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, 1999
-------------------------------------------
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, 1999 and December 31, 1998 3
Statements of Operations
For the three months ended March 31, 1999 and 1998 4
Statements of Cash Flows
For the three months ended March 31, 1999 and 1998 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
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
BALANCE SHEETS AND STATEMENT OF PARTNERS' EQUITY
------------------------------------------------
<CAPTION>
As of As of
March 31, 1999 December 31, 1998*
-------------- ------------------
ASSETS
<S> <C> <C>
Cash and equivalents $ 25,355 $ 53,634
Cash and equivalents - restricted 50,096 24,258
Accounts receivable 18,694 14,857
Land, buildings and amenities, net 1,923,157 1,943,150
Asset held for sale and development 96,949 96,949
Deferred leasing commissions 106,440 105,802
Other assets 76,204 58,243
----------- ----------
$ 2,296,895 $ 2,296,893
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
Mortgages and note payable $ 2,706,633 $ 2,739,066
Accounts payable 91,978 74,664
Security deposits 16,199 15,231
Other liabilities 51,558 35,406
----------- ----------
2,866,368 2,864,367
Commitments and Contingencies
Partners' equity (569,473) (567,474)
----------- -----------
$ 2,296,895 $ 2,296,893
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
PARTNERS' EQUITY
<S> <C> <C> <C>
Capital contributions, net of
offering costs $ 11,784,521 $ 100 $ 11,784,621
Net income (loss)- prior years (10,164,657) (102,673) (10,267,330)
Net loss - current year (1,979) (20) (1,999)
Cash distributions to partners
to date (2,038,520) (20,592) (2,059,112)
Repurchase of limited
partnership units (25,653) -- (25,653)
------------ ------------ ------------
Balances at March 31, 1999 $ (446,288) $ (123,185) $ (569,473)
============ ============ ============
</TABLE>
* Reference is made to the audited financial statements in the Form 10-K as
filed with the Commission on April 1, 1999.
- 3 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF OPERATIONS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
----------- -----------
Revenues:
<S> <C> <C>
Rental income $ 178,015 $ 227,528
Interest and other income 3,817 957
--------- ----------
181,832 228,485
Expenses:
Operating expenses 26,494 34,182
Operating expenses - affiliated 18,458 15,147
Interest expense 56,388 80,444
Management fees 10,189 13,993
Real estate taxes 16,795 21,856
Professional and administrative
expenses 15,265 10,846
Professional and administrative
expenses - affiliated 11,061 12,416
Depreciation and amortization 29,181 32,065
--------- ----------
183,831 220,949
--------- ----------
Net income (loss) $ (1,999) $ 7,536
========= ==========
Net income (loss) allocated to the limited
partners $ (1,979) $ 7,461
========= ==========
Net income (loss) per limited partnership
unit $ -- $ .01
========= ==========
Weighted average number of limited
partnership units 658,402 663,402
========= ==========
</TABLE>
- 4 -
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF CASH FLOWS
------------------------
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (1,999) $ 7,536
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 29,181 32,065
Changes in assets and liabilities:
Cash and equivalents - restricted (15,838) (22,864)
Accounts receivable (3,837) 6,869
Deferred leasing commissions (638) 5,542
Other assets (19,407) (13,169)
Accounts payable 17,314 (293,363)
Security deposits 968 (736)
Other liabilities 16,149 27,563
----------- ----------
Net cash provided by (used in) operating
activities 21,893 (250,557)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, amenities (7,739) (1,820)
----------- -----------
Net cash used in investing activities (7,739) (1,820)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in note payable 24,527 350,000
Principal payments on mortgages payable (56,960) (63,777)
Cash and equivalents - restricted (10,000) (5,000)
----------- -----------
Net cash provided by (used in) financing
activities (42,433) 281,223
----------- -----------
Net increase (decrease) in cash and equivalents (28,279) 28,846
CASH AND EQUIVALENTS, beginning of period 53,634 39,940
----------- -----------
CASH AND EQUIVALENTS, end of period $ 25,355 $ 68,786
=========== ===========
Interest paid on a cash basis $ 55,399 $ 73,006
=========== ===========
</TABLE>
- 5 -
<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 1998 Form 10-K as filed with the Commission
on April 1, 1999. 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, 1999 and 1998.
1. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Concentration of Credit Risk
----------------------------
NTS-Properties Plus Ltd. has joint venture investments in commercial
properties in Kentucky (Louisville) and Florida (Ft. Lauderdale).
