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 September 30, 1996
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 0-14695
NTS-PROPERTIES VI, a Maryland Limited Partnership
(Exact name of registrant as specified in its charter)
Maryland 61-1066060
(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 (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
Exhibit Index: See page 15
Total Pages: 16
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of September 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and nine months ended
September 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and nine months ended
September 30, 1996 and 1995 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-14
PART II
1. Legal Proceedings 15
2. Changes in Securities 15
3. Defaults upon Senior Securities 15
4. Submission of Matters to a Vote of Security Holders 15
5. Other Information 15
6. Exhibits and Reports on Form 8-K 15
Signatures 16
-2-
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES VI,
A Maryland Limited Partnership
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
September 30, 1996 December 31, 1995*
------------------------------ ------------------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 519,165 $ 867,902
Cash and equivalents - restricted 821,360 301,650
Investment securities 1,348,648 1,151,355
Accounts receivable 152,220 158,429
Land, buildings and amenities, net 40,876,373 42,196,272
Assets held for development, net 1,723,692 1,751,234
Other assets 279,330 386,949
--------------------- ---------------------
$ 45,720,788 $ 46,813,791
===================== =====================
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 27,467,522 $ 27,653,044
Accounts payable - operations 394,957 305,779
Accounts payable - construction -- 70,456
Distributions payable 221,677 239,571
Security deposits 240,631 235,187
Other liabilities 524,047 21,122
--------------------- ---------------------
28,848,834 28,525,159
Partners' equity 16,871,954 18,288,632
--------------------- ---------------------
$ 45,720,788 $ 46,813,791
===================== =====================
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
--------------------- ------------------- ---------------------
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions, net of
offering costs $ 40,518,631 $ 100 $ 40,518,731
Net income (loss) - prior years (12,533,124) (78,207) (12,611,331)
Net income - current year 145,858 1,473 147,331
Cash distributions declared to
date (10,026,381) (101,277) (10,127,658)
Repurchase of limited partnership
units (1,055,119) -- (1,055,119)
--------------------- ------------------- ---------------------
Balances at September 30, 1996 $ 17,049,865 $ (177,911) $ 16,871,954
===================== =================== =====================
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
-3-
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ -------------------------------------
1996 1995 1996 1995
------------------ ----------------- ----------------- -------------------
REVENUES:
<S> <C> <C> <C> <C>
Rental income $ 2,428,236 $ 2,265,221 $ 7,113,142 $ 6,558,554
Interest and other income 30,015 33,491 89,634 89,755
------------------ ----------------- ----------------- -------------------
2,458,251 2,298,712 7,202,776 6,648,309
EXPENSES:
Operating expenses 699,364 712,931 1,882,073 1,827,070
Operating expenses - affiliated 247,495 260,105 786,872 801,323
Interest expense 586,023 590,756 1,759,840 1,776,045
Management fees 123,699 113,381 361,666 329,419
Real estate taxes 191,141 188,436 573,267 559,617
Professional and administrative
expenses 33,192 35,596 106,239 106,562
Professional and administrative
expenses - affiliated 49,239 49,458 147,106 145,601
Depreciation and amortization 479,510 479,649 1,438,382 1,462,316
------------------ ----------------- ----------------- -------------------
2,409,663 2,430,312 7,055,445 7,007,953
------------------ ----------------- ----------------- -------------------
Net income (loss) $ 48,588 $ (131,600)$ 147,331 $ (359,644)
================== ================= ================= ===================
Net income (loss) allocated to the
limited partners $ 48,102 $ (130,284)$ 145,858 $ (356,048)
================== ================= ================= ===================
Net income (loss) per limited
partnership unit $ 1.09 $ (2.75)$ 3.20 $ (7.51)
================== ================= ================= ===================
Weighted average number of limited
partnership units 44,120 47,435 45,590 47,435
================== ================= ================= ===================
</TABLE>
-4-
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ 48,588 $ (131,600) $ 147,331 $ (359,644)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Accrued interest on investment
securities (4,294) (6,914) (1,010) (18,703)
Depreciation and amortization 479,510 479,649 1,438,382 1,462,316
