<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 0-17589
NTS-PROPERTIES VII, LTD.
(Exact name of registrant as specified in its charter)
Florida 61-1119232
(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 13
Total Pages: 14
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of June 30, 1997 and December 31, 1996 3
Statements of Operations
For the three months and six months ended
June 30, 1997 and 1996 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1997 and 1996 5
Notes To Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-12
PART II
1. Legal Proceedings 13
2. Changes in Securities 13
3. Defaults upon Senior Securities 13
4. Submission of Matters to a Vote of Security Holders 13
5. Other Information 13
6. Exhibits and Reports on Form 8-K 13
Signatures 14
- 2 -
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES VII, LTD.
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1997 December 31, 1996*
------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 323,737 $ 278,620
Cash and equivalents - restricted 197,758 162,005
Accounts receivable 2,707 14,518
Land, buildings and amenities, net 10,630,602 10,878,976
Other assets 144,446 140,380
----------- -----------
$11,299,250 $11,474,499
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 5,277,668 $ 5,358,215
Accounts payable 74,248 90,301
Distributions payable 60,426 60,645
Security deposits 41,440 39,800
Other liabilities 56,576 6,787
----------- -----------
5,510,358 5,555,748
Partners' equity 5,788,892 5,918,751
----------- -----------
$11,299,250 $11,474,499
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions, net of
offering costs $ 10,935,700 $ 100 $ 10,935,800
Net income (loss) - prior years (2,679,317) (27,063) (2,706,380)
Net loss - current year (316) (3) (319)
Cash distributions declared to
date (2,257,221) (22,800) (2,280,021)
Repurchase of limited
partnership Units (160,188) -- (160,188)
------------ ------------ ------------
Balances at June 30, 1997 $ 5,838,658 $ (49,766) $ 5,788,892
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 27, 1997.
- 3 -
<PAGE>
<TABLE>
NTS-PROPERTIES VII, LTD.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 502,542 $ 486,778 $ 986,773 $ 993,630
Interest and other income 5,474 4,369 9,427 9,346
----------- ----------- ----------- -----------
508,016 491,147 996,200 1,002,976
EXPENSES:
Operating expenses 118,135 153,380 230,173 242,282
Operating expenses - affiliated 52,823 50,496 114,381 106,637
Interest expense 111,472 114,460 223,373 229,529
Management fees 25,995 24,993 51,047 51,138
Real estate taxes 24,894 25,677 49,788 51,455
Professional and administrative
expenses 15,083 13,905 28,917 26,488
Professional and administrative
expenses - affiliated 20,549 21,350 40,863 53,739
Depreciation and amortization 128,828 136,673 257,977 273,403
----------- ----------- ----------- -----------
497,779 540,934 996,519 1,034,671
----------- ----------- ----------- -----------
Net income (loss) $ 10,237 $ (49,787) $ (319) $ (31,695)
=========== =========== =========== ===========
Net income (loss) allocated to
the limited partners $ 10,135 $ (49,289) $ (316) $ (31,378)
=========== =========== =========== ===========
Net income (loss) per limited
partnership unit $ 0.02 $ (0.08) $ 0.00 $ (0.05)
=========== =========== =========== ===========
Weighted average number of units 598,221 621,982 598,840 629,117
=========== =========== =========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES VII, LTD.
