Partnership for a total consideration of $425,949 or
an average price of $265.55 per Interest. The Affiliate paid these
investors a premium above the purchase price previously offered for
Interests pursuant to prior tender offers because this purchase
allowed the Affiliate to purchase substantial numbers of Interests
without incurring the significant expenses involved with a tender
offer and multiple transfers.
8
<PAGE>
8. Transactions Affecting the Investment in Lakeshore/University II Joint
----------------------------------------------------------------------
Venture
-------
On July 1, 1999, NTS-Properties V contributed $1,737,000 to the
Lakeshore/University II Joint Venture (L/U II Joint Venture). The
other Partners in the Joint Venture did not make capital contributions
at that time. Accordingly, the ownership percentages of the other
Partners in the Joint Venture decreased. Effective July 1, 1999,
NTS-Properties V's percentage of ownership in the Joint Venture is
79.45%, as compared to 69.23% prior to July 1, 1999.
9. Commitments and Contingencies
-----------------------------
The Partnership, as an owner of real estate, is subject to various
environmental laws of federal and local governments. Compliance by the
Partnership with existing laws has not had a material adverse effect
on the Partnership's financial condition and results of operations.
However, the Partnership cannot predict the impact of new or changed
laws or regulations on its current properties or on properties that it
may acquire in the future.
The Partnership does not believe there is any litigation threatened
against the Partnership other than routine litigation arising out of
the ordinary course of business, some of which is expected to be
covered by insurance, none of which is expected to have a material
adverse effect on the consolidated financial statements of the
Partnership.
Pursuant to a contract signed on December 6, 1999, the
Lakeshore/University II Joint Venture has a commitment to construct a
building to be known as Lakeshore Business Center Phase III on 3.8
acres of land it owns at the Lakeshore Business Center Development.
The construction cost is currently estimated to be $4,000,000 and will
be funded by working capital and approximately $2,680,000 in debt
financing.
10. Segment Reporting
-----------------
The Partnership's reportable operating segments include residential
and commercial real estate operations. The residential operations
represent the Partnership's ownership and operating results relative
to an apartment complex known as The Willows of Plainview Phase II.
The commercial operations represent the Partnership's ownership and
operating results relative to suburban commercial office space known
as Commonwealth Business Center Phase II and Lakeshore Business Center
Phases I and II.
The financial information of the operating segments has been prepared
using a management approach, which is consistent with the basis and
manner in which the Partnership's management internally reports
financial information for the purposes of assisting in making
operating decisions. The Partnership evaluates performance based on
stand-alone operating segment net income.
9
<PAGE>
10. Segment Reporting - Continued
-----------------------------
<TABLE>
Three Months Ended March 31, 2000
---------------------------------
Residential Commercial Total
----------- ---------- -----
<CAPTION>
<S> <C> <C> <C>
Rental income $ 281,155 $ 700,546 $ 981,701
Interest and other income 863 4,816 5,679
--------- --------- ---------
Total net revenues $ 282,018 $ 705,362 $ 987,380
--------- --------- ---------
Operating expenses and
operating expenses -
affiliated 113,648 237,122 350,770
Loss on disposal of assets 41,855 104,480 146,335
Interest expense 76,281 145,362 221,643
Management fees 14,051 41,556 55,607
Real estate taxes 15,045 85,156 100,201
Depreciation and amortization 48,671 158,522 207,193
--------- --------- ---------
Net loss $ (27,533) $ (66,836) $ (94,369)
========= ========= =========
</TABLE>
<TABLE>
Three Months Ended March 31, 1999
---------------------------------
<CAPTION>
Residential Commercial Total
----------- ---------- -----
<S> <C> <C> <C>
Rental income $317,957 $617,228 $935,185
Interest and other income 1,695 21,622 23,317
-------- -------- --------
Total net revenues $319,652 $638,850 $958,502
-------- -------- --------
Operating expenses and
operating expenses -
affiliated 108,553 233,864 342,417
Loss on disposal of assets 9,833 -- 9,833
Interest expense 78,572 141,959 220,531
Management fees 16,189 36,178 52,367
Real estate taxes 13,028 73,638 86,666
Depreciation and amortization 47,680 141,195 188,875
-------- -------- --------
Net income $ 45,797 $ 12,016 $ 57,813
======== ======== ========
</TABLE>
10
<PAGE>
10. Segment Reporting - Continued
-----------------------------
A reconciliation of the totals reported for the operating segments to
the applicable line items in the consolidated financial statements for
the three months ended March 31, 2000 and 1999 is necessary given
amounts recorded at the Partnership level and not allocated to the
operating properties for internal reporting purposes.