Changes in assets and liabilities:
Cash and equivalents -
restricted (227,703) (226,490) (505,460) (472,091)
Accounts receivable (1,484) 11,179 6,209 246,489
Other assets 16,026 (34,933) 41,165 (46,656)
Accounts payable - operations 59,330 66,456 89,178 106,785
Security deposits 2,307 (8,956) 5,444 (35,826)
Other liabilities 228,462 189,967 502,925 446,329
----------- ----------- ----------- -----------
Net cash provided by operating
activities 600,742 338,358 1,724,164 1,328,999
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (19,807) (36,865) (94,944) (67,059)
Purchase of investment securities (880,517) (649,419) (2,467,955) (1,750,120)
Maturity of investment securities 565,192 499,424 2,271,672 499,424
----------- ----------- ----------- -----------
Net cash used in investing
activities (335,132) (186,860) (291,227) (1,317,755)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
payable (63,135) (58,082) (185,522) (170,676)
Cash distributions (224,808) (239,570) (696,152) (718,712)
Repurchase of limited partnership
units (155,000) -- (885,750) --
Cash and equivalents - restricted 24,350 -- (14,250) --
----------- ----------- ----------- -----------
Net cash used in financing
activities (418,593) (297,652) (1,781,674) (889,388)
----------- ----------- ----------- -----------
Net decrease in cash and equivalents (152,983) (146,154) (348,737) (878,144)
CASH AND EQUIVALENTS, beginning of
period 672,148 885,614 867,902 1,617,604
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 519,165 $ 739,460 $ 519,165 $ 739,460
=========== =========== =========== ===========
Interest paid on a cash basis $ 586,023 $ 591,161 $ 1,761,585 $ 1,777,235
=========== =========== =========== ===========
</TABLE>
-5-
<PAGE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1995 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 nine months ended September 30, 1996 and 1995.
1. Cash and Equivalents - Restricted
Cash and equivalents - restricted represents funds received for residential
security deposits, funds which have been escrowed with mortgage companies
for property taxes and insurance in accordance with the loan agreements and
funds reserved by the Partnership for the repurchase of limited partnership
Units.
2. Investment Securities
Investment securities represent investments in Certificates of Deposit or
securities issued by the U.S. Government and its agencies with initial
maturities of greater than three months. The investments are carried at
cost which approximates market value. The Partnership intends to hold the
securities until maturity. During the nine months ended September 30, 1996
and 1995, the Partnership sold no investment securities. The following
provides details regarding the investments held at September 30, 1996:
Amortized Maturity Value At
Type Cost Date Maturity
-------------- ---------- --------------
Certificate of Deposit $ 153,016 10/03/96 $ 153,076
FHLMC Discount Note 308,686 11/01/96 310,000
FHLB Discount Note 178,416 12/03/96 180,000
FHLB Discount Note 153,285 12/19/96 155,000
Treasury Bill 151,232 12/26/96 153,000
FHLB Discount Note 202,541 12/26/96 205,000
201,472 01/30/97 205,000
-------------- --------------
$ 1,348,648 $ 1,361,076
============== ==============
3. New Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (the "Statement") on accounting for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to assets to
be held and used. The Statement also establishes accounting standards for
long-lived assets and certain identifiable intangibles to be disposed of.
The Partnership adopted the Statement as of January 1, 1996 as required. No
adjustments were required.
-6-
<PAGE>
4. Mortgages Payable
Mortgages payable consist of the following:
September 30, December 31,
1996 1995
------------ -------------
Mortgage payable with an insurance
company bearing interest at 8.625%,
due August 1, 1997, secured by
certain land, buildings and
amenities $ 9,200,000 $ 9,200,000
Mortgage payable with an insurance
company bearing interest at 9.20%,
due November 1, 1997, secured by
certain land, buildings and
amenities 8,554,718 8,631,951
Mortgage payable with an insurance
company bearing interest at 8.375%,
due October 5, 2002, secured by
certain land, buildings and
amenities 4,009,404 4,050,879
Mortgage payable with an insurance
company bearing interest at 8.375%,
due October 5, 2002, secured by
certain land, buildings and
amenities 954,620 964,495
Mortgage payable with an insurance
company bearing interest at 7.25%,
due January 5, 2003, secured by
certain land, buildings and
amenities 2,849,268 2,883,431
Mortgage payable with an insurance
company, bearing interest at 7.25%,
due January 5, 2003, secured by
certain land, buildings and
amenities 1,899,512 1,922,288
------------ ------------
$ 27,467,522 $ 27,653,044
============ ============
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 $32,200,000.
