<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
--------------------------------------------------
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
incorporation or organization) Identification No.)
10172 Linn Station Road
Louisville, Kentucky 40223
---------------------------------- ----------------------------------
(Address of principal executive (Zip Code)
offices)
(502) 426-4800
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
<PAGE>
TABLE OF CONTENTS
-----------------
PART I
------
Pages
-----
Item 1. Financial Statements
Balance Sheets as of September 30, 2000 and December 31, 1999 3
Statement of Partners' Deficit as of September 30, 2000 3
Statements of Operations for the three months and nine months
ended September 30, 2000 and 1999 4
Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 5
Notes to Financial Statements 6-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II
-------
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
2
<PAGE>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
BALANCE SHEETS
--------------
<CAPTION>
As of As of
September 30, December 31,
2000 1999*
---------- ----------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
Cash and equivalents $ 37,888 $ 163,798
Cash and equivalents - restricted 43,219 18,719
Accounts receivable 17,966 3,763
Land, buildings and amenities, net 1,492,377 1,423,671
Deferred leasing commissions 86,643 88,665
Other assets 49,159 38,235
---------- ----------
TOTAL ASSETS $ 1,727,252 $ 1,736,851
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Mortgages and note payable $ 2,056,960 $ 2,160,294
Accounts payable 175,578 134,091
Security deposits 13,002 13,091
Other liabilities 75,016 25,669
---------- ----------
TOTAL LIABILITIES 2,320,556 2,333,145
COMMITMENTS AND CONTINGENCIES (Note 9)
PARTNERS' DEFICIT (593,304) (596,294)
---------- ----------
TOTAL LIABILITIES AND PARTNERS' DEFICIT $ 1,727,252 $ 1,736,851
========== ==========
</TABLE>
<TABLE>
STATEMENT OF PARTNERS' DEFICIT
------------------------------
<CAPTION>
Limited General
Partners Partner Total
-------- ------- -----
PARTNERS' DEFICIT
-----------------
<S> <C> <C> <C>
Capital contributions, net of offering costs $ 11,784,521 $ 100 $ 11,784,621
Net loss - prior years (10,178,579) (102,814) (10,281,393)
Net income - current year 2,960 30 2,990
Cash distributions declared to date (2,038,520) (20,592) (2,059,112)
Repurchase of Limited Partnership Units (40,410) - (40,410)
----------- ----------- -----------
BALANCES September 30, 2000 $ (470,028) $ (123,276) $ (593,304)
=========== =========== ===========
</TABLE>
* Reference is made to the audited financial statements in Form 10-K as filed
with the Securities and Exchange Commission on March 30, 2000. The auditors'
report on these statements was qualified with respect to the Partnership
continuing as a going concern (See Notes to Financial Statements - Note 1).
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
---------
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
-------- -------- -------- --------
REVENUES
--------
<S> <C> <C> <C> <C>
Rental income $ 143,361 $ 143,233 $ 434,148 $ 501,888
Gain on sale of assets - 7,925 - 7,925
Interest and other income 598 4,189 4,247 6,851
-------- -------- -------- --------
TOTAL REVENUES 143,959 155,347 438,395 516,664
---------- ---------- ---------- ----------
EXPENSES
--------
Operating expenses 22,119 23,315 62,250 74,154
Operating expenses - affiliated 8,971 11,532 27,277 42,870
Loss on disposal of assets 1,374 - 12,515 -
Interest expense 39,646 47,088 127,424 160,194
Management fees 8,888 8,701 25,911 29,927
Real estate taxes 16,527 12,895 42,175 46,490
Professional and administrative expenses 16,497 20,108 51,627 53,329
Professional and administrative expenses
- affiliated 5,017 13,405 15,338 33,695
Depreciation and amortization 23,406 24,062 70,888 83,381
-------- -------- -------- --------
TOTAL EXPENSES 142,445 161,106 435,405 524,040
-------- -------- -------- --------
Net income (loss) $ 1,514 $ (5,759) $ 2,990 $ (7,376)
======== ======== ======== ========
Net income (loss) allocated to the Limited Partners $ 1,499 $ (5,701) $ 2,960 $ (7,302)
======== ======== ======== ========
Net income (loss) per Limited Partnership Unit $ 0.00 $ (0.01) $ 0.00 $ (0.01)
======== ======== ======== ========
Weighted average number of Limited
Partnership Units 643,645 646,600 643,645 652,851
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
<TABLE>
NTS-PROPERTIES PLUS LTD.
