<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-18952
NTS-PROPERTIES PLUS LTD.
(Exact name of registrant as specified in its charter)
Florida 61-1126478
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10172 Linn Station Road
Louisville, Kentucky 40223
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (502) 426-4800
Not Applicable
------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Exhibit Index: See page 15
Total Pages: 16
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<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of June 30, 1996 and December 31, 1995 3
Statements of Operations
For the three months and six months ended
June 30, 1996 and 1995 4
Statements of Cash Flows
For the three months and six months ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-14
PART II
1. Legal Proceedings 15
2. Changes in Securities 15
3. Defaults upon Senior Securities 15
4. Submission of Matters to a Vote of Security Holders 15
5. Other Information 15
6. Exhibits and Reports on Form 8-K 15
Signatures 16
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES PLUS LTD.
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
June 30, 1996 December 31, 1995*
ASSETS
<S> <C> <C>
Cash and equivalents $ 16,639 $ 36,269
Cash and equivalents - restricted 59,213 17,438
Accounts receivable, net of
allowance for doubtful accounts
of $4,860 (1996) and $6,224 (1995) 77,918 105,122
Land, buildings and amenities, net 1,186,050 1,254,828
Land held for development 96,949 96,949
Deferred leasing commissions 160,135 166,071
Organizational and start-up costs,
net 1,191 1,357
Other assets 88,843 42,258
-------------- --------------
$ 1,686,938 $ 1,720,292
============== ==============
LIABILITIES AND PARTNERS' EQUITY
Mortgage and notes payable $ 3,787,161 $ 3,871,374
Accounts payable - operations 267,440 165,270
Accounts payable - construction -- 14,257
Security deposits 12,231 12,030
Other liabilities 48,831 8,287
-------------- --------------
4,115,663 4,071,218
Partners' equity (2,428,725) (2,350,926)
-------------- --------------
$ 1,686,938 $ 1,720,292
============= ==============
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
<S> <C> <C> <C>
PARTNERS' EQUITY
Capital contributions,
net of offering costs $ 11,784,521 $ 100 $ 11,784,621
Net loss - prior years (11,950,641) (120,713) (12,071,354)
Net loss - current year (77,021) (778) (77,799)
Cash distributions
declared to date (2,038,520) (20,592) (2,059,112)
Repurchase of limited
partnership units (5,081) -- (5,081)
------------- ------------ -------------
Balances at June 30, 1996 $ (2,286,742) $ (141,983) $ (2,428,725)
============= ============ =============
<FN>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 29, 1996.
</FN>
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental income, net of provision
for doubtful accounts of $0
(1996) and $1,262 (1995) $ 209,883 $ 201,948 $ 414,513 $ 546,443
Interest and other income 871 2,877 1,159 3,930
--------- --------- --------- ----------
210,754 204,825 415,672 550,373
EXPENSES:
Operating expenses 27,058 26,428 56,422 81,522
Operating expenses - affiliated 12,661 17,550 25,163 45,397
Amortization of capitalized
leasing costs 740 1,613 990 6,167
Interest expense 93,029 97,749 186,840 315,899
Management fees 13,190 12,429 26,451 34,129
Real estate taxes 19,753 20,341 39,631 60,243
Professional and administrative
expenses 10,966 11,522 21,983 26,109
Professional and administrative
expenses - affiliated 25,309 27,037 53,646 54,052
Depreciation and amortization 41,541 45,882 82,345 222,110
--------- --------- --------- ----------
244,247 260,551 493,471 845,628
--------- --------- --------- ----------
Net loss $ (33,493) $ (55,726) $ (77,799) $ (295,255)
========= ========= ========= ==========
Net loss allocated to the limited
partners $ (33,158) $ (55,726) $ (77,021) $(292,302)
========= ========= ========= =========
Net loss per limited partnership
unit $ (0.05) $ (0.08) $ (0.11) $ (0.43)
========= ========= ========= =========
Weighted average number of units 685,647 685,647 685,647 685,647
========= ========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $ (33,493)$ (55,726) $ (77,799) $ (295,255)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Provision for doubtful accounts -- -- -- 1,262
Amortization of capitalized leasing
costs 740 1,613 990 6,167
Depreciation and amortization 41,541 45,882 82,345 222,110
Changes in assets and liabilities:
Cash and equivalents - restricted (21,877) (23,711) (43,500) (38,244)
