<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, 1996
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 0-18952
NTS-PROPERTIES PLUS LTD.
(Exact name of registrant as specified in its charter)
Florida 61-1126478
(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 (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Exhibit Index: See page 16
Total Pages: 17
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<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of September 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and nine months ended
September 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and nine months ended
September 30, 1996 and 1995 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-15
PART II
1. Legal Proceedings 16
2. Changes in Securities 16
3. Defaults upon Senior Securities 16
4. Submission of Matters to a Vote of Security Holders 16
5. Other Information 16
6. Exhibits and Reports on Form 8-K 16
Signatures 17
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES PLUS LTD.
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
September 30, 1996 December 31, 1995*
------------------------------ ------------------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 69,070 $ 36,269
Cash and equivalents - restricted 80,512 17,438
Accounts receivable, net of
allowance for doubtful accounts
of $4,067 (1996) and $6,224 (1995) 68,486 105,122
Land, buildings and amenities, net 1,156,659 1,254,828
Land held for development 96,949 96,949
Deferred leasing commissions 156,357 166,071
Organizational and start-up costs, net 1,108 1,357
Other assets 87,910 42,258
-------------------- --------------------
$ 1,717,051 $ 1,720,292
==================== ====================
LIABILITIES AND PARTNERS' EQUITY
Mortgages and notes payable $ 3,827,844 $ 3,871,374
Accounts payable - operations 265,050 165,270
Accounts payable - construction 6,849 14,257
Security deposits 12,496 12,030
Other liabilities 71,879 8,287
-------------------- --------------------
4,184,118 4,071,218
Partners' equity (2,467,067) (2,350,926)
-------------------- --------------------
$ 1,717,051 $ 1,720,292
==================== ====================
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
---------------------- --------------------- ---------------------
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions,
net of offering costs $ 11,784,521 $ 100 $ 11,784,621
Net loss - prior years (11,950,641) (120,713) (12,071,354)
Net loss - current year (114,979) (1,162) (116,141)
Cash distributions
declared to date (2,038,520) (20,592) (2,059,112)
Repurchase of limited
partnership units (5,081) -- (5,081)
---------------------- --------------------- ---------------------
Balances at September 30,
1996 $ (2,324,700) $ (142,367) $ (2,467,067)
====================== ===================== =====================
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
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<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
REVENUES:
Rental income, net of provision
for doubtful accounts of $0
(1996) and $3,259 (1995) $ 209,294 $ 202,210 $ 623,807 $ 748,653
Interest and other income 1,006 549 2,164 4,480
----------- ----------- ----------- -----------
210,300 202,759 625,971 753,133
EXPENSES:
Operating expenses 34,365 30,337 90,788 111,860
Operating expenses - affiliated 11,400 17,310 36,563 62,707
Write-off of unamortized loan
costs 9,082 -- 9,082 --
Amortization of capitalized
leasing costs 622 1,613 1,612 7,780
Interest expense 83,490 96,186 270,329 412,084
Management fees 13,513 12,762 39,964 46,890
Real estate taxes 20,506 20,381 60,137 80,624
Professional and administrative
expenses 9,861 13,066 31,844 39,175
Professional and administrative
expenses - affiliated 25,927 27,735 79,573 81,787
Depreciation and amortization 39,875 44,359 122,220 266,470
----------- ----------- ----------- -----------
248,641 263,749 742,112 1,109,377
----------- ----------- ----------- -----------
Net loss $ (38,341) $ (60,990) $ (116,141) $ (356,244)
=========== =========== =========== ===========
Net loss allocated to the limited
partners $ (37,958) $ (60,380) $ (114,979) $ (352,682)
=========== =========== =========== ===========
Net loss per limited partnership
unit $ (0.06) $ (0.09) $ (0.17) $ (0.51)
=========== =========== =========== ===========
Weighted average number of units 685,647 685,647 685,647 685,647
=========== =========== =========== ===========
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (38,341) $ (60,990) $ (116,141) $ (356,244)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Provision for doubtful accounts -- 1,997 -- 3,259
Write-off of unamortized loan costs 9,082 -- 9,082 --
Amortization of capitalized leasing
costs 622 1,613 1,612 7,780
Depreciation and amortization 39,875 44,359 122,220 266,470
Changes in assets and liabilities:
Cash and equivalents - restricted (21,299) (23,718) (64,799) (59,821)
Accounts receivable 9,432 16,156 36,636 41,354
