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 March 31, 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 16
Total Pages: 17
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of March 31, 1997 and December 31, 1996 3
Statements of Operations
For the three months ended March 31, 1997 and 1996 4
Statements of Cash Flows
For the three months ended March 31, 1997 and 1996 5
Notes To Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-15
PART II
1. Legal Proceedings 16
2. Changes in Securities 16
3. Defaults upon Senior Securities 16
4. Submission of Matters to a Vote of Security Holders 16
5. Other Information 16
6. Exhibits and Reports on Form 8-K 16
Signatures 17
- 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
March 31, 1997 December 31, 1996*
-------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 494,107 $ 640,541
Cash and equivalents - restricted 549,108 390,677
Investment securities 1,366,243 1,085,267
Accounts receivable 130,827 136,394
Land, buildings and amenities, net 39,992,530 40,436,784
Assets held for development, net 1,705,301 1,714,511
Other assets 377,508 367,628
----------- -----------
$44,615,624 $44,771,802
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $27,337,231 $27,403,056
Accounts payable 384,571 349,168
Distributions payable 216,293 216,692
Security deposits 242,073 250,814
Other liabilities 244,873 52,086
----------- -----------
28,425,041 28,271,816
Partners' equity 16,190,583 16,499,986
----------- -----------
$44,615,624 $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 (60,994) (616) (61,610)
Cash distributions declared to
date (10,455,036) (105,606) (10,560,642)
Repurchase of limited
partnership units (1,321,619) -- (1,321,619)
------------ ------------ ------------
Balances at March 31, 1997 $ 16,372,641 $ (182,058) $ 16,190,583
============ ============ ============
</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
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Rental income $ 2,305,318 $ 2,346,366
Interest and other income 27,947 31,810
----------- -----------
2,333,265 2,378,176
Expenses:
Operating expenses 609,883 526,516
Operating expenses - affiliated 299,489 282,643
Interest expense 582,872 587,813
Management fees 116,814 115,787
Real estate taxes 193,092 187,387
Professional and administrative expenses 35,693 36,174
Professional and administrative expenses
- affiliated 77,480 50,491
Depreciation and amortization 479,552 479,481
----------- -----------
2,394,875 2,266,292
----------- -----------
Net income (loss) $ (61,610) $ 111,884
=========== ===========
Net income (loss) allocated to the limited
partners $ (60,994) $ 110,765
=========== ===========
Net income (loss) per limited partnership
unit $ (1.39) $ 2.34
=========== ===========
Weighted average number of limited
partnership units 43,750 47,255
=========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
A Maryland Limited Partnership
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (61,610) $ 111,884
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Accrued interest on investment securities (6,365) 9,116
Depreciation and amortization 479,552 479,481
Changes in assets and liabilities:
Cash and equivalents - restricted (189,931) (190,479)
Accounts receivable 5,567 (73,098)
Other assets (24,556) (3,505)
Accounts payable 35,403 16,798
Security deposits (8,741) (2,558)
Other liabilities 192,787 188,353
----------- -----------
Net cash provided by operating activities 422,106 535,992
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and amenities (3,937) (73,918)
Purchase of investment securities (827,500) (935,192)
Maturity of investment securities 552,889 1,136,480
----------- -----------
Net cash provided by (used in) investing activities (278,548) 127,370
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgages payable (65,825) (60,555)
Cash distributions (216,692) (239,571)
Repurchase of limited partnership units (31,500) (386,000)
Additions to loan costs (7,475) --
Cash and equivalents - restricted 31,500 386,000
----------- -----------
Net cash used in financing activities (289,992) (300,126)
----------- -----------
Net increase (decrease) in cash and equivalents (146,434) 363,236
CASH AND EQUIVALENTS, beginning of period 640,541 393,552
----------- -----------
CASH AND EQUIVALENTS, end of period $ 494,107 $ 756,788
=========== ===========
Interest paid on a cash basis $ 583,331 $ 588,235
=========== ===========
</TABLE>
- 5 -
<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 ended March 31, 1997 and 1996.
