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, 1999
-------------------------------------------------
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 the registrant as specified in its charter)
Maryland 61-1066060
- -------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, KY 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 with
since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by the 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 24
Total Pages: 25
<PAGE>
TABLE OF CONTENTS
-----------------
PART I
Item 1. Financial Statements Pages
-----
Balance Sheets and Statement of Partners' Equity
as of September 30, 1999 and December 31, 1998 3
Statements of Operations
For the three months and nine months ended
September 30, 1999 and 1998 4
Statements of Cash Flows
For the nine months ended September 30, 1999
and 1998 5
Notes to Financial Statements 6-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-23
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 23
PART II
Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
BALANCE SHEETS AND STATEMENTS OF PARTNERS' EQUITY
-------------------------------------------------
<CAPTION>
As of As of
September 30, December 31,
1999 1998*
---- -----
ASSETS
- ------
<S> <C> <C>
Cash and equivalents $ 336,845 $ 362,822
Cash and equivalents - restricted 523,675 446,097
Accounts receivable 140,350 125,474
Land, buildings and amenities, net 39,556,948 37,388,637
Construction in progress 6,775,208 4,363,046
Other assets 483,522 493,329
------------ ------------
Total assets $ 47,816,548 $ 43,179,405
============ ============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Mortgages and notes payable $ 31,640,740 $ 27,119,180
Accounts payable - operations 357,171 245,279
Accounts payable - construction 448,804 319,757
Retainage payable 231,348 141,280
Distributions payable 100,604 102,497
Security deposits 215,406 222,794
Other liabilities 782,800 87,030
------------ ------------
33,776,873 28,237,817
Commitments and contingencies
Partners' equity 14,039,675 14,941,588
------------ ------------
Total liabilities and partners'
equity $ 47,816,548 $ 43,179,405
============ ============
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
PARTNERS' EQUITY
- ----------------
<S> <C> <C> <C>
Capital contributions, net
of offering costs $ 40,518,631 $ 100 $ 40,518,731
Net income (loss) - prior
years (11,749,141) (70,288) (11,819,429)
Net income (loss) - current
year (151,079) (1,526) (152,605)
Cash distributions declared
to date (11,908,663) (120,290) (12,028,953)
Repurchase of limited
partnership Units (2,478,069) -- (2,478,069)
------------ --------- ------------
Balances at September 30,
1999 $ 14,231,679 $(192,004) $ 14,039,675
============ ========= ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10- K as
filed with the Commission on March 31, 1999.
3
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF OPERATIONS
------------------------
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
REVENUES:
- ---------
<S> <C> <C> <C> <C>
Rental income $2,345,417 $2,537,372 $7,074,011 $7,372,524
Interest and other income 9,792 20,234 29,710 81,770
---------- ---------- ---------- ----------
2,355,209 2,557,606 7,103,721 7,454,294
EXPENSES:
- ---------
Operating expenses 671,463 718,335 1,838,025 1,896,817
Operating expenses -
affiliated 315,907 310,728 969,809 918,269
Write-off of unamortized
land improvements and
amenities 17,594 4,984 252,133 17,582
Interest expense 502,839 493,145 1,461,208 1,475,067
Management fees 123,268 129,155 367,782 374,571
Real estate taxes 203,311 201,374 609,932 605,194
Professional and
administrative expenses 58,958 56,498 195,416 126,273
Professional and
administrative expenses
- affiliated 61,952 62,088 176,485 197,046
Depreciation and
amortization 476,780 451,815 1,385,536 1,348,414
---------- ---------- ----------- -----------
2,432,072 2,428,122 7,256,326 6,959,233
---------- ---------- ----------- -----------
Net income (loss) $ (76,863) $ 129,484 $ (152,605) $ 495,061
========== ========== =========== ===========
Net income (loss)
allocated to the limited
partners $ (76,094) $ 128,189 $ (151,079) $ 490,110
========== ========== =========== ===========
Net income (loss) per
limited partnership Unit $ (1.91) $ 3.12 $ (3.79) $ 11.78
========== ========== =========== ===========
Weighted average number
of limited partnership
Units 39,839 41,097 39,905 41,586
========== ========== =========== ===========
</TABLE>
4
<PAGE>
<TABLE>
NTS-PROPERTIES VI,
------------------
A Maryland Limited Partnership
------------------------------
STATEMENTS OF CASH FLOWS
------------------------
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net income (loss) $ (152,605) $ 495,061
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Accrued interest on investments
securities -- 9,354
Write-off of unamortized land
improvements and amenities 252,133 17,582
Depreciation and amortization 1,385,535 1,348,414
Changes in assets and liabilities:
Cash and equivalents - restricted (155,078) (129,286)
Accounts receivable (14,876) (13,936)
Other assets 2,488 17,196
Accounts payable 111,892 48,395
Security deposits (7,388) (71)
Other liabilities 695,770 459,239
----------- -----------
Net cash provided by operating
Activities 2,117,871 2,251,948
=========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Additions to land, buildings
and amenities (6,192,983) (1,211,659)
Accounts payable - construction 219,115 --
Purchase of investment securities -- (1,004,314)
Maturity of investment securities -- 2,455,701
----------- -----------
Net cash provided by (used in)
investing activities (5,973,868) 239,728
=========== ===========
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Principal payments on mortgages
Payable (1,346,480) (749,534)
Proceeds from mortgage loan 5,868,040 --
Loan costs (17,837) (69,863)
Cash distributions (303,703) (529,238)
Repurchase of limited
partnership Units (447,500) (698,950)
Cash and equivalents - restricted 77,500 258,670
----------- -----------
Net cash provided by (used in)
financing activities 3,830,020 (1,788,915)
=========== ===========
Net increase (decrease) in
cash and equivalents (25,977) 702,761
CASH AND EQUIVALENTS, beginning
of period 362,822 276,891
----------- -----------
CASH AND EQUIVALENTS, end of
period $ 336,845 $ 979,652
=========== ===========
Interest paid on a cash basis $ 1,481,798 $ 1,482,200
=========== ===========
</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 1998 Form 10-K as filed with the Securities
Exchange Commission on March 31, 1999. 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, 1999 and 1998.
