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, 1997
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 (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 18
Total Pages: 19
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of June 30, 1997 and December 31, 1996 3
Statements of Operations
For the three months and six months ended
June 30, 1997 and 1996 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1997 and 1996 5
Notes To Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-17
PART II
1. Legal Proceedings 18
2. Changes in Securities 18
3. Defaults upon Senior Securities 18
4. Submission of Matters to a Vote of Security Holders 18
5. Other Information 18
6. Exhibits and Reports on Form 8-K 18
Signatures 19
- 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
June 30, 1997 December 31, 1996*
----------- -----------
ASSETS
<S> <C> <C>
Cash and equivalents $ 959,244 $ 640,541
Cash and equivalents - restricted 468,890 390,677
Investment securities 909,875 1,085,267
Accounts receivable 140,506 136,394
Land, buildings and amenities, net 39,556,189 40,436,784
Assets held for development, net 1,696,091 1,714,511
Other assets 324,066 367,628
----------- -----------
$44,054,861 $44,771,802
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $27,032,180 $27,403,056
Accounts payable 298,325 349,168
Distributions payable 216,177 216,692
Security deposits 247,705 250,814
Other liabilities 322,623 52,086
----------- -----------
28,117,010 28,271,816
Partners' equity 15,937,851 16,499,986
----------- -----------
$44,054,861 $44,771,802
=========== ===========
</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 (12,308,341) (75,936) (12,384,277)
Net loss - current year (91,491) (924) (92,415)
Cash distributions declared to
date (10,669,051) (107,768) (10,776,819)
Repurchase of limited
partnership units (1,327,369) -- (1,327,369)
------------ ------------ ------------
Balances at June 30, 1997 $ 16,122,379 $ (184,528) $ 15,937,851
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Annual
Report on Form 10-K as filed with the Commission on March 28, 1997.
- 3 -
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 2,303,855 $ 2,338,541 $ 4,609,172 $ 4,684,905
Interest and other income 28,474 27,807 56,422 59,618
----------- ----------- ----------- -----------
2,332,329 2,366,348 4,665,594 4,744,523
EXPENSES:
Operating expenses 616,873 656,194 1,227,450 1,182,707
Operating expenses - affiliated 251,829 256,734 551,318 539,377
Interest expense 566,074 586,004 1,148,946 1,173,817
Management fees 115,370 122,178 232,184 237,966
Real estate taxes 198,752 194,740 391,846 382,126
Professional and administrative
expenses 50,756 36,872 85,756 73,048
Professional and administrative
expenses - affiliated 79,674 47,377 157,154 97,867
Depreciation and amortization 483,806 479,390 963,355 958,872
----------- ----------- ----------- -----------
2,363,134 2,379,489 4,758,009 4,645,780
----------- ----------- ----------- -----------
Net income (loss) $ (30,805) $ (13,141) $ (92,415) $ 98,743
=========== =========== =========== ===========
Net income (loss) allocated to
the limited partners $ (30,497) $ (13,010) $ (91,491) $ 97,756
=========== =========== =========== ===========
Net income (loss) per limited
partnership unit $ (.71) $ (0.29) $ (2.13) $ 2.11
=========== =========== =========== ===========
Weighted average number of
limited partnership units 42,810 45,410 42,840 46,332
=========== =========== =========== ===========
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (30,805) $ (13,141) $ (92,415) $ 98,743
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Accrued interest on investment
securities 7,764 (5,831) 1,399 3,285
Depreciation and amortization 483,806 479,390 963,355 958,872
Changes in assets and
liabilities:
Cash and equivalents -
restricted 74,468 (87,278) (115,463) (277,757)
Accounts receivable (9,679) 80,791 (4,112) 7,693
Other assets 27,228 28,645 2,674 25,139
Accounts payable - operations (86,246) 13,048 (50,843) 29,846
Security deposits 5,632 5,695 (3,109) 3,137
Other liabilities 77,750 86,111 270,537 274,464
----------- ----------- ----------- -----------
Net cash provided by operating
activities 549,918 587,430 972,023 1,123,422
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (12,016) (1,219) (15,953) (75,137)
Purchase of investment securities (753,896) (652,246) (1,581,396) (1,587,438)