Substantially all of the tenants are local businesses or are businesses
which have operations in the location in which they lease space.
3. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds escrowed with mortgage
companies for property taxes in accordance with the loan agreements and
funds which the Partnership has reserved for the repurchase of limited
partnership Units.
4. Interest Repurchase Reserve
---------------------------
Pursuant to Section 16.4 of the Partnership's Amended and Restated
Agreement of Limited Partnership, the Partnership established an Interest
Repurchase Reserve in 1996.During the years ended December 31, 1998, 1997
and 1996, the Partnership funded $5,000, $0 and $15,572, respectively, to
the reserve.On February 17, 1997, the repurchase of partnership Units was
temporarily suspended in order to conserve cash.This step was taken until
it was clear that, in the General Partner's opinion, the Partnership had
the necessary cash reserves to meet future leasing and tenant finish
costs and had rebuilt cash reserves to meet the ongoing needs of the
Partnership. Through March 31, 1999, the Partnership has repurchased
27,245 Units for $20,572 at prices ranging from $.70 to $1.00 per Unit.
The offering price per Unit was established by the General Partner in its
sole discretion and does not purport to represent the fair market value
or liquidation value of the Units. The balance in the Reserve at March
31, 1999 is $0. Repurchased Units are retired by the Partnership, thus
increasing the percentage of ownership of each remaining investor. The
Interest Repurchase Reserve was funded from cash reserves.
On January 15,1999, the Partnership elected to fund an additional $10,000
to its Interest Repurchase Reserve. With this funding, the Partnership
will be able to repurchase up to 10,000 additional Units at a price of
$1.00 per Unit. If the number of units submitted for repurchase exceeds
that which can be repurchased by the Partnership with the current
funding,those additional Units may be repurchased in subsequent quarters.
The above offering price per Unit was established by the General Partner
in its sole discretion and does not purport to represent the fair market
value or liquidation value of the Unit.
- 6 -
<PAGE>
5. Mortgages and Note Payable
--------------------------
Mortgage and note payable consist of the following:
March 31, December 31,
1999 1998
---- ----
Mortgage payable to an insurance company,
bearing interest at a fixed rate of
8.5%, due November 15, 2005,
secured by land and building $ 1,317,850 $ 1,352,832
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 650,055 661,446
Mortgage payable to an insurance
company, bearing interest at a fixed
rate of 8.125%, due August 1, 2008,
secured by land and building 604,201 614,788
Note payable to a bank, bearing interest
at a fixed rate of 8.5%, due January
29, 2000, collateral provided by NTS
Financial Partnership, an affiliate of
NTS Development Company $ 134,527 $ 110,000
---------- -----------
$ 2,706,633 $ 2,739,066
========== ===========
Based on the borrowing rates currently available to the Partnership for
loans with similar terms and average maturities, the fair value of long
term debt approximates carrying value.
6. Basis of Property
-----------------
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, specifies circumstances in which certain long-lived assets
must be reviewed for impairment. If such review indicates that the
carrying amount of an asset exceeds the sum of its expected future cash
flows, the asset's carrying value must be written down to fair market
value. Application of this standard during the three months ended March
31, 1999 and 1998 did not result in an impairment loss.
7. Related Party Transactions
--------------------------
Property management fees of $10,189 (1999) and $13,993 (1998) 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 $315 as a repair and maintenance fee during the three months
ended March 31, 1999 and has capitalized this cost as part of land,
buildings and amenities. No such expense was incurred for the three months
ended March 31, 1998.
- 7 -
<PAGE>
As permitted by an agreement, the Partnership was also charged the
following amounts from NTS Development Company for the three months ended
March 31, 1999 and 1998. 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.
1999 1998
--------- ----------
Administrative $ 12,938 $ 14,680
Leasing 9,291 3,262
Property manager 11,111 10,249
Other 1,219 153
------- -------
$ 34,559 $ 28,344
======= =======
Accounts payable - operations includes approximately $30,300 and $16,600
due NTS Development Company at March 31, 1999 and December 31, 1998,
respectively. NTS Development Company has agreed to defer amounts owed to
it by the Partnership as of December 31, 1998 and those amounts that will
accrue during fiscal 1999 through the period ending January 1, 2000. In
addition, the Company will provide the financial support necessary for the
Partnership to pay its non-affiliated operating expenses as they come due
during the period ending January 1, 2000. Management believes the Company
has the financial resources to fulfill that commitment. There can be no
assurances that this level of support will continue past January 1, 2000.
