X
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
___ SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ______
Commission file number 0-18952
NTS-PROPERTIES PLUS LTD.
(Exact name of a registrant as specified in its charter)
Florida 61-1126478
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 426-4800 Securities
registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Exhibit Index: See page 47
Total Pages: 51
<PAGE>
TABLE OF CONTENTS
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Pages
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PART I
Items 1 and 2 Business and Properties 3-15
Item 3 Legal Proceedings 15
Item 4 Submission of Matters to a Vote of Security
Holders 15
PART II
Item 5 Market for the Registrant's Limited Partnership
Interests and Related Partner Matters 16
Item 6 Selected Financial Data 17
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 18-29
Item 8 Financial Statements and Supplementary Data 30-43
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 44
PART III
Item 10 Directors and Executive Officers of the
Registrant 44
Item 11 Management Remuneration and Transactions 45
Item 12 Security Ownership of Certain Beneficial
Owners and Management 45
Item 13 Certain Relationships and Related
Transactions 45-56
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 47-50
Signatures 51
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<PAGE>
PART I
Items 1. and 2. Business and Properties
General
- -------
NTS-Properties Plus Ltd. (the "Partnership") is a limited partnership which was
organized under the laws of the State of Florida on April 30, 1987. The general
partner is NTS-Properties Plus Associates (a Kentucky limited partnership). As
of December 31, 1995 the Partnership owned the following properties:
- A joint venture interest in Blankenbaker Business Center 1A, a
business center with approximately 50,000 net rentable ground floor
square feet and approximately 50,000 net rentable mezzanine square
feet located in Louisville, Kentucky. NTS-Properties Plus Ltd.
contributed the completed building to the joint venture between the
Partnership and NTS-Properties VII, Ltd., an affiliate of the general
partner of the Partnership. It had previously acquired the completed
building from an affiliate of the Partnership. In 1994, NTS-
Properties IV., Ltd. ("NTS-Properties IV") an affiliate of the
general partner of the Partnership, was admitted as a partner to the
joint venture. The Partnership's percentage interest in the joint
venture was 39% at December 31, 1995.
- A joint venture interest in the Lakeshore/University II Joint Venture
(L/U II Joint Venture). The L/U II Joint Venture was formed on
January 23, 1995 among the Partnership and NTS-Properties IV, NTS-
Properties V and NTS/Ft. Lauderdale, Ltd., affiliates of the general
partner of the Partnership. The Partnership's percentage interest
in the joint venture was 12% at December 31, 1995. A description of
the properties owned by the L/U II Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center with
approximately 103,000 net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by the joint venture.
- Lakeshore Business Center Phase II - a business center with
approximately 97,000 net rentable square feet located in Fort
Lauderdale, Florida, acquired complete by the joint venture.
- University Business Center Phase II - a business center with
approximately 78,000 net rentable first floor (office and service)
and second floor office square feet and approximately 10,000 net
rentable mezzanine square feet located in Orlando, Florida,
acquired complete by the joint venture.
- Outparcel Building Sites - approximately 6.2 acres of undeveloped
land adjacent to the Lakeshore Business Center development, which
is zoned for commercial development.
The joint ventures in which the Partnership is a partner has a fee title
interest in the above properties. The General Partner believes that the
Partnership's properties are adequately covered by insurance.
Blankenbaker Business Center 1A, a joint venture between the Partnership,
NTS-Properties VII, Ltd. and NTS-Properties IV, is encumbered by a mortgage
payable to an insurance company. The outstanding balance at December 31, 1995
was $4,500,239. The mortgage is recorded as a liability of the Joint Venture.
The Partnership's proportionate interest in the mortgage at December 31, 1995 is
$1,736,192. The mortgage bears interest at a fixed rate of 8.5% and is due
November 15, 2005. Currently 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.
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<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
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The properties owned by the L/U II Joint Venture, a joint venture between the
Partnership, NTS-Properties IV, NTS-Properties V and NTS/Fort Lauderdale, Ltd.,
are encumbered by notes payable to banks as follows:
Note Balance
At 12/31/95 Encumbered Property
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$9,204,000 Lakeshore Business Center Phase II
$5,740,000 University Business Center Phase II
$1,234,000 Outparcel building sites (3.8 acres)
$ 468,333 Outparcel building sites (3.8 acres)
$ 340,000 Outparcel building sites (2.4 acres)
The notes are recorded as liabilities of the Joint Venture in accordance with
the Joint Venture Agreement. The Partnership's proportionate interest in the
notes at December 31, 1995 was $1,156,943, $721,518, $155,114, $58,869, and
$42,738, respectively. All notes bear interest at a fixed rate of 10.6%, are due
January 31, 1998 and are secured by the assets of the joint venture. Principal
payments required on the $9,204,000, $1,234,000 and $5,740,000 notes are as
follows:
a) 12 monthly payments of $3,000 each, the first which was due at
closing. The second through 12th payments are due on the first day
of February through December 1995.
b) 12 monthly payments of $12,000 each, commencing on January 1, 1996
through December 1, 1996.
c) 13 monthly payments of $15,000 each, commencing on January 1, 1997
through January 1, 1998.
d) Balloon payment due at maturity on January 31, 1998.
A mortgage has been recorded on Lakeshore Business Center Phase I in the amount
of $5,500,000 in favor of the banks which held the indebtedness on University
Business Center Phase II, Lakeshore Business Center Phase II and the undeveloped
tracts of land prior to the formation of the L/U II Joint Venture. Lakeshore
Business Center Phase I was contributed to the joint
venture free and clear of any mortgage liens.
For a further discussion regarding the terms of the debt financings see
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7).
Subsequent to December 31, 1995, the L/U II Joint Venture submitted an
application with an insurance company for $17.4 million of debt financing. The
proceeds from the loan will be used to pay off the Joint Venture's current debt
financings of approximately $16.9 million. The remaining proceeds will be used
to fund Joint Venture tenant finish improvements, leasing costs and loan closing
costs. The Joint Venture anticipates that the financing will be completed during
mid-1996.
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
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, cash
reserves and the escrow funds which are described below.
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<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
- -------------------
As of December 31, 1995, the L/U II Joint Venture had commitments for
approximately $200,000 of tenant finish improvements and leasing costs. The
commitments are the result of an 8,200 square foot new lease and a 7,100 square
foot lease renewal. Both leases are for a period of five years. The
Partnership's proportionate share of these commitments is approximately $24,000
or 12%. As of December 31, 1995, approximately $130,000 had been incurred toward
these commitments, of which the Partnership's proportionate share is
approximately $16,000 or 12%.
As of December 31, 1995, the L/U II Joint Venture also 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 beginning in January 1996. This
commitment is the result of lease negotiations with Full Sail Recorders, Inc.
("Full Sail") which currently sub-leases approximately 41,000 square feet from
Philip Crosby Associates, Inc. ("PCA") at University Business Center Phase II.
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 net commitment ($200,000 less
$92,000) is approximately $13,000 or 12%.
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Business Center Phase II for approximately 7,000 square feet. As a result of the
new lease, the L/U II Joint Venture has a commitment for approximately $105,000
of tenant finish improvements of which the Partnership's proportionate share is
$13,000 or 12%.
The Partnership had no other material commitments for renovations or capital
improvements at December 31, 1995.
On January 20, 1995, the Partnership entered into debt refinancing agreements
with the banks that hold the following notes:
Note Balance
at 01/20/95 Encumbered Property
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$9,240,000 Lakeshore Business Center Phase II
$1,270,000 Outparcel building sites (3.8 acres)
$ 468,333 Outparcel building sites (3.8 acres)
$5,776,000 University Business Center Phase II
The debt refinancing agreements extended the maturity date of all notes to
January 31, 1998 and interest was fixed at 10.6%. In accordance with the debt
refinancing agreements, principal payments required on the $9,240,000,
$1,270,000 and $5,776,000 notes are as follows:
a) 12 monthly payments of $3,000 each, the first which was due at
closing. The second through 12th payments are due on the first day
of February through December 1995.
b) 12 monthly payments of $12,000 each, commencing on January 1, 1996
through December 1, 1996.
c) 13 monthly payments of $15,000 each, commencing on January 1, 1997
through January 1, 1998.
d) Balloon payment due at maturity on January 31, 1998.
The debt refinancings were concluded in conjunction with the formation of the
Lakeshore/University II Joint Venture. For a discussion regarding the new joint
venture, see pages 12 and 13.
- 5 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
General - Continued
- -------------------
The Partnership is engaged solely in the business of developing, constructing,
owning and operating commercial real estate, although the Partnership may also
develop apartment complexes and retail centers. A presentation of information
concerning industry segments is not applicable.
The current business of the Partnership is consistent with the original purpose
of the Partnership which was to acquire, directly or by joint venture,
unimproved or partially improved land, to construct and develop thereon business
and commercial centers, business parks, industrial and office buildings,
apartment complexes and/or retail centers, and to own and operate the completed
properties. The original purpose of the Partnership also includes the ability by
the Partnership to invest in fully improved properties, either directly or by
joint venture. The Partnership's properties are in a condition suitable for
their intended use.
The Partnership intends to hold the Joint Venture interests until such time as
sale or other disposition appears to be advantageous with a view to achieving
the Partnership's investment objectives, or it appears that such objectives will
not be met. In deciding whether to sell a Joint Venture interest, the
Partnership will consider factors such as potential capital appreciation, cash
flow and federal income tax considerations, including possible adverse federal
income tax consequences to the Limited Partners. The General Partner of the
Partnership is currently exploring the marketability of certain of its
properties, and has not yet determined if any of the properties might be sold in
the next 12 months. Additionally, the outparcel building sites owned by the L/U
II Joint Venture are being marketed for sale. The Joint Venture currently has a
contract for the sale of .7 acres of this land for $175,000.
Blankenbaker Business Center 1A
- -------------------------------
Prudential Service Bureau, Inc. has leased 100% of Blankenbaker Business Center
1A. The annual base rent, which excludes the cost of utilities, is $7.89 per
square foot for ground floor office space and $7.10 per square foot for second
floor office space. The average base annual rental for all space leased as of
December 31, 1995 was $7.48. The lease term is for 11 years and expires in July
2005. The lease provides for the tenant to contribute toward the payment of
common area expenses, insurance and real estate taxes. Prudential Service
Bureau, Inc. is a professional service- oriented organization which deals in
insurance claim processing. The occupancy level at the business center as of
December 31, 1995, 1994 and 1993, 1992 and 1991 was 100%.
The following table contains approximate data concerning the lease in effect on
December 31, 1995:
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area(1) Rental Options
---- ---------- ------- ------ -------
Prudential Service
Bureau, Inc. 2005 48,463 (100%) $752,787 (100%) None
(1) Rentable area includes only ground floor square feet.
- 6 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Lakeshore Business Center Phase I
- ---------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$7.71 to $12.01 per square foot for first floor office space, $5.69 to $7.50 per
square foot for first floor service space and $8.75 to $11.93 per square foot
for second floor office space. The average base rental for all space leased as
of December 31, 1995 was $9.96. Space is ordinarily leased for between one and
eight years with the majority of current square footage being leased for a term
of five years. Current leases expire between 1996 and 2000. All leases provide
for tenants to contribute toward the payment of common area expenses, insurance
and real estate taxes. As of December 31, 1995, there were 35 tenants leasing
office space (first and second floor) and service space aggregating
approximately 95,069 square feet of rentable area. The tenants who occupy
Lakeshore Business Center Phase I are professional service oriented
organizations. The principal occupations/professions practiced include
healthcare services, financial services and management offices for both a
cellular communications chain and a soft drink company. One tenant leases more
than 10% of Lakeshore Business Center Phase I's rentable area: U. S. Homecare
Infusion Therapy Products of Florida (11.7%). The occupancy levels at the
business center as of December 31 were 92% (1995), 80% (1994), 58% (1993), 55%
(1992) and 52% (1991). The Partnership acquired an interest in this property as
a result of its capital contribution to the L/U II Joint Venture as discussed on
pages 12 and 13.