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.Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at cost to the Partnership. Costs
directly associated with the acquisition, development and construction of a
project are capitalized. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which are 5-30 years for
land improvements, 5-30 years for building and improvements, 5-30 years for
amenities and the applicable lease term for tenant improvements.
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed
Of," specifies circumstances in which certain long-lived assets must be
reviewed for impairment. If such review indicates that the carrying amount of
an asset exceeds the sum of its expected future cash flows, the asset's
carrying value must be written down to fair value. Application of this
standard during the periods ended September 30, 1999 and 1998 did not result
in an impairment loss.
3.Concentration of Credit Risk
----------------------------
The Partnership owns and operates, either wholly or through a Joint Venture,
residential properties, all of which are apartments complexes, in Kentucky
(Louisville and Lexington), Indiana (Indianapolis) and Florida (Orlando). The
apartment unit is generally the principal residence of the tenant. The
Partnership also owns and operates, through a Joint Venture, a commercial
property in Louisville, Kentucky. Substantially all of the tenants are local
businesses or are businesses which have operations in the Louisville area.
4.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 sold no securities during the three months and
nine months ended September 30, 1999. The Partnership held no securities at
September 30, 1999 or at December 31, 1998.
6
<PAGE>
5. Mortgages Payable
-----------------
Mortgages payable consist of the following:
September 30, December 31,
1999 1998
---- ----
Mortgage payable with an
insurance company bearing
interest at 7.74%, due October
15, 2012 secured by certain
land, buildings and amenities. $ 9,761,891 $ 6,151,658
Mortgage payable with an
insurance company bearing
interest at 7.32%, due October
15, 2012 secured by certain
land, buildings and amenities 7,858,798 8,120,331
Mortgage payable with an
insurance company bearing
interest at 7.43%, due May 14,
2009 secured by certain land,
buildings and amenities. 7,817,125 8,220,270
Mortgage payable with an
insurance company bearing
interest at 7.38%, due
December 5, 2012 secured by
certain land, buildings and
amenities. 2,627,696 2,713,152
Note payable to a bank,currently
bearing interest at the Euro-
Rate plus 225 basis points,due
June 23, 2002 secured by
certain land, buildings and
amenities. At September 30,
1999, the interest rate was
approximately 7.63%. 1,757,808 --
Mortgage payable with an
insurance company bearing
interest at 7.38%, due
December 5, 2012 secured by
certain land, buildings and
amenities. 1,751,797 1,808,769
Note payable to a bank,
bearing interest at the Prime
Rate + 1%, due June 14, 2001
secured by certain land,
buildings and amenities. At
September 30, 1999, the
interest rate was 9.25%. $ 65,625 $ 105,000
----------- -----------
$ 31,640,740 $ 27,119,180
=========== ===========
7
<PAGE>
5.Mortgages Payable - Continued
-----------------------------
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 $31,065,000.
The mortgage payable with an outstanding balance of $9,761,891 as of September
30, 1999 has an additional availability of $2,438,109. The proceeds are being
used to fund the construction of Park Place Apartments Phase III (See Note 9
Commitments and Contingencies for further information).
As of March 31, 1999, the Partnership had obtained a temporary mortgage loan
from a bank in the amount of $500,000. A portion of the proceeds were used to
pay tenant finish costs at Plainview Point III Office Center. The remaining
proceeds were used to make equity contributions to Park Place Apartments Phase
III in accordance with the loan agreement with the mortgage company. The land,
buildings and amenities of Plainview Point III Office Center secured the
mortgage payable. The mortgage bore interest at the Euro-Rate plus 225 basis
points and matured on September 30, 1999.
On June 23, 1999, the Partnership obtained permanent financing from a bank
with an availability of $2,000,000. The temporary mortgage loan of $500,000,
mentioned above, was paid at the time of the closing. The remaining proceeds
will be used to fund renovations of the community clubhouses at Park Place,
Golf Brook and Sabal Park Apartments. The proceeds are also being used to fund
a portion of the tenant finish costs at Plainview Point III Office Center as
well as a portion of the construction costs of Park Place Apartments Phase
III. The land, buildings and amenities of Plainview Point III Office Center
secure the mortgage payable. The mortgage bears interest at the Euro-Rate plus
225 basis points and matures on June 23, 2002 (See Note 11 Subsequent Events
for further information regarding this mortgage payable).
6.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. As of October 25, 1998 (the commencement date of the First Tender
Offer), the Partnership had repurchased a total of 6,846 Units for $1,861,200
at a price ranging from $250 to $350 per unit. The Interest Repurchase Reserve
was funded from cash reserves. The above offering price per Unit was
established by the General Partner in its sole discretion and does not purport
to represent the fair market or liquidation value of the Units at that date.
Repurchased Units have been retired by the Partnership, thus increasing the
percentage of ownership of each remaining limited partnership investor. The
funds remaining in the Interest Repurchase Reserve at the commencement of the
First Tender Offer dated October 20, 1998 (discussed below) were returned to
unrestricted cash for utilization in the Partnership's operations.