8. Segment Reporting
-----------------
The Partnership adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, during the fourth quarter of 1998.
SFAS No. 131 established standards for reporting information about
operating segments in annual financial statements and requires selected
information about operating segments in interim financial reports issued
to limited partners. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision
making group, in deciding how to allocate resources and in assessing
performance. The standard also allows entities to aggregate operating
segments into a single segment if the segments are similar in each of the
six criteria set forth in SFAS No. 131. The Partnership's chief operating
decision-maker is the General Partner.
The Company's reportable operating segments include only one segment
Commercial real estate operations.
- 8 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations is structured in four major sections. The first section
provides information related to occupancy levels and rental and other
income generated by the Partnership's properties. The second analyzes
results of operations on a consolidated basis. The final sections address
consolidated cash flows and financial condition. Discussion of certain
market risks and our cautionary statements also follow. Management's
analysis should be read in conjunction with the financial statements in
Item 1.
The occupancy levels at the Partnership properties as of March 31 were as
follows:
1999(1) 1998
------- ----
Property owned in Joint Venture with
- ------------------------------------
NTS-Properties IV and NTS-Properties VII,
- -----------------------------------------
Ltd.(Ownership % at March 31, 1999)
- -----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100%
Properties owned through
- ------------------------
Lakeshore/University II Joint Venture (L/U
- ------------------------------------------
II Joint Venture)(Ownership % at March 31,
- ------------------------------------------
1999)
- -----
Lakeshore Business Center Phase I (12%) 72%(2) 94%
Lakeshore Business Center Phase II (12%) 85%(2) 100%
University Business Center Phase II (12%)(3) N/A(3) 99%
(1) Current occupancy levels are considered adequate to continue the operation
of the Partnership's properties.
(2) In the opinion of the General Partner of the Partnership, the decrease in
period ending occupancy is only a temporary fluctuation and does not
represent a permanent downward occupancy trend.
(3) Represents ownership percentage as of March 31, 1998. On October 6, 1998,
University Business Center Phase II was sold.
Average occupancy levels at the Partnership properties during the three months
ended March 31 were as follows:
1999 1998
---- ----
Property owned in Joint Venture with
- ------------------------------------
NTS-Properties IV and NTS-Properties VII,
- -----------------------------------------
Ltd.(Ownership % at March 31, 1999)
- -----------------------------------
Blankenbaker Business Center 1A (39%) 100% 100%
Properties owned through
- ------------------------
Lakeshore/University II Joint Venture (L/U
- ------------------------------------------
II Joint Venture)(Ownership % at March 31,
- ------------------------------------------
1999)
- -----
Lakeshore Business Center Phase I (12%) 79%(1) 94%
Lakeshore Business Center Phase II (12%) 85%(1) 100%
University Business Center Phase II (12%)(2) N/A(2) 99%
(1) In the opinion of the General Partner of the Partnership, the decrease in
average occupancy is only a temporary fluctuation and does not represent a
permanent downward occupancy trend.
- 9 -
<PAGE>
(2) Represents ownership percentage as of March 31, 1998. On October 6, 1998,
University Business Center Phase II was sold.
The rental and other income generated by the Partnership's properties for the
three months ended March 31, 1999 and 1998 was as follows:
1999 1998
-------- --------
Property owned in Joint Venture with NTS-
- ------------------------------------------
Properties IV and NTS-Properties VII,
- --------------------------------------
Ltd. (Ownership % at March 31, 1999)
- ------------------------------------
Blankenbaker Business Center 1A (39%) $ 92,907 $ 92,748
Properties owned through Lakeshore/
- ---------------------------------------
University II Joint Venture (L/U II Joint
- -----------------------------------------
Venture (Ownership % at March 31, 1999)
- ---------------------------------------
Lakeshore Business Center Phase I (12%) $ 43,772 $ 58,429
Lakeshore Business Center Phase II (12%) $ 41,936 $ 51,711
University Business Center Phase II (12%)(1) N/A (1) $ 25,496
(1) Represents ownership percentage as of March 31, 1998. On October 6, 1998,
University Business Center Phase II was sold.
Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.
The following is an analysis of material changes in results of operations for
the periods ending March 31, 1999 and 1998. Items that did not have a material
impact on operations for the periods listed above have been eliminated from this
discussion.