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 10,237 $ (49,787) $ (319) $ (31,695)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Accrued interest on investment
securities -- (1,230) -- 178
Depreciation and amortization 128,828 136,673 257,977 273,403
Changes in assets and liabilities
Cash and equivalents - restricted (22,226) (24,327) (44,441) (47,159)
Accounts receivable 8,654 (150) 11,811 (5,795)
Other assets 9,299 7,585 (8,079) (4,455)
Accounts payable (16,389) 22,809 (16,053) 38,090
Security deposits 825 3,025 1,640 4,555
Other liabilities 24,894 25,678 49,788 51,456
--------- --------- --------- ---------
Net cash provided by operating
activities 144,122 120,276 252,324 278,578
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (3,708) (158) (5,588) (603)
Purchase of investment securities -- (207,439) -- (207,439)
Maturity of investment securities -- -- -- 102,500
--------- --------- --------- ---------
Net cash used in investing
activities (3,708) (207,597) (5,588) (105,542)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash and equivalents - restricted 40 (80,554) 8,688 (39,174)
Principal payments on mortgages
payable (40,697) (37,410) (80,547) (74,040)
Cash distributions (60,427) (63,427) (121,072) (127,898)
Repurchase of limited partnership
Units (40) (40,716) (8,688) (82,096)
--------- --------- --------- ---------
Net cash used in financing
activities (101,124) (222,107) (201,619) (323,208)
--------- --------- --------- ---------
Net increase (decrease) in cash and
equivalents 39,290 (309,428) 45,117 (150,172)
CASH AND EQUIVALENTS, beginning of
period 284,447 408,815 278,620 249,559
--------- --------- --------- ---------
CASH AND EQUIVALENTS, end of period $ 323,737 $ 99,387 $ 323,737 $ 99,387
========= ========= ========= =========
Interest paid on a cash basis $ 111,472 $ 114,759 $ 223,791 $ 230,297
========= ========= ========= =========
</TABLE>
- 5 -
<PAGE>
NTS-PROPERTIES VII, LTD.
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1996 Annual Report. In the opinion of the general partner, all
adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation have been made to the accompanying financial statements for the
three months and six months ended June 30, 1997 and 1996.
1. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
Actual results could differ from those estimates.
2. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds received for residential
security deposits, funds which have been escrowed with mortgage companies
for property taxes in accordance with the loan agreements, and funds
reserved by the partnership for the repurchase of limited partnership
Units.
3. Investment Securities
---------------------
Investment securities represent investments in Certificates of Deposit or
securities issued by the U.S. Government with initial maturities of greater
than three months. The Partnership intends to hold the securities until
maturity. During 1996 and 1997, the Partnership sold no investment
securities. At June 30, 1997 and December 31, 1996, the Partnership held no
investment securities with initial maturities greater than three months.
4. Mortgages Payable
-----------------
Mortgages payable consist of the following:
June 30, December 31,
1997 1996
---- ----
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.375%, due October 5, 2002,
secured by land and buildings $ 3,068,348 $ 3,091,363
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.375%, due October 5, 2002,
secured by land and buildings 944,108 951,189
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,265,212 1,315,663
----------- ----------
$ 5,277,668 $ 5,358,215
=========== ==========
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 $6,600,000.
- 6 -
<PAGE>
5. Interest Repurchase Reserve
---------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated
Agreement of Limited Partnership, the Partnership established an Interest
Repurchase Reserve. Through June 1997, the Partnership has funded a total
amount of $248,923 to the Reserve which will allow the Partnership to
repurchase up to 62,230 Units at a price of $4.00 per Unit. As of June 30,
1997 the Partnership has repurchased a total of 40,047 Units for $160,188.
Repurchased Units will be retired by the Partnership, thus increasing the
share of ownership of each remaining investor. The Interest Repurchase
Reserve was funded from cash reserves. The amount remaining in the Interest
Repurchase Reserve at June 30, 1997 was $88,735.
6. Related Party Transactions
--------------------------
Property management fees of $51,047 and $51,138 were paid to NTS
Development Company, an affiliate of the general partner, during the six
months ended June 30, 1997 and 1996, respectively. The fee is paid monthly
in an amount equal to 5% of the gross revenues from the residential
properties and 6% of the gross revenues from the commercial property
pursuant to an agreement with the Partnership. The Partnership also was
charged the following amounts from NTS Development Company for the six
months ended June 30, 1997 and 1996. These charges include items which have
been expensed as operating expenses affiliated or professional and
administrative expenses - affiliated and items which have been capitalized
as other assets or as land, buildings and amenities.
