<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 March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number 0-18952
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 (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
Exhibit Index: See page 16
Total Pages: 17
<PAGE>
TABLE OF CONTENTS
Pages
PART I
Item 1. Financial Statements
Balance Sheets and Statement of Partners' Equity
As of March 31, 1997 and December 31, 1996 3
Statements of Operations
For the three months ended March 31, 1997 and 1996 4
Statements of Cash Flows
For the three months ended March 31, 1997 and 1996 5
Notes To Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-15
PART II
1. Legal Proceedings 16
2. Changes in Securities 16
3. Defaults upon Senior Securities 16
4. Submission of Matters to a Vote of Security Holders 16
5. Other Information 16
6. Exhibits and Reports on Form 8-K 16
Signatures 17
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<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NTS-PROPERTIES PLUS LTD.
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
<CAPTION>
As of As of
March 31, 1997 December 31, 1996*
-------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 21,002 $ 42,944
Cash and equivalents - restricted 44,965 24,540
Accounts receivable, net of allowance
for doubtful accounts of $377 (1997)
and (1996) 53,619 50,408
Land, buildings and amenities, net 1,088,028 1,121,097
Land held for development 96,949 96,949
Deferred leasing commissions 150,203 153,380
Organizational and start-up costs, net 942 1,025
Other assets 96,629 80,945
----------- -----------
$ 1,552,337 $ 1,571,288
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgage and notes payable $ 3,711,645 $ 3,770,347
Accounts payable - operations 332,822 268,688
Accounts payable - construction 3,541 4,106
Security deposits 13,649 12,030
Other liabilities 36,037 15,421
----------- -----------
4,097,694 4,070,592
Commitments and Contingencies
Partners' equity (2,545,357) (2,499,304)
----------- -----------
$ 1,552,337 $ 1,571,288
=========== ===========
</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 (12,094,247) (122,164) (12,216,411)
Net loss - current year (33,637) (340) (33,977)
Cash distributions to partners
to date (2,038,520) (20,592) (2,059,112)
Repurchase of limited
partnership units (20,478) -- (20,478)
------------ ------------ ------------
Balances at March 31, 1996 $ (2,402,361) $ (142,996) $ (2,545,357)
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on March 31, 1997.
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<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
Revenues:
Rental income $ 189,412 $ 204,630
Interest and other income 623 289
--------- ---------
190,035 204,919
Expenses:
Operating expenses 35,715 29,616
Operating expenses - affiliated 15,018 12,502
Interest expense 76,943 93,812
Management fees 11,932 13,262
Real estate taxes 19,763 19,879
Professional and administrative
expenses 11,456 11,033
Professional and administrative
expenses - affiliated 13,133 28,321
Depreciation and amortization 40,052 40,803
--------- ---------
224,012 249,228
--------- ---------
Net loss $ (33,977) $ (44,309)
========= =========
Net loss allocated to the limited
partners $ (33,637) $ (43,866)
========= =========
Net loss per limited partnership
unit $ (.05) $ (.06)
========= =========
Weighted average number of limited
partnership units 674,780 685,647
========= =========
</TABLE>
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<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(33,977) $(44,309)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 40,052 40,803
Changes in assets and liabilities:
Cash and equivalents - restricted (20,425) (21,623)
Accounts receivable (3,211) 13,936
Deferred leasing commissions 3,177 2,157
Other assets (17,366) (22,868)
Accounts payable - operations 64,134 52,687
Security deposits 1,619 645
Other liabilities 20,616 21,453
-------- --------
Net cash provided by (used in) operating activities 54,619 42,881
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, amenities (5,783) (21,732)
Decrease in cash and equivalents - restricted -- 1,725
-------- --------
Net cash used in investing activities (5,783) (20,007)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage and notes
payable (58,702) (41,805)
Additions to loan costs -- (5,075)
Repurchase of limited partnership Units (12,076) --
-------- --------
Net cash used in financing activities (70,778) (46,880)
-------- --------
Net decrease in cash and equivalents (21,942) (24,006)
CASH AND EQUIVALENTS, beginning of period 42,944 36,269
-------- --------
CASH AND EQUIVALENTS, end of period $ 21,002 $ 12,263
======== ========
Interest paid on a cash basis $ 78,110 $ 94,276
======== ========
</TABLE>
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<PAGE>
NTS-PROPERTIES PLUS LTD.