------------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
-----------
<CAPTION>
Nine Months Ended
September 30,
-------------
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S> <C> <C>
Net income (loss) $ 2,990 $ (7,376)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 70,888 83,381
Loss of disposal of assets 12,515 56
Changes in assets and liabilities:
Cash and equivalents - restricted (24,500) (34,028)
Accounts receivable (14,203) 8,837
Deferred leasing commissions 2,022 14,054
Other assets (9,687) 14,211
Accounts payable 41,487 21,135
Security deposits (89) (3,358)
Other liabilities 49,347 32,242
-------- --------
Net cash provided by operating activities 130,770 129,154
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings and amenities (246,456) (34,451)
Sale of land, buildings and amenities - 31,323
Change in ownership of Joint Venture (Note 8) 37,544 138,194
-------- --------
Net cash (used in) provided by investing activities (208,912) 135,066
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Principal payments on mortgages and note payable (168,790) (171,361)
Increase in mortgages and note payable 128,142 54,527
Increase in loan costs (7,120) -
Repurchase of Limited Partnership Units - (14,757)
-------- --------
Net cash used in financing activities (47,768) (131,591)
-------- --------
Net (decrease) increase in cash and equivalents (125,910) 132,629
CASH AND EQUIVALENTS, beginning of period 163,798 53,634
-------- --------
CASH AND EQUIVALENTS, end of period $ 37,888 $ 186,263
======== ========
Interest paid on a cash basis $ 120,417 $ 151,965
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
NTS-PROPERTIES PLUS LTD.
------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
The unaudited financial statements and schedules included herein should be read
in conjunction with the Partnership's 1999 Form 10-K as filed with the
Securities and Exchange Commission on March 30, 2000. In the opinion of the
General Partner, all adjustments (only consisting of normal recurring accruals)
necessary for a fair presentation have been made to the accompanying financial
statements for the three months and nine months ended September 30, 2000 and
1999.
1. Partnership's Plans Relative to Continuing Operations
-----------------------------------------------------
NTS-Properties Plus Ltd. ("the Partnership") currently holds minority
interests in four properties and thus cannot effect decisions made by NTS
affiliate partnerships holding a majority position in these properties. The
Partnership does not possess the resources to contribute to improvements of
any significant amount and has seen its minority interests further decline
as a result of the contributions made by the financially stronger majority
interest affiliate partnerships.
Prior to December 31, 1999, NTS Development Company, an affiliate of the
General Partner ("NTS"), agreed to defer amounts owed to it by the
Partnership. NTS, prior to January 1, 2000, also agreed to provide the
financial support necessary for the Partnership to pay its non-affiliated
operating expenses as they came due through January 1, 2000. NTS did not
extend the commitment past January 1, 2000.
NTS, after January 1, 2000, will not defer amounts owed to it or renew its
commitment to provide financial support for non-affiliated expenses of the
Partnership. As of September 30, 2000, the Partnership owes approximately
$77,000 to NTS.
Accordingly, without an infusion of cash or a sale of Partnership assets,
the Partnership may not be able to meet its obligations as they come due in
the normal course of business. As a result, the auditors' report in the
Partnership's 1999 Form 10-K was qualified with respect to the Partnership
continuing as a going concern. These conditions continue to exist and may
exist at December 31, 2000. Given these conditions, it is anticipated that
the auditors' report included in the Partnership's 2000 Form 10-K may be
qualified with respect to the Partnership continuing as a going concern.
The Partnership is evaluating alternatives with its assets, debt and
capital structure to remedy this situation.
2. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles ("GAAP") 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.