Accounts receivable 13,268 1,917 27,204 25,198
Deferred leasing commissions 3,779 6,096 5,935 18,503
Other assets 359 556 (22,760) (10,713)
Accounts payable - operations 49,483 (16,312) 102,170 (12,927)
Security deposits (444) 19,330 201 1,098
Other liabilities 19,094 749 40,545 (1,752)
------------ ------------ ----------- -----------
Net cash provided by (used in)
operating activities 72,450 (19,606) 115,331 (84,553)
------------ ------------ ----------- -----------
Additions to land, buildings and
amenities (1,447) (36,390) (23,179) (91,316)
Increase in cash and equivalents -
restricted -- -- -- (14,295)
Decrease in cash and equivalents -
restricted -- -- 1,725 11,745
------------ ------------ ----------- -----------
Net cash used in investing activities (1,447) (36,390) (21,454) (93,866)
------------ ------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and
notes payable (42,408) (30,391) (84,213) (71,428)
Capital contribution by a joint
venture partner -- -- -- 94,275
Additions to loan costs (24,219) (749) (29,294) (18,169)
------------ ------------ ----------- -----------
Net cash provided by (used in)
financing activities (66,627) (31,140) (113,507) 4,678
------------ ------------ ----------- -----------
Net increase (decrease) in cash and
equivalents 4,376 (87,136) (19,630) (173,741)
CASH AND EQUIVALENTS, beginning of
period 12,263 157,683 36,269 244,288
------------ ------------ ----------- -----------
CASH AND EQUIVALENTS, end of period $ 16,639 $ 70,547 $ 16,639 $ 70,547
============ ============ =========== ===========
Interest paid on a cash basis $ 93,883 $ 98,480 $ 188,159 $ 447,853
============ ============ =========== ===========
</TABLE>
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<PAGE>
NTS-PROPERTIES PLUS LTD
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein should be read in conjunction with the
Partnership's 1995 Annual Report. In the opinion of the General Partner, all
adjustments (only consisting of normal recurring accruals) necessary for a fair
presentation have been made to the accompanying financial statements for the
three months and six months ended June 30, 1996 and 1995.
1. Cash and Equivalents - Restricted
- ------------------------------------
Cash and equivalents - restricted represents funds escrowed with mortgage
companies for property taxes in accordance with the loan agreements.
Cash and equivalents - restricted at December 31, 1995 also included
escrow funds which were to be released as capital expenditures, leasing
commissions and tenant improvements were incurred at the properties owned
by the Lakeshore/University II Joint Venture. In 1996, the remaining
balance of these escrow funds were released.
2. New Accounting Pronouncement
- -------------------------------
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (the "Statement") on accounting for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to assets
to be held and used. The Statement also establishes accounting standards
for long-lived assets and certain identifiable intangibles to be disposed
of. The Partnership adopted the Statement as of January 1, 1996 as
required. No adjustments were required.
3. Mortgage and Notes Payable
- -----------------------------
Mortgage and notes payable consist of the following:
June 30, December 31,
1996 1995
---- ----
Mortgage payable to an insurance
company bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building $ 1,679,131 $ 1,736,192
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land and building 1,147,892 1,156,943
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land and building 712,468 721,518
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land 146,063 155,114
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land 58,869 58,869
Note payable to a bank bearing interest
at a fixed rate of 10.6%, due January
31, 1998, secured by land 42,738 42,738
------------- -------------
$ 3,787,161 $ 3,871,374
============= =============
-6-
<PAGE>
3. Mortgages and Notes Payable - Continued
- ---------------------------------------------
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 $4,200,000.
Subsequent to June 30, 1996, the Lakeshore/University II Joint Venture, of
which the Partnership owns a 12% interest, obtained three mortgage loans
from an insurance company totalling $17,400,000 ($6,025,000, $5,775,000
and $5,600,000). The mortgages bear interest at a fixed rate of 8.125%,
are due August 1, 2008 and are secured by the assets of the Joint Venture.