NOTES TO FINANCIAL STATEMENTS
The financial statements and schedules included herein should be read in
conjunction with the Partnership's 1996 Annual Report. In the opinion of the
general partner, all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation have been made to the accompanying financial
statements for the three months ended March 31, 1997 and 1996
1. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds escrowed with mortgage
companies for property taxes in accordance with the loan agreements.
2. Interest Repurchase Reserve
---------------------------
On November 6, 1996, the Partnership established an Interest Repurchase
Reserve in the amount of $25,000 pursuant to Section 16.4 of the
Partnership's Amended and Restated Agreement of Limited Partnership. With
these funds, the Partnership will be able to repurchase 35,714 Units at a
price of $0.70 per unit. Through March 31, 1997, the Partnership has
repurchased a total of 21,995 Units for $15,397. Repurchased Units are
retired by the Partnership, thus increasing the share of ownership of each
remaining investor. On February 17, 1997, the Partnership indefinitely
suspended the Interest Repurchase Program.
3. Mortgages Payable
-----------------
Mortgage and notes payable consist of the following:
March 31, December 31,
1997 1996
----------- ------------
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.5%, due November 15, 2005,
secured by land and building $ 1,588,876 $ 1,619,600
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 735,039 744,727
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 704,540 713,826
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 683,190 692,194
---------- ----------
$ 3,711,645 $ 3,770,347
========== ==========
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 approximates carry value.
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<PAGE>
4. Related Party Transactions
--------------------------
Property management fees of $11,932 (1997) and $13,262 (1996) were paid to
NTS Development Company, an affiliate of the general partner of the
Partnership, during the three months ended March 31. The fee is equal to
6% of all revenues from commercial properties pursuant to an agreement
with the Partnership. Also pursuant to an agreement, NTS Development
Company will receive a repair and maintenance fee equal to 5.9% of costs
incurred which relate to capital improvements. The Partnership has
incurred $860 (1997) and $373 (1996) as a repair and maintenance fee
during the three months ended March 31 and has capitalized this cost as
part of land, buildings and amenities.
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the three months ended
March 31, 1997 and 1996. These charges include items which have been
expensed as operating expenses - affiliated or professional and
administrative expenses - affiliated and items which have been capitalized
as deferred leasing commissions, other assets or as land, buildings and
amenities.
1997 1996
------- -------
Administrative $15,579 $30,404
Leasing 6,774 6,018
Property manager 9,357 6,919
Other 51 --
------- -------
$31,761 $43,341
======= =======
Accounts payable - operations includes approximately $275,000 and $233,000
due NTS Development Company at March 31, 1997 and December 31, 1996,
respectively. NTS Development Company has indicated to the Partnership
that they will not demand repayment of the amounts outstanding as of March
31, 1997 during 1997. Payments to this affiliate will be made during 1997
as cash flows permits.
5. Commitments and Contingencies
-----------------------------
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University
Business Center Phase II. The business center is owned by the
Lakeshore/University II (L/U II) Joint Venture in which the Partnership
has a 12% interest. The original lease term is for seven years, and the
tenant took occupancy in April 1991. During 1994, 1995 and 1996, Crosby
sub-leased a portion of the business center. Currently, Crosby has
sub-leased, through the end of their lease term, approximately 85,000
square feet(including approximately 10,000 square feet of mezzanine space)
of University Business Center Phase II's approximately 88,000 square feet
of net rentable area (or 96%). Of the total being sub-leased,
approximately 73,000 square feet (or 86%) is being leased by Full Sail
Recorder's Inc. ("Full Sail"), a major tenant at University Business
Center Phase I, a neighboring property owned by an affiliate of the
General Partner of the Partnership. Through December 1996, Crosby
continued to make rent payments pursuant to the original lease terms. The
Joint Venture has received notice that Crosby does not intend to pay full
rental due under the original lease agreement from and after January 1997.
The rental income from this property accounted for approximately 18% of
the partnership's total revenues during 1996. The Joint Venture has
instituted legal action to seek resolution of this situation. Although the
Joint Venture does not presently have lease agreements (except as noted
below) with the sub-lessees noted above, beginning February 1997 rent
payments from these sub-lessees are being
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<PAGE>
5. Commitment and Contingencies - Continued
----------------------------------------
made directly to the Joint Venture. The Joint Venture is currently
negotiating directly with the sub-lessees to enter into lease agreements
for the space presently sublet. At this time, the future leasing and
tenant finish costs which will be required to release this space are
unknown except as noted below for the negotiations with Full Sail.