Subsequent to September 30, 1996, the Partnership submitted an application
with an insurance company for $9,000,000 of debt financing. The proceeds
from the new financing along with cash reserves will be used to pay off
the Partnership's current $9,200,000 mortgage payable. The Partnership
anticipates that the financing will be completed during the second quarter
of 1997.
-7-
<PAGE>
5. Interest Repurchase Reserve
As of December 31, 1995, the Partnership had established an Interest
Repurchase Reserve in the amount of $474,350 pursuant to Section 16.4 of
the Partnership's Amended and Restated Agreement of Limited Partnership.
On May 24, 1996, the Partnership elected to fund an additional amount of
$455,380 to its Interest Repurchase Reserve. With these funds, the
Partnership will be able to repurchase up to 3,718 Units at a price of
$250 per Unit. As of September 30, 1996, the Partnership had repurchased a
total of 3,543 Units. Repurchased Units are retired by the Partnership,
thus increasing the share of ownership of each remaining investor.
Subsequent to September 30, 1996, the Partnership elected to fund an
additional amount of $250,000 to its Interest Repurchase Reserve. With
these funds, the Partnership will be able to repurchase up to 1,000 Units
at a price of $250 per Unit.
6. Related Party Transactions
Pursuant to an agreement with the Partnership, property management fees of
$361,666 and $329,419 for the nine months ended September 30, 1996 and
1995, 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 gross revenues of the
commercial property.
The Partnership was also charged the following amounts from NTS
Development Company for the nine months ended September 30, 1996 and 1995.
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.
1996 1995
------------------ -----------------
Administrative $ 187,515 $ 185,145
Property manager 598,679 606,301
Leasing 160,803 159,438
Other 4,574 9,524
------------------ -----------------
$ 951,571 $ 960,408
================== =================
7. Reclassification of 1995 Financial Statements
Certain reclassifications have been made to the September 30, 1995
financial statements to conform with the September 30, 1996
classifications. These reclassifications have no effect on previously
reported operations.
-8-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The occupancy levels at the Partnership's properties as of September 30 were as
follows:
1996 1995
---- ----
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments 96% 91%
Park Place Apartments Phase I 96% 96%
Willow Lake Apartments 93% 95%
Properties Owned in Joint Venture
with NTS-Properties IV (Ownership % at
September 30, 1996)
- --------------------------------------
Golf Brook Apartments (96%) 97% 94%
Plainview Point III Office Center (95%) 91% 65%
Rental and other income generated by the Partnership's properties for the three
months and nine months ended September 30, 1996 and 1995 was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ------------ -------------
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments $ 460,585 $ 417,314 $ 1,332,568 $ 1,233,780
Park Place Apartments
Phase I $ 481,698 $ 455,751 $ 1,361,823 $ 1,307,533
Willow Lake Apartments $ 595,553 $ 599,100 $ 1,816,291 $ 1,710,693
Properties Owned in Joint
Venture with NTS-
Properties IV (Ownership %
at September 30, 1996)
- --------------------------
Golf Brook Apartments
(96%) $ 724,860 $ 707,547 $ 2,073,395 $ 2,035,777
Plainview Point III Office
Center (95%) $ 174,211 $ 95,637 $ 554,958 $ 299,193
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
-9-
<PAGE>
Results of Operations - Continued
- ---------------------------------
Sabal Park Apartments' occupancy increased from 91% at September 30, 1995 to 96%
at September 30, 1996. Average occupancy for the nine month period ended
September 30 increased from 91% in 1995 to 94% in 1996. Average occupancy for
the three month period ended September 30 increased from 92% in 1995 to 97% in
1996. Occupancy at residential properties fluctuate 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 more representative of the entire period's results. Rental and other income
at Sabal Park Apartments increased for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 as a result of the
increase in average occupancy, increased rental rates and increased fees
collected upon early lease termination.