6
<PAGE>
3. Concentration of Credit Risk
----------------------------
The Partnership has joint venture investments in one commercial rental
property in Kentucky (Louisville) and three commercial rental properties in
Florida (Ft. Lauderdale). A single tenant occupies the property in
Kentucky.
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, ending in July 2005. The Partnership's proportionate
share of the rental income from this property accounted for approximately
60% of the Partnership's total revenues for the nine months ended September
30, 2000. The Partnership has not yet determined the effect, if any, on the
Partnership's operations, given the fact SHPS, Inc. is under lease until
July 2005 and no official notice of termination has been received.
4. Cash and Equivalents - Restricted
---------------------------------
Cash and equivalents - restricted represents funds which have been escrowed
with mortgage companies for property taxes in accordance with the loan
agreements.
5. Basis of Property and Depreciation
----------------------------------
Land, buildings and amenities are stated at historical cost, less
accumulated depreciation, to the Partnership. Costs directly associated
with the acquisition, development and construction of a project are
capitalized. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets which are 5-30 years for land
improvements, 7-30 years for buildings and improvements, 3-7 years for
amenities and the applicable lease term for tenant improvements.
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 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 value. Application of this standard by management
during the period ended September 30, 2000 and 1999 did not result in any
impairment loss.
On July 23, 1999, the Lakeshore/University Joint Venture closed on the sale
of 2.4 acres of land adjacent to the Lakeshore Business Center for a
purchase price of $528,405.
7
<PAGE>
6. Mortgages and Note Payable
--------------------------
Mortgages and note payable consist of the following:
<TABLE>
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Mortgage payable to an insurance company,
bearing interest at a fixed rate of 8.5%,
due November 15, 2005,
secured by land and a building. $1,083,145 $1,203,015
Mortgage payable to an insurance company,
bearing interest at a fixed rate of 8.125%,
due August 1, 2008,
secured by land and a building. 352,779 410,622
Mortgage payable to an insurance company,
bearing interest at a fixed rate of 8.125%,
due August 1, 2008,
secured by land and buildings. 327,894 381,657
Mortgage payable to a bank, bearing interest
at a variable rate based on
LIBOR daily rate plus 2.3%,
currently 8.92%, due September 8, 2003,
secured by land and a building. 61,142 -
Note payable to a bank, bearing interest
at a fixed rate of 8.75%, due January 29, 2001,
collateral provided by NTS Financial Partnership,
an affiliate of NTS Development Company. 232,000 165,000
--------- ---------
$2,056,960 $2,160,294
========= =========
</TABLE>
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 $2,046,000.
7. Related Party Transactions
--------------------------
Pursuant to an agreement with the Partnership, NTS Development Company, an
affiliate of the General Partner of the Partnership, receives property
management fees on a monthly basis. The fees are paid in an amount equal to
6% of the gross revenues from the Partnership's properties. Also pursuant
to an agreement, NTS Development Company receives a repair and maintenance
fee equal to 5.9% of costs incurred which relate to capital improvements.
These repair and maintenance fees are capitalized as part of land,
buildings and amenities.
The Partnership was charged the following amounts from NTS Development
Company for the nine months ended September 30, 2000 and 1999. 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 other assets or as land, buildings and
amenities.
8
<PAGE>
7. Related Party Transactions - Continued
--------------------------------------
<TABLE>
Nine Months Ended
September 30,
-------------
2000 1999
---- ----
<S> <C> <C>
Property management fees $ 25,911 $ 29,927
------- -------
Total property management fees 25,911 29,927
------- -------
Property management 14,959 23,182
Leasing 5,763 11,419
Administrative - operating 6,270 7,658
Other 285 611
------- -------
Total operating expenses -affiliated 27,277 42,870
------- -------
Administrative - professional 15,338 33,695
------- -------
Total professional and administrative expenses
- affiliated 15,338 33,695
------- -------
Repairs and maintenance fee 13,267 1,123
Leasing commissions 6,020 8,939
------- -------
Total related party transactions capitalized 19,287 10,062
------- -------
Total related party transactions $ 87,813 $116,554
======= =======
</TABLE>
On February 7, 2000, ORIG, LLC (the "Affiliate") purchased Interests in the
Partnership pursuant to an Agreement, Bill of Sale and Assignment by and
among the Affiliate and four investors in the Partnership. The Affiliate
purchased 2,536 Interests in the Partnership for a total consideration of
$2,536 or an average price of $1.00 per Interest.