In December 1995, Full Sail signed a 33 month lease with the L/U II Joint
Venture for approximately 41,000 square feet it currently sub-leases from
Crosby. In November 1996, Full Sail signed a lease amendment which
increased the square footage from 41,000 square feet to 48,000 square feet
and extended the lease term from 33 months to 76 months. In November 1996,
Full Sail also signed a 52 month lease for an additional approximately
21,000 square feet it presently sub-leases from Crosby. Both lease terms
commence April 1998 when the Crosby lease ends. As part of the lease
negotiations, Full Sail will receive a total of $450,000 in special tenant
allowances ($200,000 resulting from the original lease signed December
1995 and $250,000 resulting from the lease amendment signed November
1996). Approximately $92,000 of the total allowance is to be reimbursed by
Full Sail to the L/U II Joint Venture. The Partnership's proportionate
share of the net commitment ($450,000 less $92,000) is approximately
$43,000 or 12%. The tenant allowance will be due and payable to Full Sail
pursuant to the previously mentioned lease agreements, as appropriate
invoices for tenant finish costs incurred by Full Sail are submitted to
the L/U II Joint Venture. The source of funds for this commitment is
expected to be cash flows from operations and/or cash reserves.
- 8 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The occupancy levels at the Partnership properties as of March 31 were as
follows:
1997 1996
---- ----
Property owned in Joint Venture with
NTS-Properties IV and NTS-Properties VII,
Ltd.(Ownership % at March 31, 1997)
- -----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100%
Properties owned through Lakeshore/University
II Joint Venture (L/U II Joint
Venture)(Ownership % at March 31, 1997)
- ---------------------------------------
Lakeshore Business Center Phase I (12%) 95% 97%
Lakeshore Business Center Phase II (12%) 94% 72%
University Business Center Phase II (12%) 99% 99%
The rental and other income generated by the Partnership's properties for the
three months ended March 31, 1997 and 1996 was as follows:
1997 1996
-------- -------
Property owned in Joint Venture with NTS-
Properties IV and NTS-Properties VII,
Ltd. (Ownership % at March 31, 1997)
- ------------------------------------
Blankenbaker Business Center 1A (39%)
$ 91,554 $ 91,503
Properties owned through Lakeshore/
University II Joint Venture (L/U II Joint
Venture (Ownership % at March 31, 1997)
- ---------------------------------------
Lakeshore Business Center Phase I (12%) $ 44,468 $ 43,056
Lakeshore Business Center Phase II (12%) $ 41,735 $ 32,989
University Business Center Phase II (12%) $ 11,838 $ 37,231
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
- 9 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
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 ended March 31, 1997 as
compared to the same period in 1996 was not significant.
The 2% decrease in occupancy at Lakeshore Business Center Phase I from March 31,
1996 to March 31, 1997 can be attributed to five tenant move-outs totalling
approximately 10,300 square feet. The five move-outs consists of one tenant
vacating at the end of the lease term (1,800 square feet), one tenant exercising
a termination option (1,600 square feet - no termination fee was required) and
three tenants vacating prior to the end of the lease term - one due to a
business decision to consolidate its office space at another location (700
square feet - tenant paid rent through end of lease), one due to a downsizing
decision by the tenant's parent company (1,200 square feet - tenant paid the L/U
II Joint Venture a lease termination fee (recorded as rental income) of
approximately $7,000 of which the Partnership's proportionate share is $840 or
12%) and one due to bankruptcy (5,000 square feet - tenant ceased rental
payments). The write-off of accrued income connected with these leases was not
significant. The move- outs are partially offset by six new leases totalling
approximately 7,300 square feet and an expansion by a current tenant of its
existing space totalling 1,000 square feet. Average occupancy for the three
months ended March 31 decreased from 98% in 1996 to 94% in 1997. The change in
rental and other income at Lakeshore Business Center Phase I for the three
months ended March 31, 1997 as compared to the same period in 1996 was not
significant.