The repayment of principal will be amortized over 12 years. The proceeds
from the loans were used to pay off the Joint Venture's current debt
financings of approximately $16.8 million which bore interest at a fixed
rate of 10.6% and fund loan closing costs of approximately $280,000. The
Partnership's proportionate interest in the notes which were paid off was
approximately $2,000,000 or 12%. The remaining proceeds will be used to
fund Joint Venture tenant finish improvements and leasing costs.
4. Related Party Transactions
- --------------------------------
Property management fees of $26,451 and $34,129 were paid to NTS
Development Company, an affiliate of the General Partner of the
Partnership, during the six months ended June 30, 1996 and 1995,
respectively. The fee is equal to 6% of all revenues from commercial
properties pursuant to an agreement with the Partnership. Also 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 $479 and $3,585 as a
repair and maintenance fee during the six months ended June 30, 1996 and
1995, respectively, and has capitalized this cost as part of land,
buildings and amenities.
As permitted by the Partnership agreement, the Partnership was also
charged the following amounts from NTS Development Company for the six
months ended June 30, 1996 and 1995. These charges include items which
have been expensed as operating expenses - affiliated or professional and
administrative expenses - affiliated and items which have been capitalized
as deferred leasing commissions, other assets or as land, buildings and
amenities.
1996 1995
---- ----
Administrative $ 58,395 $ 59,724
Leasing 10,108 17,544
Property manager 14,775 22,890
Other 882 1,263
---------- -----------
$ 84,160 $ 101,421
========== ===========
Accounts payable - operations includes approximately $168,000 and $113,000
due NTS Development Company at June 30, 1996 and December 31, 1995,
respectively.
5. Reclassification of 1995 Financial Statements
- ---------------------------------------------------
Certain reclassifications have been made to the June 30, 1995 financial
statements to conform with the June 30, 1996 classifications. These
reclassifications have no effect on previously reported operations.
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The occupancy levels at the Partnership's properties as of June 30 were as
follows:
1996 1995
---- ----
Wholly-owned Property
- ---------------------
Lakeshore Business Center Phase II (See L/U II See below See below
Joint Venture below) (1) (1)
Property owned in Joint Venture with NTS-
Properties V (ownership % at June 30,1996)
- ------------------------------------------
University Business Center Phase II (See L/U II See below See below
Joint Venture below) (1) (1)
Property owned in Joint Venture with NTS-
Properties IV and NTS-Properties VII, Ltd.
(ownership % at June 30, 1996)
- ------------------------------------------
Blankenbaker Business Center 1A (39%) 100% 100%
Properties owned through Lakeshore/University II
Joint Venture (L/U II Joint Venture) (ownership %
at June 30, 1996)
- -------------------------------------------------
Lakeshore Business Center Phase I (12%) 99% 83%
(2)
Lakeshore Business Center Phase II (12%) 80% 82%
University Business Center Phase II (12%) 100% 100%
(1) During the first quarter of 1995, the Partnership's ownership interest in
the property changed. See below for a discussion regarding the change.
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding this change.
(Results of Operations continued on next page)
-8-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The rental and other income generated by the Partnership's properties for the
three months and six months ended June 30, 1996 and 1995 was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
Wholly-owned Property
- ---------------------
Lakeshore Business Center Phase
II (See L/U II Joint Venture
below) N/A N/A N/A $ 98,182
(1)
Property owned in Joint Venture
with NTS-Properties V (ownership
% at June 30, 1996)
- --------------------------------
University Business Center Phase
II (See L/U II Joint Venture
below) N/A N/A N/A $ 82,123
(1)
Property owned in Joint Venture
with NTS-Properties IV and NTS-
Properties VII, Ltd. (ownership
% at June 30, 1996)
- -------------------------------
Blankenbaker Business Center 1A
(39%) $ 91,554 $ 91,554 $ 183,057 $ 179,972
Properties owned through
Lakeshore/University II Joint
Venture (L/U II Joint Venture)
(ownership % at June 30, 1996)
- ------------------------------
Lakeshore Business Center
Phase I (12%) $ 44,490 $ 34,680 $ 87,547 $ 58,406
(2)
Lakeshore Business Center
Phase II (12%) $ 35,900 $ 40,326 $ 68,890 $ 65,679
University Business Center
Phase II (12%) $ 38,278 $ 37,461 $ 75,510 $ 64,502
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 June 30, 1995 is reflected below
(see L/U II Joint Venture). See below for a discussion regarding this
change.