7.Tender Offers
-------------
On October 25, 1998, the Partnership and ORIG, LLC, an affiliate of the
Partnership, (the "bidders") commenced a tender offer (the "First Tender
Offer") to purchase up to 1,250 of the Partnership's limited partnership Units
at a price of $350 per Unit. The initial expiration date of the First Tender
Offer was January 18, 1999, and this expiration date was subsequently extended
through March 31, 1999. A total of 2,103 Units were tendered and the bidders
accepted all Units tendered. The Partnership repurchased 750 Units and ORIG,
LLC purchased 1,353 Units at a total cost of $788,050 ($736,050 to purchase
2,103 Units plus approximately $52,000 for expenses associated with the First
Tender Offer).
8
<PAGE>
7.Tender Offers - Continued
-------------------------
On June 25, 1999, the Partnership and ORIG, LLC, an affiliate of the
Partnership, (the "bidders") commenced a second tender offer (the "Second
Tender Offer") to purchase up to 1,000 of the Partnership's limited
partnership Units at a price of $350 per Unit as of the date of the Second
Tender Offer. The initial expiration date of the Second Tender Offer was
August 31, 1999. On August 23, 1999, the price was increased to $370 per Unit
and the expiration date was extended to September 30, 1999.
As of September 30, 1999, a total of 2,801 Units were tendered pursuant to the
Second Tender Offer and the bidders accepted all Units tendered. The
Partnership purchased 500 Units at a cost of $185,000 and ORIG, LLC purchased
2,301 Units at a cost of $851,370. The expenses associated with administering
the Second Tender Offer are estimated to be $25,000 (See Note 11 Subsequent
Events for further information regarding the tender offers).
8.Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, property management fees of
$123,268 and $129,155 for the three months ended September 30, 1999 and 1998,
respectively, and $367,782 and $374,571 for the nine months ended September
30, 1999 and 1998, 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. Also pursuant to an agreement, NTS Development Company will receive
a repair and maintenance fee equal to 5.9% of costs incurred which relate to
capital improvements and major repair and renovation projects. The Partnership
incurred repair and maintenance fees of $4,158 and $1,664 during the three
months ended September 30, 1999 and 1998, respectively, and $19,028 and $4,420
during the nine months ended September 30, 1999 and 1998, respectively. The
Partnership was also charged the following amounts from NTS Development
Company for the three months and nine months ended September 30, 1999 and
1998, respectively. These charges include items which have been expensed as
operating expenses - affiliated or professional and administrative expenses
affiliated, and items which have been capitalized as other assets or as land,
buildings and amenities.
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Administrative $ 128,295 $ 75,209 $ 380,364 $ 236,397
Property manager 192,451 238,091 580,123 712,216
Leasing 50,572 55,665 187,720 154,381
Construction manager 96,518 71,316 342,142 145,654
Other (26) 41,559 11,027 61,024
--------- -------- --------- ---------
$ 467,810 $ 481,840 $1,501,376 $1,309,672
========= ======== ========= =========
9.Commitments and Contingencies
-----------------------------
The Partnership began the construction of Park Place Apartments Phase III (152
units) during 1998 on the 15 acres of land it owns which is adjacent to the
existing Park Place Apartments in Lexington, Kentucky. It is currently
estimated that the cost of the project will be $9,500,000. Construction costs
will be funded by loan proceeds of $7,200,000 from a mortgage loan obtained
during 1997 and cash reserves. Through September 30, 1999, approximately
$7,548,000 of the cost had been incurred.
9
<PAGE>
9.Commitments and Contingencies - Continued
-----------------------------------------
On September 8, 1999, one building (out of a total of thirteen buildings) of
the Park Place Apartments Phase III construction project was turned over for
leasing. The building contains 14 units of which one unit was leased as of
September 30, 1999. As a result of units being turned over, $875,000 of the
total estimated construction costs of $9,500,000 has been moved from
construction in progress to land, buildings and amenities, net.
Construction in progress on the September 30, 1999 Balance Sheet primarily
relates to Park Place Apartments Phase III. Approximately $22,900 of the total
construction in progress costs are related to tenant finish costs at the
Plainview Point III Office Center. The Partnership also plans to renovate the
community clubhouses at Park Place, Golf Brook and Sabal Park Apartments
during 1999 and 2000. It is currently estimated the aggregate cost for all
three renovations will be approximately $630,000. The Partnership plans to
fund the renovations with financing obtained on June 23, 1999 in the amount of
$2,000,000, which is secured by Plainview Point III Office Center. The
remaining proceeds will be used to fund a portion of the tenant finish costs
at Plainview Point III Office Center as well as a portion of the construction
costs of Park Place Apartments Phase III.
10.Segment Reporting
-----------------
The Partnership's reportable operating segments include Residential and
Commercial real estate operations. The Residential operations represent the
Partnership's ownership and operating results relative to apartment complexes
known as Willow Lake, Park Place Phase I, Park Place Phase III, Sabal Park and
Golf Brook. The Commercial operations represent the Partnership's ownership
and operating results relative to suburban commercial office space known as
Plainview Point III Office Center.
The financial information of the operating segments has been prepared using a
management approach, which is consistent with the basis and manner in which
the Partnership's management internally disaggregates financial information
for the purposes of assisting in making internal operating decisions. The
Partnership evaluates performance based on stand-alone operating segment net
income.