The following table contains approximate data concerning the leases in effect on
December 31, 1995.
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
---- ---------- ---- ------ -------
U.S. Homecare
Infusion Therapy
Products of
Florida 1998 12,081 (11.7%) $135,912 (14.3%) (1)
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- ---- ------ -------
8 1996 13,153 (12.7%) $129,384 (13.7%) (2)
8 1997 16,249 (15.7%) $153,120 (16.1%) 2 Two-Year
7 1998 12,960 (12.7%) $125,736 (13.4%) None
7 1999 32,400 (31.4%) $330,240 (34.8%) 4 Three-Year
4 2000 8,226 ( 7.9%) $ 72,756 ( 7.7%) 2 Three-Year
(1) Tenant has option to renew its lease for an unspecified period of time.
(2) 1 Two-Year and 1 Three-Year.
Lakeshore Business Center Phase II
- ----------------------------------
Base annual rents, which exclude the cost of utilities, currently range from
$8.84 to $14.00 per square foot for first floor office space, $6.52 per square
foot for first floor service space and $9.50 to $14.95 per square foot for
second floor office space. The average base rental for all space leased as of
December 31, 1995 was $11.19. Space is ordinarily leased for between one and ten
years with the majority of current square footage being
- 7 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Lakeshore Business Center Phase II - Continued
- ----------------------------------------------
leased for a term of five years. Current leases expire between 1996 and 2000.
Three leases provide for renewal options at rates which are based upon increases
in the consumer price index and/or are negotiated between lessor and lessee. All
leases provide for tenants to contribute toward the payment of common area
expenses, insurance and real estate taxes. As of December 31, 1995, there were
18 tenants leasing office space (first and second floor) and service space
aggregating approximately 68,425 square feet of rentable area (1). The tenants
who occupy Lakeshore Business Center Phase II are professional service oriented
organizations. The principal occupations/professions practiced include
healthcare services, insurance, business machine sales and management offices
for the Florida state lottery. One tenant leases more than 10% of Lakeshore
Business Center Phase II's rentable area: Kimberly Home Health Care, Inc.
(10.4%). The occupancy levels at the business center as of December 31 were 72%
(1995), 78% (1994), 75% (1993), 84% (1992) and 71% (1991).
The following table contains approximate data concerning the leases in effect on
December 31, 1995:
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area Rental Options
------- ---------- -------------- ---------------- ---------
Kimberly Home
Health Care,
Inc. 1997 10,132 (10.4%) $120,636 (15.8%) None
Other Tenants:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
No. of Year of Rentable Base Annual Renewal
Tenants Expiration Area Rental Options
------- ---------- -------------- ---------------- ---------
2 1996 6,930 ( 7.1%) $ 85,500 (11.2%) None
4 1997 18,121 (18.7%) $198,366 (25.9%) None
4 1998 16,007 (16.4%) $164,464 (21.5%) (2)
2 1999 3,962 ( 4.1%) $ 39,292 ( 5.2%) None
5 2000 13,273 (13.7%) $157,630 (20.6%) None
(1) Excludes approximately 1,218 square feet which is occupied by the business
center's property management and leasing staff.
(2) 1 Two-Year and 2 Three-Year.
University Business Center Phase II
- -----------------------------------
Philip Crosby Associates, Inc. has leased 100% of University Business Center
Phase II. The annual base rent, which does not include the cost of utilities, is
$13.00 per square foot for first floor office space, $8.50 per square foot for
first floor service space, $14.00 per square foot for second floor office space
and $13.00 per square foot for mezzanine office space. The average base annual
rental for all types of space leased as of December 31, 1995 was $12.43. The
lease term is for seven years and expires in 1998. Philip Crosby Associates,
Inc. is a professional service oriented organization which specializes in
quality control seminars. The lease provides for the tenant to contribute toward
the payment of common area expenses, insurance and real estate taxes. The
occupancy level at the business center as of December 31, 1995, 1994, 1993, 1992
and 1991 was 100%.
- 8 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
University Business Center Phase II - Continued
- -----------------------------------------------
The following table contains approximate data concerning the lease in effect as
of December 31, 1995:
Major Tenant:
Current Base
Sq. Ft. and Annual Rental
% of Net and % of Gross
Year of Rentable Base Annual Renewal
Name Expiration Area (1) Rental Options
---- ---------- -------------- ---------------- ---------
Philip Crosby
Associates,
Inc. 1998 75,975 (100%) $1,072,920 (100%) 1 Five-Year
(1) Rentable area includes only first floor (office and service) square feet and
second floor office square feet.
Additional operating data regarding the Partnerships properties is furnished in
the following table.
Federal Realty Annual
Tax Basis Tax Rate Realty Taxes
--------- -------- ------------
Property Owned in Joint
Venture with NTS-
Properties IV and NTS-
Properties VII, Ltd.
- --------------------
Blankenbaker Business
Center 1A $ 7,365,545 $.011410 $ 66,685
Properties Owned thorough
Lakeshore/University II
Joint Venture (L/U II
Joint Venture
- -------------
Lakeshore Business Center
Phase I 10,021,413 .027197 138,990
Lakeshore Business Center
Phase II 11,999,046 .027197 128,497
University Business
Center Phase II 7,104,723 .023212 106,191
Percentage ownership has not been applied to the information in the above table
for properties owned through a joint venture.
Depreciation for book purposes 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 for amenities. The estimated realty taxes on planned renovations,
primarily tenant improvements, is not be material.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations (Item 7.) for explanations regarding the fluctuations of
income and occupancy at the Partnership's properties.
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<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures
- ----------------------------
Blankenbaker Business Center Joint Venture - On December 28, 1990, the
Partnership entered into a joint venture agreement with NTS-Properties VII, Ltd.
to own and operate Blankenbaker Business Center 1A and to acquire an
approximately 2.49 acre parking lot that was being leased by the business center
from an affiliate of the general partner. The use of the parking lot is a
provision of the tenants' lease agreements with the business center. On August
16, 1994, the Blankenbaker Business Center Joint Venture agreement was amended
to admit NTS-Properties IV to the Joint Venture. The terms of the Joint Venture
shall continue until dissolved. Dissolution shall occur upon, but not before,
the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the assets of the Real Property and Parking
Lot and the sale and/or collection of any evidences of
indebtedness received in connection therewith;
(c) the vote or consent of each of the Partners to dissolve the
Partnership; or
(d) December 31, 2030.
In 1990 when the Joint Venture was originally formed, NTS-Properties VII, Ltd.
contributed $450,000 which was used for additional tenant improvements to the
business center and $325,000 to purchase the 2.49 acre parking lot. The
additional tenant improvements were made to the business center and the parking
lot was purchased in 1991. The Partnership contributed Blankenbaker Business
Center 1A together with improvements and personal property subject to mortgage
indebtedness of $4,715,000. During November 1994, this note payable was replaced
with permanent financing in the amount of $4,800,000. For a further discussion
regarding the permanent financing, see Management's Discussion and Analysis of
Financial Condition and Results of Operations (Item 7).
On April 28, 1994, the Joint Venture obtained $1,100,000 in debt financing to
fund a portion of the tenant finish and leasing costs which were associated with
the Prudential lease renewal and expansion. For a further discussion of the
lease renewal and expansion, see Management's Discussion and Analysis of
Financial Condition and Results of Operations (Item 7). The $1,100,000 note bore
interest at the Prime Rate + 1 1/2%. In order for the Joint Venture to obtain
the $4,800,000 of permanent financing discussed above, it was necessary for the
Joint Venture to seek an additional Joint Venture partner to provide the funds
necessary for the tenant finish and leasing costs instead of debt financing. See
the following paragraph for information regarding the new joint venture partner.
The $1,100,000 note was retired in August 1994. This resulted in the Joint
Venture's debt being at a level where permanent financing could be obtained and
serviced.
On August 16, 1994, NTS-Properties VII, Ltd. contributed $500,000 and NTS-
Properties IV contributed $1,100,000 in accordance with the agreement to amend
the Joint Venture. The need for additional capital by the Joint Venture was a
result of the lease renewal and expansion which was signed April 28, 1994
between the Joint Venture and Prudential. With this expansion, Prudential now
occupies 100% of the business center. The Partnership was not in a position to
contribute additional capital, nor was NTS-Properties VII, Ltd. in a position to
contribute all of the capital required for the project. NTS-Properties IV was
willing to participate in
- 10 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
the Joint Venture and to contribute, together with NTS-Properties VII, Ltd., the
capital necessary with respect to the project. The Partnership agreed to the
admission of NTS-Properties IV to the Joint Venture, and to the capital
contributions by NTS-Properties IV and NTS-Properties VII, Ltd. with the
knowledge that its joint venture interest would, as a result, decrease. See the
following paragraph for a discussion of how the revised interests in the Joint
Venture were calculated with the admission of NTS-Properties IV. No future
contributions are anticipated as of December 31, 1995.
In order to calculate the revised joint venture percentage interests, the assets
of the Joint Venture were revalued in connection with the admission of
NTS-Properties IV as a joint venture partner and the additional capital
contributions. The value of the Joint Venture's assets immediately prior to the
additional capital contributions was $6,764,322 and its outstanding debt was
$4,650,042, with net equity being $2,114,280. The difference between the value
of the Joint Venture's assets and the value at which they were carried on the
books of the Joint Venture was allocated to the Partnership and NTS-Properties
VII, Ltd. in determining each Joint Venture partner's percentage interest.
The Partnership's interest in the Joint Venture decreased from 69% to 39% as a
result of the capital contributions by NTS-Properties IV and NTS- Properties
VII, Ltd. The respective percentage interests of NTS-Properties IV and
NTS-Properties VII, Ltd. in the Joint Venture subsequent to these capital
contributions are 30% and 31%.
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interests. The term Net Cash Flow
for any period shall mean the excess, if any, of (A) the sum of (i) the gross
receipts of the Joint Venture Property for such period, other than capital
contributions, plus (ii) any funds released by the Partners from previously
established reserves (referred to in clause (B)(iv) below), over (B) the sum of
(i) all cash operating expenses paid by the Joint Venture Property during such
period in the course of business, (ii) capital expenditures paid in cash during
such period, (iii) payments during such period on account of amortization of the
principal of any debts or liabilities of the Joint Venture Property and (iv)
reserves for contingent liabilities and future expenses of the Joint Venture
Property as established by the Partners; provided, however, that the amounts
referred to in (B)(i), (ii) and (iii) above shall only be taken into account to
the extent not funded by capital contributions or paid out of previously
established reserves. Percentage Interest means that percentage which the
capital contributions of a Partner bears to the aggregate capital contributions
of all the Partners.
Net income or net loss is allocated between the Partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 39%
at December 31, 1995.
The Partnership has no liability for funding losses of the joint venture as of
December 31, 1995.
NTS University Boulevard Joint Venture - On January 3, 1989, the Partnership
entered into a joint venture agreement with NTS-Properties V to develop,
construct, own and operate Phase II of the University Business Center
development in Orlando, Florida.
NTS-Properties V contributed land valued at $1,460,000 and the Partnership
contributed development and carrying costs of approximately $8 million. In
connection with the construction of University Business Center Phase I,
- 11 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
NTS-Properties V incurred the cost of developing certain common areas which are
used by both University Business Center Phase I and Phase II. In 1989, the
Partnership paid approximately $747,000 to NTS-Properties V for Phase II's share
of the common area costs. During the second quarter of 1994, NTS-Properties V
made an approximately $79,000 capital contribution to the Joint Venture. The
capital contribution raised NTS-Properties V's ownership interest percentage
from 16% to 17% and reduced the Partnership's ownership percentage from 84% to
83%. The contribution was made to fund a portion of the Joint Venture's
operating costs. On January 23, 1995, the partners of the NTS University
Boulevard Joint Venture contributed University Business Center Phase II to the
newly formed L/U II Joint Venture. See below for a discussion of the
Lakeshore/University II Joint Venture.