8. Transactions Affecting the Investment in Lakeshore/University II Joint
---------------------------------------------------------------------------
Venture
-------
On July 1, 2000 and July 19, 1999, NTS-Properties V contributed $500,000
and $1,737,000, respectively, to the Lakeshore/University II Joint Venture
("L/U II Joint Venture"). The other partners in the L/U II Joint Venture,
including NTS-Properties Plus Ltd., did not make capital contributions at
that time. Accordingly the ownership percentages of the other partners in
the L/U II Joint Venture decreased. Effective July 1, 2000, NTS Plus'
percentage of ownership in the L/U II Joint Venture is 7.69%, as compared
to 8.40% prior to July 1, 2000 and 12.57% prior to July 1, 1999.
9. Commitments and Contingencies
-----------------------------
The Partnership, as an owner of real estate, is subject to various
environmental laws of federal and local governments. Compliance by the
Partnership with existing laws has not had a material adverse effect on the
Partnership's financial condition and results of operations. However, the
Partnership cannot predict the impact of new or changed laws or regulations
on its current properties or properties it may acquire in the future.
9
<PAGE>
9. Commitments and Contingencies - Continued
-----------------------------------------
The Partnership does not believe there is any litigation threatened against
the Partnership other than routine litigation arising out of the ordinary
course of business, some of which is expected to be covered by insurance,
none of which is expected to have a material adverse effect on the
consolidated financial statements of the Partnership.
Pursuant to a contract signed on December 6, 1999, the L/U II Joint Venture
has a commitment to construct a building to be known as Lakeshore Business
Center Phase III on 3.8 acres of land it owns at the Lakeshore Business
Center Development. The construction cost is currently estimated to be
$4,000,000 and will be funded by working capital and approximately
$2,680,000 in debt financing. As of September 30, 2000, the L/U II Joint
Venture has incurred approximately $2,820,000 in expenses for the
construction of Lakeshore Business Center Phase III.
On September 8, 2000, the Partnership, obtained a loan from a bank for an
amount not exceeding $2,680,000 to fund the construction of Lakeshore
Business Center Phase III. This commitment is guaranteed by the L/U II
Joint Venture, NTS-Properties V, NTS-Properties IV, Ltd., and NTS- Ft.
Lauderdale, Ltd. The funds will be used by the L/U II Joint Venture to
construct Lakeshore Business Center Phase III. The loan bears a variable
interest rate equal to a daily floating LIBOR rate as quoted for 30-day
investments, plus 230 basis points and is secured by 3.8 acres of land
located at the Lakeshore Business Center Development and the improvements
now and hereafter located on the land.
As of September 30, 2000, the L/U II Joint Venture has a commitment for
approximately $122,000 for tenant improvements on 6,190 square feet at
Lakeshore Business Center Phase III. The Partnership's share of this
commitment is approximately $9,000 and will be funded from debt financing
related to the property.
The L/U II Joint Venture anticipates replacing the roofs at Lakeshore
Business Center Phase I for a cost of approximately $200,000. The
Partnership's share of this project will be approximately $15,000 and will
be funded from cash flows from operations of the property.
10. Segment Reporting
-----------------
The Partnership's reportable operating segments include only one segment -
Commercial Real Estate Operations.