(2) The Partnership obtained an interest in this property during the first
quarter of 1995. See below for a discussion regarding this change.
A wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential Service Bureau, Inc.) has leased 100% of Blankenbaker Business
Center 1A through July 2005. In addition to monthly rent payments, Prudential
Service Bureau, Inc. is obligated to pay substantially all of the operating
expenses attributable to its space. The change in rental and other income at
Blankenbaker Business Center 1A for the three months and six months ended June
30, 1996 as compared to the same periods in 1995 was not significant.
-9-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The 16% increase in occupancy at Lakeshore Business Center Phase I from June 30,
1995 to June 30, 1996 can be attributed to eight new leases totalling
approximately 20,400 square feet, which includes approximately 6,900 square feet
in expansions by three current tenants. The new leases and expansions are
partially offset by two tenants, who occupied a total of approximately 3,400
square feet, vacating the premises at the end of the lease terms. Average
occupancy increased from 80% (1995) to 98% (1996) for the three months ended
June 30 and from 79% (1995) to 98% (1996) for the six month period. Rental and
other income increased at Lakeshore Business Center Phase I for the three months
and six months ended June 30, 1996 as compared to the same periods in 1995
primarily as a result of the increase in average occupancy and a decrease in the
provision for doubtful accounts. The increase in rental and other income for the
six months ended June 30, 1996 is also due to the fact that the Partnership
acquired an interest in Lakeshore Business Center Phase I as a result of the
formation of the Lakeshore/University II Joint Venture (L/U II Joint Venture) in
January 1995. (See below for a discussion regarding the Joint Venture.)
The 2% decrease in occupancy at Lakeshore Business Center Phase II from June 30,
1995 to June 30, 1996 can be attributed to four tenant move-outs totalling
approximately 11,000 square feet and a downsizing by a current tenant of its
existing space by approximately 6,000 square feet. Two of the move-outs,
totalling approximately 5,100 square feet, represent tenants who vacated prior
to the end of the lease term but are continuing to pay rent through the end of
the lease term (September 1996 and August 1997). 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 fourth tenant,
who occupied approximately 4,500 square feet, vacated the premises at the end of
the lease term. Partially offsetting the tenant move-outs are three new leases
totalling approximately 13,800 square feet and a 3,600 square foot expansion by
a current tenant of its existing space. Average occupancy at Lakeshore Business
Center Phase II decreased from 81% (1995) to 80% (1996) for the three months
ended June 30 and from 80% (1995) to 76% (1996) for the six month period. In the
opinion of the General Partner of the Partnership, the decrease in occupancy at
Lakeshore Business Center Phase II is only a temporary fluctuation and does not
represent a downward occupancy trend. Overall, the decrease in rental and other
income at Lakeshore Business Center Phase II for the three months and six months
ended June 30, 1996 as compared to the same periods in 1995 is primarily due to
the decrease in average occupancy. The decrease in rental and other income for
the six month period is also due to the Partnership's decreased ownership in
Lakeshore Business Center Phase II. (See below for a discussion regarding this
change.)
As of June 30, 1996, Lakeshore Business Center Phase II had approximately 3,400
square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the third quarter. With the new lease, the
business center's occupancy should improve to 83%.
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
52,000 square feet (or 67%) of University Business Center Phase II. Of the total
being sub-leased, approximately 41,000 square feet (or 79%) is being leased by
Full Sail Recorders, Inc. (a major tenant at University Business Center Phase I,
a neighboring property owned by an affiliate of the General Partner of the
Partnership). In December 1995, Full Sail Recorders, Inc. ("Full Sail") signed a
33-month lease with the L/U II Joint Venture for 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. The Joint
Venture has received notice that PCA will not renew its lease when it expires in
April 1998. At this time it is not known whether the other sublessees will sign
lease renewals with the Joint Venture.
