<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 September 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 14
Total Pages: 15
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
as of September 30, 1997 and December 31, 1996 3
Statements of Operations
For the three months and nine months ended
September 30, 1997 and 1996 4
Statements of Cash Flows
For the three months and nine months ended
September 30, 1997 and 1996 5
Notes To Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II
1. Legal Proceedings 14
2. Changes in Securities 14
3. Defaults upon Senior Securities 14
4. Submission of Matters to a Vote of Security Holders 14
5. Other Information 14
6. Exhibits and Reports on Form 8-K 14
Signatures 15
- 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
September 30,1997 December 31, 1996*
----------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 287,566 $ 278,620
Cash and equivalents - restricted 217,458 162,005
Investment Securities 75,000 --
Accounts receivable 1,812 14,518
Land, buildings and amenities, net 10,505,298 10,878,976
Other assets 195,576 140,380
----------- -----------
$11,282,710 $11,474,499
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 5,236,104 $ 5,358,215
Accounts payable 83,336 90,301
Distributions payable 60,426 60,645
Security deposits 39,740 39,800
Other liabilities 107,701 6,787
----------- -----------
5,527,307 5,555,748
Partners' equity 5,755,403 5,918,751
----------- -----------
$11,282,710 $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 income - current year 26,351 266 26,617
Cash distributions declared to
date (2,317,042) (23,404) (2,340,446)
Repurchase of limited
partnership Units (160,188) -- (160,188)
------------ ------------ ------------
Balances at September 30, 1997 $ 5,805,504 $ (50,101) $ 5,755,403
============ ============ ============
</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 Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 531,525 $ 537,264 $ 1,518,297 $ 1,530,895
Interest and other income 4,887 3,845 14,314 13,191
----------- ----------- ----------- -----------
536,412 541,109 1,532,611 1,544,086
EXPENSES:
Operating expenses 122,066 174,123 352,238 416,406
Operating expenses - affiliated 58,780 54,817 173,161 161,453
Interest expense 110,605 113,963 333,978 343,492
Management fees 27,398 27,851 78,445 78,987
Real estate taxes 24,894 25,907 74,682 77,363
Professional and administrative
expenses 16,913 12,161 45,829 38,649
Professional and administrative
expenses - affiliated 19,931 24,261 60,795 78,000
Depreciation and amortization 128,889 133,570 386,866 406,975
----------- ----------- ----------- -----------
509,476 566,653 1,505,994 1,601,325
----------- ----------- ----------- -----------
Net income (loss) $ 26,936 $ (25,544) $ 26,617 $ (57,239)
=========== =========== =========== ===========
Net income (loss) allocated to
the limited partners $ 26,667 $ (25,289) $ 26,351 $ (56,667)
=========== =========== =========== ===========
Net income (loss) per limited
partnership Unit $ 0.04 $ (0.04) $ 0.04 $ (0.09)
=========== =========== =========== ===========
Weighted average number of Units 598,218 603,210 598,630 620,418
=========== =========== =========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES VII, LTD.