Rental and other income decreased approximately $46,700 or 20% in 1999. The
decrease is primarily the result of the sale of University Business Center Phase
II in October 1998. University Business Center Phase II accounted for
approximately 11% of the Partnership's rental and other income for the three
months ended March 31, 1998. The decrease is also due to decreases in average
occupancy at Lakeshore Business Center Phases I and II.
Period ending occupancy percentages represent occupancy only on a specific date;
therefore, the above analysis considers average occupancy percentages which are
representative of the entire period's results.
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 three
months ended March 31, 1999 or 1998.
Operating expenses decreased approximately $7,700 or 22% in 1999 due primarily
to the sale of University Business Center Phase II in October 1998 and decreased
lawn maintenance and roof repairs at Blankenbaker Business Center 1A.
Interest expense decreased approximately $24,000 or 30% in 1999 as a result of
the reduction in debt from the sale of University Business Center Phase II in
October 1998 and from regular principal payments on the remaining joint venture
debt. This decrease is partially offset by interest incurred on the note payable
the Partnership obtained January 1998 which bears interest at 8.5%. The balance
on the note payable was $135,000 and $110,000, as of March 31, 1999 and December
31, 1998, respectively.
- 10 -
<PAGE>
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.
Real estate taxes decreased approximately $5,000 or 23% in 1999 as a result of
decreased property tax assessments for Lakeshore Business Center Phases I and II
and the sale of University Business Center Phase II in October 1998.
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 $5,809,884.
Consolidated Cash Flows and Financial Condition
- -----------------------------------------------
The majority of the Partnership's cash flow in 1998 was derived from financing
activities primarily as a result of proceeds received from a note payable
obtained by the Partnership in January 1998. The majority of the Partnership's
cash flow in 1999 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 wall covering. 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 financing activities are for principal payments on
mortgages and notes payable and repurchases of limited partnership Units. The
Partnership utilized 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 Partnership 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.
NTS Development Company (the Company) has agreed to defer amounts owed to it by
the Partnership as of December 31, 1998 through the period ending January 1,
2000. In addition, the Company will provide the financial support necessary for
the Partnership to pay its non-affiliated operating expenses as they come due
during the period ending January 1, 2000. Management of the Company believes the
Company has the financial resources to fulfill that commitment. There can be no
assurances this level of support from the Company will continue past January 1,
2000.
Cash flows provided by (used in):
1999 1998
---- ----
Operating activities $ 21,893 $ (250,557)
Investing activities (7,739) (1,820)
Financing activities (42,433) 281,223
----------- -----------
Net increase (decrease)
in cash and equivalents $ (28,279) $ 28,846
=========== ===========
- 11 -
<PAGE>
Net cash provided by operating activities increased approximately $272,450 in
1999. This increase was primarily driven by an increase in accounts payable.
Net cash used in investing activities in 1999 and 1998 was $7,739 and $1,820,
respectively. These funds were used primarily for tenant finish improvements.
Net cash (used in) provided by financing activities totaled ($42,433), and
$281,223 in 1999 and 1998, respectively. The net cash provided by financing
activities in 1998 was the result of a $350,000 note payable obtained by the
Partnership in January 1998 and is offset by principal payments on mortgages
payable and funds restricted for the repurchase of limited partnership Units.
The net cash used in financing activities in 1999 is the result of principal
payments on mortgages payable and funds restricted for the repurchase of limited
partnership Units. This activity is partially offset by an increase in the note
payable as a result of an extension of the due date from January 29, 1999 to
January 29, 2000. The note was increased in order to cover interest owed as of
the original maturity date.
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 other capital
improvements. Cash reserves (which are unrestricted cash and equivalents as
shown on the Partnership's balance sheet as of March 31) were $25,355 and
$68,786 at March 31, 1999 and 1998, respectively.
Due to the fact that no distributions were made during the three months ended
March 31, 1999 or 1998, 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 wall covering. 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.
The Partnership has no material commitments for renovations or capital
improvements as of March 31, 1999.
Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve
in 1996. During the years ended December 31, 1998, 1997 and 1996, the
Partnership funded $5,000, $0 and $15,572, respectively, to the reserve. On
February 17, 1997, the repurchase of partnership Units was temporarily suspended
in order to conserve cash. This step was taken until it was clear that, in the
General Partner's opinion, the Partnership had the necessary cash reserves to
meet future leasing and tenant finish costs and had rebuilt cash reserves to
meet the ongoing needs of the Partnership. Through March 31, 1999, the
Partnership has repurchased 27,245 Units for $20,572 at a price ranging from
$7.70 to $1.00 per Unit. The offering price per Unit was established by the
General Partner in its sole discretion and does not purport to represent the
fair market value or liquidation value of the Units. The balance in the Reserve
at March 31, 1999 is $0. Repurchased Units are retired by the Partnership, thus
increasing the percentage of ownership of each remaining investor. The Interest
Repurchase Reserve was funded from cash reserves.