Lakeshore/University II Joint Venture - On January 23, 1995, a new joint venture
known as Lakeshore/University II Joint Venture (L/U II Joint Venture) was formed
among the Partnership and 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. The table below identifies which
properties were contributed to the L/U II Joint Venture and the respective
owners of such properties prior to the formation of the joint venture.
Property Contributing Owner
-------- ------------------
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres)
University Business Center Phase II NTS-Properties V and NTS-
Properties Plus Ltd.
The term of the Joint Venture shall continued until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:
(a) the withdrawal, bankruptcy or dissolution of a Partner or the
execution by a Partner of an assignment for the benefit of its
creditors;
(b) the sale, condemnation or taking by eminent domain of all or
substantially all of the Real Property and the sale and/or
collection of any evidences of indebtedness received in connection
therewith;
(c) the vote or consent of each of the Partners to dissolve the
Partnership; or
(d) December 31, 2030.
- 12 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Investment in Joint Ventures - Continued
- ----------------------------------------
Each of the properties were contributed to the L/U II Joint Venture subject to
existing indebtedness, except for Lakeshore Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage liens, and all
such indebtedness was assumed by the joint venture. Mortgages have been recorded
on Lakeshore Business Center Phase I in the amount of $5,500,000, and on
University Business Center Phase II in the amount of $3,000,000, in favor of the
banks which held the indebtedness on University Business Center Phase II,
Lakeshore Business Center Phase II and the undeveloped tracts of land prior to
the formation of the joint venture. In addition to the above, NTS-Properties IV
contributed $750,000 to the L/U II Joint Venture. As a result of the valuation
of the properties contributed to the L/U II Joint Venture, the Partnership
obtained a 12% partnership interest in the joint venture.
The properties of the L/U II Joint Venture are encumbered by notes payable to
banks as follows:
Note Balance
at 12/31/95 Encumbered Property
----------- -------------------
$9,204,000 Lakeshore Business Center Phase II
$5,740,000 University Business Center Phase II
$1,234,000 Outparcel building sites (3.8 acres)
$ 468,333 Outparcel building sites (3.8 acres)
$ 340,000 Outparcel building sites (2.4 acres)
The notes are recorded as liabilities of the Joint Venture. The Partnership's
proportionate interest in the notes at December 31, 1995 is $2,135,182
($1,156,943, $721,518, $155,114, $58,869 and $42,738). The notes bear a fixed
interest rate of 10.6% and are due January 31, 1998. See Management's Discussion
and Analysis of Financial Condition and Results of Operations (Item 7) for a
further discussion regarding the terms of the debt financings.
The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interest. The term Net Cash Flow
means the excess, if any, of (A) the sum of (i) the gross receipts of the Joint
Venture Properties for such period (including loan proceeds), other than capital
contributions, plus (ii) any funds released from previously established reserves
(referred to in clause (B)(iv) below), over (B) the sum of (i) all cash
operating expenses paid by the Joint Venture during such period in the course of
business, (ii) capital expenditures paid in cash during such period, (iii)
payments during such period on account of amortization of the principal of any
debts or liabilities of the Joint Venture and (iv) reserves for contingent
liabilities and future expenses of the Joint Venture, as established by the
Partners; provided, however, that the amounts referred to in (B)(i), (ii) and
(iii) above shall only be taken into account to the extent not funded by capital
contributions or paid out of previously established reserves. Percentage
Interest means that percentage which the capital contributions of a Partner
bears to the aggregate capital contributions of all the Partners.
Net income or net loss is allocated between the partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 12%
at December 31, 1995.
The Partnership had no liability for funding losses of the joint venture as of
December 31, 1995.
- 13 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Competition
- -----------
The Partnership's properties are subject to competition from similar types of
properties (including, in certain areas, properties owned or managed by
affiliates of the General Partner) in the respective vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or for new tenants when vacancies occur. The Partnership maintains the
suitability and competitiveness of its properties primarily on the basis of
effective rents and service provided to tenants. Competition is expected to
increase in the future as a result of the construction of additional properties.
As of December 31, 1995, there are no properties under construction in the
respective vicinities in which the properties are located. The Partnership has
not commissioned a formal market analysis of competitive conditions in any
market in which it owns properties, but relies upon the market condition
knowledge of the employees of NTS Development Company who manage and supervise
leasing for each property.
Management of Properties
- ------------------------
NTS Development Company, an affiliate of NTS-Properties Plus Associates, the
general partner of the Partnership, directs the management of the Partnership's
properties pursuant to a written agreement. NTS Development Company is a
wholly-owned subsidiary of NTS Corporation. Mr. J. D. Nichols has a controlling
interest in NTS Corporation and is a general partner of NTS-Properties Plus
Associates. Under the agreement, the Property Manager establishes rental
policies and rates and directs the marketing activity of leasing personnel. It
also coordinates the purchase of equipment and supplies, maintenance activity
and the selection of all vendors, suppliers and independent contractors. As
compensation for its services, the Property Manager received $59,849 for the
year ended December 31, 1995. The fee is equal to 6% of gross revenues from the
Partnership's properties.
In addition, the management agreement requires the Partnership to purchase all
insurance relating to the managed properties, to pay the direct out-of-pocket
expenses of the Property Manager in connection with the operation of the
properties, including the cost of goods and materials used for and on behalf of
the Partnership, and to reimburse the Property Manager for the salaries,
commissions, fringe benefits, and related employment expenses of on-site
personnel.
The term of the Management Agreement between NTS Development Company and the
Partnership was for an initial term of five years, and thereafter for succeeding
one-year periods, unless cancelled. The Agreement is subject to cancellation by
either party upon sixty days written notice. As of December 31, 1995, the
Management Agreement is still in effect.
Conflict of Interest
- --------------------
Because the principals of the general partner and/or its affiliates own and/or
operate real estate properties other than those owned by the Partnership that
are or could be in competition with the Partnership, potential conflicts of
interest exist. Because the Partnership was organized by and is operated by the
General Partner, these conflicts are not resolved through arm's length
negotiations but through the exercise of the General Partner's good judgment
consistent with its fiduciary responsibility to the Limited Partners and the
Partnership's investment objectives and policies. The General Partner is
accountable to the Limited Partners as a fiduciary and consequently must
exercise good faith and integrity in handling the Partnership's affairs. A
provision has been made in the Partnership Agreement that the General Partner
will not be liable to the Partnership except for acts or omissions performed or
omitted fraudulently,
- 14 -
<PAGE>
Items 1. and 2. Business and Properties - Continued
Conflict of Interest - Continued
- --------------------------------
in bad faith or with negligence. In addition, the Partnership Agreement provides
for indemnification by the Partnership of the General Partner for liability
resulting from errors in judgment or certain acts or omissions. The general
partner and its affiliates retain a free right to compete with the Partnership's
properties including the right to develop competing properties now and in the
future, in addition to those existing properties which may compete directly or
indirectly.
NTS Development Company, the Property Manager and an affiliate of the general
partner, acts in a similar capacity for other affiliated entities in the same
geographic region where the Partnership has property interests. The agreement
with the Property Manager is on terms no less favorable to the Partnership than
those which could be obtained from a third party for similar services in the
same geographical region in which the properties are located. The contract is
terminable by either party without penalty upon 60 days written notice.
There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates than those previously described.
Employees
- ---------
The Partnership has no employees; however, employees of an affiliate of the
general partner are available to perform services for the Partnership. The
Partnership reimburses this affiliate for the actual costs of providing such
services.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to Vote of a Security Holders
None.
- 15 -
<PAGE>
PART II
Item 5. Market for Registrant's Limited Partnership Interests and Related
Partner Matters
There is no established trading market for the limited partnership interests,
nor is one likely to develop. The Partnership had 1,093 limited partners as of
February 29, 1996. Cash distributions and allocations of net income (loss) are
made as described in Note 1C to the Partnership's 1995 financial statements.
No distributions were paid during 1995, 1994 or 1993. Quarterly distributions
are determined based on current cash balances, cash flow being generated by
operations and cash reserves needed for future leasing costs, tenant finish
costs, and capital improvements.
Due to the fact that no distributions were made during 1995, 1994 or 1993, the
table which presents that portion of the distributions that represent a return
of capital on a Generally Accepted Accounting Principle basis has been omitted.
- 16 -
<PAGE>
<TABLE>
Item 6. Selected Financial Data
For the years ended December 31, 1995, 1994, 1993, 1992 and 1991.
<CAPTION>
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total revenue $ 955,654 $ 2,722,728 $ 2,756,319 $ 2,780,543 $ 2,505,417
Total expenses (1,341,884) (4,525,894) (4,510,386) (7,315,266) (4,623,331)
------------ ------------ ------------ ------------ ------------
Net loss $ (386,230) $ (1,803,166) $ (1,754,067) $ (4,534,723) $ (2,117,914)
============ ============ ============ ============ ============
Net income (loss)
allocated to:
General partner $ (3,862) $ (18,032) $ (17,541) $ (45,347) $ (21,179)
Limited partners $ (382,368) $ (1,785,134) $ (1,736,526) $ (4,489,376) $ (2,096,735)
Net income (loss) per
limited partnership unit $ (0.56) $ (2.60) $ (2.53) $ (6.55) $ (3.06)
Weighted average number
of limited partnership
units 685,647 685,647 685,647 685,647 685,647
Cumulative net income
(loss) allocated to:
General partner $ (120,713) $ (116,851) $ (98,819) $ (81,278) $ (35,931)
Limited partners $(11,950,641) $(11,568,273) $ (9,783,139) $ (8,046,613) $ (3,557,237)
Cumulative taxable income
(loss) allocated to:
General partner $ (51,054) $ (48,829) $ (45,647) $ (53,928) $ (40,911)
Limited partners $ (6,244,619) $ (6,088,037) $ (5,487,478) $ (5,165,445) $ (3,957,054)
Distributions declared:
General partner $ -- $ -- $ -- $ -- $ 2,078
Limited partners $ -- $ -- $ -- $ -- $ 205,694
Cumulative distributions
declared:
General partner $ 20,592 $ 20,592 $ 20,592 $ 20,592 $ 20,592
Limited partners $ 2,038,520 $ 2,038,520 $ 2,038,520 $ 2,038,520 $ 2,038,520
At year end:
Land, buildings and
amenities $ 1,254,828 $ 14,902,218 $ 18,078,427 $ 19,560,454 $ 21,114,341
Total assets $ 1,720,292 $ 17,507,720 $ 20,972,344 $ 22,627,262 $ 26,909,794
Mortgage and notes
payable $ 3,871,374 $ 18,612,183 $ 20,511,450 $ 20,715,318 $ 20,316,532
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Form 10-K
report.
- 17 -
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
The occupancy levels at the Partnership properties as of December 31 were as
follows:
Percentage
Ownership
at
12/31/95 1995 1994 1993
-------- ---- ---- ----
Wholly-owned Property
- ---------------------
Lakeshore Business Center Phase II N/A See
(1) below
(1) 78% 75%
Property owned in Joint Venture
with NTS-Properties V
- ---------------------
University Business Center Phase II N/A See
(1) below
(1) 100% 100%
Property owned in Joint Venture
with NTS-Properties IV and NTS-
Properties VII, Ltd.
- --------------------
Blankenbaker Business Center 1A 39% 100% 100% 100%
Properties owned through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
- ------------------------------
Lakeshore Business Center Phase I 12% 92% 80% 58%
(2) (2)
Lakeshore Business Center Phase II 12% 72% See See
above above
(1) (1)
University Business Center Phase II 12% 100% See See
above above
(1) (1)
(1) During the first quarter of 1995, the Partnership's ownership interest in
the property changed. See pages 20 and 21 for a discussion regarding this
change.
(2) As of December 31, 1994 and 1993, the Partnership did not have an
interest in this property. See pages 20 and 21 for a discussion regarding
this change.
- 18 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The rental and other income generated by the Partnership's properties for the
years ended December 31, 1995, 1994 and 1993 were as follows:
Percentage
Ownership
at 12/31/95 1995 1994 1993
----------- ---------- ----------- -----------
Wholly-owned Property
- ---------------------
Lakeshore Business Center
Phase II N/A $ 98,182 $1,259,257 $1,221,550
(1)
Property owned in Joint
Venture with NTS-
Properties V
- ------------
University Business
Center II N/A $ 82,183 $ 959,948 $ 964,826
(1)
Property owned in Joint
Venture with NTS-
Properties IV and NTS-
Properties VII, Ltd.