Deferred leasing commissions 3,779 3,359 9,714 21,862
Other assets 6,354 6,674 (16,403) (4,054)
Accounts payable - operations (2,390) 31,632 99,780 18,705
Security deposits 265 (191) 466 907
Other liabilities 23,049 21,514 63,592 19,762
----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities 30,428 42,405 145,759 (40,020)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
amenities (1,699) (46,740) (24,879) (138,056)
Increase in cash and equivalents -
restricted -- -- -- (14,386)
Decrease in cash and equivalents -
restricted -- 3,383 1,725 15,219
----------- ----------- ----------- -----------
Net cash used in investing activities (1,699) (43,357) (23,154) (137,223)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages payable 2,187,180 -- 2,187,180 --
Principal payments on mortgages and
notes payable (2,146,497) (31,859) (2,230,710) (103,287)
Capital contribution by a joint
venture partner -- -- -- 94,275
Additions to loan costs (16,981) -- (46,274) (18,156)
----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities 23,702 (31,859) (89,804) (27,168)
----------- ----------- ----------- -----------
Net increase (decrease) in cash and
equivalents 52,431 (32,811) 32,801 (204,411)
CASH AND EQUIVALENTS, beginning of
period 16,639 72,688 36,269 244,288
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 69,070 $ 39,877 $ 69,070 $ 39,877
=========== =========== =========== ===========
Interest paid on a cash basis $ 87,560 $ 96,289 $ 275,719 $ 544,142
=========== =========== =========== ===========
</TABLE>
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<PAGE>
NTS-PROPERTIES PLUS LTD.
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1995 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, 1996 and 1995.
1. Cash and Equivalents - Restricted
Cash and equivalents - restricted represents funds escrowed with mortgage
companies for property taxes in accordance with the loan agreements.
Cash and equivalents - restricted at December 31, 1995 also included
escrow funds which were to be released as capital expenditures, leasing
commissions and tenant improvements were incurred at the properties owned
by the Lakeshore/University II Joint Venture. In 1996, the remaining
balance of these escrow funds were released.
2. New Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (the "Statement") on accounting for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to assets
to be held and used. The Statement also establishes accounting standards
for long-lived assets and certain identifiable intangibles to be disposed
of. The Partnership adopted the Statement as of January 1, 1996 as
required. No adjustments were required.
3. Mortgages and Notes Payable
Mortgages and notes payable consist of the following:
September 30, December 31,
1996 1995
-------------- ---------------
Mortgage payable to an insurance
company bearing interest at a fixed
rate of 8.5%, due November 15,
2005, secured by land and building $ 1,649,680 $ 1,736,192
Mortgage payable to an insurance
company bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 754,220 --
Mortgage payable to an insurance
company bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 722,926 --
Mortgage payable to an insurance
company bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 701,018 --
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building -- 1,156,943
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land and building -- 721,518
(continued next page)
-6-
<PAGE>
3. Mortgages and Notes Payable - Continued
September 30, December 31,
1996 1995
---------------- --------------
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land $ -- $ 155,114
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land -- 58,869
Note payable to a bank bearing
interest at a fixed rate of 10.6%,
due January 31, 1998, secured by
land -- 42,738
--------------- -------------
$ 3,827,844 $ 3,871,374
=============== =============
Based on the borrowing rates currently available to the Partnership for
loans with similar terms and average maturities, the fair value of long
term debt approximates carrying value.
4. Related Party Transactions
Property management fees of $39,964 and $46,890 were paid to NTS
Development Company, an affiliate of the General Partner of the
Partnership, during the nine months ended September 30, 1996 and 1995,
respectively. The fee is equal to 6% of all revenues from commercial
properties pursuant to an agreement with the Partnership. 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. The Partnership has incurred $931 and $5,068 as a repair and
maintenance fee during the nine months ended September 30, 1996 and 1995,
respectively, and has capitalized this cost as part of land, buildings and
amenities.
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the nine months ended
September 30, 1996 and 1995. 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 deferred leasing commissions, other assets or as land, buildings and
amenities.