10
<PAGE>
11. Recent Accounting Pronouncement
-------------------------------
The Emerging Issues Task Force ("EITF") of the Financial Accounting
Standards Board ("FASB") has reached a consensus on Issue No. 00-1,
"Applicability of the Pro Rata Method of Consolidation to Investments in
Certain Partnerships and Other Unincorporated Joint Ventures." The EITF
reached a consensus that a proportionate gross financial statement
presentation (referred to as "proportionate consolidation" in the
Partnership's 1999 Form 10-K Notes to Financial Statements) is not
appropriate for an investment in an unincorporated legal entity accounted
for by the equity method of accounting, unless the investee is in either
the construction industry or an extractive industry where there is a
longstanding practice of its use.
The consensus is applicable to financial statements for annual periods
ending after June 15, 2000. Upon application of the consensus, all
comparative financial statements shall be restated to conform with the
consensus. The application of this consensus will not result in a
restatement of previously reported partners' equity or results of
operations, but will result in a recharacterization or reclassification of
certain financial statements' captions and amounts. The Partnership plans
to restate its financial statements using the equity method to account for
its joint venture investments for the year ending December 31, 2000.
11
<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 ("MD&A") 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. A discussion of certain market risks also
follows. MD&A should be read in conjunction with the Financial Statements in
Item 1 and the Cautionary Statements below.
Cautionary Statements
---------------------
Some of the statements included in this Item 2 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 revision to these forward-looking statements that may be made to reflect any
future events or circumstances.
Any forward-looking statements included in MD&A, 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 liquidity, capital resources and results of operations are
subject to a number of risks and uncertainties including, but not limited to the
following: the ability of the Partnership to continue as a going concern; the
ability of the Partnership to achieve planned revenues; the ability of the
Partnership to make payments due under its debt agreement; the ability of the
Partnership to negotiate and maintain terms with vendors and service providers
for operating expenses; competitive pressures from other real estate companies,
including large commercial real estate companies, which may affect the nature
and viability of the Partnership's business strategy; trends in the economy as a
whole which may affect consumer confidence and demand for the types of rental
property held by the Partnership; the ability of the Partnership to predict the
demand for specific rental properties; the ability of the Partnership to attract
and retain tenants; availability and costs of management and labor employed;
real estate occupancy and development costs, including the substantial fixed
investment costs associated with renovations necessary to obtain new tenants and
retain existing tenants; and the risk of a major commercial tenant defaulting on
its lease due 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.
12
<PAGE>
Cautionary Statements - Continued
---------------------------------
The Partnership currently holds minority interests in four properties and thus
cannot effect decisions made by NTS affiliate partnerships holding a majority
position in these properties. The Partnership does not possess the resources to
contribute to improvements of any significant amount and has seen its minority
interests further decline as a result of the contributions made by the
financially stronger majority interest affiliate partnerships.
Prior to December 31, 1999, NTS Development Company, an affiliate of the General
Partner ("NTS"), agreed to defer amounts owed to it by the Partnership. NTS,
prior to January 1, 2000, also agreed to provide the financial support necessary
for the Partnership to pay its non-affiliated operating expenses as they came
due through January 1, 2000. NTS did not extend the commitment past January 1,
2000.
NTS, after January 1, 2000, will not defer amounts owed to it or renew its
commitment to provide financial support for non-affiliated expenses of the
Partnership. As of September 30, 2000, the Partnership owes approximately
$77,000 to NTS.
Accordingly, without an infusion of cash or a sale of Partnership assets, the
Partnership may not be able to meet its obligations as they come due in the
normal course of business. As a result, the auditors' report in the
Partnership's 1999 Form 10-K was qualified with respect to the Partnership
continuing as a going concern. These conditions continue to exist and may exist
at December 31, 2000. Given these conditions, it is anticipated that the
auditors' report included in the Partnership's 2000 Form 10-K may be qualified
with respect to the Partnership continuing as a going concern. The Partnership
is evaluating alternatives with its assets, debt and capital structure to remedy
this situation. (See Notes to Financial Statements - Note 1).
Results of Operations
---------------------
The occupancy levels at the Partnership's properties as of September 30 were as
follows:
<TABLE>
Nine Months Ended
September 30,
-------------
2000 (1) 1999
-------- ----
Property Owned in Joint Venture with NTS-Properties IV
------------------------------------------------------
and NTS-Properties VII, Ltd.