Maturity of investment securities 1,202,500 570,000 1,755,389 1,706,480
----------- ----------- ----------- -----------
Net cash used in investing
activities 436,588 (83,465) 158,040 43,905
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages
payable (9,305,051) (61,832) (9,370,876) (122,387)
Proceeds from mortgage loan 9,000,000 -- 9,000,000 --
Loan costs (26) -- (7,500) --
Cash distributions (216,292) (231,773) (432,984) (471,344)
Repurchase of limited partnership
units (5,750) (344,750) (37,250) (730,750)
Cash and equivalents - restricted 5,750 (110,630) 37,250 275,370
----------- ----------- ----------- -----------
Net cash used in financing
activities (521,369) (748,985) (811,360) (1,049,111)
----------- ----------- ----------- -----------
Net increase (decrease) in cash
and equivalents 465,137 (245,020) 318,703 118,216
CASH AND EQUIVALENTS, beginning of
period 494,107 756,788 640,541 393,552
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 959,244 $ 511,768 $ 959,244 $ 511,768
=========== =========== =========== ===========
Interest paid on a cash basis $ 605,303 $ 587,327 $ 1,188,634 $ 1,175,929
=========== =========== =========== ===========
</TABLE>
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<PAGE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
NOTES TO FINANCIAL STATEMENTS
The financial statements and schedules included herein should be read in
conjunction with the Partnership's 1996 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, 1997 and 1996.
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 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.
3. Investment Securities
---------------------
Investment securities represent investments in Certificates of Deposit or
securities issued by the U.S. Government 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 1996 and 1997, the Partnership sold no investment
securities. The following provides details regarding the investments held
at June 30, 1997:
Amortized Maturity Value At
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $ 152,240 07/01/97 $ 152,240
Certificate of Deposit 129,589 08/22/97 130,494
Certificate of Deposit 125,953 09/03/97 127,104
Certificate of Deposit 100,403 09/29/97 101,697
Certificate of Deposit 300,915 09/29/97 304,835
Certificate of Deposit 100,775 11/08/97 102,646
--------- ---------
$ 909,875 $ 919,016
========= =========
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<PAGE>
3. Investment Securities - Continued
---------------------------------
The following provides details regarding the investments held at December
31, 1996:
Amortized Maturity Value At
Type Cost Date Maturity
---- ---- ---- --------
FHLB Discount Note $ 204,154 01/30/97 $ 205,000
Federal Farm Credit Bank 127,338 03/03/97 128,394
FNMA Discount Note 227,601 03/18/97 230,000
Certificate of Deposit 401,174 04/01/97 406,204
Certificate of Deposit 125,000 05/01/97 127,072
--------- ---------
$1,085,267 $1,096,670
========= =========
4. Mortgages Payable
-----------------
Mortgages payable consist of the following:
June 30, December 31,
1997 1996
---- ----
Mortgage payable with an insurance
company, bearing interest at a fixed
rate of 7.43%, due May 15, 2009,
secured by land, buildings and
amenities $ 8,962,164 $ --
Mortgage payable with an insurance
company, bearing interest at 8.625%,
due August 1, 1997, secured by land,
buildings and amenities -- 9,200,000
Mortgage payable with an insurance
company, bearing interest at 9.20%,
due November 1, 1997, secured by land,
buildings and amenities 8,471,990 8,527,771
Mortgage payable with an insurance
company, bearing interest at 8.375%,
due October 5, 2002, secured by land,
buildings and amenities 3,965,250 3,994,992
Mortgage payable with an insurance
company, bearing interest at 8.375%,
due October 5, 2002, secured by land,
buildings and amenities 944,107 951,189
Mortgage payable with an insurance
company, bearing interest at 7.25%,
due January 5, 2003, secured by land,
buildings and amenities 2,813,202 2,837,462
(Continued next page)
- 7 -
<PAGE>
4. Mortgages Payable - Continued
-----------------------------
June 30, December 31,
1997 1996
---- ----
Mortgage payable with an insurance
company, bearing interest at 7.25%,
due January 5, 2003, secured by land,
buildings and amenities $ 1,875,468 $ 1,891,642
---------- ----------
$27,032,180 $27,403,056
========== ==========
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 $33,500,000.