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 26,936 $ (25,544) $ 26,617 $ (57,239)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Accrued interest on investment
securities -- 1,230 -- 1,408
Depreciation and amortization 128,889 133,570 386,866 406,975
Changes in assets and liabilities
Cash and equivalents - restricted (19,700) (24,992) (64,141) (72,151)
Accounts receivable 895 (4,573) 12,706 (10,368)
Other assets 9,301 7,584 1,226 3,125
Accounts payable 9,088 4,488 (6,965) 42,578
Security deposits (1,700) 3,690 (60) 8,245
Other liabilities 51,130 25,903 100,914 77,361
--------- --------- --------- ---------
Net cash provided by operating
activities 204,839 121,356 457,163 399,934
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (1,578) (2,748) (7,166) (3,351)
Purchase of investment securities (75,000) -- (75,000) (207,439)
Maturity of investment securities -- 207,439 -- 309,939
--------- --------- --------- ---------
Net cash provided by (used in)
investing activities (76,578) 204,691 (82,166) 99,149
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash and equivalents - restricted -- 66,896 8,688 27,722
Principal payments on mortgages
payable (41,564) (38,206) (122,111) (112,246)
Loan Costs (62,442) -- (62,442) --
Cash distributions (60,426) (62,397) (181,498) (190,295)
Repurchase of limited partnership
Units -- (66,896) (8,688) (148,992)
--------- --------- --------- ---------
Net cash used in financing
activities (164,432) (100,603) (366,051) (423,811)
--------- --------- --------- ---------
225,444
Net increase (decrease) in cash and
equivalents (36,171) 75,272
CASH AND EQUIVALENTS, beginning of
period 323,737 99,387 278,620 249,559
--------- --------- --------- ---------
CASH AND EQUIVALENTS, end of period $ 287,566 $ 324,831 $ 287,566 $ 324,831
========= ========= ========= =========
Interest paid on a cash basis $ 110,605 $ 113,963 $ 334,396 $ 344,260
========= ========= ========= =========
</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 nine months ended September 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 December 31, 1996, the Partnership held no investment
securities with initial maturities greater than three months. The following
provides details regarding the investment held at September 30, 1997:
Amortized Maturity Value at
Type Cost Date Maturity
---- ---- ---- --------
Certificate of Deposit $ 75,000 12/04/97 $ 76,009
======= =======
4. Mortgages Payable
-----------------
Mortgages payable consist of the following:
September 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 $ 3,056,476 $ 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 940,454 951,189
(Continued next page)
- 6 -
<PAGE>
4. Mortgages Payable - Continued
-----------------------------
September 30, December 31,
1997 1996
---- ----
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building. $ 1,239,174 $ 1,315,663
------------ -----------
$ 5,236,104 $ 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 .
Subsequent to September 30, 1997, the Partnership obtained a mortgage loan
from an insurance company in the amount of $4,100,000. The new mortgage
bears interest at a fixed rate of 7.37%, matures October 12, 2012 and is
secured by the land, buildings and amenities of Park Place Apartments Phase
II. The repayment of principal will be amortized over 19 years. The
proceeds from the loan were used to pay off debt financings which had
balances at September 30, 1997 of $3,056,476 and $940,454 (total of
$3,996,930) and fund loan closing costs.
5. Interest Repurchase Reserve
---------------------------
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 September 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 September 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 September 30, 1997 was
$88,735.
6. Related Party Transactions
--------------------------
Property management fees of $78,445 and $78,987 were paid to NTS
Development Company, an affiliate of the general partner, during the nine
months ended September 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 nine
months ended September 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 $ 30,044 $ 29,725
Administrative 80,049 96,243
Property manager 122,775 112,089
Other 1,088 1,396
--------- --------
$ 233,956 $ 239,453
========= ========
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<PAGE>
7. Reclassification of 1996 Financial Statements
---------------------------------------------
Certain reclassifications have been made to the September 30, 1996
financial statements to conform with the September 30, 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 September 30 were as
follows:
1997 1996
---- ----
Wholly-owned Properties
- -----------------------
The Park at the Willows 94% 94%
Park Place Apartments Phase II 95% 94%
Property Owned in Joint Venture with
NTS-Properties IV and NTS-Properties
Plus Ltd. (Ownership % at September
30, 1997)
- ------------------------------------
Blankenbaker Business Center 1A (31%) 100% 100%
Rental and other income generated by the Partnership's properties for the three
months and nine months ended September 30, 1997 and 1996 was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------ ------ ------ ------
Wholly-owned Properties
- -----------------------
The Park at the Willows $ 88,877 $ 89,814 $ 243,872 $ 245,508
Park Place Apartments Phase II $ 369,994 $ 374,453 $1,057,099 $1,066,276
Property owned in Joint Venture
with NTS-Properties IV and NTS-
Properties Plus Ltd. (Ownership %
at September 30,1997)
- ---------------------------------
Blankenbaker Business Center 1A $ 73,478 $ 73,478 $ 220,461 $ 220,392
(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
and nine months ended September 1997 and 1996.
The Park at the Willows' occupancy was 94% at September 30, 1996 and 1997.
Average occupancy for the nine month period ended September 30 decreased from
94% (1996) to 90% (1997). Average occupancy for the three month period ended
September 30 increased from 94% (1996) to 95% (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. 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 occupancy; therefore, occupancy
percentage
- 9 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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 three months and nine months ended September 30, 1997 as
compared to the same periods in 1996.