Park Place Apartments Phase I's occupancy was at 96% at September 30, 1995 and
September 30, 1996. Average occupancy for the nine month period ended September
30 decreased from 94% in 1995 to 92% in 1996. Average occupancy for the three
month period ended September 30, 1995 and 1996 remained constant at 95%. Rental
and other income at Park Place Apartments Phase I increased for the three months
and nine months ended September 30, 1996 as compared to the same periods in 1995
as a result of increased rental rates, increased fees collected for short term
leases and early lease terminations and increased 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 occupied has
increased. The increase in rental and other income for the nine month period at
Park Place Apartments Phase I is partially offset by the decrease in average
occupancy.
Willow Lake Apartments' occupancy decreased from 95% at September 30, 1995 to
93% at September 30, 1996. Average occupancy for the nine month period ended
September 30 increased from 91% in 1995 to 94% in 1996. Average occupancy for
the three month period ended September 30 decreased from 94% in 1995 to 93% in
1996. Rental and other income increased for the nine months ended September 30,
1996 as compared to the same period in 1995 as a result of the increase in
average occupancy, increased rental rates, increased income from fully furnished
units and increased income collected for short term leases. The change in rental
and other income at Willow Lake Apartments for the three months ended September
30, 1996 as compared to the same period in 1995 was not significant.
Golf Brook Apartments' occupancy increased from 94% at September 30, 1995 to 97%
at September 30, 1996. Average occupancy for the nine month period ended
September 30 decreased from 95% in 1995 to 94% in 1996. Average occupancy for
the three month period ended September 30 increased from 96% in 1995 to 97% in
1996. Rental and other income at Golf Brook Apartments increased for the three
months and nine months ended September 30, 1996 as compared to the same periods
in 1995 as a result of increased rental rates.
The 26% increase in occupancy at Plainview Point III Office Center from
September 30, 1995 to September 30, 1996 is primarily the result of a new
five-year lease totalling approximately 16,700 square feet. The increase in
occupancy can also be attributed to expansions by three current tenants of
existing space totalling approximately 6,900 square feet. Partially offsetting
the new lease and expansions is one tenant move-out at the end of the lease term
totalling 6,900 square feet. Average occupancy increased from 54% (1995) to 90%
(1996) for the three months ended September 30 and increased from 52% (1995) to
94% (1996) for the nine month period. Rental and other income increased at
Plainview Point III Office Center for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 as a result of the
increase in average occupancy.
-10-
<PAGE>
Results of Operations - Continued
- ---------------------------------
If present trends continue, the Partnership will be able to continue at its
current level of operations without the need of any additional financing.
Current occupancy levels are considered adequate to continue the operation of
the Partnership's properties.
Interest and other income includes income from investments made by the
Partnership with cash reserves. Interest income remained fairly constant for the
three months and nine months ended September 30, 1996 as compared to the same
periods in 1995.
Operating expenses increased for the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995 as a result of increased
general building costs at all the Partnership's properties, increased furniture
rental costs associated with fully furnished units at Willow Lake and Park Place
Apartments, increased replacement costs at Golf Brook and Park Place Apartments
and increased utility costs at Park Place Apartments and Plainview Point III
Office Center. These increases are partially offset by decreased exterior
painting costs at Willow Lake and Park Place Apartments. Operating expenses
decreased for the three months ended September 30, 1996 as compared to the three
months ended September 30, 1995 due to decreased exterior painting costs at
Willow Lake and Park Place Apartments. The decrease is partially offset by
increased replacement costs at Golf Brook, Willow Lake and Park Place Apartments
and increased janitorial costs at Plainview Point III Office Center. Operating
expenses at Sabal Park Apartments remained fairly constant for the three month
period ended September 30, 1996 as compared to the same period in 1995.
Operating expenses -affiliated decreased for the three months and nine months
ended September 30, 1996 as compared to the same periods in 1995 due to
decreased property management costs. Operating expenses - affiliated are
expenses incurred for services performed by employees of NTS Development
Company, an affiliate of the General Partner of the Partnership.
The decrease in interest expense for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 is due to the
Partnership's decreasing debt level as a result of principal payments made. See
the Liquidity and Capital Resources section of this item for details regarding
the Partnership's debt.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is on the accrual basis. As a result, the
fluctuations of revenues between periods will differ from the fluctuations of
management fee expense.
The increase in real estate taxes for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 is a result of an
increased property assessment for Golf Brook Apartments. The increase in real
estate taxes for both periods is partially offset by a decreased property
assessment and decreased tax rate for Willow Lake Apartments.