----------------------------
(Ownership % at September 30, 2000)
-----------------------------------
<S> <C> <C>
Blankenbaker Business Center 1A (39.05%) 100% 100%
Property Owned through Lakeshore/University II Joint Venture
------------------------------------------------------------
(L/U II Joint Venture)
----------------------
Lakeshore Business Center Phase I (2) 74% 74%
Lakeshore Business Center Phase II (2) 86% 86%
Lakeshore Business Center Phase III (3) N/A N/A
</TABLE>
(Footnotes continued on next page)
13
<PAGE>
Results of Operations - Continued
---------------------------------
(1) Current occupancy levels are considered adequate to continue the operation
of Blankenbaker Business Center 1A and Lakeshore Business Center Phases I
and II without additional financing. Lakeshore Business Center Phase III is
currently under construction.
(2) Ownership percentage was 7.69% as of September 30, 2000 and 8.40% as of
September 30, 1999 (See Notes to Financial Statements - Note 8).
(3) Ownership percentage was 7.69% as of September 30, 2000. Construction of
the property commenced December 1999. As of September 30, 2000, one lease
for 4,689 square feet has been signed and the tenant is expected to take
occupancy during the fourth quarter of 2000. Another lease for 6,190 square
feet has been signed and the tenant is expected to take occupancy during
the first quarter of 2001.
The average occupancy levels at the Partnership's properties during the three
months and nine months ended September 30 were as follows:
<TABLE>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Property Owned in Joint Venture with
------------------------------------
NTS-Properties IV and NTS-Properties VII, Ltd.
----------------------------------------------
(Ownership % at September 30, 2000)
-----------------------------------
<S> <C> <C> <C> <C>
Blankenbaker Business Center 1A (39.05%) 100% 100% 100% 100%
Property Owned through Lakeshore/University II
----------------------------------------------
Joint Venture (L/U II Joint Venture)
------------------------------------
Lakeshore Business Center Phase I (1) 74% 73% 75% 75%
Lakeshore Business Center Phase II (1) (2) 86% 86% 83% 86%
Lakeshore Business Center Phase III (3) N/A N/A N/A N/A
</TABLE>
(1) Ownership percentage was 7.69% for the three months ended September 30,
2000, 8.40% for the six months ended June 30, 2000 and the three months
ended September 30, 1999, and 12.57% for the six months ended June 30,
1999. (See Notes to Financial Statements - Note 8).
(2) 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.
(3) Ownership percentage was 7.69% as of September 30, 2000. Construction of
the property commenced December 1999.
14
<PAGE>
Results of Operations - Continued
---------------------------------
The rental and other income generated by the Partnership's properties for the
three months and nine months ended September 30 were as follows:
<TABLE>
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Property Owned in Joint Venture with NTS-
-----------------------------------------
Properties IV and NTS-Properties VII, Ltd.
------------------------------------------
(Ownership % at September 30, 2000)
-----------------------------------
<S> <C> <C> <C> <C>
Blankenbaker Business Center 1A (39.05%) $ 89,637 $ 89,278 $264,968 $275,093
Property Owned through Lakeshore/University
-------------------------------------------
II Joint Venture (L/U II Joint Venture)
---------------------------------------
Lakeshore Business Center Phase I (1) $ 26,220 $ 25,013 $ 84,255 $109,279
Lakeshore Business Center Phase II (1) $ 27,836 $ 27,963 $ 86,114 $118,954
Lakeshore Business Center Phase III (2) N/A N/A N/A N/A
</TABLE>
(1) Represents ownership percentage of 7.69% for the three months ended
September 30, 2000, 8.40% for the six months ended June 30, 2000 and the
three months ended September 30, 1999, and 12.57% for the six months ended
June 30, 1999. (See Notes to Financial Statements - Note 8).
(2) Ownership percentage was 7.69% as of September 30, 2000. Construction of
the property commenced December 1999. As of September 30, 2000, one lease
for 4,689 square feet has been signed and the tenant is expected to take
occupancy during the fourth quarter of 2000. Another lease for 6,190 square
feet has been signed and the tenant is expected to take occupancy during
the first quarter of 2001.