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1999
<CAPTION>
MULTIFAMILY COMMERCIAL TOTAL
----------- ---------- -----
<S> <C> <C> <C>
Rental income $6,516,312 $557,699 $7,074,011
Other income 18,043 980 19,023
---------- -------- ---------
Total net revenues $6,534,355 $558,679 $7,093,034
========== ======== =========
Operating expenses 2,554,115 253,719 2,807,834
Write-off of unamortized
building improvements 235,381 16,752 252,133
Management fees 331,850 35,932 367,782
Real Estate taxes 585,109 24,823 609,932
Depreciation expense 1,186,301 119,723 1,306,024
---------- -------- ---------
Net income $1,641,599 $107,730 $1,749,329
========== ======== =========
</TABLE>
10
<PAGE>
10. Segment Reporting - Continued
-----------------------------
<TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1998
<CAPTION>
MULTIFAMILY COMMERCIAL TOTAL
----------- ---------- -----
<S> <C> <C> <C>
Rental income $6,741,871 $630,653 $7,372,524
Other income 17,106 996 18,102
--------- ------- ---------
Total net revenues $6,758,977 $631,649 $7,390,626
========= ======= =========
Operating expenses 2,575,889 239,197 2,815,086
Write-off of unamortized
building improvements 17,582 -- 17,582
Management Fees 337,248 37,323 374,571
Real Estate Taxes 580,230 24,964 605,194
Depreciation expense 1,142,013 115,406 1,257,419
--------- ------- ---------
Net income $2,106,015 $214,759 $2,320,774
========= ======= =========
</TABLE>
<TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999
<CAPTION>
MULTIFAMILY COMMERCIAL TOTAL
----------- ---------- -----
<S> <C> <C> <C>
Rental income $2,153,354 $192,063 $2,345,417
Other income 4,253 (21) 4,232
--------- -------- ---------
Total net revenues $2,157,607 $192,042 $2,349,649
Operating expenses 898,167 89,203 987,370
Write-off of unamortized
building improvements 842 16,752 17,594
Management Fees 110,064 13,204 123,268
Real Estate Taxes 195,037 8,274 203,311
Depreciation expense 417,518 43,340 460,858
--------- ------- ---------
Net income $ 535,979 $ 21,269 $ 557,248
========= ======= =========
</TABLE>
<TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1998
<CAPTION>
MULTIFAMILY COMMERCIAL TOTAL
----------- ---------- -----
<S> <C> <C> <C>
Rental income $2,326,009 $211,363 $2,537,372
Other income 6,820 333 7,153
--------- ------- ---------
Total net revenues $2,332,829 $211,696 $2,544,525
========= ======= =========
Operating expenses 939,087 89,976 1,029,063
Write-off of unamortized
building improvements 4,984 -- 4,984
Management Fees 116,243 12,912 129,155
Real Estate Taxes 193,091 8,283 201,374
Depreciation expense 381,999 39,198 421,197
--------- ------- ---------
Net income $ 697,425 $ 61,327 $ 758,752
========= ======= =========
</TABLE>
11
<PAGE>
10.Segment Reporting - Continued
-----------------------------
A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements for the three
months and nine months ended September 30, 1999 and 1998 is necessary given
amounts recorded at the Partnership level and not allocated to the operating
properties for internal reporting purposes:
<TABLE>
Nine Months Ended
September 30,
-------------
1999 1998
---- ----
<CAPTION>
NET REVENUES
------------
<S> <C> <C>
Total revenues for reportable segments $ 7,093,034 $ 7,390,626
Other income at Partnership level 10,687 63,668
Eliminations -- --
----------- -----------
Total consolidated net revenues $ 7,103,721 $ 7,454,294
=========== ===========
DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization for
reportable segments $ 1,306,024 $ 1,257,419
Depreciation and amortization Partnership
level 79,512 90,995
Eliminations -- --
----------- -----------
Total depreciation and amortization $ 1,385,536 $ 1,348,414
=========== ===========
NET INCOME (LOSS)
-----------------
Total net income for reportable segments $ 1,749,329 $ 2,320,774
Net (loss) for Partnership (1,162,912) (812,211)
Eliminations (739,022) (1,013,502)
----------- -----------
Total net income (loss) $ (152,605) $ 495,061
=========== ===========
</TABLE>
<TABLE>
Three Months Ended
September 30,
-------------
1999 1998
---- ----
<CAPTION>
NET REVENUES
------------
<S> <C> <C>
Total revenues for reportable segments $ 2,349,649 $ 2,544,525
Other income at Partnership level 5,560 13,081
Eliminations -- --
----------- -----------
Total consolidated net revenues $ 2,355,209 $ 2,557,606
=========== ===========
DEPRECIATION AND AMORTIZATION
-----------------------------
Total depreciation and amortization for
reportable segments $ 460,858 $ 421,197
Depreciation and amortization Partnership
level 15,922 30,618
Eliminations -- --
----------- -----------
Total depreciation and amortization $ 476,780 $ 451,815
=========== ===========
NET INCOME (LOSS)
-----------------
Total net income for reportable segments $ 557,248 $ 758,752
Net (loss) for Partnership (391,524) (335,092)
Eliminations (242,587) (294,176)
----------- -----------
Total net income (loss) $ (76,863) $ 129,484
=========== ===========
</TABLE>
12
<PAGE>
11.Subsequent Events
-----------------
On October 22, 1999, a second building (out of a total of thirteen buildings)
of the Park Place Apartments Phase III construction project was turned over
to be leased. This building contained 14 units, bringing total units
available for leasing to 28.
On October 28, 1999, the Partnership obtained a $500,000 increase to the
availability of the mortgage payable with a current outstanding balance of
$1,757,808, bringing the total availability of the mortgage payable to
$2,500,000. The interest rate and maturity date will remain the same. The
increase in proceeds will be used to fund a portion of the construction costs
of Park Place Apartments Phase III.