<TABLE>
Three Months Ended
March 31,
---------
<CAPTION>
2000 1999
---- ----
NET REVENUES
- ------------
<S> <C> <C>
Total revenues for reportable segments $ 987,380 $ 958,502
Other income for Partnership (92,814) 59,477
Eliminations 123,861 (32,746)
----------- -----------
Total consolidated net revenues $ 1,018,427 $ 985,233
=========== ===========
OPERATING EXPENSES
- ------------------
Total operating expenses for reportable segments $ 350,770 $ 342,417
Total operating expenses for Partnership 40 --
----------- -----------
Total operating expenses $ 350,810 $ 342,417
=========== ===========
REAL ESTATE TAXES
- -----------------
Total real estate taxes for reportable segments $ 100,201 $ 86,666
Total real estate taxes for Partnership -- 6,384
----------- -----------
Total real estate taxes $ 100,201 $ 93,050
=========== ===========
DEPRECIATION AND AMORTIZATION
- -----------------------------
Total depreciation and amortization for
reportable segments $ 207,193 $ 188,875
Depreciation and amortization for
Partnership 8,874 3,459
Eliminations 7,746 7,746
----------- -----------
Total depreciation and amortization $ 223,813 $ 200,080
=========== ===========
NET INCOME (LOSS)
- -----------------
Total net income (loss) for reportable segments $ (94,369) $ 57,813
Total net loss for Partnership (169,222) (46,930)
Eliminations 116,115 (40,492)
----------- -----------
Total net loss $ (147,476) $ (29,609)
=========== ===========
</TABLE>
11
<PAGE>
11. Subsequent Events
-----------------
On April 24, 2000, the Lakeshore/University II Joint Venture obtained
a commitment from a bank for an amount not exceeding $2,680,000 to
fund the construction of Lakeshore Business Center Phase III. The
funds will be used by the Lakeshore/University II Joint Venture to
construct Lakeshore Business Center Phase III. The loan bears a
variable interest rate equal to a daily floating LIBOR rate as quoted
for 30-day investments, plus 230 basis points and is secured by 3.8
acres of land located at the Lakeshore Business Center Development and
the improvements now and hereafter located on the land.
12
<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 ("MD&A") is structured in four major sections. The first section
provides information related to occupancy levels and rental and other income
generated by the Partnership's properties. The second analyzes results of
operations on a consolidated basis. The final sections address consolidated cash
flows and financial condition. A discussion of certain market risks also
follows. MD&A should be read in conjunction with the Financial Statements in
Item 1 and the Cautionary Statements below.
Cautionary Statements
- ---------------------
Some of the statements included in this Item 2 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 MD&A, or elsewhere in this report,
which reflect management's best judgment, 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 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.
13
<PAGE>
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of March 31 were as
follows:
2000(1) 1999
------- ----
Wholly-owned Properties
-----------------------
Commonwealth Business Center Phase II 88% 79%
Property Owned in Joint Venture with
------------------------------------
NTS-Properties IV (Ownership % at March 31, 2000)
-------------------------------------------------
The Willows of Plainview Phase II (90.30%) (2) 91% 99%
Properties Owned Through Lakeshore/University II Joint
------------------------------------------------------
Venture (L/U II Joint Venture)
------------------------------
Lakeshore Business Center Phase I (3) 76% 72%
Lakeshore Business Center Phase II (2) (3) 79% 85%
1) Current occupancy levels are considered adequate to continue the operation
of the Partnership's properties.