Revenues shown in the table above, for properties owned through a joint venture,
represent only the Partnership's percentage interest in those revenues.
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, ending in July 2005. The Partnership's proportionate
share of the rental income from this property accounted for approximately 60% of
the Partnership's total revenues for the nine months ended September 30, 2000.
The Partnership has not yet determined the effect, if any, on the Partnership's
operations, given the fact SHPS, Inc. is under lease until July 2005 and no
official notice of termination has been received.
The following is an analysis of material changes in results of operations for
the periods ending September 30, 2000 and 1999. Items that did not have a
material impact on operations for the periods listed above have been excluded
from this discussion.
Rental and other income decreased approximately $11,000 or 7% for the three
months ended September 30, 2000, as compared to the same period in 1999,
primarily as a result of a decrease in interest income earned on excess cash
invested which has been used to construct Lakeshore Business Center Phase III.
Rental and other income decreased approximately $78,000 or 15% for the nine
months ended September 30, 2000, as compared to the same period in 1999,
primarily due to a
15
<PAGE>
Results of Operations - Continued
---------------------------------
decrease in ownership of the L/U II Joint Venture, as a result of a capital
contributions made by NTS-Properties V to the Joint Venture on July 1, 1999 and
July 1, 2000. (See Notes to Financial Statements - Note 8).
In cases of tenants who cease making rental payments or abandon the premises in
breach of the lease terms, the Partnership pursues collection through the use of
collection agencies or 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 and nine months ended September 30, 2000 or 1999. As of September 30,
2000, no action is being taken against any tenants to collect funds through the
remedies discussed above.
Operating expenses decreased approximately $12,000 or 16% for the nine months
ended September 30, 2000, as compared to the same period in 1999, primarily due
to the decrease in ownership of the L/U II Joint Venture as discussed above.
Operating expenses - affiliated decreased approximately $16,000 or 37% for the
nine months ended September 30, 2000, as compared to the same period in 1999,
due to decreased overhead costs allocated to the Partnership as a result of
personnel status changes and to the decrease in ownership of the L/U II Joint
Venture. Operating expenses - affiliated are expenses for services performed by
employees of NTS Development Company, an affiliate of the General Partner.
The 2000 loss on disposal of assets is the result of retirements of original
building costs at Lakeshore Business Center Phases I and II resulting from the
renovation of the common areas of these properties. The loss represents the
costs of the assets which were not fully depreciated at the time of their
retirement.
Interest expense decreased approximately $7,000 or 16% and $33,000 or 21% for
the three months and nine months ended September 30, 2000, respectively, as
compared to the same periods in 1999, primarily as a result of the decrease in
ownership of the L/U II Joint Venture and from regular principal payments made
on the Joint Venture debt.
Professional and administrative expenses - affiliated decreased approximately
$8,000 or 63% and $18,000 or 55% for the three months and nine months ended
September 30, 2000, respectively, as compared to the same periods in 1999, as a
result of decreased salary costs due to personnel changes and the decrease in
ownership of the L/U II Joint Venture. Professional and administrative expenses
- affiliated are expenses incurred for the services performed by employees of
NTS Development Company, an affiliate of the General Partner.
Depreciation and amortization decreased approximately $12,000 or 15% for the
nine months ended September 30, 2000, as compared to the same period in 1999,
primarily as a result of the decrease in ownership of the L/U II Joint Venture.
The aggregate cost of the Partnership's properties for Federal tax purposes is
approximately $4,868,000.
16
<PAGE>
Consolidated Cash Flows and Financial Condition
-----------------------------------------------
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, II and III. 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.
Cash flows provided by (used in):
<TABLE>
Nine Months Ended September 30,
-------------------------------
2000 1999
---- ----
<S> <C> <C>
Operating activities $ 130,770 $ 129,154
Investing activities (208,912) 135,066
Financing activities (47,768) (131,591)
-------- --------
Net (decrease) increase in cash and equivalents $(125,910) $ 132,629
======== ========
</TABLE>
Net cash provided by operating activities did not change significantly for the
nine months ended September 30, 2000, as compared to the same period in 1999.