On November 9, 1999, the Partnership and ORIG, LLC, an affiliate of the
Partnership, (the "bidders") commenced a third tender offer (the "Third
Tender Offer") to purchase up to 500 of the Partnership's limited partnership
Units at a price of $380 per Unit as of the date of the Third Tender Offer.
Approximately $218,000 ($190,000 to purchase 500 Units, plus approximately
$28,000 for expenses associated with the Third Tender Offer) is required to
purchase all 500 Units. The Third Tender Offer stated that the Partnership
will purchase the first 250 Units tendered and will fund its purchase and its
portion of the expenses from cash reserves. If more than 250 Units are
tendered, ORIG, LLC, will purchase up to an additional 250 Units. If more
than 500 Units are tendered, the bidders may choose to acquire the additional
Units on a pro rata basis. Units that are acquired by the Partnership will be
retired. Units that are acquired by ORIG, LLC, will be held by it. The
General Partner, NTS-Properties Associates VI, does not intend to participate
in the Third Tender Offer. The Third Tender Offer will expire on December 23,
1999 unless extended.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is structured in four major sections. The first section
provides information related to occupancy levels and rental and other income
generated by the Partnership's properties. The second analyzes results of
operations on a consolidated basis. The final sections address consolidated cash
flows and financial condition. Discussions of certain market risks also follow.
MD&A should be read in conjunction with the financial statements in Item 1 and
the cautionary statements below.
Cautionary Statements
- ---------------------
Some of the statements included in Item 2 may be considered to be
"forward-looking statements" since such statements relate to matters which have
not yet occurred. For example, phrases such as the Partnership "anticipates,"
"believes" or "expects," indicate that it is possible that the event
anticipated, believed or expected may not occur. Should such event not occur,
then the result which the Partnership expected also may not occur or occur in a
different manner, which may be more or less favorable to the Partnership. The
Partnership does not undertake any obligations to publicly release the result of
any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.
Any forward-looking statements included in MD&A, or elsewhere in this report,
which reflect management's best judgment based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking statements as a result of a number of factors, including
but not limited to 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.
14
<PAGE>
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of September 30 were as
follows:
1999 1998
---- ----
Wholly-Owned Properties
-----------------------
Sabal Park Apartments (1) 93% 98%
Park Place Apartments Phase I 93% 82%
Willow Lake Apartments (1) 78% 96%
Properties Owned in Joint Venture
---------------------------------
With NTS-Properties IV (Ownership % at
--------------------------------------
September 30, 1999)
-------------------
Golf Brook Apartments (96%)(1) 93% 96%
Plainview Point III Office Center (95%)(1) 91% 100%
(1) In the opinion of the General Partner of the Partnership, the decrease in
occupancy is only a temporary fluctuation and does not represent a
permanent downward occupancy trend.
The average occupancy levels at the Partnership's properties for the three
months and nine months ended September 30, 1999 and 1998 were as follows:
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Wholly-owned Properties
-----------------------
Sabal Park Apartments (1) 94% 97% 96% 95%
Park Place Apartments Phase I 92% 82% 88% 86%
Willow Lake Apartments (1) 78% 96% 78% 96%
Property owned in Joint Venture with
------------------------------------
NTS-Properties IV (Ownership % at
---------------------------------
September 30, 1999
------------------
Golf Brook Apartments (96%)(1) 92% 96% 93% 96%
Plainview Point III Office Center(9%%)(1) 91% 100% 91% 97%
(1)In the opinion of the General Partner of the Partnership, the decrease in
average occupancy for the three months ended September 30 and/or nine months
ended September 30 is only a temporary fluctuation and does not represent a
permanent downward occupancy trend.
15
<PAGE>
Results of Operations - Continued
- ---------------------------------
Rental and other income generated by the Partnership's properties for the three
months and nine months ended September 30, 1999 and 1998 was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Wholly-Owned Properties
-----------------------
Sabal Park Apartments $488,668 $465,484 $1,420,452 $1,356,606
Park Place Apartments $489,414 $457,245 $1,389,456 $1,356,448
Phase I
Willow Lake Apartments $477,091 $656,472 $1,568,551 $1,838,443
Properties Owned in
-------------------
Joint Venture with
------------------
NTS-Properties IV
-----------------
(Ownership % at
---------------
September 30, 1999)
-------------------
Golf Brook Apartments(96%)$700,763 $753,628 $2,154,227 $2,207,481
Plainview Point III
Office Center (95%) $192,042 $211,696 $ 558,679 $ 631,650
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
The following is an analysis of material changes in results of operations for
the periods ending September 30, 1999 and 1998. Items that did not have a
material impact on operations for the periods listed above have been eliminated
from this discussion.
Rental income decreased approximately $192,000 or 7.6% and $298,500 or 4% for
the three months and nine months ended September 30, 1999, respectively, as
compared to the same periods in 1998. The decrease in rental income was
primarily a result of decreased average occupancy at Willow Lake Apartments,
Plainview Point III Office Center and Golf Brook Apartments and decreased common
area expense reimbursements at Plainview Point III Office Center. These
decreases are partially offset by increased rental rates at Sabal Park
Apartments, Park Place Apartments Phase I and Willow Lake Apartments.
Year-ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages that are
representative of the entire year's results.