-10-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in rental and other income at University Business Center Phase II
for the six months ended June 30, 1996 as compared to the same period in 1995 is
due to a decrease in common area expense reimbursements. The tenant reimburses
the Joint Venture for common area expenses as part of the lease agreement. The
decrease in rental and other income for the six month period can also be
attributed to the Partnership's decreased ownership of University Business
Center Phase II. (See below for a discussion of this change.) The change in
rental and other income at University Business Center Phase II for the three
month period was not significant.
In cases of tenants who cease making rental payments or abandon the premises in
breach of their lease, the Partnership pursues collection through the use of
collection agencies and other remedies available by law when practical. In cases
where tenants have vacated as a result of bankruptcy, the Partnership has taken
legal action when it was thought there could be a possible collection. There
have been no funds recovered as a result of these actions during the six months
ended June 30, 1996 and 1995. As of June 30, 1996, there were no on-going cases.
The change in interest and other income for the three months and six months
ended June 30, 1996 as compared to the same periods in 1995 was not significant.
The decrease in operating expenses for the six months ended June 30, 1996 as
compared to the same period in 1995 is primarily a result of the Partnership's
decrease in ownership of certain properties which were contributed to the L/U II
Joint Venture in January 1995. (See below for further discussion regarding the
Joint Venture.) The change in operating expenses for the three month period was
not significant.
The decrease in operating expenses - affiliated for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 can be
attributed to a decrease in leasing salaries at Blankenbaker Business Center 1A.
The decrease in operating expenses - affiliated during the six month period can
also be attributed to a decrease in ownership of certain properties which were
contributed to the L/U II Joint Venture in 1995. (See below for further
discussion regarding the Joint Venture). Operating expenses - affiliated are
expenses for services performed by employees of NTS Development Company, an
affiliate of the General Partner of the Partnership.
The decrease in amortization of capitalized leasing costs for the three months
and six months ended June 30, 1996 as compared to the same periods in 1995 is
due primarily to costs capitalized during initial lease-up at University
Business Center Phase II becoming fully amortized in 1995.
Interest expense has decreased for the six months ended June 30, 1996 as
compared to the same period in 1995 primarily as a result of the Partnership's
decrease in ownership of certain properties which were contributed to the L/U II
Joint Venture in January 1995. (See below for further discussion regarding the
Joint Venture.) Debt totalling approximately $16.7 million was contributed by
the Partnership to the Joint Venture. The decrease in interest expense for the
three months and six months ended June 30 can also be attributed to continued
principal payments.
Management fees are calculated as a percentage of cash collections; however,
revenue for reporting purposes is recorded on the accrual basis. As a result,
the fluctuations of revenues between periods will differ from the fluctuations
of management fee expense. The decrease in management fee expense for the six
months ended June 30, 1996 as compared to the same period in 1995 can be
attributed to the Partnership's decrease in ownership of certain properties
which were contributed to the L/U II Joint Venture in January 1995. (See below
for further discussion of the Joint Venture.) The change in management fees for
the three months ended June 30, 1996 as compared to the same period in 1995 was
not significant.
The decrease in real estate taxes for the six months ended June 30, 1996 as
compared to the same period in 1995 is primarily a result of the Partnership's
decrease in ownership of certain properties which were contributed to the L/U II
Joint Venture in January 1995. (See below for further discussion of the Joint
Venture.) The change in real estate taxes for the three months ended June 30,
1996 as compared to the same period in 1995 was not significant.
-11-
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in professional and administrative expenses for the six months
ended June 30, 1996 as compared to the same period in 1995 is due primarily to a
decrease in outside accounting fees. The change in professional and
administrative expenses for the three month period was not significant.
The change in professional and administrative expenses - affiliated for the
three month and six month periods was not significant. Professional and
administrative expenses - affiliated are expenses for services performed by
employees of NTS Development Company, an affiliate of the General Partner.