Professional and administrative expenses and professional and administrative
expenses - affiliated have remained fairly constant for the three months and
nine months ended September 30, 1996 as compared to the same periods in 1995.
Professional and administrative expenses - affiliated are expenses incurred for
services performed by employees of NTS Development Company, an affiliate of the
General Partner of the Partnership.
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
Depreciation and amortization decreased for the nine months ended September 30,
1996 as compared to the same periods in 1995 due to a portion of the assets at
the Partnership's residential properties having become fully depreciated. The
decrease in depreciation and amortization for the nine month period is partially
offset by depreciation on new tenant finish improvements at Plainview Point III
Office Center. Depreciation and amortization remained fairly constant for the
three months ended September 30, 1996 as compared to the same period in 1995.
Depreciation is computed using the straight-line method over the useful lives of
the assets which are 5 - 30 years for land improvements, 30 years for buildings,
5 - 30 years for building and improvements and 5 - 30 years for amenities. The
aggregate cost of the Partnership's properties for Federal tax purposes is
approximately $59,300,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations was $1,724,164 and $1,328,999 for the nine months
ended September 30, 1996 and 1995, respectively. These funds in conjunction with
cash on hand were used to make a 2% (annualized) cash distribution of $678,258
and $718,712 for the nine months ended September 30, 1996 and 1995,
respectively. The annualized distribution rate is calculated as a percent of the
original capital contribution. The limited partners received 99% and the general
partner received 1% of the distributions. The primary source of future liquidity
and distributions is expected to be derived from cash generated by the
Partnership's properties after adequate cash reserves are established for future
leasing and tenant finish costs. Cash reserves (which are unrestricted cash and
equivalents and investment securities as shown on the Partnership's balance
sheet as of September 30) were $1,867,813 and $2,008,859 at September 30, 1996
and 1995, respectively.
As of September 30, 1996, the Partnership had a mortgage payable to an insurance
company in the amount of $9,200,000. The mortgage bears interest at a fixed rate
of 8.625% and is secured by the land, buildings and amenities of Golf Brook
Apartments. The unpaid balance of the loan is due August 1, 1997.
As of September 30, 1996, the Partnership had a mortgage payable to an insurance
company in the amount of $8,554,718. The mortgage payable is due November 1,
1997, bears interest at a fixed rate of 9.20% and is secured by the land,
buildings and amenities of Willow Lake Apartments. Current monthly principal
payments are based upon a 25-year amortization schedule. The outstanding balance
at maturity based on the current rate of amortization will be $8,433,356.
As of September 30, 1996, the Partnership had two mortgage loans each with an
insurance company in the amount of $4,009,404 and $954,620. Both mortgages are
due October 5, 2002, currently bear interest at a fixed rate of 8.375% and are
secured by the land, buildings and amenities of Park Place Apartments Phase I.
Current monthly principal payments on both mortgages are based upon a 27-year
amortization schedule. The outstanding balance at maturity based on the current
rate of amortization would be $4,413,955 ($3,565,118 and $848,837).
As of September 30, 1996, the Partnership also had two mortgage loans each with
an insurance company in the amount of $2,849,268 and $1,899,512. Both mortgages
are due January 5, 2003, currently bear interest at a fixed rate of 7.25% and
are secured by the land, buildings and amenities of Sabal Park Apartments.
Current monthly principal payments on both mortgages are based upon a 27-year
amortization schedule. The outstanding balance at maturity based on the current
rate of amortization would be $4,122,326 ($2,473,396 and $1,648,930).
As previously discussed in the Partnership's Form 10-K for the year ended
December 31, 1995, the General Partner of the Partnership was exploring the
possibility of refinancing the current mortgages payable encumbering the
-12-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Partnership's properties. Subsequent to September 30, 1996, the Partnership
submitted an application with an insurance company for $9,000,000 of debt
financing. The proceeds from the new financing along with cash reserves will be
used to pay off the Partnership's current $9,200,000 mortgage payable which is
secured by the land, buildings and amenities of Golf Brook Apartments which
matures August 1, 1997. The Partnership anticipates that the financing will be
completed in the second quarter of 1997.