As of March 31, 1997, Lakeshore Business Center Phase I has approximately 2,000
square feet of additional space leased to a current tenant. The tenant is
expected to take occupancy during the second quarter of 1997. With the new
lease, the business center's occupancy should improve to 97%. See the Liquidity
and Capital Resources section of this item for the tenant finish commitment
relating to this lease.
The 22% increase in occupancy at Lakeshore Business Center Phase II from March
31, 1996 to March 31, 1997 can be attributed to seven new leases totaling
approximately 24,400 square feet which includes approximately 7,000 square feet
in expansions by two current tenants. One tenant, Lambda Physik, accounts for
nearly 11,000 square feet of the total new leases and has become the largest
tenant in the building; occupying approximately 11% of the total building
rentable square feet. Partially offsetting the new leases is a downsizing by a
current tenant of its existing space of approximately 3,600 square feet. The
downsizing was the result of a decision by the tenant's management to centralize
its warehouse operation with another location. The downsizing was done in
conjunction with a lease renewal; therefore, there was no write-off of accrued
income. Average occupancy at Lakeshore Business Center Phase II increased for
the three months ended March 31 from 72% (1996) to 91% (1997). The increase in
rental and other income at Lakeshore Business Center Phase II for the three
months ended March 31, 1997 as compared to the three months ended March 31, 1996
is due primarily to the increase in average occupancy.
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original lease term is for seven years, and the tenant took
occupancy in April 1991. As a result of Crosby downsizing and sub-leasing a
portion of its leased space, occupancy has decreased to 99% at March 31, 1997
and 1996. During January 1997, Crosby vacated the remaining space it occupied at
the business center. See below for a further discussion of Crosby and its leased
space.
- 10 -
<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in rental and other income at University Business Center Phase II
for the three months ended March 31, 1997 as compared to the same period in 1996
is due to the following. Through the end on 1996, Crosby continued to make rent
payments pursuant to the original lease term. The Joint Venture has received
notice that Crosby does not intend to pay full rental due under the lease
agreement from and after January 1997. Although the Joint Venture does not
presently have lease agreements (except as noted below) with Crosby's
sub-tenants, beginning February 1997, rent payments from Crosby's sub-tenants
(see discussion below) are being made directly to the Joint Venture, which are
substantially less than what Crosby owed. Currently, the Joint Venture is
recognizing income to the extent of what is being collected from the
sub-tenants. The decrease in rental and other income is also due to the fact
that approximately $70,000 of accrued income connected with the Crosby lease was
written-off during the first quarter of 1997, of which the Partnership's
proportionate share is approximately $8,400 or 12%.
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 on
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 three
months ended March 31, 1997 or 1996.
The change in interest and other income for the three months ended March 31,
1997 as compared to the same period in 1996 was not significant.
The increase in operating expense for the three months ended March 31, 1997 as
compared to the same period in 1996 is due primarily to increased roof repairs
at Blankenbaker Business Center 1A and increased legal expenses at Lakeshore
Business Center Phase I. Fluctuations in operating expenses at Lakeshore
Business Center Phase II and University Business Center Phase II were not
significant.
The increase in operating expense- affiliated for the three months ended March
31, 1997 as compared to the same period in 1996 is primarily the result of
increased property management costs at all of the Partnership's properties.
Operating expenses - affiliated are expenses for service performed by employees
of NTS Development Company, an affiliate of the General Partner of the
Partnership.
Interest expense has decreased for the three months ended March 31, 1997 as
compared to the same period in 1996 primarily as a result of the lower interest
rate on the permanent financings the L/U II Joint Venture obtained in July 1996
(8.125% compared to 10.6% on the previous debt). The decrease is also due to
continued principal payments on the L/U II Joint Venture's and Blankenbaker
Business Center 1A's debt.
Management fee 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 revenue between period will differ from the fluctuations of
management fee expense.
The changes in real estate taxes and professional and administrative expenses
for the three months ended March 31, 1997 as compared to the same period in 1996
were not significant.
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<PAGE>
Results of Operations - Continued
- ---------------------------------
The decrease in professional and administrative expenses - affiliated for the
three months ended March 31, 1997 as compared to the same period in 1996 is due
primarily to decreased salary costs. Professional and administrative expenses-
affiliated are expenses for services preformed by employees of NTS Development
Company, an affiliate of the General Partner.