Park Place Apartments Phase II's occupancy increased from 94% at September 30,
1996 to 95% at September 30, 1997. Average occupancy for the nine month period
ended September 30 decreased from 93% (1996) to 92% (1997). Average occupancy
for the three month period ended September 30 increased from 95% (1996) to 96%
(1997). Rental and other income at Park Place Apartments Phase II decreased for
the three months and nine months ended September 30, 1997 as compared to the
same periods in 1996 as a result of decreased income from fully furnished units.
Fully furnished units are apartments which rent at an additional premium above
base rent. Therefore, it is possible for occupancy to increase and revenues to
decrease when the number of fully furnished units has decreased.
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 nine months ended
September 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
three months and nine months ended September 30, 1997 as compared to the same
period in 1996.
Operating expenses decreased for the three months and nine months ended
September 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
decrease in operating expenses for the nine month period is partially offset by
increased carpet replacement costs, insurance costs and increased landscaping
costs at The Park at the Willows and increased exterior building repair and
maintenance costs at Blankenbaker Business Center 1A. The decrease in operating
expenses for the three month period is partially offset by increased exterior
building repair and maintenance costs at Blankenbaker Business Center 1A.
Operating expenses at The Park at the Willows for the three months ended
September 30, 1997 as compared to the same period in 1996 remained fairly
constant.
Operating expenses - affiliated increased for the three months and nine months
ended September 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 nine months ended
September 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.
- 10 -
<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 nine months ended September 30, 1997 as
compared to the same periods in 1996.
Professional and administrative expenses - affiliated decreased for the three
months and nine months ended September 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 nine months
ended September 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 $457,163 and $399,934 for the nine months ended
September 30, 1997 and 1996, respectively. These funds in conjunction with cash
on hand were used to pay a 2% (annualized) cash distribution of $181,279 and
$186,533 for the nine months ended September 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
September 30) were $362,566 and $423,754 at September 30, 1997 and 1996,
respectively.
As of September 30, 1997, the Partnership had mortgages payable in the amount of
$3,996,930 ($3,056,476 and $940,454) 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. 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. The outstanding principal
balance at maturity based on the current rate of amortization would be
$3,607,560 ($2,758,723 and $848,837).
Subsequent to September 30, 1997, the Partnership obtained a mortgage loan from
an insurance company in the amount of $4,100,000. The new mortgage bears
interest at a fixed rate of 7.37% and matures October 12, 2012 and is secured by
the land, buildings and amenities of Park Place Apartments Phase II. The
repayment of principal will be amortized over 19 years. The proceeds from the
loan were used to pay off debt financings which had balances at September 30,
1997 of $3,056,476 and $940,454 (total of $3,996,930) and fund loan closing
costs.
As of September 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 $3,953,968. 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 September
30, 1997 is $1,239,174. The mortgage bears interest at a fixed rate of 8.5% and
is due November 15, 2005. Current
- 11 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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 September 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 September 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 September
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, loan costs 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 September 30, 1997.
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, 1997 and 1996.
Net Income Cash
(Loss) Distributions Return of
Allocated Declared Capital
--------- -------- -------
Limited Partners:
1997 $ 26,351 $ 179,466 $ 153,115
1996 (56,667) 184,668 184,668
General Partner:
1997 $ 266 $ 1,813 $ 1,547
1996 (572) 1,865 1,865
- 12 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
In an effort to continue to improve occupancy at the Partnership's residential
properties, the Partnership has an on-site leasing staff, employees of NTS
Development Company, at each of the apartment communities. The staff handles all
on-site visits from potential tenants, coordinates local advertising with NTS
Development Company's marketing staff, makes visits to local companies to
promote fully furnished units and 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, or elsewhere in this report,
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 payment of 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.
- 13 -
<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
September 30, 1997.
- 14 -
<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: November 12, 1997
- 15 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1997 AND FROM THE STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 505,024
<SECURITIES> 75,000
<RECEIVABLES> 1,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 10,505,298
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 11,282,710
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 5,236,104
0
0
<COMMON> 0
<OTHER-SE> 5,755,403
<TOTAL-LIABILITY-AND-EQUITY> 11,282,710
<SALES> 1,518,297
<TOTAL-REVENUES> 1,532,611
<CGS> 0
<TOTAL-COSTS> 1,065,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333,978
<INCOME-PRETAX> 26,617
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,617
<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>