1996 1995
-------------------- -------------------
Administrative $ 84,897 $ 88,244
Leasing 14,520 30,898
Property manager 21,857 26,955
Other 4,124 3,049
-------------------- -------------------
$ 125,398 $ 149,146
==================== ===================
Accounts payable - operations includes approximately $193,000 and $113,000
due NTS Development Company at September 30, 1996 and December 31, 1995,
respectively.
5. Reclassification of 1995 Financial Statements
Certain reclassifications have been made to the September 30, 1995
financial statements to conform with the September 30, 1996
classifications. These reclassifications have no effect on previously
reported operations.
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<PAGE>
6. Subsequent Event
Subsequent to September 30, 1996, the Partnership established an Interest
Repurchase Reserve in the amount of $25,000 pursuant to Section 16.4 of
the Partnership's Amended and Restated Agreement of Limited Partnership.
With this Interest Repurchase Reserve, the Partnership will be able to
repurchase up to 35,714 Units at a currently contemplated price of $.70
per Unit. The Partnership notified the limited partners by letter dated
November 6, 1996 of the establishment of the Interest Repurchase Reserve
and the opportunity to request that the Partnership repurchase Units at
the established price.
-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:
1996 1995
---- ----
Wholly-owned Property
- ---------------------
Lakeshore Business Center Phase II (See L/U II See below See below
Joint Venture below) (1) (1)
Property owned in Joint Venture with NTS-
Properties V (ownership % at September 30,1996)
- -----------------------------------------------
University Business Center Phase II (See L/U II See below See below
Joint Venture below) (1) (1)
Property owned in Joint Venture with NTS-
Properties IV and NTS-Properties VII, Ltd.
(ownership % at September 30, 1996)
- -----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100%
Properties owned through Lakeshore/University II
Joint Venture (L/U II JointVenture) (ownership %
at September 30, 1996)
- ----------------------------------------------------
Lakeshore Business Center Phase I (12%) 97% 87%
(2)
Lakeshore Business Center Phase II (12%) 83% 73%
University Business Center Phase II (12%) 100% 100%
(1) During the first quarter of 1995, the Partnership's ownership interest in
the property changed. See below for a discussion regarding the change.
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding this change.
(Results of Operations continued on next page)
-9-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The rental and other income generated by the Partnership's properties for the
three months and nine months ended September 30, 1996 and 1995 was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- ---------- --------- ----------
Wholly-owned Property
- ---------------------
Lakeshore Business Center
Phase II (See L/U II Joint
Venture below) N/A N/A N/A $ 98,182
(1)
Property owned in Joint
Venture with NTS-Properties V
(ownership % at September 30,
1996)
- -----------------------------
University Business Center
Phase II (See L/U II Joint
Venture below) N/A N/A N/A $ 82,123
(1)
Property owned in Joint
Venture with NTS-Properties
IV and NTS-Properties VII,
Ltd. (ownership % at
September 30, 1996)
- ---------------------------
Blankenbaker Business Center $ 91,554 $ 91,646 $ 274,611 $ 271,618
1A (39%)
Properties owned through
Lakeshore/University II Joint
Venture (L/U II Joint
Venture) (ownership % at
September 30, 1996)
- -----------------------------
Lakeshore Business Center
Phase I (12%) $ 43,189 $ 35,861 $ 130,736 $ 94,267
(2)
Lakeshore Business Center
Phase II (12%) $ 36,553 $ 37,355 $ 105,442 $ 103,034
University Business Center
Phase II (12%) $ 38,268 $ 37,514 $ 113,777 $ 102,016
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
(1) During the first quarter of 1995, the Partnership's ownership interest in
the property changed. The Partnership's proportionate share of rental and
other income from January 23, 1995 to September 30, 1995 is reflected
below (see L/U II Joint Venture). See below for a discussion regarding
this change.
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding this change.
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. The change in rental and other income at
Blankenbaker Business Center 1A for the three months and nine months ended
September 30, 1996 as compared to the same periods in 1995 was not significant.