1997 1996
-------- --------
Leasing $ 20,273 $ 18,328
Administrative 54,332 66,784
Property manager 80,525 75,192
Other 113 72
-------- --------
$155,243 $160,376
======== ========
7. Reclassification of 1996 Financial Statements
---------------------------------------------
Certain reclassifications have been made to the June 30, 1996 financial
statements to conform with the June 30, 1997 classifications. These
reclassifications have no effect on previously reported operations.
- 7 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1997 1996
---- ----
Wholly-owned Properties
- -----------------------
The Park at the Willows 94% 85%
Park Place Apartments Phase II 94% 89%
Property Owned in Joint Venture with
NTS-Properties IV and NTS-Properties
Plus Ltd. (Ownership % at June 30,
1997)
- ------------------------------------
Blankenbaker Business Center 1A (31%) 100% 100%
Rental and other income generated by the Partnership's properties for the three
months and six months ended June 30, 1997 and 1996 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
--------- --------- --------- ---------
Wholly-owned Properties
- -----------------------
The Park at the Willows $ 79,945 $ 74,801 $ 154,995 $ 155,694
Park Place Apartments Phase II $ 350,648 $ 339,170 $ 687,106 $ 691,823
Property owned in Joint Venture
with NTS-Properties IV and NTS-
Properties Plus Ltd. (Ownership %
at June 30, 1997)
- ---------------------------------
Blankenbaker Business Center 1A $ 73,506 $ 73,478 $ 146,984 $ 146,914
(31%)(1)
(1) Revenues shown in this table represent the Partnership's share of
revenues generated by Blankenbaker Business Center 1A. The Partnership's
percentage interest in the joint venture was 31% during the three months
ended June 30, 1997 and 1996.
The Park at the Willows' occupancy increased from 85% at June 30, 1996 to 94% at
June 30, 1997. Average occupancy for the six month period ended June 30
decreased from 93% in 1996 to 88% in 1997. Average occupancy for the three month
period ended June 30 increased from 89% in 1996 to 90% in 1997. Occupancy at
residential properties fluctuates on a continuous basis. Period ending occupancy
percentages represent occupancy only on a specific date; therefore, it is more
meaningful to look at average occupancy percentages which are more
representative of the entire period's results. In the opinion of the General
Partner of the Partnership the decrease in average occupancy for the six month
period is only a temporary fluctuation and does not represent a downward trend.
Large changes in occupancy at The Park at the Willows are due to the fact that
the complex has only 48 units. One vacant apartment in this complex equates to a
2% decrease in
- 8 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
occupancy; therefore, occupancy percentage changes may appear distorted on a
percentage basis when compared to other residential properties. In residential
properties, it is not uncommon for multiple residents to vacate at month-end
with new residents taking occupancy within a few days. When this occurs at The
Park at the Willows, the changes in occupancy will be much greater than at other
residential properties because of its small size. The Park at the Willows'
rental and other income remained fairly constant for the six months ended June
30, 1997 as compared to the six months ended June 30, 1996. Rental and other
income increased at The Park at the Willows for the three months ended June 30,
1997 as compared to the same period in 1996 as a result of increased rental
rates and the increase in average occupancy.
Park Place Apartments Phase II's occupancy increased from 89% at June 30, 1996
to 94% at June 30, 1997. Average occupancy for the six month period ended June
30 decreased from 92% (1996) to 89% (1997). Average occupancy for the three
month period ended June 30 decreased from 92% (1996) to 90% (1997). Rental and
other income at Park Place Apartments Phase II remained fairly constant for the
six months ended June 30, 1997 as compared to the same period in 1996. Rental
and other income at Park Place Apartments Phase II increased for the three
months ended June 30, 1997 as compared to the same period in 1996 as a result of
increased rental rates.