2) In the opinion of the General Partner of the Partnership, the decrease in
period ending occupancy is only a temporary fluctuation and does not
represent a permanent downward occupancy trend.
3) Ownership percentage was 79.45% as of March 31, 2000 and 69.23% as of
March 31, 1999. See Notes to Financial Statements "8. Transactions
Affecting the Investment in Lakeshore/University II Joint Venture."
The average occupancy levels at the Partnership's properties during the three
months ended March 31 were as follows:
Three Months Ended
March 31,
---------
2000 1999
---- ----
Wholly-owned Properties
-----------------------
Commonwealth Business Center Phase II 87% 79%
Property Owned in Joint Venture with
------------------------------------
NTS-Properties IV (Ownership % at March 31, 2000)
----------------- -------------------------------
The Willows of Plainview Phase II (90.30%) (1) 89% 94%
Properties Owned Through Lakeshore/University II Joint
------------------------------------------------------
Venture (L/U II Joint Venture)
------------------------------
Lakeshore Business Center Phase I (1) (2) 76% 79%
Lakeshore Business Center Phase II (1) (2) 78% 85%
1) In the opinion of the General Partner of the Partnership, the decrease in
average occupancy is only a temporary fluctuation and does not represent
a permanent downward occupancy trend.
2) Ownership percentage was 79.45% as of March 31, 2000 and 69.23% as of
March 31, 1999. See Notes to Financial Statements "8. Transactions
Affecting the Investment in Lakeshore/University II Joint Venture."
14
<PAGE>
Results of Operations - Continued
- ---------------------------------
Rental and other income generated by the Partnership's properties for the three
months ended March 31, 2000 and 1999 was as follows:
Three Months Ended
March 31,
---------
2000 1999
---- ----
Wholly-owned Properties
-----------------------
Commonwealth Business Center Phase II $ 164,571 $149,091
Property Owned in Joint Venture with
------------------------------------
NTS-Properties IV (Ownership % at March 31, 2000)
----------------- -------------------------------
The Willows of Plainview Phase II (90.30%) $ 282,018 $319,652
Properties Owned Through Lakeshore/University II Joint
------------------------------------------------------
Venture (L/U II Joint Venture)
------------------------------
Lakeshore Business Center Phase I (1) $ 272,716 $241,076
Lakeshore Business Center Phase II (1) $ 268,075 $230,965
1) Represents ownership percentage of 79.45% for the three months ended March
31, 2000 and 69.23% for the three months ended March 31, 1999. See Notes
to Financial Statements "8. Transactions Affecting the Investment in
Lakeshore/University II Joint Venture."
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
The following is an analysis of material changes in results of operations for
the periods ending March 31, 2000 and 1999. Items that did not have a material
impact on operations for the periods listed above have been excluded from this
discussion.
Rental income increased approximately $47,000 or 5% for three months ended March
31, 2000, as compared to the same period in 1999. The increase is due primarily
to an increase in average occupancy at Commonwealth Business Center Phase II and
an increase in common area maintenance income at Lakeshore Business Center
Phases I and II. A decrease in rental income at Lakeshore Business Center Phases
I and II and The Willows of Plainview Phase II resulting from a decrease in
average occupancy partially offsets the increase.
Period ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages, which are
representative of the entire period's results.
15
<PAGE>
Results of Operations - Continued
- ---------------------------------
In cases of tenants who cease making rental payments or abandon the premises in
breach of the lease terms, 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 a possible collection. There
have been no funds recovered as a result of these actions during the three
months ended March 31, 2000 and 1999. As of March 31, 2000 no action is being
taken against any tenants to collect funds through the remedies discussed above.
Interest and other income decreased approximately $13,000 or 26% for the three
months ended March 31, 2000, as compared to the same period in 1999, as a result
of a decrease in cash reserves available for investment due to the funding of
Lakeshore Business Center Phase III construction.