-10-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 10% increase in occupancy at Lakeshore Business Center Phase I from
September 30, 1995 to September 30, 1996 can be attributed to seven new leases
totalling approximately 19,500 square feet, which includes approximately 6,900
square feet in expansions by three current tenants. The new leases and
expansions are partially offset by three tenants, who occupied a total of
approximately 5,200 square feet, vacating the premises at the end of the lease
terms. Average occupancy increased from 84% (1995) to 97% (1996) for the three
months ended September 30 and increased from 81% (1995) to 98% (1996) for the
nine month period. Rental and other income increased at Lakeshore Business
Center Phase I for the three months and nine months ended September 30, 1996 as
compared to the same periods in 1995 primarily as a result of the increase in
average occupancy and a decrease in the provision for doubtful accounts. The
increase in rental and other income for the nine months ended September 30, 1996
is also due to the fact that the Partnership acquired an interest in Lakeshore
Business Center Phase I as a result of the formation of the Lakeshore/University
II Joint Venture (L/U II Joint Venture) in January 1995. (See below for a
discussion regarding the Joint Venture.)
Subsequent to September 30, 1996, an approximately 5,000 square foot tenant
vacated Lakeshore Business Center Phase I prior to the end of the lease term. As
a result of this tenant move-out, the business center's occupancy has decreased
to 92%.
The 10% increase in occupancy at Lakeshore Business Center Phase II from
September 30, 1995 to September 30, 1996 can be attributed to three new leases
totalling approximately 13,800 square feet and expansions by two current tenants
totalling approximately 7,000 square feet. Partially offsetting the new leases
are two tenant move-outs totalling approximately 5,100 square feet and a
downsizing by a current tenant of its existing space of approximately 6,000
square feet. The two move-outs represent tenants who vacated prior to the end of
the lease term but are continuing to pay rent through the end of the lease term
(September 1996 and August 1997). Average occupancy at Lakeshore Business Center
Phase II increased from 77% (1995) to 81% (1996) for the three months ended
September 30 and decreased from 79% (1995) to 78% (1996) for the nine month
period. Overall, rental and other income decreased at Lakeshore Business Center
Phase II for the nine months ended September 30, 1996 as compared to the same
period in 1995 primarily as a result of a decrease in rental rates on lease
renewals. As discussed in prior filings, prior to the Ft. Lauderdale area
experiencing an economic downturn, the property was able to negotiate higher net
effective rental rates than current market rental rates. As a result, the leases
that were renewed at the end of 1995 and the beginning of 1996 renewed at a
lower net effective rental rate. The decrease in rental and other income for the
nine month period can also be attributed to the Partnership's decreased
ownership in Lakeshore Business Center Phase II. (See below for a discussion
regarding this change.) The change in rental and other income at Lakeshore
Business Center Phase II for the three month period was not significant.
As of September 30, 1996, Lakeshore Business Center Phase II had approximately
3,900 square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the fourth quarter. With the new lease, the
business center's occupancy should improve to 87%.
Philip Crosby Associates, Inc. ("PCA") has leased 100% of University Business
Center Phase II. The lease term is for seven years, and the tenant took
occupancy in April 1991. The tenant has currently sub-leased approximately
70,000 square feet (or 91%) of University Business Center Phase II. Of the total
being sub-leased, approximately 59,000 square feet (or 84%) is being leased by
Full Sail Recorders, Inc. (a major tenant at University Business Center Phase I,
a neighboring property owned by an affiliate of the General Partner of the
Partnership). In December 1995, Full Sail Recorders, Inc. ("Full Sail") signed a
33-month lease with the L/U II Joint Venture for approximately 41,000 square
feet it currently sub-leases from PCA. The lease term commences April 1998 when
PCA's lease ends. As part of the lease negotiations, Full Sail will receive a
$200,000 tenant finish allowance, of which approximately $92,000 will be
reimbursed by Full Sail over a 27-month period which began January 1996. The
Joint Venture has received notice that PCA will not renew its lease when it
expires in April 1998. At this time it is not known whether the other sublessees
will sign lease renewals with the Joint Venture.
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in rental and other income at University Business Center Phase II
for the nine months ended September 30, 1996 as compared to the same period in
1995 is due to a decrease in common area expense reimbursements. The tenant
reimburses the Joint Venture for common area expenses as part of the lease
agreement. The decrease in rental and other income for the nine month period can
also be attributed to the Partnership's decreased ownership of University
Business Center Phase II. (See below for a discussion of this change.) The
decrease in rental and other income for the nine month period is partially
offset by a rent escalation based upon an increase in the consumer price index.
The change in rental and other income at University Business Center Phase II for
the three month period was not significant.