As of June 30, 1997, the Partnership has obtained a commitment from an
insurance company for $8,500,000 of debt financing. The proceeds from the
new financing will be used to pay off the Partnership's current $8,471,990
mortgage payable which is secured by the land, buildings and amenities of
Willow Lake Apartments which matures November 1, 1997. The mortgage will
bear interest at a fixed rate of 7.32% and will be fully amortized over a
15-year period. Based upon the terms of the commitment, the Partnership
anticipates that the financing will be completed in the fourth quarter of
1997.
5. Interest Repurchase Reserve
---------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated
Agreement of Limited Partnership, the Partnership established an Interest
Repurchase Reserve. Through June 1997, the Partnership has funded a total
amount of $1,179,730 to the Reserve which will allow the Partnership to
repurchase up to 4,718 Units at a price of $250 per Unit. Through June 30,
1997, the Partnership has repurchased a total of 4,632 Units for
$1,158,000. 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. The amount remaining in
the Interest Repurchase Reserve at June 30, 1997 was $21,730.
6. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management fees of
$232,184 and $237,966 for the six months ended June 30, 1997 and 1996,
respectively, were paid to NTS Development Company, an affiliate of the
general partner. The fee is equal to 5% of gross revenues of the
residential properties and 6% of the gross revenues of the commercial
property. The Partnership was also charged the following amounts from NTS
Development Company for the six months ended June 30, 1997 and 1996. 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.
- 8 -
<PAGE>
6. Related Party Transactions - Continued
--------------------------------------
The charges were as follows:
1997 1996
-------- --------
Administrative $187,053 $126,588
Property manager 418,743 412,381
Leasing 103,928 113,847
Other 2,895 425
-------- --------
$712,619 $653,241
======== ========
7. Reclassification of 1996 Financial Statements
---------------------------------------------
Certain reclassifications have been made to the June 30, 1996 financial
statements to conform with the June 30, 1997 classifications. These
reclassifications have no effect on previously reported operations.
- 9 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1997 1996
---- ----
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments 86% 94%
Park Place Apartments Phase I 92% 89%
Willow Lake Apartments 90% 92%
Properties Owned in Joint Venture
with NTS-Properties IV (Ownership % at
June 30, 1997)
- --------------------------------------
Golf Brook Apartments (96%) 91% 91%
Plainview Point III Office Center (95%) 88% 87%
Rental and other income generated by the Partnership's properties for the three
months and six months ended June 30, 1997 and 1996 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
------ ------ ------ ------
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments $ 410,901 $ 430,567 $ 827,105 $ 871,982
Park Place Apartments Phase I $ 462,592 $ 447,133 $ 907,550 $ 880,125
Willow Lake Apartments $ 591,775 $ 608,825 $1,188,005 $1,220,738
Properties Owned in Joint Venture
with NTS-Properties IV (Ownership
% at June 30, 1997)
- ---------------------------------
Golf Brook Apartments (96%) $ 651,923 $ 676,329 $1,325,333 $1,348,535
Plainview Point III Office $ 194,453 $ 183,842 $ 374,517 $ 380,747
Center (95%)
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
- 10 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
Sabal Park Apartments' occupancy decreased from 94% at June 30, 1996 to 86% at
June 30, 1997. Average occupancy for the six month period ended June 30
decreased from 93%(1996) to 89%(1997). Average occupancy for the three month
period ended June 30 decreased from 93% (1996) to 88% (1997). 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 decreased for the three months and six months ended June 30,
1997 as compared to the same periods in 1996 as a result of the decrease in
average occupancy and increased rent concessions.