A wholly-owned subsidiary of the Prudential Insurance Company of America
(Prudential Service Bureau, Inc.) has leased 100% of Blankenbaker Business
Center 1A through July 2005. In addition to monthly rent payments, Prudential
Service Bureau, Inc. is obligated to pay substantially all of the operating
expenses attributable to its space. Blankenbaker Business Center 1A's rental and
other income remained fairly constant for the three months and six months ended
June 30, 1997 as compared to the same periods in 1996.
If present trends continue, the Partnership will be able to continue at its
current level of operation without the need of any additional financing. Current
occupancy levels are considered adequate to continue the operation of the
Partnership's properties. See the Liquidity and Capital Resources section of
Item 2 for a discussion regarding the cash requirements of the Partnership's
current debt financing.
Interest and other income includes interest income from investments made by the
Partnership with cash reserves. Interest income remained fairly constant for the
six months ended June 30, 1997 as compared to the same period in 1996. The
increase in interest income for the three months ended June 30, 1997 as compared
to the same period in 1996 is a result of increased cash reserves being
available for investment.
Operating expenses decreased for the three months and six months ended June 30,
1997 as compared to the same periods in 1996 as a result of decreased
replacement costs (carpet, vinyl and wallcovering) and decreased building repair
and maintenance costs at Park Place Apartments Phase II. The decreases in
operating expenses for both the three month and six month periods are partially
offset by increased carpet replacement costs and increased landscaping costs at
The Park at the Willows and increased exterior building repair and maintenance
costs at Blankenbaker Business Center 1A.
Operating expenses - affiliated increased for the three months and six months
ended June 30, 1997 as compared to the same periods in 1996 as a result of
increased property management costs at all of the Partnership's properties.
Operating expenses - affiliated are expenses incurred for services performed by
employees of NTS Development Company, an affiliate of the General Partner.
The decrease in interest expense for the three months and six months ended June
30, 1997 as compared to the same periods in 1996 is the result of 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.
- 9 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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.
Real estate taxes and professional and administrative expenses remained fairly
constant for the three months and six months ended June 30, 1997 as compared to
the same periods in 1996.
Professional and administrative expenses - affiliated decreased for the three
months and six months ended June 30, 1997 as compared to the same periods in
1996 as a result of decreased 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.
Depreciation and amortization decreased for the three months and six months
ended June 30, 1997 as compared to the same periods in 1996 as a result of a
portion of the assets with shorter lives at Park Place Apartments Phase II
becoming fully depreciated. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which are 10 - 30 years for
land improvements, 30 years for buildings, 5 - 30 years for building
improvements and 5 - 30 years for amenities. The aggregate cost of the
Partnership's properties for Federal tax purposes is approximately $12,200,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations was $252,324 and $278,578 for the six months ended
June 30, 1997 and 1996, respectively. These funds in conjunction with cash on
hand were used to pay a 2% (annualized) cash distribution of $120,853 and
$125,825 for the six months ended June 30, 1997 and 1996, respectively. The
annualized distribution rate is calculated as a percent of the original capital
contribution. The limited partners received 99% and the general partner received
1% of these distributions. The primary source of future liquidity and
distributions is expected to be derived from cash generated by the Partnership's
properties after adequate cash reserves are established for future leasing and
tenant finish costs. Cash reserves (which are unrestricted cash and equivalents
and investment securities as shown on the Partnership's balance sheet as of June
30) were $323,737 and $308,056 at June 30, 1997 and 1996, respectively.
As of June 30, 1997, the Partnership had mortgages payable in the amount of
$4,012,456($3,068,348 and $944,108) from two insurance companies. Both mortgages
bear a fixed interest rate of 8.375% for the first 60 months and are due October
5, 2002. At the end of the 56th month from the date of the notes (notes dated
September 8, 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
notes. Both mortgages are secured by a first mortgage on Park Place Apartments
Phase II. 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 principal
balance at maturity based on the current rate of amortization would be
$3,607,560 ($2,758,723 and $848,837).