The change in depreciation and amortization expense for the three months ended
March 31, 1997 as compared to the same period in 1996 was not significant.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which are 5 - 30 year 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 approximately $6,800,000.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operations was $54,619 and $42,881 for the three months ended
March 31, 1997 and 1996, 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 March 31) were $21,002 and $12,263 as of March 31, 1997 and 1996,
respectively.
As of March 31, 1997, the Blankenbaker Business Center Joint Venture had a
mortgage payable with an insurance company in the amount of $4,118,392. 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 March 31, 1997 is $1,588,876. The mortgage bears interest at a fixed
rate of 8.5% and is due November 15, 2005. Monthly principal payments are based
upon a 11-year amortization schedule. At maturity, the mortgage will have been
repaid based on the current rate of amortization.
As of March 31, 1997 the L/U II Joint Venture had three mortgage loans with an
insurance company. The outstanding balances of the loans at March 31, 1997 were
$5,847,568, $5,604,931 and $5,435,084, respectively, for a total of $16,887,583.
The loans are recorded as a liability of the Joint Venture. The Partnership's
proportionate share in the loans at March 31, 1997 was $735,039, $704,540 and
$683,190, respectively, for a total of $2,122,769. 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. Monthly principal payments are based upon a 12-year
amortization schedule. At maturity, the loans will have been repaid based on the
current rate of amortization.
The majority of the Partnership's cash flows were 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 of 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 and whether the improvements are for a new tenant or
incurred because of a lease renewal. Cash flows provided by investing activities
in 1996 were the result of a release of funds escrowed for capital expenditures,
leasing commissions and tenant improvements at the properties owned by the L/U
II Joint Venture as
- 12 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
required by a 1995 loan agreement. Cash flows used in investing activities were
funded by cash flow from operating activities. Cash flows used in financing
activities are for loan costs, principal payments on mortgages and notes payable
and the repurchase of limited partnership Units. 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 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 need of the Partnership.
Due to the fact that no distributions were made during the three months ended
March 31, 1997 or 1996, 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.
Philip Crosby Associates, Inc. ("Crosby") has leased 100% of University Business
Center Phase II. The original lease term is for seven years, and the tenant took
occupancy in April 1991. During 1994, 1995 and 1996, Crosby sub-leased a portion
of the business center. Currently, Crosby has sub-leased, through the end of
their term, approximately 85,000 square feet (including approximately 10,000
square feet of mezzanine space) of University Business Center Phase II's
approximately 88,000 square feet of net rentable area (or 96%). Of the total
being sub-leased, approximately 73,000 square feet (or 86%) is being leased by
Full Sail Recorders, Inc. ("Full Sail"), a major tenant at University Business
Center Phase I, a neighboring property owned by an affiliate of the General
Partner of the Partnership. Through December 1996, Crosby continued to make rent
payments pursuant to the original lease terms. The Joint Venture has received
notice that Crosby does not intend to pay full rental due under the original
lease agreement from and after January 1997. The rental income from this
property accounted for approximately 18% of the partnership's total revenues
during 1996. The Joint Venture has instituted legal action to seek resolution of
this situation. Although the Joint Venture does not presently have lease
agreements (except as noted below) with the sub-lessees noted above, beginning
February 1997 rent payments from the sub-lessees are being made directly to the
Joint Venture. The Joint Venture is currently negotiating directly with the
sub-lessees to enter into lease agreements for the space presently sublet. At
this time, the future leasing and tenant finish costs which will be required to
release this space are unknown except as noted below for the negotiations with
Full Sail.
- 13 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
In December 1995, Full Sail signed a 33 month lease with the L/U II Joint
Venture for approximately 41,000 square feet it currently sub-leases from
Crosby. In November 1996, Full Sail signed a lease amendment which increased the
square footage from 41,000 square feet to 48,000 square feet and extended the
lease term from 33 months to 76 months. In November 1996, Full Sail also signed
a 52 month lease for an additional approximately 21,000 square feet it presently
sub-leases from Crosby. Both lease terms commence April 1998 when Crosby's lease
ends. As part of the lease negotiations, Full Sail will receive a total of
$450,000 in special tenant allowances ($200,000 resulting from the original
lease signed December 1995 and $250,000 resulting from the lease amendment
signed November 1996). Approximately $92,000 of the total allowance is to be
reimbursed by Full Sail to the L/U II Joint Venture. The Partnership's
proportionate share of the net commitment ($450,000 less $92,000) is
approximately $43,000 or 12%. The tenant allowance will be due and payable to
Full Sail pursuant to the previously mentioned lease agreements, as appropriate
invoices for tenant finish costs incurred by Full Sail are submitted to the L/U
II Joint Venture. The source of funds for this commitment is expected to be cash
flow from operations and/or cash reserves.