Park Place Apartments Phase I occupancy increased 3% from June 30, 1996 to June
30, 1997. Average occupancy for the six month period decreased from 91% (1996)
to 89% (1997). Average occupancy for the three month period ended June 30
remained constant at 91% (1996 and 1997). Rental and other income at Park Place
Apartments Phase I increased for the three months and six months ended June 30,
1997 as compared to the same periods in 1996 as a result of increased rental
rates 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 six month period at Park Place Apartments Phase I is
partially offset by the decrease in average occupancy.
Willow Lake Apartments' occupancy decreased from 92% at June 30, 1996 to 90% at
June 30, 1997. Average occupancy for the six month period decreased from 94%
(1996) to 90% (1997). Average occupancy for the three month period ended June 30
decreased from 93%(1996) to 88%(1997). Rental and other income decreased for the
three months and six months ended June 30, 1997 as compared to the same periods
in 1996 as a result of the decrease in average occupancy and decreased income
from fully furnished units. The decrease in rental income is partially offset by
increased fees collected for short term leases and for early lease termination
and increased rental rates.
Golf Brook Apartments' occupancy was 91% at June 30, 1997 and 1996. Average
occupancy for the six month period decreased from 92% (1996) to 91% (1997).
Average occupancy for the three month period decreased from 90% (1996) to 89%
(1997). Rental and other income at Golf Brook Apartments decreased for the three
months and six months ended June 30, 1997 as compared to the same periods in
1996 as a result of decreased occupancy and increased rent concessions.
In the opinion of the General Partner of the Partnership, the decreases in
occupancy at the Partnership's residential properties are only temporary
fluctuations and do not represent a downward occupancy trend.
The 1% increase in occupancy at Plainview Point III Office Center from June 30,
1996 to June 30, 1997 is the result of expansions by two current tenants for a
total of approximately 2,500 square feet. Partially offsetting the expansions is
one tenant who vacated approximately 1,600 square feet due to a downsizing of
current space. The downsizing was done in conjunction with a lease renewal, so
there was no write-off of accrued income. Average occupancy decreased from 94%
(1996) to 89% (1997) for the three month period
- 11 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
ended June 30 and from 95% (1996) to 91% (1997) for the six month period. Rental
and other income remained fairly constant at Plainview Point III Office Center
for the three months and six months ended June 30, 1997 as compared to the same
periods in 1996.
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 six months ended June 30, 1997 as compared to the same periods
in 1996.
Operating expenses increased for the six months ended June 30, 1997 as compared
to the same period in 1996 as a result of increased replacement costs (carpet,
vinyl and wallcoverings) and increased repair and maintenance costs at Sabal
Park Apartments and Golf Brook Apartments. These increases are partially offset
by decreased snow removal costs at Park Place Apartments Phase I. Operating
expenses for the six month period remained fairly constant at Willow Lake
Apartments and Plainview Point III Office Center. Operating expenses decreased
for the three months ended June 30, 1997 as compared to the same period in 1996
as a result of decreased repair and maintenance costs at Park Place Apartments
Phase I and Willow Lake Apartments and decreased replacement costs (carpet,
vinyl and wallcovering) at Park Place Apartments Phase I. The decreases in
operating expenses for the three month period are partially offset by increased
replacement costs (carpet, vinyl, and wallcovering) at Golf Brook Apartments.
Operating expenses for the three month period remained fairly constant at Sabal
Park Apartments and Plainview Point III Office Center.
Operating expenses - affiliated remained fairly constant for the three months
and six months ended June 30, 1997 as compared to the same periods in 1996.