16
<PAGE>
Results of Operations - Continued
- ---------------------------------
Interest and other income includes interest income from investments made by the
Partnership with cash reserves. Interest income decreased approximately $10,500
or 52% and $52,100 or 64% for the three months and nine months ended September
30, 1999, respectively, as compared to the same periods in 1998. The decrease
was a result of the Partnership having no security investment transactions
during the three months and nine months ended September 30, 1999; therefore, no
interest on investments was earned.
Operating expenses decreased approximately $58,800 or 3% for the nine months
ended September 30, 1999 as compared to the same period in 1998 primarily due to
the following: 1) decreased floor covering, garage repairs and roof repairs at
Golf Brook Apartments, 2) decreased landscaping and interior painting and wall
covering at Park Place Apartments Phase I and 3) decreased advertising expenses
at Sabal Park Apartments, Golf Brook Apartments and Park Place Apartments Phase
I. These decreases are partially offset by 1) increased floor covering at Park
Place Apartments Phase I, Sabal Park Apartments and Willow Lake Apartments, 2)
increased landscaping at Sabal Park Apartments, Golf Brook Apartments and Willow
Lake Apartments and 3) increased parking lot expenses at Sabal Park Apartments,
Golf Brook Apartments and Park Place apartments Phase I. Operating expenses
decreased approximately $46,900 or 6.5% for the three months ended September 30,
1999 as compared to the same period in 1998 primarily due to the following: 1)
decreased floor covering, wood replacements and garage repairs at Golf Brook
Apartments, 2) decreased interior painting and wall covering at Willow Lake
Apartments and Golf Brook Apartments and 3) decreased advertising expenses at
Golf Brook Apartments and Sabal Park Apartments. The decrease is partially
offset by 1) increased landscaping at Willow Lake Apartments, Golf Brook
Apartments and Sabal Park Apartments, 2) increased floor covering at Willow Lake
Apartments and Park Place Apartments Phase I and 3) increased parking lot
repairs and heating and air conditioning repairs at Golf Brook Apartments.
Operating expenses - affiliated increased approximately $5,200 or 2% and $51,500
or 5.6% for the three months and nine months ended September 30, 1999,
respectively, compared to the same periods in 1998 primarily as a result of
increased administrative salary costs, property management salary costs, and
leasing salary costs. Operating expenses - affiliated are expenses incurred for
services by employees of NTS Development Company, an affiliate of the General
Partner of the Partnership.
The 1999 write-off of unamortized land improvements and amenities can be
attributed to Sabal Park Apartments, Golf Brook Apartments, Willow Lake
Apartments and Plainview Point III Office Center. The 1998 write-off of
unamortized land improvements and amenities can be attributed to Park Place
Apartments Phase I. The write-offs are the result of various property
renovations, including painting and the replacement of exterior wood at Sabal
Park and Golf Brook Apartments, roof replacement at Willow Lake Apartments and
carpet replacement at Plainview Point III Office Center in 1999, and signage and
deck renovations at Park Place Apartments Phase I in 1998. The write-offs
represent the cost of unamortized assets, which were replaced as a result of the
renovations.
Interest expense decreased approximately $13,900 or 1% for nine months ended
September 30, 1999, as compared to the same period in 1998 as a result of the
Partnership's decreasing debt level as a result of principal payments made. The
decrease is partially offset by interest paid on the loan obtained at the end of
17
<PAGE>
Results of Operations - Continued
- ---------------------------------
1998 for the water meter project at Golf Brook Apartments and Sabal Park
Apartments and interest paid on a temporary loan obtained by the Partnership,
secured by Plainview Point III Office Center, which was replaced by permanent
financing on June 23, 1999. See Note 5 Mortgages Payable for additional
information regarding the permanent financing. Interest expense increased
approximately $9,700 or 2% for the three months ended September 30, 1999 as
compared to the same period in 1998, as a result of interest paid on the loan
obtained at the end of 1998 for the water meter project at Golf Brook Apartments
and Sabal Park Apartments and interest paid on a new mortgage payable obtained
on June 23, 1999, secured by Plainview Point III Office Center (See Note 5
Mortgages Payable for additional information regarding permanent financing). The
increase is partially offset by decreased interest paid on the Partnership's
remaining mortgage payables due to their decreasing debt level as a result of
principal payments. Interest expense of approximately $170,000 incurred on the
Park Place Apartments Phase I and II loan due to the construction of Park Place
Apartments Phase III has been capitalized.
Professional and administrative expenses increased approximately $2,500 or 4%
and $69,100 or 55% for the three months and nine months ended September 30,
1999, respectively, as compared to the same periods in 1998 primarily as a
result of the following: 1) increased general legal services, 2) costs incurred
in connection with the Tender Offers discussed below and 3) increased outside
accounting fees.
Professional and administrative expenses - affiliated decreased approximately
$100 or .2% and $20,600 or 10% for the three months and nine months ended
September 30, 1999, respectively, as compared to the same periods in 1998
primarily as a result of decreased finance and accounting salary costs due to
staff turnover. 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, on behalf of
the Partnership.
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 improvements and 5-30 years for amenities. The aggregate
cost for the Partnership's properties for Federal tax purpose is approximately
$62,225,000.
Liquidity and Capital Resources
- -------------------------------
Cash flows provided by (used in) during the nine months ended September 30:
1999 1998
---- ----
Operating activities $ 2,117,871 $ 2,251,948
Investing activities (5,973,868) 239,728
Financing activities 3,830,020 (1,788,915)
----------- -----------
Net increase (decrease) in cash
and Equivalents $ (25,977) $ 702,761
=========== ===========
18
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Net cash provided by operating activities decreased approximately $134,100 or 6%
for the nine months ended September 30, 1999 as compared to the same period in
1998. The decrease in net cash provided by operating activities was primarily
driven by lower net operating results due to lower net revenues and investment
income, offset by changes in working capital items.