Depreciation and amortization expense has decreased for the three months and six
months ended June 30, 1996 as compared to the same periods in 1995 due to a
portion of the assets of the Partnership's joint venture properties becoming
fully depreciated. The decrease in depreciation and amortization for the six
month period is also a result of the Partnership's decrease in ownership of
certain properties which were contributed to the L/U II Joint Venture in January
1995. (See below for further discussion of the Joint Venture.) Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets which are 5 - 30 years for land improvements, 30 years for buildings, 5 -
30 years for building improvements and 5 - 30 years for amenities. The aggregate
cost of the Partnership's properties for Federal tax purposes is approximately
$6,900,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by (used in) operations was $115,331 and $(84,553) for the six
months ended June 30, 1996 and 1995, respectively. The Partnership has not made
any cash distributions since the quarter ended June 30, 1991. Distributions will
be resumed once the Partnership has established adequate cash reserves and is
generating cash from operations which, in management's opinion, is sufficient to
warrant future distributions. The primary source of future liquidity and
distributions is expected to be derived from cash generated by the Partnership's
properties after adequate cash reserves are established for future leasing
costs, tenant finish costs and capital improvements. Cash reserves (which are
unrestricted cash and equivalents as shown on the Partnership's balance sheet as
of June 30) were $16,639 and $70,547 as of June 30, 1996 and 1995, respectively.
As previously disclosed in the Partnership's Form 10-K for the year ended
December 31, 1995, a new joint venture known as Lakeshore/University II Joint
Venture (L/U II Joint Venture) was formed on January 23, 1995 among the
Partnership, NTS-Properties IV, NTS-Properties V and NTS/Fort Lauderdale, Ltd.,
affiliates of the General Partner of the Partnership, for purposes of owning
Lakeshore Business Center Phases I and II, University Business Center Phase II
and certain undeveloped tracts of land adjacent to the Lakeshore Business Center
development.
As of June 30, 1996, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company in the amount of $4,352,334. The
mortgage is recorded as a liability of the Joint Venture and is secured by the
assets of the Joint Venture. The Partnership's proportionate interest in the
mortgage at June 30, 1996 is $1,679,131. The mortgage bears interest at a fixed
rate of 8.5% and is due November 15, 2005. Monthly principal payments are based
upon an 11-year amortization schedule. At maturity, the mortgage will have been
repaid based on the current rate of amortization.
As of June 30, 1996, the L/U II Joint Venture had notes payable to banks in the
following amounts: $9,132,000, $5,668,000, $1,162,000, $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 June
30, 1996 was $1,147,892, $712,468, $146,063, $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. The Joint Venture met this funding requirement during 1995. In
1996, all funds in the escrow account had been released. The notes bear
-12-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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 $9,132,000,
$5,668,000 and $1,162,000 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 were 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 above.
Subsequent to June 30, 1996, the L/U II Joint Venture obtained three mortgage
loans from an insurance company totalling $17,400,000 million ($6,025,000,
$5,775,000 and $5,600,000). The mortgages bear interest at a fixed rate of
8.125%, are due August 1, 2008, and are secured by the assets of the Joint
Venture. The repayment of principal will be amortized over 12 years, with
monthly payments of principal and interest totalling approximately $190,000. The
proceeds from the loans were used to pay off the Joint Venture's current debt
financings of approximately $16.8 million which bore interest at a fixed
interest rate of 10.6% and fund loan closing costs of approximately $280,000.
The Partnership's proportionate interest in the notes which were paid off was
approximately $2,000,000 or 12%. The remaining proceeds will be used to fund
Joint Venture tenant finish improvements and leasing costs.
The majority of the Partnership's 1996 cash flow was derived from operating
activities. The majority of the Partnership's 1995 cash flow was derived from
the use of cash reserves. Cash flows used in investing activities include tenant
finish improvements. Changes to current tenant finish improvements are a typical
part of any lease negotiation. Improvements generally include a revision to the
current floor plan to accommodate a tenant's needs, new carpeting and paint
and/or wallcovering. The extent and cost of these improvements are determined by
the size of the space and whether the improvements are for a new tenant or
incurred because of a lease renewal. Cash flows used in investing activities in
1995 also include cash which is being escrowed for capital expenditures, leasing
commissions and tenant improvements at the properties owned by the L/U II Joint
Venture. Cash flows provided by investing activities in 1996 were the result of
a release of these escrow funds. Cash flows provided by investing activities in
1995 were the result of a release from the funds escrowed for tenant finish
improvements at Lakeshore Business Center Phase II as required by a July 1993
loan extension agreement. Cash flows used in investing activities were funded by
cash flow from operating activities and a capital contribution (see below). Cash
flows 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 increase in
cash which resulted from a capital contribution when the Joint Venture was
formed on January 23, 1995 (see above for a discussion of the Joint Venture).