Net cash used in investing activities for the nine months ended September 30,
2000, increased approximately $344,000, as compared to the same period in 1999.
The increase is due to increased capital expenditures at Lakeshore Business
Center Phases I and II and the inclusion of Lakeshore Business Center Phase III
construction costs. Also contributing to the increase is the effect of the
change in ownership.
Net cash used in financing activities decreased approximately $84,000 or 64% for
the nine months ended September 30, 2000, as compared to the same period in
1999. The decrease is due partially to a decrease in cash reserved for the
repurchase of Limited Partnership Units. The net cash provided by financing
activities in 2000 and 1999 was the result of additional funds received on the
note payable obtained by the Partnership in January 1998. The principal amount
of the note payable was increased in order to cover interest due as of the
original maturity date in January 1999.
The Partnership has not made any cash distributions since the quarter ended
September 30, 1991. Cash reserves (which are unrestricted cash and equivalents
as shown on the Partnership's balance sheet) as of September 30, 2000 were
$37,888.
Due to the fact that no distributions were made during the nine months ended
September 30, 2000 or 1999, the table which presents that portion of the
distribution that represents a return of capital on a GAAP 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, and the construction of Lakeshore Business
Center Phase III as described later in this discussion. 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
17
<PAGE>
Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------
and/or wallcovering. The extent and costs 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.
Pursuant to a contract signed on December 6, 1999, the L/U II Joint Venture has
a commitment to construct a building to be known as Lakeshore Business Center
Phase III on 3.8 acres of land it owns at the Lakeshore Business Center
Development. The construction cost is currently estimated to be $4,000,000 and
will be funded by the Joint Venture's working capital and approximately
$2,680,000 in debt financing. As of September 30, 2000, the L/U II Joint Venture
incurred approximately $2,820,000 in expenses for the construction of Lakeshore
Business Center Phase III.
On September 8, 2000, the Partnership, obtained a loan from a bank for an amount
not exceeding $2,680,000 to fund the construction of Lakeshore Business Center
Phase III. This commitment is guaranteed by the L/U II Joint Venture,
NTS-Properties V, NTS-Properties IV, Ltd., and NTS-Ft. Lauderdale, Ltd. The
funds will be used by the L/U II Joint Venture to construct Lakeshore Business
Center Phase III. The loan bears a variable interest rate equal to a daily
floating LIBOR rate as quoted for 30-day investments, plus 230 basis points and
is secured by 3.8 acres of land located at the Lakeshore Business Center
Development and the improvements now and hereafter located on the land.
As of September 30, 2000, the L/U II Joint Venture has a commitment for
approximately $122,000 for tenant improvements on 6,190 square feet at Lakeshore
Business Center Phase III. The Partnership's share of this commitment is
approximately $9,000 and will be funded from debt financing related to the
property.
The L/U II Joint Venture anticipates replacing the roofs at Lakeshore Business
Center Phase I for a cost of approximately $200,000. The Partnership's share of
this project will be approximately $15,000 and will be funded from cash flows
from operations of the property.
The Partnership has no other material commitments for renovations or capital
improvements as of September 30, 2000.
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, II and III, 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.
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. These lease provisions should protect the Partnership's operations from
the impact of inflation and changing prices.
18
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Our primary market risk exposure with regard to financial instruments is changes
in interest rates. At September 30, 2000, a hypothetical 100 basis point
increase in interest rates would result in an approximate $50,000 decrease in
the fair value of debt.
19
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
Exhibit 27. Financial Data Schedule
b) Reports on Form 8-K:
Not applicable.
20
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of 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,
General Partner
By: NTS Capital Corporation,
General Partner
/s/ Gregory A. Wells
------------------------------------------
Gregory A. Wells
Senior Vice President and
Chief Financial Officer of
NTS Capital Corporation
Date: November 13, 2000
21
<PAGE>