Net cash (used in) provided by investing activities totaled $(5,973,868) and
$239,728 for the nine months ended September 30, 1999 and 1998, respectively.
The decrease is primarily a result of increased capital expenditures, primarily
at Park Place Apartments Phase III, and a result of the Partnership having no
security investment transactions during the nine months ended September 30,
1999.
Net cash provided by (used in) financing activities totaled $3,830,020 and
$(1,788,915) for the nine months ended September 30, 1999 and 1998,
respectively. The increase is primarily a result of proceeds from draws made on
the Park Place Apartments Phase I and III loan, from a new mortgage loan on
Plainview Point Phase III Office Center, decreased distributions to partners
(see below), and decreased repurchases of limited partnership Units. These
changes were offset somewhat by increased principal payments on mortgages
payable.
The Partnership used cash flow from operations and cash on hand to make a 1%
(annualized) distribution of $301,810 and a 1.5% (annualized) cash distribution
of $418,047 for the nine months ended September 30, 1999 and 1998, respectively.
Cash distributions were reduced from 2% to 1% per quarter, effective September
30, 1998, as a result of capital improvements at the Partnership's properties
including the construction of Park Place Apartments Phase III. 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 these distributions. The primary source of future liquidity and
distributions is expected to be derived from cash generated by the Partnership's
properties after the construction of Park Place Apartments Phase III and other
capital improvements are funded and adequate cash reserves are established for
future leasing and tenant finish costs. It is anticipated that the cash flow
from operations, cash reserves and the remaining funds available on the
$12,200,000 mortgage payable (balance is $9,761,891 at September 30, 1999) will
be sufficient to meet the needs of the Partnership. Cash reserves, which are
unrestricted cash and equivalents and investment securities as shown on the
Partnership's balance sheet, were $336,845 at September 30, 1999.
The Partnership does not expect any material changes in the mix and relative
cost of capital resources from those in 1998 except for the construction of Park
Place Apartments Phase III, as discussed below.
19
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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, 1999 and 1998. These distributions were funded
by cash flow derived from operating activities.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1999 $ (151,079) $ 298,792 $ 298,792
1998 $ 490,110 $ 413,867 $ --
General Partner:
1999 $ (1,526) $ 3,018 $ 3,018
1998 $ 4,951 $ 4,180 $ --
The demand on future liquidity has increased as a result of construction
beginning at Park Place Apartments Phase III (152 units) during 1998 on the 15
acres of land the Partnership owns which is adjacent to the existing Park Place
Apartments in Lexington, Kentucky. It is currently estimated that the cost of
the project will be $9,500,000. Through September 30, 1999, approximately
$7,548,000 of cost had been incurred. Construction costs will be funded by
$7,200,000 of loan proceeds and cash reserves. As of September 30, 1999,
$2,438,109 is available on the mortgage payable for construction costs.
On September 8, 1999, one building out of the Park Place Apartments Phase III
construction project was turned over for leasing. The building contains 14 units
of which one unit was leased as of September 30, 1999. As a result of units
being turned over, approximately 9% (14 units divided by 152 units total) or
$875,000 of the total estimated construction costs of $9,500,000 has been moved
from construction in progress to land, buildings and amenities, net.
Construction in progress on the September 30, 1999 Balance Sheet primarily
relates to Park Place Apartments Phase III. Approximately $22,900 of the total
construction in progress costs is related to tenant finish costs at the
Plainview Point III Office Center.
In the next 12 months, the demand on future liquidity is also anticipated to
increase as the Partnership continues its efforts in the leasing of Plainview
Point III Office Center. At this time, the future leasing and tenant finish
costs, which will be required to renew the current leases that expire during
1999 or obtain new tenants, are unknown.
The Partnership also plans to renovate the community clubhouses at Park Place,
Golf Brook and Sabal Park Apartments during 1999 and 2000. It is currently
estimated the aggregate cost for all three renovations will be approximately
$630,000. The Partnership plans to fund the renovations with financing obtained
on June 23, 1999 in the amount of $2,000,000 that is secured by Plainview Point
III Office Center. The remaining proceeds will be used to fund a portion of the
tenant finish costs at Plainview Point III Office Center as well as a portion of
the construction costs of Park Place Apartments Phase III. The Partnership had
no other material commitments for renovations or capital expenditures at
September 30, 1999.
20
<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
in December 1995. As of October 25, 1998 (the commencement date of the First
Tender Offer), the Partnership has repurchased a total of 6,846 Units for
$1,861,200 at a price ranging from $250 to $350 per Unit. The Interest
Repurchase Reserve was funded from cash reserves. The above offering price per
Unit was established by the General Partner in its sole discretion and does not
purport to represent the fair market or liquidation value of the Unit at that
date. Repurchased Units have been retired by the Partnership, thus increasing
the percentage of ownership of each remaining limited partnership investor. The
funds remaining in the Interest Repurchase Reserve at the commencement of the
First Tender Offer dated October 25, 1998(discussed below) were returned to
unrestricted cash for utilization in the Partnership's operations.
On October 25, 1998, the Partnership and ORIG, LLC, an affiliate of the
Partnership, (the "bidders") commenced a tender offer (the "First Tender Offer")
to purchase up to 1,250 of the Partnership's limited partnership Units at a
price of $350 per Unit. The initial expiration date of the First Tender Offer
was January 18, 1999, and this expiration date was subsequently extended through
March 31, 1999. A total of 2,103 Units were tendered and the bidders accepted
all Units tendered. The Partnership repurchased 750 Units and ORIG, LLC
purchased 1,353 Units at a total cost of $788,050 ($736,050 to purchase 2,103
Units plus approximately $52,000 for expenses associated with the First Tender
Offer).