As of December 31, 1995, the Partnership had established an Interest Repurchase
Reserve in the amount of $474,350 pursuant to Section 16.4 of the Partnership's
Amended and Restated Agreement of Limited Partnership. On May 24, 1996, the
Partnership elected to fund an additional amount of $455,380 to its Interest
Repurchase Reserve. With these funds, the Partnership will be able to repurchase
up to 3,718 Units at a price of $250 per Unit. As of September 30, 1996, the
Partnership had repurchased a total of 3,543 Units. Repurchased Units are
retired by the Partnership, thus increasing the share of ownership of each
remaining investor. The Interest Repurchase Reserve was funded from cash
reserves.
Subsequent to September 30, 1996, the Partnership elected to fund an additional
amount of $250,000 to its Interest Repurchase Reserve. With these funds, the
Partnership will be able to repurchase up to 1,000 Units at a price of $250 per
Unit.
The majority of the Partnership's cash flow is derived from operating
activities. The decrease in accounts receivable during 1995 represents a
settlement received from the insurance company of the manufacturer of the pipe
fittings which were used in the construction of Willow Lake Apartments. Cash
flows used in investing activities are for tenant finish improvements and other
capital additions at the Partnership's properties. Changes to current tenant
improvements at commerical properties are a typical part of any lease
negotiation. Improvements generally include a revision to the current floor plan
to accomodate a tenant's needs, new carpeting and paint and/or wallcovering. The
extent and cost of these improvements are determined by the size of the space
and whether the improvements are for a new tenant or incurred because of a lease
renewal. The tenant finish improvements and other capital additions are funded
by cash flow from operations. Cash flows used in investing activities are also
for the purchase of investment securities. As part of its cash management
activities, the Partnership has purchased Certificates of Deposit or securities
issued by the U.S. Government with initial maturities of greater than three
months to improve the return on its cash reserves. The Partnership intends to
hold the securities until maturity. Cash flows provided by investing activities
are derived from the maturity of investment securities. Cash flows used in
financing activities are for cash distributions, principal payments on mortgages
payable and repurchases of limited partnership Units. Cash flows used in
financing activities also include 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 from those in 1995 except for the changes resulting from the debt
financing which the Partnership is currently exploring as discussed above.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
nine months ended September 30, 1996 and 1995. These distributions were funded
by cash flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
------------- -------------- --------------
Limited Partners:
1996 $ 145,858 $ 671,475 $ 525,617
1995 (356,048) 711,525 711,525
General Partner:
1996 $ 1,473 $ 6,783 $ 5,310
1995 (3,596) 7,187 7,187
-13-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
In an effort to continue to improve occupancy at the Partnership's residential
properties, the Partnership has an on-site leasing staff, employees of NTS
Development Company, at each of the apartment communities. The staff handles all
on-site visits from potential tenants, coordinates local advertising with NTS
Development Company's marketing staff, makes visits to local companies to
promote fully furnished units and negotiates lease renewals with current
residents.
The leasing and renewal negotiations for the Partnership's commercial property
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
commercial property. All advertising for the commercial property is coordinated
by NTS Development Company's marketing staff located in Louisville, Kentucky.
Leases at Plainview Point III Office Center provide for tenants to contribute
toward the payment of increases in common area maintenance expenses, insurance,
utilities and real estate taxes. Leases at the office center 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 15 acres of land, adjacent to the Park Place
Apartments development, in Lexington, Kentucky which is zoned for 163 apartment
units (Park Place Apartments Phase III). Included in the cost of approximately
$1,724,000 is land cost, capitalized interest, common area costs and amenity
costs. The Partnership continues to evaluate whether to sell or develop the
tract of land. At this time, no final decision has been made.
-14-
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NTS-PROPERTIES VI,
a Maryland Limited Partnership
(Registrant)
BY: NTS-Properties Associates VI
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: November 11 , 1996
-16-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,340,525
<SECURITIES> 1,348,648
<RECEIVABLES> 152,220
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 40,876,373
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 45,720,788
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 27,467,522
0
0
<COMMON> 0
<OTHER-SE> 16,871,954
<TOTAL-LIABILITY-AND-EQUITY> 45,720,788
<SALES> 7,113,142
<TOTAL-REVENUES> 7,202,776
<CGS> 0
<TOTAL-COSTS> 5,042,260
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,759,840
<INCOME-PRETAX> 147,331
<INCOME-TAX> 0
<INCOME-CONTINUING> 147,331
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147,331
<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>