In cases of tenants who cease making rental payments or abandon the premises in
breach of their lease, the Partnership pursues collection through the use of
collection agencies and other remedies available by law when practical. In cases
where tenants have vacated as a result of bankruptcy, the Partnership has taken
legal action when it was thought there could be a possible collection. There
have been no funds recovered as a result of these actions during the nine months
ended September 30, 1996 and 1995.
The change in interest and other income for the three months and nine months
ended September 30, 1996 as compared to the same periods in 1995 was not
significant.
The decrease in operating expenses for the nine months ended September 30, 1996
as compared to the same period in 1995 is primarily a result of the
Partnership's decrease in ownership of certain properties which were contributed
to the L/U II Joint Venture in January 1995. (See below for further discussion
regarding the Joint Venture.) The increase in operating expenses for the three
months ended September 30, 1996 as compared to the same period in 1995 is the
result of increased legal fees incurred at Lakeshore Business Center Phase I.
The decrease in operating expenses - affiliated for the three months and nine
months ended September 30, 1996 as compared to the same periods in 1995 can be
attributed to a decrease in leasing costs at Blankenbaker Business Center 1A.
The decrease in operating expenses - affiliated during the nine month period can
also be attributed to a decrease in ownership of certain properties which were
contributed to the L/U II Joint Venture in 1995. (See below for further
discussion regarding the Joint Venture.) Operating expenses - affiliated are
expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner of the Partnership.
The 1996 write-off of unamortized loan costs relate to loan costs associated
with the Lakeshore/University II Joint Venture's notes payable. The unamortized
loan costs were expensed due to the fact that the notes were retired in 1996
prior to their maturity (January 31, 1998). See the Liquidity and Capital
Resources section in this item for further discussion.
The decrease in amortization of capitalized leasing costs for the three months
and nine months ended September 30, 1996 as compared to the same periods in 1995
is due primarily to costs capitalized during initial lease-up at University
Business Center Phase II becoming fully amortized in 1995.
Interest expense has decreased for the nine months ended September 30, 1996 as
compared to the same period in 1995 primarily as a result of the Partnership's
decrease in ownership of certain properties which were contributed to the L/U II
Joint Venture in January 1995. (See below for further discussion regarding the
Joint Venture.) Debt totalling approximately $16.7 million was contributed by
the Partnership to the Joint Venture. The decrease in interest expense for the
three month and nine month periods can also be attributed to continued principal
payments and a lower interest rate on the permanent financings the L/U II Joint
Venture obtained on July 23, 1996. See the Liquidity and Capital Resources
section for a discussion regarding the new mortgages.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is recorded on the accrual basis. As a result,
the fluctuations of revenues between periods will differ from the fluctuations
of management fee expense. The decrease in management fee expense for the nine
months ended September 30, 1996 as compared to the same period in 1995 can be
-12-
<PAGE>
Results of Operations - Continued
- ---------------------------------
attributed to the Partnership's decrease in ownership of certain properties
which were contributed to the L/U II Joint Venture in January 1995. (See below
for further discussion of the Joint Venture.) The change in management fees for
the three months ended September 30, 1996 as compared to the same period in 1995
was not significant.
The decrease in real estate taxes for the nine months ended September 30, 1996
as compared to the same period in 1995 is primarily a result of the
Partnership's decrease in ownership of certain properties which were contributed
to the L/U II Joint Venture in January 1995. (See below for further discussion
of the Joint Venture.) The change in real estate taxes for the three months
ended September 30, 1996 as compared to the same period in 1995 was not
significant.
The decrease in professional and administrative expenses for the three months
and nine months ended September 30, 1996 as compared to the same periods in 1995
is due primarily to a decrease in outside accounting fees.
The change in professional and administrative expenses - affiliated for the
three month and nine month periods was not significant. Professional and
administrative expenses - affiliated are expenses for services performed by
employees of NTS Development Company, an affiliate of the General Partner.
Depreciation and amortization expense has decreased for the three months and
nine months ended September 30, 1996 as compared to the same periods in 1995 due
to a portion of the assets of the Partnership's joint venture properties
becoming fully depreciated. The decrease in depreciation and amortization for
the nine month period is also a result of the Partnership's decrease in
ownership of certain properties which were contributed to the L/U II Joint
Venture in January 1995. (See below for further discussion of the Joint
Venture.) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 5 - 30 years for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
5 - 30 years for amenities. The aggregate cost of the Partnership's properties
for Federal tax purposes is approximately $6,900,000.00.