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 six months ended June
30, 1997 as compared to the same periods in 1996 is due to the Partnership's
decreasing debt level as a result of principal payments made. The decrease in
interest expense for both periods is also a result of the new debt financing
which was obtained May 15, 1997. The $9,200,000 loan which was paid off had an
interest rate of 8.625% compared to 7.43% on the new $9,000,000 loan. 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 six months ended June
30, 1997 as compared to the same periods in 1996 is a result of increased
property assessments for Golf Brook and Sabal Park Apartments partially offset
by a decreased property assessment and a decreased tax rate for Willow Lake
Apartments. Real estate taxes at Park Place Apartments Phase I and Plainview
Point III Office Center remained fairly constant for the three months and six
months ended June 30, 1997 as compared to the same periods in 1996.
- 12 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
Professional and administrative expenses increased for the three months and six
months ended June 30, 1997 as compared to the same periods in 1996 as a result
of increased outside accounting and legal fees.
Professional and administrative expenses - affiliated increased for the three
months and six months ended June 30, 1997 as compared to the same periods in
1996 as a result of increased salary costs. 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.
Depreciation and amortization remained fairly constant for the three months and
six months ended June 30, 1997 as compared to the same periods in 1996.
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 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 $972,023 and $1,123,422 for the six months ended
June 30, 1997 and 1996, respectively. These funds in conjunction with cash on
hand were used to make a 2% (annualized) cash distribution of $432,470 and
$456,581 for the six months ended June 30, 1997 and 1996, 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 June
30) were $1,869,119 and $1,540,798 at June 30, 1997 and 1996, respectively.
On May 15, 1997, the Partnership obtained a mortgage loan from an insurance
company in the amount of $9,000,000. The outstanding balance of the loan at June
30, 1997 was $8,962,164. The mortgage bears interest at a fixed rate of 7.43%,
is due May 15, 2009 and is secured by the assets of Golf Brook Apartments.
Monthly principal payments are based upon a 12-year amortization schedule. At
maturity, the loan will have been repaid based on the current rate of
amortization. The proceeds from the loan along with cash reserves were used to
pay of the Partnership's $9,200,000 mortgage payable which was secured by Golf
Brook Apartments. The mortgage bore interest at a fixed rate of 8.625% and had a
maturity date of August 1, 1997.
As of June 30, 1997, the Partnership also had a mortgage payable to an insurance
company in the amount of $8,471,990. 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.
- 13 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
As of June 30, 1997 , the Partnership had obtained a commitment from an
insurance company for $8,500,000 of debt financing. The proceeds from the new
financing will be used to pay off the Partnership's current $8,471,990 mortgage
payable which is secured by the land, buildings and amenities of Willow Lake
Apartments which matures November 1, 1997. The mortgage will bear interest at a
fixed rate of 7.32% and will be fully amortized over a 15-year period. Based
upon the terms of the commitment, the Partnership anticipates that the financing
will be completed in the fourth quarter of 1997.
As of June 30, 1997 the Partnership had two mortgage loans each with an
insurance company in the amount of $3,965,250 and $944,107. Both mortgages
payable are due October 5, 2002, currently bear a fixed interest rate of 8.375%
for the first 60 months, and are secured by the land, buildings and amenities of
Park Place Apartments Phase I. At the end of the 56th month from the date of the
notes (notes dated September 1992), the insurance companies will notify the
Partnership of the interest rate which is their then prevailing interest rate
for loans with a term of five years on properties comparable to the apartments
(the "Modified Rate"). The Partnership will have 30 days to accept or reject the
Modified Rate. If the Modified Rate is rejected by the Partnership the entire
unpaid principal balance is due with the 60th installment of interest. If the
Partnership accepts the Modified Rate, it becomes effective the 61st month from
the date of the note. Current monthly principal payments on both mortgages are
based upon a 27-year amortization schedule. If the Partnership accepts the
Modified Rate, the principal balance of both mortgages will be amortized using a
22-year amortization schedule beginning the 61st month. The outstanding balance
at maturity based on the current rate of amortization would be $4,413,955
($3,565,118 and $848,837).