- --------------------
Blankenbaker Business
Center 1A 39% $ 363,172 $ 497,566 $ 564,649
Properties owned through
Lakeshore/University II
Joint Venture (L/U II
Joint Venture
- -------------
Lakeshore Business Center
Phase I 12% $ 135,055 N/A (2) N/A (2)
Lakeshore Business Center
Phase II 12% $ 135,324 N/A (3) N/A (3)
University Business
Center Phase II 12% $ 139,477 N/A (3) N/A (3)
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 December 31, 1995 is reflected
below (see L/U II Joint Venture). See pages 20 and 21 for a discussion
regarding this change.
(2) During 1994 and 1993, the Partnership did not have an interest in this
property. See pages 20 and 21 for a discussion regarding the change which
occurred during the first quarter of 1995.
(3) During the first quarter of 1995, the Partnership's ownership interest in
this property changed. Rental and other income for 1994 and 1993 is
reflected above. See pages 20 and 21 for a discussion regarding this
change.
- 19 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
On August 16, 1994, Blankenbaker Business Center Joint Venture amended its joint
venture agreement to admit NTS-Properties IV to the Joint Venture. In accordance
with the Joint Venture Agreement, NTS-Properties IV contributed $1,100,000 and
NTS-Properties VII, Ltd. contributed $500,000. Additional capital was needed by
the Blankenbaker Business Center Joint Venture to fund the tenant finish and
leasing costs connected with the project discussed in the following paragraph.
However, the Partnership was not in a position to contribute additional capital,
nor was NTS-Properties VII, Ltd. in a position to contribute all of the capital
required for the project. NTS-Properties IV was willing to participate in the
Joint Venture and to contribute, together with NTS-Properties VII, Ltd., the
capital necessary with respect to the project. The general partner of the
Partnership agreed to this admission of NTS-Properties IV to the Joint Venture,
and to the capital contributions by NTS-Properties IV and NTS- Properties VII,
Ltd. with the knowledge that the Partnership's joint venture interest would, as
a result, decrease.
The need for additional capital by the Joint Venture was a result of the lease
renewal and expansion which was signed April 28, 1994 between the Joint Venture
and Prudential Service Bureau, Inc. ("Prudential"). The lease was a result of
winning a competitive request for proposals issued by Prudential as it
approached a decision regarding where it would locate its expanding Louisville
operations following the expiration of its lease at Blankenbaker Business Center
1A. To meet the needs of the tenant, the lease expanded Prudential's leased
space by approximately 15,000 square feet and extended its current lease term
through July 2005. Approximately 12,000 square feet of the expansion was into
new space which had to be constructed on the second level of the existing
business center. With this expansion, Prudential now occupies 100% of the
business center (approximately 101,000 square feet). The tenant finish and
leasing costs connected with the lease renewal and expansion were approximately
$1.4 million.
In order to calculate the revised joint venture percentage interests, the assets
of the Joint Venture were revalued in connection with the admission of
NTS-Properties IV as a joint venture partner and the additional capital
contributions. The value of the Joint Venture's assets immediately prior to the
additional capital contributions was $6,764,322 and its outstanding debt was
$4,650,042, with net equity being $2,114,280. The difference between the value
of the Joint Venture's assets and the value at which they were carried on the
books of the Joint Venture was allocated to the Partnership and NTS-Properties
VII, Ltd. in determining each Joint Venture partner's percentage interest.
The Partnership's interest in the Joint Venture decreased from 69% to 39% as a
result of the capital contributions by NTS-Properties IV and NTS- Properties
VII, Ltd. The respective percentage interests of NTS-Properties IV and
NTS-Properties VII, Ltd. in the Joint Venture subsequent to these capital
contributions are 30% and 31%.
On January 23, 1995, a new joint venture known as Lakeshore/University II Joint
Venture (L/U II Joint Venture) was formed 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 adjacent to the Lakeshore Business Center Development.
- 20 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The table below identifies which properties were contributed to the L/U II Joint
Venture and the respective owners of such properties prior to the formation of
the joint venture.
Property Owner
-------- -----
Lakeshore Business Center Phase I NTS-Properties IV and NTS-
Properties V
Lakeshore Business Center Phase II NTS-Properties Plus Ltd.
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center development
(3.8 acres)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center development
(2.4 acres)
University Business Center Phase II NTS-Properties V and NTS-Properties
Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture subject to
existing indebtedness, except for Lakeshore Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage liens, and all
such indebtedness was assumed by the joint venture. Mortgages have been recorded
on Lakeshore Business Center Phase I in the amount of $5,500,000, and on
University Business Center Phase II in the amount of $3,000,000, in favor of the
banks which held the indebtedness on University Business Center Phase II,
Lakeshore Business Center Phase II and the undeveloped tracts prior to the
formation of the joint venture. In addition to the above, NTS-Properties IV
contributed $750,000 to the L/U II Joint Venture. As a result of the valuation
of the properties contributed to the L/U II Joint Venture, the Partnership
obtained a 12% partnership interest in the joint venture.
The general partner of the Partnership believes that the results of operations
for 1995 and 1994 are not comparable and therefore, a discussion comparing the
results of operations for these periods is not included due to the fact that the
Partnership's ownership interest in the Blankenbaker Business Center Joint
Venture changed from 69% to 39% on August 16, 1994 as a result of capital
contributions made by affiliates of the general partner of the Partnership (as
discussed on page 19). Comparisons of the results of operations between 1995 and
1994 are also difficult because of the Partnership's investment in the L/U II
Joint Venture (as discussed above). These changes in the Partnership's
investments are permanent changes and will effect future results of operations.
Discussions regarding the change in occupancy levels from 1994 to 1995 and from
1993 to 1994 along with a discussion comparing the results of operations from
1994 to 1993 follows.
The 6% decrease in year-ending occupancy at Lakeshore Business Center Phase II
from 1994 to 1995 can be attributed to four tenant move-outs totalling
approximately 9,600 square feet and a downsizing by a current tenant of its
existing space of approximately 6,000 square feet. Two of the move-outs,
totalling approximately 5,800 square feet, represent tenants who vacated the
premises at the end of the lease term. The third tenant, who occupied
approximately 1,400 square feet, vacated the premises and ceased making rental
payments in breach of the lease terms due to bankruptcy. The write-off of
accrued income connected with this lease was not significant. The
- 21 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
fourth tenant, who occupied approximately 2,400 square feet, vacated the
premises prior to the end of the lease term but is continuing to pay rent
through the end of the lease term. Partially offsetting the tenant move- outs
are six new leases for a total of approximately 9,700 square feet. Average
occupancy at Lakeshore Business Center Phase II decreased from 78% (1994) to 76%
(1995).
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Business Center Phase II for approximately 7,000 square feet. The tenant is
expected to take occupancy during the second quarter of 1996. With this new
lease, the buildings occupancy will increase to 79%.
Lakeshore Business Center Phase II's year-ending occupancy increased 3% from
1993 to 1994. The increase in occupancy can be attributed to three new leases
for a total of approximately 10,000 square feet, an expansion of approximately
1,900 square feet by a current tenant and the fact that the business center's
leasing office was relocated from Lakeshore Business Center Phase I (previously
owned by a joint venture between NTS-Properties IV and NTS-Properties V,
affiliates of the general partner) to an approximately 1,200 square foot suite
in Lakeshore Business Center Phase II. The increases in occupancy are partially
offset by an approximately 4,700 square foot downsizing by a current tenant. In
accordance with the lease agreement, the tenant paid the Partnership a total of
approximately $48,500 during the second and third quarters of 1994 to compensate
the Partnership for lost rents and undepreciated renovation costs (recorded as
lease buyout income). The increases in occupancy are also partially offset by an
approximately 2,300 square foot move-out by a tenant who vacated before the end
of the lease term, but continued to make rental payments through the end of the
lease term. There was no write-off of accrued income in connection with this
lease. Additionally, the increases in occupancy are partially offset by an
approximately 3,600 square foot move-out by a tenant who vacated and ceased
making rental payments in breach of the lease agreement. Accrued income
associated with this lease of approximately $17,000 was written off as
uncollectible after it was determined that there was no possible collection. The
accrued income which was written off is attributed to the straight-line method
of accounting for rental income. Average occupancy at Lakeshore Business Center
Phase II increased from 75% in 1993 to 78% in 1994.
Rental and other income at Lakeshore Business Center Phase II increased from
1993 to 1994 as a result of the increase in average occupancy, a decrease in the
provision for doubtful accounts, an increase in lease buyout income and an
increase in common area expense reimbursements. Tenants reimburse the
Partnership for common area expenses as a part of the lease agreement. The
increase in rental and other income at Lakeshore Business Center Phase II from
1993 to 1994 is partially offset by the accrued income write-off of
approximately $17,000 (as discussed above) and a decrease in rental rates.
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
50,000 square feet (or 64%) of University Business Center Phase II. Of the total
being sub-leased, approximately 41,000 square feet (or 52%) is being leased by
Full Sail Recorders, Inc. (a major tenant at University Business Center Phase
I). Prior to December 31, 1995, Full Sail Recorders, Inc. ("Full Sail") signed a
33 month lease with the L/U II Joint Venture for the 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 in 1996, of which approximately $92,000 will be
reimbursed by Full Sail over a 27-month period beginning January 1996. At this
time, it is not known whether Philip Crosby Associates, Inc. or the other sub-
lessee will renew the current lease with the business center when the
- 22 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
original lease expires in 1998. In August 1990, the tenant paid an $80,000
security deposit which was to be returned three years from the date of
occupancy. The security deposit plus interest was returned to Philip Crosby
Associates, Inc. in April 1994.
The decrease in rental and other income at University Business Center Phase II
from 1993 to 1994 is due to a decrease in common area expense reimbursements.
The tenant reimburses the Partnership for common area expenses as a part of the
lease agreement. The decrease in rental and other income at University Business
Center Phase II from 1993 to 1994 is partially offset by a rent escalation which
is based on changes in the consumer price index.
A wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential Service Bureau, Inc.) has leased 100% of Blankenbaker Business
Center 1A. During 1994, Prudential Service Bureau, Inc. signed a lease renewal
and expansion. The renewal extends the current lease through July 2005. With the
expansion, the tenant occupied 100% of the business center during the third
quarter of 1994. See page 20 for a further discussion of the lease renewal and
expansion. 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 decreased
from 1993 to 1994 as a result of the Partnership's decreased ownership in the
Blankenbaker Business Center Joint Venture. (See page 20 for a discussion
regarding the change in ownership.)
The 12% increase in year-ending occupancy at Lakeshore Business Center Phase I
from 1994 to 1995 can be attributed to 11 new leases, totalling approximately
19,000 square feet which includes approximately 6,400 square feet in expansions
by two current tenants. The new leases and expansion are partially offset by
four tenant move-outs, who vacated at the end of the lease terms, totalling
approximately 6,100 square feet. Average occupancy increased from 70% (1994) to
84% (1995).
During January 1996, Lakeshore Business Center Phase I's occupancy increased to
98% as a result of approximately 6,400 square feet of expansions by two current
tenants.
The 22% increase in year-ending occupancy at Lakeshore Business Center Phase I
from 1993 to 1994 can be attributed to 12 new leases totalling approximately
32,700 square feet which includes approximately 3,100 square feet in expansions
by three current tenants. Included in the new leases is a five-year,
approximately 9,400 square foot lease which commenced during the second quarter
of 1994 and a five-year, approximately 6,400 square foot lease which commenced
during the third quarter of 1994. The new leases and expansions are partially
offset by an approximately 1,200 square foot downsizing by an existing tenant
and four tenants, who occupied approximately 7,300 square feet, vacating at the
end of the lease terms. In addition to the move-outs and downsizing, the
business center's leasing office of approximately 1,500 square feet was
relocated to Lakeshore Business Center Phase II. The leasing office was
relocated in order to accommodate an approximately 9,400 square foot new lease.