As of March 31, 1997, the L/U II Joint Venture had a commitment of approximately
$55,000 for tenant finish improvements at Lakeshore Business Center Phase I as a
result of a lease renewal and expansion. The expansion increased the tenants
current leased space by approximately 2,000 square feet and the renewal extends
the lease for five years. The Partnership's proportionate share of the
commitment is approximately $6,900 or 12%. The project is expected to be
completed during the second quarter of 1997. The source of funds for this
project is expected to be cash flow from operations and/or cash reserves.
The Partnership had no other material commitments for renovations or capital
improvements at March 31, 1997.
During 1996, the Partnership established an Interest Repurchase Reserve in the
amount of $25,000 pursuant to Section 16.4 of the Partnership's Amended and
Restated Agreement of Limited Partnership. With these funds the Partnership will
be able to repurchase 35,714 Units at a price of $0.70 per Unit. As of March 31,
1997, 21,995 Units have been repurchased for $15,397. Repurchased Units are
being retired by the Partnership, thus increasing the share of ownership of each
remaining investor.
On February 17, 1997, the repurchase of Partnership Units was indefinitely
suspended in order to conserve cash. This step is being taken until it is clear
that, in the General Partner's opinion, the Partnership has the necessary cash
reserves to meet future leasing and tenant finish costs and has rebuilt cash
reserves to meet the ongoing needs of the Partnership.
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 March 31, 1997 in the asset held for
sale is $96,949. The Joint Venture continues to actively market the asset for
sale. In management's opinion, the net book value of the asset held for sale
approximates the fair market value less cost to sell.
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
- 14 -
<PAGE>
Liquidity and Capital Resources - Continued
- -------------------------------------------
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.
Some of the statements included in Item 2, Management's Discussion and Analysis
of Financial Condition and Results of Operations, may be considered to be
"forward-looking" statements since such statements related to matters which have
not yet occurred. For example, phrases such as the Partnership "anticipates",
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such event not occur, then the result
which the Partnership expected also may not occur or occur in a different
manner, which may be more or less favorable to the Partnership. The Partnership
does not undertake any obligations to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
Any forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations or elsewhere in this report,
which reflects managements's best judgement based on factors known, involve
risks and uncertainties. Actual results could differ materially from these
anticipated in any forward-looking statements as a result of a number of
factors, including but not limited to those discussed below. Any forward-looking
information provided by the Partnership pursuant to the safe harbor established
by recent securities legislation should be evaluated in the context of these
factors.
The Partnership's principal activity is the leasing and management of commercial
business centers. If a major commercial tenant defaults on its lease, the
Partnership's ability to make payments due under its debt agreements, payments
of operating costs and other partnership expenses would be directly impacted. A
lessee's ability to make payments are subject to risks generally associated with
real estate, many of which are beyond the control of the Partnership, including
general or local economic conditions, competition, interest rates, real estate
tax rates, other operating expenses and acts of God.
- 15 -
<PAGE>
PART II. OTHER INFORMATION
l. 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 February 20, 1997 to report in Item 5 the
suspension of the Partnership's Interest Repurchase Program.
- 16 -
<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,
General Partner
BY: NTS Capital Corporation,
General Partner
/s/ John W. Hampton
-------------------
John W. Hampton
Senior Vice President
Date: May 12, 1997
- 17 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONATINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AS OF MARCH 31, 1997 AND FROM THE STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 65,967
<SECURITIES> 0
<RECEIVABLES> 53,619
<ALLOWANCES> 377
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,088,028
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 1,552,337
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 3,711,645
0
0
<COMMON> 0
<OTHER-SE> (2,545,357)
<TOTAL-LIABILITY-AND-EQUITY> 1,552,337
<SALES> 189,412
<TOTAL-REVENUES> 190,035
<CGS> 0
<TOTAL-COSTS> 122,480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,943
<INCOME-PRETAX> (33,977)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,977)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,977)
<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>