As of June 30, 1997, the Partnership also had two mortgage loans each with an
insurance company in the amount of $2,813,202 and $1,875,468. Both mortgages
payable are due January 5, 2003, currently bear interest at a fixed rate of
7.25% for the first 60 months and are secured by the land, buildings and
amenities of Sabal Park Apartments. At the end of the 56th month from the date
of the notes (notes dated December 1992), the insurance companies will notify
the Partnership of the interest rate which is their then prevailing interest
rate for loans with a term of five years on properties comparable to the
apartments (the "Modified Rate"). The Partnership will have 30 days to accept or
reject the Modified Rate. If the Modified Rate is rejected by the Partnership,
the entire unpaid principal balance is due with the 60th installment of
interest. If the Partnership accepts the Modified Rate, it becomes effective the
61st month from the date of the note. Current monthly principal payments on both
mortgages are based upon a 27-year amortization schedule. If the Partnership
accepts the Modified Rate, the principal balance of both mortgages will be
amortized using a 22-year amortization schedule beginning the 61st month. The
outstanding balance at maturity based on the current rate of amortization would
be $4,122,326 ($2,473,396 and $1,648,930).
The General Partner of the Partnership is presently exploring the possibility of
refinancing the mortgages encumbering Park Place Apartments Phase I and Sabal
Park Apartments. If an interest rate can be obtained which would be less than
the Modified Rate, together with a favorable amortization schedule, the loans
will likely be refinanced.
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 other capital improvements at the Partnership's properties.
- 14 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Changes to current tenant finish improvements at commercial properties are a
typical part of any lease negotiation. Improvements generally include a revision
to the current floor plan to accommodate a tenant's needs, new carpeting and
paint and/or wallcovering. The extent and cost of these improvements are
determined by the size of the space and whether the improvements are for a new
tenant or incurred because of a lease renewal. The tenant finish improvements
and other capital additions were 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, repurchase of limited
partnership Units and payment of loan costs. Cash flows provided by financing
activities represent the utilization of cash which has been reserved by the
Partnership for the repurchase of limited partnership Units and proceeds from a
mortgage loan. The Partnership does not expect any material changes in the mix
and relative cost of capital resources from those in 1996 except for the changes
resulting from the $9,000,000 mortgage payable obtained May 15, 1997, the
$8,500,000 loan commitment and other debt refinancings which the Partnership is
currently exploring as discussed above.
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve.
Through June 1997, the Partnership has funded a total amount of $1,179,730 to
the Reserve which will allow the Partnership to repurchase up to 4,718 Units at
a price of $250 per Unit. Through June 30, 1997 the Partnership has repurchased
a total of 4,632 Units for $1,158,000. 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. The amount
remaining in the Interest Repurchase Reserve at June 30, 1997 was $21,730.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the six
months ended June 30, 1997 and 1996. These distributions were funded by cash
flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1997 $ (91,491) $ 428,145 $ 428,145
1996 97,756 452,015 354,259
General Partner:
1997 $ (924) $ 4,325 $ 4,325
1996 987 4,566 3,579
- 15 -
<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 agent's 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
$1,700,000 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. In management's
opinion, the net book value approximates the fair market value.
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 that which is 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.
- 16 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
The Partnership's principal activity is the leasing and management of a
commercial office building and apartment complexes. If a major commercial tenant
or a large number of apartment lessees default on their lease, 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, or other operating expenses and acts of God.
- 17 -
<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
There were no reports on Form 8-K for the three months ended June
30, 1997.
- 18 -
<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,
General Partner
By: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 11 , 1997
- 19 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1997 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,428,134
<SECURITIES> 909,875
<RECEIVABLES> 140,506
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 39,556,189
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 44,054,861
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 27,032,180
0
0
<COMMON> 0
<OTHER-SE> 15,937,851
<TOTAL-LIABILITY-AND-EQUITY> 44,054,861
<SALES> 4,609,172
<TOTAL-REVENUES> 4,665,594
<CGS> 0
<TOTAL-COSTS> 3,366,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,148,946
<INCOME-PRETAX> (92,415)
<INCOME-TAX> 0
<INCOME-CONTINUING> (92,415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92,415)
<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>