Average occupancy at Lakeshore Business Center Phase I increased from 56% (1993)
to 70% (1994).
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.
Interest and other income includes interest earned from short-term investments
made by the Partnership with excess cash. The increase in interest income from
1993 to 1994 is the result of an increase in cash available for investment.
- 23 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
Operating expenses increased from 1993 to 1994 as a result of increased exterior
painting costs at University Business Center Phase II, increased snow removal
costs at Blankenbaker Business Center 1A and increased repair and maintenance
costs at Lakeshore Business Center Phase II and University Business Center Phase
II. The increases in operating expenses are partially offset by decreased
landscaping costs at Lakeshore Business Center Phase II and University Business
Center Phase II. The increase in operating expenses from 1993 to 1994 is net of
the decrease caused by the Partnership's decreased ownership in the Blankenbaker
Business Center Joint Venture. (See page 20 for a discussion regarding the
change in ownership.)
Operating expenses - affiliated increased from 1993 to 1994 as a result of
increased leasing costs. The increase in operating expenses - affiliated from
1993 to 1994 is net of the decrease caused by the Partnership's decreased
ownership in the Blankenbaker Business Center Joint Venture. (See page 20 for a
discussion regarding the change in ownership.) Operating expenses - affiliated
are expenses incurred for services performed by employees of NTS Development
Company, an affiliate of the General Partner of the Partnership.
The 1994 write-off of unamortized tenant improvements is primarily a result of
the lease renewal and expansion of Prudential Service Bureau, Inc., the tenant
which occupies 100% of Blankenbaker Business Center 1A. As a condition of the
lease renewal and expansion, it was agreed that the area into which the tenant
expanded would be renovated. Changes to current tenant 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. In order to complete the renovations, it is sometimes
necessary to replace improvements which had not been fully depreciated. This
results in a write-off of unamortized tenant improvements.
The 1993 write-off of unamortized tenant improvements is the result of an
approximately 3,400 square foot lease renewal plus an additional 2,000 square
foot expansion by a current tenant at Lakeshore Business Center Phase II.
Amortization of capitalized leasing costs represents the amortization of various
costs which were capitalized during the initial leasing and start-up period of
University Business Center Phase II. The amortization of these costs commenced
when Philip Crosby Associates, Inc. occupied the building in April 1991.
Amortization of capitalized leasing costs was fairly constant from 1993 to 1994.
The increase in interest expense from 1993 to 1994 is a result of increases in
the Prime Rate from 6% at December 31, 1993 to 8.5% at December 31, 1994. The
increase in interest expense is also a result of interest incurred in 1994 due
to the non-payment of the 1993 real estate taxes associated with University
Business Center Phase II, Lakeshore Business Center Phase II and land adjacent
to the Lakeshore Business Center development by the March 31, 1994 due date. The
University Business Center Phase II's taxes plus interest were paid during the
second quarter of 1994. The 1993 real estate taxes associated with Lakeshore
Business Center Phase II and land adjacent to the Lakeshore Business Center
development were paid subsequent to December 31, 1994. The increase in interest
expense from 1993 to 1994 is net of the decrease caused by the Partnership's
decreased ownership in the Blankenbaker Business Center Joint Venture. (See page
20 for a discussion regarding the change in ownership.) See the Liquidity and
Capital Resources section of this item for details regarding the Partnership's
debt.
- 24 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
Management fees are calculated based on cash collections; however, revenue for
reporting purposes is on the accrual basis. As a result, the fluctuations
between periods are not consistent with the fluctuations of management fee
expense.
The increase in real estate taxes from 1993 to 1994 is the result of additional
taxes being expensed in 1994 for the 1993 taxes of University Business Center
Phase II, Lakeshore Business Center Phase II and the land adjacent to the
Lakeshore Business Center development. The Partnership was unable to take
advantage of available discounts due to the cash requirements of the
Partnership. Real estate taxes for Blankenbaker Business Center 1A remained
fairly constant. The increase in real estate taxes from 1993 to 1994 is also due
to an increase in the 1994 property tax assessment for University Business
Center Phase II. The increase in real estate taxes from 1993 to 1994 is net of
the decrease caused by the Partnership's decreased ownership in the Blankenbaker
Business Center Joint Venture. (See page 20 for a discussion regarding the
change in ownership.)
The decrease in professional and administrative expenses from 1993 to 1994 is
due to a decrease in outside legal costs and loan fees. In 1993, loan fees were
paid to extend the maturity date of the $9,240,000, $1,270,000 and $470,000
(balances as of December 31, 1994) notes payable from December 31, 1992 to
February 17, 1993. There was no similar expense in 1994. The decrease in
professional and administrative expenses from 1993 to 1994 is partially offset
by the write-off of unamortized loan costs which were associated with the
Blankenbaker Business Center Joint Venture's notes payable. The loan fees were
expensed due to the fact that the notes were retired during 1994.
Professional and administrative expenses - affiliated remained fairly constant
from 1993 to 1994. Professional and administrative expenses affiliated are
expenses incurred for services performed by employees of NTS Development
Company, an affiliate of the General Partner.
The decrease in depreciation and amortization from 1993 to 1994 is a result of a
portion of organizational and start up costs having become fully amortized
during the fourth quarter of 1993 and a portion of Lakeshore Business Center
Phase II's tenant finish assets having become fully depreciated. These decreases
are partially offset by depreciation on new tenant finish improvements at
Blankenbaker Business Center 1A and Lakeshore Business Center Phase II and by
the amortization of additional loan costs incurred in connection with extending
the maturity dates of the Partnership's notes payable. The decrease in
depreciation and amortization from 1993 to 1994 is net of the decrease caused by
the Partnership's decreased ownership in Blankenbaker Business Center Joint
Venture. (See page 20 for a discussion regarding the change in ownership.)
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.
Capital Resources and Liquidity
- -------------------------------
Cash (used in) provided by operations was $(242,385) (1995), $402,028 (1994) and
$640,167 (1993). 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 December 31) were $36,269,
$244,288 and $156,081 at December 31, 1995, 1994 and 1993, respectively.
- 25 -
<PAGE>
Capital Resources and Liquidity - Continued
- -------------------------------------------
On January 20, 1995, the Partnership entered into debt refinancing agreements
with the banks that held the following notes:
Note Balance
at 01/20/95 Encumbered Property
----------- -------------------
$9,240,000 Lakeshore Business Center Phase II
1,270,000 Outparcel building sites (3.8 acres)
468,333 Outparcel building sites (3.8 acres)
5,776,000 University Business Center Phase II
The debt refinancing agreements extended the maturity date of all notes to
January 31, 1998 and interest was fixed at 10.6%. In accordance with the debt
refinancing agreements, principal payments required on the $9,240,000,
$1,270,000 and $5,776,000 notes are as follows:
a) 12 monthly payments of $3,000 each , the first of which was due at
closing. The second through 12th payments are due on the first day
of February through December 1995.
b) 12 monthly payments of $12,000 each, commencing on January 1, 1996
through December 1, 1996.
c) 13 monthly payments of $15,000 each, commencing on January 1, 1997
through January 1, 1998.
d) Balloon payment due at maturity on January 31, 1998.
The debt refinancing was concluded in conjunction with the formation of the
Lakeshore/University II Joint Venture. For a discussion regarding the new joint
venture, see pages 20 and 21.
As of December 31, 1995, the L/U II Joint Venture had notes payable to banks in
the following amounts: $9,204,000, $5,740,000, $1,234,000, $468,333 and
$340,000. The notes are a liability of the joint venture in accordance with the
Joint Venture Agreement. The Partnership's proportionate interest in the notes
at December 31, 1995 was $1,156,943, $721,518, $155,114, $58,869 and $42,738,
respectively. As part of the loan agreements with the banks, the Joint Venture
is required to place in escrow funds for capital expenditures, leasing
commissions and tenant improvements at the properties owned by the Joint
Venture. During the term of the loans, the Joint Venture is required to fund a
total of $200,000 to the escrow account. As of December 31, 1995, the Joint
Venture had met this funding requirement. The notes bear interest at a fixed
rate of 10.6%, are due January 31, 1998 and are secured by the assets of the
joint venture. See the discussion above regarding principal payments required on
the $9,204,000, $5,740,000 and $1,234,000 notes.
Subsequent to December 31, 1995, the L/U II Joint Venture submitted an
application with an insurance company for $17.4 million of debt financing. The
proceeds from the loan will be used to pay off the Joint Venture's current debt
financings of approximately $16.9 million. The remaining proceeds will be used
to fund Joint Venture tenant finish improvements, leasing costs and loan closing
costs. The Joint Venture anticipates that the financing will be completed during
mid-1996.
As of December 31, 1995, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company (obtained November 1994) in the
amount of $4,500,239. 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 December 31, 1995 is $1,736,192. The
mortgage bears interest at a fixed rate of 8.5% and is due November 15, 2005.
Currently 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.
- 26 -
<PAGE>
Capital Resources and Liquidity - Continued
- -------------------------------------------
The majority of the Partnership's 1995 cash flows was derived from the use of
cash reserves. The majority of the Partnership's 1994 and 1993 cash flow was
derived from operating activities. 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 provided by (used in) investing activities also
include an increase (decrease) in construction payables. Cash flows used in
investing activities were funded by cash flow from operating activities and
capital contributions (as discussed on pages 20 and 21). Cash flows provided by
investing activities in 1994 and 1993 were the result of a release from the
funds escrowed for tenant finish improvements at Lakeshore Business Center Phase
II. Cash flows provided by investing activities in 1995 were also the result of
a release from the funds escrowed for capital expenditures, leasing commissions
and tenant finish improvements at the properties owned by the L/U II Joint
Venture partially offset by deposits made to the L/U II Joint Venture escrow as
required by the loan agreements (discussed on page 26). Cash flows used in
investing activities (1993) also include cash which was escrowed for tenant
improvements at Lakeshore Business Center Phase II as required by a July 1993
loan extension agreement. Cash flows provided by financing activities are
derived from increases in the Partnership's debt level (1993) and the
Blankenbaker Business Center Joint Venture's debt level (1994). Cash flows used
in financing activities are for loan costs and principal payments on mortgage
and notes payable. The capital contribution by a joint venture partner
represents the Partnership's interest in the L/U II Joint Venture's (1995) and
Blankenbaker Business Center Joint Venture's (1994) increase in cash which
resulted from a capital contribution. 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 cash requirements connected with the required principal payments of the L/U
II Joint Venture's notes payable (as discussed on page 26) and as a result of
the Blankenbaker Business Center Joint Venture's permanent financing obtained
November 1994 (see page 26). 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. 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, cash
reserves and the escrow funds as discussed on page 26 will be sufficient to meet
the needs of the Partnership.
Due to the fact that no distributions were made during 1995, 1994 or 1993, 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.
At December 31, 1995, none of the Partnership's properties were in the
construction stage.
- 27 -
<PAGE>
Capital Resources and Liquidity - Continued
- -------------------------------------------
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
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, cash
reserves and the escrow funds which are described on page 26.
As of December 31, 1995, the L/U II Joint Venture had commitments for
approximately $200,000 of tenant finish improvements and leasing costs. The
commitments are the result of an 8,200 square foot new lease and a 7,100 square
foot lease renewal. Both leases are for a period of five years. The
Partnership's proportionate share of these commitments is approximately $24,000
or 12%. As of December 31, 1995, approximately $130,000 had been incurred toward
these commitments, of which the Partnership's proportionate share is
approximately $16,000 or 12%.
As of December 31, 1995, the L/U II Joint Venture also 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 beginning in January 1996. This
commitment is the result of lease negotiations with Full Sail Recorders, Inc.
("Full Sail") which currently sub-leases approximately 41,000 square feet from
Philip Crosby Associates, Inc. ("PCA") at University Busienss Center Phase II.
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 net commitment ($200,000 less
$92,000) is approximately $13,000 or 12%.