On January 15, 1999, the Partnership elected to fund an additional $10,000 to
its Interest Repurchase Reserve. With this funding, the Partnership will be able
to repurchase 10,000 Units at a price of $1.00 per Unit.
- 12 -
<PAGE>
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, 1999 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. See below for information
regarding a contract for the sale of a portion of this land.
As of March 31, 1999, L/U II Joint Venture had a contract for the sale of
approximately 2.4 acres of land adjacent to the Lakeshore Business Center
development for a purchase price of $528,405. Concurrent with the signing of the
original contract, the purchaser deposited into an escrow account $10,000. This
deposit will be applied to the purchase price at closing. The contract requires
that the purchaser proceed, at their cost, to have the property re-zoned to
allow for a self-storage facility. If the purchaser is unable to obtain the
re-zoning, they may cancel the contract. The General Partner of the Partnership
has met with city officials who seem interested in the project and have voiced a
willingness to consider the re-zoning request. Subsequent to March 31, 1999, the
re-zoning has not yet been granted and per the contract, the purchaser has
elected to postpone the closing. At its option, the purchaser may postpone the
original Closing Date four times for a period of 30 days each by delivering
written notice and paying to the L/U II Joint Venture $10,000 for each 30-day
postponement period. $5,000 of each payment will be applied toward the purchase
price. The Partnership has a 12% interest in the Joint Venture. The Partnership
has not yet determined what the use of net proceeds would be from the sale of
the land.
As of March 31, 1999 the L/U II Joint Venture intends to use the remaining 3.8
acres of the land it owns at the Lakeshore Business Center development to
construct Lakeshore Business Center Phase III. Construction is expected to begin
during 1999. The construction cost is currently estimated to be $4,000,000 and
will be funded by a capital contribution from NTS-Properties V and debt
financing. Construction will not begin until, in the opinion of the General
partners, financing on favorable terms has been obtained. The Partnership and
NTS-Properties IV, which currently have a 12% and 18% interest, respectively, in
the L/U II Joint Venture are not in a position to contribute additional capital
required for the construction of Lakeshore Business Center Phase III. The
Partnership, together with NTS-Properties IV, has agreed that NTS-Properties V
will make a capital contribution to the L/U II Joint Venture with the knowledge
that their Joint Venture interest will, as a result, decrease.
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.
During the first quarter of 1999, SHPS, Inc., formerly known as Sykes Health
Plan Services, Inc., announced its intentions to consolidate its operations and
to build its corporate headquarters in Jefferson County, Kentucky. One of SHPS,
Inc's operations, Sykes, is already based in Louisville, Kentucky. Sykes
occupies 100% of Blankenbaker Business Center 1A. Due to the expansion of SHPS,
Inc's headquarters, it is the Partnership's understanding that SHPS, Inc. does
not intend to continue to occupy the space at Blankenbaker Business Center 1A
through the duration of its lease term, which expires in July 2005. The
Partnership's proportionate share of the rental income from this property
accounted for approximately 42% of the Partnership's rent revenues during 1998.
The Partnership has not yet determined the effect, if any, on the Partnership's
operations, given the fact Sykes is under lease until July 2005 and no official
notice of termination has been received.
- 13 -
<PAGE>
Leases at the Partnership's properties provide for tenants to contribute toward
the payment of increases in 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.
Year 2000
- ---------
All divisions of NTS, the General Partner of the Partnership, are reviewing the
effort necessary to prepare our information systems (IT) and non-information
technology with embedded technology (ET) for the Year 2000. The information
technology solutions have been addressed separately for the Year 2000 since the
Partnership saw the need to move to more advanced management and accounting
systems made available by new technology and software developments during the
decade of the 1990's.
The PILOT software system, purchased in the early 1990's, needed to be replaced
by a windows based network system both for our headquarters functions and other
locations. The real estate accounting system developed, sold, and supported by
the Yardi Company of Santa Barbara, California has been selected to supercede
PILOT. The Yardi system has been tested and is compatible with Year 2000 and
beyond. This system is being implemented with the help of third party
consultants and should be fully operational by the third quarter of 1999. Our
system for multi-family apartment locations was converted to GEAC's Power Site
System earlier in 1998 and is Year 2000 compliant.