Operating expenses increased approximately $15,000 or 7% for the three months
ended March 31, 2000, as compared to the same period in 1999, due primarily to
increased landscape maintenance and janitorial services at Lakeshore Business
Center Phases I and II and Commonwealth Business Center Phase II.
Operating expenses - affiliated decreased $6,800 or 5% for the three months
ended March 31, 2000, as compared to the same period in 1999, due to decreased
overhead costs allocated to the Partnership as a result of personnel status
changes. Operating expenses - affiliated are expenses incurred for services
performed by NTS Development Company, an affiliate of the General Partner.
The 2000 and 1999 loss on disposal of assets can be attributed to the retirement
of assets at The Willows of Plainview II and Lakeshore Business Center Phases I
and II. The retirements are the result of common area improvements and new alarm
system installations. The loss represents the cost to retire assets which were
not fully depreciated at the time of replacement.
Real estate taxes increased approximately $7,000 or 8% for the three months
ended March 31, 2000, as compared to the same periods in 1999, as a result of an
increased assessment at The Willows of Plainview II. Partially offsetting the
increase is the sale of 2.4 acres of land owned by the Lakeshore/University II
Joint Venture in July 1999.
Professional and administrative expenses decreased approximately $15,500 or 31%
for the three months ended March 31, 2000, as compared to the same period in
1999, primarily as a result of decreased legal and accounting fees.
Professional and administrative expenses - affiliated decreased $13,500 or 29%
for the three months ended March 31, 2000, as compared to the same period in
1999,as a result of decreased salary costs due to personnel changes.
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 increased approximately $24,000 or 12% for the
three months ended March 31, 2000, as compared to the same period in 1999, as a
result of an increase in ownership of the Lakeshore/University II Joint Venture
as described below.
16
<PAGE>
Results of Operations - Continued
- ---------------------------------
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, 5-30 years for amenities and the
applicable lease term for tenant improvements. The aggregate cost of the
Partnership's properties for Federal tax purposes is approximately $30,084,265.
Contributing to all of the increases discussed above is an increase in ownership
of the Lakeshore/University II Joint Venture from 69.23% to 79.45% effective
July 1, 1999. See Notes to Financial Statements "8. Transactions Affecting the
Investment in Lakeshore/University II Joint Venture."
Consolidated Cash Flows and Financial Condition
- -----------------------------------------------
In the next 12 months, the Partnership expects the demand on future liquidity to
increase as a result of future leasing activity at Commonwealth Business Center
Phase II and Lakeshore Business Center Phases I, II and III. 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.
Cash flow provided by (used in):
2000 1999
---- ----
Operating activities $ 446,622 $ 176,276
Investing activities (554,735) 123,338
Financing activities (145,589) (1,423,986)
Net decrease in cash and ----------- -----------
equivalents $ (253,702) $(1,124,372)
=========== ===========
Net cash provided by operating activities increased approximately $270,000 for
the three months ended March 31, 2000, as compared to the same period in 1999.
The increase was primarily driven by an increase in accounts payable and by
changes in other working capital accounts.
Net cash used in investing activities increased approximately $678,000 for the
three months ended March 31, 2000, as compared to the same period in 1999. The
increase is the result of increased capital expenditures primarily at the
Lakeshore Business Center Development.
Net cash used in financing activities decreased approximately $1,278,000 for the
three months ended March 31, 2000, as compared to the same period in 1999. The
decrease was primarily the result of a $1,252,000 cash distribution paid to the
Limited Partners in March 1999. No distributions were paid during the three
months ended March 31, 2000.
17
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
The table below presents that portion of the distributions which represent a
return of capital on a Generally Accepted Accounting Principle basis for the
three months ended March 31, 1999. No distributions were made during the three
months ended March 31, 2000.
Cash
Net Loss Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners
2000 (146,001) -- --
1999 (29,313) 1,252,275 1,252,275
General Partners
2000 (1,475) -- --
1999 (296) 12,649 12,649
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations and the construction of Lakeshore Business Center
Phase III as described below. 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 the improvements
are determined by the size of the space being leased 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 cash
reserves.