Subsequent to December 31, 1995, a new six-year lease was signed at Lakeshore
Busienss Center Phase II for approximately 7,000 square feet. As a result of the
new lease, the L/U II Joint Venture has a commitment for approximately $105,000
of tenant finish improvements of which the Partnership's proportionate share is
$13,000 or 12%.
The Partnership had no other material commitments for renovations or capital
improvements at December 31, 1995.
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 December 31, 1995 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.
Historically, extremely weak economic conditions in Ft. Lauderdale, Florida have
caused the low occupancy levels at Lakeshore Business Center Phases I and II. In
the opinion of the general partner, leasing activity is improving in this part
of Florida. In an effort to continue to improve the occupancy 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.
- 28 -
<PAGE>
Capital Resources and Liquidity - Continued
- -------------------------------------------
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.
- 29 -
<PAGE>
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To NTS-Properties Plus Ltd:
We have audited the accompanying balance sheets of NTS-Properties Plus Ltd. (a
Florida limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' equity, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements and the
schedules referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NTS-Properties Plus Ltd. as of
December 31, 1995 and 1994 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules included on pages 48
through 50 are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
February 14, 1996
- 30 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<CAPTION>
1995 1994
------------- -------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 36,269 $ 244,288
Cash and equivalents - restricted 17,438 19,077
Accounts receivable, net of allowance
for doubtful accounts of $6,224 (1995)
and $10,553 (1994) 105,122 792,375
Land, buildings and amenities, net 1,254,828 14,902,218
Land held for development 96,949 1,090,000
Deferred leasing commissions 166,071 373,201
Organizational and start-up costs, net 1,357 4,221
Other assets 42,258 82,340
------------ ------------
$ 1,720,292 $ 17,507,720
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgage and notes payable $ 3,871,374 $ 18,612,183
Accounts payable - operations 165,270 302,233
Accounts payable - construction 14,257 68,782
Security deposits 12,030 26,506
Other liabilities 8,287 462,712
------------ -----------
4,071,218 19,472,416
Partners' equity (2,350,926) (1,964,696)
------------ ------------
$ 1,720,292 $ 17,507,720
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 31 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income, net of provision for
doubtful accounts of $3,133 (1995),
$-0- (1994) and $21,832 (1993) $ 950,567 $ 2,712,113 $ 2,747,261
Interest and other income 5,087 10,615 9,058
----------- ----------- -----------
955,654 2,722,728 2,756,319
Expenses:
Operating expenses 143,083 417,653 387,483
Operating expenses - affiliated 59,801 195,659 187,470
Write-off of unamortized tenant
improvements -- 58,341 31,063
Amortization of capitalized leasing
costs 8,938 42,002 42,385
Interest expense 507,675 1,597,816 1,416,188
Management fees 59,849 180,332 181,000
Real estate taxes 98,903 308,727 300,096
Professional and administrative
expenses 52,487 81,262 93,360
Professional and administrative
expenses - affiliated 101,543 100,632 98,220
Depreciation and amortization 309,604 1,543,470 1,773,121
----------- ----------- -----------
1,341,883 4,525,894 4,510,386
----------- ----------- -----------
Net loss $ (386,230) $(1,803,166) $(1,754,067)
=========== =========== ===========
Net loss allocated to the limited
partners $ (382,368) $(1,785,134) $(1,736,526)
=========== =========== ===========
Net loss per limited partnership
unit $ (0.56) $ (2.60) $ (2.53)
=========== =========== ===========
Weighted average number of limited
partnership units 685,647 685,647 685,647
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 32 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Limited General
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Balances at December 31, 1992 $ 1,694,307 $ (101,770) $ 1,592,537
Net loss (1,736,526) (17,541) (1,754,067)
----------- ----------- -----------
Balances at December 31, 1993 (42,219) (119,311) (161,530)
Net loss (1,785,134) (18,032) (1,803,166)
----------- ----------- -----------
Balances at December 31, 1994 (1,827,353) (137,343) (1,964,696)
Net loss (382,368) (3,862) (386,230)
----------- ----------- -----------
Balances at December 31, 1995 $(2,209,721) $ (141,205) $(2,350,926)
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 33 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $ (386,230) $(1,803,166) $(1,754,067)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Provision for doubtful accounts 3,133 -- 21,832
Write-off of unamortized tenant improvements -- 58,341 31,063
Amortization of capitalized leasing costs 8,938 42,002 42,385
Depreciation and amortization 309,604 1,543,470 1,773,121
Changes in assets and liabilities:
Cash and equivalents - restricted (8,383) (7,332) --
Accounts receivable 57,132 267,896 243,247
Deferred leasing commissions 23,719 (79,410) 57,684
Other assets 2,919 (54,880) (129)
Accounts payable - operations 19,466 280,163 4,022
Security deposits 1,897 (62,894) (812)
Other liabilities (36,919) 217,838 221,821
----------- ----------- -----------
Net cash provided by (used in) operating
activities (4,724) 402,028 640,167
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Additions to) decreases in land, buildings,
amenities and land held for development (101,298) (484,806) (165,267)
Increase in cash and equivalents - restricted (25,471) -- (100,000)
Decrease in cash and equivalents - restricted 35,491 88,255 --
Increase (decrease) in accounts payable -
construction (52,895) (27,330) 77,986
----------- ----------- -----------
Net cash used in investing activities (144,173) (423,881) (187,281)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to organizational and start-up costs -- (2,963) --
Principal payments on mortgage and notes
payable (135,233) (2,455,479) (220,455)
Increase in mortgage and notes payable -- 2,008,503 16,587
Capital contribution by a joint venture partner 94,275 595,975 --
Additions to loan costs (18,164) (35,976) (100,490)
----------- ----------- -----------
Net cash provided by (used in) financing
activities (59,122) 110,060 (304,358)
----------- ----------- -----------
Net increase (decrease) in cash and
equivalents (208,019) 88,207 148,528
CASH AND EQUIVALENTS, beginning of year 244,288 156,081 7,553
----------- ----------- -----------
CASH AND EQUIVALENTS, end of year $ 36,269 $ 244,288 $ 156,081
=========== =========== ===========
Interest paid on a cash basis $ 639,167 $ 1,577,136 $ 1,411,718
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 34 -
<PAGE>
NTS-PROPERTIES PLUS LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Significant Accounting Policies
-------------------------------
A) Organization
------------
NTS-Properties Plus Ltd. (the "Partnership") is a limited partnership
organized under the laws of the State of Florida on April 30, 1987.
The general partner is NTS-Properties Plus Associates (a Kentucky
limited partnership). The Partnership is in the business of
developing, constructing, owning and operating commercial real
estate.
B) Properties
----------
The Partnership owns and operates the following properties:
- A 39% joint venture interest in Blankenbaker Business Center 1A,
a business center with approximately 50,000 net rentable ground
floor square feet and approximately 50,000 net rentable
mezzanine square feet located on approximately 5.2 acres of land
in Louisville, Kentucky.
- A 12% joint venture interest in the Lakeshore/University II
Joint Venture. A description of the properties owned by the
Joint Venture appears below:
- Lakeshore Business Center Phase I - a business center with
approximately 103,000 net rentable square feet located in
Fort Lauderdale, Florida.
- Lakeshore Business Center Phase II - a business center with
approximately 97,000 net rentable square feet located in
Fort Lauderdale, Florida.
- University Business Center Phase II - a business center with
approximately 78,000 net rentable first floor (office and
service) and second floor office square feet and
approximately 10,000 net rentable mezzanine square feet
located in Orlando, Florida.
- Outparcel Building Sites - approximately 6.2 acres of
undeveloped land adjacent to the Lakeshore Business Center
development which is zoned for commercial development.
C) Allocation of Net Income (Loss) and Cash Distributions
------------------------------------------------------
Pre-Termination Date Net Cash Receipts and Interim Net Cash Receipts,
as defined in the partnership agreement and which are made available
for distribution, will be distributed 99% to the limited partners and
1% to the general partner.
Net operating income shall be allocated to the limited partners and
the general partner in proportion to their respective cash
distributions. Net operating income in excess of cash distributions
shall be allocated as follows: (1) pro rata to all partners with a
negative capital account in an amount to restore the negative capital
account to zero; (2) 99% to the limited partners and 1% to the
general partner until the limited partners have received cash
- 35 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
C) Allocation of Net Income (Loss) and Cash Distributions - Continued
------------------------------------------------------------------
distributions from all sources equal to their original capital; (3)
the balance, 90% to the limited partners and 10% to the general
partner. Net operating losses shall be allocated 99% to the limited
partners and 1% to the general partner.
D) Tax Status
----------
The Partnership has received a ruling from the Internal Revenue
Service stating that the Partnership is classified as a limited
partnership for federal income tax purposes. As such, the Partnership
makes no provision for income taxes. The taxable income or loss is
passed through to the holders of the partnership interests for
inclusion on their individual income tax returns.
A reconciliation of net loss for financial statement purposes versus
that for income tax reporting is as follows:
1995 1994 1993
---------- ----------- -----------
Net loss $ (386,230) $(1,803 166) $(1,754,067)
Items handled
differently for tax
purposes:
Write-off of
unamortized tenant
finish improvements (8,328) (83,565) (67,656)
Allowance for doubtful
accounts 2,015 (11,739) 21,832
Depreciation and
amortization 174,563 963,035 1,231,928
Capitalized leasing
costs 5,065 41,693 41,323
Rental income 54,108 290,001 212,888
---------- ----------- -----------
Taxable loss (158,807) $ (603,741) $ (313,752)
========== =========== ===========
E) 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.
F) Joint Venture Accounting
------------------------
The Partnership has adopted the proportionate consolidation method of
accounting for joint venture properties. The Partnership's
proportionate interest in the 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. All intercompany accounts and transactions
have been eliminated in consolidation.
- 36 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
G) Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents escrow funds which are
to be released as capital expenditures, leasing commissions and
tenant improvements are incurred at the properties owned by the
Lakeshore/University II Joint Venture and funds which have been
escrowed with mortgage companies for property taxes in accordance
with the loan agreements.
H) Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at cost to the Partnership.
Costs directly associated with the acquisition, development and
construction of a project are capitalized. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets which are 5-30 years for land improvements, 5-30 years for
building and improvements and 5 - 30 years for amenities.
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 is required to adopt
the Statement no later than January 1, 1996, although earlier
implementation is permitted. The Statement is required to be applied
prospectively for assets to be held and used. The initial application
of the Statement to assets held for disposal is required to be
reported as the cumulative effect of a change in accounting
principle.
The Partnership plans to adopt the Statement as of January 1, 1996.
Based on a preliminary review, the Partnership does not anticipate
that any material adjustments will be required.
I) Capitalized Leasing Costs
-------------------------
The Partnership has capitalized certain costs associated with the
initial leasing of the properties. These costs are being amortized
over a five year period.
J) Organizational and Start-up Costs
---------------------------------
Organizational costs are expenses incidental to the creation of the
Partnership and joint ventures such as legal and accounting fees.
Start-up costs are partnership administration expenses which are
capitalized until the Partnership acquires its first property for
development and construction. Organizational costs are amortized over
a five-year period beginning when investors' funds are released from
escrow. Start-up costs are amortized over a five-year period
beginning when the first property is acquired.
K) Rental Income and Deferred Leasing Commissions
----------------------------------------------
Certain of the Partnership's lease agreements are structured to
include scheduled and specified rent increases over the lease term.
For financial reporting purposes, the income from these leases is
being recognized on a straight-line basis over the lease term.
Accrued income connected with these leases is included in accounts
receivable and totalled $107,413 and $762,683 as of December 31, 1995
and 1994, respectively. All commissions paid to leasing agents are
deferred and amortized on a straight-line basis over the term of the
lease to which they apply.
- 37 -
<PAGE>
1. Significant Accounting Policies - Continued
-------------------------------------------
L) Statements of Cash Flows
------------------------
For purposes of reporting cash flows, cash and equivalents include
cash on hand and short-term, highly liquid investments with initial
maturities of three months or less.