Liquidity and Capital Resources
- -------------------------------
Cash provided by (used in) operations was $145,759 and $(40,020) for the nine
months ended September 30, 1996 and 1995, respectively. The Partnership has not
made any cash distributions since the quarter ended June 30, 1991. Distributions
will be resumed once the Partnership has established adequate cash reserves and
is generating cash from operations which, in management's opinion, is sufficient
to warrant future 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
costs, tenant finish costs and capital improvements. Cash reserves (which are
unrestricted cash and equivalents as shown on the Partnership's balance sheet as
of September 30) were $69,070 and $39,877 as of September 30, 1996 and 1995,
respectively.
As previously disclosed in the Partnership's Form 10-K for the year ended
December 31, 1995, a new joint venture known as Lakeshore/University II Joint
Venture (L/U II Joint Venture) was formed on January 23, 1995 among the
Partnership, NTS-Properties IV, NTS-Properties V and NTS/Fort Lauderdale, Ltd.,
affiliates of the General Partner of the Partnership, for purposes of owning
Lakeshore Business Center Phases I and II, University Business Center Phase II
and certain undeveloped tracts of land adjacent to the Lakeshore Business Center
development.
On July 23, 1996, the L/U II Joint Venture obtained three mortgage loans from an
insurance company totalling $17,400,000 million ($6,025,000, $5,775,000 and
$5,600,000). The outstanding balances of the loans at September 30, 1996 were
$6,000,163, $5,751,193 and $5,576,915, respectively. The loans are recorded as a
liability of the Joint Venture. The Partnership's proportionate share in the
loans at September 30, 1996 was $754,220, $722,926 and $701,018, respectively.
The mortgages bear interest at a fixed rate of 8.125%, are due August 1, 2008,
-13-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
and are secured by the assets of the Joint Venture. Monthly principal payments
are based upon a 12-year amortization schedule. At maturity, the loans will have
been repaid based on the current rate of amortization. The proceeds from the
loans were used to pay off the Joint Venture's notes payable of approximately
$16.8 million, which bore interest at a fixed rate of 10.6%, and to fund loan
closing costs of approximately $280,000. The Partnership's proportionate
interest in the notes which were paid off was approximately $2,000,000 or 12%.
The notes which were paid off had a maturity date of January 31, 1998. The
remaining proceeds will be used to fund Joint Venture tenant finish improvements
and leasing costs.
As of September 30, 1996, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company in the amount of $4,275,998. 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, 1996 is $1,649,680. The mortgage bears interest at a
fixed rate of 8.5% and is due November 15, 2005. 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.
The majority of the Partnership's 1996 cash flow was derived from operating
activities. The majority of the Partnership's 1995 cash flow was derived from
the use of cash reserves. Cash flows used in investing activities include tenant
finish improvements. Changes to current tenant finish improvements are a typical
part of any lease negotiation. Improvements generally include a revision to the
current floor plan to accommodate a tenant's needs, new carpeting and paint
and/or wallcovering. The extent and cost of these improvements are determined by
the size of the space and whether the improvements are for a new tenant or
incurred because of a lease renewal. Cash flows used in investing activities in
1995 also include cash which is being escrowed for capital expenditures, leasing
commissions and tenant improvements at the properties owned by the L/U II Joint
Venture. Cash flows provided by investing activities in 1996 were the result of
a release of these escrow funds. Cash flows provided by investing activities in
1995 were the result of a release from the funds escrowed for tenant finish
improvements at Lakeshore Business Center Phase II as required by a July 1993
loan extension agreement. Cash flows used in investing activities were funded by
cash flow from operating activities and a capital contribution (see below). Cash
flows provided by financing activities are from the L/U II Joint Venture debt
refinancings (discussed above). Cash flows used in financing activities are for
loan costs and principal payments on mortgages and notes payable. The capital
contribution by a joint venture partner represents the Partnership's interest in
the L/U II Joint Venture's increase in cash which resulted from a capital
contribution when the Joint Venture was formed on January 23, 1995 (see above
for a discussion of the Joint Venture). The Partnership utilizes the
proportionate consolidation method of accounting for joint venture properties.