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 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 March 31, 1997:
Amortized Maturity Value At
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $ 406,204 04/01/97 $ 406,204
Certificate of Deposit 176,846 04/15/97 177,182
Certificate of Deposit 126,558 05/01/97 127,072
Certificate of Deposit 128,105 05/22/97 128,921
Certificate of Deposit 251,815 06/03/97 253,973
Certificate of Deposit 126,345 06/16/97 127,672
Certificate of Deposit 150,370 07/01/97 152,240
--------- ---------
$1,366,243 $1,373,264
========= =========
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
========= =========
- 6 -
<PAGE>
3. Mortgages Payable
-----------------
Mortgages payable consist of the following:
March 31, December 31,
1997 1996
----------- -----------
Mortgage payable with an insurance
company, bearing interest at 8.625%,
due August 1, 1997, secured by 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 land,
buildings and amenities 8,500,200 8,527,771
Mortgage payable with an insurance
company, bearing interest at 8.375%,
due October 5, 2002, secured by land,
buildings and amenities 3,980,276 3,994,992
Mortgage payable with an insurance
company, bearing interest at 8.375%,
due October 5, 2002, secured by land,
buildings and amenities 947,685 951,189
Mortgage payable with an insurance
company, bearing interest at 7.25%,
due January 5, 2003, secured by land,
buildings and amenities 2,825,442 2,837,462
Mortgage payable to an insurance
company, bearing interest at 7.25%,
due January 5, 2003, secured by land,
buildings and amenities 1,883,628 1,891,642
---------- ----------
$27,337,231 $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 $31,050,000.
As of March 31, 1997, the Partnership had obtained a commitment from 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, and which matures
August 1, 1997. The mortgage will bear interest at a fixed rate of 7.43%
and will be fully amortized over a 12-year period. Based upon the terms of
the commitment, the Partnership anticipates that the financing will be
completed in the second quarter of 1997.
As of March 31, 1997, the Partnership has also 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
$8,500,200 mortgage payable which is secured by the land, buildings and
amenities of Willow Lake Apartments, and which matures November 1, 1997.
- 7 -
<PAGE>
3. Mortgages Payable - Continued
-----------------------------
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.
4. Interest Repurchase Reserve
---------------------------
Purusant to Section 16.4 of the Partnership's Amended and Restated
Agreement of Limited Partnership, the Partnership established an Interest
Repurchase Reserve. Through March 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 March 31,
1997, the Partnership has repurchased a total of 4,609 Units for
$1,152,250. 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 March 31, 1997 was $27,480.
5. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management fees of
$116,814 and $115,787 for the three months ended March 31, 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 three months ended March 31, 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.
1997 1996
-------- --------
Administrative $ 92,428 $ 64,926
Property manager 223,117 214,868
Leasing 64,219 69,118
Other 1,352 218
-------- --------
$381,116 $349,130
======== ========
6. Reclassification of 1996 Financial Statements
---------------------------------------------
Certain reclassifications have been made to the March 31, 1996 financial
statements to conform with the March 31, 1997 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 March 31 were as
follows:
1997 1996
-------- --------
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments 91% 93%
Park Place Apartments Phase I 90% 93%
Willow Lake Apartments 91% 94%
Properties Owned in Joint Venture
with NTS-Properties IV (Ownership % at
March 31, 1997)
- --------------------------------------
Golf Brook Apartments (96%) 90% 92%
Plainview Point III Office Center (95%) 91% 98%
Rental and other income generated by the Partnership's properties for the three
months ended March 31, 1997 and 1996 was as follows:
1997 1996
--------- ---------
Wholly-Owned Properties
- -----------------------
Sabal Park Apartments $ 416,204 $ 441,415
Park Place Apartments Phase I $ 444,958 $ 432,992
Willow Lake Apartments $ 596,230 $ 611,913
Properties Owned in Joint Venture
with NTS-Properties IV (Ownership %
at March 31, 1997)
- -----------------------------------
Golf Brook Apartments (96%) $ 673,410 $ 672,205
Plainview Point III Office Center (95%) $ 180,064 $ 196,905
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 decreased from 93% at March 31, 1996 to 91% at
March 31, 1997. Average occupancy for the three month period ended March 31
decreased from 93% in 1996 to 91% in 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 ended March 31, 1997 as compared to the same period in 1996 as
a result of the decrease in average occupancy, increased rent concessions and
decreased fees collected upon early lease termination.
Park Place Apartments Phase I had a 3% decrease in occupancy from March 31, 1996
to March 31, 1997. Average occupancy for the three month period ended March 31
decreased from 91% in 1996 to 88% in 1997. Rental and other income at Park Place
Apartments Phase I increased for the three months ended March 31, 1997 as
compared to the same period 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 increases in rental
and other income at Park Place Apartments Phase I are partially offset by the
decrease in average occupancy.
Willow Lake Apartments' occupancy decreased from 94% at March 31, 1996 to 91% at
March 31, 1997. Average occupancy for the three month period ended March 31
decreased from 96% in 1996 to 91% in 1997. Rental and other income decreased for
the three months ended March 31, 1997 as compared to the same period 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 decreased from 92% at March 31, 1996 to 90% at
March 31, 1997. Average occupancy for the three month period ended March 31 was
94% in 1996 and 93% in 1997. Rental and other income at Golf Brook Apartments
remained fairly constant for the three months ended March 31, 1997 as compared
to the same period in 1996.