On June 25, 1999, the Partnership and ORIG, LLC, an affiliate of the
Partnership, (the "bidders") commenced a second tender offer (the "Second Tender
Offer") to purchase up to 1,000 of the Partnership's limited partnership Units
at a price of $350 per Unit as of the date of the Second Tender Offer. The
initial expiration date of the Second Tender Offer was August 31, 1999. On
August 23, 1999, the price was increased to $370 per Unit and the expiration
date was extended to September 30, 1999.
As of September 30, 1999, a total of 2,801 Units were tendered pursuant to the
Second Tender Offer and the bidders accepted all Units tendered. The Partnership
purchased 500 Units at a cost of $185,000 and ORIG, LLC purchased 2,301 Units at
a cost of $851,370. The expenses associated with administering the Second Tender
Offer are estimated to be $25,000 (See Note 11 Subsequent Events for further
information regarding the tender offers).
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.
21
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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.
Year 2000
- ---------
All divisions of NTS Corporation, including NTS-Properties Associates, the
General Partner of the Partnership, are reviewing the effort necessary to
prepare NTS' information systems (IT) and non-information technology with
embedded technology (ET) for the Year 2000. The information technology solutions
have been addressed separately for the Year 2000 since the Partnership saw the
need to move to more advanced management and accounting systems made available
by new technology and software developments during the decade of the 1990's.
The PILOT software system, purchased in the early 1990's, is being replaced by a
Windows based network system both for NTS' headquarters functions and other
locations. The real estate accounting system developed, sold, and supported by
the Yardi Company of Santa Barbara, California is replacing PILOT. The Yardi
system has been tested and is compatible with Year 2000 and beyond. This system
is being implemented with the help of third party consultants and should be
fully operational during the fourth quarter of 1999. NTS' system for
multi-family apartment locations was converted to GEAC's Power Site System
earlier in 1998 and is Year 2000 compliant.
The few remaining systems not addressed by these conversions are being modified
by NTS' in-house staff of programmers. The Hewlett Packard 3000 system, used for
PILOT and custom applications, was purchased in 1997 and is part of the new
network. It will be retained as long as necessary to assure smooth operations
and was upgraded to meet Year 2000 requirements.
All risks identified with information technology are believed to be addressed by
these plans.
The costs of these advances in the systems technology are not all attributable
to the Year 2000 issue since the NTS had already identified the need to move to
a network based system regardless of the Year 2000. The Partnership's share of
the costs involved was approximately $30,000 during 1999. Costs incurred through
December 31, 1998 were approximately $9,000. These costs include primarily
purchase, lease and maintenance of hardware and software.
NTS property management staff has been surveying its vendors to evaluate
embedded technology in its alarm systems, HVAC controls, telephone systems and
other computer associated facilities. In a few cases, equipment is being
replaced. In some cases, circuitry is being upgraded. The cost involved is still
being evaluated. There are no known significant risks that are currently without
solutions. Management anticipates that applications involving ET will be Year
2000 compliant by the fourth quarter of 1999.
NTS is also currently addressing the Year 2000 readiness of third parties whose
business interruption could have a material negative impact on business. All
significant vendors and tenants have indicated that they will be compliant by
the end of 1999. Such assurances are being evaluated and documented.
22
<PAGE>
Year 2000 - Continued
- ---------------------
Management has determined that at its current state of readiness, the need does
not presently exist for a contingency plan. NTS will continue to evaluate the
need for such a plan.
Despite diligent preparation, unanticipated third-party failures, inability of
tenants to pay rent when due, more general public infrastructure failures or
failure to successfully conclude NTS' remediation efforts as planned could have
a material adverse impact on the results of operations, financial conditions
and/or cash flows in 1999 and beyond.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's primary market risk exposure with regards to financial
instruments is changes in interest rates. All of the Partnership's debt bears
interest at a fixed rate with the exception of the $1,757,808 note payable that
bears interest at the Euro-Rate plus 225 basis points and the $65,625 note
payable that bears interest at the Prime Rate +1%. At September 30, 1999, a
hypothetical 100 basis point increase in interest rates would result in
approximately $18,200 additional interest expense and an approximately
$1,263,000 decrease in the fair value of debt.
23
<PAGE>
PART II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities
---------------------------------
None
Item 5. Other Information
-----------------
Mr. Richard L. Good, who was the Vice Chairman and former President
of NTS Capital Corporation and NTS Development Company, retired
effective September 3, 1999.
Item 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
September 30, 1999.
Items 1,2 and 4 are not applicable and have been omitted.
24
<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/ Gregory A. Wells
--------------------
Gregory A. Wells
Senior Vice President of
NTS Capital Corporation
Date: November 15, 1999
25
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1999 AND FROM THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1999AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 860,520
<SECURITIES> 0
<RECEIVABLES> 140,350
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 46,332,156
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 47,816,548
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 31,640,740
0
0
<COMMON> 0
<OTHER-SE> 14,039,675
<TOTAL-LIABILITY-AND-EQUITY> 47,816,548
<SALES> 7,074,011
<TOTAL-REVENUES> 7,103,721
<CGS> 0
<TOTAL-COSTS> 5,795,118
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,461,208
<INCOME-PRETAX> (152,605)
<INCOME-TAX> 0
<INCOME-CONTINUING> (152,605)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152,605)
<EPS-BASIC> 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.
</FN>
</TABLE>