The Partnership's interest in the joint venture's assets, liabilities, revenues,
expenses and cash flows are combined on a line-by-line basis with the
Partnership's own assets, liabilities, revenues, expenses and cash flows. The
Partnership does not expect any material change in the mix and relative cost of
capital resources except that which is discussed in the following paragraph.
In the next 12 months, the demand on future liquidity will increase as a result
of the three mortgage loans the L/U II Joint Venture obtained on July 23, 1996
(see discussion above). The Partnership also expects the demand on future
liquidity to increase as a result of future leasing activity at Lakeshore
Business Center Phases I and II and University Business Center Phase II. At this
time, the future leasing and tenant finish costs which will be required to renew
the current leases or obtain new tenants are unknown. It is anticipated that the
cash flow from operations and cash reserves will be sufficient to meet the needs
of the Partnership.
Due to the fact that no distributions were made during the nine months ended
September 30, 1996 or 1995, the table which presents that portion of the
distribution that represents a return of capital on a Generally Accepted
Accounting Principle basis has been omitted.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations. Changes to current tenant finish improvements
-14-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
are a typical part of any lease negotiation. Improvements generally include a
revision to the current floor plan to accommodate a tenant's needs, new
carpeting and paint and/or wallcovering. The extent and cost of the improvements
are determined by the size of the space being leased and whether the
improvements are for a new tenant or incurred because of a lease renewal. The
tenant finish improvements will be funded by cash flow from operations and cash
reserves.
As of September 30, 1996, the L/U II Joint Venture had a commitment for a
$200,000 special tenant finish allowance, of which approximately $92,000 will be
reimbursed by the tenant over a 27-month period which began in January 1996.
This commitment is the result of lease negotiations with Full Sail Recorders,
Inc. ("Full Sail") which currently sub-leases approximately 59,000 square feet
from Philip Crosby Associates, Inc. ("PCA") at University Business Center Phase
II. The Joint Venture anticipates that the allowance will be paid to Full Sail
during the fourth quarter of 1996 and/or early 1997. PCA currently leases 100%
of the business center through April 1998. Full Sail's lease term with the Joint
Venture is for 33 months (April 1998 to December 2000). The Partnership's
proportionate share of the net commitment ($200,000 less $92,000) is
approximately $13,000 or 12%.
As of September 30, 1996, the L/U II Joint Venture has a commitment for
approximately $65,000 of tenant finish improvements at Lakeshore Business Center
Phase II. The Partnership's proportionate share of this commitment is
approximately $8,000 or 12%. The commitment is the result of an expansion by a
current tenant of its existing space by approximately 3,900 square feet. The
tenant is expected to take occupancy of the expansion space in the fourth
quarter of 1996.
The Partnership had no other material commitments for renovations or capital
improvements at September 30, 1996.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at September 30, 1996 in the land held for
development is approximately $97,000. The Joint Venture currently has a contract
for the sale of .7 acres of this land for $175,000.
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's properties. At Lakeshore Business
Center Phases I and II, the Partnership has an on-site leasing agent, an
employee of NTS Development Company (an affiliate of the General Partner), who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local advertising with the assistance of NTS Development Company's
marketing staff. The leasing and renewal negotiations of University Business
Center Phase II are handled by a leasing agent, an employee of NTS Development
Company, located at the University Business Center development.
Leases at the Partnership's properties provide for tenants to contribute toward
the payment of common area expenses, insurance and real estate taxes. Leases at
the Partnership's properties also provide for rent increases which are based
upon increases in the consumer price index. These lease provisions should
protect the Partnership's operations from the impact of inflation and changing
prices.
-15-
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 PLUS, LTD.
(Registrant)
BY: NTS-Properties Plus Associates
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
------------------------------
John W. Hampton
Senior Vice President
Date: November 11, 1996
-17-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 149,582
<SECURITIES> 0
<RECEIVABLES> 68,486
<ALLOWANCES> 4,067
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,156,659
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 1,717,051
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,827,844
0
0
<COMMON> 0
<OTHER-SE> (2,467,067)
<TOTAL-LIABILITY-AND-EQUITY> 1,717,051
<SALES> 623,807
<TOTAL-REVENUES> 625,971
<CGS> 0
<TOTAL-COSTS> 360,366
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 270,329
<INCOME-PRETAX> (116,141)
<INCOME-TAX> 0
<INCOME-CONTINUING> (116,141)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,141)
<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>