The few remaining systems not addressed by these conversions are being modified
by the Company's in-house staff of programmers. The Hewlett Packard 3000 system,
used for PILOT and custom applications, was purchased in 1997 and will be part
of the new network. It will be retained as long as necessary to assure smooth
operations and has been upgraded to meet Year 2000 requirements.
All risks identified with information technology are believed to be addressed by
these plans.
The cost of these advances in our systems technology is not all attributable to
the Year 2000 issue since the Partnership had already identified the need to
move to a network based system regardless of the Year 2000. The costs involved
will be approximately $6,500 during 1999. Costs incurred through December 31,
1998 were approximately $1,500. These costs primarily included hardware and
software.
NTS property management staff has been surveying our vendors to evaluate
embedded technology in our alarm systems, HVAC controls, telephone systems and
other computer associated facilities. In a few cases, equipment is being
replaced. In some cases, circuitry is being upgraded. The cost involved is still
being evaluated. There are no known significant risks that are currently without
solutions. Management anticipates that applications involving ET will be Year
2000 compliant by the third quarter of 1999.
We are also currently addressing the Year 2000 readiness of third parties whose
business interruption could have a material negative impact on our business. All
significant vendors and tenants have indicated that they will be compliant by
the end of 1999. Such assurances are being evaluated and documented.
Management has determined that at our current state of readiness, the need does
not presently exist for a contingency plan. We will continue to evaluate the
need for such a plan.
Despite diligent preparation, unanticipated third-party failures, inability of
our tenants to pay rent when due, more general public infrastructure failures or
failure to successfully conclude our remediation efforts as planned could have a
material adverse impact on our results of operations, financial conditions
and/or cash flows in 1999 and beyond.
- 14 -
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
Our primary market risk exposure with regards to financial instruments is
changes in interest rates. All of the Partnership's debt bears interest at a
fixed rate.
Cautionary Statements
- ---------------------
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 relate to matters which have
not yet occurred. For example, phrases such as "the Partnership anticipates",
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such event not occur, then the result
which the Partnership expected also may not occur or occur in a different
manner, which may be more or less favorable to the Partnership. The Partnership
does not undertake any obligations to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
Any forward-looking statements included in Managements's Discussion and Analysis
of Financial Condition and Results of Operations, or elsewhere in this report,
which reflect management's best judgement based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking statements as a result of a number of factors, including
but not limited to those discussed below. Any forward-looking information
provided by the Partnership pursuant to the safe harbor established by recent
securities legislation should be evaluated in the context of these factors.
The Partnership's principal activity is the leasing and management of commercial
business centers. If a major commercial tenant defaults on its lease, the
Partnership's ability to make payments due under its debt agreements, payment 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
3. Defaults upon Senior Securities
-------------------------------
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 on February 11, 1999 to report in Item 5 that
the Partnership has elected to fund an additional amount of
$10,000 to its Interest Repurchase Reserve.
Items 1,2,4 and 5 are not applicable and have been omitted.
- 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/ Brian F. Lavin
------------------
Brian F. Lavin
President and Chief Operating
Officer of NTS Capital
Corporation (acting Chief
Financial Officer)
Date: May 17, 1999
--------------
- 17 -
<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
-----------------------------
Brian F. Lavin
President and Chief Operating
Officer of NTS Capital
Corporation (acting Chief
Financial Officer)
Date: May 17, 1999
-------------
- 18 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1999 AND FROM THE STATEMENT OF OPERATIONS FROM THE THREE
MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 75,451
<SECURITIES> 0
<RECEIVABLES> 18,694
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 1,923,157
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 2,296,895
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,706,633
0
0
<COMMON> 0
<OTHER-SE> (569,473)
<TOTAL-LIABILITY-AND-EQUITY> 2,296,895
<SALES> 178,015
<TOTAL-REVENUES> 181,832
<CGS> 0
<TOTAL-COSTS> 127,443
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,388
<INCOME-PRETAX> (1,999)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,999)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,999)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>THE PARTNERSHIP HAS AN UNCLASSIFIED BALANCE SHEET; THEREFORE, THE VALUE IS
$0.
<F2>THIS INFORMATIONHAS NOT BEEN DISCLOSED IN THE PARTNERSHIP'S FORM 10-Q
FILING.
</FN>
</TABLE>