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 7% decrease in occupancy at Plainview Point III Office Center from March 31,
1996 to March 31, 1997 is primarily the result of one tenant move-out at the end
of the lease term totalling 6,900 square feet. Partially offsetting the tenant
move-out are expansions by two current tenants of existing space totalling
approximately 2,500 square feet. Average occupancy for the three months ended
March 31 decreased from 96% in 1996 to 91% in 1997. The Partnership is actively
seeking new tenants to occupy the vacant space at this time, it is unknown the
extent and cost of any tenant improvements which will be required to attract new
tenants. Rental and other income decreased at Plainview Point III Office Center
for the three months ended March 31, 1997 as compared to the same period in 1996
as a result of the decrease in average occupancy.
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.
- 10 -
<PAGE>
Results of Opertions - Continued
- --------------------------------
Interest and other income includes income from investments made by the
Partnership with cash reserves. Interest income remained fairly constant for the
three months ended March 31, 1997 as compared to the same period in 1996.
Operating expenses increased for the three months ended March 31, 1997 as
compared to the same period in 1996 primarily as a result of increased
replacement costs (primarily carpet, vinyl and wallcovering), increased building
repair and maintenance costs and increased vacant utility costs at the
Partnership's residential properties. The increase in operating expenses at the
Partnership's residential properties is partially offset by decreased snow
removal costs at Park Place Apartments Phase I and Willow Lake Apartments and
decreased advertising and pest control costs at Golf Brook Apartments. Operating
expenses remained fairly constant at Plainview Point III Office Center for the
three months ended March 31, 1997 as compared to the same period in 1996.
Operating expenses - affiliated increased for the three months ended March 31,
1997 as compared to the three months ended March 31, 1996 as a result of
increased property management salary 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 ended March 31, 1997 as
compared to the same period in 1996 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 ended March 31, 1997 as
compared to the same period 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 ended
March 31, 1997 as compared to the same period in 1996.
Professional and administrative expenses remained fairly constant for the three
months ended March 31, 1997 as compared to the same period in 1996.
Professional and administrative expenses - affiliated increased for the three
months ended March 31, 1997 as compared to the three months ended March 31, 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
ended March 31, 1997 as compared to the same period in 1996. 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.
- 11 -
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations was $422,106 and $535,992 for the three months ended
March 31, 1997 and 1996, respectively. These funds in conjunction with cash on
hand were used to make a 2% (annualized) cash distribution of $216,293 for the
three months ended March 31, 1997 and a 2% (annualized) cash distribution of
$231,773 for the three months ended March 31, 1996. 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 March 31) were
$1,860,350 and $1,697,740 at March 31, 1997 and 1996, respectively.
As of March 31, 1997, 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 March 31, 1997 , the Partnership had obtained a commitment from 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, and which matures August 1, 1997. The
mortgage will bear interest at a fixed rate of 7.43% and will be fully amortized
over a 12-year period. Based upon the terms of the commitment, the Partnership
anticipates that the financing will be completed in the second quarter of 1997.
As of March 31, 1997, the Partnership also had a mortgage payable to an
insurance company in the amount of $8,500,200. 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 March 31, 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 $8,500,200 mortgage
payable which is secured by the land, buildings and amenities of Willow Lake
Apartments, and 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 March 31, 1997 the Partnership had two mortgage loans each with an
insurance company in the amount of $3,980,276 and $947,685. 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
- 12 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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 March 31, 1997, the Partnership also had two mortgage loans each with an
insurance company in the amount of $2,825,442 and $1,883,628. 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.
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. 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 and $8,500,000 loan commitments and other debt refinancings which the
Partnership is currently exploring as discussed above.
- 13 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve.
Through March 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 March 31, 1997 the Partnership has repurchased
a total of 4,609 Units for $1,152,250. 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 March 31, 1997 was $27,480.
The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
three months ended March 31, 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 $ (60,994) $ 214,130 $ 214,130
1996 110,765 229,455 118,690
General Partner:
1997 $ (616) $ 2,163 $ 2,163
1996 1,119 2,318 1,199
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
$1,705,000 is land cost, capitalized interest, common area
- 14 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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.
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.
- 15 -
<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 March
31, 1997.
- 16 -
<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: May 12, 1997
- 18 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF MARCH 31, 1997 AND FROM THE STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,043,215
<SECURITIES> 1,366,243
<RECEIVABLES> 130,827
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 39,992,530
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 44,615,624
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 27,337,231
0
0
<COMMON> 0
<OTHER-SE> 16,190,583
<TOTAL-LIABILITY-AND-EQUITY> 44,615,624
<SALES> 2,305,318
<TOTAL-REVENUES> 2,333,265
<CGS> 0
<TOTAL-COSTS> 1,698,830
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 582,872
<INCOME-PRETAX> (61,610)
<INCOME-TAX> 0
<INCOME-CONTINUING> (61,610)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (61,610)
<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>