Pursuant to a contract signed on December 6, 1999, the Lakeshore/University II
Joint Venture has a commitment to construct a building to be known as Lakeshore
Business Center Phase III on 3.8 acres of land it owns at the Lakeshore Business
Center Development. The construction commenced in December 1999 and cost is
currently estimated to be $4,000,000 and will be funded by working capital and
approximately $2,680,000 in debt financing.
The Partnership has no other material commitments for renovations or capital
improvements as of March 31, 2000.
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, who are 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. A leasing agent, an employee of NTS Development
Company, located at the Lakeshore Business Center Development, handles the
leasing and renewal negotiations at Lakeshore Business Center Phases I, II and
III. At The Willows of Plainview Phase II, the Partnership has an on-site
leasing staff, who are 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.
18
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
- -----------------------------------------------------------
Leases at the Partnership's commercial properties provide for tenants to
contribute toward the payment of common area expenses, insurance and real estate
taxes. 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.
Year 2000
- ---------
During 1999, all divisions of NTS Corporation, including NTS-Properties V, the
General Partner of the Partnership, reviewed the effort necessary to prepare
NTS' information systems (IT) and non-information technology with embedded
technology (ET) for the Year 2000. The information technology solutions were
addressed separately for the Year 2000 since the Partnership saw the need to
move to more advanced management and accounting systems made available by new
technology and software development during the decade of the 1990's. NTS'
property management staff surveyed vendors to evaluate embedded technology in
our alarm systems, HVAC controls, telephone systems and other computer
associated facilities. Some equipment was replaced, while others had circuitry
upgrades.
In 1999, the PILOT software system, purchased in the early 1990's, was replaced
by a Windows based network system both for NTS' headquarters functions and other
locations. The real estate accounting system developed, sold, and supported by
the Yardi Company of Santa Barbara, California replaced PILOT. The Yardi system
was fully implemented and operational as of December 31, 1999. There have been
no Year 2000 related problems with the system.
The costs of these advances in NTS' systems technology are not all attributable
to the Year 2000 issue since NTS had already identified the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
costs involved were approximately $60,000 during 1999 and 1998. These costs
include primarily purchase, lease and maintenance of hardware and software.
At the date of this filing the Partnership did not experience any significant
operating issues relative to the Year 2000 issue. Despite diligent preparation,
unanticipated third-party failures, inability of our tenants to pay rent when
due, more general public infrastructure failures or failure of our remediation
efforts as planned could have a material adverse impact on our results of
operations, financial conditions and/or cash flows in 2000 and beyond.
19
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Our primary market risk exposure with regards to financial instruments is
changes in interest rates. All of the Partnership's debt bears interest at a
fixed rate. At March 31, 2000, a hypothetical 100 basis point increase in
interest rates would result in an approximately $469,000 decrease in the fair
value of the debt.
20
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 3. Defaults upon Senior Securities
-------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K:
None.
Items 1,2 and 4 are not applicable and have been omitted.
21
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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/ Gregory A. Wells
----------------------------------------
Gregory A. Wells
Senior Vice President and
Chief Financial Officer of
NTS Capital Corporation
Date: May 12, 2000
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 2000 AND FROM THE STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,553,496
<SECURITIES> 0
<RECEIVABLES> 97,191
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,193,070
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 20,503,459
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 11,523,151
0
0
<COMMON> 0
<OTHER-SE> 8,002,323
<TOTAL-LIABILITY-AND-EQUITY> 20,503,459
<SALES> 981,701
<TOTAL-REVENUES> 1,018,427
<CGS> 0
<TOTAL-COSTS> 944,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221,643
<INCOME-PRETAX> (147,476)
<INCOME-TAX> 0
<INCOME-CONTINUING> (147,476)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (147,476)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSSIFIED BALANCE SHEET, THEREFORE THE VALUE IS
$0.
<F2>THIS INFORMATION IS NOT DISCLOSED IN THE PARTNERSHIP'S FORM 10-Q FILING.
</FN>
</TABLE>