M) Reclassification of 1994 and 1993 Financial Statements
------------------------------------------------------
Certain reclassifications have been made to the December 31, 1994 and
1993 financial statements to conform with December 31, 1995
classifications. These classifications have no effect on previously
reported operations.
2. Concentration of Credit Risk
----------------------------
NTS-Properties Plus Ltd. has a joint venture investment in commercial
properties in Kentucky (Louisville) and Florida (Orlando and Ft.
Lauderdale). Substantially all of the tenants are local businesses or
are businesses which have operations in the location in which they
lease space. The Kentucky property is occupied by one tenant.
3. Investment in Joint Ventures
----------------------------
A) NTS University Boulevard Joint Venture
--------------------------------------
In January 1989, the Partnership entered into a joint venture
agreement with NTS-Properties V, a Maryland limited partnership, an
affiliate of the general partner of the Partnership, to develop
University Business Center Phase II, an approximately 78,000 square
foot business center, in Orlando, Florida. NTS-Properties V
contributed land valued at $1,460,000 and the Partnership contributed
development and carrying costs of approximately $8 million. During
the second quarter of 1994, NTS-Properties V made an approximately
$79,000 capital contribution to the Joint Venture. The capital
contribution increased NTS-Properties V's ownership interest
percentage from 16% to 17% and reduced the Partnership's ownership
percentage from 84% to 83%. The contribution was made to fund a
portion of the Joint Venture's operating costs. The net income or net
loss is allocated each calendar quarter based upon the respective
partnership's contribution. The Partnership's ownership share of
University Business Center Phase II was 83% prior to its contribution
to the Lakeshore/University II Joint Venture. The Partnership's share
of the Joint Venture's net operating income was $12,946 (1995),
$143,953 (1994) and $171,391 (1993).
On January 23, 1995, the partners of the NTS University Boulevard
Joint Venture contributed University Business Center Phase II to the
newly formed Lakeshore/University II (L/U II) Joint Venture. For a
further discussion see Note 3C to the Partnership's 1995 financial
statements.
B) Blankenbaker Business Center Joint Venture
------------------------------------------
On December 28, 1990 the Partnership entered into a Joint Venture
agreement with NTS-Properties VII, Ltd., an affiliate of the general
partner of the Partnership, to complete the development of
Blankenbaker Business Center 1A. The Partnership contributed
Blankenbaker Business Center 1A together with improvements and
- 38 -
<PAGE>
3. Investment in Joint Ventures - Continued
----------------------------------------
B) Blankenbaker Business Center Joint Venture - Continued
------------------------------------------------------
personal property (Real Property) to the capital of the Joint
Venture, subject to mortgage indebtedness in the amount of
$4,715,000. The agreed upon net fair market value of the
Partnership's capital contribution is $1,700,000, being the appraised
value of the Real Property ($6,415,000) reduced by the $4,715,000
mortgage. NTS-Properties VII, Ltd. contributed $450,000 which was
used for additional tenant improvements to the Real Property and made
a capital contribution to the Joint Venture of $325,000 to purchase a
2.49 acre parking lot that was being leased from an affiliate of the
general partner as described in NTS- Properties Plus Ltd.'s
Prospectus. NTS-Properties Plus Ltd. transferred to the Joint Venture
its option to purchase the parking lot, and the Joint Venture
exercised its option. The use of the parking lot is a provision of
the tenant's lease agreement with the business center. By purchasing
the parking lot, the Joint Venture's annual operating expenses were
reduced approximately $35,000. The purchase price of the parking lot
was determined by an independent appraisal.
On August 16, 1994, the Blankenbaker Business Center Joint Venture
amended its joint venture agreement to admit NTS-Properties IV (an
affiliate of the general partner of the Partnership) to the Joint
Venture. In accordance with the Joint Venture Agreement, NTS-
Properties IV contributed $1,100,000 and NTS-Properties VII, Ltd.
contributed $500,000. Additional capital was needed by the
Blankenbaker Business Center Joint Venture to fund the tenant finish
and leasing costs connected with the project discussed in the
following paragraph. However, the Partnership was not in a position
to contribute additional capital, nor was NTS-Properties VII, Ltd. in
a position to contribute all of the capital required for the project.
NTS-Properties IV was willing to participate in the Joint Venture and
to contribute, together with NTS-Properties VII, Ltd. the capital
necessary with respect to the project. The general partner of the
Partnership agreed to this admission of NTS- Properties IV to the
Joint Venture, and to the capital contributions by NTS-Properties IV
and NTS-Properties VII, Ltd. with the knowledge that the
Partnership's joint venture interest would, as a result, decrease.
The need for additional capital by the Joint Venture was a result of
the lease renewal and expansion which was signed April 28, 1994
between the Joint Venture and Prudential Service Bureau, Inc.
("Prudential"). The lease expands Prudential's leased space by
approximately 15,000 square feet and extends its current lease term
through July 2005. Approximately 12,000 square feet of the expansion
was into new space which had to be constructed on the second level of
the existing business center. With this expansion, Prudential now
occupies 100% of the business center (approximately 101,000 square
feet). The tenant finish and leasing costs connected with the lease
renewal and expansion were approximately $1.4 million.
In order to calculate the revised joint venture percentage interests,
the assets of the Joint Venture were revalued in connection with the
admission of NTS-Properties IV as a joint venture partner and the
additional capital contributions. The value of the Joint Venture's
assets immediately prior to the additional capital contributions was
$6,764,322 and its outstanding debt was $4,650,042, with net equity
being $2,114,280. The difference
- 39 -
<PAGE>
3. Investment in Joint Ventures - Continued
----------------------------------------
B) Blankenbaker Business Center Joint Venture - Continued
------------------------------------------------------
between the value of the Joint Venture's assets and the value at
which they were carried on the books of the Joint Venture has been
allocated to the Partnership and NTS-Properties VII, Ltd. in
determining each Joint Venture partner's percentage interest.
The Partnership's interest in the Joint Venture decreased from 69% to
39% as a result of the capital contributions by NTS-Properties IV and
NTS-Properties VII, Ltd. The respective percentage interests of
NTS-Properties IV and NTS-Properties VII, Ltd. in the Joint Venture
subsequent to these capital contributions are 30% and 31%.
Net income or loss is allocated each calendar quarter based on the
respective partnership's contribution. The Partnership's ownership
share was 39% at December 31, 1995. The Partnership's share of the
Joint Venture's net operating loss was $79,234 (1995), $302,899
(1994) and $256,432 (1993).
C) Lakeshore/University II Joint Venture
-------------------------------------
On January 23, 1995, a new joint venture known as
Lakeshore/University II Joint Venture (L/U II Joint Venture) was
formed among the Partnership and 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 adjacent to the Lakeshore Business Center
Development. The table below identifies which properties were
contributed to the L/U II Joint Venture and the respective owners of
such properties prior to the formation of the joint venture.
Property (Net Asset Contributed) Owner
-------------------------------- -----
Lakeshore Business Center NTS-Properties IV and NTS-
Phase I ($6,249,667) Properties V
Lakeshore Business Center NTS-Properties Plus Ltd.
Phase II (-$1,023,535)
Undeveloped land adjacent to the NTS-Properties Plus Ltd.
Lakeshore Business Center
development (3.8 acres)(-$670,709)
Undeveloped land adjacent to the NTS/Fort Lauderdale, Ltd.
Lakeshore Business Center
development (2.4 acres) ($27,104)
University Business Center NTS-Properties V and NTS-
Phase II ($953,236) Properties Plus Ltd.
Each of the properties were contributed to the L/U II Joint Venture
subject to existing indebtedness, except for Lakeshore Business
Center Phase I which was contributed to the joint venture free and
clear of any mortgage liens, and all such indebtedness was assumed by
the L/U II joint venture. Mortgages have been recorded on Lakeshore
Business Center Phase I in the amount of $5,500,000, and on
University Business Center Phase II in the amount of $3,000,000, in
favor of the banks which held the indebtedness on University Business
Center Phase II, Lakeshore Business Center Phase II and the
undeveloped tracts prior to the formation of the joint venture. In
- 40 -
<PAGE>
3. Investment in Joint Ventures - Continued
----------------------------------------
C) Lakeshore/University II Joint Venture - Continued
-------------------------------------------------
addition to the above, NTS-Properties IV also contributed $750,000 to
the L/U II Joint Venture. The Partnership's ownership share was 12%
at December 31, 1995. The Partnership's share of the joint ventures
net operating loss was $155,457 in 1995.
4. Land, Buildings and Amenities
-----------------------------
The following schedule provides an analysis of the Partnership's
investment in property held for lease as of December 31:
1995 1994
----------- -----------
Land and improvements $ 1,847,061 $ 6,260,269
Buildings and improvements 1,690,674 14,456,717
Amenities 8,306 6,712
---------- ----------
3,546,041 20,723,698
Less accumulated depreciation 2,291,213 5,821,480
---------- ----------
$ 1,254,828 $14,902,218
========== ==========
5. Land Held for Development
-------------------------
Land held for development at December 31, 1995 represents the
Partnership's proportionate share of approximately 6.2 acres of land
owned by the L/U II Joint Venture which is adjacent to the Lakeshore
Business Center development in Ft. Lauderdale, Florida. The Joint Venture
currently has a contract for the sale of .7 acres of this land for
$175,000.
Land held for development at December 31, 1994 represents a 3.8 acre
parcel of land adjacent to the Lakeshore Business Center development
which the Partnership acquired on October 15, 1990. On January 23, 1995,
the Partnership contributed this land held to the L/U II Joint Venture.
See Note 3C of the Partnership's 1995 financial statements for a further
discussion of the L/U II Joint Venture.
6. Mortgage and Notes Payable
--------------------------
Mortgage and notes payable as of December 31 consist of the following:
1995 1994
----------- -----------
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 $ 5,786,000
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land 58,869 470,000
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 9,240,000
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land 155,114 1,270,000
(continued next page)
- 41 -
<PAGE>
6. Mortgage and Notes Payable - Continued
--------------------------------------
1995 1994
----------- -----------
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land $ 42,738 $ --
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building 1,736,192 1,846,183
---------- ----------
$ 3,871,374 $18,612,183
========== ==========
Scheduled maturities of debt are as follows:
For the Years Ended December 31, Amount
-------------------------------- ---------
1996 $ 170,895
1997 194,776
1998 2,151,116
1999 150,323
2000 163,610
Thereafter 1,040,654
---------
$ 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 is approximately $4,400,000.
7. Rental Income Under Operating Leases
------------------------------------
The following is a schedule of minimum future rental income on
noncancellable operating leases as of December 31, 1995:
For the Years Ended December 31, Amount
-------------------------------- ---------
1996 $ 586,541
1997 550,574
1998 436,685
1999 351,808
2000 318,684
Thereafter 1,347,332
---------
$ 3,591,624
==========
8. Related Party Transactions
--------------------------
Property management fees of $59,849 (1995), $180,332 (1994) and $181,000
(1993) were paid to NTS Development Company, an affiliate of the general
partner. The fee is equal to 6% of all revenues from commercial
properties pursuant to an agreement with the Partnership. Also permitted
by the partnership 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 $6,446 and $21,607
as a repair and maintenance fee during the years ended December 31, 1995
and 1994, respectively, and has capitalized this cost as part of land,
buildings and amenities.
- 42 -
<PAGE>
8. Related Party Transactions - Continued
--------------------------------------
As permitted by the partnership agreement, the Partnership was also
charged the following amounts from NTS Development Company for the years
ended December 31, 1995, 1994 and 1993. 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:
1995 1994 1993
-------- -------- --------
Administrative $110,191 $125,031 $120,181
Leasing 17,194 60,213 56,158
Property manager 38,675 116,074 115,228
Other 2,482 14,624 13,391
------- ------- -------
$168,542 $315,942 $304,958
======= ======= =======
Accounts payable - operations includes approximately $113,000 and
$115,000 due NTS Development Company at December 31, 1995 and 1994,
respectively.
- 43 -
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Because the Partnership is a limited partnership, and not a corporation, it has
no directors or officers as such. Management of the Partnership is the
responsibility of the general partner, NTS-Properties Plus Associates. The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the general partner, to provide property management services.