- 10 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
The General Partner of the Partnership is presently exploring the possibility of
refinancing the mortgages payable discussed above due to the interest rate
change which will be effective September 1997. 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.
As of June 30, 1997, Blankenbaker Business Center Joint Venture, in which the
Partnership has a joint venture interest, had a mortgage payable with an
insurance company in the amount of $4,037,051. The mortgage is recorded as a
liability of the Joint Venture and is secured by the assets of the Joint
Venture. The Partnership's proportionate interest in the mortgage at June 30,
1997 is $1,265,212. The mortgage bears interest at a fixed rate of 8.5% and is
due November 15, 2005. Current monthly principal payments are based upon an
11-year amortization schedule. At maturity, the mortgage will have been repaid
based on the current rate of amortization.
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership has established an Interest Repurchase
Reserve. Through June 1997, the Partnership has funded a total amount of
$248,923 to the Reserve which will allow the Partnership to repurchase up to
62,230 units at a price of $4.00 per Unit. As of June 30, 1997, the Partnership
has repurchased a total of 40,047 Units for $160,188. Repurchased Units will be
retired by the Partnership, thus increasing the share of ownership of each
remaining investor. The Interest Repurchase Reserve was funded from cash
reserves. The amount remaining in the Interest Repurchase Reserve at June 30,
1997 was $88,735.
The majority of the Partnership's cash flow is derived from operating
activities. Cash flows used in investing activities are for capital improvements
at the Partnership's properties. These improvements are funded by cash flow from
operations. Cash flows used in investing activities are also for the purchase of
investments securities. Cash flows provided by investing activities are derived
from the maturity 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 its return on its cash reserves. The Partnership held the
securities until maturity. Cash flows used in financing activities are for cash
distributions, principal payments on mortgages payable and repurchases of
limited partnership Units. Cash flows used in financing activities also include
cash which has been reserved by the Partnership for the repurchase of limited
partnership Units. 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.
The primary source of future liquidity and distributions is expected to be
derived from cash generated by the Partnership's operating properties after
adequate cash reserves are established for future leasing, renovations and
tenant finish costs. It is anticipated that the cash flow from operations and
cash reserves will be sufficient to meet the needs of the Partnership. The
Partnership had no material commitments for renovations or capital improvements
at June 30, 1997.
(Continued next page)
- 11 -
<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 six
months ended June 30, 1997 and 1996.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1997 $ (316) $ 119,644 $ 119,644
1996 (31,378) 124,566 124,566
General Partner:
1997 $ (3) $ 1,209 $ 1,209
1996 (317) 1,259 1,259
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 works with current residents on lease
renewals.
The lease at Blankenbaker Business Center 1A provides for the tenant to
contribute toward the payment of common area expenses, insurance and real estate
taxes. This lease provision, 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.
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 those discussed below. Any forward-looking information
provided by the Partnership pursuant to the safe harbor established by recent
securities legislation should be evaluated in the context of these factors.
The Partnership's principal activity is the leasing and management of a
commercial business center and apartment complexes. If Prudential, the tenant
that occupies 100% of the business center, 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, other operating expenses and
acts of God.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K for the three months ended June
30, 1997.
- 13 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, NTS-Properties VII, Ltd. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NTS-PROPERTIES VII, LTD.
(Registrant)
By: NTS-Properties Associates VII,
General Partner
By: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 11 , 1997
- 15 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1997 AND FROM THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 521,495
<SECURITIES> 0
<RECEIVABLES> 2,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 10,630,602
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 11,299,250
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,277,668
0
0
<COMMON> 0
<OTHER-SE> 5,788,892
<TOTAL-LIABILITY-AND-EQUITY> 11,299,250
<SALES> 986,773
<TOTAL-REVENUES> 996,200
<CGS> 0
<TOTAL-COSTS> 703,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 223,373
<INCOME-PRETAX> (319)
<INCOME-TAX> 0
<INCOME-CONTINUING> (319)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (319)
<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>