The Partnership utilizes the proportionate consolidation method of accounting
for joint venture properties. The Partnership's interest in the joint venture's
assets, liabilities, revenues, expenses and cash flows are combined on a
line-by-line basis with the Partnership's own assets, liabilities, revenues,
expenses and cash flows. The Partnership does not expect any material change in
the mix and relative cost of capital resources except that which is discussed in
the following paragraph.
In the next 12 months, the demand on future liquidity will increase as a result
of the three mortgage loans the L/U II Joint Venture obtained subsequent to June
30, 1996 (see discussion above). The Partnership also expects the demand on
future liquidity to increase as a result of future leasing activity at Lakeshore
Business Center Phases I and II and University Business Center Phase II. At this
time, the future leasing and tenant finish costs which will be required to renew
the current leases or obtain new tenants are unknown. It is anticipated that the
cash flow from operations and cash reserves will be sufficient to meet the needs
of the Partnership.
-13-
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
Due to the fact that no distributions were made during the six months ended June
30, 1996 or 1995, the table which presents that portion of the distribution that
represents a return of capital on a Generally Accepted Accounting Principle
basis has been omitted.
Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant improvements at the Partnership's properties as
required by lease negotiations. Changes to current tenant finish improvements
are a typical part of any lease negotiation. Improvements generally include a
revision to the current floor plan to accommodate a tenant's needs, new
carpeting and paint and/or wallcovering. The extent and cost of the improvements
are determined by the size of the space being leased and whether the
improvements are for a new tenant or incurred because of a lease renewal. The
tenant finish improvements will be funded by cash flow from operations and cash
reserves.
As of June 30, 1996, the L/U II Joint Venture had a commitment for a $200,000
special tenant finish allowance, of which approximately $92,000 will be
reimbursed by the tenant over a 27-month period 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 the net commitment ($200,000
less $92,000) is approximately $13,000 or 12%.
The Partnership had no other material commitments for renovations or capital
improvements at June 30, 1996.
The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at June 30, 1996 in the land held for
development is approximately $97,000. The Joint Venture currently has a contract
for the sale of .7 acres of this land for $175,000.
The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's properties. At Lakeshore Business
Center Phases I and II, the Partnership has an on-site leasing agent, an
employee of NTS Development Company (an affiliate of the General Partner), who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local advertising with the assistance of NTS Development Company's
marketing staff. The leasing and renewal negotiations of University Business
Center Phase II are handled by a leasing agent, an employee of NTS Development
Company, located at the University Business Center development.
Leases at the Partnership's properties provide for tenants to contribute toward
the payment of common area expenses, insurance and real estate taxes. Leases at
the Partnership's properties also provide for rent increases which are based
upon increases in the consumer price index. These lease provisions should
protect the Partnership's operations from the impact of inflation and changing
prices.
-14-
<PAGE>
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K was filed May 14, 1996 to report in Item 5 that
Lakeshore/University II Joint Venture had obtained a
commitment for permanent financing from an insurance company
totalling $17,400,000.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NTS-PROPERTIES PLUS, LTD.
(Registrant)
BY: NTS-Properties Plus Associates
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
John W. Hampton
Senior Vice President
Date: August 13 , 1996
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF JUNE 30, 1996 AND FROM THE STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 75,852
<SECURITIES> 0
<RECEIVABLES> 77,918
<ALLOWANCES> 4,860
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,186,050
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 1,686,938
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,787,161
0
0
<COMMON> 0
<OTHER-SE> (2,428,725)
<TOTAL-LIABILITY-AND-EQUITY> 1,686,938
<SALES> 414,513
<TOTAL-REVENUES> 415,672
<CGS> 0
<TOTAL-COSTS> 231,002
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,840
<INCOME-PRETAX> (77,799)
<INCOME-TAX> 0
<INCOME-CONTINUING> (77,799)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,799)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE
IS $0.
<F2>THIS INFORMATION IS NOT DISCLOSED IN THE PARTNERSHIP'S FORM 10-Q FILING.
</FN>
</TABLE>