The general partners of NTS-Properties Plus Associates are as follows:
J. D. Nichols
- -------------
Mr. Nichols (age 54) is the managing general partner of NTS-Properties Plus
Associates and is Chairman of the Board of NTS Corporation (since 1985) and NTS
Development Company (since 1977).
Richard L. Good
- ---------------
Mr. Good (age 56) President and Chief Operating Officer of NTS Corporation,
President of NTS Development Company and Chairman of the Board of NTS
Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he
was Executive Vice President of Jacques-Miller, Inc., a real estate syndication,
property management and financial planning firm in Nashville, Tennessee.
NTS Capital Corporation
- -----------------------
NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979. J. D. Nichols is Chairman of the Board and the sole
director of NTS Capital Corporation.
The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J. D. Nichols,
Richard L. Good and John W. Hampton:
John W. Hampton
- ---------------
Mr. Hampton (age 46) is Senior Vice President of NTS Corporation with
responsibility for all accounting operations. Before joining NTS in March 1991,
Mr. Hampton was Vice President - Finance and Chief Financial Officer of the
Sturgeon-Thornton-Marrett Development Company in Louisville, Kentucky for nine
years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is
a Certified Public Accountant and a graduate of the University of Louisville
with a Bachelor of Science degree in Commerce. He is a member of the American
Institute of CPA's and the Kentucky Society of CPA's.
- 44 -
<PAGE>
Item 11. Management Remuneration and Transactions
The officers and/or directors of the corporate general partner receive no direct
remuneration in such capacities. The Partnership is required to pay a property
management fee based on gross rentals to NTS Development Company or an
affiliate. The Partnership is also required to pay to NTS Development Company a
repair and maintenance fee on costs related to specified projects. NTS
Development Company provides certain other services to the Partnerships. See
Note 8 to the financial statements which sets forth transactions with NTS
Development Company for the years ended December 31, 1995, 1994 and 1993.
The general partner is entitled to receive cash distributions and allocations of
profits and losses from the Partnership. See Note 1C to the financial statements
which describes the methods used to determine income allocations and cash
distributions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The general partner is NTS-Properties Plus Associates, a Kentucky Limited
Partnership, 10172 Linn Station Road, Louisville, Kentucky 40223. The partners
of the general partner and their total respective interests in
NTS-Properties Plus Associates are as follows:
J. D. Nichols
10172 Linn Station Road 30.10%
Louisville, Kentucky 40223
NTS Capital Corporation
10172 Linn Station Road 9.95%
Louisville, Kentucky 40223
Richard L. Good 10.00%
10172 Linn Station Road
Louisville, Kentucky 40223
The remaining 49.95% interests are owned by various limited partners of
NTS-Properties Plus Associates.
Item 13. Certain Relationships and Related Transactions
Property management fees of $59,849 (1995), $180,332 (1994) and $181,000 (1993)
were paid to NTS Development Company, an affiliate of the general partner. The
fee is equal to 6% of all revenues from commercial properties pursuant to an
agreement with the Partnership. Also permitted by the partnership 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 $6,446 and $21,607 as a repair and maintenance fee during the year
ended December 31, 1995 and 1994, respectively, and has capitalized this cost as
part of land, buildings and amenities.
- 45 -
<PAGE>
Item 13. Certain Relationships and Related Transactions - Continued
As permitted by the partnership agreement, the Partnership was also charged the
following amounts from NTS Development Company for the years ended December 31,
1995, 1994 and 1993. 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:
1995 1994 1993
-------- -------- --------
Administrative $110,191 $125,031 $120,181
Leasing 17,194 60,213 56,158
Property manager 38,675 116,074 115,228
Other 2,482 14,624 13,391
------- ------- -------
$168,542 $315,942 $304,958
======= ======= =======
Accounts payable - operations includes approximately $113,000 and $115,000 due
NTS Development at December 31, 1995 and 1994, respectively.
There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates than those previously described.
- 46 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
1. Financial statements
The financial statements for the years ended December 31, 1995, 1994 and
1993, together with the report of Arthur Andersen LLP dated February 14,
1996 appear in Item 8. The following financial statement schedules
should be read in conjunction with such financial statements.
2. Financial statement schedules
Schedules Page No.
--------- --------
III - Real Estate and Accumulated Depreciation 48 - 50
All other schedules have been omitted because they are not applicable,
or not required, or because the required information is included in the
financial statements or notes thereto.
3. Exhibits
Exhibit No. Page No.
----------- --------
3. Amended and Restated *
Agreement and Certificate
of Limited Partnership of
NTS-Properties Plus Ltd., a
Florida limited partnership
10. Property Management and *
Construction Agreement between
NTS Development Company and
NTS-Properties Plus Ltd.
27. Financial Data Schedule Included
herewith
* Incorporated by reference to documents filed with the Securities
and Exchange Commission in connection with the filing of the
Registration statements on Form S-11 on July 1, 1987 (effective
June 24, 1988) under Commission File No. 33-15475.
4. Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended December 31,
1995.
- 47 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<CAPTION>
Lakeshore University
Business Business Blankenbaker
Center Center Business
Phase II Phase II Center 1A
-------- -------- ---------
<S> <C> <C> <C>
Encumbrances (A) (A) (B)
Initial cost to partnership:
Land $ 3,690,531 $ 1,817,916 $ 1,613,251
Buildings and improvements 7,066,267 3,472,794 4,414,277
Cost capitalized subsequent to
acquisition
Improvements 1,229,182 1,695,478 770,481
Other (10,704,480)(C) (4,959,565)(C) (4,970,766)(D)
Carrying costs -- -- --
Gross amount at which carried
December 31, 1995:
Land $ 373,900 $ 273,340 $ 862,361
Buildings and improvements 907,600 1,753,283 964,882
------------ ------------ ------------
Total $ 1,281,500 $ 2,026,623 $ 1,827,243
============ ============ ============
Accumulated depreciation $ 491,707 $ 329,462 $ 916,966
============ ============ ============
Date of construction N/A 12/90 N/A
Date Acquired 10/90 N/A 12/89
Life at which depreciation in
latest income statement is
computed (E) (E) (E)
<FN>
(A) First mortgage held by a bank.
(B) First mortgage held by an insurance company.
(C) Represents NTS-Properties Plus Ltd.'s decreased interest in Lakeshore
Business Center Phase II and University Business Center Phase II as a
result of NTS-Properties Plus Ltd.'s contribution of its interest in
these properties to the Lakeshore/University II Joint Venture in 1995.
(D) Represents NTS-Properties Plus Ltd.'s decreased interest in Blankenbaker
Business Center 1A as a result of NTS-Properties Plus Ltd.'s
contribution of Blankenbaker Business Center 1A to the Blankenbaker
Business Center Joint Venture in 1990 and as a result of capital
contributions made by the Partnership and NTS-Properties IV to the
Blankenbaker Business Center Joint Venture in 1994.
(E) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 10 - 30 years for land
improvements, 5 - 30 years for buildings and improvements and 5 - 30
years for amenities.
</FN>
</TABLE>
- 48 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<CAPTION>
Lakeshore
Business
Center Total
Phase I Pages 48-49
------- -----------
<S> <C> <C>
Encumbrances (A)
Initial cost to partnership:
Land $ 337,460 $ 7,459,158
Buildings and improvements 797,848 15,751,186
Cost capitalized subsequent to
acquisition
Improvements 11,298 3,706,439
Other -- (20,634,811)
Carrying costs -- --
Gross amount at which carried
December 31, 1995 (B):
Land $ 337,460 $ 1,847,061
Buildings and improvements 809,146 4,434,911
------------ ----------
Total $ 1,146,606 $ 6,281,972 (D)
============ ==========
Accumulated depreciation $ 553,078 $ 2,291,213
============ ==========
Date of construction N/A
Date Acquired 01/95
Life at which depreciation in
latest income statement is
computed (C)
<FN>
(A) First mortgage held by a bank.
(B) Aggregate cost of real estate for tax purposes is $6,921,831.
(C) Depreciation is computed using the straight-line method over the
estimated useful lives of the assets which are 10 - 30 years for land
improvements, 5 - 30 years for buildings and improvements and 5 - 30
years for amenities.
(D) Total Gross Cost at December 31, 1995 $ 6,281,972
Adjust building contribution from fair market value to cost:
University Business Center Phase II (2,735,931)
----------
Balance at December 31, 1995 $ 3,546,041
==========
</FN>
</TABLE>
- 49 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 AND 1992
<CAPTION>
Real Accumulated
Estate Depreciation
------ ------------
<S> <C> <C>
Balances at December 31, 1992 $ 23,198,234 $ 3,637,780
Additions during period:
Improvements (a) 164,777 --
Depreciation (b) -- 1,615,741
Deductions during period:
Retirements (109,753) (78,690)
------------ ------------
Balances at December 31, 1993 23,253,258 5,174,831
Additions during period:
Improvements (a) 472,279 --
Depreciation (b) -- 1,481,198
Deductions during period:
Retirements (161,461) (103,667)
Other (c) (2,840,378) (730,882)
------------ ------------
Balances at December 31, 1994 20,723,698 5,821,480
Additions during period:
Improvements (a) 98,777 --
Depreciation (b) -- 288,592
Other (d) 1,135,308 524,452
Deductions during period:
Retirements (11,766) (10,910)
Other (e) (18,399,976) (4,332,401)
------------ ------------
Balances at December 31, 1995 $ 3,546,041 $ 2,291,213
============ ============
<FN>
(a) The additions to real estate on this schedule will differ from the
expenditures on the Statements of Cash Flows as a result of minor
changes in the Partnership's joint venture investment ownership
percentages. Changes that may occur in the ownership percentages are
less than one percent.
(b) The additions charged to accumulated depreciation on this schedule will
differ from the depreciation and amortization on the Statements of Cash
Flows due to the amortization of loan costs.
(c) Represents a decrease in the joint venture ownership percentage for
Blankenbaker Business Center 1A as a result of capital contributions
made by NTS-Properties IV and NTS-Properties VII, Ltd.
(d) Represents the Partnership's share of Lakeshore Business Center I's
property and equipment under the proportionate consolidation method as a
result of the formation of the Lakeshore/University II Joint Venture.
(e) Represents the decrease in the Partnership's share of Lakeshore Business
Center Phase II's and University Business Center Phase II's property and
equipment under the proportionate consolidation method as a result of
the formation of the Lakeshore/University II Joint
Venture.
</FN>
</TABLE>
- 50 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities exchange
Act of 1934, NTS-Properties Plus Ltd. 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: March 28 , 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Form 10-K has been signed below by the following persons on behalf of the
registrant in their capacities and on the date indicated above.
Signature Title
--------- -----
/s/ J. D. Nichols General Partner of NTS-Properties Plus
J. D. Nichols Associates and Chairman of the Board and
Sole Director of NTS Capital Corporation
/s/ Richard L. Good General Partner of NTS-Properties Plus
Richard L. Good Associates and President of
NTS Capital Corporation
/s/ John W. Hampton Senior Vice President of NTS Capital
John W. Hampton Corporation
The Partnership is a limited partnership and no proxy material has been sent to
the limited partners.
- 51 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF DECEMBER 31, 1995 AND FROM THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 53,707
<SECURITIES> 0
<RECEIVABLES> 105,122
<ALLOWANCES> 6,224
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,546,041
<DEPRECIATION> 2,291,213
<TOTAL-ASSETS> 1,720,292
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,871,374
0
0
<COMMON> 0
<OTHER-SE> (2,350,926)
<TOTAL-LIABILITY-AND-EQUITY> 1,720,292
<SALES> 950,567
<TOTAL-REVENUES> 955,654
<CGS> 0
<TOTAL-COSTS> 680,178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,133
<INTEREST-EXPENSE> 507,675
<INCOME-PRETAX> (386,230)
<INCOME-TAX> 0
<INCOME-CONTINUING> (386,230)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (386,230)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE
IS $0.
</FN>
</TABLE>
